<PAGE>

                                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, 1999
                                       or
[  ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

For the transition period from __________ to __________

Commission file numbers   1-11331
                          333-06693

                            Ferrellgas Partners, L.P.
                        Ferrellgas Partners Finance Corp.

           (Exact name of registrants as specified in their charters)

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

                   One Liberty Plaza, Liberty, Missouri 64068

               (Address of principal executive offices) (Zip Code)

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

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

                            Name of each exchange on
         Title of each class                               which registered

            Common Units                                New York Stock Exchange

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

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

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

The  aggregate  market value as of October 1, 1999, 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 $220,740,026.

At October 1, 1999, Ferrellgas Partners, L.P. had units outstanding as follows:
       31,307,116  Common Units
                0  Subordinated Units
Documents Incorporated by Reference:   None


<PAGE>


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

                          1999 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 THE 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...............11
ITEM    7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..19
ITEM     8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................20
ITEM     9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                ACCOUNTING AND FINANCIAL DISCLOSURE.........................20

                                    PART III

ITEM    10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS..........20
ITEM    11.     EXECUTIVE COMPENSATION.......................................22
ITEM    12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                AND MANAGEMENT...............................................26
ITEM    13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...............28

                                     PART IV

ITEM    14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                REPORTS ON FORM 8-K...........................................28

<PAGE>


                                     PART I

ITEM 1.       BUSINESS.

Business of Ferrellgas Partners, L.P.

     Ferrellgas Partners,  L.P. (the "Master Limited Partnership" or the "MLP"),
is a Delaware limited  partnership which was formed on April 19, 1994. The MLP's
Common Units are listed on the New York Stock Exchange. The MLP's activities are
conducted through its subsidiary Ferrellgas,  L.P. (the "Operating  Partnership"
or the "OLP"). The MLP, with a 99% limited partner interest, is the sole limited
partner of the Operating Partnership.  The MLP and the Operating Partnership are
together  referred to herein as the  "Partnership".  The  Operating  Partnership
accounts for nearly all of the MLP's  consolidated  assets,  sales and operating
earnings.  The MLP's  consolidated  net earnings also reflect  interest  expense
related to $160  million of 9 3/8%  Senior  Secured  Notes  issued by the MLP in
April 1996.

Business of Ferrellgas, L.P.

     The Operating  Partnership,  a Delaware limited partnership,  was formed on
April 22, 1994, to acquire,  own and operate the propane  business and assets of
Ferrellgas,  Inc. (the  "Company",  "Ferrellgas",  and "General  Partner").  The
Company has retained a 1% general  partner  interest in the MLP and also holds a
1.0101% general partner  interest in the OLP,  representing a 2% general partner
interest  in the  Partnership  on a combined  basis.  As General  Partner of the
Partnership,  the Company  performs all  management  functions  required for the
Partnership.

General

     The Partnership is engaged in the sale, distribution, marketing and trading
of propane and other natural gas liquids. The discussion that follows focuses on
the  Partnership's  retail  operations and its other  operations,  which consist
primarily  of propane  and natural gas  liquids  trading and  wholesale  propane
marketing  operations,  all of which were conveyed to the Partnership on July 5,
1994. All historical  references  prior to July 5, 1994 relate to the operations
as conducted by the Company.

     The  Partnership  believes that it is the second largest retail marketer of
propane in the United  States as measured  by gallons  sold,  serving  more than
800,000  residential,  industrial/commercial  and  agricultural  customers in 45
states and the District of Columbia  through 520 retail outlets  (excluding area
offices)  in 38 states,  as of July 31,  1999.  Some  outlets  serve  interstate
markets.  Based upon information contained in industry publications for calendar
year 1998,  the  Partnership  believes  that its retail  operations  account for
approximately  8% of the retail propane  gallons sold in the United States.  For
the Partnership's fiscal years ended July 31, 1999, 1998 and 1997, annual retail
propane sales volumes were 680 million,  660 million,  and 694 million  gallons,
respectively.   The  retail  propane   business  of  the  Partnership   consists
principally of transporting  propane purchased in the contract and spot markets,
primarily from major oil companies,  to its retail distribution outlets and then
to tanks  located on its  customers'  premises,  as well as to portable  propane
cylinders.

     The  Partnership  also  believes  that it is a leading  natural gas liquids
trading  company.  Annual  propane and natural  gas liquids  trading,  wholesale
propane and other sales volumes were approximately 0.8 billion, 1.0 billion, and
1.2 billion  gallons during the fiscal years ended July 31, 1999, 1998 and 1997,
respectively.


                                       1
<PAGE>


Retail Operations

   Formation and History

     Ferrell Companies, Inc. ("Ferrell"),  the parent of Ferrellgas, was founded
in  1939  as a  single  retail  propane  outlet  in  Atchison,  Kansas  and  was
incorporated  in 1954.  Ferrellgas  was  formed in 1984 to  operate  the  retail
propane  business  previously  conducted by Ferrell.  In July 1994,  the propane
business  and  assets of  Ferrellgas  were  contributed  to the  Partnership  in
connection  with the  Partnership's  initial  public  offering of Common  Units.
Ferrell 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 ("ESOT").

     The Company's  initial growth largely  resulted from small  acquisitions in
the rural areas of eastern Kansas, northern and central Missouri,  Iowa, western
Illinois,  southern Minnesota, South Dakota and Texas. In July 1984, the Company
acquired propane operations with annual retail sales volumes of approximately 33
million gallons and in December 1986, the Company  acquired  propane  operations
with annual retail sales volumes of approximately 395 million gallons. These two
major acquisitions and many other smaller  acquisitions  significantly  expanded
and diversified the Company's  geographic coverage.  Since 1986,  Ferrellgas has
acquired more than 100 smaller  independent  propane  retailers,  the largest of
which were Skelgas  Propane,  Inc.  ("Skelgas")  acquired in May 1996 and Vision
Energy  Resources,  Inc.  ("Vision")  acquired in November  1994. For the fiscal
years ended July 31, 1999 to 1995, the Partnership (or its predecessor) invested
approximately $48.7 million, $13.0 million,  $38.8 million,  $108.8 million, and
$70.1 million,  respectively,  to acquire operations with annual retail sales of
approximately 21.5 million, 4.4 million,  20.5 million,  111.8 million, and 70.0
million  gallons  of  propane,  respectively.  Primarily  as a  result  of  this
acquisition  strategy,  retail propane  gallons sold by the  Partnership (or its
predecessor)  increased  from 68 million in fiscal 1986 to 680 million in fiscal
1999. The propane industry is relatively fragmented, with the ten largest retail
distributors possessing approximately 33% of the total retail propane market and
much  of  the  industry   consisting  of  more  than  5,000  local  or  regional
distributors.  The  Partnership  believes the  fragmented  nature of the propane
industry provides significant opportunities for growth through acquisitions.

   Business Strategy

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

     The  Partnership  intends to  concentrate  its  acquisition  activities  in
geographical areas in close proximity to the Partnership's  existing  operations
and to acquire  propane  retailers  that can be  efficiently  combined with such
existing  operations to provide an attractive  return on investment after taking
into account the efficiencies  which may result from such combination.  However,
the  Partnership  will also pursue  acquisitions  which  broaden its  geographic
coverage.  The  Partnership's  goal in any  acquisition  will be to improve  the
operations and profitability of these smaller companies by integrating them into
the  Partnership's   established  supply  network.  The  Partnership   regularly
evaluates a number of propane distribution companies which may be candidates for
acquisition.  The  Partnership  believes  that there are  numerous  local retail
propane distribution  companies that are possible candidates for acquisition and
that its  geographic  diversity of  operations  helps to create many  attractive
acquisition opportunities.  The Partnership intends to fund acquisitions through
internal cash flow,  external  borrowings  or the issuance of additional  Common
Units or other securities.  The Partnership's  ability to accomplish these goals
will be subject to the  continued  availability  of  acquisition  candidates  at
prices attractive to the Partnership. There is no assurance the Partnership will
be  successful  in  sustaining  the  recent  level of  acquisitions  or that any
acquisitions that are made will prove beneficial to the Partnership.

                                       2
<PAGE>

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

   Marketing

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

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

     The retail propane marketing  business  generally involves large numbers of
small volume  deliveries  averaging  approximately  200 gallons each. The market
areas are  generally  rural,  but also  include  suburban  areas for  industrial
applications where natural gas service is not available.

     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 three markets: residential, industrial/commercial, and agricultural
and other  (principally to other propane  retailers and as engine fuel).  During
the fiscal year ended July 31, 1999,  sales to residential  customers  accounted
for 56% of  retail  gross  profit,  sales to  industrial  and  other  commercial
customers  accounted for 32% of retail gross profit,  and sales to  agricultural
and other customers accounted for 12% of retail gross profit.  Residential sales
have a greater  profit  margin,  more stable  customer  base and tend to be less
sensitive to price changes than the other markets served by the Partnership.  No
single  customer  of  the   Partnership   accounted  for  10%  or  more  of  the
Partnership's consolidated revenues in fiscal 1999.

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

                                       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
(November through April).  In addition,  sales volume  traditionally  fluctuates
from year to year in response to variations in weather, price and other factors,
although 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 30 years with fluctuations occurring on a year-to-year basis only.
During times of colder-than-normal  winter weather, the Company 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.

   Supply and Distribution

     The  Partnership  purchases  propane  primarily  from  major  domestic  oil
companies.  Supplies  of propane  from these  sources  have  traditionally  been
readily  available,  although no assurance can be given that supplies of propane
will be readily  available in the future.  As a result of (i) the  Partnership's
ability  to buy  large  volumes  of  propane  and (ii) the  Partnership's  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, 1999,  no supplier  provided more
than  10% of  the  Partnership's  total  propane  purchases.  A  portion  of the
Partnership's  propane  inventory is  purchased  under  supply  contracts  which
typically  have a one year term and a fluctuating  price relating to spot market
prices.  Additionally,  the  Partnership  will enter into fixed price  contracts
which have terms of less than one year.  Certain of the Partnership's  contracts
specify minimum and maximum amounts of propane to be purchased  thereunder.  The
Partnership  may  purchase  and store  inventories  of  propane in order to help
insure  uninterrupted  deliverability  during  periods  of extreme  demand.  The
Partnership owns three underground storage facilities with an aggregate capacity
of  approximately  206 million  gallons.  Currently,  approximately  173 million
gallons of this  capacity is leased to third  parties.  The  remaining  space is
available for the Partnership's use.

     Propane is generally  transported  from natural gas  processing  plants and
refineries,  pipeline  terminals and storage  facilities to retail  distribution
outlets and wholesale  customers by railroad tank cars leased by the Partnership
and highway transport trucks owned or leased by the Partnership.  Common carrier
transport  trucks  may be used  during  the peak  delivery  season in the winter
months or to provide service in areas where economic considerations favor common
carrier  use.  Propane  is  then  transported  from  the  Partnership's   retail
distribution  outlets to customers by its fleet of 1,586 bulk  delivery  trucks,
which are fitted  generally with 2,000 to 3,000 gallon  propane  tanks.  Propane
storage  tanks  located on the  customers'  premises  are then  filled  from the
delivery truck. Propane is also delivered to customers in portable cylinders.

Industry and Competition

   Industry

     Based upon industry publications,  propane accounts for approximately 3% to
4% of household energy  consumption in the United States, an average level which
has remained  relatively  constant for the past two  decades.  Propane  competes
primarily  with  natural  gas,  electricity  and  fuel oil as an  energy  source
principally on the basis of price, availability and portability. Propane serves


                                       4
<PAGE>

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  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,  therefore,
will  have an  incentive  to  switch  to fuel  oil  only  if  fuel  oil  becomes
significantly  less expensive than propane.  Likewise,  the  Partnership  may be
unable to expand  its  customer  base in areas  where  fuel oil is widely  used,
particularly the Northeast United States,  unless propane becomes  significantly
less expensive than fuel oil.  Alternatively,  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.  The
Partnership  believes that propane  generally is becoming  increasingly  favored
over  fuel  oil and  other  alternative  sources  of fuel as an  environmentally
preferred energy source.

   Competition

     In addition to competing  with  marketers of other fuels,  the  Partnership
competes  with  other  companies  engaged  in the  retail  propane  distribution
business.  Competition within the propane  distribution  industry stems from two
types of participants:  the larger multi-state marketers, and the smaller, local
independent marketers,  including recent entrants such as certain rural electric
cooperatives.  Based upon industry  publications,  the Partnership believes that
the  ten  largest  multi-state  retail  marketers  of  propane,   including  the
Partnership,  account for approximately 33% of the total retail sales of propane
in the United States. Based upon information  contained in industry publications
for calendar year 1998, the  Partnership  also believes no single marketer has a
greater  than 10% share of the total  market in the  United  States and that the
Partnership  is the  second  largest  retail  marketer  of propane in the United
States,  with a market  share of  approximately  8% 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  influencing  competition
among propane  marketers are price and service.  The  Partnership  competes with
other  retail  marketers  primarily on the basis of  reliability  of service and
responsiveness  to customer needs,  safety and price.  Each retail  distribution
outlet  operates in its own  competitive  environment  because retail  marketers
locate in close  proximity to customers to lower the cost of providing  service.
The typical  retail  distribution  outlet has an effective  marketing  radius of
approximately 25 miles.

Other Operations

     The other operations of the Partnership, which do not constitute reportable
segments as described by Statement of Financial Standards No. 131,  "Disclosures
about Segments of an Enterprise and Other  Information",  consist principally of
trading and wholesale propane  marketing.  The Partnership,  through its natural
gas liquids trading and wholesale  marketing  operations,  has become one of the
leading  independent  traders of propane  and  natural gas liquids in the United
States.   The  Partnership  owns  no  properties  that  are  material  to  these
operations.  These operations may utilize  available space in the  Partnership's
underground  storage facilities in the furtherance of these businesses.  Because
the  Partnership  possesses a large  distribution  system,  underground  storage
capacity  and the  ability to buy large  volumes  of  propane,  the  Partnership
believes  that 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.


                                       5
<PAGE>


   Trading

     The Partnership's  traders are engaged in trading propane and other natural
gas liquids for the  Partnership's  account and for supplying the  Partnership's
retail and  wholesale  propane  operations.  The  Partnership  primarily  trades
products  purchased  from its  over 100  suppliers;  however,  it also  conducts
transactions on the New York Mercantile Exchange.  Trading activity is conducted
primarily  to  generate  a  profit  independent  of  the  retail  and  wholesale
operations,  but is also conducted to insure the  availability of propane during
periods  of  short  supply.   Propane   represents   approximately  70%  of  the
Partnership's total trading volume, with the remainder consisting principally of
various other natural gas liquids.  The Partnership attempts to minimize trading
risk  through the  enforcement  of its trading  policies,  which  include  total
inventory  limits and loss limits,  and attempts to minimize credit risk through
credit checks and application of its credit policies.  However,  there can be no
assurance  that  historical  experience  or the  existence of such policies will
prevent trading losses in the future.  For the Partnership's  fiscal years ended
July 31, 1999,  1998 and 1997 net revenues of $7.7 million,  $7.5  million,  and
$5.5 million, respectively, were derived from trading activities.


   Wholesale Marketing

     The  Partnership  engages in the wholesale  marketing and  distribution  of
propane to other retail propane distributors. During the fiscal years ended July
31, 1999, 1998 and 1997, the Partnership sold 103 million,  136 million, and 123
million  gallons,  respectively,  of  propane  to  wholesale  customers  and had
revenues  attributable to such sales of $33.8 million,  $49.9 million, and $57.5
million, respectively.

Employees

     The  Partnership  has no  employees  and is managed by the General  Partner
pursuant to the Partnership Agreement. At July 31, 1999, the General Partner had
3,625 full-time employees and 838 temporary and part-time employees. The General
Partner's full-time employees were employed in the following areas:
<TABLE>
<CAPTION>

<S>                                                                                                   <C>
                    Retail Locations                                                                  3,065
                    Transportation and Storage                                                          241
                    Corporate Offices (Liberty, MO & Houston, TX)                                       319
                                                                                                 -----------
                            Total                                                                     3,625
                                                                                                 ===========
</TABLE>

     Approximately   one  percent  of  the  General   Partner's   employees  are
represented  by six  local  labor  unions,  which  are all  affiliated  with the
International  Brotherhood of Teamsters. The General Partner has not experienced
any significant work stoppages or other labor problems.

     The  Partnership's  supply,  trading,  wholesale  marketing,   distribution
scheduling and product  accounting  functions are operated  primarily out of the
Partnership's  offices located in Houston,  by a total full-time corporate staff
of 72 people.


                                       6
<PAGE>

Governmental Regulation; Environmental and Safety Matters

     From August 1971 until January 1981, the United States Department of Energy
regulated the price and  allocation  of propane.  The  Partnership  is no longer
subject to any similar regulation.

     Propane is not a  hazardous  substance  within the  meaning of federal  and
state  environmental laws. In connection with all acquisitions of retail propane
businesses that involve the purchase of real estate, the Partnership  conducts a
due diligence  investigation to attempt to determine whether any substance other
than  propane has been sold from or stored on any such real estate  prior to its
purchase.  Such  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 ("DOT"). National
Fire Protection  Association  Pamphlet No. 58, which  establishes a set of rules
and   procedures   governing  the  safe  handling  of  propane,   or  comparable
regulations,  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.  In June 1998,  the DOT  established  a formal  Regulation  Negotiation
Committee to address emergency  discharge control issues and the Partnership was
granted a seat on this committee. These negotiations were completed successfully
in April of 1999 and the new regulations  became  effective on July 1, 1999 with
various  requirements phased in over the next seven years. The Partnership is in
full compliance  with the current  regulatory  requirements  and is working with
both the DOT and  outside  experts to fully  test  emergency  discharge  control
systems  that comply with the new  requirements  as they become  effective.  The
Partnership  expects  to meet all  regulatory  requirements  on or before  their
effective date.

Service Marks and Trademarks

     The  Partnership  markets  retail  propane under the  "Ferrellgas",  "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  and uses 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. The Company contributed
all of its rights,  title and interest in such  tradenames  and trademark in the
continental  United States to the Partnership.  The General Partner will have an
option to purchase such  tradenames  and trademark  from the  Partnership  for a
nominal  value if the  General  Partner is  removed  as  general  partner of the
Partnership  other than for cause. If the General Partner ceases to serve as the
general partner of the Partnership for any other reason, it will have the option
to purchase such  tradenames and trademark from the  Partnership for fair market
value.

Business of  Ferrellgas Partners Finance Corp.

Ferrellgas Partners Finance Corp. (the "Finance Corp"), a Delaware  corporation,
was formed on March 28, 1996, and is a  wholly-owned  subsidiary of the MLP. The
Finance Corp has nominal assets and does not conduct any operations,  but serves
as a co-obligor for securities issued by the MLP.  Accordingly,  a discussion of
the results of operations,  liquidity and capital  resources of the Finance Corp
is not  presented.  Certain  institutional  investors  that might  otherwise  be
limited in their ability to invest in securities issued by the MLP by reasons of
the legal  investment  laws of their  states of  organization  or their  charter
documents,  may be able to invest in the MLP's  securities  because  the Finance
Corp is a co-obligor.  See the notes to the Finance Corp's financial  statements
for a  discussion  of the  securities  with respect to which the Finance Corp is
serving as a co-obligor.


                                      7
<PAGE>


ITEM 2.       PROPERTIES.
<TABLE>
<CAPTION>

     The Partnership owns or leases the following transportation equipment which
is utilized primarily in retail operations.
                                                                              Owned       Leased      Total
<S>                                                                               <C>      <C>           <C>
         Truck tractors ..................................................        87         81          168
         Transport trailers................................................      279         32          311
         Bulk delivery trucks..............................................      690        896        1,586
         Pickup and service trucks.........................................      923        540        1,463
         Railroad tank cars................................................        -        222          222
</TABLE>

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

     A typical  retail  distribution  outlet is located on one to three acres of
land and includes a small office,  a workshop,  bulk storage  capacity of 18,000
gallons to 60,000 gallons and a small inventory of stationary  customer  storage
tanks and portable propane cylinders that the Partnership provides to its retail
customers for propane  storage.  The Partnership  owns the land and buildings of
approximately  50% of its retail outlets and leases the remaining  facilities on
terms customary in the industry and in the applicable local markets.

     Approximately  715,000 propane tanks are owned by the Partnership,  most of
which are  located  on  customer  property  and leased to those  customers.  The
Partnership also owns approximately 646,000 portable propane cylinders,  most of
which are leased to industrial and commercial customers.

     The Partnership owns underground storage facilities at Hutchinson,  Kansas;
Adamana,  Arizona;  and Moab,  Utah.  At July 31,  1999,  the  capacity of these
facilities  approximated 114 million gallons, 87 million gallons,  and 5 million
gallons,  respectively  (an  aggregate of  approximately  206 million  gallons).
Currently, approximately 173 million gallons of this capacity is leased to third
parties. The remaining space is available for the Partnership's use.

     The  Partnership  owns the land and two  buildings  (50,245  square feet of
office space) comprising its corporate  headquarters in Liberty,  Missouri,  and
leases 27,696 square feet of office space in Houston,  Texas,  where its trading
and wholesale marketing operations are primarily located.

     The Partnership  believes that it has satisfactory title to or valid rights
to use all of its material  properties and, although some of such properties are
subject to liabilities and leases and, in certain cases, 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,
taken as a whole. In addition,  the  Partnership  believes that it has, or is in
the process of  obtaining,  all  required  material  approvals,  authorizations,
orders, licenses,  permits, franchises and consents of, and has obtained or made
all  required  material  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.



                                       8
<PAGE>


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.
The  Partnership,  in the ordinary course of business,  is threatened with or is
named as a defendant in various lawsuits which,  among other items,  seek actual
and punitive damages for product liability, personal injury and property damage.
The Partnership  maintains  liability  insurance  policies with insurers in such
amounts and with such coverages and deductibles as it believes is reasonable and
prudent. However, there can be no assurance that such insurance will be adequate
to protect the  Partnership  from  material  expenses  related to such  personal
injury or property  damage or that such levels of insurance  will continue to be
available in the future at  economical  prices.  It is not possible to determine
the ultimate disposition of these matters discussed above;  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.

     No  matters  were  submitted  to a vote  of  the  security  holders  of the
Partnership during the fiscal year ended July 31, 1999.

                                                      PART II

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

     The Common Units,  representing  common  limited  partner  interests in the
Partnership, are listed and traded on the New York Stock Exchange ("NYSE") under
the symbol FGP. The Common Units began  trading on June 28, 1994,  at an initial
public  offering  price of $21.00 per Common Unit. As of October 1, 1999,  there
were 747 registered Common Unitholders of record. The following table sets forth
the high and low  sales  prices  for the  Common  Units on the NYSE and the cash
distributions declared per Common Unit for the periods indicated.
<TABLE>
<CAPTION>

                                  Common Unit Price Range
                        ---------------------------------------------  Distributions
                                High                  Low           Declared per Unit
                        --------------------- -------------------- ---------------------
                          1998       1999       1998       1999       1998       1999
                        ---------- ---------- ---------- ---------- ---------- ----------
<S>                      <C>        <C>        <C>        <C>         <C>        <C>
First Quarter             $24.25     $20.94     $22.63     $19.13     $0.50      $0.50
Second Quarter             23.25      21.75      22.00      17.00      0.50       0.50
Third Quarter              22.63      18.88      20.25      16.00      0.50       0.50
Fourth Quarter             21.94      17.94      20.25      16.69      0.50       0.50
</TABLE>

     During 1994, the Partnership also issued  Subordinated  Units, all of which
were held by Ferrell,  for which there was no established public trading market.
Effective August 1, 1999, the Subordinated Units converted into Common Units and
will be subsequently  registered and listed on the NYSE. The Subordinated  Units
and the conversion to Common Units are more fully  described in Notes C and F to
the Consolidated Financial Statements provided herein.

     The Partnership  makes quarterly cash  distributions of its Available Cash,
as defined  by the MLP's  Partnership  Agreement.  Available  Cash is  generally
defined as consolidated cash receipts less  consolidated cash  disbursements and
changes  in  cash  reserves  established  by  the  General  Partner  for  future
requirements. To the extent necessary, the Partnership will reserve cash inflows
from the  second and third  quarters  for  distribution  in the first and fourth
fiscal quarters.



                                       9
<PAGE>



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

ITEM 6.       SELECTED HISTORICAL FINANCIAL DATA.

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

                                       (in thousands, except per unit data)

                                                           Ferrellgas Partners L.P.
                                         --------------------------------------------------------------
                                                              Year Ended July 31,
                                         ---------------------------------------------------------------
                                            1999          1998         1997        1996         1995
                                         ------------ ------------ ------------ ----------- ------------
Income Statement Data:
<S>                                        <C>          <C>          <C>         <C>          <C>
Total revenues                             $ 624,149    $ 667,353    $ 804,298   $ 653,640    $ 596,436
Depreciation and amortization                 47,257       45,009       43,789      37,024       32,014
ESOP compensation charge                       3,295          350       -           -            -
Operating income                              62,339       52,760       68,819      62,506       55,927
Interest expense                              46,621       49,129       45,769      37,983       31,993
Earnings before minority interest and
extraordinary loss                            14,783        4,943       23,218      24,312       23,820
Basic earnings per limited partner
unit-Earnings before extraordinary loss         0.47         0.16         0.74        0.77         0.76
Cash distributions declared per unit (1)        2.00         2.00         2.00        2.00         1.65

Balance Sheet Data (at end of period):
Working capital                            $ (4,567)      $ (443)     $ 18,111    $ 15,294     $ 28,928
Total assets                                 656,745      621,223      657,076     654,295      578,596
Long-term debt                               583,840      507,222      487,334     439,112      338,188

Partners' Capital:
Common Unitholders                           $ 1,215     $ 27,985     $ 52,863    $ 71,323     $ 84,489
Subordinated Unitholders                    (10,516)       19,908       50,337      71,302       91,824
General Partner                             (59,553)     (58,976)     (58,417)    (58,016)     (57,676)
Accumulated other comprehensive income         (797)       -            -           -            -

Operating Data:
Retail propane sales volumes (in             680,477      659,932      693,995     650,214      575,935
gallons)

Capital expenditures (2):
        Maintenance                         $ 10,505     $ 10,569     $ 10,137     $ 6,657      $ 8,625
        Growth                                15,238       10,060        6,055       6,654       11,097
        Acquisition                           48,749       13,003       38,780     108,803       70,069
                                         ------------ ------------ ------------ ----------- ------------
             Total                           $ 74,492     $ 33,632     $ 54,972   $ 122,114     $ 89,791
                                         ============ ============ ============ =========== ============
Supplemental Data:
Adjusted earnings before depreciation,
amortization, interest and taxes (3):       $112,891      $98,119     $112,608     $99,530      $87,941
Net cash provided by operating               $92,502      $74,337      $75,087     $65,096      $66,030
activities

</TABLE>

                                       10
<PAGE>

(1)  No cash  distributions  were declared by the Partnership  from inception to
     July 31,  1994.  The  $1.65  distribution  declared  for  fiscal  year 1995
     includes the following (a) a $0.65 distribution made at the end of the 1995
     first quarter which included $0.50 for the first quarter of fiscal 1995 and
     $0.15  for  the  period  from  inception  to  July  31,  1994,  (b) a $0.50
     distribution  for the second  quarter of fiscal  1995,  and (c) and a $0.50
     distribution for the third quarter of fiscal 1995.

(2)  The   Partnership's   capital   expenditures   fall  generally  into  three
     categories: (i) maintenance capital expenditures, which include capitalized
     expenditures  for repair and replacement of property,  plant and equipment;
     (ii) 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 (iii) acquisition
     capital   expenditures,   which   include   expenditures   related  to  the
     acquisitions of retail propane operations. Acquisition capital expenditures
     represent total cost of acquisition less working capital acquired.

(3)  Adjusted  EBITDA is calculated as operating  income plus  depreciation  and
     amortization and an ESOP related  non-cash  compensation  charge.  Adjusted
     EBITDA is not intended to represent  cash flow and does not  represent  the
     measure of cash available for  distribution.  Adjusted EBITDA is a non-GAAP
     measure,   but  provides   additional   information   for   evaluating  the
     Partnership's ability to make the Minimum Quarterly Distribution.  Adjusted
     EBITDA,  as defined by the Partnership,  may not be comparable to similarly
     reported measures reported by other companies. In addition, adjusted EBITDA
     is not intended as an alternative to earnings from continuing operations or
     net earnings.


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,  L.P. 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 that are not historical facts, including
statements concerning possible acquisition growth,  regulatory compliance,  Year
2000 compliance,  and the belief that the OLP will have sufficient funds to meet
its  obligations  and to enable it to distribute to the MLP sufficient  funds to
permit the MLP to meet its  obligations  with  respect  to the MLP Senior  Notes
issued  in  April  1996,  and  sufficient  funds  to pay the  Minimum  Quarterly
Distribution   ($0.50  per  Unit)  on  all  Common  Units,  are  forward-looking
statements.

     Such  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:  a) the  effect of
weather  conditions on demand for propane,  b) price and availability of propane
supplies, c) identifying  attractive acquisition  candidates,  acquiring them on
economically  acceptable  terms,  or  successfully  integrating  them  into  our
existing  operations  and making cost saving  changes,  d) the  availability  of
capacity to transport  propane to market areas, e) competition from other energy
sources  and within the propane  industry,  f)  operating  risks  incidental  to
transporting,  storing, and distributing  propane, g) changes in interest rates,
h) governmental legislation and regulations, i) energy efficiency and technology
trends,  j) Year 2000  compliance and k) other factors that are discussed in the
Risk Factor  section of the  Partnership's  most recent 1933 Act filing with the
Securities  and Exchange  Commission,  Amendment No. 1 to Form S-3  Registration
Statement, as filed February 5, 1999.


                                       11
<PAGE>


Year 2000 Compliance

     Many computer  systems and  applications  in use throughout the world today
may not be able to  appropriately  interpret  dates  beginning  in the year 2000
("Year 2000" issue). As a result,  this problem could have adverse  consequences
on the operations of companies and the integrity of information processing.

     The Partnership began the process in 1997 of identifying and correcting its
computer systems and applications  that were exposed to the Year 2000 issue. The
Partnership  initially  focused  on  the  systems  and  applications  that  were
considered  critical to its operations and services for supplying propane to its
customers and to its ability to account for those business services  accurately.
These critical areas include the retail propane accounting and operations system
(including  related  computer  hardware),  financial  accounting  and  reporting
system, supply and distribution accounting and operating system, payroll system,
local and wide area  networks  and  electronic  mail  systems.  The  supply  and
distribution   accounting  and  operating  system,  payroll  system,   financial
accounting and reporting  system,  the retail propane  accounting and operations
system,  and the local  and wide  area  networks  are  believed  to be Year 2000
compliant.  The  Partnership  is nearing  completion  of the  conversion  of the
electronic  mail system and the retail  propane  computer  equipment and expects
both to be Year 2000 compliant by the beginning of November 1999. One of the key
steps to achieving  Year 2000  compliance  is the  installation  of new personal
computers at nearly all retail outlets.  The Partnership had planned the upgrade
of the these computers for business reasons  unrelated to Year 2000 issues.  The
Partnership has acquired all necessary computers and is currently in the process
of loading the appropriate software and delivering to each retail location.

     The  Partnership  has also  taken  steps  to  identify  other  non-critical
applications that may have exposure to the Year 2000 issue. It has established a
separate  company group to independently  test these  applications for Year 2000
compliance.  To date,  no material  Year 2000 issues have been  identified  as a
result of this testing.

     There  can be no  assurance  that  every  system  in every  location  where
Ferrellgas  conducts  business  will  function  properly on January 1, 2000.  In
addition,  there are other  Year 2000 risks  which are beyond the  Partnership's
control, any of which if wide spread could have a material adverse affect on the
Partnership's  operations.  Such  risks  include,  but are not  limited  to, the
failure of utility and  telecommunications  companies  to provide  service.  For
these reasons, the Partnership has developed a contingency plan should Year 2000
problems  temporarily affect any of our locations.  Each Ferrellgas location has
been provided with a contingency plan that contains, among others, procedures to
keep the  Partnership's  plants  operational,  to  access  emergency  management
personnel, and to utilize cellular phones.

     The Partnership  conducts business with several hundred outside  suppliers.
While no single supplier is considered  material to the Partnership,  a combined
number could  constitute a material amount to the  Partnership.  The Partnership
has reviewed its largest suppliers, particularly liquid petroleum gas suppliers,
to obtain appropriate assurances that they are, or will be, Year 2000 compliant.
This review included general public  disclosures  made by the supplier,  general
questionnaires and direct contact with suppliers regarding specific  facilities.
While no supplier will provide assurances  regarding Year 2000 compliance or the
effect  from  external  factors on their  operations,  our review has  indicated
suppliers are addressing  Year 2000 issues.  If compliance by the  Partnership's
suppliers is not achieved in a timely manner, it is unknown what effect, if any,
the Year 2000 issue could have on the Partnership's operations.

     The Partnership has evaluated its Year 2000 issues and does not expect that
the total cost of related  modifications  and  conversions  will have a material
effect on its financial  position,  results of  operations  or cash flows.  Such
costs are being  expensed as incurred.  To date,  the  Partnership  has incurred
approximately  $875,000 to  identify  and  correct  its Year 2000  issues.  This



                                       12
<PAGE>

expense has been primarily related to its critical systems and applications.  It
is estimated that in the remaining calendar year 1999 the Partnership will incur
an  additional  $100,000 to  identify  and  correct  its Year 2000  issues.  The
Partnership does not anticipate  significant  purchases of computer  software or
hardware  as a result  of its Year  2000  issue  and does not  believe  that the
correction  of any Year 2000  issues  will delay or  eliminate  other  scheduled
computer upgrades and replacements. Despite the Partnership's efforts to address
and remediate the Year 2000 issue,  there can be no assurance  that all critical
areas and non-critical  applications will continue without  interruption through
January 1, 2000 and beyond.


General

     The Partnership is engaged in the sale, distribution, marketing and trading
of propane and other natural gas liquids.  The Partnership's  revenue is derived
primarily from the retail propane marketing business.  The Partnership  believes
that it is the second largest  retail  marketer of propane in the United States,
based   on   gallons    sold,    serving   more   than   800,000    residential,
industrial/commercial  and agricultural  customers in 45 states and the District
of Columbia through  approximately 520 retail outlets  (excluding area offices).
Annual  retail  propane  sales  volumes were 680 million,  660 million,  and 694
million  gallons  for the fiscal  years  ended July 31,  1999,  1998,  and 1997,
respectively.

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

   The  Partnership  is also engaged in the trading of propane and other natural
gas liquids and  wholesale  propane  marketing.  Through its natural gas liquids
trading  and  wholesale  marketing  operations,  the  Partnership  is one of the
leading  independent  traders of propane  and  natural gas liquids in the United
States.

   The  Partnership's  traders are engaged in trading  propane and other natural
gas liquids for the  Partnership's  account and for supplying the  Partnership's
retail and  wholesale  propane  operations.  The  Partnership  primarily  trades
products  purchased  from its  over 100  suppliers,  however,  it also  conducts
transactions on the New York Mercantile Exchange.  Trading activity is conducted
primarily  to  generate  a  profit  independent  of  the  retail  and  wholesale
operations,  but is also conducted to insure the  availability of propane during
periods  of  short  supply.   Propane   represents   approximately  70%  of  the
Partnership's total trading volume, with the remainder consisting principally of
various other natural gas liquids. For the Partnership's fiscal years ended July
31, 1999, 1998 and 1997, net revenues from trading activities were $7.7 million,
$7.5 million, and $5.5 million, respectively.


                                       13
<PAGE>

Selected Quarterly Financial Data

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

The following presents the Partnership's  selected quarterly  financial data for
the two years ended July 31, 1999.

<TABLE>
<CAPTION>


Fiscal year ended July 31, 1999
(in thousands, except per unit data)
                                          First Quarter(1)       Second Quarter        Third Quarter        Fourth Quarter
                                         -----------------    -----------------     -----------------     ----------------

<S>                                              <C>                  <C>                   <C>                   <C>
Revenues                                         $130,339             $230,077              $169,892              $93,841
Gross profit                                       71,627              128,749                99,721               50,664
Earnings (loss) before
   extraordinary loss                            (11,221)               39,915                13,629             (27,540)
Earnings (loss) before
   extraordinary loss per
   limited partners unit - basic
   and diluted                                     (0.35)                 1.26                  0.43               (0.87)
Net earnings (loss) (1)                          (24,007)               39,915                13,629             (27,540)

(1)  Reflects a $12,786 extraordinary loss on early retirement of debt, net of minority interest of $130.
</TABLE>
<TABLE>
<CAPTION>

Fiscal year ended July 31, 1998
(in thousands, except per unit data)
                                          First Quarter       Second Quarter        Third Quarter         Fourth Quarter
                                         ----------------     ----------------      ---------------      -----------------

<S>                                             <C>                  <C>                  <C>                   <C>
Revenues                                        $153,205             $248,811             $175,167              $90,170
Gross profit                                      66,589              117,932               89,449               50,783
Net earnings (loss)                             (13,311)               32,759               10,775             (25,280)
Net earnings (loss) per
   limited partner unit - basic
   and diluted                                    (0.42)                 1.04                 0.34               (0.80)


Results of Operations

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

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

</TABLE>
                                       14
<PAGE>

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

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

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

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

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

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

   Fiscal Year Ended July 31, 1998 versus Fiscal Year Ended July 31, 1997

     Total Revenues. Total gas liquids and related product sales decreased 18.1%
to $622,423,000 as compared to $759,941,000 in the prior year,  primarily due to
a  decrease  in sales  price  per  gallon as a result  of the  unusually  higher
wholesale  cost of propane  experienced in the previous year, the effects of the
warmer weather, partially offset by acquisitions of propane businesses.

     A less  volatile  propane  market  during  fiscal 1998 caused a significant
decrease in the cost of product,  which in turn caused a decrease in sales price
per gallon as compared  to fiscal  1997.  Retail  volumes  decreased  by 4.9% or
34,063,000  gallons,  primarily  due to the  decrease in volumes  related to the
unusually warm winter during fiscal 1998,  attributable  in large part to the El
Nino  weather  phenomenon.  The winter of fiscal 1998 was  reported as the third
warmest winter in recorded  history.  For the year,  temperatures were 8% warmer
than  normal and 4% warmer  than the same  period  last year as  reported by the
American  Gas  Association.  The  warmer  than  normal  temperatures  were  also
compounded by other El Nino related  weather factors such as reduced wind chill,
humidity,  snow and cloud cover, all of which  contributed to lower a demand for
propane and a decrease in earnings for the Partnership.

     Gross Profit.  Gross profit  decreased 2.8% to  $324,753,000 as compared to
$334,170,000  during  fiscal 1997,  primarily  due to a decrease in retail sales
gross margin  dollars,  partially  offset by an increase  from trading  profits.
Retail  operations   results  decreased   primarily  due  to  decreased  volumes
attributed to the warmer  weather,  partially  offset by the impact of increased
retail margins and the increase in volumes attributed to acquisitions.

     Operating  Expenses.  Operating expenses increased slightly to $199,010,000
in fiscal 1998 as  compared to  $198,298,000  in fiscal  1997.  Fiscal year 1998
operating expenses were impacted by decreased variable expenses,  resulting from
reduced  gallon  deliveries  due to the  warmer  weather,  offset  by  increased
expenses associated with acquisitions.



                                       15
<PAGE>

     Vehicle and Tank Lease Expense. Vehicle and tank lease expense increased by
$2,694,000  due to the  utilization of operating  lease  financing to fund fleet
upgrades and replacements.

     Interest  Expense.  Interest expense increased 7.3% over the prior year due
primarily to increased  borrowings for the financing of acquisitions,  partially
offset by a slight decrease in the average interest rate paid by the Partnership
on its variable rate borrowings.


Liquidity and Capital Resources

     The ability of the MLP 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.
For the fiscal year ending July 31, 2000, the General Partner  believes that the
OLP will  have  sufficient  funds  to meet  its  obligations  and  enable  it to
distribute to the MLP sufficient funds to permit the MLP to meet its obligations
with respect to the $160,000,000 senior secured notes issued in April 1996 ("MLP
Senior  Secured  Notes")  and  enable it to  distribute  the  Minumum  Quarterly
Distribution ("MQD") ($0.50 per Unit) on all Common Units.

     The MLP Senior  Secured  Notes,  the  $350,000,000  OLP senior  notes ("New
Senior Notes"), the amended and restated OLP credit facility ("Credit Facility")
and the additional OLP revolving credit agreement ("Additional Credit Facility")
(See Financing  Activities  following)  contain  several  financial  tests which
restrict the Partnership's ability to pay distributions,  incur indebtedness and
engage in certain other  business  transactions.  These tests,  in general,  are
based on the  ratio of the  MLP's  and  OLP's  consolidated  cash  flow to fixed
charges,  primarily  interest  expense.  Because the  Partnership is more highly
leveraged  at the MLP than at the  OLP,  the  tests  related  to the MLP  Senior
Secured Notes are more sensitive to fluctuations in consolidated  cash flows and
fixed  charges.  The most  sensitive  of the MLP  related  tests  restricts  the
Partnership's ability to make certain Restricted Payments which includes, but is
not limited to, the payment of the  Minimum  Quarterly  Distribution  ("MQD") to
unitholders.

     Although the MLP's financial  performance  during fiscal 1999 was adversely
impacted by unseasonably  warm  temperatures,  the Partnership  believes it will
continue to meet the MLP Senior  Secured  Notes  Restricted  Payment test during
fiscal 2000, in addition to meeting the other  financial tests in the MLP Senior
Secured Notes, New Senior Notes,  Credit Facility and Additional Credit Facility
agreements.  However,  if the OLP were to encounter any unexpected  downturns in
business  operations,  it could result in the  Partnership  not meeting  certain
financial tests in future quarters, including but not limited to, the MLP Senior
Secured Notes  Restricted  Payment  test.  Depending on the  circumstances,  the
Partnership would pursue alternatives to permit the continued payment of the MQD
to its  Common  Unitholders.  No  assurances  can be given,  however,  that such
alternatives will be successful with respect to any given quarter.

     Because certain  financial  tests were satisfied  during fiscal years 1997,
1998 and 1999  pursuant to the  Agreement of Limited  Partnership  of Ferrellgas
Partners,  L.P.,  the  Subordinated  Units  converted to Common Units  effective
August 1, 1999. One of the primary  financial tests applied to each of the three
consecutive  four quarter periods ending on July 31, 1999, and related to making
the MQD on all Common and  Subordinated  Units.  These  financial tests are more
fully  described in Note C to the  Consolidated  Financial  Statements  provided
herein.

   Future  maintenance and working capital needs of the Partnership are expected
to be provided by cash generated from future operations,  existing cash balances
and the working capital borrowing  facility.  In order to fund expansive capital
projects and future acquisitions, the OLP may borrow on existing bank lines, the
MLP or OLP may  issue  additional  debt or the MLP may issue  additional  equity
securities, including among others, Common Units.

                                       16
<PAGE>

     Toward  this  purpose,   on  February  5,  1999,  the  MLP  filed  a  shelf
registration   statement  with  the  Securities  and  Exchange  Commission  (the
"Commission")  for the periodic sale of up to $300,000,000 in debt and/or equity
securities.  The  registered  securities  would  be  available  for  sale by the
Partnership in the future to fund acquisitions or to reduce indebtedness.  Also,
the MLP  maintains  a shelf  registration  statement  with  the  Commission  for
2,010,484 Common Units  representing  limited partner  interests in the MLP. The
Common Units may be issued from time to time by the MLP in  connection  with the
OLP's  acquisition  of other  businesses,  properties  or securities in business
combination transactions.

     Operating Activities. Cash provided by operating activities was $92,502,000
for the year ended July 31,  1999,  compared to  $74,337,000  in the prior year.
This increase was primarily due to increased  earnings  before an  extraordinary
loss on early  extinguishment  of debt,  the increased  non-cash  employee stock
ownership  compensation  charge,  and  the  effect  of  trading  operations  and
acquisitions on the net increase in receivables, inventory and payables.

     Investing  Activities.  The  Partnership  made  total  acquisition  capital
expenditures  of  $50,049,000  during  fiscal  1999.  This  amount was funded by
$43,838,000   cash   payments,   $6,012,000  of   noncompete   notes  and  other
consideration and $199,000 of Common Units issued.

     During  the year ended  July 31,  1999,  the  Partnership  made  growth and
maintenance  capital  expenditures  of  $25,743,000  primarily for the following
purposes:  1) additions  to  Partnership-owned  underground  storage and related
facilities,  customer tanks and cylinders,  2) relocating and upgrading district
plant facilities,  3) upgrading  computer  equipment and software and 4) vehicle
lease  buyouts.  Capital  requirements  for repair and  maintenance of property,
plant and equipment are relatively low since technological change is limited and
the useful lives of propane tanks and  cylinders,  the  Partnership's  principal
physical  assets,  are generally long. The Partnership  leases  additions to its
vehicle and  transportation  equipment fleet of light and medium duty trucks and
tractors.  The Partnership  believes  vehicle leasing is a cost effective method
for meeting the  Partnership's  transportation  equipment needs. The Partnership
continues to seek expansion of its operations through strategic  acquisitions of
smaller retail propane operations  located  throughout the United States.  These
acquisitions will be funded through internal cash flow,  external  borrowings or
the issuance of additional  Partnership equity securities.  The Partnership does
not have any material  commitments of funds for capital  expenditures other than
to support the current level of operations. In fiscal 2000, the Partnership does
not  expect an  increase  in growth  and  maintenance  capital  expenditures  as
compared to fiscal 1999 levels.

     Financing Activities. On August 4, 1998, the OLP issued $350,000,000 of new
privately  placed unsecured senior notes ("New Senior Notes") and entered into a
$145,000,000  revolving  credit facility  ("Credit  Facility") with its existing
banks.  The  proceeds of the New Senior  Notes,  which  include five series with
maturities ranging from year 2005 through 2013 at an average fixed interest rate
of 7.16%,  were used to redeem  $200,000,000  of OLP 10% fixed rate Senior Notes
("Senior Notes") issued in July 1994,  including a 5% call premium, and to repay
outstanding  indebtedness under the then existing OLP revolving credit facility.
Because these financing activities occurred at the beginning of fiscal 1999, the
Partnership does not expect a decrease in interest  expense  resulting from this
transaction during fiscal 2000.

     The OLP entered into an additional  credit facility  agreement on April 30,
1999.  This  new  facility   ("Additional   Credit  Facility")  provides  for  a
$38,000,000  unsecured  facility for  acquisitions,  capital  expenditures,  and
general corporate purposes.  The outstanding  Additional Credit Facility balance
at April 29,  2000,  may be converted to a term loan and will be due and payable
in full  July 2,  2001.  See  Note E to the  Consolidated  Financial  Statements
included elsewhere in this report for additional  information  regarding the New
Senior Notes, the Credit Facility and the Additional Credit Facility.

                                       17
<PAGE>

     On July 17,  1998,  all of the  outstanding  common  stock of  Ferrell  was
purchased by the newly  established  ESOT. As a result of this change in control
in the ownership of Ferrell,  and  indirectly in the General  Partner,  the MLP,
pursuant to the MLP Senior  Secured  Note  Indenture,  was  required to offer to
purchase  the  outstanding  notes  at a price  of 101% of the  principal  amount
thereof.  The offer to purchase was made on July 27, 1998 and expired August 26,
1998. Upon the expiration of the offer, the MLP accepted for purchase $65,000 of
the notes which were all of the notes  tendered  pursuant to the offer.  The MLP
assigned  its right to purchase  the notes to a third  party.  See Note E to the
Consolidated   Financial  Statements  included  elsewhere  in  this  report  for
additional details regarding the offer to purchase the MLP Senior Secured Notes.

     During  the  fiscal  year ended July 31,  1999,  the  Partnership  borrowed
$57,449,000  under its  $145,000,000  Credit Facility to fund expected  seasonal
working  capital needs,  business  acquisitions,  and capital  expenditures.  In
addition,  letters of credit  outstanding,  used primarily to secure obligations
under certain insurance arrangements, totaled $32,178,000. The Additional Credit
Facility had no borrowings  outstanding  at July 31, 1999. At July 31, 1999, the
Operating   Partnership  had  $72,022,000   available  for  general   corporate,
acquisition and working capital  purposes under its two credit  facilities.  The
Partnership typically has significant cash needs during the first fiscal quarter
due to seasonal low revenues,  increasing inventories and the Partnership's cash
distribution paid in mid-September.

     On April 26, 1996, the MLP issued the MLP Senior Secured Notes. These notes
will be redeemable at the option of the Partnership, in whole or in part, at any
time on or after June 15, 2001. Interest is payable  semi-annually in arrears on
June 15 and December 15.

     To offset the variable rate characteristic of the revolving credit facility
borrowings, the OLP has entered into an interest rate collar agreement, expiring
December 2001 with a major bank,  that  effectively  limits  interest rates on a
certain  notional  amount  between  5.05%  and 6.5%  under the  current  pricing
arrangement.  At July 31,  1999,  the total  notional  principal  amount of this
agreement was $25,000,000.

     During  the  year  ended  July  31,  1999,   the   Partnership   paid  cash
distributions of $2.00 per limited partner unit. These distributions covered the
period from May 1, 1998 to April 30, 1999. On August 19, 1999,  the  Partnership
declared its fourth-quarter cash distribution of $0.50 per limited partner unit,
which was paid September 14, 1999. The Partnership's  annualized distribution is
presently $2.00 per limited partner unit.

     The MLP  Senior  Secured  Notes,  New Senior  Notes,  Credit  Facility  and
Additional Credit Facility contain various restrictive  covenants  applicable to
the MLP and the OLP, the most restrictive  relating to additional  indebtedness,
sale and disposition of assets,  and transactions  with affiliates.  The MLP and
the  OLP  are in  compliance  with  all  requirements,  tests,  limitations  and
covenants  related to the MLP Senior  Secured  Notes,  New Senior Notes,  Credit
Facility  and  Additional  Credit  Facility.  The New  Senior  Notes and  credit
facility agreements have similar  restrictive  covenants to the Senior Notes and
credit facility agreements that were replaced.

New Accounting Pronouncements

     In fiscal 1999, the Partnership  adopted Statement of Financial  Accounting
Standards No. 130,  "Reporting  Comprehensive  Income" ("SFAS No. 130") and SFAS
No. 131  "Disclosures  about Segments of an Enterprise and Related  Information"
("SFAS No.  131").  The  Partnership  implemented  SFAS No. 130 by changing  the
format of the  statement  of  partners'  capital to  include  the  reporting  of
comprehensive   income.   SFAS  No.  130  also  introduced   "accumulated  other
comprehensive  income",  a new  balance  sheet item,  to reflect the  cumulative
activity for other comprehensive  income. SFAS No. 131 establishes standards for
reporting  information about operating  segments as well as related  disclosures
about  products  and  services,   geographic  areas,  and  major  customers.  In
determining  our  reportable  segments under the provisions of SFAS No. 131, the
Partnership  examined the way it organizes  its business  internally  for making
operating   decisions  and  assessing  business   performance.   Based  on  this
examination,  the  Partnership  has determined  that it has a single  reportable

                                       18
<PAGE>


operating  segment  which  engages in the  distribution  of propane  and related
equipment  and  supplies.   No  single  customer   represents  10%  or  more  of
consolidated revenues. In addition, nearly 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.

     The  Financial  Accounting  Standards  Board  recently  issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133").
SFAS No. 133, as amended by SFAS No. 137, "Accounting for Derivative Instruments
and Hedging  Activities - Deferral of the Effective  Date of FASB  Statement No.
133",  is required  to be adopted by the  Partnership  for the first  quarter of
fiscal  2001.  The  Partnership  is  currently   assessing  its  impact  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.  Additionally,  the Partnership seeks to mitigate its interest
rate risk  exposure on variable  rate debt by entering into interest rate collar
agreements.

     The Partnership  has $78,800,000 in variable rate debt  outstanding at July
31, 1999.  Moreover the  Partnership  has only  $25,000,000  notional  amount of
interest rate collar agreements  outstanding.  Thus,  assuming a 100 basis point
change increase in the variable  interest rate to the Partnership,  the interest
rate risk related to the variable  rate debt and the  associated  interest  rate
collar agreements is not material to the financial statements.

     The  Partnership's  trading  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  ("NYMEX" or
"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 non-trading activities utilize certain over-the-counter energy
commodity  options  to limit  overall  price risk and to hedge its  exposure  to
inventory price movements.

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

     Market and Credit Risk. NYMEX traded futures are guaranteed by the Exchange
and have  nominal  credit  risk.  The  Partnership  is  exposed  to credit  risk
associated  with  futures,  swaps  and  option  transactions  in  the  event  of
nonperformance  by  counterparties.   For  each  counterparty,  the  Partnership
analyzes  the  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.

     Sensitivity  Analysis.  The Partnership has prepared a sensitivity analysis
to  estimate  the  exposure to market  risk of its energy  commodity  positions.
Forward  contracts,   futures,  swaps  and  options  were  analyzed  assuming  a
hypothetical  10% change in forward prices for the delivery month for all energy
commodities.  The potential loss in future  earnings from these positions from a
10% adverse  movement in market prices of the underlying  energy  commodities is
estimated at $5,041,000 as of July 31, 1999. Actual results may differ.

     Further  discussion of the risk  management  activities  and accounting for
derivative  commodity  contracts is contained in the  accompanying  notes to the
Consolidated Financial Statements.

                                       19
<PAGE>


ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

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

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

ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS.

Partnership Management

     The General Partner manages and operates the activities of the Partnership,
and the General Partner  anticipates that its activities will be limited to such
management and operation.  Unitholders do not directly or indirectly participate
in the management or operation of the  Partnership.  The General  Partner owes a
fiduciary duty to the Unitholders.

     The General  Partner has  appointed  persons who are neither  officers  nor
employees  of the General  Partner or any  affiliate  of the General  Partner to
serve  on a  committee  of the  Partnership  (the  "Audit  Committee")  with the
authority to review, at the request of the General Partner,  specific matters as
to which the  General  Partner  believes  there may be a conflict of interest in
order to determine if the  resolution of such  conflict  proposed by the General
Partner is fair and reasonable to the Partnership. The Audit Committee will only
review  matters  relating to conflicts of interest at the request of the General
Partner, and the General Partner 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 will be
conclusively  deemed to be fair and reasonable to the  Partnership,  approved by
all  unitholders of the  Partnership  and not a breach by the General Partner of
any duties it may owe the Partnership or the Unitholders.

     The Partnership does not directly employ any of the persons responsible for
managing or operating the Partnership. At July 31, 1999, 3,625 full-time and 838
temporary and part-time individuals were employed by the General Partner.

Directors and Executive Officers of the General Partner

     The  following  table sets forth  certain  information  with respect to the
directors  and  executive  officers of the General  Partner at October 11, 1999.
Each of the persons named below is elected to their respective

                                       20
<PAGE>


     office or offices  annually.  Only Mr. Ferrell and Mr. Sheldon have entered
into employment agreements with the General Partner. See Employment Agreements.

<TABLE>
<CAPTION>


                                    Director
Name                                            Age          Since       Position
<S>                                             <C>          <C>         <C>
James E. Ferrell                                60           1984        Chairman of the Board and a Director
                                                                         of the General Partner

Danley K. Sheldon                               41           1998        Chief Executive Officer, President and
                                                                         a Director of the General Partner

Patrick J. Chesterman                           49                       Executive Vice President and Chief
                                                                         Operating Officer - Ferrellgas North
                                                                         America and Ferrellgas-Houston

James M. Hake                                   39                       Senior Vice President, Acquisitions

Kenneth G. Atchley                              36                       Vice President, Chief Operating
                                                                         Officer-Western U.S.

Boyd H. McGathey                                40                       Vice President, Chief Operating
                                                                         Officer-Eastern U.S.

Kevin T. Kelly                                  34                       Vice President, Chief Financial
                                                                         Officer and Treasurer

Patrick J. Walsh                                46                       Vice President, Administration

A. Andrew Levison                               43           1994        Director of the General Partner

Elizabeth T. Solberg                            60           1998        Director of the General Partner


     James E. Ferrell--Mr. Ferrell has been with Ferrell or its predecessors and
its affiliates in various  executive  capacities  since 1965. He served as Chief
Executive Officer until August 1998 and as President until October 1996.

     Danley K. Sheldon--Mr.  Sheldon was named Chief Executive Officer in August
1998 and was named a director of the Company in July 1998. He has been President
of the Company since October 1996 and was Chief Financial Officer of the Company
from  January 1994 until May 1998.  He served as Treasurer  from 1989 until 1998
and joined the Company in 1986.

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


</TABLE>
                                       21
<PAGE>


     James M. Hake--Mr.  Hake was named Senior Vice  President,  Acquisitions in
August  1998.  He had been Vice  President,  Acquisitions  of the Company  since
October, 1994. He joined the Company in 1986.

     Kenneth G. Atchley--Mr.  Atchley was named Vice President,  Chief Operating
Officer-Western  U.S. in August 1998. He served as Regional Vice President since
May 1996.  After joining the Company in 1985, he held District  Manager and Area
Manager positions.

     Boyd H.  McGathey--Mr.  McGathey was named Vice President,  Chief Operating
Officer-Eastern  U.S. in August 1998. He served as Regional Vice President since
February 1997.  After joining the Company in 1989, he held District  Manager and
Area Manager positions.

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

     Patrick J.  Walsh--Mr.  Walsh was named Vice President,  Administration  in
August  1998.  Prior  to that he was  Director,  Field  Services  and  Director,
Marketing  and  Communications.  He joined the  Company in 1986 when the Company
bought Buckeye Gas Products Company.

     A.  Andrew  Levison---Mr.  Levison was elected a Director of the Company in
September 1994. Mr. Levison has been a Managing Director of Donaldson,  Lufkin &
Jenrette Securities Corporation since 1989.

     Elizabeth T. Solberg---Ms. Solberg was elected a Director of the Company in
July 1998.  Ms.  Solberg  is  Executive  Vice  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.


Compensation of the General Partner

     The General Partner  receives no management fee or similar  compensation in
connection  with its management of the  Partnership and receives no remuneration
other than:

(i) distributions in respect to its 2% general partner  interest,  on a combined
basis, in the Partnership and the Operating Partnership; and

(ii)  reimbursement  for all direct and indirect costs and expenses  incurred on
behalf of the  Partnership,  all selling,  general and  administrative  expenses
incurred by the  General  Partner  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 the General Partner.



ITEM 11.      Executive Compensation.

   Summary Compensation Table

     The following table sets forth the compensation for the past three years of
the Company's Chief Executive Officer ("CEO") and the Company's five most highly
compensated executive officers other than

                                       22
<PAGE>


the Chief Executive  Officer ("named executive  officers"),  who were serving as
executive officers at the end of the 1999 fiscal year.

<TABLE>
<CAPTION>
                                                                    Long-Term Compensation
                                                                    -----------------------------------
                                           Annual Compensation          Awards         Pay-outs
                                         -------------------------  --------------- ---------------
                                                                                      Long-Term
                                                                        Stock         Incentive           All Other
            Name and                       Salary      Bonus (1)      Options(2)       Payouts           Compensation
       Principal Position         Year       ($)          ($)            (#)             ($)                 ($)
--------------------------------- ------ ------------ ------------  --------------- ---------------    -----------------
<S>                                <C>       <C>          <C>          <C>                <C>                <C>
Danley K. Sheldon                  1999      344,802      123,420      937,500           ---             12,883 (3)
---------------------------------
   President and Chief             1998      225,000       50,000        ---             ---             20,104
     Executive Officer             1997      218,221      ---           30,000           ---             15,440

Patrick J. Chesterman              1999      198,338      110,000      200,000           ---             31,197 (3)
---------------------------------
   Executive Vice President,       1998      161,500       25,000        ---             ---             15,530
    and Chief Operating            1997      132,917      ---           20,000           ---              9,087
    Officer, Ferrellgas -
Houston

James A. Hake                      1999      181,667       55,830      200,000           ---              8,140 (3)
---------------------------------
   Senior Vice President           1998      120,000       85,000        ---             ---             15,887
    Acquisitions                   1997      120,000       90,000       15,000           ---             13,592

Kenneth G. Atchley                 1999      140,003       38,409      200,000           ---              7,485 (3)
---------------------------------
  Vice President, Chief
    Operating Officer-Western
    U.S.

Boyd H. McGathey                   1999      140,003       24,348      200,000           ---             37,038 (3)
---------------------------------
  Vice President, Chief
    Operating Officer-Eastern
    U.S.

Kevin T. Kelly                     1999      142,808       25,000      150,000           ---              5,001 (3)
---------------------------------
  Vice President, Chief            1998       99,014       50,000        ---             ---              9,376
    Financial Officer
</TABLE>

(1)  Mr.  Sheldon  receives a bonus pursuant to his  employment  agreement.  All
     other Named Executives participate in the Ferrellgas Annual Incentive Plan.
     Awards under both plans are for the year  reported,  regardless of the year
     paid.

(2)  In 1999,  the awards  related to grants of stock options from the Incentive
     Compensation Plan, a non-qualified  stock option plan of Ferrell Companies,
     Inc. In 1997, the awards related to the Ferrellgas, Inc. Unit Option Plan.

(3)  Includes for Mr. Sheldon  contributions of $11,752 to the employee's 401(k)
     and profit  sharing plans and  compensation  of $1,131  resulting  from the
     payment of life insurance premiums. Includes for Mr. Chesterman $21,517 for
     relocation reimbursement,  contributions of $8,084 to the employee's 401(k)
     and profit  sharing plans and  compensation  of $1,596  resulting  from the
     payment of life insurance premiums.  Includes for Mr. Hake contributions of
     $7,530 to the employee's  401(k) and profit sharing plans and  compensation
     of $610 resulting from the payment of life insurance premiums. Includes for
     Mr. Atchley  contributions  of $6,660 to the em ployee's  401(k) and profit
     sharing plans and  compensation  of $825 resulting from the payment of life
     insurance  premiums.  Includes  for Mr.  McGathey  $28,021  for  relocation
     reimbursement,  contributions of $8,097 to the employee's 401(k) and profit
     sharing plans and  compensation  of $920 resulting from the payment of life
     insurance premiums.  Includes for Mr. Kelly, contributions of $5,001 to the
     employee's 401(k) and profit sharing plans.

     Unit Options

     On October 14, 1994, the General Partner adopted the Ferrellgas,  Inc. Unit
Option Plan (the "Unit Option Plan") pursuant to which key employees are granted
options to purchase the MLP's Subordinated Units. The purpose of the Unit Option
Plan is to  encourage  certain  employees  of the  General  Partner 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 the General Partner to
attract and retain key  individuals  who are  essential to progress,  growth and
profitability of the Partnership.

                                       23
<PAGE>

     The  General  Partner  has  granted  options to  purchase  Units (the "Unit
Options"),  781,025 of which are outstanding at July 31, 1999, at prices ranging
from $16.80 to $21.67 per unit,  which was an estimate of the fair market  value
of the Subordinated Units at the time of the grant. The options vest immediately
or over a one to five year period,  and expire on the tenth  anniversary  of the
date of the grant. On July 31, 1999, none of the Unit Options were  exercisable.
Effective  August 1, 1999, with the conversion of the  Subordinated  Units,  the
units covered by the options are Common Units.

     There were no grants of unit options during the 1999 fiscal year to the CEO
and named executive officers.

     The  following  table  lists  information  on the CEO and  named  executive
officers' exercised/unexercised unit options as of October 15, 1999.

<TABLE>
<CAPTION>

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

                                                                       Number of
                                                                 Securities Underlying       Value of Unexercised
                                                                  Unexercised Options      In-The-Money Options at
                                                                 at Fiscal Year-End (#)      Fiscal Year-End ($)
                                                                ------------------------- ---------------------------
                                  Shares
                                Acquired on       Value             Exercisable/               Exercisable/
Name                           Exercise (#)   Realized ($)          Unexercisable              Unexercisable
------------------------------ -------------- --------------    ---------------------- ------------------------------
<S>                                  <C>            <C>              <C>                           <C>
Danley K. Sheldon                    0              0                80,500/19,500                 18,375/0
Patrick J. Chesterman                0              0                12,450/17,550                    787/0
James M. Hake                        0              0                 41,250/9,750                  9,450/0
Kenneth G. Atchley                   0              0                13,188/10,562                  1,969/0
Boyd H. McGathey                     0              0                      7,500/0                  1,969/0
Kevin T. Kelly                       0              0                  3,500/6,500                      0/0

   Employee Stock Ownership Plan
</TABLE>

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

   Incentive Compensation Plan

         On July  17,  1998,  a  nonqualified  stock  option  plan  ("NQP")  was
establish  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.  The following table lists  information on the CEO
and the named executive officers' stock options granted in the fiscal year ended
July 31, 1999 .


                                       24
<PAGE>



                        OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>

                                                                 Individual Grant
                              ---------------------------------------------------------------------------------------
                               Number of
                               Securities   % of Total Options
                               Underlying       Granted to       Exercise
                                Options        Employees in      Price       Expiration             Grant date
Name                          Granted (1)       Fiscal Year      ($/Share)      Date           present value $ (2)
--------------------------    ------------- -------------------- ----------- ------------     -----------------------
<S>                             <C>                <C>              <C>        <C>                   <C>
Danley K. Sheldon               937,500            25.3             4.10       01-31-18             1,697,984
Patrick J. Chesterman           200,000             5.4             4.10       01-31-18                362,227
James M. Hake                   200,000             5.4             4.10       01-31-18                362,227
Kenneth G. Atchley              200,000             5.4             4.10       01-31-18                362,227
Boyd H. McGathey                200,000             5.4             4.10       01-31-18                362,227
Kevin T. Kelly                  150,000             4.0             4.10       01-31-18                271,667
</TABLE>

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

(2)  Based on a binomial option valuation model. The key input variables used in
     valuing the options were the  following:  risk-free  interest rate of 5.5%;
     dividend  amount of $0;  Ferrell stock price  volatility of 10.6%;  options
     exercised 25% in 2006, 25% in 2007, 10% in years 2009 through 2013, because
     this is most likely assuming the Ferrell debt is retired as scheduled. Only
     two stock  values were used in the  computation  of  volatility  as Ferrell
     common stock is not publicly  traded and has only had two valuations  since
     the  grant  date.  No  adjustments  for   non-transferability  or  risk  of
     forfeiture  were made. The actual value, if any, a grantee may realize will
     depend on the excess of the Ferrell 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.


   Profit Sharing Plan

     The Ferrell  Companies Inc. Profit Sharing and 401(k)  Investment Plan is a
qualified defined  contribution plan (the "Profit Sharing Plan").  All full-time
employees of Ferrell 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. In regards to the profit sharing  portion,  the Board of Directors
of  Ferrell  determines  the  amount of the  annual  contribution  to the Profit
Sharing  Plan,  which is purely  discretionary.  This  decision  is based on the
operating results of Ferrell for the previous fiscal year and anticipated future
cash needs of the General Partner and Ferrell.  The  contributions are allocated
to the Profit Sharing Plan  participants  based on each  participant's  wages or
salary as compared to the total of all participants' wages and salaries.

     Historically,  the annual  contribution to the Profit Sharing Plan has been
1% to 7% of each participant's  annual wage or salary. With the establishment of
the ESOP in July 1998, the Company decided to suspended future  contributions to
the profit sharing plan beginning with fiscal year 1998. The Profit Sharing Plan
also has a 401(k) feature allowing all full-time  employees to specify a portion
of their pre-tax and/or  after-tax  compensation to be contributed to the Profit
Sharing Plan.

   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.



                                       25
<PAGE>


   Employment Agreements

     On July 17,  1998,  Mr. James E.  Ferrell,  as Chairman of the Board of the
General  Partner,  entered into a five year employment  agreement with automatic
one year renewals. He receives an annual salary of $120,000 and a bonus based on
the  annual  increase  in the  equity  value  of  Ferrell.  In  addition  to his
compensation, Mr. Ferrell participates in the Company's various employee benefit
plans,  with  the  exception  of the  employee  stock  ownership  plan  and  the
nonqualified stock option plan of Ferrell.

     Also on July 17, 1998, Mr. Danley K. Sheldon,  Chief  Executive  Officer of
the General  Partner,  entered  into an eight year  employment  agreement,  with
automatic  one year  renewals.  He receives an annual  salary of $340,000 and an
annual bonus based on the earnings of the Partnership.

     Pursuant to the terms of both employment agreements, in the event of either
a  termination  without  cause or  resignation  for cause,  Mr.  Ferrell and Mr.
Sheldon are  entitled to a cash amount  equal to three times the greater of 125%
of their  current  base  salary or the average  compensation  paid for the prior
three fiscal  years,  including  amounts for the  reimbursement  of taxes.  If a
change of control of Ferrell or the General Partner occurs,  Mr. Ferrell and Mr.
Sheldon will receive a cash termination benefit equal to three times the greater
of 125% of their  current  base  salary or the average  three year  compensation
paid.

     Mr. Ferrell's agreement contains a non-compete  provision for the period of
time equal to the greater of five years or the time in which certain outstanding
debt of Ferrell 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
Company.

     Mr. Sheldon's  agreement  contains a non-compete  provision for a period of
two years  following his termination of employment.  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 Company.

   Compensation of Directors

     The  General  Partner  does  not pay  any  additional  remuneration  to its
employees  for serving as  directors,  except for the annual  salary of $120,000
paid to Mr. Ferrell  pursuant to his employment  agreement as discussed above in
"Employment  Agreements".  Beginning  in  fiscal  1999,  directors  who  are not
employees of the General  Partner  receive an annual  retainer of $16,000.  They
also currently  receive a fee per meeting of $1,000 if they attend in person and
$500 if they  participate by telephone,  plus  reimbursement  for  out-of-pocket
expenses.


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

     The following table sets forth certain  information as of October 11, 1999,
regarding  the  beneficial  ownership  of the Common Units of the MLP by certain
beneficial  owners,  all directors and named  executive  officers of the General
Partner  and the  Partnership,  each of the named  executive  officers,  and all
directors  and  executive  officers  of the  General  Partner  as a  group.  All
Subordinated  Units  converted to Common  Units  effective  August 1, 1999.  The
General Partner knows of no other person beneficially owning more than 5% of the
Common Units.



                                       26
<PAGE>

<TABLE>
<CAPTION>

Ferrellgas Partners, L.P.
                                                                  Units
                          Name and Address of Beneficial      Beneficially         Percentage of
Title of Class            Owner                                   Owned      (1)       Class
------------------------  ---------------------------------------------------     ----------------
<S>                      <C>                                        <C>      <C>             <C>
Common Units              ESOT                                    17,817,600 (2)             56.9
                          Goldman, Sachs & Co.                     1,729,935 (3)              5.5
                          The Goldman Sachs Group                  1,729,935 (3)              5.5
                          Danley K. Sheldon                           84,500                  0.3
                          Patrick J. Chesterman                       12,650                    *
                          James M. Hake                               41,650                  0.1
                          Kenneth G. Atchley                          15,188                    *
                          Boyd H. McGathey                             7,600                    *
                          Kevin T. Kelly                               3,765                    *
                          Patrick J. Walsh                             8,000                    *
                          James E. Ferrell                            10,000                    *
                          Elizabeth T. Solberg                         8,200                    *
                          A. Andrew Levison                           35,300                  0.1

                          All Directors and Officers as a            226,853                  0.7
                          Group
</TABLE>

(1)  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  ("Voting
     Power")  or to  dispose  or direct  the  disposition  thereof  ("Investment
     Power") or has the right to acquire  either of those  powers  within  sixty
     (60) days. See "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.

(2)  The  address  for  LaSalle  National  Bank,  the  trustee  for the  Ferrell
     Companies,  Inc.  Employee Stock Ownership Trust ("ESOT") is 125 S. LaSalle
     Street, 17th Floor, Chicago, Illinois, 60603.

     Includes  17,803,883  Common Units owned by Ferrell  which is 100% owned by
     the ESOT and 13,717 Common Units owned by Ferrell  Propane,  Inc., a wholly
     owned subsidiary of Ferrellgas, Inc.

(3)  The address for both Goldman Sachs Group, L.P. and Goldman,  Sachs & Co. is
     85 Broad Street, New York, New York, 10004.

     Goldman, Sachs & Co., a broker/dealer,  and its parent Goldman Sachs Group,
     L.P. are deemed to have shared  voting power and shared  dispositive  power
     over 1,729,935 Common Units owned by their customers.


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

     Section  16(a) of the  Securities  and  Exchange  Act of 1934  requires the
General Partner'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 Securities and
Exchange   Commission  ("SEC").   Officers,   directors  and  greater  than  10%
unitholders  are required by SEC regulation to furnish the General  Partner with
copies of all Section 16(a) forms.

     Based  solely on its  review of the copies of such  forms  received  by the
General Partner, or written  representations from certain reporting persons that
no Form 5's ("Annual  Statement of  Beneficial  Ownership of  Securities")  were
required for those persons, the General Partner believes that during fiscal year
1999 all filing requirements applicable to its officers,  directors, and greater
than 10% beneficial owners were met in a timely manner,  except for directors A.
Andrew Levison and Elizabeth T. Solberg,  who each filed a Form 4 ("Statement of
Changes in Beneficial  Ownership")  one month late in November 1998. Each of the
Form 4's related to one transaction.

                                       27
<PAGE>


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 the
General Partner.  Pursuant to the Partnership Agreement,  the General Partner 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 the General Partner in connection  with operating the  Partnership's
business. These costs, which totaled $143,850,000, $129,808,000 and $128,033,000
for the  years  ended  July 31,  1999,  1998  and  1997,  respectively,  include
compensation and benefits paid to officers and employees of the General Partner,
and general and  administrative  costs.  In addition,  the conveyance of the net
assets of the Company to the  Partnership  included the  assumption  of specific
liabilities  related to employee  benefit and incentive plans for the benefit of
the officers and employees of the General Partner.

     During fiscal 1999,  two affiliates of the  Partnership  which are owned by
the chairman of the board,  James E. Ferrell,  Ferrell  International,  Ltd. and
Ferrell  Resources LLC, paid the  Partnership a total of $265,000 for accounting
and administration  services.  The Partnership  believes these transactions were
under terms that were no less favorable to the  Partnership  than those arranged
with other parties.

     Ferrell,  the parent of the  General  Partner,  and its other  wholly-owned
subsidiaries formerly engaged in various investment  activities  including,  but
not limited to, commodity  investments and the trading thereof.  The Partnership
from time to time acts as an agent on behalf of Ferrell to  purchase  and market
natural gas liquids and enter into certain trading  activities.  The Partnership
charges all direct and indirect  expenses incurred in performing this agent role
to Ferrell.  During the years ended July 31, 1998 and 1997, the Partnership,  as
Ferrell's  agent,  performed  the  following  services:  i) purchased  1,089,929
barrels of propane  during  1997,  ii)  marketed  and sold  469,820  and 619,929
barrels, in 1998 and 1997,  respectively,  and iii) entered into certain hedging
arrangements  during 1997. The Partnership  charged Ferrell $66,467 and $73,078,
in 1998 and 1997,  respectively,  for its direct and indirect  expenses.  Of the
469,820  barrels of propane sold in fiscal year 1998,  all of these barrels were
sold  to and  used  by the  Partnership  at the  applicable  market  prices  (an
aggregate of $7,405,200).  Of the 619,929 barrels of propane sold in fiscal year
1997, 534,929 barrels were sold to and used by the Partnership at the applicable
market prices (an aggregate of  $13,128,765).  In addition,  during fiscal 1998,
the  Partnership  sold to Ferrell  certain  physical  and  derivative  crude oil
commodity   contracts  totaling  4,120,000  aggregate  barrels  at  a  price  of
$2,548,927.  The Partnership  believes these  transactions were under terms that
were no less  favorable  to the  Partnership  than  those  arranged  with  other
parties.

     See  Note  L to  the  Consolidated  Financial  Statements  in  Item  14 for
discussion of transactions involving acquisitions related to the General Partner
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.


                                       28
<PAGE>

     (b) Reports on Form 8-K.

The Partnership did not file a Form 8-K during the quarter ended July 31, 1999.

                                       29
<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/ Danley K. Sheldon
                                        Danley K. Sheldon
                                        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:

<TABLE>
<CAPTION>

                  Signature                                   Title                                   Date



<S>                                                       <C>                                        <C>
   /s/  Danley K. Sheldon                              President, Chief Executive Officer            10/28/99
  Danley K. Sheldon                                    and Director (Principal Executive
                                                       Officer)



/s/  James E. Ferrell                                Chairman of the Board                         10/28/99
  James E. Ferrell



/s/ A. Andrew  Levison                               Director                                      10/28/99
  A. Andrew Levison



/s/ Elizabeth T. Solberg                             Director                                      10/28/99
  Elizabeth T. Solberg



/s/ Kevin T. Kelly                                   Vice President and Chief                      10/28/99
  Kevin T. Kelly                                       Financial Officer (Principal
                                                       Financial and Accounting Officer)
</TABLE>


<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/ Danley K. Sheldon
                                     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:

<TABLE>
<CAPTION>

                  Signature                                   Title                                   Date


<S>                                                    <C>                                           <C>
   /s/ Danley K. Sheldon                             Chairman of the Board,                        10/28/99
  Danley K. Sheldon                                  Chief Executive Officer and
                                                     Sole Director (Principal
                                                     Executive Officer)






/s/ Kevin T. Kelly                                   Chief Financial Officer                       10/28/99
  Kevin T. Kelly                                     (Principal Financial and
                                                     Accounting Officer)

</TABLE>

<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

      (1)      3.1          Agreement of Limited Partnership of Ferrellgas
                            Partners, L.P.

      (2)      3.2          Articles of Incorporation for Ferrellgas Partners
                            Finance Corp.

      (3)      3.3          Bylaws of Ferrellgas Partners Finance Corp.

      (4)      4.1          Indenture dated as of April 26, 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.

      (5)      4.2          Registration  Rights Agreement dated as of
                            April, 26, 1996, among Ferrellgas  Partners,
                            L.P.,  Ferrellgas  Partners  Finance  Corp.,
                            Ferrellgas,  L.P.,  Donaldson,  Lufkin  &
                            Jenrette Securities Corporation and Goldman,
                            Sachs & Co.


      (6)      4.3          Ferrellgas, L.P., Note Purchase Agreement Dated as
                            of July 1, 1998 Re:
                            $109,000,000 6.99% Senior Notes, Series A, due
                            August 1, 2005 $37,000,000 7.08% Senior
                            Notes, Series B, due August 1, 2006 $52,000,000
                            7.12% Senior Notes, Series C, due
                            August 1, 2008 $82,000,000 7.24% Senior Notes,
                            Series D, due August 1, 2010
                            $70,000,000 7.42% Senior Notes, Series E, due
                            August 1, 2013.

      (7)#     10.1         Ferrell Companies, Inc. Supplemental Savings Plan.

      (8)#     10.2         Amended and Restated Ferrellgas, Inc. Unit Option
                            Plan.

      (9)      10.8         Second Amended and Restated Agreement of Limited
                            Partnership of Ferrellgas, L.P. dated
                            as of October 14, 1998.

      (10)     10.9         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.

      (11)     10.11        Second Amended and Restated Credit Agreement dated
                            as of July 2, 1998, among
                            Ferrellgas, L.P., Ferrellgas, Inc., Bank of America
                             National Trust and Savings
                            Association,  as administrative agent, and the other
                            financial institutions party thereto.

      (12)     10.12#       Ferrell Companies, Inc. 1998 Incentive Compensation
                            Plan

      (13)     10.13#       Employment agreement between James E. Ferrell
                            and Ferrellgas, Inc. dated July 31, 1998.

      (14)     10.14#       Employment   agreement  between  Danley  K.
                            Sheldon and Ferrellgas, Inc. dated July 31, 1998.

                                      E-1
<PAGE>

      (15)     10.15        First Amendment to the Second Amended and Restated
                            Credit Agreement dated as of
                            October 9, 1998, among Ferrellgas, L.P.,
                            Ferrellgas, Inc., Bank of America National
                            Trust and Savings Association, as agent, and the
                            other financial institutions party thereto.

      (16)     10.16        Short-Term Revolving Credit Agreement dated as of
                            April 30, 1999, among Ferrellgas,
                            L.P., Ferrellgas, Inc., Bank Of America Trust And
                            Savings Asssociation, as agent, and
                            the other financial institutions party hereto.

               10.17        Second  Amendment to the Second Amended and Restated
                            Credit  Agreement dated as of April 27, 1999,  among
                            Ferrellgas,  L.P., Ferrellgas, Inc., Bank of America
                            National  Trust and Savings  Association,  as agent,
                            and the other financial institutions party thereto.

               21.1         List of subsidiaries.


               23.1         Consent of Deloitte & Touche LLP, Independent
                            Auditors.

               27.1         Financial Data Schedule - Ferrellgas Partners, L.P.
                            (filed in electronic format only).

               27.2         Financial Data Schedule -  Ferrellgas Partners
                            Finance Corp. (filed in electronic format only).
----------------------------------------------------------------------

      #          Management contracts or compensatory plans.




         (1)     Incorporated  by reference to the same numbered  Exhibit to the
                 Registrant's Current Report on Form 8-K filed August 15, 1994.

         (2)     Incorporated  by reference to Exhibit same numbered  Exhibit to
                 Registrant's  Quarterly  Report on Form 10-Q  filed on June 13,
                 1997.

         (3)     Incorporated  by reference to Exhibit same numbered  Exhibit to
                 Registrant's  Quarterly  Report on Form 10-Q  filed on June 13,
                 1997.

         (4)     Incorporated  by  reference  to  Exhibit  4.1  to  Registrant's
                 Current Report on Form 8-K filed on May 6, 1996.

         (5)     Incorporated  by  reference  to  Exhibit  4.2  to  Registrant's
                 Current Report on Form 8-K filed on May 6, 1996.

         (6)     Incorporated by reference to the Exhibit 4.4 to Registrant's
                 Annual Report on Form 10-K filed on
                 October 29, 1998.

         (7)     Incorporated  by reference to the Exhibit 10.7 to  Registrant's
                 Annual Report on Form 10-K filed
                 on October 17, 1995.

         (8)     Incorporated  by reference to the Exhibit 10.1 to  Registrant's
                 Registration  Statement  on Form S-8 File No.  333-87633  filed
                 with the Commission on September 23, 1999

         (9)     Incorporated  by  reference  to  Exhibit  10.1 to  Registrant's
                 Quarterly Report on Form 10-Q filed on March 17, 1999.

                                      E-2
<PAGE>

        (10)     Incorporated by reference to Exhibit 10.2 to Registrant's
                 Current Report on Form 8-K filed on
                 May 6, 1996.

        (11)     Incorporated by reference to the Exhibit 10.11 to Registrant's
                 Annual Report on
                 Form 10-K filed on October 29, 1998.

        (12)     Incorporated by reference to the Exhibit 10.12 to Registrant's
                 Annual Report on
                 Form 10-K filed on October 29, 1998.

        (13)     Incorporated by reference to the Exhibit 10.13 to Registrant's
                 Annual Report on
                 Form 10-K filed on October 29, 1998.

        (14)     Incorporated by reference to the Exhibit 10.14 to Registrant's
                 Annual Report on
                 Form 10-K filed on October 29, 1998.

        (15)     Incorporated by reference to the Exhibit 10.2 to Registrant's
                 Quarterly Report on
                 Form 10-Q filed on March 17, 1999.

        (16)     Incorporated by reference to the Exhibit 10.1 to Registrant's
                 Quarterly Report on
                 Form 10-Q filed on June 14, 1998.

                                      E-3
<PAGE>
                          INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                                                                                              Page

Ferrellgas Partners, L.P. and Subsidiaries
<S>                                                                                                              <C>
         Independent Auditors' Report..........................................................................F-2
         Consolidated Balance Sheets - July 31, 1999 and 1998..................................................F-3
         Consolidated Statements of Earnings - Year ended July 31, 1999, 1998 and 1997.........................F-4
         Consolidated Statements of Partners' Capital - Year ended
              July 31, 1999, 1998 and 1997.....................................................................F-5
         Consolidated Statements of Cash Flows - Year ended July 31, 1999, 1998 and 1997.......................F-6
         Notes to Consolidated Financial Statements............................................................F-7


Ferrellgas Partners Finance Corp.
         Independent Auditors' Report.........................................................................F-19
         Balance Sheets - July 31, 1999 and 1998..............................................................F-20
         Statements of Earnings - Year ended July 31, 1999, 1998 and
               1997...........................................................................................F-21
         Statements of Stockholder's Equity - Year ended July 31, 1999, 1998 and
               1997...........................................................................................F-22
         Statements of Cash Flows - Year ended July 31, 1999, 1998 and
              1997............................................................................................F-23
         Notes to Financial Statements........................................................................F-24

</TABLE>

                                      F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

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

     We have audited the accompanying  consolidated balance sheets of Ferrellgas
Partners,  L.P. and  subsidiaries  as of July 31, 1999 and 1998, and the related
consolidated  statements of earnings,  partners' capital and other comprehensive
income and cash flows for each of the three years in the period  ending July 31,
1999. 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  generally  accepted  auditing
standards.  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, 1999 and 1998, and the results of their  operations
and their cash flows for each of the three  years in the period  ending July 31,
1999, in conformity with generally accepted accounting principles.






DELOITTE & TOUCHE LLP
Kansas City, Missouri
September 14, 1999



                                      F-2
<PAGE>

                   FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except unit data)



<TABLE>
<CAPTION>
                                                                   July 31,            July 31,
ASSETS                                                                1999                1998
---------------------------------------------------------        ----------------    ----------------

Current Assets:
<S>                                                                     <C>                 <C>
  Cash and cash equivalents                                             $ 35,134            $ 16,961
  Accounts and notes receivable (net of
    allowance for doubtful accounts of $1,296 and
    $1,381 in 1999 and 1998, respectively)                                58,380              50,097
  Inventories                                                             24,645              34,727
  Prepaid expenses and other current assets                                6,780               8,706
                                                                 ----------------    ----------------
    Total Current Assets                                                 124,939             110,491

Property, plant and equipment, net                                       405,292             395,855
Intangible assets, net                                                   118,117             105,655
Other assets, net                                                          8,397               9,222
                                                                 ----------------    ----------------
    Total Assets                                                        $656,745            $621,223
                                                                 ================    ================



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

Current Liabilities:
  Accounts payable                                                       $60,754             $48,017
  Other current liabilities                                               48,266              41,767
  Short-term borrowings                                                   20,486              21,150
                                                                 ----------------    ----------------
    Total Current Liabilities                                            129,506             110,934

Long-term debt                                                           583,840             507,222
Other liabilities                                                         12,144              12,640
Contingencies and commitments (Note H)                                     -                   -
Minority interest                                                            906               1,510

Partners' Capital:
  Common unitholders (14,710,765 and 14,699,678 units
    outstanding in 1999 and 1998, respectively)                            1,215              27,985
  Subordinated unitholders (16,593,721 units outstanding
    in 1999 and 1998)                                                    (10,516)             19,908
  General partner                                                        (59,553)            (58,976)
  Accumulated other comprehensive income                                    (797)              -
                                                                 ----------------    ----------------
    Total Partners' Capital                                              (69,651)            (11,083)
                                                                 ----------------    ----------------
    Total Liabilities and Partners' Capital                             $656,745            $621,223
                                                                 ================    ================
</TABLE>

                 See notes to consolidated financial statements.

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

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

<TABLE>
<CAPTION>


                                                           For the year ended July 31,
                                                      --------------------------------------
                                                         1999         1998          1997
                                                      -----------  -----------   -----------

Revenues:
<S>                                                     <C>          <C>           <C>
  Gas liquids and related product sales                 $578,025     $622,423      $759,941
  Other                                                   46,124       44,930        44,357
                                                      -----------  -----------   -----------
    Total revenues                                       624,149      667,353       804,298

Cost of product sold (exclusive of
  depreciation, shown separately below)                  273,388      342,600       470,128
                                                      -----------  -----------   -----------

Gross profit                                             350,761      324,753       334,170

Operating expense                                        205,720      199,010       198,298
Depreciation and amortization expense                     47,257       45,009        43,789
Employee stock ownership plan compensation charge          3,295          350        -
General and administrative expense                        19,174       17,497        15,831
Vehicle and tank lease expense                            12,976       10,127         7,433
                                                      -----------  -----------   -----------

Operating income                                          62,339       52,760        68,819

Interest expense                                         (46,621)     (49,129)      (45,769)
Interest income                                            1,216        1,695         2,002
Loss on disposal of assets                                (1,842)        (174)       (1,439)
                                                      -----------  -----------   -----------
Earnings before minority interest
  and extraordinary loss                                  15,092        5,152        23,613

Minority interest                                            309          209           395
                                                      -----------  -----------   -----------

Earnings before extraordinary loss                        14,783        4,943        23,218

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

Net earnings                                               1,997        4,943        23,218

General partner's interest in net earnings                    20           49           232
                                                      -----------  -----------   -----------

Limited partners' interest in net earnings               $ 1,977      $ 4,894      $ 22,986
                                                      ===========  ===========   ===========

Basic earnings per limited partner unit:
Earnings before extraordinary loss                        $ 0.47       $ 0.16        $ 0.74
Extraordinary loss                                         (0.41)      -             -
                                                      -----------  -----------   -----------
Net earnings                                              $ 0.06       $ 0.16        $ 0.74
                                                      ===========  ===========   ===========

Diluted earnings per limited partner unit
Earnings before extraordinary loss                        $ 0.47       $ 0.16        $ 0.73
Extraordinary loss                                         (0.41)      -             -
                                                      -----------  -----------   -----------
Net earnings                                              $ 0.06       $ 0.16        $ 0.73
                                                      ===========  ===========   ===========

</TABLE>

                 See notes to consolidated financial statements.
                                      F-4
<PAGE>
                   FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

   CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL AND OTHER COMPREHENSIVE INCOME
                                 (in thousands)
<TABLE>
<CAPTION>


                                                                                                   Accumulated
                                    Number of units                                                other
                               --------------------------                                          compre-
                                                            Common    Subordinated    General      hensive    Total partners'
                                 Common    Subordinated    Unitholders Unitholders    partner      income       capital
                               ----------- --------------  ------------------------- -----------  ----------  -------------

<S>                             <C>            <C>          <C>            <C>       <C>            <C>           <C>
August 1, 1996                   14,612.6       16,593.7     $71,324        $71,302   $ (58,017)     $ -           $84,609

  Quarterly distributions          -             -           (29,224)       (33,188)       (632)      -            (63,044)

  Net earnings                     -             -            10,763         12,223         232       -             23,218

                               ----------- --------------  ---------- -------------- -----------  ----------  -------------
July 31, 1997                    14,612.6       16,593.7      52,863         50,337     (58,417)      -             44,783

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

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

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

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

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

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

   Contribution from general
     partner 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
    Other comprehensive income-
       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)
                               =========== ==============  ========== ============== ===========  ==========  =============
</TABLE>

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

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>



                                                                           For the year ended July 31,
                                                               ----------------------------------------------------
                                                                    1999              1998              1997
                                                               ---------------   ----------------  ----------------

Cash Flows From Operating Activities:
<S>                                                                    <C>                <C>              <C>
 Net earnings                                                          $1,997             $4,943           $23,218
 Reconciliation of net earnings to net
  cash from operating activities:
  Depreciation and amortization                                        47,257             45,009            43,789
  Employee stock ownership plan compensation charge                     3,295                350
  Minority interest                                                       309                209               395
  Extraordinary loss                                                   12,786                -                 -
  Other                                                                 4,487              5,236             6,056
  Changes in operating  assets and  liabilities,
     net of effects  from  business
  acquisitions:
    Accounts and notes receivable                                      (9,565)             9,313             6,685
    Inventories                                                        11,382              8,052              (906)
    Prepaid expenses and other current assets                           1,926                200            (3,221)
    Accounts payable                                                   12,737              8,695            (9,078)
    Accrued interest expense                                            2,152               (157)           (1,171)
    Other current liabilities                                           4,235             (7,799)            9,368
    Other liabilities                                                    (496)               286               (48)
                                                               ---------------   ----------------  ----------------
      Net cash provided by operating activities                        92,502             74,337            75,087
                                                               ---------------   ----------------  ----------------

Cash Flows From Investing Activities:
 Business acquisitions                                                (43,838)            (9,839)          (36,114)
 Capital expenditures                                                 (25,743)           (20,629)          (16,192)
 Other                                                                  3,286              4,539             3,068
                                                               ---------------   ----------------  ----------------
      Net cash used in investing activities                           (66,295)           (25,929)          (49,238)
                                                               ---------------   ----------------  ----------------

Cash Flows From Financing Activities:
 Distributions                                                        (63,229)           (63,176)          (63,044)
 Additions to long-term debt                                          408,113             21,094            45,463
 Reductions of long-term debt                                        (338,613)            (2,759)           (2,640)
 Cash paid for call premiums and debt issuance costs                  (12,827)              -                 -
 Net reductions to short-term borrowings                                 (664)              (636)           (3,734)
 Minority interest activity                                              (818)              (798)             (818)
 Other                                                                      4                 40               (58)
                                                               ---------------   ----------------  ----------------
      Net cash used in financing activities                            (8,034)           (46,235)          (24,831)
                                                               ---------------   ----------------  ----------------

Increase in cash and cash equivalents                                  18,173              2,173             1,018
Cash and cash equivalents - beginning of period                        16,961             14,788            13,770
                                                               ---------------   ----------------  ----------------
Cash and cash equivalents - end of period                             $35,134            $16,961           $14,788
                                                               ===============   ================  ================

Cash paid for interest                                                $42,310            $46,546           $44,516
                                                               ===============   ================  ================
</TABLE>

                                 See notes to consolidated financial statements.
                                      F-6

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

A.  Partnership Organization and Formation

    Ferrellgas  Partners,  L.P. (the "MLP") was formed April 19, 1994,  and is a
    publicly traded limited  partnership,  owning a 99% limited partner interest
    in Ferrellgas,  L.P. (the "Operating Partnership" or "OLP"). The MLP and the
    OLP are both Delaware limited partnerships, and are collectively referred to
    as the Partnership. Ferrellgas Partners, L.P. was formed to acquire and hold
    a limited  partner  interest in the  Operating  Partnership.  The  Operating
    Partnership was formed to acquire,  own and operate the propane business and
    assets  of  Ferrellgas,   Inc.  (the  "Company"  or  "General  Partner"),  a
    wholly-owned subsidiary of Ferrell Companies, Inc. ("Ferrell").  Ferrell has
    a 56% limited partnership interest in Ferrellgas Partners,  L.P. The Company
    has retained a 1% general partner interest in Ferrellgas Partners,  L.P. and
    also holds a 1.0101% general partner interest in the Operating  Partnership,
    representing a 2% general partner  interest in the Partnership on a combined
    basis.  As General  Partner of the  Partnership,  the Company  performs  all
    management functions required for the Partnership.

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


B.  Summary of Significant Accounting Policies

    (1) Nature of operations:  The Partnership is engaged primarily in the sale,
    distribution, marketing and trading of propane and other natural gas liquids
    throughout the United States.  The retail market is seasonal because propane
    is used primarily for heating in residential and commercial  buildings.  The
    Partnership serves more than 800,000 residential,  industrial/commercial and
    agricultural customers.

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

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

                                      F-7

<PAGE>


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

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

    (6) Property, plant and equipment and intangible assets: Property, plant and
    equipment is stated at cost less accumulated depreciation.  Expenditures for
    maintenance  and routine  repairs are expensed as incurred.  Depreciation is
    calculated  using the  straight-line  method based on the  estimated  useful
    lives of the assets  ranging from two to thirty  years.  Intangible  assets,
    consisting primarily of customer location values,  goodwill,  and noncompete
    notes,  are  stated  at  cost,  net of  amortization  calculated  using  the
    straight-line  method over periods  ranging from 5 to 40 years.  Accumulated
    amortization of intangible  assets totaled  $139,273,000 and $123,531,000 as
    of July 31, 1999 and 1998,  respectively.  The  Partnership,  using its best
    estimates based on reasonable and supportable  assumptions and  projections,
    reviews  for  impairment  of  long-lived  assets  and  certain  identifiable
    intangibles to be held and used whenever events or changes in  circumstances
    indicate that the carrying amount of its assets might not be recoverable and
    has concluded no financial statement adjustment is required.

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

    (8)  Revenue  recognition:  Sales are  recognized  by the  Partnership  when
    product is delivered or shipped to its customers.

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

    (10) Net earnings per limited  partner unit: Net earnings (loss) per limited
    partner  unit is computed by dividing  net  earnings,  after  deducting  the
    General Partner's 1% interest, by the weighted average number of outstanding
    Common Units,  Subordinated  Units and the dilutive  effect (if any) of Unit
    Options in  accordance  with  Statement  of  Financial  Accounting  Standard
    ("SFAS") No. 128,  "Earnings Per Share".  The only effect of the application
    of SFAS No. 128 on the  earnings  per share was a decrease of $0.01 per unit
    in fiscal year 1997 to net earnings per limited  partner unit. This decrease
    was due to including  the effect of assuming the  conversion of 143,000 Unit
    Options in the denominator of the dilutive per-unit computation.

                                      F-8

<PAGE>


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

    (12) Segment  information:  In fiscal 1999, the Partnership adopted SFAS No.
    131,  "Disclosures about Segments of an Enterprise and Related  Information"
    ("SFAS  No.  131").  SFAS  No.  131  establishes   standards  for  reporting
    information  about operating  segments as well as related  disclosures about
    products and services, geographic areas, and major customers. In determining
    the Partnership's  reportable segments under the provisions of SFAS No. 131,
    the  Partnership  examined the way it organizes its business  internally for
    making operating decisions and assessing business performance. Based on this
    examination,  the Partnership has determined that it has a single reportable
    operating  segment which engages in the  distribution of propane and related
    equipment  and  supplies.  No  single  customer  represents  10% or  more of
    consolidated revenues. In addition, nearly all of the Partnership's revenues
    are derived from sources within the U.S.,  and all of its long-lived  assets
    are located in the U.S.

    (13) Adoption of new accounting  standards:  In fiscal 1999, the Partnership
    adopted SFAS No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). The
    Partnership  implemented  SFAS  No.  130  by  modifying  the  format  of the
    statement of  partners'  capital to include the  reporting of  comprehensive
    income  for  an  adjustment  to a  pension  liability.  SFAS  No.  130  also
    introduced a new balance sheet item "accumulated other comprehensive income"
    to reflect the  cumulative  activity  for other  comprehensive  income.  The
    Financial   Accounting   Standards   Board  recently  issued  SFAS  No.  133
    "Accounting for Derivative  Instruments and Hedging  Activities"  ("SFAS No.
    133"). SFAS No. 133, as amended by SFAS No. 137,  "Accounting for Derivative
    Instruments and Hedging  Activities - Deferral of the Effective Date of FASB
    Statement No. 133", is required to be adopted by the  Partnership  beginning
    in the first quarter of fiscal 2001. The Partnership is currently  assessing
    its impact on the Partnership's  financial  position,  results of operations
    and cash flows.


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.  These reserves are retained 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 by the Partnership in an amount equal to 100% of its Available
    Cash will generally be made 98% to the Common and  Subordinated  Unitholders
    (the "Unitholders") and 2% to the General Partner, subject to the payment of
    incentive  distributions to the holders of Incentive  Distribution Rights to
    the extent that certain target levels of cash distributions are achieved. To
    the extent there is sufficient  Available  Cash, the holders of Common Units
    have the right to receive the "Minimum  Quarterly  Distribution"  ($0.50 per
    Unit), plus any "arrearages", prior to any distribution of Available Cash to
    the holders of Subordinated  Units.  Common Units will not accrue arrearages
    for any quarter  after the  "Subordination  Period"  (as defined  below) and
    Subordinated   Units  will  not  accrue  any  arrearages   with  respect  to
    distributions for any quarter.

    In general, the Partnership Agreement provides that the Subordination Period
    will continue  indefinitely  until the first day of any quarter beginning on
    or after  August 1,  1999,  in which (i)  distributions  of  Available  Cash
    constituting Cash from Operations (as defined in the Partnership  Agreement)
    equal or exceed the Minimum Quarterly Distribution on the Common Units and

                                      F-9

<PAGE>


   the Subordinated Units for each of the three consecutive four quarter periods
    immediately  preceding  such date and (ii) the  Partnership  has invested at
    least  $50,000,000 in acquisitions and capital  additions or improvements to
    increase the operating capacity of the Partnership.  Management has reported
    that the Subordinated  Units converted into Common Units effective August 1,
    1999.

    The Partnership  makes  distributions of all of its Available Cash 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.


D.  Supplemental Balance Sheet Information
<TABLE>
<CAPTION>

    Inventories consist of:

       (in thousands)                                                                     1999             1998
                                                                                      --------------   --------------
<S>                                                                                         <C>              <C>
       Liquefied propane gas and related products                                           $15,480          $26,316
       Appliances, parts and supplies                                                         9,165            8,411
                                                                                      --------------   --------------
                                                                                            $24,645          $34,727
                                                                                      ==============   ==============
</TABLE>

       In addition to inventories on hand, the Partnership enters into contracts
       to buy product for supply purposes.  Nearly all such 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, 1999, in addition to the inventory on hand,  the
       Partnership  had committed to take delivery of  approximately  59,280,000
       gallons at a fixed price for its estimated future retail propane sales.

<TABLE>
<CAPTION>

    Property, plant and equipment consist of:

       (in thousands)                                                                      1999            1998
                                                                                       -------------   --------------
<S>                                                                                        <C>              <C>
       Land and improvements                                                               $ 32,776         $ 30,368
       Buildings and improvements                                                            43,577           40,557
       Vehicles                                                                              50,897           50,810
       Furniture and fixtures                                                                28,626           22,397
       Bulk equipment and district facilities                                                71,693           66,150
       Tanks and customer equipment                                                         418,598          404,532
       Other                                                                                  4,369            5,969
                                                                                       -------------   --------------
                                                                                            650,536          620,783
       Less:  accumulated depreciation                                                      245,244          224,928
                                                                                       -------------   --------------
                                                                                           $405,292         $395,855
                                                                                       ==============  =============
</TABLE>

       Depreciation expense totaled  $30,772,000,  $30,034,000,  and $29,960,000

       for the years ended July 31, 1999, 1998, and 1997, respectively.


                                      F-10

<PAGE>

<TABLE>
<CAPTION>

    Other current liabilities consist of:

       (in thousands)                                                                      1999             1998
                                                                                       --------------   -------------
<S>                                                                                           <C>            <C>
       Accrued insurance                                                                      $4,300         $ 4,563
       Accrued interest                                                                       15,065          12,914
       Accrued payroll                                                                        11,821           8,635
       Other                                                                                  17,080          15,655
                                                                                       --------------   -------------
                                                                                             $48,266         $41,767
                                                                                       ==============   =============

</TABLE>
<TABLE>
<CAPTION>

E.   Long-Term Debt

     Long-term debt consists of:

    (in thousands)                                                                       1999             1998
                                                                                     -------------     ------------
    Senior Notes
<S>                                                                                    <C>                 <C>
      Fixed rate, 7.16% due 2005-2013 (1)                                                $350,000            $   -
      Fixed rate, 10%, due 2001 (2)                                                                        200,000
      Fixed rate, 9.375%, due 2006 (3)                                                    160,000          160,000

    Credit Agreement
      Term loan, 8.5%                                                                       -               50,000
      Revolving credit loans, 6.0% and 8.5% weighted average interest
      rates, respectively, due 2001 (4) (5)                                              58,314           85,850

    Notes payable, 7.3% and 6.7% weighted average interest rates,
      respectively, due 1999 to 2007 (6)                                                   18,154           13,558
                                                                                     -------------     ------------
                                                                                          586,468          509,408
    Less:  current portion                                                                  2,628            2,186
                                                                                     -------------     ------------
                                                                                         $583,840         $507,222
                                                                                     =============     ============
</TABLE>


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

    (2)      The old OLP  fixed  rate  Senior  Notes,  issued  in June 1994 were
             redeemed  at the  option  of the OLP on  August  5,  1998 with a 5%
             premium paid concurrent with the issuance of the New Senior Notes.

                                      F-11
<PAGE>

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

    (4)      At July 31, 1999, the unsecured  $145,000,000  Credit Facility (the
             "Credit Facility"),  expiring July 2001, consisted of a $50,000,000
             unsecured working capital and general corporate  facility including
             a letter  of  credit  facility,  a  $55,000,000  unsecured  general
             corporate  and  acquisition  facility and a  $40,000,000  revolving
             working capital  facility,  which is subject to an annual reduction
             in outstanding  balances to zero for thirty  consecutive  days. All
             borrowings  under the Credit Facility bear interest at either LIBOR
             plus an  applicable  margin  varying  from  0.425% to 1.375% or the
             bank's base rate,  depending  on the nature of the  borrowing.  The
             bank's  base  rate at July 31,  1999  and  1998 was 8.0% and  8.5%,
             respectively.  To offset the variable  rate  characteristic  of the
             Credit  Facility,  the OLP  entered  into a  interest  rate  collar
             agreement,  expiring  December 2001, with a major bank limiting the
             floating  rate  portion of  LIBOR-based  loan  interest  rates on a
             notional amount of $25,000,000 to between 5.05% and 6.5%.

    (5)      The OLP entered into a credit facility agreement on April 30, 1999.
             This new facility  ("Additional  Credit  Facility")  provides for a
             $38,000,000   unsecured   facility   for   acquisitions,    capital
             expenditures,  and  general  corporate  purposes.  The  outstanding
             Additional  Credit  Facility  balance  at April  29,  2000,  may be
             converted  to a term loan and will be due and  payable in full July
             2, 2001.  There was not an outstanding  balance on this facility at
             July 31, 1999.

          (6) The notes  payable are  secured by  approximately  $2,893,000  and
     $3,729,000   of  property  and   equipment  at  July  31,  1999  and  1998,
     respectively.

          At July 31, 1999 and 1998, $20,486,000 and $21,150,000,  respectively,
     of short-term  borrowings  were  outstanding  under the credit facility and
     letters of credit  outstanding,  used primarily to secure obligations under
     certain  insurance  arrangements,   totaled  $32,178,000  and  $29,056,000,
     respectively.

     The Senior Secured  Notes,  the New Senior Notes,  the Credit  Facility and
     Additional Credit Facility Agreements contain various restrictive covenants
     applicable to the MLP and OLP and its  subsidiaries,  the most  restrictive
     relating to additional  indebtedness,  sale and disposition of assets,  and
     transactions  with affiliates.  In addition,  the Partnership is prohibited
     from making cash  distributions of the Minimum Quarterly  Distribution if a
     default  or  event of  default  exists  or would  exist  upon  making  such
     distribution,  or if the Partnership  fails to meet certain coverage tests.
     The Partnership is in compliance with all requirements,  tests, limitations
     and covenants related to the Senior Secured Note Indenture,  the New Senior
     Note Indenture,  Credit Facility and Additional Credit Facility agreements.
     The New  Senior  Notes and the  Credit  Facility  agreements  have  similar
     restrictive  covenants  to the Senior Note  Indenture  and credit  facility
     agreement that were replaced.
                                      F-12

<PAGE>

     The annual  principal  payments on long-term debt for each of the next five
     fiscal years are  $2,628,000  in 2000,  $3,808,000  in 2001,  $1,755,000 in
     2002, $1,891,000 in 2003 and $2,031,000 in 2004.

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


F.   Partners' Capital

     Partners'  capital consists of 14,710,765  Common Units  representing a 46%
     limited partner interest,  16,593,721 Subordinated Units representing a 53%
     limited partner interest, and a 1% General Partner interest.

     The  Agreement of Limited  Partnership  of Ferrellgas  Partners,  L.P. (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.

     Effective,   August  1,  1999,  the  Subordination  Period  ended  and  the
     Subordinated  Units converted to Common Units,  because  certain  financial
     tests,  which  were  primarily  related  to making  the  Minimum  Quarterly
     Distribution on all Units, were satisfied for each of the three consecutive
     four quarter  periods  ending on July 31, 1999. 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.

     The Partnership  maintains a shelf registration  statement for Common Units
     representing limited partner interests in the Partnership. The Common Units
     may be issued from time to time by the  Partnership in connection  with the
     Partnership's acquisition of other businesses,  properties or securities in
     business combination  transactions.  The Partnership also maintains another
     shelf  registration  statement for the issuance of Common  Units,  Deferred
     Participation Units, Warrants and Debt Securities.


G.   Transactions with Related Parties

     The  Partnership  has no  employees  and is managed and  controlled  by the
     General Partner. Pursuant to the Partnership Agreement, the General Partner
     is entitled to reimbursement  for all direct and indirect expenses incurred
     or payments it makes on behalf of the Partnership,  and all other necessary
     or  appropriate   expenses   allocable  to  the  Partnership  or  otherwise
     reasonably incurred by the General Partner in connection with operating the
     Partnership's   business.   These  costs,   which   totaled   $143,850,000,
     $129,808,000,  and $128,033,000 for the years ended July 31, 1999, 1998 and
     1997, respectively,  include compensation and benefits paid to officers and
     employees of the General Partner, and general and administrative costs.

     During fiscal 1999,  Ferrell  International  Limited and Ferrell Resources,
     LLC,  two  affiliates  of the  Partnership  which are owned by the  General
     Partner's chairman of the board,  James E. Ferrell,  paid the Partnership a
     total  of  $265,000  for  accounting  and  administration   services.   The
     Partnership  believes these transactions were under terms that were no less
     favorable to the Partnership than those available with other parties.

                                      F-13
<PAGE>

     Prior to the ESOP  transaction  completed  on July 17, 1998,  Ferrell,  the
     parent of the  General  Partner  and its other  wholly-owned  subsidiaries,
     engaged in various  investment  activities  including,  but not limited to,
     commodity investments and the trading thereof. The Partnership from time to
     time acted as an agent on behalf of Ferrell to purchase and market  natural
     gas liquids and enter into  certain  trading  activities.  The  Partnership
     charged all direct and indirect  expenses incurred in performing this agent
     role to Ferrell.  During the years  ended July 31, 1998 and July 31,  1997,
     the Partnership,  as Ferrell's agent,  performed the following services: a)
     purchased  1,089,929  barrels of propane  during 1997, b) marketed and sold
     469,820 and 619,929 barrels in 1998 and 1997  respectively,  and c) entered
     into certain hedging  arrangements in 1997. The Partnership charged Ferrell
     $66,467  and  $73,078  in 1998 and 1997,  respectively,  for its direct and
     indirect expenses related to these transactions. All of the 469,820 barrels
     of  propane  sold  in  fiscal  year  1998  were  sold  to and  used  by the
     Partnership at the applicable  market prices (an aggregate of  $7,405,200).
     Of the 619,929  barrels of propane  sold in fiscal year 1997,  534,929 were
     sold to and used by the  Partnership  at the  applicable  market prices (an
     aggregate of $13,128,765). In addition, during fiscal 1998, the Partnership
     sold to  Ferrell  certain  physical  and  derivative  crude  oil  commodity
     contracts  totaling  4,120,000  aggregate barrels at a price of $2,548,927.
     Management  believes these  transactions were under terms that were no less
     favorable  to the  Partnership  than those  available  with other  parties.
     Subsequent to the close of the ESOP  transaction,  Ferrell  divested of its
     wholly-owned  subsidiaries that were engaged in these commodity and trading
     activities.


H.   Contingencies and Commitments

     The  Partnership  is  threatened  with or named as a  defendant  in various
     lawsuits which, 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
     results  of  operations,   financial   condition  and  cash  flows  of  the
     Partnership.

     Certain  property and  equipment is leased under  noncancellable  operating
     leases which  require  fixed  monthly  rental  payments and which expire at
     various  dates  through 2018.  Rental  expense  under these leases  totaled
     $19,595,000,  $17,095,000,  and  $13,169,000,  for the years ended July 31,
     1999,  1998 and 1997,  respectively.  Future minimum lease  commitments for
     such leases are  $15,846,000 in 2000,  $13,094,000  in 2001,  $9,931,000 in
     2002, $5,229,000 in 2003, $1,563,000 in 2004 and $2,161,000 thereafter.


I.   Employee Benefits

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

     Ferrell  makes  contributions  to the ESOT  which  causes a portion  of the
     shares of Ferrell owned by the ESOT to be allocated to employees'  accounts
     over time. The allocation of Ferrell shares to employee  accounts  causes a
     non-cash  compensation charge to be incurred by Ferrell,  equivalent to the
     fair value of such shares  allocated.  The  Partnership is not obligated to
     fund or make  contributions to the ESOT.  Nevertheless,  due to the benefit
     received by the Company's  employees  from  participating  in the ESOP, the
     non-cash compensation charge is also recorded by the Partnership.

     The General  Partner  and its parent  Ferrell  have a defined  contribution
     profit-sharing plan which covers substantially all employees with more than
     one year of service. Contributions were made to the plan at the discretion

                                      F-14
<PAGE>

   of Ferrell's Board of Directors. With the  establishment  of the ESOP in July
     1998, the Company suspended future contributions to the profit sharing plan
     beginning with fiscal year 1998. The profit sharing plan,  which  qualifies
     under  section  401(k) of the  Internal  Revenue  Code,  also  provides for
     matching  contributions  under a cash or  deferred  arrangement  based upon
     participant salaries and employee contributions to the plan. These matching
     contributions   are  not  affected  by  the   establishment  of  the  ESOP.
     Contributions  for the year ended July 31, 1997, were $3,000,000  under the
     profit sharing  provision,  and for the years ended July 31, 1999, 1998 and
     1997, respectively,  were $2,110,000,  $1,693,000, and $1,542,000 under the
     401(k) provision.


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

     The  Ferrellgas,  Inc. Unit Option Plan (the "Unit Option Plan")  currently
     authorizes  the  issuance of options  (the "Unit  Options")  covering up to
     850,000 of the MLP's units to certain officers and employees of the General
     Partner.  Effective August 1, 1999, with the conversion of the Subordinated
     Units,  the units covered by the options are Common Units. The Unit Options
     are  exercisable  beginning after July 31, 1999, at exercise prices ranging
     from  $16.80 to $21.67 per unit,  which was an  estimate of the fair market
     value of the Subordinated  Units at the time of the grant. The options vest
     immediately  or over a one to five  year  period,  and  expire on the tenth
     anniversary of the date of the grant.

<TABLE>
<CAPTION>


                                                                      Number      Weighted Average      Weighted
                                                                        of         Exercise Price     Average Fair
                                                                      Units                              Value
                                                                    -----------------------------------------------
<S>                                                                   <C>               <C>
          Outstanding, July 31, 1996                                 668,425           $17.38
          Granted                                                    216,500             20.23           $0.52
          Forfeited                                                 (157,325)            18.02
                                                                   -------------
          Outstanding, July 31, 1997                                 727,600             18.09
          Granted                                                    118,500             19.47            0.47
          Forfeited                                                  (64,100)            19.16
                                                                   -------------
          Outstanding, July 31, 1998                                 782,000             18.21
          Granted                                                      40,000            18.54            0.39
          Forfeited                                                  (40,975)            18.15
                                                                   -------------
          Outstanding, July 31, 1999                                 781,025
                                                                   -------------
          Options exercisable, July 31, 1999                            0
                                                                   -------------

                                                                         Options Outstanding at July 31, 1999
                                                                   -------------------------------------------------
          Range of option prices at end of year                                     $16.80-$21.67
          Weighted average remaining contractual life                                 6.9 years

</TABLE>

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

                                      F-15
<PAGE>

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

                                                                   1999             1998             1997
                                                               -------------    -------------    -------------
<S>                                                                   <C>              <C>             <C>
           Net earnings as reported                                   $1,997           $4,943          $23,218
          Pro forma adjustment                                        (465)             (40)             (29)
                                                               -------------    -------------    -------------
          Net earnings adjusted                                      $1,532           $4,903           $23,189
                                                               =============    =============    =============

          Pro forma basic and diluted net earnings per
          limited partner share                                       $0.05            $0.16            $0.73
                                                               =============    =============    =============
</TABLE>


     The fair value of the unit options  granted during the 1999,  1998 and 1997
fiscal years were determined  using a binomial  option  valuation model with the
following assumptions:  a) distribution amount of $0.50 per unit per quarter for
1999, 1998 and 1997, b) average Common Unit price  volatilities of 18.1%,  16.2%
and 16.9% were used as an estimate of  Subordinated  Unit  volatility  for 1999,
1998 and 1997,  respectively,  c) the risk-free  interest  rates used were 5.5%,
5.7% and 5.9%, for 1999, 1998 and 1997, respectively and d) the expected life of
the  option  used was 5 years for 1999,  1998 and  1997.  The fair  value of the
Ferrell  Companies,  Inc. NQP stock options  granted during the 1999 fiscal year
was  determined  using a binomial  option  valuation  model  with the  following
assumptions: a) no dividends, b) average stock price volatility of 10.6%, c) the
risk-free  interest  rate  used  was 5.5% and d)  expected  life of the  options
between 8 and 15 years.


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

     The carrying  amount of current  financial  instruments  approximates  fair
     value because of the short maturity of the instruments.  The estimated fair
     value of the Partnership's long-term debt was $568,459,000 and $524,612,000
     as of July 31,  1999 and 1998,  respectively.  The fair value is  estimated
     based on quoted market prices.

     Interest Rate Collar  Agreements.  The Partnership has entered into various
     interest  rate  collar  agreements  involving  the  exchange  of fixed  and
     floating  interest  payment   obligations   without  the  exchange  of  the
     underlying principal amounts. At July 31, 1999 and 1998, the total notional
     principal  amount of these  agreements was  $25,000,000  and  $100,000,000,
     respectively,  and the fair value of these agreements was immaterial to the
     financial position, results of operations or cash flows of the Partnership.
     The  counterparties  to these agreements are large financial  institutions.
     The interest rate collar  agreements  subject the  Partnership to financial
     risk that will vary  during the life of these  agreements  in  relation  to
     market interest rates.

     Option  Commodity  Contracts.  The Partnership is a party to certain option
     contracts,   involving  various  liquefied  petroleum  products,  for  risk
     management  purposes  in  connection  with  its  trading  activities.  Such
     contracts   do  not  meet  the  criteria   for   classification   as  hedge
     transactions.  Contracts are executed with private  counterparties and to a
     lesser extent on national mercantile exchanges. Open contract positions are
     summarized below.

                                      F-16
<PAGE>

     Forward,  Futures and Swaps Commodity Contracts. The Partnership is a party
     to certain forward,  futures and swaps contracts for trading purposes. Such
     contracts   do  not  meet  the  criteria   for   classification   as  hedge
     transactions.   Net  gains  from  trading   activities   were   $7,699,000,
     $7,464,000,  and $5,476,000,  for the years ended July 31, 1999,  1998, and
     1997,  respectively.  Such contracts  permit  settlement by delivery of the
     commodity. Open contract positions are summarized below (assets are defined
     as  purchases  or  long  positions  and  liabilities  are  sales  or  short
     positions).
<TABLE>
<CAPTION>


                                   As of July 31
                    (In thousands, except price per gallon data)                   Derivative Commodity
                      Derivative Commodity Instruments Held for                    Instruments Held for
                           Purposes Other than Trading                               Trading Purposes
                                     (Options)                                (Forwards, Futures and Swaps)
                    -------------------------------------------    ---------------------------------------------------
                           1999                    1998                     1999                        1998
                    --------------------    -------------------    -----------------------     -----------------------
                      Asset      Liab.        Asset     Liab.         Asset       Liab.           Asset       Liab.
                    --------- ----------    -------- ----------    ----------- -----------     ---------- ------------

<S>                  <C>      <C>            <C>      <C>           <C>        <C>              <C>         <C>
 Volume (gallons)    3,245    (22,648)       3,927    (13,444)      2,814,698  (2,720,295)      568,949     (628,573)

 Price (cent)/gal)   23-39      27-55          31       49-18         19-49      19-49           35-23        35-24


 Maturity           8/99-      8/99           8/98-      8/98-       8/99-       8/99-           8/98-        8/98-
 Dates              3/00       3/00           12/98      2/99        12/01       12/01           12/99        12/99

 Contract Amounts
 ($)                 10,775   (13,973)       8,295    (19,757)      1,232,209  (1,215,341)      181,541     (201,497)

 Fair Value ($)      10,941   (15,850)       7,901    (19,538)      1,337,924  (1,318,526)      186,696     (203,162)

 Unrealized gain
 (loss) ($)           166      (1,877)       (394)       219         105,715   (103,185)         5,155       (1,665)
</TABLE>

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


L.  Business Combinations

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

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


                                      F-17
<PAGE>


     During the year ended July 31, 1997, the Partnership  made  acquisitions of
     eight  businesses  valued  at  $40,200,000.   This  amount  was  funded  by
     $36,114,000 cash payments and noncash  transactions  totaling $4,086,000 in
     the issuance of noncompete notes and other costs and consideration.

     All  transactions  have been  accounted  for using the  purchase  method of
     accounting and, accordingly,  the results of operations of all acquisitions
     have been  included in the  consolidated  financial  statements  from their
     dates of acquisition.  The pro forma effect of these  transactions  was not
     material to the results of operations.
                                      F-18
<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,
1999, and 1998 and the related statement of earnings,  stockholder's  equity and
cash flows for each of the three years in the period ended July 31, 1999.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  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, 1999 and 1998, and the results of its operations and its cash flows for each
of the  three  years in the  period  ended  July  31,  1999 in  conformity  with
generally accepted accounting principles.



DELOITTE & TOUCHE LLP
Kansas City, Missouri
September 14, 1999


                                      F-19
<PAGE>

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

                                 BALANCE SHEET
<TABLE>
<CAPTION>
                                                                           July 31,            July 31,
ASSETS                                                                       1999                1998
------------------------------------------------------------------     -----------------   ------------------

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


</TABLE>
<TABLE>
<CAPTION>

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

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

Additional paid in capital                                                          774                  548

Accumulated deficit                                                                (774)                (548)
                                                                       -----------------   ------------------
Total Stockholder's Equity                                                        1,000                1,000
                                                                       -----------------   ------------------

Total Liabilities and Stockholder's Equity                                       $1,000               $1,000
                                                                       =================   ==================
</TABLE>





                       See notes to financial statements

                                      F-20
<PAGE>
                        FERRELLGAS PARTNERS FINANCE CORP.
            (a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

                             STATEMENTS OF EARNINGS



<TABLE>
<CAPTION>

                                                                    For the year ended July 31,
                                                    ------------------------------------------------------------
                                                          1999                  1998                 1997
                                                    -----------------     -----------------     ----------------

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

General and administrative expense                               226                   221                  285
                                                    -----------------     -----------------     ----------------
Net loss                                                       $(226)                $(221)               $(285)
                                                    =================     =================     ================
</TABLE>






                       See notes to financial statements

                                      F-21
<PAGE>
                        FERRELLGAS PARTNERS FINANCE CORP.
            (a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

                       STATEMENTS OF STOCKHOLDER'S EQUITY


<TABLE>
<CAPTION>




                                    Common stock                                                         Total
                             -----------------------------  Additional          Accumulated         stockholder's
                              Shares        Dollars       paid in capital       deficit              equity
                             -------------  ------------  -------------------------------------   -----------------

<S>                                 <C>          <C>                    <C>               <C>               <C>
    August 1, 1996                  1,000        $1,000                 $42               $(42)             $1,000

    Capital contribution                -             -                 285                  -                 285

    Net loss                            -             -                   -               (285)               (285)
                             -------------  ------------  ------------------  -----------------   -----------------
    July 31, 1997                   1,000         1,000                 327               (327)              1,000

    Capital contribution                -             -                 221                  -                 221

    Net loss                            -             -                   -               (221)               (221)
                             -------------  ------------  ------------------  -----------------   -----------------
    July 31, 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
                             =============  ============  ==================  =================   =================
</TABLE>

                       See notes to financial statements
                                      F-22
<PAGE>
                        FERRELLGAS PARTNERS FINANCE CORP.
            (a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

                            STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>

                                                                            For the year ended July 31,
                                                             ----------------------------------------------------------
                                                                   1999                 1998                1997
                                                             -----------------    -----------------   -----------------
Cash Flows From Operating Activities:
<S>                                                                     <C>                  <C>                 <C>
  Net loss                                                              $(226)               $(221)              $(285)
                                                             -----------------    -----------------   -----------------
      Cash used by operating activities                                  (226)                (221)               (285)
                                                             -----------------    -----------------   -----------------


Cash Flows From Financing Activities:
  Capital contribution                                                    226                  221                 285
                                                             -----------------    -----------------   -----------------
      Cash provided by financing activities                               226                  221                 285
                                                             -----------------    -----------------   -----------------

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


</TABLE>

                       See notes to financial statements
                                      F-23
<PAGE>

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

                          NOTES TO FINANCIAL STATEMENTS



A.       Formation

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

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

B.       Commitment

         On April 26, 1996, the Partnership issued $160,000,000 of 9 3/8% Senior
         Secured Notes due 2006 (the "Senior  Notes").  The Senior Notes will be
         redeemable  at the option of the  Partnership,  in whole or in part, at
         any time on or after June 15, 2001.  Interest is payable  semi-annually
         in arrears on June 15 and December 15 of each year. 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  $320   associated   with  the  current  year  net  operating   loss
         carryforward  of $823,  which expire at various  dates through July 31,
         2014, a valuation allowance has been provided on the full amount of the
         deferred tax asset.  Accordingly,  there is no net deferred tax benefit
         for the year ended July 31,  1999 or 1998 and there is no net  deferred
         tax asset as of July 31, 1999 or July 31, 1998.

                                      F-24

<PAGE>


                     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, 1999 and
                  1998,  and Statements of Earnings and Cash Flows for the Years
                  ended July 31, 1999, 1998, and 1997 S-3


Schedule II       Valuation and Qualifying Accounts for the
                  Years ended July 31, 1999, 1998
                  and 1997..................................................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 as of July 31, 1999 and 1998, and for each of
the three years ended July 31, 1999,  and have issued our report  thereon  dated
September 14, 1999.  Our audit also included the financial  statement  schedules
listed  at  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  audit.  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, 1999


                                      S-2
<PAGE>


                           FERRELLGAS PARTNERS, L.P.
                                  PARENT ONLY

                                 BALANCE SHEET
                                 (in thousands)



<TABLE>
<CAPTION>

 ASSETS                                                   July 31, 1999     July 31, 1998
-----------------------------------------------------    ----------------  -----------------

<S>                                                                  <C>                <C>
 Cash and cash equivalents                                           $ 1                $ 1
 Investment in Ferrellgas, L.P.                                   88,758            148,013
 Other assets, net                                                 3,466              2,778
                                                        ----------------  -----------------
    Total Assets                                                $ 92,225          $ 150,792
                                                         ================  =================
</TABLE>



LIABILITIES AND PARTNERS' CAPITAL
-----------------------------------------------------
<TABLE>
<CAPTION>

<S>                                                              <C>                <C>
Other current liabilities                                        $ 1,876            $ 1,875

Long term debt                                                   160,000            160,000

Partners' Capital
  Common unitholders                                               1,215             27,985
  Subordinated unitholders                                       (10,516)            19,908
  General partner                                                (59,553)           (58,976)
  Accumulated other comprehensive income                            (797)          -
                                                         ----------------  -----------------
    Total Partners' Capital                                      (69,651)           (11,083)
                                                         ----------------  -----------------

    Total Liabilities and Partners' Capital                     $ 92,225          $ 150,792
                                                         ================  =================

</TABLE>

                                      S-3
<PAGE>

                            FERRELLGAS PARTNERS, L.P.
                                  PARENT ONLY

                             STATEMENTS OF EARNINGS
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                      For the Year Ended
                                                  ---------------------------------------------------------
                                                   July 31, 1999       July 31, 1998       July 31, 1997
                                                  ----------------    -----------------   -----------------

<S>                                                      <C>                  <C>                 <C>
Equity in earnings of Ferrellgas, L.P.                   $ 17,511             $ 20,462            $ 38,673
Operating expense                                               -                    5                  27
Interest expense                                           15,514               15,514              15,428
                                                  ----------------    -----------------   -----------------
  Net earnings                                            $ 1,997              $ 4,943            $ 23,218
                                                  ================    =================   =================
                                      S-4
<PAGE>

                           FERRELLGAS PARTNERS, L.P.
                                  PARENT ONLY

                            STATEMENTS OF CASH FLOWS
                                 (in thousands)

<CAPTION>


                                                                                             For the Year Ended
                                                                    ---------------------------------------------------------
                                                                     July 31, 1999       July 31, 1998        July 31, 1997
                                                                    -----------------   -----------------    ----------------
Cash Flows From Operating Activities:
<S>                                                                          <C>                 <C>                <C>
 Net earnings                                                                $ 1,997             $ 4,943            $ 23,218
 Reconciliation of net earnings to
 net cash from operating activities:
    Amortization of capitalized financing costs                                  513                 513                 511
    Equity in earnings of Ferrellgas, L.P.                                   (17,690)            (20,671)            (39,068)
    Other current assets                                                      (1,201)                  3                 879
    Distributions received from Ferrellgas, L.P.                              79,430              78,176              80,085
    Increase (decrease) in other current liabilities                               1                  (1)             (2,980)
                                                                    -----------------   -----------------    ----------------
      Net cash provided by operating activities                               63,050              62,963              62,645
                                                                    -----------------   -----------------    ----------------

Cash Flows From Financing Activities:
 Distributions to partners                                                   (63,229)            (63,176)            (63,044)
  Net advance from affiliate                                                     179                 213                 399
                                                                    -----------------   -----------------    ----------------
      Net cash used by financing activities                                  (63,050)            (62,963)            (62,645)
                                                                    -----------------   -----------------    ----------------

Increase in cash and cash equivalents                                              -                   -                   -
Cash and cash equivalents - beginning of period                                    1                   1                   1
                                                                    -----------------   -----------------    ----------------
Cash and cash equivalents - end of period                                        $ 1                 $ 1                 $ 1
                                                                    =================   =================    ================
</TABLE>
                                      S-5
<PAGE>
                    FERRELLGAS PARTNERS, L.P. AND SUBSIDIARY

                       VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

<TABLE>
<CAPTION>

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

Year ended July 31, 1999

<S>                                               <C>              <C>                  <C>             <C>               <C>
Allowance for doubtful accounts                   $1,381           $1,622               $40             $1,787            $1,296

Accumulated amortization:

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

    Other assets                                   9,054            1,686                 0              5,735             5,005


Year ended July 31, 1998

Allowance for doubtful accounts                    1,234            3,003                 0              2,856             1,381

Accumulated amortization:

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

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


Year ended July 31, 1997

Allowance for doubtful accounts                    1,169            2,604                 0              2,539             1,234

Accumulated amortization:

    Intangible assets                             95,801           13,410                 0                  0           109,211

    Other assets                                   4,647            2,106                 0                  0             6,753
</TABLE>
                                      S-6