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

                           FORM 10-K/A Amendment No. 2

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the fiscal year ended July 31, 2002

                                       or

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

For the transition period from __________ to __________

Commission file numbers   1-11331 and
                           333-06693

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

           (Exact name of registrants as specified in their charters)

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

                   One Liberty Plaza, Liberty, Missouri 64068
--------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

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

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

                                                 Name of each exchange on
         Title of each class                          which registered

            Common Units                         New York Stock Exchange
--------------------------------------------------------------------------------

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes    [X]    No    [   ]

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

The aggregate market value as of September 30, 2002, 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 $362,574,000.

At September 30, 2002,  Ferrellgas  Partners,  L.P. had  outstanding  36,089,703
Common Units and 2,782,211 Senior Units.

Documents  Incorporated  by Reference:  None


<PAGE>

EXPLANATORY NOTE

     On October 23, 2002, we filed with the Securities  and Exchange  Commission
(SEC) our Annual Report on Form 10-K for our fiscal year ended July 31, 2002. On
December 10, 2002, we filed with the SEC Amendment No. 1 to our Annual Report on
Form 10-K/A for the sole  purpose of including  an  explanatory  sentence to the
unqualified Independent Auditors' Report of our independent auditor,  Deloitte &
Touche LLP. In the explanatory sentence, Deloitte & Touche LLP clarified for the
reader that we changed our  accounting  in fiscal  2002 for  goodwill  and other
intangible assets by virtue of the adoption of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets."

     This  Amendment  No. 2 to our Annual  Report on Form  10-K/A for our fiscal
year ended July 31, 2002, is being filed to restate our consolidated  statements
of cash flows  related to our accounts  receivable  securitization  for July 31,
2002 and  2001.  This  information  was  previously  shown  in the  consolidated
statements  of cash  flows  on a net  basis  in the  section  "Cash  Flows  from
Investing  Activities"  and is now shown on a gross basis in the  section  "Cash
Flows from Operating  Activities" and includes a disaggregation for the proceeds
from new accounts receivable  securitizations to the amounts previously provided
in Note E, as filed in Amendment No. 1 to our Annual Report on Form 10-K/A.  The
gross amounts related to the accounts receivable securitizations were previously
reflected  within  Note  E  to  the  consolidated  financial  statements.   This
restatement   necessitated  amending  Note  E  to  our  consolidated   financial
statements by moving the gross information to our consolidated statement of cash
flows and the addition of a new Note R to our consolidated  financial statements
to explain the restatement.

     It is  important  to note that  this  amended  filing  has no effect on our
aggregate  "Increase  (decrease) in cash and cash  equivalents" for the 2002 and
2001 fiscal  years,  but merely  affect the  allocation  of our cash flows.  Our
aggregate  "Increase  (decrease) in cash and cash  equivalents" for the 2002 and
2001 fiscal years remain the same as  initially  disclosed in our Annual  Report
filed on  October  23,  2002.  Additionally,  other than as stated  above,  this
restatement  has no impact on our  previously  reported  consolidated  financial
statements and accompanying notes for our 2002, 2001 and 2000 fiscal years.

The amendments being made pursuant to this Amendment No. 2 are as follows:

     o    Item 6.  "Selected  Financial  Data" has been  restated to reflect the
          amendments made to Item 8;

     o    Item 7. "Management's  Discussion and Analysis of Financial  Condition
          and Results of Operations" has been revised to reflect the restatement
          made to Item 8 as follows:

     o    "Liquidity and Capital  Resources - Operating  activities" - the first
          paragraph  from our initial  10-K has been  modified  and a new second
          paragraph has been added; and

     o    "Liquidity and Capital  Resources - Investing  activities" - the fifth
          paragraph from our initial 10-K has been deleted;

     o    Item 8. "Financial Statements and Supplementary Data" has been revised
          to  restate  our   consolidated   statements   of  cash   flows.   See
          "Consolidated  Statement  of  Cash  Flows"  and  Notes  E and R of the
          accompanying consolidated financial statements; and

     o    Item 15. "Exhibits, Financial Statement Schedules, and Reports on Form
          8-K"  has  been  revised  to  include  an  update  to the  Independent
          Auditor's Consent and the  certifications  required by Title 18 U.S.C.
          Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
          Act of 2002. See Exhibits 23.1, 99.1 and 99.2.

Except as described  above, no other changes have been made to our Annual Report
on Form 10-K or Amendment  No. 1 to our Annual  Report on Form  10-K/A.  For the
convenience of the reader and as required under SEC rules,  this Amendment No. 2
sets  forth  the  complete  text of Items 6, 7, 8 and 15,  rather  than just the
amended  portions  thereof.   To  preserve  the  nature  and  character  of  the
disclosures set forth in these Items as originally  filed,  this Amendment No. 2
continues  to  speak  as of  October  23,  2002,  and we have  not  updated  the
disclosures  in this  Amendment  No. 2 to speak as of a later date or to reflect
any events  which  occurred  at a later  date.  For Items not  modified  herein,
reference should be made to our Annual Report on Form 10-K as filed with the SEC
on October 23, 2002. The filing of this Amendment No. 2 is not an admission that
our  initial  Annual  Report on Form 10-K or our  Amendment  No. 1 to our Annual
Report on Form 10-K/A,  when made,  knowingly included any untrue statement of a
material fact or omitted to state a material fact  necessary to make a statement
not misleading.


<PAGE>



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


                          2002 FORM 10-K/A Amendment No. 2
                                 ANNUAL REPORT


                                Table of Contents

                                                                           Page
                                                                           ----

                                     PART II

ITEM     6.     SELECTED FINANCIAL DATA...................................... 1

ITEM     7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND RESULTS OF OPERATIONS................ 3

ITEM     8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..................16


                                     PART IV

ITEM    15.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                REPORTS ON FORM 8-K..........................................16


<PAGE>


                                     PART II
                                    ---------


ITEM 6.       SELECTED FINANCIAL DATA.

     The following table presents our selected consolidated historical financial
data.

(in thousands, except per unit data)
<TABLE>
<S>                                          <C>             <C>            <C>             <C>            <C>
                                                                    Ferrellgas Partners, L.P.
                                             -------------------------------------------------------------------------
                                                                       Year Ended July 31,
                                             -------------------------------------------------------------------------
                                                2002            2001           2000            1999           1998
                                             -----------     -----------    ------------    -----------    -----------
Income Statement Data:
Total revenues                               $1,034,796      $1,468,670        $959,023       $633,349       $623,775
Interest expense                                 59,608          61,544          58,298         46,621         49,129
Earnings before extraordinary loss               59,959          64,068             860         14,783          4,943
Basic and diluted earnings (loss) per
 common and subordinated unit-
   Earnings (loss) before extraordinary
   loss                                            1.34            1.43           (0.32)          0.47           0.16
Cash distributions declared per common
    and subordinated unit                          2.00            2.00            2.00           2.00           2.00

Balance Sheet Data at end of period:
Working capital                                 $ 9,436        $ 22,062       $  (6,344)       $(4,567)        $ (443)
Total assets                                    885,128         896,159         967,907        656,745        621,223
Long-term debt                                  703,858         704,782         718,118        583,840        507,222
Partners' capital:                               21,161          37,987          40,344        (69,651)       (11,083)

Operating Data:
Retail propane sales volumes (in                831,592         956,718         846,664        680,477        659,932
gallons)

Capital expenditures
   Maintenance                                  $ 9,576         $11,996         $ 8,917       $ 10,505       $ 10,569
   Growth                                         4,826           3,152          11,838         15,238         10,060
   Technology initiative                         30,070             100               -              -              -
   Acquisition                                   10,962           1,417         310,260         48,749         13,003
                                             -----------     -----------    ------------    -----------    -----------
Total                                           $55,434         $16,665        $331,015       $ 74,492        $33,632
                                             ===========     ===========    ============    ===========    ===========
</TABLE>

                                       1
<PAGE>

<TABLE>
<S>                                          <C>             <C>            <C>             <C>            <C>
                                                                    Ferrellgas Partners, L.P.
                                             -------------------------------------------------------------------------

                                                                       Year Ended July 31,
                                             -------------------------------------------------------------------------
                                                2002            2001
                                                (as             (as
                                              restated*)      restated*)        2000            1999           1998
                                             -----------     -----------    ------------    -----------    -----------

Supplemental Data:
Net cash provided by operating                 $121,925        $130,859         $53,352       $ 92,494        $74,337
activities

Operating income                                118,915         126,691          57,091         60,497         52,586
Add: Depreciation and amortization               41,937          56,523          61,633         47,257         45,009
        ESOP compensation charge                  5,218           4,843           3,733          3,295            350
        Loss (gain) on disposal of
        assets and other                          3,957           5,744            (356)         1,842            174
                                             -----------     -----------    ------------    -----------    -----------
EBITDA                                         $170,027        $193,801        $122,101       $112,891       $ 98,119
                                             ===========     ===========    ============    ===========    ===========
<FN>
* See Note R to the consolidated financial statements.
</FN>
</TABLE>


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

Depreciation and amortization expense decreased  significantly in the year ended
July 31, 2002, due to the elimination of goodwill  amortization  and in the year
ended July 31,  2001,  due to a change in the  estimated  residual  value of our
customer and storage  tanks.  See additional  discussion  about these changes in
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations - Liquidity and Capital Resources - Results of Operations" and in our
Notes D and F to our Consolidated Financial Statements.

Our capital expenditures fall generally into four categories:

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

     o    growth capital expenditures,  which include expenditures for purchases
          of new propane tanks and other  equipment to  facilitate  expansion of
          our customer base and operating capacity;

     o    technology and process  enhancement  initiative capital  expenditures,
          which  include  expenditures  for  purchase of computer  hardware  and
          software and the development of new software; and

     o    acquisition capital  expenditures,  which include expenditures related
          to the acquisition of retail propane  operations.  Acquisition capital
          expenditures  represent  the total cost of  acquisitions  less working
          capital acquired.  Our fiscal 2001 capital expenditures do not include
          a $4,638,000  adjustment  made in the second fiscal  quarter of fiscal
          2001 to working  capital  related to a final  valuation  adjustment to
          record the Thermogas  acquisition.  We acquired  Thermogas in December
          1999 for a total acquisition  cost, less working capital acquired,  of
          approximately  $307,000,000.  The Thermogas acquisition  contributed a
          significant increase in our total revenues, interest expense, earnings
          before   extraordinary  loss,   operating  income,   depreciation  and
          amortization,  and EBITDA in the years  ended July 31,  2001 and 2000.
          This acquisition  also contributed to a significant  increase in total
          assets,  long-term  debt and partners'  capital as of July 31, 2000 as
          compared to July 31, 1999.

                                       2
<PAGE>



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

     The following is a discussion  of our  historical  financial  condition and
results of  operations  and should be read in  conjunction  with our  historical
Consolidated  Financial  Statements  and  accompanying  Notes  thereto  included
elsewhere in this Annual Report on Form 10-K.

     As  discussed  in  Note R to the  consolidated  financial  statements,  the
partnership  has  restated  its  consolidated  statements  of cash flows for the
fiscal years 2002 and 2001. The Management Discussion and Analysis for Operating
Activities and for Investing Activities give effect to this restatement.

     On  January  22,  2002,  the  Securities  and  Exchange  Commission  issued
cautionary  advice  recommending  various  disclosures.  We  have  provided  the
recommended disclosures as follows:

o    liquidity and capital resources,  including off-balance sheet arrangements;
     see discussion in "Liquidity and Capital Resources - Investing Activities",

o    trading  activities;  see  discussion  regarding the fair value of our risk
     management   trading  contracts  in  "Liquidity  and  Capital  Resources  -
     Disclosures about Risk Management  Activities Accounted for at Fair Value",
     and

o    transactions  with  related  and  certain  other  parties;  see  discussion
     regarding the nature of these transactions in "Disclosures about Effects of
     Transactions with Related Parties."

Forward-looking statements

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

o    whether  Ferrellgas,  L.P.  will  have  sufficient  funds  1) to  meet  its
     obligations and to enable it to distribute to us sufficient funds to permit
     us to meet our obligations  with respect to our  $170,000,000  senior notes
     due 2012 and 2) assuming all quarterly  financial tests required by various
     financing  instruments  are met, to pay the  required  distribution  on our
     senior  units and the minimum  quarterly  distribution  of $0.50 per common
     unit;

o    whether  or not we will  continue  to meet all of the  quarterly  financial
     tests required by the agreements governing our indebtedness; and

o    the  expectation  that  future  periods  may not have  the same  percentage
     decrease in retail  volumes,  revenues and expenses as was  experienced  in
     fiscal 2002.

     You should not put undue reliance on any  forward-looking  statements.  All
forward-looking  statements  are subject to risks and  uncertainties  that could
cause actual results to differ  materially from those expressed in or implied by
such statements.  The risks and uncertainties and their effect on our operations
include,  but are not  limited  to, the  following  risks,  which are more fully
described in the our Securities Act filings:

o    the retail propane industry is a mature one;

o    the effect of weather conditions on demand for propane;

o    increases in propane prices may cause higher levels of  conservation by our
     customers;

o    price, availability and inventory risk of propane supplies,  including risk
     management  activities;

o    the timing of collections  of the our accounts  receivable and increases in
     product costs and demand may decrease our working capital availability;

                                       3
<PAGE>


o    the availability of capacity to transport propane to market areas;

o    competition from other energy sources and within the propane industry;

o    operating  risks  incidental to  transporting,  storing,  and  distributing
     propane,  including  the  litigation  risks  which  may not be  covered  by
     insurance;

o    we may not be successful in making acquisitions;

o    changes in interest rates, including the refinancing of long-term financing
     at favorable interest rates;

o    governmental legislation and regulations;

o    energy efficiency and technology trends may affect demand for propane;

o    the condition of the capital markets in the United States;

o    the political and economic stability of the oil producing nations;

o    we may sell additional  limited partner  interests,  thus diluting existing
     interests of our unitholders;

o    the  distribution  priority  to  our  common  units  owned  by  the  public
     terminates no later than December 31, 2005;

o    the holder of our senior  units may have the right in the future to convert
     the senior units into common units;

o    the  holder of our  senior  units may be able to sell the  senior  units or
     convert into common units with special  indemnification rights available to
     the holder from us;

o    a redemption of the senior units may be dilutive to our common unitholders;

o    the terms of the  senior  units  limit our use of  proceeds  from  sales of
     equity and the rights of our common unitholders;

o    the current  holder of the senior units has a special  voting  exemption if
     the senior units convert into common units; and

o    the  expectation  that the  remaining  senior units will be redeemed in the
     future with proceeds from an offering of equity at a price  satisfactory to
     us.

Results of Operations

Fiscal Year Ended July 31, 2002 versus Fiscal Year Ended July 31, 2001

     Gas liquid and related product sales. Total gas liquids and related product
sales  decreased  $240,126,000  due to a decrease in the average  propane  sales
price per gallon and an additional  $188,697,000  primarily due to a significant
decrease in retail propane sales volume.

     The average propane sales price per gallon decreased due to the effect of a
significant decrease in the wholesale cost of propane. In addition, retail sales
volumes  decreased  13.1% to  831,592,000  gallons in fiscal 2002 as compared to
fiscal  2001,  primarily  due to the  effects of the  significantly  warmer than
normal  weather and to a lesser  extent the weak national  economy.  The heating
season of fiscal 2002 (November through March) was the third warmest in recorded
United  States  history,  according  to the  National  Oceanic  and  Atmospheric
Administration  (NOAA) data, with national average  temperatures 12% warmer than
normal  compared to 6% colder than normal for the same period last year.  During
the peak winter heating season  (December  through  February)  average  national
temperatures were 14% warmer than normal.

     Other revenues. Other revenues decreased 5.8% in fiscal 2002 as compared to
fiscal 2001, primarily due to lower appliance sales and service labor related to
the effect of the weak national economy.

     Cost of product sold.  Cost of product sold decreased  $338,443,000  due to
the significant  decline in the wholesale cost of propane during fiscal 2002 and
an additional  $87,705,000  primarily due to the effect of the decline in retail
sales volume compared to last year. The propane wholesale market price at one of
the major supply points,  Mt. Belvieu,  Texas,  averaged $0.37 per gallon during
fiscal 2002 compared to an average of $0.58 per gallon for the prior year. Other
major supply points in the United States also experienced  significant  declines
in propane prices.  However,  cost of product sold increased  $29,468,000 due to
exceptional results from risk management trading activities recognized in fiscal
2001 that were not repeated in fiscal 2002. See additional  discussion regarding
risk management trading activities in "Quantitative and Qualitative  Disclosures
about Market Risk."

                                       4
<PAGE>


     Gross profit.  Gross profit decreased 6.9% primarily due to the effect of a
significant  decrease  in retail  propane  volumes and to a lesser  extent,  the
decrease in results from risk management trading activities.  These factors were
partially offset by an increase in retail margin per gallon.

     Operating  expense.  Operating  expense  decreased  3.0% primarily due to a
$12,980,000  decrease in operating expenses incurred at our retail  distribution
outlets generally  resulting from fewer gallons delivered to customers in fiscal
2002 as compared to fiscal 2001.

     General and  administrative  expense.  General and  administrative  expense
increased   6.5%   primarily  due  to  increased   performance-based   incentive
compensation expense.

     Depreciation  and  amortization  expense.   Depreciation  and  amortization
expense  decreased  25.8% primarily due to the  implementation  of SFAS No. 142,
which  eliminated   goodwill   amortization.   See  further  discussion  of  the
implementation  of  SFAS  No.  142  in  Note  B to  the  Consolidated  Financial
Statements.

     Equipment lease expense. Equipment lease expense decreased 20.8% due to the
impact  that  significantly  lower  interest  rates  had  on our  variable  rate
operating leases as compared to fiscal 2001. See further  discussion about these
leases  in  "Liquidity  and  Capital  Resources  -  Investing   Activities"  and
"Financing Activities."

     Loss (gain) on disposal of assets and other. Loss on disposal of assets and
other decreased  $1,787,000  primarily due to a decrease in the activity related
to the  transfer of accounts  receivables  pursuant to the  accounts  receivable
securitization   facility.   See  further  discussion  about  this  facility  in
"Liquidity  and  Capital  Resources  -  Investing   Activities"  and  "Financing
Activities."

     Interest expense.  Interest expense decreased 3.1% primarily due to reduced
borrowings  and the impact that  significantly  lower  interest rates had on our
credit facility borrowings.  This decrease was partially offset by the effect of
the  termination  of an interest  rate swap  agreement in the fourth  quarter of
fiscal 2001.

     Forward  looking  statements.  Our gross profit,  operating  income and net
earnings  each  declined  between 6% and 7% from fiscal 2001 to 2002.  In fiscal
2002, we also  recognized  decreases in gas liquids and related  product  sales,
cost  of  product  sold,  operating  expenses,   equipment  lease  expense,  and
depreciation  and  amortization  expense.  Warm winter  weather,  a  significant
decrease in interest rates and the elimination of goodwill  amortization  during
fiscal 2002 largely  contributed to these  decreases.  Assuming that the weather
remains the same as in fiscal  2002 or becomes  colder and that  interest  rates
remain  relatively  stable,  we do not anticipate  similar decreases in revenue,
gross  profit,  operating  expenses and  operating  income as was  recognized in
fiscal 2002 versus fiscal 2001.

     We will implement SFAS No. 143 beginning in the fiscal year ending July 31,
2003,  and expect to record a one-time  reduction  to earnings  during the first
quarter of fiscal  2003,  as a cumulative  change in  accounting  principle,  of
approximately $2,800,000. We believe the implementation will not have a material
ongoing effect on our financial position,  results of operations and cash flows.
In addition,  as a result of the redemption of our  $160,000,000  senior secured
notes in September  2002, we will reflect an  approximate  $7,100,000  charge to
earnings  related to the premium  and other  costs  incurred to redeem the notes
plus the write-off of financing  costs  related to the original  issuance of the
notes in 1996. See further  discussion  about this debt redemption in "Liquidity
and Capital Resources - Financing Activities."

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

     Gas liquid and related product sales. Total gas liquids and related product
sales increased  $317,962,000 due to an increased average sales price per gallon
and an additional  $184,598,000 primarily due to increased retail sales volumes.
The average sales price per gallon  increased due to the effect of a significant
increase  in the  wholesale  cost of  propane  during  fiscal  2001,  which  was
significantly higher as compared to fiscal 2000.

     Retail sales volumes increased 13.0% to 956,718,000  gallons in fiscal 2001
as compared to  846,664,000  gallons  for the prior year,  primarily  due to the
acquisition  of Thermogas  completed  in December  1999 and the effect of colder
weather,  partially offset by the impact of customer  conservation caused by the
higher  product  cost  environment.  During the heating  season of fiscal  2001,
temperatures  as  reported  by NOAA were 6% colder  than  normal as  compared to
temperatures 16% warmer than normal during the same period in fiscal 2000.

                                       5
<PAGE>


     Other revenues. Other revenues increased 8.9% in fiscal 2001 as compared to
fiscal 2000, primarily due to the acquisition of Thermogas completed in December
1999.

     Cost of product sold. Cost of product sold increased  $262,523,000 due to a
significant  increase in the wholesale cost of propane during fiscal 2001 and an
additional  $131,522,000  primarily  due to the 13.0%  increase in retail  sales
volumes delivered compared to fiscal 2000. The propane wholesale market price at
one of the major supply points,  Mt. Belvieu,  Texas,  averaged $0.58 per gallon
during  fiscal  2001  compared  to an  average of $0.45 per gallon for the prior
year.   Other  major  supply  points  in  the  United  States  also  experienced
significant  increases  in  propane  prices.  Cost  of  product  sold  increased
$5,093,000 due to lower gains from risk management  trading activities in fiscal
2001 compared to the prior year's exceptional performance.

     Gross  profit.  Gross profit  increased  25.8%  primarily  due to increased
retail  margins,  the effect on sales related to the colder than normal  weather
and the acquired Thermogas operations, partially offset by lower gains from risk
management  trading  activities.   See  additional   discussion  regarding  risk
management trading activities in "Quantitative and Qualitative Disclosures about
Market  Risk"  and  Note J to the  Consolidated  Financial  Statements  included
elsewhere in this report.

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

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

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

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

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

                                       6
<PAGE>


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

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

Liquidity and Capital Resources

     Our  ability  to  satisfy  our   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 our control.
During fiscal 2002 the United States  experienced  unusually  mild  temperatures
that were  approximately 12% warmer than normal during the winter heating season
(November  through  March) and 14% warmer  than  normal  during the peak  winter
heating season (December through February). These temperatures rank as the third
warmest  winter  heating  season and fifth warmest peak winter heating season in
the  National  Oceanic  and  Atmospheric   Administration's   108-year  history.
Moreover,  the weather has been significantly  warmer than normal in four of the
last five winter heating seasons. Despite these challenges,  we paid the minimum
quarterly distribution of $0.50 on all common units on September 13, 2002, which
represents the thirty-second  consecutive minimum quarterly distribution paid to
our common unitholders dating back to October 1994.

     Due to the  seasonality  of the retail  propane  distribution  business,  a
significant  portion of our cash flow from  operations  is generated  during the
winter heating season which occurs during our second and third fiscal  quarters.
We  generate  significantly  lower cash flows from  operations  in our first and
fourth  fiscal  quarters as compared  to the second and third  quarters  because
fixed costs exceed gross profit during the non-peak  heating season.  Subject to
meeting the financial tests discussed  below,  our general partner believes that
Ferrellgas,  L.P. will have sufficient  funds available to meet its obligations,
and to distribute to Ferrellgas  Partners  sufficient funds to permit Ferrellgas
Partners to meet its obligations with respect to the $170,000,000  senior notes.
In addition,  our general  partner  believes  that  Ferrellgas,  L.P.  will have
sufficient funds available to distribute to Ferrellgas  Partners sufficient cash
to pay the required  quarterly  distribution on the senior units and the minimum
quarterly distribution on all common units during fiscal 2003.

     Our credit  facilities,  public debt,  private  debt,  accounts  receivable
securitization  facility and operating  tank leases  contain  several  financial
tests and covenants restricting our ability to pay distributions, incur debt and
engage in certain other business transactions. In general, these tests are based
on our debt to cash flow  ratio and cash flow to  interest  expense  ratio.  Our
general partner  believes that the most restrictive of these tests currently are
debt incurrence  limitations  within the credit facility,  operating tank leases
and accounts receivable  securitization  facility and limitations on the payment
of distributions  within Ferrellgas Partners' senior notes. The credit facility,
operating tank leases and accounts receivable  securitization facility generally
limit Ferrellgas,  L.P.'s ability to incur debt if it exceeds  prescribed ratios
of  either  debt to  cash  flow or cash  flow to  interest  expense.  Ferrellgas
Partners'  senior  notes  restrict  payments if a minimum  ratio of cash flow to
interest  expense is not met,  assuming  certain  exceptions to this ratio limit
have previously  been  exhausted.  This  restriction  places  limitations on our
ability to make restricted payments such as the payment of cash distributions to
unitholders.  The cash flow used to determine these financial tests generally is
based upon our most recent  cash flow  performance  giving pro forma  effect for
acquisitions  and divestitures  made during the test period.  It should be noted
that  none  of our  credit  facilities,  public  debt,  private  debt,  accounts
receivable  securitization  facility or operating tank leases contain  repayment
provisions related to a decline in our credit rating.

                                       7
<PAGE>


     As of July 31,  2002,  our  general  partner  believes  that we met all the
required quarterly  financial tests and covenants.  Based upon current estimates
of our cash flow, our general partner  believes that we will be able to continue
to meet all of the required quarterly financial tests and covenants. However, if
we were to encounter  unexpected downturns in business operations in the future,
such as  significantly  warmer than normal weather,  a volatile energy commodity
cost environment or continued economic downturn,  we may not meet the applicable
financial tests in future quarters.  This could have a materially adverse effect
on our operating capacity and cash flows and could restrict our ability to incur
debt or to make cash distributions to our unitholders,  even if sufficient funds
were available. Depending on the circumstances,  we may consider alternatives to
permit the  incurrence  of debt or the continued  payment of the quarterly  cash
distribution to our unitholders.  No assurances can be given, however, that such
alternatives can or will be implemented with respect to any given quarter.

     Our future capital  expenditures  and working capital needs are expected to
be provided by cash  generated from future  operations,  existing cash balances,
the credit facility or the accounts receivable  securitization facility. To fund
expansive  capital  projects  and  future  acquisitions,  we may  borrow  on our
facilities,  we may issue additional debt to the extent permitted under existing
financing arrangements or we may issue additional equity securities,  including,
among others, common units.

     Toward this  purpose,  on February 5, 1999,  we filed a shelf  registration
statement with the  Securities and Exchange  Commission for the periodic sale of
equity and/or debt securities. The registered securities are available to us for
sale in the future to fund  acquisitions,  to reduce  indebtedness or to provide
funds for general  corporate  purposes.  On June 8, 2001, we issued  $89,550,000
worth of equity common units and on September  24, 2002, we issued  $170,000,000
worth of debt, both pursuant to this registration  statement.  We currently have
approximately  $40,000,000 remaining available under this registration statement
for the sale of  registered  securities  in the future.  See further  discussion
about debt issuance in "Liquidity and Capital Resources - Financing Activities."

     We also maintain a shelf  registration  statement  with the  Securities and
Exchange  Commission for 2,010,484 common units. We may issue these common units
in connection with our acquisition of other businesses, properties or securities
in business combination transactions.

     Operating   Activities.   Cash   provided  by  operating   activities   was
$121,925,000  for fiscal 2002,  compared to  $130,859,000  for fiscal 2001. This
decrease is primarily due to reduced net earnings and the decreased  utilization
of the accounts receivable facility.

          Accounts receivable securitization

We utilize an accounts  receivable  securitization  facility  for the purpose of
providing us with  additional  short-term  working capital  funding,  especially
during the winter heating months. As part of this 364-day facility,  we transfer
an  interest  in  a  pool  of  our  trade  accounts   receivable  to  Ferrellgas
Receivables,  LLC, our wholly-owned,  qualifying  special purpose entity,  which
sells its  interest to a  commercial  paper  conduit of Banc One,  NA. We do not
provide  any  guarantee  or  similar  support  to the  collectability  of  these
receivables. We structured the facility using a wholly-owned, qualifying special
purpose entity in order to facilitate  the  transaction as required by Banc One,
N.A.  and to comply  with our  various  debt  covenants.  We remit daily to this
special  purpose entity funds collected on its pool of trade  receivables.  This
unconsolidated  entity,  together  with the accounts  receivable  securitization
facility,  provide us additional  working  capital  liquidity at interest  rates
approximately  one-half of one  percent  lower than  borrowings  from our credit
facility,  based on the most recent  twelve-month  period.  The level of funding
available  from this facility is currently  limited to the lesser of $60,000,000
or  qualified  trade  accounts  receivable.  At  July  31,  2002,  there  was no
outstanding  balance  from  this  facility.  During  fiscal  2002,  the  funding
outstanding from this facility was reduced by $31,000,000 to zero. This decrease
in funding  resulted from our reduced  liquidity  needs caused  primarily by the
significant decrease in the amount of account receivables  outstanding and lower
inventory  levels  related   primarily  to  the  lower  wholesale  propane  cost
environment  experienced  for most of this fiscal year as compared to last year.
We renewed this facility effective  September 24, 2002, for a 364-day commitment
with Banc One,  N.A.  In  accordance  with SFAS No.  140,  this  transaction  is
reflected  on  our  Consolidated  Financial  Statements  as a sale  of  accounts
receivable and an investment in an unconsolidated  subsidiary. See Note E to the
Consolidated Financial Statements for further discussion about this facility.

                                       8
<PAGE>


     Investing Activities. During fiscal 2002, we made cash capital expenditures
of $37,516,000 consisting primarily of the following:

o    technology and process  enhancement  initiative  discussed in the following
     paragraph,

o    upgrading district plant facilities,

     o    vehicle lease buyouts, and

     o    additional propane storage tanks and cylinders.

     During fiscal 2001, we completed a review of our key business  processes to
identify  areas  where  we could  use  technology  to  improve  our  operational
efficiency.  Specifically,  we  identified  areas where we believe we can reduce
operating expenses and improve customer  satisfaction in the near future.  These
areas of  opportunity  include  improvements  to our routing and  scheduling  of
customer deliveries,  customer  administration and operational workflow.  During
fiscal 2002,  we allocated  considerable  resources  toward these  improvements,
including the purchase of computer  hardware and software and development of new
software.  The  capital  expenditures  related  to the  technology  and  process
enhancement  initiative  were funded  primarily  from excess cash generated from
operations  during our record  financial  performance in fiscal year 2001. These
capital   expenditures   represent  a   substantial   majority  of  the  capital
expenditures we expect to incur in connection with this initiative. We intend to
fund  any  remaining  capital  requirements  from  cash  generated  from  future
operations or funds  available from our credit  facility or accounts  receivable
securitization  facility. We incurred the following expenditures related to this
initiative in fiscal 2002 and 2001.

<TABLE>
<S>                                                             <C>              <C>           <C>           <C>
                                                                  Capital Expenditures            Expensed Items
                                                                --------------------------    ------------------------

(in thousands)                                                    Fiscal         Fiscal          Fiscal        Fiscal
                                                                   2002           2001            2002          2001
                                                                   ----           ----            ----          ----
Development of new computer software                             $25,847          $100          $    -        $    -
Purchased computer software and licenses                           3,947             -               -             -
Computer hardware and other equipment                                276             -               -             -
Operating expense                                                      -             -           2,032             -
General and administrative expenses                                    -             -               -         1,703
                                                                -----------     ----------    ----------    ----------
Total incurred                                                    30,070           100           2,032         1,703
Less: amounts payable to vendors                                   6,956             -               -             -

                                                                -----------     ----------    ----------    ----------
Total cash used for technology initiative                        $23,114         $ 100          $2,032        $1,703
                                                                ===========     ==========    ==========    ==========
</TABLE>

     Other  than this  initiative,  our  capital  requirements  for  repair  and
maintenance of property,  plant and equipment are expected to remain  relatively
low.

     We lease computers, light and medium duty trucks, tractors and trailers. We
believe   vehicle   leasing  is  a   cost-effective   method  for   meeting  our
transportation and technology equipment needs. We purchased $860,000 of vehicles
whose lease terms expired during fiscal 2002.

                                       9
<PAGE>


     We continue  to consider  opportunities  to expand our  operations  through
strategic  acquisitions  of retail  propane  operations  located  throughout the
United  States.  During the  fiscal  year  ended  July 31,  2002,  we made total
acquisition capital  expenditures of approximately  $10,962,000  pursuant to the
acquisition  of three  retail  propane  companies.  This  amount  was  funded by
approximately  $6,294,000 of cash payments, the issuance of $2,325,000 in common
units and $2,343,000 in notes and other consideration.

     Financing  Activities.  On September  24, 2002, we issued  $170,000,000  of
publicly-held  senior  notes at a fixed  rate of 8.75%  due  2012.  Interest  is
payable  semi-annually  in arrears on June 15 and  December  15,  commencing  on
December 15, 2002. These new notes are unsecured and not redeemable  before June
15, 2007, except under specific circumstances. We used the proceeds from the new
senior note issuance to repurchase and redeem our $160,000,000 9.375% fixed rate
senior secured notes due 2006,  including  related premiums,  fees,  accrued and
unpaid interest and tender consent payments.

     We paid the  required  quarterly  distribution  on the senior units and the
minimum  quarterly  distribution on all common units, as well as general partner
interests,  totaling $84,075,000 and $69,125,000 in fiscal 2002 and fiscal 2001,
respectively. The increase in cash distributions from fiscal 2001 to fiscal 2002
is primarily due to:

o    a full  year of cash  distributions  paid in fiscal  2002 on the  4,500,000
     common units issued in June 2001; and

o    cash  distributions paid on the senior units for a full year in fiscal 2002
     as compared to in-kind  distributions paid for two quarters in fiscal 2001.
     On September 13, 2002, we paid our fourth fiscal quarter cash  distribution
     of $1.00 and $0.50 per senior and common unit, respectively.

     On June 8, 2001, we received  $84,865,000,  net of issuance costs, pursuant
to the issuance of 4,500,000 common units to the public.  We used these proceeds
to redeem  2,048,697  senior  units,  to pay the  related  accrued  senior  unit
distribution and to pay related common unit issuance fees.

     On April 6, 2001, we announced a series of transactions  that increased the
cash  distribution  coverage to our public common  unitholders  and modified the
structure of our  outstanding  senior units.  In addition,  we announced that an
entity owned by our general  partner's  Chairman,  Chief  Executive  Officer and
President, James E. Ferrell, purchased all the outstanding senior units from The
Williams  Companies for a purchase price of $195,529,000 plus accrued and unpaid
distributions.  We pay the senior units a quarterly cash distribution equivalent
to 10 percent per annum of the liquidating value. We can redeem the senior units
at any time, in whole or in part, upon payment in cash of the liquidating  value
of the senior units,  currently $40 per unit, plus the amount of any accrued and
unpaid  distributions.  The holder of the senior units has the right, subject to
various  events and  conditions,  to convert any  outstanding  senior units into
common  units at the earlier of December  31, 2005 or upon the  occurrence  of a
material event as defined by our partnership  agreement.  Such conversion rights
are contingent upon us not previously  redeeming such securities.  Also, Ferrell
Companies  granted us the option,  until  December  31,  2005,  to defer  future
distributions  on the  common  units held by it up to an  aggregate  outstanding
amount of  $36,000,000.  As of July 31,  2002,  we have not elected to defer any
common unit distributions due Ferrell Companies.

     Our credit facility,  which expires June 30, 2003, is an unsecured facility
and consists of the following:

o    a $117,000,000 working capital, general corporate and acquisition facility,
     including a letter of credit sub-facility, and

                                       10
<PAGE>


o    a $40,000,000  revolving working capital  facility,  which is subject to an
     annual  reduction in  outstanding  balances to zero for thirty  consecutive
     days.

We intend to renew this  facility  before June 30, 2003,  however,  there are no
assurances  that  the new  facility  will be  renewed  or on  terms  at least as
favorable as the existing  agreement.  All borrowings  under the credit facility
bear  interest,  at the  borrower's  option,  at a rate  equal to either  London
Interbank  Offered Rate plus an applicable  margin,  based upon our debt to cash
flow ratio,  varying  from 1.25  percent to 2.25 percent or the bank's base rate
plus an applicable margin varying from 0.25 percent to 1.25 percent.  The bank's
base  rates  at  July  31,  2002  and  July  31,  2001  were  4.75%  and  6.75%,
respectively.  See "Investing  Activities"  for a discussion of additional  cash
availability related to the accounts receivable facility agreement.

At July 31, 2002,  $40,614,000 of letters of credit were outstanding  under this
credit  facility.  Letters of credit  are  currently  used to cover  obligations
primarily  relating to requirements for insurance  coverage and, and to a lesser
extent, risk management  activities.  Based on the pricing grid contained in the
credit  facility,  the current  borrowing rate for future  borrowings  under the
credit  facility  is either the bank's base rate plus 0.75% or LIBOR plus 1.75%.
Effective July 16, 2001, the credit  facility was amended to increase the letter
of credit sub-facility availability from $60,000,000 to $80,000,000.

     At July 31, 2002, we had a total of $176,386,000 of funding available under
two facilities:

o    $116,386,000  available  for  general  corporate,  acquisition  and working
     capital purposes under the credit facility, and

o    $60,000,000   of   funding   available   from   the   accounts   receivable
     securitization facility.

We believe that the liquidity available from these facilities will be sufficient
to meet our future working capital needs.  However,  if we were to experience an
unexpected significant increase in working capital requirements, this need could
exceed our immediately available resources. Events that could cause increases in
working capital borrowings or letter of credit requirements include, but are not
limited to the following:

o    a significant increase in the cost of propane,

o    a significant delay in the collections of accounts receivable,

o    increased  volatility in energy commodity prices related to risk management
     activities,

o    increased liquidity requirements imposed by insurance providers,

o    a significant downgrade in our credit rating, or

o    decreased trade credit.

If one or more of these events caused a significant use of available funding, we
would consider  alternatives to provide  increased  working capital funding.  No
assurances can be given, however, that such alternatives could be implemented.

     In December 1999, we entered into a $25,000,000 operating lease involving a
portion of our customer tanks.  Also in December 1999, we assumed a $135,000,000
operating  lease  involving  a  portion  of the  Thermogas  acquisition  related
customer tanks. Both arrangements utilize a structure referred to as a synthetic
operating lease,  using a special purpose entity as lessor and Ferrellgas,  L.P.
as lessee;  thus, the assets and liabilities of the special purpose entities are
not included in our  Consolidated  Balance  Sheet.  We made  $8,819,000  of rent
payments related to these leases for the most recent  twelve-month  period. Both
arrangements  have terms that expire June 30, 2003,  and may be extended for two
additional one-year periods at the option of Ferrellgas, L.P., if such extension
is  approved by the lessor.  Prior to the end of the lease  terms,  we intend to
secure  additional  financing  in order to either  lease or purchase the related
customer  tanks. No assurances can be given that such financing will be obtained
or, if obtained,  such financing  will be on terms equally  favorable to us. See
further discussion about these lease arrangements in "Investing Activities."

                                       11
<PAGE>


     The following  table  summarizes our long-term debt  obligations as of July
31, 2002:
<TABLE>
     <S>                                    <C>           <C>          <C>          <C>              <C>
     (in thousands)                                          Principal Payments due by Pay Period
                                            ------------------------------------------------------------------------
                                                          Less than                                      After
                                               Total        1 year      1-3 years      4-5 years        5 years
                                            ------------ ------------- ------------ ---------------- ---------------
     Long-term debt, including current
     portion of long-term debt                $706,177      $2,319       $4,433         $330,352        $369,073
</TABLE>

     The following  table  summarizes our long-term debt  obligations as of July
31, 2002,  and after the September 24, 2002 issuance of the  $170,000,000  fixed
rate senior notes and related  repurchase  and  redemption  of the  $160,000,000
fixed rate senior secured notes:
<TABLE>
     <S>                                    <C>          <C>           <C>          <C>              <C>
     (in thousands)                                          Principal Payments due by Pay Period
                                            ------------------------------------------------------------------------
                                                          Less than                                      After
                                               Total        1 year      1-3 years      4-5 years        5 years
                                            ------------ ------------- ------------ ---------------- ---------------
     Long-term debt, including
     current portion of long-term debt        $716,177      $2,319       $4,433         $170,352        $539,073
</TABLE>

     In addition, we lease property,  computer equipment,  light and medium duty
trucks,  tractors and trailers.  We account for these  arrangements as operating
leases. See further discussion about these leases in "Investing Activities." The
following  tables  summarize  our  future  minimum  rental   commitments   under
non-cancelable  operating  lease  agreements  as of July 31,  2002.  The summary
presents the future minimum rental  payments and,  should we elect to do so, the
buyout  amounts  necessary  to purchase  the  equipment  at the end of the lease
terms.
<TABLE>
     <S>                                      <C>           <C>          <C>           <C>          <C>
     (in thousands)                                        Future Minimum Rental and Buyout Amounts
                                              -------------------------------------------------------------------
                                                             Less than                                 After
                                                 Total        1 year      1-3 years     4-5 years     5 years
                                              ------------- ------------ ------------- ------------ -------------
     Operating leases rental payments          $ 68,575       $ 26,986     $23,701        $13,248       $4,640
     Operating leases buyouts                  $178,658       $158,577     $ 8,843        $ 9,020       $2,218
</TABLE>

     Historically,  we have  been  successful  in  renewing  some of our  leases
subject to buyouts. However, there is no assurance that we will be successful in
the future.  The large  buyout  amount in fiscal 2003  primarily  relates to the
previously  discussed  operating  tank leases.  These two leases have terms that
expire June 30, 2003, and may be extended for two additional one-year periods at
the option of Ferrellgas,  L.P., if such extension is approved by the lessor. We
intend to secure  additional  financing in order to either lease or purchase the
related tanks.  See Note L to the  Consolidated  Financial  Statements  included
elsewhere in this report for additional information regarding these leases.

     At July 31, 2002, we had no borrowings  outstanding on our credit facility.
We had letters of credit outstanding in the amount of $40,614,000 used primarily
to cover obligations  relating to requirements for insurance  coverage.  At July
31,  2002,   we  did  not  have  any  funding   from  our  accounts   receivable
securitization  facility.  As of July 31, 2002,  in addition to the inventory on
hand, we had committed to make delivery of approximately  7,061,000 gallons at a
fixed price.

Disclosures about Risk Management Activities Accounted for at Fair Value

     The following  table  summarizes the change in the unrealized fair value of
contracts from risk management trading activities for the fiscal year ended July
31, 2002.  This table  summarizes  the contracts  where  settlement  has not yet
occurred:
<TABLE>
<S>                                                                                  <C>
(in thousands)                                                                        Fiscal year ended
                                                                                        July 31, 2002
                                                                                     ---------------------
Unrealized (losses) in fair value of contracts outstanding at July 31, 2001               $(12,587)
Other unrealized gains and (losses) recognized                                              (6,148)
Less: realized gains and (losses) recognized                                               (14,166)
                                                                                     ---------------------
Unrealized (losses) in fair value of contracts outstanding at July 31, 2002               $ (4,569)
                                                                                     =====================
</TABLE>
                                       12
<PAGE>

     The  following  table  summarizes  the maturity of these  contracts for the
valuation  methodologies  we utilize as of July 31, 2002. This table  summarizes
the contracts from risk management  trading  activities where settlement has not
yet occurred:
<TABLE>
<S>                                                             <C>                       <C>
(in thousands)                                                     Fair Value of Contracts at Period-End
                                                                ---------------------------------------------
                                                                  Maturity less           Maturity greater
                                                                      than                 than 1 year and
Source of Fair Value                                                 1 year              less than 18 months
------------------------------------------------------------    ---------------------    --------------------
Prices actively quoted                                               $  (328)                  $  -
Prices provided by other external sources                             (4,225)                   (16)
Prices based on models and other
  valuation methods                                                        -                      -
                                                                ---------------------    --------------------
Unrealized (losses) in fair value of contracts
  outstanding at July 31, 2002                                       $(4,553)                  $(16)
                                                                =====================    ====================
</TABLE>

See additional discussion about market,  counterparty credit and liquidity risks
related to the our risk management  trading activities and other risk management
activities in "Quantitative and Qualitative Disclosures about Market Risk."

Disclosures about Effects of Transactions with Related Parties

     We have no employees and are managed and controlled by our general partner.
Pursuant  to our  partnership  agreement,  our  general  partner is  entitled to
reimbursement for all direct and indirect expenses incurred or payments it makes
on our behalf,  and all other necessary or appropriate  expenses allocable to us
or  otherwise  reasonably  incurred by our general  partner in  connection  with
operating our business.  These costs,  which totaled  $197,863,000  for the year
ended July 31, 2002,  include  compensation  and  benefits  paid to officers and
employees of our general partner who perform  services on our behalf and general
and administrative costs.

     On December 12, 2001,  we issued  37,487  common units to Ferrell  Propane,
Inc., a subsidiary of our general  partner in connection with our acquisition of
Blue Flame Bottle Gas (see Note P to the Consolidated Financial Statements.) The
common unit issuance  compensated  Ferrell Propane for its retention of $725,000
of certain tax liabilities of Blue Flame.

     During  fiscal 2002,  we paid JEF Capital  Management  $776,445 to redeem a
total of 19,411 senior units and $11,192,000 in senior unit distributions.  In a
noncash transaction, we accrued a senior unit distribution of $2,782,211 that we
paid to JEF Capital Management on September 13, 2002.

     Ferrell  International  Limited and FI Trading, Inc. are beneficially owned
by James E. Ferrell and thus are our affiliates. We enter into transactions with
Ferrell  International  Limited  and FI  Trading  in  connection  with  our risk
management  activities  and  do so at  market  prices  in  accordance  with  our
affiliate  trading policy approved by our general  partner's Board of Directors.
These  transactions  include  forward,  option  and swap  contracts  and are all
reviewed for compliance  with the policy.  During fiscal 2002, we recognized net
receipts  from  purchases,   sales  and  commodity  derivative  transactions  of
$10,692,000.  These net purchases,  sales and commodity derivative  transactions
with Ferrell  International  Limited and FI Trading, Inc. are classified as cost
of product sold. Amounts due from (to) Ferrell International Limited at July 31,
2002 were $396,000 and $(266,000), respectively.

     We believe these related party  transactions  were under terms that were no
less favorable to us than those available with third parties.

     See both Item 13 "Certain  relationships and related transactions" and Note
K to the Consolidated Financial Statements for additional discussion.

                                       13
<PAGE>


Adoption of New Accounting Standards

     The  Financial  Accounting  Standards  Board  recently  issued SFAS No. 141
"Business  Combinations",  SFAS No. 142 "Goodwill and Other Intangible  Assets",
SFAS No.  143  "Accounting  for  Asset  Retirement  Obligations",  SFAS No.  144
"Accounting for the Impairment or Disposal of Long-lived  Assets",  SFAS No. 145
"Rescission of FASB  Statements  No. 4, 44, and 64,  Amendment of FASB Statement
No. 13, and  Technical  Corrections",  and SFAS No.  146  "Accounting  for Costs
Associated with Exit or Disposal Activities."

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

     SFAS No. 142 modifies the financial  accounting  and reporting for acquired
goodwill and other  intangible  assets,  including the requirement that goodwill
and some intangible  assets no longer be amortized.  Also some  intangibles were
reclassified to goodwill. We adopted SFAS No. 142 beginning in the first quarter
of fiscal 2002. Although there was no cash flow effect, our amortization expense
decreased by $10,600,000 in fiscal 2002, compared to the amortization that would
have been  recorded had the new  accounting  standard not been issued.  This new
standard  also  required  us to test  goodwill  for  impairment  at the time the
standard  was  adopted  and  also on an  annual  basis.  The  results  of  these
impairment  tests  did not have a  material  effect on our  financial  position,
results of operations and cash flows. We did not recognize any impairment losses
as a result of these tests.

     SFAS No. 143  requires  the  recognition  of a liability if a company has a
legal or contractual financial obligation in connection with the retirement of a
tangible  long-lived  asset.  We will  implement  SFAS No. 143  beginning in the
fiscal year ending July 31, 2003,  and expect to record a one-time  reduction to
earnings  during the first  quarter of fiscal 2003,  as a  cumulative  change in
accounting principle,  of approximately  $2,800,000.  This charge relates to the
estimated  expenditures  that will be incurred by us in the future  primarily to
close our underground storage facilities. We believe the implementation will not
have a material ongoing effect on our financial position,  results of operations
and cash flows.

     SFAS No. 144 modifies the financial accounting and reporting for long-lived
assets  to  be  disposed  of  by  sale  and  it  broadens  the  presentation  of
discontinued operations to include more disposal transactions. We will implement
SFAS No. 144 beginning in the fiscal year ending July 31, 2003,  and believe the
implementation  will not  have a  material  effect  on our  financial  position,
results of operations and cash flows.

     SFAS No. 145  eliminates  the  requirement  that material  gains and losses
resulting   from  the  early   extinguishment   of  debt  be  classified  as  an
extraordinary  item  in the  results  of  operations.  Instead,  companies  must
evaluate  whether the  transaction  meets both the criteria of being  unusual in
nature and infrequent in  occurrence.  Other aspects of SFAS No. 145 relating to
accounting  for  intangible  assets of motor  carriers and  accounting for lease
modifications  do not  currently  apply to us. We will  implement  SFAS No.  145
beginning   in  the  fiscal  year  ending  July  31,   2003,   and  believe  the
implementation  will not  have a  material  effect  on our  financial  position,
results of operations and cash flows.

     SFAS No. 146 modifies the  financial  accounting  and  reporting  for costs
associated  with exit or disposal  activities.  This  standard  requires  that a
liability for a cost associated with an exit or disposal  activity be recognized
when the  liability  is  incurred.  Additionally,  the  statement  requires  the
liability to be recognized and measured  initially at fair value. Under previous
rules,  a liability for an exit cost was  recognized at the date of the entity's
commitment to an exit plan. We adopted and implemented SFAS No. 146 for any exit
or disposal  activities  that are initiated  after July 31, 2002. We believe the
implementation  will not  have a  material  effect  on our  financial  position,
results of operations and cash flows.

                                       14
<PAGE>


New Federal Legislation

     The Public Company  Accounting  Reform and Investor  Protection Act of 2002
was enacted by the United  States  Congress on July 30, 2002.  This Act covers a
wide  variety of issues and its  provisions  will become  effective at different
times generally when implementing  regulations become effective,  at 30, 60, 180
or 360 days after enactment depending on the specific provision. It is important
to note, however, that a number of the Act's provisions became effective on July
30, 2002.

Highlights of this legislation as it applies to us include:

o    certification  of the periodic  reports by the chief executive  officer and
     chief  financial   officer;  o  restrictions  on  insider  trading  of  our
     partnership   units  and  quicker   reporting  of  insider  trades  in  our
     partnership units;

o    prohibition of company loans to executives;

o    future  periodic  reports will contain an internal  control  assessment  by
     management  and the  independent  public  accountants  will  attest to this
     assessment;

o    adoption of a code of ethics for senior financial officers;

o    the audit committee will establish  procedures to handle  complaints  about
     accounting matters, including the confidential submission by employees;

o    independent  public  accountants  are  prohibited  from  providing  certain
     non-audit related activities to audit clients;

o    all audit and non-audit services provided to the company by its independent
     public accountant will be pre-approved by the audit committee; and

o    increased  communication  between the audit  committee and the  independent
     public accountants.

There are many other  aspects of this Act which will not  directly  apply to our
company and other aspects which will have only a minor effect.  We will continue
to review this Act and forthcoming regulations as they are published.

Critical Accounting Policies and Estimates

     The  preparation of financial  statements in conformity  with United States
Generally Accepted  Accounting  Principles  requires us to establish  accounting
policies and make estimates and assumptions  that affect our reported amounts of
assets and liabilities at the date of the Consolidated Financial Statements.  We
evaluate our  policies and  estimates  on an on-going  basis.  Our  Consolidated
Financial Statements may differ based upon different estimates and assumptions.

     We  discuss  our  significant   accounting   policies  in  Note  B  to  the
Consolidated  Financial  Statements.  We believe the  following are our critical
accounting policies:

Depreciation of Property, Plant and Equipment

     We  calculate  depreciation  using the  straight-line  method  based on the
estimated  useful lives of the assets  ranging from two to 30 years.  Changes in
the estimated useful lives of our assets could have a material effect on results
of operations.

Amortization of Intangible Assets

     We calculate amortization using either straight-line or accelerated methods
over  periods  ranging  from two to 15 years.  We use  amortization  methods and
determine  asset  values  based  on our  best  estimates  using  reasonable  and
supportable assumptions and projections.  Changes in the amortization methods or
asset values could have a material effect on results of operations.

                                       15
<PAGE>


Fair Value of Derivative Commodity Contracts

     We enter into  commodity  forward,  futures,  swaps and  options  contracts
involving propane and related  products,  which, in accordance with SFAS No. 133
"Accounting  for  Derivative   Instruments  and  Hedging  Activities,"  are  not
accounting  hedges,  but are used for risk management  trading purposes.  To the
extent such contracts are entered into at fixed prices and thereby subject us to
market risk, the contracts are accounted for using the fair value method.  Under
this  valuation  method,  derivatives  are carried in the  Consolidated  Balance
Sheets at fair value with changes in value  recognized in earnings.  We classify
all gains and  losses  from these  derivative  contracts  entered  into for risk
management  trading  purposes  as  cost  of  product  sold  in the  Consolidated
Statements   of   Earnings.   We  utilize   published   settlement   prices  for
exchange-traded  contracts,  quotes  provided by brokers and estimates of market
prices  based on daily  contract  activity to  estimate  the fair value of these
contracts.  Changes in the  methods  used to  determine  the fair value of these
contracts  could have a material  effect on results of  operations.  For further
discussion of derivative commodity contracts,  see "Management's  Discussion and
Analysis  of  Financial  Condition  and  Results  of  Operations  -  Results  of
Operations",   "Liquidity  and  Capital   Resources  -  Disclosures  about  Risk
Management  Activities  Accounted  for at  Fair  Value"  and  "Quantitative  and
Qualitative  Disclosures  about  Market  Risk"  and  Note J to the  Consolidated
Financial Statements.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     Our 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 Note S to the Consolidated  Financial Statements
for Selected Quarterly Financial Data.




                                     PART IV
                                     -------
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
         FORM 8-K.

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

     (b) Reports on Form 8-K.

We furnished one Form 8-K during the quarter ended July 31, 2002.

                      Items
Date of Report        Reported      Financial Statements Filed
--------------        --------      --------------------------
May 20, 2002          9             None




                                       16
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, each Registrant has duly caused this Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized.


                                         FERRELLGAS PARTNERS, L.P.

                                         By Ferrellgas, Inc. (General Partner)



Date: June 6, 2003                       By /s/ Kevin T. Kelly
                                            ------------------------------------
                                             Kevin T. Kelly
                                             Senior Vice President and
                                             Chief Financial Officer (Principal
                                             Financial and Accounting Officer)



Date: June 6, 2003                       FERRELLGAS PARTNERS FINANCE CORP.


                                         By /s/ Kevin T. Kelly
                                            ------------------------------------
                                             Kevin T. Kelly
                                             Senior Vice President and
                                             Chief Financial Officer (Principal
                                             Financial and Accounting Officer)
<PAGE>


Certifications

I, James E. Ferrell, certify that:

1.   I have reviewed  this annual report on Form 10-K/A of Ferrellgas  Partners,
     L.P.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report; and

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report.


Date: June 6, 2003


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


I, Kevin T. Kelly, certify that:

1.   I have reviewed  this annual report on Form 10-K/A of Ferrellgas  Partners,
     L.P.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report; and

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report.


Date: June 6, 2003


/s/ Kevin T. Kelly
--------------------------
 Kevin T. Kelly
 Senior Vice President and Chief Financial Officer



<PAGE>


Certifications

I, James E. Ferrell, certify that:

1.   I have reviewed  this annual  report on Form 10-K/A of Ferrellgas  Partners
     Finance Corp.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report; and

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report.


Date: June 6, 2003


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


I, Kevin T. Kelly, certify that:

1.   I have reviewed  this annual  report on Form 10-K/A of Ferrellgas  Partners
     Finance Corp.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report; and

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report.


Date: June 6, 2003


/s/ Kevin T. Kelly
--------------------------
 Kevin T. Kelly
 Senior Vice President and Chief Financial Officer



<PAGE>

                                INDEX TO EXHIBITS


     The  exhibits  listed  below  are  filed as part of this  Annual  Report on
Amendment No. 2 to Form 10-K/A.  Exhibits required by Item 601 of Regulation S-K
of the Securities Act, which are not listed, are not applicable.


Exhibit
Number      Description
-------     -----------

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

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

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

   4.1      Indenture,  dated  as of  September  24,  2002,  with  Form  of Note
            attached,  by  and  among  Ferrellgas  Partners,   L.P.,  Ferrellgas
            Partners  Finance  Corp.,  and U.S.  Bank National  Association,  as
            trustee,  relating to $170,000,000 aggregate principal amount of our
            8 3/4% Senior Notes due 2012.  Incorporated  by reference to Exhibit
            4.1 to our Current Report on Form 8-K filed September 24, 2002.

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

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

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

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

                                      E-1
<PAGE>

Exhibit
Number      Description
-------     -----------

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

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

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

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

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

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

  10.4      First Amendment to the Third Amended and Restated Credit  Agreement,
            dated  as of  January  17,  2001,  by and  among  Ferrellgas,  L.P.,
            Ferrellgas,  Inc.,  Bank  of  America  National  Trust  and  Savings
            Association,  as agent, and the other financial  institutions  party
            thereto.  Incorporated by reference to Exhibit 10.1 to our Quarterly
            Report on Form 10-Q filed March 14, 2001.

  10.5      Second Amendment to the Third Amended and Restated Credit Agreement,
            dated  as  of  July  16,  2001,  by  and  among  Ferrellgas,   L.P.,
            Ferrellgas,  Inc.,  Bank  of  America  National  Trust  and  Savings
            Association,  as agent, and the other financial  institutions  party
            thereto.  Incorporated  by reference to Exhibit  10.28 to our Annual
            Report on Form 10-K filed October 25, 2001.

  10.6      Receivable Interest Sale Agreement,  dated as of September 26, 2000,
            by and between  Ferrellgas,  L.P.,  as  originator,  and  Ferrellgas
            Receivables,  L.L.C., as buyer. Incorporated by reference to Exhibit
            10.17 to our Annual Report on Form 10-K filed October 26, 2000.


                                      E-2
<PAGE>

Exhibit
Number      Description
-------     -----------

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

  10.8      Receivables  Purchase Agreement,  dated as of September 26, 2000, by
            and among Ferrellgas  Receivables,  L.L.C.,  as seller,  Ferrellgas,
            L.P., as servicer, Jupiter Securitization Corporation, the financial
            institutions from time to time party hereto,  and Bank One, NA, main
            office Chicago, as agent. Incorporated by reference to Exhibit 10.18
            to our Annual Report on Form 10-K filed October 26, 2000.

  10.9      First Amendment to the Receivables  Purchase Agreement,  dated as of
            January 17, 2001, by and among Ferrellgas  Receivables,  L.L.C.,  as
            seller,  Ferrellgas,   L.P.,  as  servicer,  Jupiter  Securitization
            Corporation,  the  financial  institutions  from time to time  party
            hereto,  and  Bank  One,  N.A.,  main  office  Chicago,   as  agent.
            Incorporated by reference to Exhibit 10.4 to our Quarterly Report on
            Form 10-Q filed March 14, 2001.

  10.10     Second Amendment to the Receivables  Purchase  Agreement dated as of
            September 25, 2001, by and among Ferrellgas Receivables,  L.L.C., as
            seller,  Ferrellgas,   L.P.,  as  servicer,  Jupiter  Securitization
            Corporation,  the  financial  institutions  from time to time  party
            hereto,  and  Bank  One,  N.A.,  main  office  Chicago,   as  agent.
            Incorporated  by reference to Exhibit  10.29 to our Annual Report on
            Form 10-K filed October 25, 2001.

  10.11     Third Amendment to the Receivables  Purchase Agreement,  dated as of
            September 24, 2002, by and among Ferrellgas Receivables,  L.L.C., as
            seller,  Ferrellgas,  L.P.,  as  servicer,  Jupiter  Secruritization
            Corporation,  the  financial  institutions  from time to time  party
            hereto,   and  Bank  One,  NA,  main  office   Chicago,   as  agent.
            Incorporated  by reference to Exhibit  10.11 to our Annual Report on
            Form 10-K filed October 23, 2002.

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

  10.13     Lease  Intended as  Security,  dated as of December 1, 1999,  by and
            between  Ferrellgas,  L.P.,  as  lessee,  and First  Security  Bank,
            National  Association,  solely as  certificate  trustee,  as lessor.
            Incorporated by reference to Exhibit 10.1 to our Quarterly Report on
            Form 10-Q filed December 13, 1999.

  10.14     Lease  Intended as Security,  dated as of December 15, 1999,  by and
            between Thermogas L.L.C. as lessee and First Security Bank, National
            Association,  solely as certificate trustee, as lessor. Incorporated
            by reference to Exhibit 10.1 to our Current Report on Form 8-K filed
            December 29, 2000.

  10.15     Participation Agreement,  dated as of December 1, 1999, by and among
            Ferrellgas,  L.P., as lessee, Ferrellgas,  Inc., as general partner,
            First Security  Bank,  National  Association,  solely as certificate
            trustee,  First Security  Trust Company of Nevada,  solely as agent,
            and purchasers and lenders named therein.  Incorporated by reference
            to Exhibit 10.2 to our Quarterly  Report on Form 10-Q filed December
            13, 1999.

                                      E-3
<PAGE>

Exhibit
Number      Description
-------     -----------

  10.16     Participation Agreement, dated as of December 15, 1999, by and among
            Thermogas L.L.C.,  as lessee,  The Williams  Companies,  Inc., First
            Security Bank, National Association,  solely as certificate trustee,
            First  Security  Trust Company of Nevada,  solely as agent,  and the
            purchasers and lenders named therein.  Incorporated  by reference to
            Exhibit  10.2 to our Current  Report on Form 8-K filed  December 29,
            1999.

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

  10.18     Omnibus  Amendment  Agreement,  dated as of  February  4,  2000,  in
            respect of the  Ferrellgas,  L.P.  Trust No.  1999-A:  Participation
            Agreement,  Loan  Agreement  and Trust  Agreement  each  dated as of
            December 1, 1999.  Incorporated by reference to Exhibit 10.11 to our
            Annual Report of Form 10-K filed October 25, 2001.

  10.19     Omnibus  Amendment  Agreement,  dated as of  February  4,  2000,  in
            respect of the Thermogas Trust No. 1999-A:  Participation Agreement,
            Loan  Agreement  and Trust  Agreement  each dated as of December 15,
            1999.  Incorporated  by  reference  to  Exhibit  10.12 to our Annual
            Report of Form 10-K filed October 25, 2001.

  10.20     Omnibus  Amendment  Agreement  No. 2, dated as of April 18, 2000, in
            respect of the  Ferrellgas,  L.P.  Trust No.  1999-A:  Participation
            Agreement,  Lease Intended as Security and Loan Agreement each dated
            as of December 1, 1999.  Incorporated  by  reference to Exhibit 10.3
            to our Quarterly Report on Form 10-Q filed June 14, 2000.

  10.21     Omnibus  Amendment  Agreement  No. 2, dated as of April 18, 2000, in
            respect of the Thermogas Trust No. 1999-A:  Participation Agreement,
            Lease  Intended  as  Security  and Loan  Agreement  each dated as of
            December 15, 1999.  Incorporated by reference to Exhibit 10.4 to our
            Quarterly Report on Form 10-Q filed June 14, 2000.

  10.22     Omnibus Amendment Agreement No. 3, dated as of December 28, 2000, in
            respect of the  Ferrellgas,  L.P.  Trust No.  1999-A:  Participation
            Agreement dated as of December 1, 1999. Incorporated by reference to
            Exhibit  10.2 to our  Quarterly  Report on Form 10-Q filed March 14,
            2001.

  10.23     Omnibus Amendment Agreement No. 3, dated as of December 28, 2000, in
            respect of the Thermogas Trust No. 1999-A:  Participation  Agreement
            dated as of December 15, 1999.  Incorporated by reference to Exhibit
            10.3 to our Quarterly Report on Form 10-Q filed March 14, 2001.

                                      E-4
<PAGE>

Exhibit
Number      Description
-------     -----------

  10.24     Purchase  Agreement,  dated as of  November  7,  1999,  by and among
            Ferrellgas Partners, L.P., Ferrellgas,  L.P and Williams Natural Gas
            Liquids,  Inc.  Incorporated  by  reference  to  Exhibit  2.1 to our
            Current Report on Form 8-K filed November 12, 1999.

  10.25     First  Amendment  to Purchase  Agreement,  dated as of December  17,
            1999, by and among Ferrellgas Partners, L.P., Ferrellgas,  L.P., and
            Williams  Natural Gas  Liquids,  Inc.  Incorporated  by reference to
            Exhibit 2.2 to our  Current  Report on Form 8-K filed  December  29,
            1999.

  10.26     Second Amendment to Purchase Agreement,  dated as of March 14, 2000,
            by  and  among  Ferrellgas  Partners,  L.P.,  Ferrellgas  L.P.,  and
            Williams  Natural Gas  Liquids,  Inc.  Incorporated  by reference to
            Exhibit  2.1 to our  Quarterly  Report on Form 10-Q filed  March 16,
            2000.

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

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

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

# 10.30     Ferrell   Companies,   Inc.  1998  Incentive   Compensation  Plan  -
            Incorporated  by reference to Exhibit  10.12 to our Annual Report on
            Form 10-K filed October 29, 1998.

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

# 10.32     Employment agreement between Patrick Chesterman and Ferrellgas, Inc.
            dated July 31, 2000.  Incorporated  by reference to Exhibit 10.19 to
            our Annual Report on Form 10-K filed October 26, 2000.

# 10.33     Employment agreement between Kevin Kelly and Ferrellgas,  Inc. dated
            July 31, 2000.  Incorporated  by  reference to Exhibit  10.22 to our
            Annual Report on Form 10-K filed October 26, 2000.

* 21.1      List of subsidiaries.

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

* 99.1      Certification of Ferrellgas Partners, L.P. Pursuant to U.S.C.
            Section 1350, pursuant to Section 906 of the Sarbanes-Oxley Act
            of 2002.

* 99.2      Certification of Ferrellgas Partners Finance Corp. Pursuant to
            U.S.C. Section 1350, pursuant to Section 906 of the Sarbanes-Oxley
            Act of 2002.

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

                                      E-5
<PAGE>




                          INDEX TO FINANCIAL STATEMENTS

                                                                           Page
                                                                           ----
Ferrellgas Partners, L.P. and Subsidiaries
         Independent Auditors' Report.......................................F-2
         Consolidated Balance Sheets - July 31, 2002 and 2001...............F-3
         Consolidated Statements of Earnings - Years ended
             July 31, 2002, 2001 and 2000...................................F-4
         Consolidated Statements of Partners' Capital -
             Years ended July 31, 2002, 2001 and 2000...................... F-5
         Consolidated Statements of Cash Flows -
             Years ended July 31, 2002, (as restated)
             2001 (as restated) and 2000....................................F-6
         Notes to Consolidated Financial Statements.........................F-7


Ferrellgas Partners Finance Corp.
         Independent Auditors' Report.......................................F-29
         Balance Sheets - July 31, 2002 and 2001............................F-30
         Statements of Earnings - Years ended
             July 31, 2002, 2001 and 2000...................................F-31
         Statements of Stockholder's Equity -
             Years ended July 31, 2002, 2001 and 2000.......................F-32
         Statements of Cash Flows - Years ended
             July 31, 2002, 2001 and 2000...................................F-33
         Notes to Financial Statements......................................F-34

                                      F-1

<PAGE>
                          INDEPENDENT AUDITORS' REPORT

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

We have  audited the  accompanying  consolidated  balance  sheets of  Ferrellgas
Partners,  L.P. and  subsidiaries  (the  "Partnership")  as of July 31, 2002 and
2001, and the related consolidated statements of earnings, partners' capital and
cash flows for each of the three years in the period ended July 31, 2002.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the  financial  position of Ferrellgas  Partners,  L.P. and
subsidiaries  as of July 31, 2002 and 2001, and the results of their  operations
and their  cash flows for each of the three  years in the period  ended July 31,
2002, in conformity with accounting  principles generally accepted in the United
States of America.

As discussed in Notes B(15) and F to the consolidated financial statements,  the
Partnership  changed its method of accounting for goodwill and other  intangible
assets with the adoption of Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets", in fiscal 2002.

As discussed in Note R, the accompanying 2002 and 2001  consolidated  statements
of cash flows have been restated.




DELOITTE & TOUCHE LLP
Kansas City, Missouri
September 12, 2002 (May 29, 2003 as to Notes E and R)


                                      F-2

<TABLE>

                   FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except unit data)


<S>                                                      <C>          <C>

                                                                 July 31,
                                                         -----------------------
ASSETS                                                      2002         2001
---------------------------------------------------      ----------   ----------

Current Assets:
  Cash and cash equivalents                               $ 19,781     $ 25,386
  Accounts and notes receivable (net of
    allowance for doubtful accounts of $1,467 and
    $3,159 in 2002 and 2001, respectively)                  74,274       56,772
  Inventories                                               48,034       65,284
  Prepaid expenses and other current assets                 10,724       10,504
                                                         ----------   ----------
    Total Current Assets                                   152,813      157,946

Property, plant and equipment, net                         506,531      491,194
Goodwill                                                   124,190      114,171
Intangible assets, net                                      98,170      116,747
Other assets                                                 3,424       16,101
                                                         ----------   ----------
    Total Assets                                          $885,128     $896,159
                                                         ==========   ==========




LIABILITIES AND PARTNERS' CAPITAL
---------------------------------------------------
Current Liabilities:
  Accounts payable                                         $54,316      $58,274
  Other current liabilities                                 89,061       77,610
                                                         ----------   ----------
    Total Current Liabilities                              143,377      135,884

Long-term debt                                             703,858      704,782
Other liabilities                                           14,861       15,472
Contingencies and commitments (Note L)                           -            -
Minority interest                                            1,871        2,034

Partners' Capital:
  Senior unitholder (2,782,211 and 2,801,622
    units outstanding at 2002 and 2001, respectively -
    liquidation preference $111,288 and $112,065,
    respectively)                                          111,288      112,065

  Common unitholders (36,081,203 and 35,908,366 units
    outstanding in 2002 and 2001, respectively)            (28,320)     (12,959)
  General partner (392,556 and 391,010 units
    outstanding at 2002 and 2001, respectively)            (59,035)     (58,738)
  Accumulated other comprehensive loss                      (2,772)      (2,381)
                                                         ----------   ----------
    Total Partners' Capital                                 21,161       37,987
                                                         ----------   ----------
    Total Liabilities and Partners' Capital               $885,128     $896,159
                                                         ==========   ==========


                 See notes to consolidated financial statements.

</TABLE>

                                       F-3
<PAGE>

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

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


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

                                                                   For the year ended July 31,
                                                              ------------------------------------
                                                                 2002         2001         2000
                                                              -----------  -----------  -----------

Revenues:
  Gas liquids and related product sales                       $  953,117   $1,381,940   $  879,380
  Other                                                           81,679       86,730       79,643
                                                              -----------  -----------  -----------
    Total revenues                                             1,034,796    1,468,670      959,023

Cost of product sold (exclusive of
  depreciation, shown separately below)                          533,437      930,117      530,979
                                                              -----------  -----------  -----------

Gross profit                                                     501,359      538,553      428,044

Operating expense                                                279,624      288,258      255,838
Depreciation and amortization expense                             41,937       56,523       61,633
General and administrative expense                                27,157       25,508       24,587
Equipment lease expense                                           24,551       30,986       25,518
Employee stock ownership plan compensation charge                  5,218        4,843        3,733
Loss (gain) on disposal of assets and other                        3,957        5,744         (356)
                                                              -----------  -----------  -----------

Operating income                                                 118,915      126,691       57,091

Interest expense                                                 (59,608)     (61,544)     (58,298)
Interest income                                                    1,423        3,027        2,229
Other charges                                                          -       (3,277)           -
                                                              -----------  -----------  -----------

Earnings before minority interest                                 60,730       64,897        1,022

Minority interest                                                    771          829          162
                                                              -----------  -----------  -----------

Net earnings                                                      59,959       64,068          860

Distribution to senior unitholder                                 11,172       18,013       11,108
Net earnings (loss) available to general partner                     488          461         (102)
                                                              -----------  -----------  -----------
Net earnings (loss) available to common unitholders           $   48,299   $   45,594     ($10,146)
                                                              ===========  ===========  ===========

Basic and diluted earnings (loss)
   per common unit                                                $ 1.34       $ 1.43      $ (0.32)
                                                              ===========  ===========  ===========





                             See notes to consolidated financial statements.
</TABLE>

                                                   F-4
<PAGE>

<TABLE>


                           FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

                          CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
                                         (in thousands)
<S>                      <C>        <C>         <C>        <C>        <C>        <C>        <C>        <C>         <C>     <C>

                                                                                                                   Accum-
                                     Number of units                                                               ulated
                         --------------------------------------------                                              other
                                                   Sub-     General                            Sub-     General   compre-    Total
                           Senior     Common     ordinate   partner     Senior     Common    ordinate   partner   hensive  partners'
                         unitholder unitholders unitholder unitholder unitholder unitholder unitholder unitholder  income    capital
                         ---------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- -------- ---------

August 1, 1999                -       14,710.8   16,593.7       -      $   -      $ 1,215    $(10,516)  $(59,553)   $(797) $(69,651)

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

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

General partner interest
   conversion to general
   partner units              -          -          -         360.4        -          -          -          -         -        -

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

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

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

Senior unit paid in
   kind distributions       277.7        -          -           2.8      11,108   (10,997)       -         (111)      -        -

Comprehensive income:
     Net earnings             -          -          -           -          -          851        -            9       -         860
     Pension liability
       adjustment             -          -          -           -          -          -          -          -         797       797
                                                                                                                             -------
Comprehensive income                                                                                                          1,657
                         ---------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- -------- ---------
July 31, 2000              4,652.7    31,307.1       -         363.2    179,786   (80,931)       -       (58,511)     -      40,344

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

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

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

Senior unit paid in kind
   distributions             235.5       -           -           2.4      9,422    (9,328)       -           (94)     -        -

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

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

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

Redemption of senior
   units                  (2,086.6)      -           -         (21.1)   (83,464)     -           -           -        -     (83,464)

Comprehensive income:
    Net earnings              -          -           -          -          -       63,427        -           641      -      64,068
    Other comprehensive
     income:
       Cumulative effect
        of accounting
        change                -          -           -          -          -         -           -           -        709
       Risk management
        fair value
        adjustment            -          -           -          -          -         -           -           -       (289)
       Reclassification
        adjustments           -          -           -          -          -         -           -           -       (709)
       Pension liability
        adjustment            -          -           -          -          -         -           -           -     (2,092)   (2,381)
                                                                                                                             -------
Comprehensive income                                                                                                         61,687
                         ---------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- -------- ---------
July 31, 2001              2,801.6    35,908.4       -         391.0    112,065   (12,959)       -       (58,738)  (2,381)   37,987

Contribution in
  connection with
  ESOP compensation
  charge                      -          -           -          -          -        5,114        -            51      -       5,165

Common unit cash
   distributions              -          -           -          -          -      (72,044)       -          (727)      -    (72,771)

Senior unit cash
   and accrued
   distributions              -          -           -          -          -      (11,030)       -          (253)      -    (11,283)

Redemption of
   senior units              (19.4)      -           -          (0.2)      (777)     -           -           -         -       (777)

Common unit options
   exercised                 -           55.4        -           0.6       -          930        -             9       -        939

Common units issued
   in connection
   with acquisitions         -          117.5        -           1.2       -        2,310        -            23       -      2,333

Comprehensive income:
   Net earnings              -           -           -          -          -       59,359        -           600       -     59,959
   Other comprehensive
    income:
      Risk management
       fair value
       adjustment            -           -           -          -          -         -           -           -        136
      Pension liability
       adjustment            -           -           -          -          -         -           -           -       (527)     (391)
                                                                                                                             -------
Comprehensive income                                                                                                         59,568
                         ---------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- -------- ---------
July 31, 2002              2,782.2    36,081.3       -         392.6   $111,288  $ (28,320)    $ -      $(59,035) $(2,772)  $21,161
                         ========== =========== ========== ========== ========== ========== ========== ========== ======== =========


</TABLE>










                 See notes to consolidated financial statements.

                                       F-5


<PAGE>

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

                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (in thousands)


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

                                                                     For the year ended July 31,
                                                                  ---------------------------------
                                                                     2002       2001        2000
                                                                     (as        (as
                                                                  restated*)  restated*)
                                                                  ---------- ----------  ----------

Cash Flows From Operating Activities:
 Net earnings                                                       $59,959    $64,068       $ 860
 Reconciliation of net earnings to net cash provided
   by operating activities
  Depreciation and amortization                                      41,937     56,523      61,633
  Employee stock ownership plan compensation charge                   5,218      4,843       3,733
  Minority interest                                                     771        829         162
  Other                                                               4,295      7,555       2,759
  Changes in operating assets and liabilities, net of effects
   from business acquisitions:
    Accounts and notes receivable, net of securitization             19,614     (9,121)    (12,609)
    Inventories                                                      17,318     11,333     (25,423)
    Prepaid expenses and other current assets                         1,661     (2,071)       (731)
    Accounts payable                                                 (1,386)   (39,792)     10,418
    Accrued interest expense                                           (434)     1,157       6,594
    Other current liabilities                                         1,915      2,233       7,140
    Other liabilities                                                 2,057      2,302      (1,184)
  Accounts receivable securitization:
    Proceeds from new accounts receivable securitizations            30,000    115,000           -
    Proceeds from collections reinvested in revolving
      period accounts receivable securitizations                    360,677    725,955           -
    Remittances of amounts collected as server of
      accounts receivable securitizations                          (421,677)  (809,955)          -
                                                                  ---------- ----------  ----------
      Net cash provided by operating activities                     121,925    130,859      53,352
                                                                  ---------- ----------  ----------

Cash Flows From Investing Activities:
 Business acquisitions, net of cash acquired                         (6,294)    (4,668)     47,656
 Cash paid for acquisition transaction fees                             -          -       (15,893)
 Capital expenditures - technology initiative                       (23,114)      (100)        -
 Capital expenditures - other                                       (14,402)   (15,148)    (20,755)
 Proceeds from sale leaseback transaction                                 -          -      25,000
 Other                                                                4,240      1,652       5,743
                                                                  ---------- ----------  ----------
      Net cash provided by (used in) investing activities           (39,570)   (18,264)     41,751
                                                                  ---------- ----------  ----------

Cash Flows From Financing Activities:
 Distributions                                                      (84,075)   (69,125)    (63,247)
 Issuance of common units, net of issuance costs                          -     84,865           -
 Redemption of senior units                                            (777)   (83,464)          -
 Proceeds from issuance of debt                                           -      9,843     226,490
 Principal payments on debt                                          (3,069)   (26,205)   (276,111)
 Net reductions to short-term borrowings                                  -    (18,342)     (2,144)
 Cash paid for debt and lease financing costs                             -        (56)     (3,163)
 Minority interest activity                                            (994)      (848)      1,008
 Proceeds from exercise of common unit options                          939      1,718           -
 Cash contribution from general partner                                  16          -       1,768
 Other                                                                    -       (433)          -
                                                                  ---------- ----------  ----------
      Net cash used in financing activities                         (87,960)  (102,047)   (115,399)
                                                                  ---------- ----------  ----------

Increase (decrease) in cash and cash equivalents                     (5,605)    10,548     (20,296)
Cash and cash equivalents - beginning of year                        25,386     14,838      35,134
                                                                  ---------- ----------  ----------
Cash and cash equivalents - end of year                             $19,781    $25,386     $14,838
                                                                  ========== ==========  ==========

Cash paid for interest                                              $57,732    $57,893     $49,176
                                                                  ========== ==========  ==========
<FN>
* See Note R to these consolidated financial statements.
</FN>
</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 "Master Limited Partnership" or "MLP") was formed
April 19,  1994,  and is a publicly  traded  limited  partnership,  owning a 99%
limited partner  interest in Ferrellgas,  L.P. (the  "Operating  Partnership" or
"OLP"). The MLP and the OLP (collectively  referred to as the "Partnership") are
both  Delaware  limited  partnerships.  Both the MLP and the OLP are governed by
partnership  agreements that were made effective at the time of formation of the
partnerships. Ferrellgas Partners, L.P. was formed to acquire and hold a limited
partner  interest in the Operating  Partnership.  The Operating  Partnership was
formed  to  acquire,  own  and  operate  the  propane  business  and  assets  of
Ferrellgas, Inc. (the "Company" or "General Partner"), a wholly-owned subsidiary
of  Ferrell  Companies,  Inc.  ("Ferrell").   Ferrell  owns  17,855,087  of  the
outstanding  MLP common  units.  The Company has  retained a 1% general  partner
interest in Ferrellgas  Partners,  L.P. and also holds a 1.0101% general partner
interest in the  Operating  Partnership,  representing  an  effective 2% general
partner  interest in the  Partnership on a combined basis. As General Partner of
the Partnership,  the Company performs all management functions required for the
Partnership.

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

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

On June 5,  2000,  the MLP's  Partnership  Agreement  was  amended  to allow the
General Partner to have an option in maintaining its 1% general partner interest
concurrent  with  the  issuance  of  other  additional  equity.  Prior  to  this
amendment,  the General  Partner was required to make capital  contributions  to
maintain its 1% general  partner  interest  concurrent  with the issuance of any
additional MLP equity.  Also as part of this  amendment,  the General  Partner's
interest in the MLP's Common Units was converted from a General Partner interest
to General Partner units.

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


                                      F-7

<PAGE>


B.  Summary of Significant Accounting Policies

     (1) Nature of  operations:  The  Partnership  is engaged  primarily  in the
     retail  distribution  of propane and related  equipment and supplies in the
     United  States.  The  retail  market is  seasonal  because  propane is used
     primarily  for  heating  in  residential  and  commercial  buildings.   The
     Partnership serves more than 1,000,000  residential,  industrial/commercial
     and agricultural customers.

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

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

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

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

     (6) Property, plant and equipment: Property, plant and equipment are stated
     at cost less  accumulated  depreciation.  Expenditures  for maintenance and
     routine repairs are expensed as incurred.  Depreciation is calculated using
     the straight-line  method based on the estimated useful lives of the assets
     ranging  from two to 30 years.  In the first  quarter of fiscal  2001,  the
     Partnership  increased the estimate of the residual  values of its existing
     customer and storage  tanks.  This change in accounting  estimate  resulted
     from a review by  management  of its tank  values  established  through  an
     independent  tank  valuation   obtained  in  connection  with  a  financing
     completed in December 1999. The Partnership, using its best estimates based
     on  reasonable  and  supportable   assumptions  and  projections,   reviews
     long-lived   assets   for   impairment   whenever   events  or  changes  in
     circumstances  indicate that the carrying amount of its assets might not be
     recoverable.

     (7)  Goodwill:  Goodwill  is not  amortized  and  is  tested  annually  for
     impairment.  Beginning in the first quarter of fiscal 2002, the Partnership
     adopted  Statement of Financial  Accounting  Standards (SFAS) No. 142 which
     modified the financial  accounting and reporting for acquired  goodwill and
     other intangible  assets,  including the requirement that goodwill and some
     intangible assets no longer be amortized.  The Partnership  tested goodwill
     for  impairment  at the time the statement was adopted and during the third
     quarter of fiscal 2002, and will continue to do so on an annual basis.  The
     results of these  impairment  tests did not have a  material  effect on the
     Partnership's financial position, results of operations and cash flows. The
     Partnership  did not recognize any  impairment  losses as a result of these
     tests.

                                      F-8

<PAGE>


     (8) Intangible assets:  Intangible assets, consisting primarily of customer
     lists  and  noncompete  notes,  are  stated  at cost,  net of  amortization
     calculated using either  straight-line or accelerated  methods over periods
     ranging  from  two  to  15  years.  The  Partnership  reviews  identifiable
     intangibles for impairment in a similar manner as with  long-lived  assets.
     The  Partnership,   using  its  best  estimates  based  on  reasonable  and
     supportable  assumptions and  projections,  reviews  long-lived  assets for
     impairment  whenever events or changes in  circumstances  indicate that the
     carrying amount of its assets might not be recoverable.

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

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

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

     (12) Net earnings per common unit:  Net earnings  (loss) per common unit is
     computed by dividing net earnings, after deducting the General Partner's 1%
     interest  and accrued and paid senior unit  distributions,  by the weighted
     average number of outstanding common units and the dilutive effect, if any,
     of  outstanding  unit  options.  There was a less than $0.01  effect on the
     dilutive  earnings per unit calculation when making the assumption that all
     outstanding unit options were exercised into common units.

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

     (14) Segment information:  The Partnership is a single reportable operating
     segment  engaging  in  the  retail  distribution  of  propane  and  related
     equipment and supplies.

                                      F-9

<PAGE>


     (15)  Adoption  of  new  accounting  standards:  The  Financial  Accounting
     Standards   Board   (FASB)   recently   issued   SFAS  No.  141   "Business
     Combinations",  SFAS No. 142 "Goodwill and Other Intangible  Assets",  SFAS
     No.  143  "Accounting  for  Asset  Retirement  Obligations",  SFAS No.  144
     "Accounting for the Impairment or Disposal of Long-lived Assets",  SFAS No.
     145  "Rescission of FASB  Statements  No. 4, 44, and 64,  Amendment of FASB
     Statement No. 13, and Technical Corrections",  and SFAS No. 146 "Accounting
     for Costs Associated with Exit or Disposal Activities."

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

     SFAS No. 142 modified the financial  accounting  and reporting for acquired
     goodwill  and other  intangible  assets,  including  the  requirement  that
     goodwill and some intangible assets no longer be amortized. The Partnership
     adopted SFAS No. 142  beginning in the first  quarter of fiscal 2002.  This
     adoption  resulted in a  reclassification  to  goodwill  of both  assembled
     workforce  and other  intangible  assets.  Although  there was no cash flow
     effect, the Partnership's  amortization expense decreased by $10,600,000 in
     fiscal 2002, compared to the amortization that would have been recorded had
     the new  accounting  statement  not been  issued.  This new  standard  also
     required us to test  goodwill for  impairment  at the time the standard was
     adopted and also on an annual basis.  The results of these impairment tests
     did not have a material  effect on the  Partnership's  financial  position,
     results of operations and cash flows. The Partnership did not recognize any
     impairment losses as a result of these tests.

     SFAS No. 143  requires  the  recognition  of a liability if a company has a
     legal or contractual financial obligation in connection with the retirement
     of a tangible long-lived asset. The Partnership will implement SFAS No. 143
     beginning in the fiscal year ending July 31, 2003,  and expects to record a
     one-time  reduction to earnings during the first quarter of fiscal 2003, as
     a cumulative change in accounting principle,  of approximately  $2,800,000.
     The  Partnership  believes  the  implementation  will not  have a  material
     ongoing  effect on its financial  position,  results of operations and cash
     flows.

     SFAS No. 144 modifies the financial accounting and reporting for long-lived
     assets  to be  disposed  of by sale and it  broadens  the  presentation  of
     discontinued   operations  to  include  more  disposal  transactions.   The
     Partnership will implement SFAS No. 144 beginning in the fiscal year ending
     July 31, 2003,  and believes  the  implementation  will not have a material
     effect on its financial position, results of operations and cash flows.

     SFAS No. 145  eliminates  the  requirement  that material  gains and losses
     resulting  from  the  early  extinguishment  of  debt be  classified  as an
     extraordinary  item in the results of operations.  Instead,  companies must
     evaluate  whether the transaction  meets both the criteria of being unusual
     in nature  and  infrequent  in  occurrence.  Other  aspects of SFAS No. 145
     relating  to  accounting  for  intangibles  assets  of motor  carriers  and
     accounting for certain lease  modifications  do not currently  apply to the
     Partnership.  The Partnership  will implement SFAS No. 145 beginning in the
     fiscal year ending July 31, 2003, and believes the implementation  will not
     have a material effect on its financial position, results of operations and
     cash flows.

     SFAS No. 146 modifies the  financial  accounting  and  reporting  for costs
     associated with exit or disposal activities. This statement requires that a
     liability  for a cost  associated  with  an exit or  disposal  activity  be
     recognized  when the  liability is incurred.  Additionally,  the  statement
     requires the  liability  to be  recognized  and measured  initially at fair
     value. Under previous rules,  liabilities for exit costs were recognized at
     the date of the entity's  commitment to an exit plan. The Partnership  will
     adopt and implement SFAS No. 146 for any exit or disposal  activities  that
     are  initiated   after  July  31,  2002.  The   Partnership   believes  the
     implementation  will not have a material effect on its financial  position,
     results of operations and cash flows.

                                      F-10

<PAGE>


     (16)  Reclassifications:  Certain  reclassifications  have been made to the
     prior years'  Consolidated  Financial  Statements to conform to the current
     year's Consolidated Financial Statements' presentation.


C.  Quarterly Distributions of Available Cash

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

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

     On April 6, 2001, the Partnership modified the structure of its outstanding
     senior units and increased the cash  distribution  coverage to its publicly
     held  common  unitholders.  Among  other  changes,  the  senior  units were
     modified  to allow the holder to be paid a quarterly  distribution  in cash
     instead  of  in  additional  senior  unit  distributions.  See  Note  A for
     additional  information  about the  modifications  to the senior units.  In
     addition,  Ferrell  Companies,  Inc.,  the  beneficial  owner of 17,855,087
     common  units,   granted  the  Partnership  the  ability  to  defer  future
     distributions on the common units held by it up to an aggregate outstanding
     amount of  $36,000,000.  The  ability  to defer  distributions  to  Ferrell
     provides the MLP's public  common  unitholders  distribution  support until
     December  31,  2005.  This new  distribution  support is  available  if the
     Partnership's  available cash for any fiscal quarter is insufficient to pay
     all of the common  unitholders their quarterly  distribution.  The MLP will
     first  pay  a  distribution  to  the  senior  units  and  then  will  pay a
     distribution  out of the  remaining  available  cash  to the  publicly-held
     common  units.  Any  remaining  available  cash  will then be used to pay a
     distribution   on  the  common  units  held  by  Ferrell.   Any   quarterly
     distribution  paid per unit to the  publicly-held  common units that is not
     able to be paid on the Ferrell-owned common units will be deferred,  within
     certain limits,  and paid to Ferrell in future quarters when available cash
     is sufficient. If insufficient available cash should exist for a particular
     quarter  or  any  previous   deferred   distributions   to  Ferrell  remain
     outstanding, the distribution declared per common unit may not be more than
     the highest quarterly  distribution paid on the common units for any of the
     immediately  preceding four fiscal  quarters.  If the cumulative  amount of
     deferred quarterly distributions to Ferrell were to reach $36,000,000,  the
     common units held by Ferrell will then be paid in the same  priority as the
     publicly-held common units. After payment of all required distributions for
     any  subsequent  period,  the MLP will use any remaining  available cash to
     reduce any amount previously  deferred on the common units held by Ferrell.
     Reductions in amounts previously  deferred will then again be available for
     future  deferrals to Ferrell through  December 31, 2005. In connection with
     these  transactions,  during  fiscal 2001 the MLP  incurred  $3,277,000  in
     banking,  legal and other  professional  fees that are  classified as other
     charges in the Consolidated Statements of Earnings.

                                      F-11

<PAGE>


D.  Supplemental Balance Sheet Information

    Inventories consist of:
<TABLE>
       <S>                                          <C>        <C>
       (in thousands)                                 2002       2001
                                                    --------   --------
       Propane gas and related products             $29,169    $45,966
       Appliances, parts and supplies                18,865     19,318
                                                    --------   --------
                                                    $48,034    $65,284
                                                    ========   ========
</TABLE>


     In addition to inventories on hand, the  Partnership  enters into contracts
     to buy  product for supply  purposes.  Nearly all of these  contracts  have
     terms of less  than one year and  most  call for  payment  based on  market
     prices at the date of  delivery.  All fixed price  contracts  have terms of
     less than one year.  As of July 31, 2002,  in addition to the  inventory on
     hand, the Partnership  had committed to make net delivery of  approximately
     7,061,000 gallons at a fixed price.

    Property, plant and equipment consist of:
<TABLE>
       <S>                                                          <C>             <C>           <C>
                                                                     Estimated
       (in thousands)                                               useful lives       2002          2001
                                                                    ------------    ---------     ---------
       Land and improvements                                            2-20        $ 40,781      $ 41,191
       Buildings and improvements                                         20          54,453        54,384
       Vehicles, including transport trailers                           8-20          77,226        76,611
       Furniture and fixtures                                              5           8,730         9,523
       Bulk equipment and district facilities                           5-30          93,816        90,930
       Tanks and customer equipment                                     5-30         473,324       472,593
       Computer equipment and software                                   2-5          29,530        25,515
       Computer software development in progress                         n/a          29,904           100
       Other                                                                           2,652         3,281
                                                                                    ---------     ---------
                                                                                     810,416       774,128
       Less:  accumulated depreciation                                               303,885       282,934
                                                                                    ---------     ---------
                                                                                    $506,531      $491,194
                                                                                    =========     =========
</TABLE>


     In a non-cash  transaction,  the Partnership has recognized  payables as of
     July 31,  2002,  totaling  $6,956,000  related  to the  development  of new
     computer software. The Partnership capitalized $697,000 of interest expense
     related to the development of computer software for the year ended July 31,
     2002.   Depreciation   expense  totaled   $27,915,000,   $28,332,000,   and
     $37,941,000  for the fiscal  years  ended July 31,  2002,  2001,  and 2000,
     respectively.  In  the  first  quarter  of  fiscal  2001,  the  Partnership
     increased the estimate of the residual values of its existing  customer and
     storage tanks. Due to this change in the tank residual values, depreciation
     expense decreased by approximately $12,000,000 in both fiscal 2002 and 2001
     or $0.33  and $0.38 per  common  unit,  respectively,  as  compared  to the
     depreciation  that would have been recorded using the previously  estimated
     residual values.

                                      F-12

<PAGE>

     Other current liabilities consist of:
<TABLE>
       <S>                                           <C>           <C>
       (in thousands)                                  2002          2001
                                                     --------      --------
       Accrued interest                              $22,382       $22,816
       Accrued payroll                                24,068        20,236
       Accrued insurance                               9,409         8,056
       Other                                          33,202        26,502
                                                     --------      --------
                                                     $89,061       $77,610
                                                     ========      ========
</TABLE>


E.   Accounts Receivable Securitization

     On  September  26,  2000,  the  OLP  entered  into  an  account  receivable
     securitization  facility  with  Bank  One,  NA.  As part of this  renewable
     364-day  facility,  the OLP  transfers  an  interest in a pool of its trade
     accounts receivable to Ferrellgas Receivables, LLC, a wholly-owned, special
     purpose entity,  which sells its interest to a commercial  paper conduit of
     Banc One, NA. The OLP does not provide any guarantee or similar  support to
     the  collectability of these  receivables.  The OLP structured the facility
     using a  wholly-owned,  qualifying  special  purpose  entity  in  order  to
     facilitate the transaction as required by Banc One, N.A. and to comply with
     the  Partnership's  various  debt  covenants.  The OLP remits daily to this
     special  purpose  entity funds  collected on the pool of trade  receivables
     held by  Ferrellgas  Receivables.  The  Partnership  renewed  the  facility
     effective  September 25, 2001, for a 364-day  commitment  with Bank One, NA
     and intends to renew the facility for an additional  364-day  commitment on
     September 24, 2002.

     The level of funding  available from this facility is currently  limited to
     $60,000,000. In accordance with SFAS No. 140, "Accounting for Transfers and
     Servicing of Financial Assets and  Extinguishments  of  Liabilities,"  this
     transaction  is  reflected  on  the  Partnership's  Consolidated  Financial
     Statements  as a  sale  of  accounts  receivable  and an  investment  in an
     unconsolidated  subsidiary. The OLP retained servicing rights and the right
     to collect finance charges,  however,  the assets related to these retained
     interests  at July  31,  2002  and  2001,  had no  material  effect  on the
     Consolidated  Balance Sheet.  The following table provides amounts recorded
     on the Partnership's statement of earnings and balance sheet.
<TABLE>
      <S>                                                                                <C>             <C>

       (in thousands)                                                                     2002        2001
                                                                                        --------    --------
      Statement of earnings information
      Loss on sale of receivables                                                       $ 3,862     $ 7,816
      Equity in earnings of unconsolidated subsidiary                                    (1,843)      2,205
      Service income                                                                     (1,285)     (1,326)
                                                                                        --------    --------
      Amount included in "Loss (gain) on disposal of assets and other"                  $   734     $ 8,695
                                                                                        ========    ========
      Balance sheet information
      Investment in unconsolidated subsidiary, included in "other assets"               $     -     $ 7,225
                                                                                        ========    ========
</TABLE>

                                      F-13

<PAGE>

     These  amounts  reported  in  the   Consolidated   Statements  of  Earnings
     approximate the financing cost of issuing  commercial paper backed by these
     accounts receivable plus an allowance for doubtful accounts associated with
     the outstanding receivables transferred to Ferrellgas Receivables.

F.   Goodwill

     SFAS No. 142 modified the financial  accounting  and reporting for acquired
     goodwill  and other  intangible  assets,  including  the  requirement  that
     goodwill and some intangible assets no longer be amortized. The Partnership
     adopted SFAS No. 142  beginning in the first  quarter of fiscal 2002.  This
     adoption  resulted in a  reclassification  to  goodwill  of both  assembled
     workforce  and other  intangible  assets  classified  as other  assets with
     remaining book value of $10,019,000.  The changes in the carrying amount of
     goodwill for the year ended July 31, 2002, are as follows:
<TABLE>
     <S>                                                          <C>          <C>           <C>
     (in thousands)                                                            Intangible    Other
                                                                  Goodwill       Assets      Assets
                                                                  ---------    ----------   --------
     Balance as of July 31, 2001, net of accumulated
        amortization                                              $114,171      $116,747    $16,101
     Reclassified to goodwill                                       10,019        (8,221)    (1,798)
     Additions during the period                                         -         3,866          -
     Amortization expense                                                -       (14,022)         -
     Reduction of investment in unconsolidated
        subsidiary (see Note E)                                          -             -     (7,225)
     Other changes                                                       -          (200)    (3,654)
                                                                  ---------    ----------   --------
     Balance as of July 31, 2002                                  $124,190      $ 98,170    $ 3,424
                                                                  =========    ==========   ========
</TABLE>

     The remaining intangible assets are subject to amortization.  The following
     table  discloses  our net earnings for the fiscal years ended July 31, 2001
     and 2000, adding back the amortization expense related to goodwill and some
     intangible assets that are no longer amortized.
<TABLE>
     <S>                                                                <C>        <C>         <C>

                                                                          For the year ended July 31,
                                                                        -------------------------------
     (in thousands)                                                       2002       2001        2000
                                                                        --------   --------    --------
     Reported net earnings                                              $59,959    $64,068      $  860
     Add back: Goodwill amortization                                          -     11,308       6,474
                                                                        --------   --------    --------
     Adjusted net earnings                                              $59,959    $75,376      $7,334
                                                                        ========   ========    ========
</TABLE>

     Basic and diluted earnings per common unit:
<TABLE>
     <S>                                                                <C>        <C>         <C>

                                                                          For the year ended July 31,
                                                                        ------------------------------
                                                                          2002       2001        2000
                                                                        --------   --------    --------
     Reported net earnings (loss) available to common unitholders         $1.34      $1.43      $(0.32)
     Goodwill amortization                                                    -       0.32        0.23
                                                                        --------   --------    --------
     Adjusted net earnings (loss) available to common unitholders         $1.34      $1.75      $(0.09)
                                                                        ========   ========    ========
</TABLE>


                                      F-14


<PAGE>


G.   Intangible Assets, net

     Intangible assets, net consist of:
<TABLE>
     <S>                            <C>           <C>               <C>           <C>           <C>                 <C>
                                                July 31, 2002                                July 31, 2001
                                  -------------------------------------------   --------------------------------------------
                                     Gross                                         Gross
                                    Carrying      Accumulated                     Carrying      Accumulated
     (in thousands)                  Amount       Amortization         Net         Amount       Amortization          Net
                                    ---------    -------------      ---------     ---------     -------------      ---------
     Customer lists                 $208,662       $(124,860)       $83,802       $207,667        $(114,679)         $92,988
     Non-compete agreements           62,893         (48,525)        14,368         60,222          (44,684)          15,538
     Assembled workforce                   -               -              -          9,600           (1,379)           8,221
                                    ---------    -------------      ---------     ---------     -------------      ---------
       Total                        $271,555       $(173,385)       $98,170       $277,489        $(160,742)        $116,747
                                    =========    =============      =========     =========     =============      =========

</TABLE>


     Customer  lists  have  estimated  lives  of  15  years,  while  non-compete
     agreements have estimated lives ranging from two to 10 years.

<TABLE>
<S>                                   <C>               <C>             <C>
     (in thousands)
     Aggregate Amortization Expense:
                                        2002              2001            2000
                                      --------          --------        --------
     For the year ended July 31,      $14,022           $16,883         $17,218

</TABLE>

<TABLE>
     <S>                                                          <C>
     (in thousands)
     Estimated Amortization Expense:

     For the year ended July 31, 2003                             $11,656
     For the year ended July 31, 2004                              10,682
     For the year ended July 31, 2005                              10,150
     For the year ended July 31, 2006                               9,631
     For the year ended July 31, 2007                               8,991
</TABLE>

H.   Long-Term Debt

     Long-term debt consists of:
<TABLE>
    <S>                                              <C>              <C>

    (in thousands)                                     2002             2001
                                                     --------         --------
    Senior Notes
      Fixed rate, 7.16% due 2005-2013 (1)            $350,000         $350,000
      Fixed rate, 9.375%, due 2006 (2)                160,000          160,000
      Fixed rate, 8.8%, due 2006-2009 (3)             184,000          184,000

    Notes payable, 7.6% and 7.9% weighted
      average interest rates, respectively,
      due 2002 to 2011                                 12,177           12,566
                                                     --------         --------
                                                      706,177          706,566
    Less:  current portion, included in other
      current liabilities                               2,319            1,784
                                                     --------         --------
                                                     $703,858         $704,782
                                                     ========         ========


                                      F-15
<PAGE>

<FN>
     (1)  The OLP fixed rate Senior Notes ("$350 million Senior Notes"),  issued
          in August 1998, are general unsecured  obligations of the OLP and rank
          on an equal basis in right of payment with all senior  indebtedness of
          the OLP and senior to all  subordinated  indebtedness  of the OLP. The
          outstanding  principal  amount  of the  Series  A, B, C, D and E Notes
          shall  be  due  on  August  1,  2005,  2006,  2008,  2010,  and  2013,
          respectively.  In general,  the OLP does not have the option to prepay
          the Notes prior to maturity without incurring prepayment penalties.

     (2)  The  Partnership has a commitment to redeem on September 24, 2002, the
          MLP fixed rate Senior  Secured  Notes ("MLP  Senior  Secured  Notes"),
          issued in April 1996, with the proceeds  expected from $170,000,000 of
          MLP fixed rate Senior Notes. The Partnership  anticipates that it will
          recognize an approximate  $7,100,000 charge to earnings related to the
          premium  and  other  costs  incurred  to  redeem  the  notes  plus the
          write-off of financing  costs related to the original  issuance of the
          MLP Senior Secured Notes.  The MLP Senior Secured Notes are secured by
          the MLP's  partnership  interest  in the OLP.  The MLP Senior  Secured
          Notes bear interest from the date of issuance,  payable  semi-annually
          in arrears on June 15 and December 15 of each year.

     (3)  The OLP fixed rate Senior Notes ("$184 million Senior Notes"),  issued
          in February  2000,  are general  unsecured  obligations of the OLP and
          rank  on  an  equal  basis  in  right  of  payment   with  all  senior
          indebtedness of the OLP and senior to all subordinated indebtedness of
          the OLP.  The  outstanding  principal  amount of the Series A, B and C
          Notes are due on  August 1,  2006,  2007 and  2009,  respectively.  In
          general, the OLP does not have the option to prepay the Notes prior to
          maturity without incurring prepayment penalties.
</FN>
</TABLE>

     At July 31, 2002, the unsecured  $157,000,000  Credit Facility (the "Credit
     Facility"),  expiring  June 2003,  consisted  of a  $117,000,000  unsecured
     working capital,  general corporate and acquisition  facility,  including a
     letter of credit  facility,  and a $40,000,000  revolving  working  capital
     facility.  This  $40,000,000  facility is subject to an annual reduction in
     outstanding  balances to zero for thirty  consecutive  days. All borrowings
     under the Credit  Facility bear interest,  at the borrower's  option,  at a
     rate equal to either a) LIBOR plus an applicable  margin varying from 1.25%
     to 2.25% or, b) the bank's base rate plus an applicable margin varying from
     0.25% to 1.25%.  The bank's  base rate at July 31,  2002 and 2001 was 4.75%
     and 6.75%,  respectively.  In addition,  a commitment fee is payable on the
     daily unused portion of the credit facility  (generally a per annum rate of
     0.0375% at July 31, 2002).

     The Partnership had no short-term  borrowings  outstanding under the credit
     facility at July 31,  2002 and 2001.  Letters of credit  outstanding,  used
     primarily  to secure  obligations  under  certain  insurance  arrangements,
     totaled  $40,614,000 and $46,660,000,  respectively.  At July 31, 2002, the
     Partnership had $116,386,000 of funding available. The Partnership incurred
     commitment  fees  of  $445,000  and  $460,000  in  fiscal  2002  and  2001,
     respectively.  Effective July 16, 2001, the credit  facility was amended to
     increase the letter of credit sub-facility availability from $60,000,000 to
     $80,000,000.

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

                                      F-16
<PAGE>

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

     The MLP Senior  Secured  Notes,  the $350 million and $184  million  Senior
     Notes  and  the  Credit  Facility  agreement  contain  various  restrictive
     covenants  applicable  to the MLP and OLP and its  subsidiaries,  the  most
     restrictive  relating  to  additional   indebtedness.   In  addition,   the
     Partnership  is prohibited  from making cash  distributions  of the Minimum
     Quarterly  Distribution  if a default or event of  default  exists or would
     exist upon making such  distribution,  or if the Partnership  fails to meet
     certain   coverage  tests.  The  Partnership  is  in  compliance  with  all
     requirements,  tests,  limitations  and  covenants  related  to these  debt
     agreements.

     The  scheduled  annual  principal  payments  on  long-term  debt  are to be
     $2,319,000 in 2003, $2,134,000 in 2004, $2,299,000 in 2005, $271,313,000 in
     2006, $59,039,000 in 2007 and $369,073,000 thereafter.

I.   Partners' Capital

     On July 31, 2002, the  Partnership's  capital consisted of 2,782,211 senior
     units,  36,081,203  common units,  and 392,556  general partner units which
     equal a 1% General Partner  interest.  The Partnership  Agreement  contains
     specific  provisions for the allocation of net earnings and loss to each of
     the partners for purposes of maintaining the partner capital accounts.

     In connection with the Thermogas acquisition on December 17, 1999 (See Note
     P) , the Partnership  issued  4,375,000 senior units to a subsidiary of The
     Williams  Companies,  Inc.  ("Williams").   Ferrellgas,   Inc.  contributed
     $1,768,000 to Ferrellgas Partners, L.P. and $1,803,000 to Ferrellgas,  L.P.
     in order to maintain its 1% and 1.0101%  general  partner  interest in each
     respective  entity.  On April 6, 2001, an entity owned by James E. Ferrell,
     the Chairman, Chief Executive Officer and President of the General Partner,
     purchased all senior units held by Williams,  who prior to the  transaction
     agreed to certain  modifications  to the senior units.  See Note A for more
     information on the modifications to the senior units.

     The Partnership  maintains shelf  registration  statements for common units
     representing limited partner interests in the Partnership. One of the shelf
     registration  statements  allows for common units to be issued from time to
     time by the Partnership in connection with the Partnership's acquisition of
     other  businesses,   properties  or  securities  in  business   combination
     transactions.  The Partnership  also maintains  another shelf  registration
     statement for the issuance of common units,  deferred  participation units,
     warrants and debt securities.  The Partnership Agreement allows the General
     Partner to issue an unlimited number of additional  Partnership general and
     limited  interests and other equity  securities of the Partnership for such
     consideration  and on such terms and  conditions as shall be established by
     the General  Partner  without the approval of any  unitholders.  On June 8,
     2001, the Partnership  received  $84,865,000 net of issuance costs pursuant
     to the issuance of 4,500,000  common units to the public.  The  Partnership
     then used these  proceeds  to redeem  2,048,697  senior  units and  related
     accrued but unpaid  distributions.  These common units issued to the public
     on June 8, 2001,  were entitled to the same  distribution to be paid to the
     already  outstanding  publicly held common units for the quarter ended July
     31, 2001. The Partnership  also made  redemptions of 37,915 senior units in
     July 2001 and 19,411 in February  2002. The  Partnership  issued 55,350 and
     101,250  common  units during the fiscal year ended July 31, 2002 and 2001,
     respectively,   pursuant  to  the  unit  option  plan  (see  Note  N).  The
     Partnership  issued  117,487  common units as part of the purchase price of
     acquisitions during the fiscal year ended July 31, 2002.

                                      F-17
<PAGE>

     During 1994, the Partnership issued  subordinated  units, all of which were
     held by Ferrell for which there was no established  public trading  market.
     Effective August 1, 1999, the  subordinated  units were 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 ended July 31, 1999.

J.   Derivatives

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

     Fluctuations  in the wholesale  cost of propane  expose the  Partnership to
     purchase price risk. The  Partnership  purchases  propane at various prices
     that are  eventually  sold to its  customers,  exposing the  Partnership to
     future product price  fluctuations.  Also, certain forecasted  transactions
     expose the Partnership to purchase price risk. The Partnership monitors its
     purchase price  exposures and utilizes  product hedges to mitigate the risk
     of future price  fluctuations.  Propane is the only product hedged with the
     use of product hedge positions.  The Partnership uses derivative  contracts
     to hedge a portion of its  forecasted  purchases  for up to one year in the
     future.  These derivatives are designated as cash flow hedging instruments.
     Because these derivatives are designated as cash flow hedges, the effective
     portions of changes in the fair value of the  derivatives  are  recorded in
     other  comprehensive  income (OCI) and are  recognized in the  Consolidated
     Statements of Earnings when the forecasted  transaction  impacts  earnings.
     The $136,000  risk  management  fair value  adjustment  classified as other
     comprehensive income in the Consolidated Statements of Partners' Capital at
     July  31,  2002,  will be  recognized  in the  Consolidated  Statements  of
     Earnings during fiscal 2003.  Changes in the fair value of cash flow hedges
     due to hedge  ineffectiveness,  if any, are  recognized  in cost of product
     sold on the  Consolidated  Statements  of  Earnings.  The fair value of the
     derivatives   related  to  purchase   price  risk  are  classified  on  the
     Consolidated Balance Sheets as inventories.

     Through  its risk  management  trading  activities,  the  Partnership  also
     purchases  and sells  derivatives  that are not  designated  as  accounting
     hedges to manage other risks  associated  with commodity  prices.  Emerging
     Issues Task Force issue 98-10 "Accounting for Contracts  Involved in Energy
     Trading and Risk Management  Activities"  applies to these activities.  The
     types of contracts  utilized in these  activities  include energy commodity
     forward  contracts,  options  and  swaps  traded  on  the  over-the-counter
     financial  markets,  and  futures  and  options  traded  on  the  New  York
     Mercantile  Exchange.  The Partnership utilizes published settlement prices

                                      F-18
<PAGE>

     for exchange traded contracts,  quotes provided by brokers and estimates of
     market prices based on daily  contract  activity to estimate the fair value
     of these  contracts.  The  changes in fair  value of these risk  management
     trading  activities are recognized as they occur in cost of product sold in
     the Consolidated Statements of Earnings. During fiscal years ended July 31,
     2002,  2001 and 2000, the Partnership  recognized  risk management  trading
     gains (losses)  related to derivatives not designated as accounting  hedges
     of $(6,148,000), $23,320,000, and $28,413,000, respectively.

     Estimates related to our risk management  trading  activities are sensitive
     to uncertainty and volatility  inherent in the energy  commodities  markets
     and  actual  results  could  differ  from  these   estimates.   Assuming  a
     hypothetical  10% adverse  change in prices for the  delivery  month of all
     energy commodities,  the potential loss in future earnings of such a change
     is estimated at $1,100,000  for risk  management  trading  activities as of
     July 31,  2002.  The  preceding  hypothetical  analysis is limited  because
     changes in prices may or may not equal 10%.

     The following  table  summarizes the change in the unrealized fair value of
     contracts  from risk  management  trading  activities  for the fiscal years
     ended July 31, 2002 and 2001.  This table  summarizes  the contracts  where
     settlement has not yet occurred.

<TABLE>
<S>                                                                                   <C>             <C>
                                                                                           Fiscal year ended
     (in thousands)                                                                             July 31,
                                                                                      --------------------------
                                                                                         2002            2001
                                                                                      ----------      ----------
     Unrealized (losses) in fair value of contracts outstanding
     at beginning of year                                                              $(12,587)      $    (359)
     Unrealized gains and (losses) recognized at inception                                 -               -
     Unrealized gains and (losses) recognized as a result of changes in
         valuation techniques or assumptions                                               -               -
     Other unrealized gains and (losses) recognized                                      (6,148)         23,320
     Less:  realized gains and (losses) recognized                                      (14,166)         35,548
                                                                                      ----------      ----------
     Unrealized (losses) in fair value of contracts outstanding at end of year        $  (4,569)      $ (12,587)
                                                                                      ==========      ==========
</TABLE>

     The  following  table  summarizes  the maturity of these  contracts for the
     valuation methodologies we utilize as of July 31, 2002 and 2001. This table
     summarizes the contracts where settlement has not yet occurred.

<TABLE>
     <S>                                                                  <C>                <C>
     (in thousands)                                                           Fair Value of Contracts
                                                                                   at Period-End
                                                                          ---------------------------------
                                                                                                Maturity
                                                                                             greater than 1
                                                                          Maturity                year
                                                                          less than          and less than
                         Source of Fair Value                               1 year             18 months
     -------------------------------------------------------------        ----------         --------------

     Prices actively quoted                                                $   (328)            $     -
     Prices provided by other external sources                               (4,225)                   (16)
     Prices based on models and other valuation methods                        -                      -
                                                                          ----------         --------------
     Unrealized  (losses) in fair value of contracts  outstanding
          at July 31, 2002                                                  $(4,553)              $    (16)
                                                                          ==========         ==============

     Prices actively quoted                                                 $(2,535)              $   -
     Prices provided by other external sources                               (4,061)                (5,991)
     Prices based on models and other valuation methods                        -                      -
                                                                          ----------         --------------
     Unrealized  (losses) in fair value of contracts  outstanding
          at July 31, 2001                                                  $(6,596)               $(5,991)
                                                                          ==========         ==============

</TABLE>
                                      F-19
<PAGE>
     The following table summarizes the gross transaction volumes in barrels
     (one barrel equals 42 gallons) for risk management trading contracts that
     were physically settled for the years ended July 31, 2002, 2001 and 2000:

<TABLE>
     <S>                                                           <C>
     (in thousands)
     Fiscal year ended July 31, 2002                               11,162
     Fiscal year ended July 31, 2001                               18,539
     Fiscal year ended July 31, 2000                               42,284

</TABLE>

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

     As of July 31, 2002, the Partnership holds  $706,177,000 in primarily fixed
     rate debt and $156,000,000 in variable rate operating leases.  Fluctuations
     in interest rates subject the Partnership to interest rate risk.  Decreases
     in interest rates increase the fair value of the  Partnership's  fixed rate
     debt, while increases in interest rates subject the Partnership to the risk
     of  increased  interest  expense  related  to its  variable  rate  debt and
     operating leases.

     The Partnership  enters into fair value and cash flow hedges to help reduce
     its overall interest rate risk.  Interest rate swaps were used to hedge the
     exposure  to changes in the fair value of fixed rate debt due to changes in
     interest  rates.  The fair  value of  interest  rate  derivatives  that are
     considered  fair value or cash flow hedges are  classified  either as other
     current or long-term assets or as other current or long-term liabilities on
     the  Consolidated  Balance  Sheets.  Changes in the fair value of the fixed
     rate debt and any related fair value hedges are recognized as they occur in
     interest expense in the Consolidated Statements of Earnings.  There were no
     such fair value hedges outstanding at July 31, 2002. Interest rate caps are
     used to hedge the risk  associated  with  rising  interest  rates and their
     effect on forecasted  transactions  related to variable rate debt and lease
     obligations.  These  interest rate caps are  designated as cash flow hedges
     and are  outstanding  at July 31, 2002.  Thus,  the  effective  portions of
     changes  in the fair value of the  hedges  are  recorded  in OCI at interim
     periods  and  are  recognized  as  interest  expense  in  the  Consolidated
     Statements of Earnings when the forecasted  transaction  impacts  earnings.
     Cash flow  hedges are assumed to hedge the risk of changes in cash flows of
     the hedged risk.

K.   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   $197,863,000,
     $194,519,000, and $179,033,000 for the years ended July 31, 2002, 2001, and
     2000, respectively,  include compensation and benefits paid to officers and
     employees of the General Partner and general and administrative costs.

     On December 12, 2001, the Partnership issued 37,487 common units to Ferrell
     Propane,  Inc., a subsidiary of the General  Partner in connection with the
     acquisition of Blue Flame Bottle Gas (see Note P). The common unit issuance
     compensated  Ferrell  Propane for its  retention of $725,000 of certain tax
     liabilities of Blue Flame.

                                      F-20
<PAGE>

     During fiscal 2000,  Williams became a related party to the Partnership due
     to the Partnership's  issuance of 4,375,000 senior units to a subsidiary of
     Williams  as part of the  Thermogas  acquisition  (See Notes I and P). In a
     noncash  transaction,  during fiscal 2001 and 2000,  the  Partnership  paid
     quarterly  senior  unit   distributions  to  Williams  of  $11,108,000  and
     $9,422,000,  respectively,  using  additional  senior units. In April 2001,
     Williams  sold all its senior  units to JEF Capital  Management,  Inc.,  an
     entity owned by James E. Ferrell,  Chairman,  Chief  Executive  Officer and
     President of the General  Partner,  and thereafter,  ceased to be a related
     party of the  Partnership.  During  fiscal 2001 and 2000,  the  Partnership
     recognized   wholesale  sales  to  Williams  of  $493,000  and  $2,091,000,
     respectively.  In connection with its normal purchasing and risk management
     activities,  the Partnership entered into, with Williams as a counterparty,
     certain  purchase,  forward,  futures,  option and swap  contracts.  During
     fiscal 2001 and 2000 the Partnership  recognized a net increase  (decrease)
     to cost of sales of $(4,456,000) and $3,645,000,  respectively,  related to
     these activities.

     During  fiscal  2000,  Williams  provided  propane  supply and  general and
     administrative  services to the Partnership to assist in the integration of
     the acquisition. The Partnership paid $67,547,000,  $4,062,000 and $176,000
     to Williams in fiscal  2000 and  classified  these costs to cost of product
     sold,   general  and  administrative   expenses  and  operating   expenses,
     respectively.

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

     During  fiscal  2001,  the  Partnership  paid  to  JEF  Capital  Management
     $83,464,000  to redeem a total of 2,086,612  senior units and $5,750,000 in
     senior unit  distributions.  During fiscal 2002, the  Partnership  paid JEF
     Capital  Management  $776,445 to redeem a total of 19,411  senior units and
     $11,192,000 in senior unit  distributions.  In a noncash  transaction,  the
     Partnership  accrued a senior unit  distribution of $2,782,211 that will be
     paid to JEF Capital Management on September 13, 2002.

     Ferrell International Limited, FI Trading, Inc. and Ferrell Resources,  LLC
     are  beneficially  owned by James E. Ferrell and thus are affiliates of the
     Partnership.   The  Partnership   enters  into  transactions  with  Ferrell
     International Limited and FI Trading in connection with its risk management
     activities  and does so at market  prices in  accordance  with an affiliate
     trading policy approved by the General Partner's Board of Directors.  These
     transactions  include  forward,  option  and  swap  contracts  and  are all
     reviewed for compliance with the policy. During fiscal 2002, 2001 and 2000,
     the  Partnership  recognized net receipts  (disbursements)  from purchases,
     sales and commodity derivative transactions of $10,692,000,  $(28,140,000),
     and $(8,508,000),  respectively.  These net purchases,  sales and commodity
     derivative  transactions with Ferrell International Limited and FI Trading,
     Inc.  are  classified  as cost of product  sold.  Amounts due from  Ferrell
     International  Limited  at July 31,  2002 and 2001  were  $396,000  and $0,
     respectively. Amounts due to Ferrell International Limited at July 31, 2002
     and 2001 were $266,000 and $0, respectively.

     During  fiscal  2002,  2001 and 2000,  Ferrell  International  Limited,  FI
     Trading,  Inc. and Ferrell  Resources,  LLC paid the Partnership a total of
     $40,000,   $40,000,   and  $313,000,   respectively,   for  accounting  and
     administration services.

     The  Partnership  also leased propane tanks from Ferrell  Propane,  Inc., a
     subsidiary of the General Partner from October 1998 until February 2002, at
     which time,  Ferrell Propane sold all its tanks to an unrelated entity. The
     Partnership  recognized $300,000,  $515,000,  and $515,000 of lease expense
     during fiscal years 2002, 2001, and 2000.

                                      F-21
<PAGE>

L.   Contingencies and Commitments

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

     On December 6, 1999, the OLP entered into,  with Banc of America  Leasing &
     Capital LLC, a $25,000,000  operating lease involving the sale-leaseback of
     a portion of the OLP's customer tanks. This operating lease has a term that
     expires  June 30,  2003 and may be  extended  for two  additional  one-year
     periods at the option of the OLP,  if such  extension  is  approved  by the
     lessor.  On  December  17,  1999,  immediately  prior to the closing of the
     Thermogas  acquisition (See Note P),  Thermogas  entered into, with Banc of
     America  Leasing & Capital LLC, a $135,000,000  operating lease involving a
     portion  of  its  customer   tanks.   In  connection   with  the  Thermogas
     acquisition,  the  OLP  assumed  all  obligations  under  the  $135,000,000
     operating lease,  which has terms and conditions similar to the December 6,
     1999,  $25,000,000  operating  lease discussed  above.  Prior to the end of
     these lease terms, the Partnership  intends to secure additional  financing
     in order to purchase the related customer tanks. No assurances can be given
     that such financing  will be obtained or, if obtained,  such financing will
     be on terms equally favorable to the Partnership.

     Effective June 2, 2000, the OLP entered into an interest rate cap agreement
     ("Cap Agreement") with Bank of America,  related to variable quarterly rent
     payments due pursuant to two operating tank lease agreements.  The variable
     quarterly  rent payments are  determined  based upon a floating LIBOR based
     interest  rate. The Cap  Agreement,  which expires June 30, 2003,  requires
     Bank of America to pay the OLP at the end of each  March,  June,  September
     and December the excess,  if any, of the  applicable  three month  floating
     LIBOR interest rate over 9.3%, the cap, applied to the total obligation due
     each  quarter  under the two  operating  tank lease  agreements.  The total
     obligation  under these two operating tank lease  agreements as of July 31,
     2002 and 2001 was $156,000,000 and $157,600,000, respectively.

     The  2,782,211  senior  units  outstanding  as of  July  31,  2002  have  a
     liquidating  value of $40 per unit or  $111,288,000.  The senior  units are
     redeemable  by the  Partnership  at any  time,  in whole  or in part,  upon
     payment in cash of the liquidating value of the senior units, currently $40
     per unit,  plus the amount of any  accrued  and unpaid  distributions.  The
     holder of the  senior  units has the right,  subject to certain  events and
     conditions,  to convert any  outstanding  senior units into common units at
     the earlier of December 31, 2005 or upon the occurrence of a material event
     as  defined  by the  Partnership  Agreement.  Such  conversion  rights  are
     contingent upon the Partnership not previously redeeming such securities.

     Certain  property and  equipment is leased  under  noncancelable  operating
     leases which  require  fixed  monthly  rental  payments and which expire at
     various  dates  through 2020.  Rental  expense  under these leases  totaled
     $36,959,000,  $42,420,000,  and  $35,292,000  for the years  ended July 31,
     2002, 2001, and 2000,  respectively.  Future minimum lease  commitments for
     such leases in the next five years, including the aforementioned  operating
     tank leases, are $26,986,000 in 2003,  $13,478,000 in 2004,  $10,223,000 in
     2005, $8,228,000 in 2006 and $5,020,000 in 2007.

     In addition to the future minimum lease commitments,  the Partnership plans
     to purchase vehicles and computers at the end of their lease terms totaling
     $158,577,000 in 2003, $4,738,000 in 2004, $4,105,000 in 2005, $2,076,000 in
     2006 and  $6,944,000  in  2007.  The  Partnership  intends  to renew  other
     vehicle, tank and computer leases that would have had buyouts of $5,039,000
     in 2003 and $311,000 in 2004.

                                      F-22
<PAGE>

M.   Employee Benefits

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

     Ferrell  makes  contributions  to the ESOT  which  causes a portion  of the
     shares of Ferrell owned by the ESOT to be allocated to employees'  accounts
     over time. The allocation of Ferrell shares to employee  accounts  causes a
     non-cash compensation charge to be incurred by the Partnership,  equivalent
     to the fair value of such  shares  allocated.  This  non-cash  compensation
     charge is reported separately in the Partnership's  Consolidated Statements
     of Earnings and thus excluded from operating and general and administrative
     expenses.  The non-cash  compensation charge has increased from fiscal 2000
     to  fiscal  2001  primarily  due to the  effect of  employees  added to the
     company from the Thermogas  acquisition (see Note P). This charge increased
     from fiscal 2001 to fiscal 2002  primarily  due to the increase in the fair
     value of the Ferrell shares allocated to employees.  The Partnership is not
     obligated to fund or make contributions to the ESOT.

     The General Partner and its parent,  Ferrell,  have a defined  contribution
     profit-sharing  plan  which  includes  both  profit  sharing  and  matching
     contributions.  The plan covers  substantially all employees with more than
     one year of service.  With the  establishment of the ESOP in July 1998, the
     Company suspended future profit sharing contributions to the plan beginning
     with fiscal year 1998. The plan,  which  qualifies  under section 401(k) of
     the Internal Revenue Code, also provides for matching contributions under a
     cash or deferred  arrangement based upon participant  salaries and employee
     contributions to the plan. Unlike the profit sharing  contributions,  these
     matching  contributions  were not eliminated with the  establishment of the
     ESOP. Contributions for the years ended July 31, 2002, 2001, and 2000, were
     $2,773,000,  $3,235,000,  and  $2,869,000,  respectively,  under the 401(k)
     provisions.

     The General Partner has a defined  benefit plan that provides  participants
     who were  covered  under a  previously  terminated  plan with a  guaranteed
     retirement  benefit at least equal to the benefit they would have  received
     under  the  terminated  plan.  Until  July 31,  1999,  benefits  under  the
     terminated  plan were  determined  by years of credited  service and salary
     levels.  As of July 31, 1999,  years of credited  service and salary levels
     were  frozen.  The  General  Partner's  funding  policy for this plan is to
     contribute  amounts  deductible  for Federal income tax purposes and invest
     the plan assets  primarily in  corporate  stocks and bonds,  U.S.  Treasury
     bonds and short-term cash investments.  As of July 31, 2002 and 2001, other
     comprehensive  income was  reduced  and other  liabilities  were  increased
     $527,000  and  $2,092,000,  respectively  because the  accumulated  benefit
     obligation of this plan exceeded the fair value of plan assets.

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

     Prior to April 19, 2001,  the Second Amended and Restated  Ferrellgas  Unit
     Option Plan (the "unit  option  plan")  authorized  the issuance of options
     (the "unit  options")  covering up to 850,000 of the MLP's  common units to
     employees of the General  Partner or its  affiliates.  Effective  April 19,
     2001, the unit option plan was amended to authorize the issuance of options
     covering  an  additional  500,000  common  units.  The unit  option plan is
     intended to meet the  requirements  of the New York Stock  Exchange  equity
     holder  approval policy for option plans not approved by the equity holders
     of a company, and thus approval of the plan from the unitholders of the MLP
     was not required. The Board of Directors of the General Partner administers
     the unit option plan, authorizes grants of unit options thereunder and sets

                                      F-23
<PAGE>

     the unit option price and vesting terms of unit options in accordance  with
     the terms of the unit  option  plan.  No single  officer or director of the
     General  Partner may acquire more than 314,895  common units under the unit
     option  plan.  The  unit  options  outstanding  as of July  31,  2002,  are
     exercisable  at  exercise  prices  ranging  from $16.80 to $21.67 per unit,
     which was an estimate of the fair market  value of the units at the time of
     the grant. In general,  the options  currently  outstanding  under the unit
     option  plan  vest  over a  five-year  period,  and  expire  on  the  tenth
     anniversary of the date of the grant.

<TABLE>
          <S>                                                     <C>             <C>                  <C>
                                                                     Number          Weighted           Weighted
                                                                       Of             Average            Average
                                                                     Units        Exercise Price       Fair Value
                                                                  -----------     --------------       ----------
          Outstanding, August 1, 1999                                782,025           $18.23
          Granted                                                       -                 -              $   -
          Forfeited                                                  (60,500)           19.38
                                                                  -----------
          Outstanding, July 31, 2000                                 721,525            18.13
          Granted                                                    651,000            17.90               2.56
          Exercised                                                 (101,250)           16.80
          Forfeited                                                  (42,075)           19.27
                                                                  -----------
          Outstanding, July 31, 2001                               1,229,200            18.08
          Granted                                                       -                 -                  -
          Exercised                                                  (55,350)           16.80
          Forfeited                                                  (98,450)           18.04
                                                                  -----------
          Outstanding, July 31, 2002                               1,075,400            18.15
                                                                  -----------
          Options exercisable, July 31, 2002                         594,725            18.25
                                                                  -----------
</TABLE>

<TABLE>
          <S>                                                     <C>

                                                                  Options Outstanding at July 31, 2002
                                                                  ------------------------------------
          Range of option prices at end of year                             $16.80-$21.67
          Weighted average remaining contractual life                         6.2 Years

</TABLE>

     The  Ferrell  Companies   Incentive   Compensation  Plan  (the  "ICP")  was
     established  by Ferrell to allow upper middle and senior level  managers of
     the General  Partner to  participate  in the equity growth of Ferrell.  The
     shares   underlying  the  stock  options  are  common  shares  of  Ferrell,
     therefore,  there is no potential dilution of the Partnership.  The Ferrell
     ICP stock  options  vest ratably in 5% to 10%  increments  over 12 years or
     100% upon a change of  control of  Ferrell,  or the  death,  disability  or
     retirement  at  the  age  of 65 of  the  participant.  Vested  options  are
     exercisable  in  increments  based on the  timing of the  payoff of Ferrell
     debt, but in no event later than 20 years from the date of issuance.

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

                                      F-24
<PAGE>

<TABLE>
      <S>                                                        <C>         <C>         <C>
      (in thousands, except per unit amounts)                      2002        2001        2000
                                                                 --------    --------    --------
       Net earnings (loss) available to common unitholders
       as reported                                               $48,299     $45,594    $(10,146)

       Pro forma adjustment                                          (10)       (498)        (79)
                                                                 --------    --------   ---------

       Net earnings (loss) available to common unitholders
       as adjusted                                               $48,289     $45,096    $(10,225)
                                                                 ========    ========   =========

       Pro forma basic and diluted net earnings
         (loss) per common unit                                    $1.34     $  1.41    $  (0.32)
                                                                 ========    ========   =========

</TABLE>

     The  fair  value  of the  unit  options  granted  during  fiscal  2001  was
     determined  using a binomial  option  valuation  model  with the  following
     assumptions:  a)  distribution  amount  of $0.50 per unit per  quarter,  b)
     average common unit price  volatility of 23.2%,  c) the risk-free  interest
     rate used was 4.4%,  and d) the  expected  life of the option used was five
     years.  The fair value of the Ferrell  Companies,  Inc.  ICP stock  options
     granted during the 2002, 2001 and 2000 fiscal years were determined using a
     binomial  option  valuation  model with the  following  assumptions:  a) no
     dividends, b) average stock price volatility of 19.2%, 13.2% and 10.1% used
     in 2002, 2001 and 2000,  respectively,  c) the risk-free interest rate used
     was  4.3%,  5.2% and  6.4% in 2002,  2001  and  2000,  respectively  and d)
     expected life of the options between five and 12 years.


O.   Disclosures About Fair Value of Financial Instruments

     The carrying amount of short-term financial  instruments  approximates fair
     value because of the short maturity of the instruments.  The estimated fair
     value of the Partnership's long-term financial instruments was $710,228,000
     and $681,060,000 as of July 31, 2002 and 2001, respectively. The fair value
     is estimated based on quoted market prices.

     Interest Rate Collar, Cap and Swap Agreements. The Partnership from time to
     time has entered into various interest rate collar, cap and swap agreements
     involving,  among  others,  the  exchange  of fixed and  floating  interest
     payment  obligations  without  the  exchange  of the  underlying  principal
     amounts.  During fiscal 2001, an interest rate collar agreement expired and
     a swap agreement was terminated by a counterparty.  As of July 31, 2002, an
     interest rate cap agreement  with a counterparty  who is a large  financial
     institution  remained in place.  The fair value of this  interest  rate cap
     agreement at July 31, 2002 and 2001 was de minimis.


P.  Business Combinations

     During the year ended July 31, 2002, the Partnership  acquired three retail
     propane businesses with an aggregate value at $10,790,000.

     o Blue Flame Bottle Gas, based in southern Arizona

     o Alabama Butane Co., based in central and south Alabama

     o Alma Farmers Union Co-op, based in western Wisconsin

                                      F-25
<PAGE>

     These  purchases were funded by $6,294,000 of cash payments and, in noncash
     transactions,  the issuance of 117,487  common units valued at an aggregate
     of $2,325,000, and $2,171,000 of notes payable to the seller. The aggregate
     value  was  allocated  as  follows:  $7,064,000  for fixed  assets  such as
     customer tanks, buildings and land, $2,671,000 for non-compete  agreements,
     $1,195,000 for customer lists,  $32,000 for other assets and $(172,000) for
     net working  capital.  Net working  capital  was  comprised  of $556,000 of
     current assets and $728,000 of current  liabilities.  The weighted  average
     amortization period for non-compete  agreements and customer lists are five
     and 15 years, respectively.

     During the year ended July 31, 2001, the Partnership  made  acquisitions of
     three  businesses with an aggregate  value at $418,000.  The purchases were
     funded by $200,000 of cash  payments  and, in a non-cash  transaction,  the
     issuance of $218,000 of notes payable to the seller. Non-compete agreements
     and  customer   lists  were   assigned   values  of  $228,000  and  $4,000,
     respectively.

     On December 17, 1999, the Partnership purchased Thermogas from a subsidiary
     of Williams.  At closing the Partnership entered into the following noncash
     transactions:  a) issued  $175,000,000  in senior  units to the seller,  b)
     assumed a  $183,000,000  loan,  (see Note H) and c) assumed a  $135,000,000
     operating   lease   (see   Note  L).   After   the   conclusion   of  these
     acquisition-related  transactions,  including  the  merger  of the  OLP and
     Thermogas,  the Partnership acquired $61,842,000 of cash, which remained on
     the Thermogas  balance sheet at the acquisition  date. The Partnership paid
     $17,146,000  in additional  costs and fees related to the  acquisition.  As
     part of the Thermogas acquisition, the OLP agreed to reimburse Williams for
     the value of  working  capital  received  by the  Partnership  in excess of
     $9,147,500. On June 6, 2000, the OLP and Williams agreed upon the amount of
     working  capital that was acquired by the Partnership on December 17, 1999.
     The OLP reimbursed  Williams $5,652,500 as final settlement of this working
     capital  reimbursement  obligation.  In fiscal 2000,  the  Partnership  had
     accrued $7,033,000 in involuntary  employee  termination  benefits and exit
     costs, which it expected to incur within twelve months from the acquisition
     date as it implemented  the integration of the Thermogas  operations.  This
     accrual included $5,870,000 of termination benefits and $1,163,000 of costs
     to  exit  Thermogas   activities.   The  Partnership  paid  $2,788,000  and
     $1,306,000  for  termination  benefits  and  $491,000 and $890,000 for exit
     costs in fiscal years 2001 and 2000, respectively.  The remaining liability
     for  termination  benefits  and exit costs was  reduced  in fiscal  2001 by
     $1,558,000 as an adjustment to goodwill.

     Prior to the issuance of SFAS No. 141,  "Business  Combinations," the total
     assets  contributed  to the OLP  (at the  Partnership's  cost  basis)  were
     allocated as follows:  (a) working  capital of  $16,870,000,  (b) property,
     plant and equipment of $140,284,000,  (c) $60,200,000 to customer list with
     an estimated useful life of 15 years, (d) $9,600,000 to assembled workforce
     with an estimated  useful life of 15 years,  (e)  $3,071,000 to non-compete
     agreements  with an estimated  useful life ranging from one to seven years,
     and (f)  $86,475,000  to goodwill at an estimated  useful life of 15 years.
     The  transaction  was  accounted for as a purchase  and,  accordingly,  the
     results of operations of Thermogas  have been included in the  Consolidated
     Financial  Statements  from  the  date  of  acquisition.  Pursuant  to  the
     implementation  of SFAS No. 141,  assembled  workforce  was  considered  an
     acquired  intangible  asset that did not meet the criteria for  recognition
     apart from goodwill.  Effective  August 1, 2000,  the  $8,221,000  carrying
     value of assembled workforce was reclassified to goodwill.

                                      F-26
<PAGE>

     The following pro forma  financial  information  assumes that the Thermogas
     acquisition occurred as of August 1, 1999 (unaudited):

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

</TABLE>

     During  the  fiscal  year  ended  July  31,  2000,  the  Partnership   made
     acquisitions of two other businesses with an aggregate value of $7,183,000,
     in addition to the Thermogas  acquisition.  These  purchases were funded by
     $6,338,000  of cash payments and the following  noncash  transactions:  the
     issuance  of $601,000  of notes  payable to the  seller,  $46,000 of common
     units and  $198,000 of other costs and  consideration.  Customer  lists and
     non-compete  agreements  were assigned  values of $2,056,000  and $601,000,
     respectively.

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


Q.   Earnings Per Common Unit

     In fiscal  2002,  71,253 unit options were  considered  dilutive,  however,
     these  additional  units caused less than a $0.01 change  between the basic
     and dilutive  earnings per unit. In fiscal 2001 and 2000,  the unit options
     were antidilutive. Below is a calculation of the basic and diluted earnings
     per unit on the Consolidated  Statements of Earnings.  For diluted earnings
     per unit  purposes,  the senior units were excluded as they are  considered
     contingently  issuable common units for which all necessary  conditions for
     their  issuance  have not  been  satisfied  as of the end of the  reporting
     period. In order to compute the basic and diluted earnings per common unit,
     the  distributions  on senior  units are  subtracted  from net  earnings to
     compute net earnings available to common unitholders.

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

                                               For the year ended July 31,
                                           -----------------------------------
                                              2002        2001         2000
                                           ---------    ---------    ---------
     Net earnings (loss) available
      to common unitholders                 $48,299      $45,594     $(10,146)
                                           ---------    ---------    ---------

     Weighted average common
      units outstanding                    36,022.3     31,987.3     31,306.7

     Basic and diluted earnings
      (loss) per common unit                $  1.34      $  1.43     $  (0.32)
                                           =========    =========    =========
</TABLE>

                                      F-27
<PAGE>

R.   Restatement of Consolidated Statements of Cash Flows


     Subsequent  to the  issuance of the  Partnership's  consolidated  financial
     statements for the year ended July 31, 2002,  management of the Partnership
     determined that the Partnership's  cash flows from the accounts  receivable
     securitizations should be reflected gross in its consolidated statements of
     cash flows and be included within  operating  activities  rather than a net
     presentation  within investing  activities.  The Partnership had previously
     disclosed the gross activity within the notes to the consolidated financial
     statements.  As a result, the Partnership's  consolidated statement of cash
     flows for the years  ended  July 31,  2002 and 2001 have been  restated  to
     present  the  gross  cash  flow  activities  from the  accounts  receivable
     securitizations and within the correct cash flow activity. A summary of the
     significant effects of the restatement is as follows:

<TABLE>
      <S>                                                                  <C>                <C>
                                                                               For the year ended July 31,
                                                                           ------------------------------------
      (in thousands)                                                           2002               2001
                                                                           --------------     --------------

      Cash Flows From Operating Activities

      Net cash provided by operating activities, as previously reported      $152,925            $99,859

      Adjustment of cash flows related to accounts receivable
      securitizations

        Proceeds from new accounts receivable
           securitizations                                                     30,000            115,000

        Proceeds from collections reinvested in revolving
          period accounts receivable securitizations                          360,677            725,955

        Remittances of amounts collected as servicer of
          accounts receivable securitizations                                (421,677)          (809,955)
                                                                           --------------     --------------

      Net cash provided by operating activities, as restated                 $121,925           $130,859
                                                                           ==============     ==============

      Cash Flows From Investing Activities

      Net cash provided by (used in) investing activities, as previously
      reported                                                               $(70,570)           $12,736

      Adjustment of cash flows related to accounts receivable
      securitizations                                                          31,000            (31,000)
                                                                           --------------     --------------
      Net cash (used in) investing activities, as restated                   $(39,570)          $(18,264)
                                                                           ==============     ==============
</TABLE>

<PAGE>


S.   Quarterly Data (unaudited)

     The following  summarized unaudited quarterly data includes all adjustments
     (consisting  only  of  normal  recurring  adjustments)  which  we  consider
     necessary for a fair  presentation.  Due to the  seasonality  of the retail
     distribution of propane,  first and fourth quarter  revenues,  gross profit
     and net earnings are  consistently  less than the second and third  quarter
     results.   Other  factors  affecting  the  results  of  operations  include
     competitive  conditions,   demand  for  product,  timing  of  acquisitions,
     variations in the weather and  fluctuations in propane  prices.  The sum of
     net  earnings  (loss)  per  common  unit by  quarter  may not equal the net
     earnings  (loss)  per  common  unit for the year due to  variations  in the
     weighted average units outstanding used in computing such amounts.

<TABLE>
<S>                                      <C>               <C>                <C>               <C>
(in thousands, except per unit data)
Fiscal year ended July 31, 2002
                                         First Quarter     Second Quarter     Third Quarter     Fourth Quarter
                                         -------------     --------------     -------------     --------------
Revenues                                     $245,243           $355,738          $287,161           $146,654
Gross profit                                   95,296            179,147           152,521             74,395
Net earnings (loss)                           (13,502)            68,188            36,635            (31,362)
Net earnings (loss) per
  common unit - basic                           (0.45)              1.80              0.93              (0.94)
Net earnings (loss) per
  common unit - diluted                         (0.45)              1.80              0.93              (0.93)

Fiscal year ended July 31, 2001
                                         First Quarter     Second Quarter     Third Quarter     Fourth Quarter
                                         -------------     --------------     -------------     --------------
Revenues                                     $288,461           $641,817          $384,393           $153,999
Gross profit                                   92,141            234,150           152,801             59,461
Net earnings (loss)                           (17,565)            94,948            30,402            (43,717)
Net earnings (loss) per
  common unit - basic and
  diluted                                       (0.70)              2.85              0.81              (1.38)


</TABLE>

                                      F-28

<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,
2002, and 2001, and the related statements of earnings, stockholder's equity and
cash flows for each of the three years in the period ended July 31, 2002.  These
financial  statements are the responsibility of the Ferrellgas  Partners Finance
Corp.'s  management.  Our  responsibility  is to  express  an  opinion  on these
financial statements based on our audits.

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

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects, the financial position of Ferrellgas Partners Finance Corp. as of July
31, 2002 and 2001, and the results of its operations and its cash flows for each
of the  three  years in the  period  ended  July  31,  2002 in  conformity  with
accounting principles generally accepted in the United States of America.








DELOITTE & TOUCHE LLP
Kansas City, Missouri
September 12, 2002









                                      F-29
<PAGE>

<TABLE>


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

                                      BALANCE SHEETS


    <S>                                                                 <C>        <C>

                                                                             July 31,
                                                                       --------------------
    ASSETS                                                               2002       2001
    ----------------------------------------------------------------   ---------  ---------
    Cash                                                                $1,000     $1,000
                                                                       ---------  ---------
    Total Assets                                                        $1,000     $1,000
                                                                       =========  =========



    STOCKHOLDER'S EQUITY
    ----------------------------------------------------------------
    Common stock, $1.00 par value; 2,000 shares
    authorized; 1,000 shares issued and outstanding                     $1,000     $1,000

    Additional paid in capital                                           2,061      1,662

    Accumulated deficit                                                 (2,061)    (1,662)
                                                                       ---------  ---------
    Total Stockholder's Equity                                          $1,000     $1,000
                                                                       =========  =========
</TABLE>



                       See notes to financial statements.

                                      F-30

<PAGE>
<TABLE>

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

                             STATEMENTS OF EARNINGS



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


                                                         For the year ended July 31,
                                                     -----------------------------------
                                                        2002         2001        2000
                                                     ----------   ----------  ----------

Revenues                                                   $ -          $ -         $ -

General and administrative expense                         399          425         463
                                                     ----------   ----------  ----------

Net loss                                                $ (399)      $ (425)     $ (463)
                                                     ==========   ==========  ==========


</TABLE>





                       See notes to financial statements.

                                      F-31


<PAGE>
<TABLE>

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

                               STATEMENTS OF STOCKHOLDER'S EQUITY


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

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

   August 1, 1999                     1,000     $1,000        $774       $ (774)           $1,000

   Capital contribution               -          -             463        -                   463

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

   Capital contribution               -          -             425       -                    425

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

   Capital contribution               -          -             399        -                   399

   Net loss                           -          -           -             (399)            (399)
                                 ----------- ---------- ----------- ------------ -----------------
    July 31, 2002                     1,000     $1,000      $2,061      $(2,061)           $1,000
                                 =========== ========== =========== ============ =================

</TABLE>

                       See notes to financial statements.

                                      F-32

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

          STATEMENTS OF CASH FLOWS

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



                                                            For the year ended July 31,
                                                         -----------------------------------
                                                            2002        2001        2000
                                                         -----------  ----------  ----------
Cash Flows From Operating Activities:
  Net loss                                                   $ (399)     $ (425)     $ (463)
                                                         -----------  ----------  ----------
      Cash used by operating activities                        (399)       (425)       (463)
                                                         -----------  ----------  ----------


Cash Flows From Financing Activities:
  Capital contribution                                          399         425         463
                                                         -----------  ----------  ----------
      Cash provided by financing activities                     399         425         463
                                                         -----------  ----------  ----------

Change in cash                                                -           -           -
Cash - beginning of year                                      1,000       1,000       1,000
                                                         -----------  ----------  ----------
Cash - end of year                                           $1,000      $1,000      $1,000
                                                         ===========  ==========  ==========
</TABLE>


                       See notes to financial statements.

                                      F-33

<PAGE>

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

                          NOTES TO FINANCIAL STATEMENTS



A.       Formation

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

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

B.       Commitment

          On April 26,  1996,  the  Partnership  issued  $160,000,000  of 9 3/8%
          Senior Secured Notes due 2006 (the "Senior  Notes").  The Senior Notes
          became  redeemable  at the option of the  Partnership,  in whole or in
          part,  at any time on or after June 15, 2001.  On September  24, 2002,
          the Partnership has a commitment to redeem the Senior Notes,  with the
          proceeds from $170,000,000 of newly issued fixed rate senior notes.

          Effective  April 27, 2000,  the  Partnership  entered into an interest
          rate swap agreement ("Swap  Agreement") with Bank of America,  related
          to the semi-annual  interest payment due on the Senior Notes. The Swap
          Agreement,  which was  terminated by Bank of America on June 15, 2001,
          required Bank of America to pay the stated fixed interest rate (annual
          rate 9 3/8%)  pursuant to the Senior Notes equaling  $7,500,000  every
          six  months  due on each June 15 and  December  15. In  exchange,  the
          Partnership  was required to make  quarterly  floating  interest  rate
          payments on the 15th of March,  June,  September and December based on
          an annual  interest rate equal to the 3 month LIBOR interest rate plus
          1.655%  applied  to the same  notional  amount  of  $160,000,000.  The
          Partnership  resumed  paying the stated fixed  interest rate effective
          June 16, 2001.

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

C.       Income Taxes

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

          Due to the  inability  of the  Company to  utilize  the  deferred  tax
          benefit of $821  associated  with the current year net operating  loss
          carryforward of $2,110, which expire at various dates through July 31,
          2022, a valuation  allowance  has been  provided on the full amount of
          the  deferred  tax asset.  Accordingly,  there is no net  deferred tax
          benefit for the years ended July 31, 2002,  2001 or 2000, and there is
          no net deferred tax asset as of July 31, 2002 and 2001.

                                      F-34
<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, 2002 and 2001 and Statements of Earnings
                  and Cash Flows for the years ended July 31, 2002,
                  2001 and 2000............................................S-3


Schedule II       Valuation and Qualifying Accounts for the
                  years ended July 31, 2002, 2001 and 2000.................S-6


                                      S-1

<PAGE>



                          INDEPENDENT AUDITORS' REPORT

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

We have audited the consolidated  financial  statements of Ferrellgas  Partners,
L.P. and subsidiaries (the  "Partnership") as of July 31, 2002 and 2001, and for
each of the three  years in the period  ended July 31,  2002 and have issued our
report thereon,  which included two explanatory  paragraphs relating to a change
in  accounting  principle  and to the  restatement  described  in Note R,  dated
September  12, 2002 (May 29, 2003 as to Notes E and R). Our audit also  included
the financial  statement  schedules listed in Item 15. These financial statement
schedules  are  the   responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion  based on our audits.  In our  opinion,
such financial  statement  schedules,  when  considered in relation to the basic
consolidated  financial  statements  taken as a  whole,  present  fairly  in all
material respects the information set forth therein.



DELOITTE & TOUCHE LLP
Kansas City, Missouri
September 12, 2002





                                       S-2



<PAGE>
<TABLE>
                                                                     Schedule I
                           FERRELLGAS PARTNERS, L.P.
                                  PARENT ONLY

                                 BALANCE SHEETS
                                 (in thousands)

<S>                                                    <C>        <C>
                                                            July 31,
                                                       -------------------
 ASSETS                                                  2002       2001
---------------------------------------------------    ---------  ---------

 Cash and cash equivalents                                $ 393      $ 215
 Prepaid expenses and other current assets                2,079        147
 Investment in Ferrellgas, L.P.                         180,401    196,737
 Other assets, net                                          423      3,019
                                                       ---------  ---------
    Total Assets                                       $183,296   $200,118
                                                       =========  =========




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

Other current liabilities                               $ 2,135    $ 2,131
Long term debt                                          160,000    160,000

Partners' Capital
  Senior unitholder                                     111,288    112,065
  Common unitholders                                    (28,320)   (12,959)
  General partner                                       (59,035)   (58,738)
  Accumulated other comprehensive income                 (2,772)    (2,381)
                                                       ---------  ---------
    Total Partners' Capital                              21,161     37,987
                                                       ---------  ---------

    Total Liabilities and Partners' Capital            $183,296   $200,118
                                                       =========  =========


</TABLE>

                                      S-3

<PAGE>
<TABLE>

                                                                     Schedule I
                           FERRELLGAS PARTNERS, L.P.
                                  PARENT ONLY

                             STATEMENT OF EARNINGS
                                 (in thousands)

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

                                              For the year ended July 31,
                                           --------------------------------
                                             2002        2001       2000
                                           ---------   ---------  ---------
Equity in earnings of Ferrellgas, L.P.     $ 75,588    $ 81,203   $ 15,907
Operating expense                                 2         -          -
Interest expense                             15,583      13,858     15,047
Other charges                                    44       3,277        -
                                           ---------   ---------  ---------

  Net earnings                             $ 59,959    $ 64,068      $ 860
                                           =========   =========  =========

</TABLE>

                                      S-4
<PAGE>
<TABLE>

                                                                   Schedule I

                           FERRELLGAS PARTNERS, L.P.
                                  PARENT ONLY

                            STATEMENTS OF CASH FLOWS
                                 (in thousands)

    <S>                                                        <C>         <C>        <C>
                                                                 For the year ended July 31,
                                                               -------------------------------
                                                                  2002       2001       2000
                                                               ----------  ---------  ---------
    Cash Flows From Operating Activities:
     Net earnings                                                $59,959    $64,068      $ 860
     Reconciliation of net earnings to
     net cash used in operating activities:
        Amortization of capitalized financing costs                  515        523        515
        Other                                                        192         48        -
        Equity in earnings of Ferrellgas, L.P.                   (75,588)   (81,203)   (15,907)
        Increase (decrease) in other current liabilities             (73)       289        -
        Increase (decrease) in accrued interest expense               77        148       (183)
                                                               ----------  ---------  ---------
          Net cash used in operating activities                  (14,918)   (16,127)   (14,715)
                                                               ----------  ---------  ---------

    Cash Flows From Investing Activities:
     Distributions received from Ferrellgas, L.P.                 99,051     83,133     77,962
                                                               ----------  ---------  ---------
          Net cash provided by investing activities               99,051     83,133     77,962
                                                               ----------  ---------  ---------

    Cash Flows From Financing Activities:
     Distributions to partners                                   (84,075)   (69,125)   (63,247)
     Issuance of common units, net of issuance costs                 -       84,865        -
     Redemption of senior units                                     (777)   (83,464)       -
     Proceeds from exercise of common unit options                   939      1,718        -
     Other                                                            16       (774)       -
     Net advance from (to) affiliate                                 (58)       (12)       -
                                                               ----------  ---------  ---------
          Net cash used by financing activities                  (83,955)   (66,792)   (63,247)
                                                               ----------  ---------  ---------

    Increase in cash and cash equivalents                            178        214        -
    Cash and cash equivalents - beginning of year                    215          1          1
                                                               ----------  ---------  ---------
    Cash and cash equivalents - end of year                        $ 393      $ 215        $ 1
                                                               ==========  =========  =========

</TABLE>


                                      S-5
<PAGE>
<TABLE>

                                                                    Schedule II

                    FERRELLGAS PARTNERS, L.P. AND SUBSIDIARY

                       VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

<S>                                   <C>            <C>           <C>         <C>            <C>
                                      Balance at     Charged to                Deductions     Balance
                                      beginning        cost/         Other      (amounts       at end
            Description               of period       expenses     Additions   charged-off)   of period
----------------------------------   -----------     -----------   ---------   ------------   ---------
Year ended July 31, 2002
------------------------
Allowance for doubtful accounts          $3,159          $1,604          $0        $(3,296)     $1,467


Year ended July 31, 2001
------------------------
Allowance for doubtful accounts           2,388           3,029           0         (2,258)      3,159


Year ended July 31, 2000
------------------------
Allowance for doubtful accounts           1,296           2,349           0         (1,257)      2,388


</TABLE>




                                      S-6
<PAGE>