þ		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

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

(Exact name of registrants as specified in their charters)

Delaware		43-1698480
Delaware		43-1742520
Delaware		43-1698481
Delaware		14-1866671
(States or other jurisdictions of		(I.R.S. Employer Identification Nos.)
incorporation or organization)

(Address of principal executive offices) (Zip Code)

(913) 661-1500
(Registrants’ telephone number, including area code)

Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No þ *

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, or smaller reporting companies. See definitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Ferrellgas Partners, L.P.

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

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).

Ferrellgas Partners, L.P. and Ferrellgas, L.P.		Yes o		No þ
Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp.		Yes þ		No o

At May 29, 2009, the registrants had common units or shares of common stock outstanding as follows:

Ferrellgas Partners, L.P.			68,178,103			Common Units
Ferrellgas Partners Finance Corp.			1,000			Common Stock
Ferrellgas, L.P.			n/a				n/a
Ferrellgas Finance Corp.			1,000			Common Stock

EACH OF FERRELLGAS PARTNERS FINANCE CORP. AND FERRELLGAS FINANCE CORP. MEET THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION (H)(1) (A) AND (B) OF FORM 10-Q AND ARE THEREFORE, WITH RESPECT TO EACH SUCH REGISTRANT, FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE FORMAT.

 

 

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

For the quarterly period ended April 30, 2009
FORM 10-Q QUARTERLY REPORT

Table of Contents

		Page
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (unaudited)
Ferrellgas Partners, L.P. and Subsidiaries
Condensed Consolidated Balance Sheets — April 30, 2009 and July 31, 2008			1
Condensed Consolidated Statements of Earnings — Three and nine months ended April 30, 2009 and 2008			2
Condensed Consolidated Statement of Partners’ Capital — Nine months ended April 30, 2009			3
Condensed Consolidated Statements of Cash Flows — Nine months ended April 30, 2009 and 2008			4
Notes to Condensed Consolidated Financial Statements			5
Ferrellgas Partners Finance Corp.
Condensed Balance Sheets — April 30, 2009 and July 31, 2008			16
Condensed Statements of Earnings — Three and nine months ended April 30, 2009 and 2008			16
Condensed Statements of Cash Flows — Nine months ended April 30, 2009 and 2008			17
Note to Condensed Financial Statements			17
Ferrellgas, L.P. and Subsidiaries
Condensed Consolidated Balance Sheets — April 30, 2009 and July 31, 2008			18
Condensed Consolidated Statements of Earnings — Three and nine months ended April 30, 2009 and 2008			19
Condensed Consolidated Statement of Partners’ Capital — Nine months ended April 30, 2009			20
Condensed Consolidated Statements of Cash Flows — Nine months ended April 30, 2009 and 2008			21
Notes to Condensed Consolidated Financial Statements			22
Ferrellgas Finance Corp.
Condensed Balance Sheets — April 30, 2009 and July 31, 2008			32
Condensed Statements of Earnings — Three and nine months ended April 30, 2009 and 2008			32
Condensed Statements of Cash Flows — Nine months ended April 30, 2009 and 2008			33
Note to Condensed Financial Statements			33
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			34
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			49
ITEM 4. CONTROLS AND PROCEDURES			50
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			51
ITEM 1A. RISK FACTORS			51
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			52
ITEM 3. DEFAULTS UPON SENIOR SECURITIES			52
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS			52
ITEM 5. OTHER INFORMATION			52
ITEM 6. EXHIBITS			53
Exhibit 10.4
Exhibit 31.1
Exhibit 31.2
Exhibit 31.3
Exhibit 31.4
Exhibit 32.1
Exhibit 32.2
Exhibit 32.3
Exhibit 32.4

		April 30,				July 31,
		2009				2008
ASSETS
Current assets:
Cash and cash equivalents		$	12,691			$	16,614
Accounts and notes receivable, net			168,934				145,081
Inventories			109,998				152,301
Price risk management assets			57				26,086
Prepaid expenses and other current assets			14,626				10,924
Total current assets			306,306				351,006
Property, plant and equipment, net			673,353				685,328
Goodwill			248,939				248,939
Intangible assets, net			214,243				225,273
Other assets, net			18,612				18,685
Total assets		$	1,461,453			$	1,529,231
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable		$	81,991			$	71,348
Short-term borrowings			41,580				125,729
Price risk management liabilities			33,835				7,337
Other current liabilities			252,086				100,517
Total current liabilities			409,492				304,931
Long-term debt			848,295				1,034,719
Other liabilities			19,019				23,237
Contingencies and commitments (Note I)			—				—
Minority interest			5,000				4,220
Partners’ capital:
Common unitholders (68,178,103 and 62,961,674 units outstanding at April 30, 2009 and July 31, 2008, respectively)			270,972				201,618
General partner (688,668 and 635,977 units outstanding at April 30, 2009 and July 31, 2008, respectively)			(57,335	)			(58,036	)
Accumulated other comprehensive income (loss)			(33,990	)			18,542
Total partners’ capital			179,647				162,124
Total liabilities and partners’ capital		$	1,461,453			$	1,529,231

See notes to condensed consolidated financial statements.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

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

		For the three months								For the nine months
		ended April 30,								ended April 30,
		2009				2008				2009				2008
Revenues:
Propane and other gas liquids sales		$	461,850			$	621,343			$	1,546,274			$	1,664,734
Other			99,283				90,747				210,558				206,240
Total revenues			561,133				712,090				1,756,832				1,870,974
Costs and expenses:
Cost of product sold — propane and other gas liquids sales			295,881				455,375				1,042,153				1,212,418
Cost of product sold — other			75,714				61,850				136,153				121,232
Operating expense			94,993				93,349				296,920				274,828
Depreciation and amortization expense			20,635				21,443				62,170				63,883
General and administrative expense			8,520				10,947				29,367				33,855
Equipment lease expense			4,282				5,990				14,418				18,484
Employee stock ownership plan compensation charge			1,460				3,447				4,865				9,693
Loss on disposal of assets and other			2,323				2,662				8,924				8,729
Operating income			57,325				57,027				161,862				127,852
Interest expense			(22,027	)			(21,214	)			(69,090	)			(66,351	)
Other income (expense), net			(190	)			350				(1,351	)			1,348
Earnings before income taxes and minority interest			35,108				36,163				91,421				62,849
Income tax expense (benefit)			1,847				572				2,713				(1,452	)
Minority interest			397				420				1,079				832
Net earnings			32,864				35,171				87,629				63,469
Net earnings available to general partner unitholder			329				352				876				635
Net earnings available to common unitholders		$	32,535			$	34,819			$	86,753			$	62,834
Basic and diluted net earnings available per common unit		$	0.48			$	0.55			$	1.34			$	1.00

See notes to condensed consolidated financial statements.

																		Accumulated other
		Number of units																comprehensive income (loss)
						General								General								Currency								Total
		Common				partner				Common				partner				Risk				translation				Pension				partners’
		unitholders				unitholder				unitholders				unitholder				management				adjustments				liability				capital
July 31, 2008			62,961.7				636.0			$	201,618			$	(58,036	)		$	18,749			$	26			$	(233	)		$	162,124
Contributions in connection with ESOP and stock-based compensation charges			—				—				5,855				59				—				—				—				5,914
Common units issued in public offering			4,985.6				50.4				69,447				702				—				—				—				70,149
Common unit distributions			—				—				(97,166	)			(981	)			—				—				—				(98,147	)
Common units issued in connection with acquisition			230.8				2.3				4,465				45				—				—				—				4,510
Comprehensive income:
Net earnings			—				—				86,753				876				—				—				—				87,629
Other comprehensive income (loss):
Net loss on risk management derivatives			—				—				—				—				(172,942	)			—				—
Reclassification of derivatives to earnings			—				—				—				—				120,415				—				—
Foreign currency translation adjustment			—				—				—				—				—				(19	)			—
Tax effect on foreign currency translation adjustment			—				—				—				—				—				8				—
Pension liability adjustment			—				—				—				—				—				—				6				(52,532	)
Comprehensive income																															35,097
April 30, 2009			68,178.1				688.7			$	270,972			$	(57,335	)		$	(33,778	)		$	15			$	(227	)		$	179,647

See notes to condensed consolidated financial statements.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

		For the nine months
		ended April 30,
		2009				2008
Cash flows from operating activities:
Net earnings		$	87,629			$	63,469
Reconciliation of net earnings to net cash provided by operating activities:
Depreciation and amortization expense			62,170				63,883
Employee stock ownership plan compensation charge			4,865				9,693
Stock-based compensation charge			1,109				1,383
Loss on disposal of assets			2,977				3,109
Minority interest			1,079				832
Loss on transfer of accounts receivable related to the accounts receivable securitization			9,084				8,852
Deferred tax expense (benefit)			404				(2,052	)
Other			5,752				4,534
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts and notes receivable, net of securitization			(22,952	)			(123,307	)
Inventories			42,303				(10,480	)
Prepaid expenses and other current assets			(3,236	)			(2,859	)
Accounts payable			10,956				12,947
Accrued interest expense			9,133				1,474
Other current liabilities			(8,258	)			(10,318	)
Other liabilities			(1,273	)			378
Accounts receivable securitization:
Proceeds from new accounts receivable securitizations			109,000				103,000
Proceeds from collections reinvested in revolving period accounts receivable securitizations			1,001,169				1,117,320
Remittances of amounts collected as servicer of accounts receivable securitizations			(1,118,169	)			(1,149,320	)
Net cash provided by operating activities			193,742				92,538
Cash flows from investing activities:
Business acquisitions, net of cash acquired			(213	)			(184	)
Capital expenditures			(43,549	)			(32,403	)
Proceeds from sale of assets			6,878				8,665
Other			(3,668	)			(1,530	)
Net cash used in investing activities			(40,552	)			(25,452	)
Cash flows from financing activities:
Distributions			(98,147	)			(95,392	)
Issuance of common units, net of issuance costs of $401			69,447				—
Proceeds from increase in long-term debt			198,234				108,354
Reductions in long-term debt			(238,839	)			(91,955	)
Net additions to (reductions in) short-term borrowings			(84,149	)			13,246
Cash paid for financing costs			(3,945	)			(79	)
Cash contribution from general partner			702				—
Minority interest activity			(405	)			(1,095	)
Proceeds from exercise of common unit options			—				19
Net cash used in financing activities			(157,102	)			(66,902	)
Effect of exchange rate changes on cash			(11	)			(5	)
Increase (decrease) in cash and cash equivalents			(3,923	)			179
Cash and cash equivalents — beginning of period			16,614				20,685
Cash and cash equivalents — end of period		$	12,691			$	20,864

See notes to condensed consolidated financial statements.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2009
(Dollars in thousands, except per unit data, unless otherwise designated)
(unaudited)

A.		Partnership organization and formation
		Ferrellgas Partners, L.P. (“Ferrellgas Partners”) is a publicly traded limited partnership, owning an approximate 99% limited partner interest in Ferrellgas, L.P. (the “operating partnership”). Ferrellgas Partners and the operating partnership are collectively referred to as “Ferrellgas.” Ferrellgas, Inc. (the “general partner”), a wholly-owned subsidiary of Ferrell Companies, Inc. (“Ferrell Companies”), has retained a 1% general partner interest in Ferrellgas Partners and also holds an approximate 1% general partner interest in the operating partnership, representing an effective 2% general partner interest in Ferrellgas on a combined basis. As general partner, it performs all management functions required by Ferrellgas. At April 30, 2009 Ferrell Companies beneficially owned 20.3 million of Ferrellgas Partners’ outstanding common units.
		The condensed consolidated financial statements of Ferrellgas reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the interim periods presented. All adjustments to the condensed consolidated financial statements were of a normal, recurring nature. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with (i) the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (ii) the consolidated financial statements and accompanying notes, each as set forth in Ferrellgas’ Annual Report on Form 10-K for fiscal 2008.
B.		Summary of significant accounting policies
		(1) Nature of operations:
		Ferrellgas Partners is a holding entity that conducts no operations and has two subsidiaries, Ferrellgas Partners Finance Corp. and the operating partnership. Ferrellgas Partners owns a 100% equity interest in Ferrellgas Partners Finance Corp., whose only business activity is to act as the co-issuer and co-obligor of any debt issued by Ferrellgas Partners. The operating partnership is the only operating subsidiary of Ferrellgas Partners.
		The operating partnership is engaged primarily in the distribution of propane and related equipment and supplies in the United States. The propane distribution market is seasonal because propane is used primarily for heating in residential and commercial buildings. Therefore, the results of operations for the nine months ended April 30, 2009 and 2008 are not necessarily indicative of the results to be expected for a full fiscal year. The operating partnership serves approximately one million residential, industrial/commercial, portable tank exchange, agricultural, wholesale and other customers in all 50 states, the District of Columbia and Puerto Rico.
		(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 condensed consolidated financial statements include accruals that have been established for contingent liabilities, pending claims and legal actions arising in the normal course of business, useful lives of property, plant and equipment assets, residual values of tanks, capitalization of customer tank installation costs, amortization methods of intangible assets, valuation methods used to value sales returns and allowances, allowance for doubtful accounts, financial derivative contracts and stock and unit-based compensation calculations.

(3) Supplemental cash flow information:

		For the nine months
		ended April 30,
		2009				2008
CASH PAID FOR:
Interest		$	54,325			$	63,353
Income taxes			869				1,327
NON-CASH INVESTING ACTIVITIES:
Issuance of common units in connection with acquisitions		$	4,515			$	—
Issuance of liabilities in connection with acquisitions			1,002				—
Property, plant and equipment additions			1,604				1,811

		(4) Accounts receivable securitization:
		Ferrellgas has agreements to transfer, on an ongoing basis, a portion of its trade accounts receivable through Ferrellgas Receivables, LLC (“Ferrellgas Receivables”), an accounts receivable securitization facility that is a wholly-owned unconsolidated special purpose entity. Ferrellgas retains servicing responsibilities as well as a retained interest in the transferred receivables. Ferrellgas also holds a note receivable from Ferrellgas Receivables to the extent that expected cash proceeds from the sales of accounts receivable to Ferrellgas Receivables have not been received. Ferrellgas has no other continuing involvement with the transferred receivables, other than servicing the receivables. The related receivables are transferred from the condensed consolidated balance sheets and a retained interest and note receivable are recorded for the amount of receivables sold in excess of cash received and a related loss on the transfer is recorded, which represents the discount on the sale. The retained interest and note receivable are included in “Accounts and notes receivable, net” in the condensed consolidated balance sheets.
		Ferrellgas determines the fair value of its retained interest and note receivable based on the present value of future expected cash flows using management’s best estimates of various factors, including credit loss experience and discount rates commensurate with the risks involved. These assumptions are updated periodically based on actual results; therefore, the estimated credit loss and discount rates utilized are materially consistent with historical performance. Due to the short-term nature of Ferrellgas’ trade receivables, variations in the credit and discount assumptions would not significantly impact the fair value of the retained interests and note receivable. Costs associated with the sale of receivables are included in “Loss on disposal of assets and other” in the condensed consolidated statements of earnings. See Note D – Accounts and notes receivable, net and accounts receivable securitization – for further discussion of these transactions.
		(5) New accounting standards:
		Statement of Financial Accounting Standards (“SFAS”) No. 161 “Disclosures about Derivative Instruments and Hedging Activities, an Amendment to FASB Statement No. 133” enhances disclosure requirements for derivative instruments and hedging activities. The adoption of this statement effective February 1, 2009 did not have a significant impact on Ferrellgas’ financial position or results of operations. See additional disclosures relating to commodity derivative and financial derivative transactions in Note G – Derivatives.
		SFAS No. 157, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The adoption of this statement effective August 1, 2008 did not have a significant impact on Ferrellgas’ financial position or results of operations. See disclosure of Ferrellgas’ fair value measurements commodity derivative and financial derivative transactions in Note G – Derivatives.

SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” provides entities the irrevocable option to elect to carry most financial assets and liabilities at fair value with changes in fair value recorded in earnings. The adoption of this statement was effective August 1, 2008; however, Ferrellgas has not elected the fair value option for any of its financial assets or liabilities.

SFAS No. 141(R) “Business Combinations” (a replacement of SFAS No. 141, “Business Combinations”) establishes principles and requirements for how the acquirer in a business combination recognizes and measures the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, how the acquirer recognizes and measures goodwill or a gain from a bargain purchase (formerly negative goodwill) and how the acquirer determines what information to disclose. This statement is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Ferrellgas is currently evaluating the potential impact of this statement.

SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements” establishes accounting and reporting standards for the noncontrolling interest (formerly minority interest) in a subsidiary and for the deconsolidation of a subsidiary and it clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Ferrellgas is currently evaluating the potential impact of this statement.

FASB Staff Position (“FSP”) SFAS 140-4 and FASB Interpretation No. 46R-8 “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities” improves the transparency of transfers of financial assets and an enterprise’s involvement with variable interest entities, including qualifying special-purpose entities. This FSP is effective for interim and annual reporting periods ending after December 15, 2008. The adoption of this FSP effective November 1, 2008 did not have a significant impact on Ferrellgas’ financial position or results of operations.

EITF No. 07-4, “Application of the Two-Class Method under FASB Statement No. 128, Earnings per Share, to Master Limited Partnerships” addresses the computation of incentive distribution rights and the appropriate allocation of these rights to current period earnings in the computation of earnings per share. This statement is effective for financial statements issued for fiscal years beginning on or after December 15, 2008 and interim periods within those fiscal years. Ferrellgas is currently evaluating the potential impact of this statement.

(6) Price risk management assets and liabilities:

Financial instruments formally designated and documented as a hedge of a specific underlying exposure are recorded gross at fair value as “Price risk management assets” and “Price risk management liabilities” on the condensed consolidated balance sheets with changes in fair value reported in other comprehensive income. See additional discussion about price risk management assets and liabilities in Note G – Derivatives.

(7) Income taxes:

Income tax expense (benefit) consisted of the following:

		For the three months								For the nine months
		ended April 30,								ended April 30,
		2009				2008				2009				2008
Current expense		$	1,572			$	243			$	2,309			$	600
Deferred expense (benefit)			275				329				404				(2,052	)
Income tax expense (benefit)		$	1,847			$	572			$	2,713			$	(1,452	)

Deferred taxes consisted of the following:

		April 30,				July 31,
		2009				2008
Deferred tax assets		$	812			$	4,065
Deferred tax liabilities			(1,840	)			(4,689	)
Net deferred tax liability		$	(1,028	)		$	(624	)

		During the first quarter of fiscal 2008 the Governor of the State of Michigan signed into law a one time credit for a previously passed Michigan Business Tax law. The passing of this new tax law caused Ferrellgas to recognize a one time deferred tax benefit of $2.8 million during the first quarter of fiscal 2008.
C.		Supplemental financial statement information
		Inventories consist of the following:

		April 30,				July 31,
		2009				2008
Propane gas and related products		$	88,617			$	128,776
Appliances, parts and supplies			21,381				23,525
Inventories		$	109,998			$	152,301

In addition to inventories on hand, Ferrellgas enters into contracts primarily to buy propane for supply procurement purposes. Most of these contracts have terms of less than one year and call for payment based on market prices at the date of delivery. All supply procurement fixed price contracts have terms of fewer than 24 months. As of April 30, 2009, Ferrellgas had committed, for supply procurement purposes, to take net delivery of approximately 57.8 million gallons of propane at fixed prices.

Other current liabilities consist of the following:

		April 30,				July 31,
		2009				2008
Current portion of long-term debt		$	153,078			$	2,397
Accrued interest			29,008				19,875
Customer deposits and advances			16,054				25,065
Other			53,946				53,180
Other current liabilities		$	252,086			$	100,517

Loss on disposal of assets and other consist of the following:

		For the three months								For the nine months
		ended April 30,								ended April 30,
		2009				2008				2009				2008
(Gain)/loss on disposal of assets		$	(53	)		$	1,094			$	2,977			$	3,109
Loss on transfer of accounts receivable related to the accounts receivable securitization			3,563				3,037				9,084				8,852
Service income related to the accounts receivable securitization			(1,187	)			(1,469	)			(3,137	)			(3,232	)
		$	2,323			$	2,662			$	8,924			$	8,729

Shipping and handling expenses are classified in the following condensed consolidated statements of earnings line items:

		For the three months								For the nine months
		ended April 30,								ended April 30,
		2009				2008				2009				2008
Operating expense		$	42,581			$	45,001			$	134,193			$	127,482
Depreciation and amortization expense			1,256				1,301				3,689				3,833
Equipment lease expense			4,176				5,585				13,498				17,116
		$	48,013			$	51,887			$	151,380			$	148,431

D.		Accounts and notes receivable, net and accounts receivable securitization
		Accounts and notes receivable, net consist of the following:

		April 30,				July 31,
		2009				2008
Accounts receivable		$	59,462			$	127,975
Note receivable from Ferrellgas Receivables			68,013				—
Retained interest			46,763				22,753
Other			298				330
Less: Allowance for doubtful accounts			(5,602	)			(5,977	)
Accounts and notes receivable, net		$	168,934			$	145,081

During April 2009, Ferrellgas renewed its accounts receivable securitization facility with JPMorgan Chase Bank, N.A., Falcon Asset Securitization Company, LLC and Fifth Third Bank for an additional 364-day commitment. As part of this renewed facility, the operating partnership transfers a portion of its trade accounts receivable to Ferrellgas Receivables, which finances its acquisition of the trade receivable assets by issuing beneficial interests in (securitizing) the receivables to a commercial paper conduit for proceeds of up to $145.0 million. The operating partnership does not provide any guarantee or similar support to the collectability of these receivables. The operating partnership structured the facility using a wholly-owned, unconsolidated special purpose entity in order to facilitate the transaction while complying with Ferrellgas’ various debt covenants. If the covenants are compromised, funding from the facility could be restricted or suspended, or its costs could increase. As a servicer, the operating partnership remits daily to this special purpose entity funds collected on the trade receivables held by Ferrellgas Receivables.

The operating partnership transfers a portion of its trade accounts receivable to Ferrellgas Receivables and retains an interest and a note receivable related to these transferred receivables. As these transferred receivables are subsequently collected, the funding from the accounts receivable securitization facility is reduced. Ferrellgas Receivables recorded the following on its balance sheet:

		April 30,				July 31,
		2009				2008
Trade accounts receivable transferred from the operating partnership		$	183,635			$	97,333
Note payable to the operating partnership			68,013				—

The operating partnership’s consolidated balance sheet does not include trade accounts receivables transferred, but does include a note receivable from Ferrellgas Receivables which represents expected cash proceeds from the sale of accounts receivable to Ferrellgas Receivables that have not yet been received. As of April 30, 2009, the operating partnership had received proceeds from trade accounts receivable sales of $65.0 million with the ability to receive proceeds of an additional $4.0 million.

Other accounts receivable securitization activity consists of the following:

		For the three months								For the nine months
		ended April 30,								ended April 30,
		2009				2008				2009				2008
Net non-cash activity		$	2,376			$	1,568			$	5,947			$	5,620
Bad debt expense			300				—				600				—

The net non-cash activity reported in the condensed consolidated statements of earnings approximates the financing cost of issuing commercial paper backed by these accounts receivable transferred to Ferrellgas Receivables. See details of the net non-cash activity disclosed in Note C – Supplemental financial statement information – “Loss on transfer of accounts receivable related to the accounts receivable securitization” and “Service income related to the accounts receivable securitization.” The weighted average discount rate used to value the retained interest in the transferred receivables was 3.0% and 4.7% as of April 30, 2009 and July 31, 2008, respectively.

E.		Long-term debt
		Long-term debt consists of the following:

		April 30,				July 31,
		2009				2008
Senior notes
Fixed rate, Series D-E, ranging from 7.24% to 7.42% due 2010-2013		$	152,000			$	204,000
Fixed rate, 8.75%, due 2012, net of unamortized premium of $1,186 and $1,471 at April 30, 2009 and July 31, 2008, respectively			269,186				269,471
Fixed rate, Series C, 8.87%, due 2009			73,000				73,000
Fixed rate, 6.75% due 2014, net of unamortized discount of $26,647 and $518 at April 30, 2009 and July 31, 2008, respectively			423,353				249,482
Credit facility, variable interest rate, expiring 2010 (net of $41.6 million and $125.7 million classified as short-term borrowings at April 30, 2009 and July 31, 2008, respectively)			78,420				235,270
Notes payable, 8.0% weighted average interest rate in 2009 due 2009 to 2016, net of unamortized discount of $1,084 and $1,160 at April 30, 2009 and July 31, 2008, respectively			5,414				5,864
Capital lease obligations			—				29
			1,001,373				1,037,116
Less: current portion, included in other current liabilities on the condensed consolidated balance sheets			153,078				2,397
Long-term debt		$	848,295			$	1,034,719

On August 1, 2008, Ferrellgas made scheduled principal payments of $52.0 million on the 7.12% Series C senior notes using proceeds from borrowings on the unsecured credit facility due 2010.

On August 4, 2008, Ferrellgas issued $200.0 million in aggregate principal amount of its 6.75% senior notes due 2014 at an offering price equal to 85% of par.

Unsecured credit facility

On October 15, 2008, Ferrellgas executed a second amendment to its Fifth Amended and Restated Credit Agreement due 2010 which increased the letter of credit sublimit from $90.0 million to $200.0 million through February 28, 2009 and to $150.0 million thereafter. The letter of credit sublimit is part of, and not in addition to, the aggregate credit facility commitment. The amendment also requires Ferrellgas to cash collateralize any outstanding letter of credit obligations in an amount equal to the pro rata share of any defaulting lender.

On April 20, 2009 Ferrellgas terminated the $150.0 million unsecured credit facility due August 1, 2009. In conjunction with this termination Ferrellgas paid down the total borrowings outstanding under this facility of $95.0 million using borrowing capacity available under the $448.0 million unsecured credit facility due April 2010.

As of April 30, 2009, Ferrellgas had total borrowings outstanding under its unsecured credit facility of $120.0 million. Ferrellgas classified $41.6 million of this amount as short-term borrowings since it was used to fund working capital needs that management intends to pay down within the following 12 months. Ferrellgas classified the remaining $78.4 million as current portion of long term debt because the unsecured credit facility matures within one year. Ferrellgas intents to extend or renew this unsecured credit facility before its maturity date in April 2010. These borrowings have a weighted average interest rate of 2.2%.

As of July 31, 2008, Ferrellgas had total borrowings outstanding under its two unsecured credit facilities of $361.0 million. Ferrellgas classified $125.7 million of this amount as short-term borrowings since it was used to fund working capital needs that management had intended to pay down within the following 12 months. These borrowings had a weighted average interest rate of 4.72%.

Letters of credit outstanding at April 30, 2009 totaled $76.9 million and were used primarily to secure insurance arrangements, margin calls under certain risk management activities, and to a lesser extent, product purchases. Letters of credit outstanding at July 31, 2008 totaled $42.3 million and were used primarily for insurance arrangements. At April 30, 2009, Ferrellgas had available letter of credit capacity of $73.1 million.

As of April 30, 2009, Ferrellgas met all the required quarterly financial tests and covenants related to its senior notes and unsecured credit facility.

F.

Partners’ capital

Partnership distributions paid

Ferrellgas Partners has paid the following distributions:

		For the three months								For the nine months
		ended April 30,								ended April 30,
		2009				2008				2009				2008
Public common unit holders		$	21,758			$	19,159			$	60,174			$	57,498
Ferrell Companies (1)			10,040				10,040				30,121				30,121
FCI Trading Corp. (2)			98				98				294				294
Ferrell Propane, Inc. (3)			26				26				77				77
James E. Ferrell (4)			2,167				2,157				6,500				6,449
General partner			344				318				981				953
		$	34,433			$	31,798			$	98,147			$	95,392

(1)		Ferrell Companies is the owner of the general partner and a 30% beneficial owner of Ferrellgas’ common units and thus a related party.
(2)		FCI Trading Corp. (“FCI Trading”) is an affiliate of the general partner and thus a related party.

(3)		Ferrell Propane, Inc. (“Ferrell Propane”) is controlled by the general partner and thus a related party.
(4)		James E. Ferrell is the Chairman and Chief Executive Officer of the general partner and thus a related party.

On May 27, 2009, Ferrellgas Partners declared a cash distribution of $0.50 per common unit for the three months ended April 30, 2009, which is expected to be paid on June 12, 2009.

Included in this cash distribution are the following amounts expected to be paid to related parties:

Ferrell Companies		$	10,040
FCI Trading Corp.			98
Ferrell Propane, Inc.			26
James E. Ferrell			2,177
General partner			344

See additional discussions about transactions with related parties in Note H – Transactions with related parties.

In February 2009, Ferrellgas completed a registered public offering of 5.0 million common units representing limited partner interests. This transaction was comprised of both an original offering of 4.5 million common units and an over allotment offering of 0.5 million common units. The net proceeds received from this offering of $69.4 million were used to reduce long term borrowings under Ferrellgas’ unsecured credit facility. Ferrellgas intends to use the resulting additional credit facility capacity to make principal payments on debt on or prior to its maturity on August 1, 2009.

Other comprehensive income (“OCI”)

See Note G – Derivatives – for details regarding changes in fair value on risk management financial derivatives recorded within OCI for the nine months ended April 30, 2009.

G.

Derivatives

Commodity Price Risk Management

Ferrellgas’ risk management activities primarily attempt to mitigate price risks related to the purchase, storage, transport and sale of propane generally in the contract and spot markets from major domestic energy companies on a short-term basis. Ferrellgas attempts to mitigate these price risks through the use of financial derivative instruments and forward propane purchase and sales contracts.

Ferrellgas’ risk management strategy involves taking positions in the forward or financial markets that are equal and opposite to Ferrellgas’ positions in the physical products market in order to minimize the risk of financial loss from an adverse price change. This risk management strategy is successful when its gains or losses in the physical product markets are offset by its losses or gains in the forward or financial markets. These financial derivatives are designated as cash flow hedges.

Ferrellgas’ risk management activities include the use of financial derivative instruments including, but not limited to, price swaps, options, futures and basis swaps to seek protection from adverse price movements and to minimize potential losses. Ferrellgas enters into these financial derivative instruments directly with third parties in the over-the-counter market and with brokers who are clearing members with the New York Mercantile Exchange. Ferrellgas also enters into forward propane purchase and sales contracts with counterparties. These forward contracts qualify for the normal purchase normal sales exception within SFAS 133 and are therefore not recorded prior to settlement on Ferrellgas’ financial statements.

Cash Flow Hedging Activity

Ferrellgas uses financial derivative instruments for risk management purposes to hedge a portion of its exposure to market fluctuations in propane prices. These financial derivative instruments are designated as cash flow hedging instruments, thus the effective portions of changes in the fair value of the financial derivatives are recorded in OCI prior to settlement and are subsequently recognized in the condensed consolidated statements of earnings in “Cost of goods sold – propane and other gas liquids sales” when the forward or forecasted propane sales transaction impacts earnings. The effectiveness of cash flow hedges is evaluated at inception and on an on-going basis. Changes in the fair value of cash flow hedges due to hedge ineffectiveness, if any, are recognized in “Cost of product sold – propane and other gas liquids sales.” During the nine months ended April 30, 2009 and 2008, Ferrellgas did not recognize any gain or loss in earnings related to hedge ineffectiveness and did not exclude any component of the financial derivative contract gain or loss from the assessment of hedge effectiveness related to these cash flow hedges.

The fair value of financial derivative instruments are classified gross on the condensed consolidated balance sheets as “Price risk management assets” and “Price risk management liabilities” as follows:

		April 30,				July 31,
		2009				2008
Derivatives – Price risk management assets		$	57			$	26,086
Derivatives – Price risk management liabilities			33,835				7,337

Ferrellgas had the following cash flow hedge activity included in OCI in the condensed consolidated statements of partners’ capital:

		For the nine
		months ended
		April 30,
		2009
Fair value loss adjustment classified as OCI with offset in Price risk management assets and Price risk management liabilities		$	(172,942	)
Reclassification of net losses originally recorded within OCI to Cost of product sold – propane and other gas liquids			(120,415	)

The fair value losses reported above relate to the recent significant decrease in wholesale propane prices. Assuming a minimal change in future market prices, Ferrellgas expects to reclassify net losses of approximately $33.8 million to earnings during the next nine months. These net losses are expected to be offset by margins on propane sales commitments Ferrellgas has with its customers that qualify for the normal purchase normal sales exception under SFAS 133.

During the three and nine months ended April 30, 2009 and 2008, Ferrellgas had no reclassifications to earnings resulting from discontinuance of any cash flow hedges arising from the probability of the original forecasted transactions not occurring within the originally specified period of time defined within the hedging relationship.

As of April 30, 2009, Ferrellgas had financial derivative contracts covering 1.2 million barrels of propane that were entered into as cash flow hedges of forward and forecasted purchases of propane.

During the nine months ended April 30, 2009 and 2008, four counterparties represented 84% and 87%, respectively, of net settled cash flow hedging positions reported in “Cost of goods sold – propane and other gas liquids sales.” During the nine months ended April 30, 2009 and 2008, Ferrellgas neither held nor entered into financial derivative contracts that contained credit risk related contingency features.

In accordance with SFAS 157, Ferrellgas determines the fair value of its assets and liabilities subject to fair value measurement by using the highest possible “Level” as defined within SFAS 157. The three levels defined by the SFAS 157 hierarchy are as follows:

	•		Level 1 – Quoted prices available in active markets for identical assets or liabilities.
	•		Level 2 – Pricing inputs not quoted in active markets but either directly or indirectly observable.
	•		Level 3 – Significant inputs to pricing that have little or no transparency with inputs requiring significant management judgment or estimation.

Ferrellgas considers over-the-counter derivative instruments entered into directly with third parties as Level 2 valuation since the values of these derivatives are quoted by third party brokers and are on an exchange for similar transactions. The market prices used to value Ferrellgas’ derivatives have been determined using independent third party prices, readily available market information, broker quotes, and appropriate valuation techniques.

At April 30, 2009 and July 31, 2008, all derivative assets and liabilities qualified for classification as Level 2 — other observable inputs as defined within SFAS 157. All financial derivatives assets and liabilities were non-trading positions.

H.

Transactions with related parties

Reimbursable costs

Ferrellgas has no employees and is managed and controlled by its general partner. Pursuant to Ferrellgas’ partnership agreements, the general partner is entitled to reimbursement for all direct and indirect expenses incurred or payments it makes on behalf of Ferrellgas and all other necessary or appropriate expenses allocable to Ferrellgas or otherwise reasonably incurred by its general partner in connection with operating Ferrellgas’ business. These costs primarily include compensation and benefits paid to employees of the general partner who perform services on Ferrellgas’ behalf and are reported in the condensed consolidated statements of earnings as follows:

		For the three months								For the nine months
		ended April 30,								ended April 30,
		2009				2008				2009				2008
Operating expense		$	50,122			$	46,127			$	158,929			$	138,050
General and administrative expense			5,879				7,197				17,622				20,629

During the three and nine months ended April 30, 2009, Ferrellgas received payments totaling $75 thousand and $195 thousand, respectively, for services provided to and sublease revenue receipts from Samson Dental Practice Management, LLC, a company wholly-owned by James E. Ferrell. No payments were received from Samson Dental Practice Management, LLC during the three and nine months ended April 30, 2008.

See additional discussions about transactions with related parties in Note F – Partners’ capital.

I.

Contingencies

Ferrellgas’ operations are subject to all operating hazards and risks normally incidental to handling, storing, transporting and otherwise providing for use by consumers of combustible liquids such as propane. As a result, at any given time, Ferrellgas is threatened with or named as a defendant in various lawsuits arising in the ordinary course of business. Currently, Ferrellgas is not a party to any legal proceedings other than various claims and lawsuits arising in the ordinary course of business. It is not possible to determine the ultimate disposition of these matters; however, management is of the opinion that there are no known claims or contingent claims that are reasonably expected to have a material adverse effect on the condensed consolidated financial condition, results of operations and cash flows of Ferrellgas.

J.

Earnings per common unit

Below is a calculation of the basic and diluted net earnings available per common unit in the condensed consolidated statements of earnings for the periods indicated. In accordance with EITF 03-6, “Participating Securities and the Two-Class Method under FASB Statement No. 128, Earnings per Share” (“EITF 03-6”), Ferrellgas calculates net earnings per limited partner unit for each period presented according to distributions declared and participation rights in undistributed earnings, as if all of the earnings for the period had been distributed. In periods with undistributed earnings above certain levels, the calculation according to the two-class method results in an increased allocation of undistributed earnings to the general partner and a dilution of the earnings to the limited partners. Due to the seasonality of the propane business, the dilution effect of EITF 03-6 typically impacts only the three months ending January 31. There was not a dilutive effect of EITF 03-6 on basic net earnings per limited partner unit for the three months ended April 30, 2009 and 2008 or the nine months ended April 30, 2009 and 2008.

In periods with year-to-date net losses, the allocation of the net losses to the limited partners and the general partner will be determined based on the same allocation basis specified in the Ferrellgas Partners’ partnership agreement that would apply to periods in which there were no undistributed earnings. Ferrellgas typically incurs net losses in the three month periods ended October 31 and July 31.

		For the three months								For the nine months
		ended April 30,								ended April 30,
		2009				2008				2009				2008
Net earnings available to common unitholders		$	32,535			$	34,819			$	86,753			$	62,834
Weighted average common units outstanding (in thousands)			67,809.3				62,958.9				64,650.2				62,958.7
Dilutive securities			40.5				10.9				70.4				11.9
Weighted average common units outstanding plus dilutive securities			67,849.8				62,969.8				64,720.6				62,970.6
Basic and diluted net earnings available per common unit		$	0.48			$	0.55			$	1.34			$	1.00

		April 30,				July 31,
		2009				2008
ASSETS
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			5,594				5,149
Accumulated deficit			(5,594	)			(5,149	)
Total stockholder’s equity		$	1,000			$	1,000

		For the three months								For the nine months
		ended April 30,								ended April 30,
		2009				2008				2009				2008
General and administrative expense		$	400			$	—			$	445			$	105
Net loss		$	(400	)		$	—			$	(445	)		$	(105	)

See note to condensed financial statements.

		For the nine months
		ended April 30,
		2009				2008
Cash flows from operating activities:
Net loss		$	(445	)		$	(105	)
Cash used in operating activities			(445	)			(105	)
Cash flows from financing activities:
Capital contribution			445				105
Cash provided by financing activities			445				105
Change in cash			—				—
Cash — beginning of period			1,000				1,000
Cash — end of period		$	1,000			$	1,000

See note to condensed 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 condensed financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the interim periods presented. All adjustments to the condensed financial statements were of a normal, recurring nature.

The Finance Corp. has nominal assets, does not conduct any operations, has no employees and serves as co-issuer and co-obligor for debt securities of the Partnership.

		April 30,				July 31,
		2009				2008
ASSETS
Current assets:
Cash and cash equivalents		$	12,637			$	16,545
Accounts and notes receivable, net			168,934				145,081
Inventories			109,998				152,301
Price risk management assets			57				26,086
Prepaid expenses and other current assets			13,935				10,251
Total current assets			305,561				350,264
Property, plant and equipment, net			673,353				685,328
Goodwill			248,939				248,939
Intangible assets, net			214,243				225,273
Other assets, net			17,214				16,817
Total assets		$	1,459,310			$	1,526,621
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable		$	81,991			$	71,348
Short-term borrowings			41,580				125,729
Price risk management liabilities			33,835				7,337
Other current liabilities			243,157				97,453
Total current liabilities			400,563				301,867
Long-term debt			579,109				765,248
Other liabilities			19,019				23,237
Contingencies and commitments (Note I)			—				—
Partners’ capital
Limited partner			489,609				413,507
General partner			5,000				4,220
Accumulated other comprehensive income (loss)			(33,990	)			18,542
Total partners’ capital			460,619				436,269
Total liabilities and partners’ capital		$	1,459,310			$	1,526,621

See notes to condensed consolidated financial statements.

FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

		For the three months								For the nine months
		ended April 30,								ended April 30,
		2009				2008				2009				2008
Revenues:
Propane and other gas liquids sales		$	461,850			$	621,343			$	1,546,274			$	1,664,734
Other			99,283				90,747				210,558				206,240
Total revenues			561,133				712,090				1,756,832				1,870,974
Costs and expenses:
Cost of product sold — propane and other gas liquids sales			295,881				455,375				1,042,153				1,212,418
Cost of product sold — other			75,714				61,850				136,153				121,232
Operating expense			94,925				93,278				296,715				274,632
Depreciation and amortization expense			20,635				21,443				62,170				63,883
General and administrative expense			8,520				10,947				29,367				33,855
Equipment lease expense			4,282				5,990				14,418				18,484
Employee stock ownership plan compensation charge			1,460				3,447				4,865				9,693
Loss on disposal of assets and other			2,323				2,662				8,924				8,729
Operating income			57,393				57,098				162,067				128,048
Interest expense			(16,100	)			(15,289	)			(51,311	)			(48,566	)
Other income (expense), net			(190	)			350				(1,351	)			1,348
Earnings before income taxes			41,103				42,159				109,405				80,830
Income tax expense (benefit)			1,810				571				2,629				(1,528	)
Net earnings		$	39,293			$	41,588			$	106,776			$	82,358