Our management's discussion and analysis of financial condition and results of operations relates to Ferrellgas Partners, L.P. and Ferrellgas, L.P. Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp. have nominal assets, do not conduct any operations and have no employees other than officers. Ferrellgas Partners Finance Corp. serves as co-issuer and co-obligor for debt securities of Ferrellgas Partners, L.P. and Ferrellgas Finance Corp. serves as co-issuer and co-obligor for debt securities of Ferrellgas, L.P. Accordingly, and due to the reduced disclosure format, a discussion of the results of operations, liquidity and capital resources of Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp. is not presented in this section.
In this Quarterly Report on Form 10-Q, unless the context indicates otherwise:
• "us," "we," "our," "ours," or "consolidated" are references exclusively to Ferrellgas Partners, L.P. together with its consolidated subsidiaries, including Ferrellgas Partners Finance Corp., Ferrellgas, L.P. and Ferrellgas Finance Corp., except when used in connection with "common units," in which case these terms refer to Ferrellgas Partners, L.P. without its consolidated subsidiaries;

• "Ferrellgas Partners" refers to Ferrellgas Partners, L.P. itself, without its consolidated subsidiaries;

• the "operating partnership" refers to Ferrellgas, L.P., together with its consolidated subsidiaries, including Ferrellgas Finance Corp.;

• our "general partner" refers to Ferrellgas, Inc.;

• "Ferrell Companies" refers to Ferrell Companies, Inc., the sole shareholder of our general partner;

• "unitholders" refers to holders of common units of Ferrellgas Partners;

• "customers" refers to customers other than our wholesale customers or our other bulk propane distributors or marketers;

• "retail sales" refers to Propane and other gas liquid sales: Retail - Sales to End Users or the volume of propane sold primarily to our residential, industrial/commercial and agricultural customers;

• "wholesale sales" refers to Propane and other gas liquid sales: Wholesale - Sales to Resellers or the volume of propane sold primarily to our portable tank exchange customers and bulk propane sold to wholesale customers;

• "other gas sales" refers to Propane and other gas liquid sales: Other Gas Sales or the volume of bulk propane sold to other third party propane distributors or marketers and refined fuel volumes sold;

• "propane sales volume" refers to the volume of propane sold to our retail sales and wholesale sales customers; and

• "Notes" refers to the notes of the condensed consolidated financial statements of Ferrellgas Partners or the operating partnership, as applicable.

Ferrellgas Partners is a holding entity that conducts no operations and has two direct subsidiaries, Ferrellgas Partners Finance Corp. and the operating partnership. Ferrellgas Partners' only significant assets are its approximate 99% limited partnership interest in the operating partnership and its 100% equity interest in Ferrellgas Partners Finance Corp. The common units of Ferrellgas Partners are listed on the New York Stock Exchange and our activities are primarily conducted through the operating partnership.
The operating partnership was formed on April 22, 1994, and accounts for substantially all of our consolidated assets, sales and operating earnings, except for interest expense related to $268.0 million in the aggregate principal amount of 8.75% senior notes due 2012 co-issued by Ferrellgas Partners and Ferrellgas Partners Finance Corp.
Our general partner performs all management functions for us and our subsidiaries and holds a 1% general partner interest in Ferrellgas Partners and an approximate 1% general partner interest in the operating partnership. The parent company of our general partner, Ferrell Companies, beneficially owns approximately 30% of our outstanding common units. Ferrell Companies is owned 100% by an employee stock ownership trust.
We file annual, quarterly, and other reports and information with the SEC. You may read and download our SEC filings over the Internet from several commercial document retrieval services as well as at the SEC's website at www.sec.gov. You may also read and copy our SEC filings at the SEC's Public Reference Room located at 100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information concerning the Public Reference Room and any applicable copy charges. Because our common units are traded on the New York Stock Exchange, under the ticker symbol of "FGP," we also provide our SEC filings and particular other information to the New York Stock Exchange. You may obtain copies of these filings and such other information at the offices of the New York Stock Exchange located at 11 Wall Street, New York, New York 10005. In addition, our SEC filings are available on our website at www.ferrellgas.com at no cost as soon as reasonably practicable after our electronic filing or furnishing thereof with the SEC. Please note that any Internet addresses provided in this Quarterly Report on Form 10-Q are for informational purposes only and are not intended to be hyperlinks. Accordingly, no information found and/or provided at such Internet addresses is intended or deemed to be incorporated by reference herein.
The following is a discussion of our historical financial condition and results of operations and should be read in conjunction with our historical condensed consolidated financial statements and accompanying Notes thereto included elsewhere in this Quarterly Report on Form 10-Q.
The discussions set forth in the "Results of Operations" and "Liquidity and Capital Resources" sections generally refer to Ferrellgas Partners and its consolidated subsidiaries. However, in these discussions there exist two material differences between Ferrellgas Partners and the operating partnership. Those material differences are:
• because Ferrellgas Partners has issued $268.0 million in aggregate principal amount of 8.75% senior notes due fiscal 2012, the two partnerships incur different amounts of interest expense on their outstanding indebtedness; see the statements of earnings in their respective condensed consolidated financial statements and Note E - Long-term debt - in the respective notes to their condensed consolidated financial statements; and

• Ferrellgas Partners issued common units during both fiscal 2008 and fiscal 2009.

Overview
We are a leading distributor of propane and related equipment and supplies to customers primarily in the United States and conduct our business as a single reportable operating segment. We believe that we are the second largest retail marketer of propane in the United States, and the largest national provider of propane by portable tank exchange, as measured by our propane sales volumes in fiscal 2008.
We serve 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. Our operations primarily include the distribution and sale of propane and related equipment and supplies with concentrations in the Midwest, Southeast, Southwest and Northwest regions of the United States. Our propane distribution business consists principally of transporting propane purchased from third parties to propane distribution locations and then to tanks on customers' premises or to portable propane tanks delivered to nationwide and local retailers. Our portable tank exchange operations, nationally branded under the name Blue Rhino, are conducted through a network of independent and partnership-owned distribution outlets. Our market areas for our residential and agricultural customers are generally rural, but also include urban areas for industrial applications. Our market area for our industrial/commercial and portable tank exchange customers is generally urban. In the residential and industrial/commercial markets, propane is primarily used for space heating, water heating, cooking and other propane fueled appliances. In the portable tank exchange market, propane is used primarily for outdoor cooking using gas grills. In the agricultural market, propane is primarily used for crop drying, space heating, irrigation and weed control. In addition, propane is used for a variety of industrial applications, including as an engine fuel which is burned in internal combustion engines that power vehicles and forklifts, and as a heating or energy source in manufacturing and drying processes.
The market for propane is seasonal because of increased demand during the winter months primarily for the purpose of providing heating in residential and commercial buildings. Consequently, sales and operating profits are concentrated in our second and third fiscal quarters, which are during the winter heating season of November through March. However, our propane by portable tank exchanges sales volume provides us increased operating profits during our first and fourth fiscal quarters due to its counter-seasonal business activities. It also provides us the ability to better utilize our seasonal resources at our propane distribution locations. Other factors affecting our results of operations include competitive conditions, volatility in energy commodity prices, demand for propane, timing of acquisitions and general economic conditions in the United States.
We use information on temperatures to understand how our results of operations are affected by temperatures that are warmer or colder than normal. We use the definition of "normal" temperatures based on information published by the National Oceanic and Atmospheric Administration ("NOAA"). Based on this information we calculate a ratio of actual heating degree days to normal heating degree days. Heating degree days are a general indicator of weather impacting propane usage.
Weather conditions have a significant impact on demand for propane for heating purposes during the winter heating season of November through March. Accordingly, the volume of propane used by our customers for this purpose is directly affected by the severity of the winter weather in the regions we serve and can vary substantially from year to year. In any given region, sustained warmer-than-normal temperatures will tend to result in reduced propane usage, while sustained colder-than-normal temperatures will tend to result in greater usage. Although there is a direct correlation between weather and customer usage, there is a natural time lag between the onset of cold weather and increased sales to customers. Nationwide temperatures during the fiscal third quarter were 4% warmer than normal and 5% warmer than one year ago.

Our gross margin from the retail distribution of propane is primarily based on the cents-per-gallon difference between the sale price we charge our customers and our costs to purchase and deliver propane to our propane distribution locations. Our residential customers and portable tank exchange customers typically provide us a greater cents-per-gallon margin than our industrial/commercial, agricultural, wholesale and other customers. We track "Propane sales volumes," "Revenues - Propane and other gas liquids sales" and "Gross margin - Propane and other gas liquids sales" by customer; however, we are not able to specifically allocate operating and other costs in a manner that would determine their specific profitability with a high degree of accuracy. The wholesale propane price per gallon is subject to various market conditions and may fluctuate based on changes in demand, supply and other energy commodity prices, primarily crude oil and natural gas, as propane prices tend to correlate with the fluctuations of these underlying commodities.
We employ risk management activities that attempt to mitigate price risks related to the purchase, storage, transport and sale of propane. We enter into propane sales commitments with a portion of our customers that provide for a contracted price agreement for a specified period of time. These commitments can expose us to product price risk if not immediately hedged with an offsetting propane purchase commitment. Due to the significant price decrease in propane since the beginning of fiscal 2009, most financial derivative purchase commitments we entered into to hedge propane sales commitments experienced significant losses when they settled. These losses were offset by margins on propane sales commitments that had qualified for the normal purchase normal sale exception under SFAS 133.
Most of our currently open financial derivative purchase commitments have experienced similar mark to market losses resulting from the significant price decrease in propane since the beginning of fiscal 2009. Because these financial derivative purchase commitments qualify for hedge accounting treatment under SFAS 133, the resulting liability and related mark to market losses are recorded on the balance sheet as price risk management liabilities and accumulated other comprehensive income (loss), respectively, until settled. Upon settlement, realized gains or losses on these contracts will be reclassified to "Cost of product sold-propane and other gas liquid sales" in the condensed consolidated statements of earnings. These financial derivative purchase commitment losses are expected to be offset by margins on propane sales commitments that qualify for the normal purchase normal sale exception under SFAS 133. At April 30, 2009 we estimate 86% of currently open financial derivative purchase commitments, the related propane sales commitments, and the resulting gross margin will be realized into earnings during the remainder of fiscal 2009. Our business strategy is to:
• capitalize on our national presence and economies of scale;

• expand our operations through disciplined acquisitions and internal growth;

• maximize operating efficiencies through utilization of our technology platform; and

• align employee interests with our investors through significant employee ownership.

Forward-looking Statements
Statements included in this report include forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. These statements often 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. These statements often discuss plans, strategies, events or developments that we expect or anticipate will or may occur in the future and are based upon the beliefs and assumptions of our management and on the information currently available to them. In particular, statements, express or implied, concerning our future operating results or our ability to generate sales, income or cash flow are forward-looking statements.

Forward-looking statements are not guarantees of performance. You should not put undue reliance on any forward-looking statements. All forward-looking statements are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially from those expressed in or implied by these forward-looking statements. Many of the factors that will affect our future results are beyond our ability to control or predict. Some of our forward-looking statements include the following:
• whether the operating partnership will have sufficient funds to meet its obligations, including its obligations under its debt securities, and to enable it to distribute to Ferrellgas Partners sufficient funds to permit Ferrellgas Partners to meet its obligations with respect to its existing debt and equity securities;

• whether Ferrellgas Partners and the operating partnership will continue to meet all of the quarterly financial tests required by the agreements governing their indebtedness; and

• our expectation that "Operating income" and "Net earnings" during the remainder of fiscal 2009 will be higher than the same period during fiscal 2008.

These forward-looking statements can also be found in the section of our Annual Report on Form 10-K for our fiscal 2008 entitled "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations." When considering any forward-looking statement, you should also keep in mind the risk factors set forth in both the section in our Annual Report on Form 10-K for our fiscal 2008 entitled "Item 1A. Risk Factors" and "Item 1A. Risk Factors" within this Form 10-Q. Any of these risks could impair our business, financial condition or results of operations. Any such impairment may affect our ability to make distributions to our unitholders or pay interest on the principal of any of our debt securities. In addition, the trading price, if any, of our securities could decline as a result of any such impairment.
Except for our ongoing obligations to disclose material information as required by federal securities laws, we undertake no obligation to update any forward-looking statements or risk factors after the date of this quarterly report.
In addition, the classification of Ferrellgas Partners and the operating partnership as partnerships for federal income tax purposes means that we do not generally pay federal income taxes. We do, however, pay taxes on the income of our subsidiaries that are corporations. See the section in our Annual Report on Form 10-K for our fiscal 2008 entitled "Item 1A. Risk Factors - Tax Risks." The IRS could treat us as a corporation for tax purposes or changes in federal or state laws could subject us to entity-level taxation, which would substantially reduce the cash available for distribution to our unitholders.

Results of Operations
Three months ended April 30, 2009 compared to April 30, 2008

                                                                             Favorable
 (amounts in thousands)                                                    (Unfavorable)
 Three months ended April 30,                 2009          2008              Variance

 Propane sales volumes (gallons):
 Retail - Sales to End Users                  183,683       204,683        (21,000 )     (10 )%
 Wholesale - Sales to Resellers                55,523        47,427          8,096        17 %

                                              239,206       252,110        (12,904 )      (5 )%


 Revenues -
 Propane and other gas liquids sales:
 Retail - Sales to End Users                $ 343,712     $ 461,201     $ (117,489 )     (25 )%
 Wholesale - Sales to Resellers               110,590       112,126         (1,536 )      (1 )%
 Other Gas Sales                                7,548        48,016        (40,468 )     (84 )%

                                            $ 461,850     $ 621,343     $ (159,493 )     (26 )%


 Gross margin -
 Propane and other gas liquids sales: (a)
 Retail - Sales to End Users                $ 124,708     $ 134,285     $   (9,577 )      (7 )%
 Wholesale - Sales to Resellers                40,979        29,197         11,782        40 %
 Other Gas Sales                                  282         2,486         (2,204 )     (89 )%

                                            $ 165,969     $ 165,968     $        1         - %


 Operating income                           $  57,325     $  57,027     $      298         1 %
 Interest expense                              22,027        21,214           (813 )      (4 )%
 Interest expense - operating partnership      16,100        15,289           (811 )      (5 )%

(a) Gross margin from propane and other gas liquids sales represents "Propane and other gas liquids sales" less "Cost of product sold
- propane and other gas liquids sales."

Propane sales volumes during the three months ended April 30, 2009 decreased 12.9 million gallons from that of the prior year period due primarily to 21.0 million of decreased gallon sales to our retail customers. This decrease was partially offset by an 8.1 million increase in gallon sales to our wholesale customers. We believe retail sales volumes decreased primarily due to temperatures being 5% warmer than the prior year period and due to customer conservation associated with the current overall weak economic environment. Wholesale sale volumes increased due to our emphasis on expanding this portion of our business.
The wholesale market price at one of the major supply points, Mt. Belvieu, Texas, during the three months ended April 30, 2009 averaged 57% less than the prior year period. The wholesale market price averaged $0.65 and $1.50 per gallon during the three months ended April 2009 and 2008, respectively. Revenues - Propane and other gas liquids sales Retail sales decreased $117.5 million compared to the prior year period. This decrease resulted primarily from a $70.2 million decrease in sales price per gallon resulting from a significant reduction in the wholesale market price of propane and a $47.3 million decrease due to lower propane sales volumes, both as discussed above.
Other gas sales decreased $40.5 million compared to the prior year period. This decrease resulted primarily from a $31.7 million decrease due to lower propane sales volumes and a $7.1 million decrease in sales price per gallon.

Gross margin - Propane and other gas liquids sales Retail sales gross margin decreased $9.6 million compared to the prior year period. This decrease resulted primarily from a $13.8 million decrease due to lower propane sales volumes, as discussed above, partially offset by a $4.2 million increase in gross margin. Gross margin increased primarily due to our ability to maintain a slower pace of decreasing sales prices despite a significant decrease in the wholesale market price of propane, as discussed above.
Wholesale sales gross margin increased $11.8 million compared to the prior year period. This increase resulted primarily from a $6.8 million increase in gross margin per gallon and a $5.0 million increase due to higher propane sales volumes, as discussed above. Gross margin increased primarily due to our ability to maintain a slower pace of decreasing sales prices despite a significant decrease in the wholesale market price of propane, as discussed above. Operating income
Operating income increased $0.3 million compared to the prior year period primarily due to a $2.4 million decrease in "General and administrative expense" a $2.0 million decrease in "Employee stock ownership plan ownership charges" and a $1.7 million decrease in "Equipment lease expense". These favorable results were partially offset by a $5.3 million decrease in gross margin from "Revenues:
Other" and a $1.6 million increase in "Operating expense". General and administrative expense decreased primarily due to $1.7 million in personnel and performance based incentive expenses savings. Employee stock ownership plan ownership charges decreased primarily due to the effect of lower Ferrellgas common unit prices during the current year period. Equipment lease expense decreased primarily due to $1.1 million in computer related lease expense. Revenue: Other decreased primarily due to $10.5 million of miscellaneous fees billed to customers in the prior year period that were not repeated during the current year period, which were somewhat offset by a $1.6 million increase in appliance sales gross margin. Operating expenses increased primarily due to $3.8 million in personnel expenses that were partially offset by a $2.5 million decrease in fuel costs and a $1.0 million decrease in bad debt expense. Interest expense - consolidated
Interest expense for the three months ended April 30, 2009 increased $0.8 million due to a $1.7 million increase in interest rates primarily from the debt issuance in August 2008 and a $1.4 million increase in discount amortization on the debt issuance in August 2008 at 85% of par. These increases were partially offset by a $3.1 million reduction in expense due to decreased borrowings on our unsecured credit facility. Interest expense - operating partnership Interest expense for the three months ended April 30, 2009 increased $0.8 million due to a $1.7 million increase in interest rates primarily from the debt issuance in August 2008 and a $1.4 million increase in discount amortization on the debt issuance in August 2008 at 85% of par. These increases were partially offset by a $3.1 million reduction in expense due to decreased borrowings on our unsecured credit facility.

Nine months ended April 30, 2009 compared to April 30, 2008

                                                                                      Favorable
(amounts in thousands)                                                              (Unfavorable)
Nine months ended April 30,                    2009             2008                  Variance

Propane sales volumes (gallons):
Retail - Sales to End Users                     556,078          567,247         (11,169 )           (2 )%
Wholesale - Sales to Resellers                  169,293          131,412          37,881             29 %

                                                725,371          698,659          26,712              4 %


Revenues -
Propane and other gas liquids sales:
Retail - Sales to End Users                 $ 1,149,969      $ 1,230,370      $  (80,401 )           (7 )%
Wholesale - Sales to Resellers                  353,098          302,911          50,187             17 %
Other Gas Sales                                  43,207          131,453         (88,246 )          (67 )%

                                            $ 1,546,274      $ 1,664,734      $ (118,460 )           (7 )%


Gross margin -
Propane and other gas liquids sales: (a)
Retail - Sales to End Users                 $   403,513      $   367,727      $   35,786             10 %
Wholesale - Sales to Resellers                  100,320           84,681          15,639             18 %
Other Gas Sales                                     288              (92 )           380             NM

                                            $   504,121      $   452,316      $   51,805             11 %


Operating income                            $   161,862      $   127,852      $   34,010             27 %
Interest expense                                 69,090           66,351          (2,739 )           (4 )%
Interest expense - operating partnership         51,311           48,566          (2,745 )           (6 )%



NM -   not
       meaningful

(a)    Gross margin
       from propane
       and other
       gas liquids
       sales
       represents
       "Propane and
       other gas
       liquids
       sales" less
       "Cost of
. . .