922360--10/12/2006--FERRELLGAS_PARTNERS_L

related topics

{investment, property, distribution}

{tax, income, asset}

{debt, indebtedness, cash}

{product, market, service}

{gas, price, oil}

{operation, international, foreign}

{interest, director, officer}

{acquisition, growth, future}

{condition, economic, financial}

{system, service, information}

{stock, price, share}

{loss, insurance, financial}

{customer, product, revenue}

The propane distribution industry is a mature one, which may limit our growth. The propane distribution business faces competition from other energy sources, which may reduce the existing demand for our propane. Energy efficiency and technology advances may affect demand for propane; increases in propane prices may cause our residential customers to increase their conservation efforts. Current economic and political conditions may harm the energy business disproportionately to other industries. Fuel prices are at relatively high levels and rising fuel prices may adversely affect our profits. The revenues received from our portable tank exchange are concentrated with a limited number of retailers under non-exclusive arrangements that may be terminated at will. If the independently-owned distributors that some of our customers rely upon for the delivery of propane by portable tank exchange do not perform up to the expectations of such customers, if we encounter difficulties in managing the operations of these distributors or if we or these distributors are not able to manage growth effectively, our relationships with our customers may be adversely impacted and our delivery of propane by portable tank exchange may suffer. If we are unable to manage the impact of overfill prevention device valve guidelines, our delivery of propane by portable tank exchange may suffer. We depend on particular management information systems to effectively manage all aspects of our delivery of propane. Potential retail partners may not be able to obtain necessary permits or may be substantially delayed in obtaining necessary permits, which may adversely impact our ability to increase our delivery of propane by portable tank exchange to new retail locations. Risks Inherent to Our Business Our substantial debt and other financial obligations could impair our financial condition and our ability to fulfill our obligations. Ferrellgas Partners or the operating partnership may be unable to refinance their indebtedness or pay that indebtedness if it becomes due earlier than scheduled. Restrictive covenants in the agreements governing our indebtedness and other financial obligations may reduce our operating flexibility. Our results of operations and our ability to make distributions or pay interest or principal on debt securities could be negatively impacted by price and inventory risk and management of these risks. We are dependent on our principal suppliers, which increases the risks from an interruption in supply and transportation. The availability of cash from our credit facilities may be impacted by many factors beyond our control. We may not be successful in making acquisitions and any acquisitions we make may not result in our anticipated results; in either case, this would potentially limit our growth, limit our ability to compete and impair our results of operations. We are subject to operating and litigation risks, which may not be covered by insurance. Risks Inherent to an Investment in Our Debt Securities Ferrellgas Partners and the operating partnership are required to distribute all of their available cash to their equity holders and Ferrellgas Partners and the operating partnership are not required to accumulate cash for the purpose of meeting their future obligations to holders of their debt securities, which may limit the cash available to service those debt securities. Debt securities of Ferrellgas Partners will be structurally subordinated to all indebtedness and other liabilities of the operating partnership and its subsidiaries. All payments on any subordinated debt securities that we may issue will be subordinated to the payments of any amounts due on any senior indebtedness that we may have issued or incurred. Debt securities of Ferrellgas Partners are expected to be non-recourse to the operating partnership, which will limit remedies of the holders of Ferrellgas Partners debt securities. Ferrellgas Partners or the operating partnership may be unable to repurchase debt securities upon a change of control; it may be difficult to determine if a change of control has occurred. There may be no active trading market for our debt securities, which may limit a holder s ability to sell our debt securities. Risks Inherent to an Investment in Ferrellgas Partners Equity Ferrellgas Partners may sell additional limited partner interests, diluting existing interests of unitholders. Cash distributions are not guaranteed and may fluctuate with our performance and other external factors. Our general partner has broad discretion to determine the amount of available cash for distribution to holders of our equity securities through the establishment and maintenance of cash reserves, thereby potentially lessening and limiting the amount of available cash eligible for distribution. The debt agreements of Ferrellgas Partners and the operating partnership may limit their ability to make distributions to holders of their equity securities. The distribution priority to our common units owned by the public terminates no later than April 30, 2010. Persons owning 20% or more of Ferrellgas Partners common units cannot vote. This limitation does not apply to common units owned by Ferrell Companies, our general partner and its affiliates. Risks Arising from Our Partnership Structure and Relationship with Our General Partner Ferrellgas Partners is a holding entity and has no material operations or assets. Accordingly, Ferrellgas Partners is dependent on distributions from the operating partnership to service its obligations. These distributions are not guaranteed and may be restricted. The ownership of our general partner could change if Ferrell Companies defaults on its outstanding indebtedness. Unitholders have limits on their voting rights; our general partner manages and operates us, thereby generally precluding the participation of our unitholders in operational decisions. Our general partner has a limited call right with respect to the limited partner interests of Ferrellgas Partners. Unitholders may not have limited liability in specified circumstances and may be liable for the return of distributions. Our general partner s liability to us and our unitholders may be limited. Our general partner and its affiliates may have conflicts with us. Ferrell Companies may transfer the ownership of our general partner which could cause a change of our management and affect the decisions made by our general partner regarding resolutions of conflicts of interest. Our general partner may voluntarily withdraw or sell its general partner interest. Our general partner can protect itself against dilution. The IRS could treat us as a corporation for tax purposes, which would substantially reduce the cash available for distribution to our unitholders. A successful IRS contest of the federal income tax positions we take may reduce the market value of our common units and the costs of any contest will be borne by us and therefore indirectly by our unitholders and our general partner. Unitholders may be required to pay taxes on income from us even if unitholders do not receive any cash distributions from us. The ratio of taxable income to cash distributions could be higher or lower than our estimates, which could result in a material reduction of the market value of our common units. There are limits on the deductibility of losses Tax gain or loss on the disposition of our common units could be different than expected. Tax-exempt entities, regulated investment companies, and foreign persons face unique tax issues from owning common units that may result in additional tax liability or reporting requirements for them. Certain information relating to a unitholder s investment may be subject to special IRS reporting requirements. An audit of us may result in an adjustment or an audit of a unitholder s own tax return. Reporting of partnership tax information is complicated and subject to audits; we cannot guarantee conformity to IRS requirements. Unitholders may lose tax benefits as a result of nonconforming depreciation conventions. As a result of investing in our common units, a unitholder will likely be subject to state and local taxes and return filing requirements in jurisdictions where it does not live. States may subject partnerships to entity-level taxation in the future; thereby decreasing the amount of cash available to us for distributions and potentially causing a decrease in our distribution levels, including a decrease in the minimum quarterly distribution. Unitholders may have negative tax consequences if we default on our debt or sell assets.

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922360--10/12/2006--FERRELLGAS_PARTNERS_L_P