UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended October 31, ~~2020~~2021


☐	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: 001-11331, 333-06693-02, 000-50182 and 000-50183

Ferrellgas Partners, L.P.

Ferrellgas Partners Finance Corp.

Ferrellgas, L.P.

Ferrellgas Finance Corp.

(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 incorporation or organization)		(I.R.S. Employer Identification Nos.)

7500 College Boulevard, Suite 1000, Overland Park, Kansas		66210
(Address of principal executive office)		(Zip Code)

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

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 ☒ No ☐

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted 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 registrants were required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “Large Accelerated Filer,” “Accelerated Filer,” “Smaller Reporting Company,” and “Emerging Growth Company” in Rule 12b-2 of the Exchange Act.

Ferrellgas Partners, L.P.:
Large Accelerated Filer ☐	Accelerated Filer ☐	Non-accelerated Filer ☒	Smaller Reporting Company ☒
			Emerging Growth Company ☐

Ferrellgas Partners Finance Corp, Ferrellgas, L.P. and Ferrellgas Finance Corp.:
Large Accelerated Filer ☐	Accelerated Filer ☐	Non-accelerated Filer ☒	Smaller Reporting Company ☒
			Emerging Growth Company ☐

If an Emerging Growth Company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Ferrellgas Partners, L.P. and Ferrellgas, L.P. ☐

Ferrellgas Partners Finance Corp. 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 ☐ No ☒

Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp. Yes ☒ No ☐

Indicate by check mark whether the registrants have filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Ferrellgas Partners, L.P. and Ferrellgas Partners Finance Corp. Yes ☒ No ☐

Ferrellgas, L.P. and Ferrellgas Finance Corp. N/A

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


Title of each class:	Trading Symbol	Name of each exchange on which registered:
N/A	N/A	N/A

At November 30, ~~2020,~~2021, the registrants had ~~common units~~Class A Units, Class B Units or shares of common stock outstanding as follows:

Ferrellgas Partners, L.P.	~~97,152,665~~4,857,605	~~Common~~Class A Units
	1,300,000	Class B Units
Ferrellgas Partners Finance Corp.	1,000	Common Stock
Ferrellgas, L.P.	n/a	n/a
Ferrellgas Finance Corp.	1,000	Common Stock

Documents Incorporated by Reference: None

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.

Table of Contents

FERRELLGAS PARTNERS, L.P.

FERRELLGAS PARTNERS FINANCE CORP.

FERRELLGAS, L.P.

FERRELLGAS FINANCE CORP.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS (unaudited)

	Ferrellgas Partners, L.P. and Subsidiaries
	Condensed Consolidated Balance Sheets – October 31, ~~2020~~2021 and July 31, ~~2020~~2021	3
	Condensed Consolidated Statements of Operations – Three months ended October 31, ~~2020~~2021 and ~~2019~~2020	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) – Three months ended October 31, ~~2020~~2021 and ~~2019~~2020	5
	Condensed Consolidated Statement of ~~Partners’ Deficit~~Equity – Three months ended October 31, ~~2020~~2021 and ~~2019~~2020	6
	Condensed Consolidated Statements of Cash Flows – Three months ended October 31, ~~2020~~2021 and ~~2019~~2020	7
	Notes to Condensed Consolidated Financial Statements	8

	Ferrellgas Partners Finance Corp.
	Condensed Balance Sheets – October 31, ~~2020~~2021 and July 31, ~~2020~~2021	2530
	Condensed Statements of Operations – Three months ended October 31, ~~2020~~2021 and ~~2019~~2020	2631
	Condensed Statements of Cash Flows – Three months ended October 31, ~~2020~~2021 and ~~2019~~2020	2732
	Notes to Condensed Financial Statements	2833

	Ferrellgas, L.P. and Subsidiaries
	Condensed Consolidated Balance Sheets – October 31, ~~2020~~2021 and July 31, ~~2020~~2021	3034
	Condensed Consolidated Statements of Operations – Three months ended October 31, ~~2020~~2021 and ~~2019~~2020	3135
	Condensed Consolidated Statements of Comprehensive Income (Loss) – Three months ended October 31, ~~2020~~2021 and ~~2019~~2020	3236
	Condensed Consolidated Statement of Partners’ Deficit – Three months ended October 31, ~~2020~~2021 and ~~2019~~2020	3337
	Condensed Consolidated Statements of Cash Flows – Three months ended October 31, ~~2020~~2021 and ~~2019~~2020	3438
	Notes to Condensed Consolidated Financial Statements	3539

	Ferrellgas Finance Corp.
	Condensed Balance Sheets – October 31, ~~2020~~2021 and July 31, ~~2020~~2021	5758
	Condensed Statements of Operations – Three months ended October 31, ~~2020~~2021 and ~~2019~~2020	5859
	Condensed Statements of Cash Flows – Three months ended October 31, ~~2020~~2021 and ~~2019~~	59
	~~Notes to Condensed Financial Statements~~2020	60
	Notes to Condensed Financial Statements	61

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	62
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	78
ITEM 4.	CONTROLS AND PROCEDURES	79
~~ITEM 4.~~	~~CONTROLS AND PROCEDURES~~	80

PART II - OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	81
ITEM 1A.	RISK FACTORS	81
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	81
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	81
ITEM 4.	MINE SAFETY DISCLOSURES	81
ITEM 5.	OTHER INFORMATION	81
ITEM 6.	EXHIBITS	8382

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS (unaudited)

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)


	October 31, 2021		July 31, 2021
ASSETS
Current assets:
Cash and cash equivalents (including $11,500 of restricted cash at October 31, 2021 and July 31, 2021)	$	168,851	$	281,952
Accounts and notes receivable, net		163,473		131,574
Inventories		131,280		88,379
Price risk management asset		129,389		78,001
Prepaid expenses and other current assets		59,600		39,092
Total current assets		652,593		618,998

Property, plant and equipment, net		585,993		582,118
Goodwill, net		251,065		246,946
Intangible assets (net of accumulated amortization of $434,166 and $432,032 at October 31, 2021 and July 31, 2021, respectively)		103,277		100,743
Operating lease right-of-use assets		87,379		87,611
Other assets, net		96,318		93,228
Total assets	$	1,776,625	$	1,729,644

LIABILITIES, MEZZANINE AND EQUITY
Current liabilities:
Accounts payable	$	80,233	$	47,913
Broker margin deposit liability		126,325		79,178
Current portion of long-term debt		2,079		1,670
Current operating lease liabilities		27,207		25,363
Other current liabilities		154,309		166,822
Total current liabilities		390,153		320,946

Long-term debt		1,446,895		1,444,890
Operating lease liabilities		72,117		74,349
Other liabilities		63,822		61,189
Contingencies and commitments (Note M)

Mezzanine equity:
Senior preferred units, net of issue discount and offering costs (700,000 units outstanding at October 31, 2021 and July 31, 2021)		651,349		651,349

Equity:
Limited partner unitholders
Class A (4,857,605 units outstanding at October 31, 2021 and July 31, 2021)		(1,239,276)		(1,214,813)
Class B (1,300,000 units outstanding at October 31, 2021 and July 31, 2021)		333,014		383,012
General partner unitholder (49,496 units outstanding at October 31, 2021 and July 31, 2021)		(72,426)		(72,178)
Accumulated other comprehensive income		138,679		88,866
Total Ferrellgas Partners, L.P. equity		(840,009)		(815,113)
Noncontrolling interest		(7,702)		(7,966)
Total equity		(847,711)		(823,079)
Total liabilities, mezzanine and equity	$	1,776,625	$	1,729,644

October 31, 2020

July 31, 2020
ASSETS

Current assets:

Cash and cash equivalents (including $96,909 and $95,759 of restricted cash at October 31, 2020 and July 31, 2020, respectively)

$
299,527

$
333,761
Accounts and notes receivable, net (including $120,261 and $103,703 of accounts receivable pledged as collateral at October 31, 2020 and July 31, 2020, respectively)

119,488

101,438
Inventories

78,980

72,664
Prepaid expenses and other current assets

40,088

35,944
Total current assets

538,083

543,807




Property, plant and equipment, net

592,132

591,042
Goodwill, net

246,946

247,195
Intangible assets (net of accumulated amortization of $425,426 and $423,290 at October 31, 2020 and July 31, 2020, respectively)

101,812

104,049
Operating lease right-of-use assets

100,349

107,349
Other assets, net

73,522

74,748
Total assets

$
1,652,844

$
1,668,190




LIABILITIES AND PARTNERS' DEFICIT




Current liabilities:




Accounts payable

$
44,641

$
33,944
Current portion of long-term debt

859,095

859,095
Current operating lease liabilities

28,280

29,345
Other current liabilities

186,938

167,466
Total current liabilities

1,118,954

1,089,850




Long-term debt

1,647,106

1,646,396
Operating lease liabilities

83,337

89,022
Other liabilities

49,543

51,190
Contingencies and commitments (Note L)




Partners' deficit:




Common unitholders (97,152,665 units outstanding at October 31, 2020 and July 31, 2020)

(1,171,359)

(1,126,452)
General partner unitholder (989,926 units outstanding at October 31, 2020 and July 31, 2020)

(71,741)

(71,287)
Accumulated other comprehensive income (loss)

5,534

(2,303)
Total Ferrellgas Partners, L.P. partners' deficit

(1,237,566)

(1,200,042)
Noncontrolling interest

(8,530)

(8,226)
Total partners' deficit

(1,246,096)

(1,208,268)
Total liabilities and partners' deficit

$
1,652,844

$
1,668,190

Table of Contents

See notes to condensed consolidated financial statements.

~~Table of Contents~~

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit data)

(unaudited)

For the three months ended October 31,


2020

2019


Revenues:

Propane and other gas liquids sales

$
281,049

$
273,385

Other

19,845

19,829

Total revenues

300,894

293,214



Costs and expenses:



Cost of sales - propane and other gas liquids sales

137,627

134,028

Cost of sales - other

3,667

3,681

Operating expense - personnel, vehicle, plant and other

109,027

114,543

Operating expense - equipment lease expense

6,830

8,388

Depreciation and amortization expense

21,390

19,219

General and administrative expense

13,080

9,695

Non-cash employee stock ownership plan compensation charge

708

795

Loss on asset sales and disposals

813

2,235



Operating income

7,752

630

Interest expense

(54,226)

(45,697)

Other income (expense), net

108

(132)

Loss before income taxes

(46,366)

(45,199)

Income tax expense

87

518

Net loss

(46,453)

(45,717)

Net loss attributable to noncontrolling interest

(391)

(373)

Net loss attributable to Ferrellgas Partners, L.P.

(46,062)

(45,344)

Less: General partner's interest in net loss

(461)

(453)

Common unitholders' interest in net loss

$
(45,601)

$
(44,891)

Basic and diluted net loss per common unit

$
(0.47)

$
(0.46)


	For the three months ended October 31,
	2021		2020
Revenues:
Propane and other gas liquids sales	$	372,704	$	281,049
Other		21,802		19,845
Total revenues		394,506		300,894

Costs and expenses:
Cost of sales - propane and other gas liquids sales		220,538		137,627
Cost of sales - other		3,610		3,667
Operating expense - personnel, vehicle, plant and other		117,112		109,027
Operating expense - equipment lease expense		5,690		6,830
Depreciation and amortization expense		20,295		21,390
General and administrative expense		12,575		13,080
Non-cash employee stock ownership plan compensation charge		909		708
Loss on asset sales and disposals		1,410		813

Operating income		12,367		7,752

Interest expense		(25,395)		(54,226)
Other income, net		4,264		108

Loss before income taxes		(8,764)		(46,366)

Income tax expense		96		87

Net loss		(8,860)		(46,453)

Net loss attributable to noncontrolling interest		(254)		(391)

Net loss attributable to Ferrellgas Partners, L.P.		(8,606)		(46,062)

Distribution to preferred unitholders		17,005		—

Less: General partner's interest in net loss		(86)		(461)

Class A Unitholders' interest in net loss	$	(25,525)	$	(45,601)

Basic and diluted net loss per Class A Unit	$	(5.25)	$	(9.39)

See notes to condensed consolidated financial statements.

Table of Contents

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

For the three months ended October 31,

2020

2019

Net loss

$
(46,453)

$
(45,717)

Other comprehensive income (loss):

Change in value of risk management derivatives

5,767

(13,627)

Reclassification of losses on derivatives to earnings, net

2,150

7,479

Other comprehensive income (loss)

7,917

(6,148)

Comprehensive loss

(38,536)

(51,865)

Less: Comprehensive loss attributable to noncontrolling interest

(311)

(435)

Comprehensive loss attributable to Ferrellgas Partners, L.P.

$
(38,225)

$
(51,430)


	For the three months ended October 31,
	2021		2020

Net loss	$	(8,860)	$	(46,453)
Other comprehensive income:
Change in value of risk management derivatives		72,932		5,767
Reclassification of (gains) losses on derivatives to earnings, net		(22,610)		2,150
Other comprehensive income		50,322		7,917
Comprehensive income (loss)		41,462		(38,536)
Less: Comprehensive income (loss) attributable to noncontrolling interest		(509)		(311)
Comprehensive income (loss) attributable to Ferrellgas Partners, L.P.	$	41,971	$	(38,225)

See notes to condensed consolidated financial statements.

Table of Contents

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF ~~PARTNERS’ DEFICIT~~EQUITY

(in thousands)

(unaudited)



	Number of units									Accumulated		Total Ferrellgas
			General					General		other		Partner, L.P.
	Class A	Class B	partner	Class A		Class B		partner		comprehensive		partners'		Non-controlling		Total partners'
	unitholders	unitholders	unitholder	unitholders		unitholders		unitholder		income		equity		interest		equity
Balance at July 31, 2021	4,857.6	1,300.0	49.5	$	(1,214,813)	$	383,012	$	(72,178)	$	88,866	$	(815,113)	$	(7,966)	$	(823,079)
Contributions in connection with non-cash ESOP compensation charges	—	—	—		892		—		8		—		900		9		909
Distributions to Class B unitholders	—	—	—		—		(49,998)		—		—		(49,998)		—		(49,998)
Net earnings allocated to preferred units	—	—	—		(16,835)		—		(170)		—		(17,005)		—		(17,005)
Net loss	—	—	—		(8,520)		—		(86)		—		(8,606)		(254)		(8,860)
Other comprehensive income	—	—	—		—		—		—		49,813		49,813		509		50,322
Balance at October 31, 2021	4,857.6	1,300.0	49.5		(1,239,276)		333,014		(72,426)		138,679		(840,009)		(7,702)		(847,711)

Number of units





Accumulated

Total Ferrellgas




General

General

other

Partner, L.P.

Common

partner

Common

partner

comprehensive

partners’

Non-controlling

Total partners’


unitholders

unitholder

unitholders

unitholder

income (loss)

deficit

interest

deficit
Balance at July 31, 2020

97,152.7

989.9

$
(1,126,452)

$
(71,287)

$
(2,303)

$
(1,200,042)

$
(8,226)

$
(1,208,268)
Contributions in connection with non-cash ESOP compensation charges

—

—

694

7

—

701

7

708
Net loss

—

—

(45,601)

(461)

—

(46,062)

(391)

(46,453)
Other comprehensive income

—

—

—

—

7,837

7,837

80

7,917
Balance at October 31, 2020

97,152.7

989.9

(1,171,359)

(71,741)

5,534

(1,237,566)

(8,530)

(1,246,096)


	Number of units						Accumulated		Total Ferrellgas
		General			General		other		Partner, L.P.
	Class A	partner	Class A		partner		comprehensive		partners’		Non-controlling		Total partners’
	unitholders	unitholder	unitholders		unitholder		income (loss)		equity		interest		equity
Balance at July 31, 2020	4,857.6	49.5	$	(1,126,452)	$	(71,287)	$	(2,303)	$	(1,200,042)	$	(8,226)	$	(1,208,268)
Contributions in connection with non-cash ESOP compensation charges	—	—		694		7		—		701		7		708
Net loss	—	—		(45,601)		(461)		—		(46,062)		(391)		(46,453)
Other comprehensive loss	—	—		—		—		7,837		7,837		80		7,917
Balance at October 31, 2020	4,857.6	49.5		(1,171,359)		(71,741)		5,534		(1,237,566)		(8,530)		(1,246,096)

Number of units





Accumulated

Total Ferrellgas




General

General

other

Partner, L.P.

Common

partner

Common

partner

comprehensive

partners’

Non-controlling

Total partners’


unitholders

unitholder

unitholders

unitholder

loss

deficit

interest

deficit
Balance at July 31, 2019

97,152.7

989.9

$
(1,046,245)

$
(70,476)

$
(14,512)

$
(1,131,233)

$
(7,705)

$
(1,138,938)
Contributions in connection with non-cash ESOP and stock and unit-based compensation charges

—

—

779

8

—

787

8

795
Distributions

—

—

—

—

—

—

(1)

(1)
Cumulative adjustment for lease accounting standard

—

—

(1,347)

(14)

—

(1,361)

(14)

(1,375)
Net loss

—

—

(44,891)

(453)

—

(45,344)

(373)

(45,717)
Other comprehensive loss

—

—

—

—

(6,086)

(6,086)

(62)

(6,148)
Balance at October 31, 2019

97,152.7

989.9

(1,091,704)

(70,935)

(20,598)

(1,183,237)

(8,147)

(1,191,384)

See notes to condensed consolidated financial statements.

Table of Contents

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

For the three months ended October 31,


2020

2019
Cash flows from operating activities:




Net loss

$
(46,453)

$
(45,717)
Reconciliation of net loss to net cash provided by (used in) operating activities:




Depreciation and amortization expense

21,390

19,219
Non-cash employee stock ownership plan compensation charge

708

795
Loss on asset sales and disposals

813

2,235
Provision for doubtful accounts

678

665
Deferred income tax expense (benefit)

(1)

554
Other

2,346

3,450
Changes in operating assets and liabilities, net of effects from business acquisitions:


Accounts and notes receivable, net of securitization

(18,728)

(14,410)
Inventories

(6,316)

(4,541)
Prepaid expenses and other current assets

(334)

(8,008)
Accounts payable

10,479

11,360
Accrued interest expense

14,827

34,167
Other current liabilities

6,154

8,214
Other assets and liabilities

2,946

(872)
Net cash provided by (used in) operating activities

(11,491)

7,111




Cash flows from investing activities:




Business acquisitions, net of cash acquired

—

(6,400)
Capital expenditures

(19,454)

(18,126)
Proceeds from sale of assets

1,407

835
Cash payments to construct assets in connection with future lease transactions

—

(16,879)
Cash receipts in connection with leased vehicles

—

5,863
Net cash used in investing activities

(18,047)

(34,707)




Cash flows from financing activities:




Payments on long-term debt

(696)

(512)
Net additions to short-term borrowings

—

37,000
Net additions to collateralized short-term borrowings

—

11,000
Cash paid for financing costs

(2,297)

(1,102)
Noncontrolling interest activity

—

(1)
Cash payments for principal portion of finance lease liability

(1,703)

(38)
Net cash provided by (used in) financing activities

(4,696)

46,347




Net change in cash and cash equivalents

(34,234)

18,751
Cash and cash equivalents - beginning of period

333,761

11,054
Cash, cash equivalents and restricted cash - end of period

$
299,527

$
29,805


	For the three months ended October 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	(8,860)	$	(46,453)
Reconciliation of net loss to net cash provided by operating activities:
Depreciation and amortization expense		20,295		21,390
Non-cash employee stock ownership plan compensation charge		909		708
Loss on asset sales and disposals		1,410		813
Provision for expected credit losses		640		678
Deferred income tax expense (benefit)		3		(1)
Other		1,901		2,346
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts and notes receivable, net of securitization		(32,539)		(18,728)
Inventories		(42,901)		(6,316)
Prepaid expenses and other current assets		(20,507)		(334)
Accounts payable		32,119		10,479
Accrued interest expense		(20,627)		14,827
Other current liabilities		52,376		6,154
Other assets and liabilities		520		2,946
Net cash used in operating activities		(15,261)		(11,491)

Cash flows from investing activities:
Business acquisitions, net of cash acquired		(9,758)		—
Capital expenditures		(20,440)		(19,454)
Proceeds from sale of assets		641		1,407
Net cash used in investing activities		(29,557)		(18,047)

Cash flows from financing activities:
Preferred unit distributions		(15,673)		—
Distributions to Class B unitholders		(49,998)		—
Payments on long-term debt		(595)		(696)
Cash paid for financing costs		(319)		(2,297)
Cash payments for principal portion of lease liability		(1,698)		(1,703)
Net cash used in financing activities		(68,283)		(4,696)

Net change in cash, cash equivalents and restricted cash		(113,101)		(34,234)
Cash, cash equivalents and restricted cash - beginning of period		281,952		333,761
Cash, cash equivalents and restricted cash - end of period	$	168,851	$	299,527

See notes to condensed consolidated financial statements.

Table of Contents

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per unit data, unless otherwise designated)

(unaudited)

A. Partnership organization and formation

Ferrellgas Partners, L.P. (“Ferrellgas Partners”) was formed on April 19, 1994, and is a publicly traded limited ~~partnership, owning an approximate 99% limited partner interest in~~partnership. Ferrellgas Partners is a holding entity that conducts no operations and has 2 direct subsidiaries, Ferrellgas Partners Finance Corp. and Ferrellgas, L.P. (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 securities issued by Ferrellgas Partners. Our activities are primarily conducted through the operating partnership. Ferrellgas Partners and the holders of Preferred Units (as defined in Note G – Preferred units) are the only limited partners of the operating partnership. Ferrellgas Partners and the operating partnership, collectively referred to as “Ferrellgas,” are both Delaware limited partnerships and are governed by their respective partnership agreements. Ferrellgas Partners was formed to acquire and hold a limited partner interest in the operating partnership. ~~As of October 31, 2020, Ferrell Companies, Inc., a Kansas corporation (“Ferrell Companies”), beneficially owns 22.8 million of Ferrellgas Partners’ outstanding common units.~~

Ferrellgas, Inc. (the “general partner”), a Delaware corporation and a wholly-owned subsidiary of Ferrell Companies, is the sole general partner of Ferrellgas Partners and ~~one of three general partners of~~ the operating ~~partnership.~~partnership and, excluding the economic interests attributable to Ferrellgas ~~Inc. has retained~~Partners’ Class B Units and the operating partnership’s Preferred Units, owns an approximate 1% general partner economic interest in ~~Ferrellgas Partners~~each, and, ~~also holds an approximate 1% general partner economic interest in the operating partnership, representing~~therefore, an effective 2% general partner economic interest in the operating partnership. Excluding the economic interests attributable to the Preferred Units, Ferrellgas ~~on a combined basis. As~~Partners owns an approximate 99% limited partner interest in the ~~sole~~operating partnership. Our general partner ~~of Ferrellgas Partners, Ferrellgas, Inc.~~ performs all management functions ~~required by Ferrellgas Partners.~~for us. Unless contractually provided for, creditors of the operating partnership have no recourse with regards to Ferrellgas Partners.

~~The term “general partner” (i) with respect to Ferrellgas Partners refers to Ferrellgas, Inc. and (ii) with respect to the operating partnership refers to (a) Ferrellgas,~~ As of July 31, 2021, Ferrell Companies Inc., ina Kansas corporation (“Ferrell Companies”), the ~~case~~parent company of ~~any economic~~our general partner, ~~interest and (b) Ferrellgas, Inc., Ferrellgas GP II, LLC and Ferrellgas GP III, LLC, collectively, in the case of any voting general partner interest.~~

~~Ferrellgas Partners is a holding entity that conducts no operations and has two subsidiaries, Ferrellgas Partners Finance Corp. and the operating partnership. Ferrellgas Partners~~currently beneficially 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 subsidiaryapproximately 23.4% of Ferrellgas ~~Partners.~~Partners’ outstanding Class A Units. Ferrell Companies is owned 100% by an employee stock ownership trust.

Ferrellgas is primarily engaged in the retail distribution of propane and related equipment sales. The propane distribution market is seasonal because propane is used primarily for heating in residential and commercial buildings. Ferrellgas serves residential, industrial/commercial, portable tank exchange, agricultural, wholesale and other customers in all 50 states, the District of Columbia, and Puerto Rico.

The operating partnership was formed on April 22, 1994, and accounts for substantially all of our consolidated assets, sales and operating earnings.

Due to seasonality, the results of operations for the three months ended October 31, ~~2020~~2021 are not necessarily indicative of the results to be expected for the full fiscal year ending July ~~30, 2021.~~31, 2022.

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 included in Ferrellgas’ Annual Report on Form 10-K for fiscal ~~2020.~~2021.

~~Going Concern~~

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business. Ferrellgas Partners has $357.0 million in unsecured notes due June 15, 2020, which Ferrellgas Partners failed to repay, that are classified as current in the condensed consolidated financial statements. Additionally, Ferrellgas, L.P. has $500.0 million in unsecured notes due May 1, 2021, that are also classified as current in the condensed consolidated financial statements. The ability of Ferrellgas Partners to restructure, refinance or otherwise satisfy these notes is uncertain considering the level of other outstanding indebtedness. Given these concerns, Ferrellgas Partners believes there is substantial doubt about the entity’s ability to continue as a going concern. Ferrellgas has engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist in its ongoing process to reduce existing debt and address its debt maturities. On December 10, 2020, Ferrellgas Partners, Ferrellgas

Table of Contents

Partners Finance Corp., the operating partnership and additional Ferrellgas entities entered into a Transaction Support Agreement (the “TSA”) with certain holders of, or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims arising under, derived from or based upon the indenture governing the Ferrellgas Partners Notes due June 15, 2020. There is no assurance that the transactions contemplated by the TSA will be consummated and the outcome of Ferrellgas’ debt reduction strategy continues to remain uncertain. See Note N – Subsequent Events, for a discussion of the TSA and the transactions contemplated thereunder. Additionally, see Note F – Debt below for further discussion of the outstanding debt.

B. Summary of significant accounting policies

(1) 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, 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 expected credit losses, fair value of reporting units, fair value of Class B units, recoverability of long-lived assets, assumptions used to value business combinations, determination of incremental borrowing rate used to measure right-of-use asset and lease liability, fair values of derivative contracts and stock-based compensation calculations.

~~Update to accounting estimates:~~

~~On August 1, 2020 Ferrellgas adopted Accounting Standards Update (“ASU”) 2016-13,~~ ~~Financial Instruments – Credit Losses (Topic 326)~~~~. As a result, we updated our significant accounting policies for the measurement of expected credit losses below.~~

~~Allowance for expected credit losses~~

Ferrellgas closely monitors accounts receivable balances and estimates the allowance for expected credit losses. The estimate is primarily based on historical collection experience and other factors, including those related to current market conditions and events. The expected credit losses associated with accounts receivable have not historically been material and the adoption impact on Ferrellgas’ allowance for expected credit losses was immaterial as of October 31, 2020.

(2) New accounting standards:

~~FASB Accounting Standard Update No. 2016-13~~No new accounting standards were adopted during the current quarter.

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326),~~ which requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. This standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. Ferrellgas adopted the amended guidance effective August 1, 2020. The adoption of this standard did not have a material impact on the condensed consolidated financial statements.

~~Table of Contents~~

C. Leases

The following table provides the operating and financing ~~ROU~~right-of-use assets and lease liabilities as of October 31, ~~2020~~2021 and July 31, ~~2020:~~2021:


Leases	Classification		October 31, 2020		July 31, 2020	Classification		October 31, 2021		July 31, 2021
Assets
Operating lease assets	Operating lease right-of-use assets	$	100,349	$	107,349	Operating lease right-of-use assets	$	87,379	$	87,611
Financing lease assets	Other assets, net		39,753		41,426	Other assets, net		33,814		34,858
Total leased assets		$	140,102	$	148,775		$	121,193	$	122,469

Liabilities
Current
Operating	Current operating lease liabilities	$	28,280	$	29,345	Current operating lease liabilities	$	27,207	$	25,363
Financing	Other current liabilities		7,186		6,955	Other current liabilities		5,811		7,479
Noncurrent
Operating	Operating lease liabilities		83,337		89,022	Operating lease liabilities		72,117		74,349
Financing	Other liabilities		32,033		33,473	Other liabilities		27,801		28,029
Total leased liabilities		$	150,836	$	158,795		$	132,936	$	135,220

Table of Contents

The following table provides the lease expenses for the three months ended October 31, ~~2020~~2021 and ~~2019:~~2020:


		For the three months ended October 31,					For the three months ended October 31,
Leases expense	Classification	2020		2019		Classification	2021		2020

Operating lease expense	Operating expense - personnel, vehicle, plant and other	$	1,783	$	1,741	Operating expense - personnel, vehicle, plant and other	$	1,709	$	1,783
	Operating expense - equipment lease expense		6,442		7,607	Operating expense - equipment lease expense		5,232		6,442
	Cost of sales - propane and other gas liquids sales		526		389	Cost of sales - propane and other gas liquids sales		440		526
	General and administrative expense		282		266	General and administrative expense		473		282
Total operating lease expense			9,033		10,003			7,854		9,033

Short-term expense	Operating expense - personnel, vehicle, plant and other		2,033		1,954	Operating expense - personnel, vehicle, plant and other		1,808		2,033
	General and administrative expense		242		110	General and administrative expense		86		242
Total short-term expense			2,275		2,064			1,894		2,275

Variable lease expense	Operating expense - personnel, vehicle, plant and other		746		675	Operating expense - personnel, vehicle, plant and other		770		746
	Operating expense - equipment lease expense		388		733	Operating expense - equipment lease expense		458		388
Total variable lease expense			1,134		1,408			1,228		1,134

Finance lease expense:
Amortization of leased assets	Depreciation and amortization expense		2,165		40	Depreciation and amortization expense		851		2,165
Interest on lease liabilities	Interest expense		945		42	Interest expense		938		945
Total finance lease expense			3,110		82			1,789		3,110

Total lease expense (a)		$	15,552	$	13,557		$	12,765	$	15,552

~~Table of Contents~~

(a)

~~As of~~For the three months ended October 31, ~~2020~~2021 and ~~2019~~2020 Ferrellgas has also recognized ~~$0.1~~$0.2 million and $0.1 million, respectively, of expense related to the accretion of lease exit costs associated with a crude oil storage agreement that is no longer being utilized, primarily due to the various ~~Midstream~~ dispositions and other significant transactions, and for which Ferrellgas does not anticipate any future economic benefit.

Minimum annual payments under existing operating and finance lease liabilities as of October 31, ~~2020~~2021 are as follows:


Maturities of lease liabilities		Operating leases		Finance leases		Total
2022	$	23,351	$	6,607	$	29,958
2023		40,085		8,095		48,180
2024		20,801		7,869		28,670
2025		14,305		7,766		22,071
2026		5,663		6,913		12,576
Thereafter		17,746		4,943		22,689
Total lease payments	$	121,951	$	42,193	$	164,144
Less: Imputed interest		22,627		8,581		31,208
Present value of lease liabilities	$	99,324	$	33,612	$	132,936

Maturities of lease liabilities

Operating leases

Finance leases

Total
2021

$
25,539

$
7,751

$
33,290
2022

27,163

9,709

36,872
2023

35,832

7,742

43,574
2024

18,150

7,173

25,323
2025

12,889

7,183

20,072
Thereafter

21,532

10,655

32,187
Total lease payments

$
141,105

$
50,213

$
191,318
Less: Imputed interest

29,488

10,994

40,482
Present value of lease liabilities

$
111,617

$
39,219

$
150,836

Table of Contents

The following table represents the weighted-average remaining lease term and discount rate as of October 31, ~~2020:~~2021:


	As of October 31, 2020		As of October 31, 2021
Lease type	Weighted-average remaining lease term (years)	Weighted-average discount rate	Weighted-average remaining lease term (years)	Weighted-average discount rate
Operating leases	5.3	8.2%	4.6	7.9%
Finance leases	5.9	8.6%	5.2	8.6%

Cash flow information is presented below:

For the three months ended October 31,

2020

2019
Cash paid for amounts included in the measurement of lease liabilities for operating leases:

Operating cash flows
$
8,395

$
11,049

Cash paid for amounts included in the measurement of lease liabilities for financing leases:

Operating cash flows
$
877

$
42
Financing cash flows
$
1,703

$
38


	For the three months ended October 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	5,579	$	8,395

Cash paid for amounts included in the measurement of lease liabilities for financing leases:
Operating cash flows	$	768	$	877
Financing cash flows	$	1,698	$	1,703

D. Supplemental financial statement information

Inventories consist of the following:

October 31, 2020

July 31, 2020
Propane gas and related products

$
65,513

$
58,733
Appliances, parts and supplies, and other

13,467

13,931
Inventories

$
78,980

$
72,664


	October 31, 2021		July 31, 2021
Propane gas and related products	$	118,113	$	75,848
Appliances, parts and supplies, and other		13,167		12,531
Inventories	$	131,280	$	88,379

In addition to inventories on hand, Ferrellgas enters into contracts to take delivery of propane for supply procurement purposes with terms that generally do not exceed 36 months. Most of these contracts call for payment based on market prices at the date of delivery. As of October 31, ~~2020,~~2021, Ferrellgas had committed, for supply procurement purposes, to take delivery of approximately ~~1.7~~2.5 million gallons of propane at fixed prices.

~~Table of Contents~~

Prepaid expenses and other current assets consist of the following:

October 31, 2020

July 31, 2020
Broker margin deposit assets

$
9,381

$
14,398
Other

30,707

21,546
Prepaid expenses and other current assets

$
40,088

$
35,944


	October 31, 2021		July 31, 2021
Broker margin deposit assets	$	31,129	$	21,068
Other		28,471		18,024
Prepaid expenses and other current assets	$	59,600	$	39,092

Other current liabilities consist of the following:


	October 31, 2021		July 31, 2021
Accrued interest	$	8,468	$	29,095
Customer deposits and advances		48,442		35,734
Accrued payroll		15,117		28,143
Accrued insurance		12,698		11,104
Accrued senior preferred units distributions		17,345		16,013
Other		52,239		46,733
Other current liabilities	$	154,309	$	166,822

October 31, 2020

July 31, 2020
Accrued interest

$
68,668

$
53,841
Customer deposits and advances

40,898

32,257
Accrued payroll

13,431

18,375
Accrued insurance

10,994

14,796
Price risk management liabilities

1,506

5,029
Other

51,441

43,168
Other current liabilities

$
186,938

$
167,466

Table of Contents

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

For the three months ended October 31,


2020

2019

Operating expense - personnel, vehicle, plant and other

$
47,531

$
48,015

Depreciation and amortization expense

4,523

1,840

Operating expense - equipment lease expense

5,883

7,642

$
57,937

$
57,497


	For the three months ended October 31,
	2021		2020
Operating expense - personnel, vehicle, plant and other	$	54,447	$	47,531
Depreciation and amortization expense		2,535		4,523
Operating expense - equipment lease expense		4,535		5,883
	$	61,517	$	57,937

Cash and cash equivalents consist of the following:


	October 31, 2020		July 31, 2020		October 31, 2021		July 31, 2021
Cash and cash equivalents	$	202,618	$	238,002	$	157,351	$	270,452
Restricted cash (1)		96,909		95,759		11,500		11,500
Cash, cash equivalents and restricted cash	$	299,527	$	333,761	$	168,851	$	281,952

(1)

As of October 31, ~~2020, the $96.9 million of~~2021 and July 31, 2021, restricted cash ~~includes $79.4 million~~consists of ~~pledged cash collateral for letters of credit outstanding,~~ an $11.5 million cash deposit made with the administrative agent under the operating partnership’s senior secured credit facility that was terminated ~~Senior Secured Credit Facility,~~in April 2020, which may be used by the administrative agent to pay contingent obligations arising under the ~~Financing Agreement~~financing agreement that governed the Senior Secured Credit Facility, and $6.0 million of additional pledged collateral. As of July 31, 2020, the $95.8 million of restricted cash includes $78.2 million of pledged cash collateral for letters ofterminated senior secured credit outstanding, an $11.5 million cash deposit made with the administrative agent under the terminated Senior Secured Credit Facility, which may be used by the administrative agent to pay contingent obligations arising under the Financing Agreement that governed the Senior Secured Credit Facility, and $6.1 million of additional pledged collateral. For additional discussion see Note I – Debt.facility.

~~Table of Contents~~

For purposes of the condensed consolidated statements of cash flows, Ferrellgas considers cash equivalents to include all highly liquid debt instruments purchased with an original maturity of three months or less. Certain cash flow and significant non-cash activities are presented below:


	For the three months ended October 31,				For the three months ended October 31,
	2020		2019		2021		2020
Cash paid for:
Interest	$	36,997	$	8,284	$	44,152	$	36,997
Income taxes	$	35	$	—	$	—	$	35
Non-cash investing and financing activities:
Liabilities incurred in connection with acquisitions	$	—	$	520	$	644	$	—
Change in accruals for property, plant and equipment additions	$	(65)	$	(43)	$	65	$	(65)
Lease liabilities arising from operating right-of-use assets	$	366	$	11,563	$	7,558	$	366
Lease liabilities arising from finance right-of-use assets	$	554	$	5,614	$	812	$	554
Accrued senior preferred units distributions					$	17,005	$	—

E. Accounts and notes receivable, net ~~and accounts receivable securitization~~

Accounts and notes receivable, net consist of the following:

October 31, 2020

July 31, 2020
Accounts receivable pledged as collateral

$
120,261

$
103,703
Accounts receivable not pledged as collateral (including other reserves)

823

(825)
Note receivable

15,148

12,648
Other

37

36
Less: Allowance for expected credit losses

(16,781)

(14,124)
Accounts and notes receivable, net

$
119,488

$
101,438


	October 31, 2021		July 31, 2021
Accounts receivable	$	167,505	$	135,182
Note receivable		13,648		13,648
Less: Allowance for expected credit losses		(17,680)		(17,256)
Accounts and notes receivable, net	$	163,473	$	131,574

At October 31, 2020, $120.3 million of trade accounts receivable were pledged as collateral, but Ferrellgas had no outstanding collateralized notes payable due to a commercial paper conduit. At July 31, 2020, $103.7 million of trade accounts receivable were pledged as collateral, but Ferrellgas had no outstanding collateralized notes payable due to a commercial paper conduit. These accounts receivable pledged as collateral are bankruptcy remote from the operating partnership. The operating partnership does not provide any guarantee or similar support to the collectability of these accounts receivable pledged as collateral.

As of October 31, 2020, Ferrellgas had received no cash proceeds from trade accounts receivables securitized, with $26.0 million remaining capacity to receive additional proceeds or issue letters of credit. As of July 31, 2020, Ferrellgas had received no cash proceeds from trade accounts receivables securitized, with $11.0 million remaining capacity to receive additional proceeds or issue letters of credit.

The agreement governing the accounts receivable securitization facility (the “Purchase Agreement”) requires the operating partnership to maintain a fixed charge coverage ratio of not less than 1.00x and a senior secured leverage ratio of not greater than 3.00x. The operating partnership was in compliance with these financial ratio requirements as of October 31, 2020. However, if at any time the operating partnership is not in compliance with these financial ratio requirements, Ferrellgas will be unable to access the facility for working capital or other cash requirements and the facility may be terminated. This facility matures in May 2021 and includes an option, at Ferrellgas’ request and consent, for the purchasers in their sole discretion to extend the facility for up to an additional three years.

1312

Table of Contents

F. Debt

Long-term debt

Long-term debt consists of the following:


	October 31, 2020		July 31, 2020		October 31, 2021		July 31, 2021
Unsecured senior notes
Fixed rate, 6.50%, due 2021 (1)	$	500,000	$	500,000
Fixed rate, 6.75%, due 2023 (2)		500,000		500,000
Fixed rate, 6.75%, due 2022, net of unamortized premium of $770 and $937 at October 31, 2020 and July 31, 2020, respectively (3)		475,770		475,937
Fixed rate, 8.625%, due 2020 (4)		357,000		357,000

Secured senior notes
Fixed rate, 10.00%, due 2025, net of unamortized premium of $3,424 at October 31, 2020 and $3,573 at July 31, 2020, respectively (5)		703,424		703,573
Fixed rate, 5.375%, due 2026 (1)					$	650,000	$	650,000
Fixed rate, 5.875%, due 2029 (1)						825,000		825,000

Notes payable
9.7% and 9.4% weighted average interest rate at October 31, 2020 and July 31, 2020, respectively, due 2020 to 2029, net of unamortized discount of $449 and $537 at October 31, 2020 and July 31, 2020, respectively		3,956		4,564
8.5% and 8.8% weighted average interest rate at October 31, 2021 and July 31, 2021, respectively, due 2021 to 2029, net of unamortized discount of $648 and $573 at October 31, 2021 and July 31, 2021, respectively						5,181		3,882
Total debt, excluding unamortized debt issuance and other costs		2,540,150		2,541,074		1,480,181		1,478,882
Unamortized debt issuance and other costs		(33,949)		(35,583)		(31,207)		(32,322)
Less: current portion of long-term debt		859,095		859,095		2,079		1,670
Long-term debt	$	1,647,106	$	1,646,396	$	1,446,895	$	1,444,890

(1)

~~During November 2010,~~On March 30, 2021 (the “Effective Date”), 2 wholly-owned subsidiaries of the operating partnership (referred to herein as the Escrow Issuers) issued ~~$500.0~~$650.0 million aggregate principal amount of ~~6.50%~~5.375% senior notes due ~~2021. These~~2026 (referred to herein as the “2026 Notes”) and $825.0 million aggregate principal amount of 5.875% senior notes ~~are~~due 2029 (referred to herein as the “2029 Notes”). On the Effective Date and immediately after the issuance of the 2026 Notes and 2029 Notes by the Escrow Issuers, (i) the Escrow Issuers were merged into the operating partnership and Ferrellgas Finance Corp., respectively, and the operating partnership and Ferrellgas Finance Corp. assumed the obligations of the Escrow Issuers as co-issuers of the 2026 Notes and the 2029 Notes, and (ii) the general ~~unsecured senior obligations~~partner and certain subsidiaries of the operating partnership guaranteed the 2026 Notes and ~~are (i) effectively junior to all existing~~the 2029 Notes. The 2026 Notes and future senior secured indebtedness of the operating partnership, to the extent of the value of the assets securing such debt, and (ii) structurally subordinated to all existing and future indebtedness and obligations of the operating partnership’s subsidiaries. The senior notes2029 Notes bear interest from the date of issuance, payable semi-annually in arrears on ~~May~~October 1 and ~~November~~April 1 of each year. The ~~outstanding principal amount is due~~2026 Notes will mature on ~~May~~April 1, ~~2021.~~

~~(2)~~

During June 2015, the operating partnership issued $500.0 million aggregate principal amount of 6.75% senior notes due 2023. These notes are general unsecured senior obligations of the operating partnership and are (i) effectively junior to all existing and future senior secured indebtedness of the operating partnership, to the extent of the value of the assets securing such debt, and (ii) structurally subordinated to all existing and future indebtedness and obligations of any subsidiary of the operating partnership that is not a guarantor of these notes. The senior notes bear interest from the date of issuance, payable semi-annually in arrears on June 15 and December 15 of each year. The outstanding principal amount is due June 15, 2023. The operating partnership would incur prepayment penalties if it were to repay the notes prior to June 15, 2021.

~~(3)~~

During fiscal 2014, the operating partnership issued $475.0 million aggregate principal amount of 6.75% senior notes due 2022, $325.0 million of which was issued at par and $150.0 million of which was issued at 104% of par. These notes are general unsecured senior obligations of the operating partnership and are (i) effectively junior to all existing and future senior secured indebtedness of the operating partnership, to the extent of the value of the assets securing such debt, and (ii) structurally subordinated to all existing and future indebtedness and obligations of the operating partnership’s subsidiaries. The senior notes bear interest from the date of issuance, payable semi-annually in arrears on January 15 and July 15 of each year. The outstanding principal amount is due January 15, 2022.

~~(4)~~

During January 2017, Ferrellgas Partners issued $175.0 million aggregate principal amount of additional 8.625% unsecured senior notes due 2020, issued at 96% of par. Ferrellgas Partners contributed the net proceeds from the offering of approximately $166.1 million to the operating partnership, which used such amounts to

~~Table of Contents~~

repay borrowings under its previous senior secured credit facility. During April 2010, Ferrellgas Partners issued $280.0 million of these notes. During March 2011, Ferrellgas Partners redeemed $98.0 million of these notes. These notes are general unsecured senior obligations of Ferrellgas Partners and are (i) effectively junior to all existing and future senior secured indebtedness of Ferrellgas Partners, to the extent of the value of the assets securing such debt, and (ii) structurally subordinated to all existing and future indebtedness and obligations of the operating partnership and its subsidiaries. The unsecured senior notes bear interest from the date of issuance, payable semi-annually in arrears on June 15 and December 15 of each year. The outstanding principal amount was due on June 15, 2020, but has not been repaid.

~~(5)~~

During April 2020, the operating partnership issued $700.0 million aggregate principal amount of 10.00% senior secured first lien notes due 2025, $575.0 million of which was issued at par and $125.0 million of which was issued at 103% of par. These notes are senior secured obligations of the operating partnership2026, and the guarantors of such notes, including Ferrellgas Partners, the general partners of the operating partnership and certain subsidiaries of the operating partnership, and are (i) effectively senior to all existing senior unsecured indebtedness of the operating partnership and the guarantors, to the extent of the value of the assets securing such debt, and (ii) structurally subordinated to all existing and future indebtedness and obligations of Ferrellgas Receivables, LLC, a special purpose subsidiary that does not guarantee the notes. The senior notes bear interest from the date of issuance, payable semiannually in arrears2029 Notes will mature on April 15 and October 15 of each year. The operating partnership would incur prepayment penalties if it were to repay the notes prior to April 15, 2024. The outstanding principal amount is due on April 15, 2025.1, 2029. See “–Senior unsecured notes” below for additional discussion.

~~The scheduled principal payments on long-term debt are as follows:~~Senior secured revolving credit facility

Scheduled
Payment due by fiscal year

principal payments
2021 (a)

$
858,425
2022

476,435
2023

500,999
2024

329
2025

700,199
Thereafter

19
Total

$
2,536,406

~~(a)~~

~~Includes the Ferrellgas Partners Notes, which matured on June 15, 2020, but have not yet been repaid.~~

~~Letters~~On the Effective Date, the operating partnership, the general partner and certain of credit outstanding at October 31, 2020 and July 31, 2020 totaled $127.1 million and $126.0 million, respectively, and were used to secure insurance arrangements, product purchases and commodity hedges. At October 31, 2020 and July 31, 2020 Ferrellgas did not have in placethe operating partnership’s subsidiaries entered into a credit agreement (the “Credit Agreement”), which provides for a four-year revolving credit facility ~~providing~~(the “Credit Facility”) in an aggregate principal amount of up to $350.0 million, including a sublimit not to exceed $225.0 million for the issuance of letters of credit ~~and had $79.4~~for a period of 60 days after March 30, 2021, reducing to $200.0 million and $78.2 million, respectively, of restricted cash pledged as cash collateral for letters of credit outstanding. Additionally, at both October 31, 2020 and July 31, 2020, Ferrellgas also issued letters of credit of $50.0 million by utilizing our liquidity available on the accounts receivable securitization facility.thereafter.

~~Forbearance Agreement with respect to Ferrellgas Partners’ 8.625% Unsecured Senior Notes due June 15, 2020~~

On June 7, 2020, Ferrellgas Partners and additional Ferrellgas entities entered into a Forbearance Agreement (the “Forbearance Agreement”) with the beneficial owners (or nominees, investment managers, advisors or subadvisors for the beneficial owners, collectively referred to as the “Forbearing Noteholders”) of approximately 77% of the aggregate principal amount of Ferrellgas Partners’ 8.625% unsecured senior notes due June 15, 2020, pursuant to which the Forbearing Noteholders agreed to forbear from exercising any default-related rights and remedies with respect to the Ferrellgas Partners Notes and to direct the trustee thereunder not to take any remedial action. The forbearance periodAll borrowings under the ~~Forbearance Agreement expired on August 15, 2020. Following~~Credit Facility are guaranteed by the ~~expiration of the forbearance period, discussions with representatives of the Forbearing Noteholders have continued.~~

~~Financial covenants~~

~~The indenture governing the outstanding notes of Ferrellgas Partners~~general partner and the ~~agreements governing the operating partnership’s indebtedness contain various covenants that limit Ferrellgas Partners’ ability~~direct and ~~the ability of specified~~indirect subsidiaries ~~to, among other things, make restricted payments and incur additional indebtedness. The general partner~~

~~Table of Contents~~

believes that the most restrictive of these covenants are the restricted payments covenants in the indenture governing the outstanding notes of Ferrellgas Partners and the indentures governing the outstanding notes of the operating partnership ~~which are discussed below.~~

(other than Ferrellgas Finance Corp. and Ferrellgas Receivables, LLC) and a limited-recourse guaranty from Ferrellgas Partners ~~L.P.,~~(limited to its equity interests in the ~~master limited~~operating partnership). Additionally, all borrowings are secured, on a first priority basis, by substantially all of the assets of the operating partnership and its subsidiaries and all of the equity interests in the operating partnership held by the general partner and Ferrellgas Partners.

Availability under the Credit Facility is, at any time, an amount equal to (a) the lesser of the revolving commitment (initially $350.0 million) and the Borrowing Base (as defined below) minus (b) the sum of the aggregate outstanding amount of borrowings under the Credit Facility plus the undrawn amount of outstanding letters of credit under the Credit Facility plus unreimbursed drawings in respect of letters of credit (unless otherwise converted into revolving loans). The "Borrowing Base" equals the sum of: (a) $200.0 million, plus (b) 80% of the eligible accounts receivable of the operating partnership and its subsidiaries, plus (c) 70% of the eligible propane inventory of the operating partnership and its subsidiaries, valued at weighted average cost, less (d) certain reserves, as determined and subject to certain modifications by the administrative agent in its permitted discretion.

Table of Contents

Amounts borrowed under the Credit Facility bear interest, at the operating partnership's option, at either (a) for base rate loans, (i) a base rate determined by reference to the highest of (A) the rate of interest last quoted by The Wall Street Journal in the U.S. as the prime rate in effect, (B) the NYFRB Rate from time to time plus 0.50% per annum and (C) the Adjusted LIBO Rate for a one-month interest period plus 1.00% per annum plus (ii) a margin of 1.50% to 2.00% per annum depending on total net leverage or (b) for Eurodollar rate loans, (i) a rate determined by reference to the Adjusted LIBO Rate plus (ii) a margin of 2.50% to 3.00% per annum depending on total net leverage. The operating partnership will be required to pay an undrawn fee to the lenders on the average daily unused amount of the Credit Facility at a rate of 0.375% to 0.50% per annum depending on total net leverage.

The ~~indenture governing~~Credit Agreement contains customary representations, warranties, covenants and events of default.

The financial covenants in the ~~outstanding notes~~Credit Agreement require the operating partnership to maintain: (1) a minimum interest coverage ratio (defined generally as the ratio of ~~Ferrellgas Partners due June 15, 2020 contains~~adjusted EBITDA to cash interest expense) of 2.50 to 1.00, (2) a ~~covenant~~maximum secured leverage ratio (defined generally as the ratio of total first priority secured indebtedness to adjusted EBITDA) of 2.50 to 1.00, and (3) a maximum total net leverage ratio (defined generally as the ratio of total indebtedness (net of unrestricted cash, subject to certain limits) to adjusted EBITDA) of 5.50 to 1.00 initially. The maximum total net leverage ratio adjusts to 5.25 to 1.00 starting with the quarter ending April 30, 2022, 5.00 to 1.00 starting with the quarter ending October 31, 2022, and 4.75 to 1.00 starting with the quarter ending April 30, 2023.

In addition to the financial covenants, the Credit Agreement includes covenants that ~~restricts~~may (or if not met will) restrict the ability of ~~Ferrellgas Partners~~the operating partnership to, among other things: incur indebtedness or liens; effect certain fundamental changes, including mergers, consolidations, liquidations, dissolutions and changes in line of business; make certain restricted payments, including distributions ~~on its common units.~~to holders of Preferred Units, Ferrellgas Partners ~~continues~~and the general partner and redemptions of Preferred Units; make investments, loans or advances; dispose of assets; effect sale and leaseback transactions; enter into swap agreements; make optional payments and modifications of subordinated and other debt instruments; enter into transactions with affiliates; agree to ~~comply~~negative pledge clauses and burdensome agreements; and effect amendments to organizational documents.

In particular, under these covenants, subject to certain exceptions and additional requirements, the operating partnership is permitted to make cash distributions to holders of Preferred Units, Ferrellgas Partners and the general partner, redemptions of Preferred Units and other restricted payments (i) only in limited amounts specified in the Credit Agreement and (ii) only if availability under the Credit Facility exceeds the greater of $50.0 million and 15% of the Borrowing Base and the operating partnership’s total net leverage ratio is not greater than 5.0 to 1.0 (or 4.75 to 1.0 starting on April 30, 2023). As of October 31, 2021, the operating partnership is in compliance with the ~~restrictive covenants with respect~~availability and total net leverage ratio requirements.

On June 11, 2021, the operating partnership, the general partner and certain of the operating partnership’s subsidiaries entered into a First Amendment to the ~~$357.0~~Credit Agreement (the “Credit Agreement Amendment”), with an effective date of April 30, 2021. Among other matters, the Credit Agreement Amendment amended the minimum-interest-coverage-ratio covenant described above by (i) waiving compliance with the covenant for the trailing four fiscal quarters ended April 30, 2021 and (ii) annualizing the cash interest expense component of the covenant for (a) the fiscal quarter ended on July 31, 2021, (b) the two fiscal quarters ending October 31, 2021, and (c) the three fiscal quarters ending January 31, 2022.

Table of Contents

Senior unsecured notes

On the Effective Date, (i) the Escrow Issuers issued $650.0 million aggregate principal amount of ~~its~~2026 Notes and $825.0 million aggregate principal amount of 2029 Notes, and (ii) the operating partnership and Ferrellgas Finance Corp. assumed the obligations of the Escrow Issuers as co-issuers of the 2026 Notes and the 2029 Notes upon the merger of the Escrow Issuers into the operating partnership and Ferrellgas Finance Corp., respectively. The operating partnership received aggregate net proceeds from the issuance and sale of the 2026 Notes and the 2029 Notes of approximately $1,441.2 million, after deducting the initial purchasers’ discount and estimated offering expenses. The operating partnership used such net proceeds, together with the net proceeds of the issuance and sale of the Preferred Units, as discussed in Note G – Preferred units, and cash on hand, (i) to redeem (or satisfy and discharge the indentures governing and subsequently redeem) all of the issued and outstanding 6.50% senior unsecured ~~senior~~ notes due ~~June 15, 2020 as it continues~~2021 (the “2021 Notes”), 6.75% senior unsecured notes due 2022 (the “2022 Notes”), 6.75% senior unsecured notes due 2023 (the “2023 Notes”) and 10.00% senior secured notes due 2025 (the “2025 Notes”), in the aggregate combined principal amount for all such notes of $2,175.0 million, and (ii) to ~~negotiate~~repay all outstanding obligations under the agreement governing the accounts receivable securitization facility (the “Accounts Receivables Facility”) in connection with the ~~Forbearing Noteholders.~~termination of that facility.

~~Under this covenant,~~The 2026 Notes and 2029 Notes are the senior unsecured obligations of the operating partnership and Ferrellgas Finance Corp. and are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the general partner and all domestic subsidiaries of the operating partnership other than Ferrellgas Finance Corp. and Ferrellgas Receivables, LLC.

The 2026 Notes may be redeemed prior to April 1, 2023 and the 2029 Notes may be redeemed prior to April 1, 2024 at the issuer’s option, in whole or in part, at a redemption price of par plus the applicable make-whole premium and accrued and unpaid interest. On and after April 1, 2023 and April 1, 2024, the 2026 Notes and the 2029 Notes, respectively, may be redeemed at the issuer’s option, in whole or in part, at the redemption prices set forth in the respective indenture governing such notes, plus accrued and unpaid interest. Beginning on April 1, 2025 and April 1, 2026, the 2026 Notes and 2029 Notes, respectively, may be redeemed at par plus accrued and unpaid interest.

The indentures governing the 2026 Notes and 2029 Notes contain customary affirmative and negative covenants restricting, among other things, the ability of the operating partnership and its restricted subsidiaries to: incur additional indebtedness and guarantee indebtedness; pay dividends or make other distributions (including distributions to holders of Preferred Units, Ferrellgas Partners and the general partner) or repurchase or redeem their equity interests (including redemptions of Preferred Units); repurchase or redeem certain debt; make certain other restricted payments or investments; sell assets, incur liens, enter into transactions with affiliates, enter into agreements restricting the operating partnership’s subsidiaries’ ability to pay dividends; and consolidate, merge or sell all or substantially all of their assets. The indentures also restrict the ability of the general partner to engage in certain activities.

In particular, under these covenants, subject to certain exceptions and additional requirements, the ~~limited exception described below,~~operating partnership is permitted to make cash distributions to holders of Preferred Units, Ferrellgas Partners ~~may not make a~~and the general partner, redemptions of Preferred Units and other restricted ~~payment unless its consolidated fixed charge coverage ratio (defined~~payments (i) only in limited amounts specified in the ~~indenture~~indentures and (ii) only if the operating partnership’s net leverage ratio (defined generally to mean the ratio of consolidated total net debt to trailing ~~four~~4 quarters consolidated EBITDA, ~~to consolidated interest expense,~~ both as adjusted for certain, specified items) is ~~at least 1.75x,~~not greater than 5.0 to 1.0, on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events. ~~As of October 31, 2020, Ferrellgas Partners’~~Further, if the operating partnership’s consolidated fixed charge coverage ratio ~~was 1.38x.~~

If the consolidated fixed charge coverage ratio is below 1.75x, Ferrellgas Partners may make restricted payments of up to $50.0 million in total over a sixteen quarter period. As a result of distributions paid to common unitholders in September 2017, December 2017, March 2018, June 2018, and September 2018, while this ratio was less than 1.75x, Ferrellgas Partners has used substantially all of its capacity under the limited exception and therefore is currently restricted by this covenant from making future restricted payments, including distributions to common unitholders. Accordingly, no distributions have been or will be paid to common unitholders for the three months ended October 31, 2020, and the general partner expects that this covenant will continue to prohibit Ferrellgas Partners from making common unit distributions, unless and until the outstanding notes of Ferrellgas Partners due 2020 are restructured, refinanced or otherwise satisfied. While there can be no assurance of success, as part of our debt and interest expense reduction strategy, we are presently considering potential solutions to address the maturity of the outstanding notes of Ferrellgas Partners due June 15, 2020, as well as the upcoming maturity of the operating partnership’s $500.0 million in unsecured notes due May 1, 2021. The potential solutions include, among others, restructuring, refinancing or a transaction to exchange new notes for some or all of these notes.

~~Ferrellgas, L.P., the operating partnership~~

Similar to the indenture governing the outstanding notes of Ferrellgas Partners, the indentures governing the outstanding notes of the operating partnership contain covenants that restrict the ability of the operating partnership to make certain restricted payments, including distributions to Ferrellgas Partners. Under these covenants, in the indentures governing the operating partnership’s notes, subject to the limited exceptions described below, the operating partnership may not make a restricted payment unless its consolidated fixed charge coverage ratio (defined ~~in the indentures~~ generally to mean the ratio of trailing ~~four~~4 quarters consolidated EBITDA to consolidated ~~interest expense,~~fixed charges, both as adjusted for certain, specified items) is ~~at least 1.75x on~~equal to or less than 1.75 to 1.00 (on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified ~~events.~~events), the amount of distributions and other restricted payments the operating partnership is permitted to make under the indentures is further limited. As of October 31, ~~2020,~~2021, the operating partnership is in compliance with the total net leverage ratio and fixed charge coverage ratio requirements.

Table of Contents

The scheduled annual principal payments on long-term debt are as follows:


	Scheduled
Payment due by fiscal year	principal payments
2022	$	1,075
2023		1,709
2024		1,139
2025		930
2026		650,710
Thereafter		825,266
Total	$	1,480,829

Letters of credit outstanding at October 31, 2021 and July 31, 2021 totaled $97.5 million and $107.7 million, respectively, and were used to secure insurance arrangements, product purchases and commodity hedges. As of October 31, 2021, Ferrellgas had available borrowing capacity under its Credit Facility of $252.5 million.

G. Preferred units

On the Effective Date, pursuant to an Investment Agreement with certain purchasers named therein, the operating partnership issued and sold an aggregate of 700,000 Preferred Units (the “Preferred Units”), having an aggregate initial liquidation preference of $700.0 million. The purchase price per Preferred Unit was $1,000 less a 3.0% purchase price discount, for an aggregate purchase price of $679.0 million. The operating partnership received net proceeds from the issuance and sale of the Preferred Units of approximately $651.3 million, after deduction of the purchase price discount and certain expenses.

The operating partnership used such net proceeds, together with the net proceeds of the issuance and sale of the 2026 Notes and the 2029 Notes and cash on hand, (i) to redeem (or satisfy and discharge the indentures governing and subsequently redeem) all of the issued and outstanding 2021 Notes, 2022 Notes, 2023 Notes and 2025 Notes, as described in Note F - Debt, and (ii) to repay all outstanding obligations under the Accounts Receivable Facility in connection with the termination of that facility.

Redemption of the Preferred Units in the near term is not probable because of the high redemption price in the first three to five years. As described in greater detail under “Issuer Redemption Right” below, the Redemption Price for the Preferred Units is based upon the greater of the amount that would result in a 1.47x MOIC (defined below) and the amount that would result in a 12.25% internal rate of return. If the Preferred Units were redeemed at any time during the first three to four years after issuance, the 1.47x MOIC would require a large premium payment and that large premium payment would result in an internal rate of return far in excess of the minimum 12.25%. Consequently, it is unlikely that Ferrellgas would be able to achieve any savings in its cost of capital by redeeming the Preferred Units during the first three to four years after issuance.

“MOIC” means, with respect to a Preferred Unit, a multiple on invested capital equal to the quotient determined by dividing (A) the sum of (x) the aggregate amount of all distributions made in cash with respect to such Preferred Unit prior to the applicable date of determination, with certain exclusions, plus (y) each Redemption Price paid in cash in respect of such Preferred Unit, on or prior to the applicable date of determination, by (B) the Purchase Price (defined below) of such Preferred Unit.

On the Effective Date the general partner entered into (i) the Fifth Amended and Restated Agreement of Limited Partnership of Ferrellgas, L.P. (the “Amended OpCo LPA”), which amended and restated in its entirety the Fourth Amended and Restated Agreement of Limited Partnership of Ferrellgas L.P., and (ii) the First Amendment to the Amended OpCo LPA (the “OpCo LPA Amendment”), which sets forth the preferences, rights, privileges and other terms of the Preferred Units.

Table of Contents

Issuer Redemption Right

The operating partnership has the right to redeem all or a portion of the Preferred Units for cash, pro rata and at any time and from time to time, including in connection with a Change of Control (as defined in the OpCo LPA Amendment), at an amount per Preferred Unit (the “Redemption Price”) equal to, without duplication, the sum of (a) the greater of (i) the amount necessary to result in a MOIC of 1.47x in respect of the purchase price, before discount, of such Preferred Unit, which is $1,000 per Preferred Unit (the “Purchase Price”), and (ii) the amount necessary to result in the applicable internal rate of return equal to 12.25%, which is increased by 150 basis points if the operating partnership has elected to pay more than four Quarterly Distributions (as defined below) in PIK Units (as defined below) and (b) the accumulated but unpaid Quarterly Distributions to the date of redemption, if any. A partial redemption of the Preferred Units is permitted only in the event the aggregate amount to be paid in respect of all Preferred Units included in such partial redemption is at least $25.0 million.

Investor Redemption Right

In the event that (i) any Class B Units are outstanding, or (ii) (x) 0 Class B Units are outstanding and (y) no more than 233,300 Preferred Units are outstanding, at any time on and after the tenth anniversary of the Effective Date the Required Holders may elect, by delivery of written notice, to have the operating partnership fully redeem each remaining outstanding Preferred Unit for an amount in cash equal to the Redemption Price. “Required Holders” refers to both (i) holders owning at least 33.3% of the total Preferred Units outstanding at any time and (ii) certain initial affiliated purchasers, for so long as such initial affiliated purchasers collectively own at least 25% of the Preferred Units outstanding at such time.

In the event that (i) 0 Class B Units are outstanding and (ii) more than 233,300 Preferred Units are outstanding, the Required Holders will have the right to trigger a sale of the operating partnership after the tenth anniversary of the Effective Date. If the operating partnership fails to consummate a sale that would pay the Redemption Price in full within 180 days of written notice requiring such sale, the Required Holders will have the right to appoint a majority of the members of the Board of Directors of the general partner and initiate a sale of the operating partnership.

Change of Control

Upon a Change of Control (as defined in the OpCo LPA Amendment), the Required Holders will have the option to require the redemption of all or a portion of the Preferred Units in cash in an amount equal to the Redemption Price; provided, that such Redemption Price shall not be payable unless the operating partnership shall have first made any required change of control offer pursuant to the indentures governing the 2026 Notes and the 2029 Notes and purchased all such 2026 Notes and 2029 Notes tendered pursuant to such offer (unless otherwise waived by such noteholders); provided, further that the Redemption Price shall be paid immediately following the purchase of such tendered Notes (if any).

Fair Value of Embedded Derivatives

Ferrellgas identified the investor redemption right and the change in control option as embedded derivatives that require bifurcation as they are not clearly and closely related to the debt host contract and has concluded that the fair values at issuance and at October 31, 2021, are immaterial to the financial statements.

Distributions

Pursuant to the OpCo LPA Amendment, the operating partnership is required to pay to the holders of each Preferred Unit a cumulative, quarterly distribution (the "Quarterly Distribution") at the Distribution Rate (as defined below) on the Purchase Price.

"Distribution Rate" means, for the first five years after March 30, 2021, a rate per annum equal to 8.956%, with certain increases in the Distribution Rate on each of the 5^th, 6^th and 7^th anniversaries of March 30, 2021, subject to a maximum rate of 11.125% and certain other adjustments and exceptions.

Table of Contents

The Quarterly Distribution may be paid in cash or, at the election of the operating partnership, "in kind" through the issuance of additional Preferred Units ("PIK Units") at the quarterly Distribution Rate plus an applicable premium that escalates each year from 75 bps to 300 bps so long as the Preferred Units remain outstanding. In the event the operating partnership fails to make any Quarterly Distribution in cash, such Quarterly Distribution will automatically be paid in PIK Units.

The Distribution Rate on the Preferred Units will increase upon violation of certain protective provisions for the benefit of Preferred Unit holders notwithstanding the cap mentioned above.

As of October 31, 2021, the Quarterly Distribution accrued was $17.3 million. $15.1 million of the Quarterly Distribution was paid in cash to holders of Preferred Units on November 15, 2021.

Tax Distributions

For any quarter in which the operating partnership makes a Quarterly Distribution in PIK Units in lieu of cash, it will be required to make a subsequent cash tax distribution for such quarter in an amount equal to the (i) the lesser of (x) 25% and (y) the highest combined federal, state and local tax rate applicable for corporations organized in New York, multiplied by (ii) the excess (if any) of (A) one-fourth (1/4th) of the estimated taxable income to be allocated to the holders of Preferred Units for the year in which the Quarterly Tax Payment Date (which refers to certain specified dates that next follow a Quarterly Distribution date on which PIK Units were issued) occurs, over (B) any cash paid on the Quarterly Distribution date immediately preceding the Quarterly Tax Payment Date on which a quarterly tax amount would otherwise be paid (such amount, the "Tax Distribution"). Tax Distributions are treated as advances against, and reduce, future cash distributions for any reason, including payments in redemption of Preferred Units or PIK Units, or payments to the holders in their capacity as such pursuant to any side letter or other agreement.

Additional Amounts for Certain Purchasers

The operating partnership is required to pay certain additional amounts of cash (the “Additional Amounts”) as necessary to certain holders of Preferred Units that hold their interests through a “blocker,” which is a U.S. entity that is owned and organized by certain original purchasers of Preferred Units who are non-U.S. persons or tax exempt for U.S. tax purposes and is treated as a corporation for U.S. tax purposes. Only certain original purchasers of Preferred Units who hold their Preferred Units through such blockers are, and none of their transferees is, entitled to Additional Amounts. Additional Amounts are capped at the lesser of: (a) the product of 20% multiplied by taxable income allocated to a “blocker” (as defined) divided by 0.8, and (b) the actual taxes payable by the “blocker” as a result of holding Senior Preferred Units.

Board Rights

For so long as at least 140,000 Preferred Units remain outstanding, holders of the Preferred Units have the right to designate 1 director to the Board of the general partner, subject to approval by the general partner.

Protective Provisions

The OpCo LPA Amendment and the Amended Ferrellgas Partners LPA (as defined in Note H – Equity) include, among other things, certain covenants for the benefit of holders of Preferred Units applicable to the operating partnership and, in certain instances, Ferrellgas Partners, for so long as at least $35,000,000 of Preferred Units and PIK Units remain outstanding. These covenants include, among other things, limitations on (i) effecting a Change of Control, (ii) amending organizational documents, (iii) issuing certain equity securities, (iv) issuing Preferred Units, (v) filing for bankruptcy, (vi) non-ordinary course investments, and (vii) incurring certain levels of indebtedness.

Ranking and Liquidation Preference

The Preferred Units rank senior to any other class or series of equity interests of the operating partnership (including the partnership interests held by Ferrellgas Partners and the general partner). Upon a liquidation, dissolution or winding up of the operating partnership, each holder of Preferred Units will be entitled to receive, prior and in preference to any distribution of any assets of the operating partnership to the holders of any other class or series of equity interests in the operating partnership (including Ferrellgas Partners and the general partner), an amount per Preferred Unit equal to the Redemption Price.

Table of Contents

Restrictions on Cash Distributions to Ferrellgas Partners and the General Partner

Under the covenants in the indentures governing the operating partnership’s unsecured notes, if the consolidated fixed charge coverage ratio is below 1.75x, the operating partnership may still make restricted payments in limited amounts determined under the indentures governing the operating partnership’s unsecured notes. The distributions made by the operating partnership on June 15, 2019 and December 15, 2019 for payment of interest on Ferrellgas Partners’ unsecured senior notes due June 2020 were made from capacity under this limited exception to the ratio requirement under the indentures governing the operating partnership’s unsecured notes.

The indenture governing the operating partnership’s senior secured first lien notes due 2025 contains a similar but, in some respects, a different restricted payments covenant. The covenant in the secured notes indenture provides for the same 1.75x consolidated fixed charge coverage ratio test as the unsecured notes indentures and a limited exception when that ratio is below 1.75x. In addition, the secured notes indenture also provides that, subject to a separate limited exception, described below, the operating partnership generally may not make a restricted payment unless the operating partnership’s consolidatednet leverage ~~ratio~~ (defined ~~in the secured notes indenture~~ generally to mean the ratio of

~~Table of Contents~~

the operating partnership’s consolidated total net debt (including the total redemption price of all outstanding Preferred Units and PIK Units but excluding certain letters of credit and capital lease obligations) as of each Quarterly Distribution Date to trailing four quarters consolidated EBITDA, both as adjusted for certain, specified items) is ~~no greater than 5.5x, on a pro forma basis~~below 7.25x through May 15, 2022 and 7.00x thereafter, net of cash, immediately before and after giving effect to the restricted payment and, if applicable, certain other specified events. The consolidated leverage ratio test applies regardless of whether the operating partnership’s consolidated fixed coverage ratio is at least 1.75x or below 1.75x. As of October 31, 2020, the operating partnership’s consolidated leverage ratio was substantially in excess of 5.5x. Additionally, the secured notes indenture provides for restricted payments under its limited exception to the consolidated fixed charge coverage ratio test that is less than the capacity available under the similar exception in the unsecured notes indentures. However, the secured notes indenture contains a separate exception to both the consolidated fixed charge coverage ratio test and the consolidated leverage ratio test that can be utilized to make certain specified restricted payments in a limited amount whensuch distribution, (iv) the operating partnership ~~does not meet either the consolidated fixed charge coverage ratio test or the consolidated leverage ratio test. This separate exception under the secured notes indenture currently~~ has ~~capacity for such specified restricted payments that is substantially the same as the~~at least $100 million of liquidity, consisting of unrestricted cash on hand and available capacity under the ~~most restrictive~~Credit Agreement or any replacement thereof, and (v) the operating partnership is in compliance with the other protective provisions in the OpCo LPA Amendment.

H. Equity

Reverse Unit Split

On the Effective Date, Ferrellgas Partners effected a 1-for-20 reverse unit split in which holders of its then-outstanding common units received one Class A Unit for every twenty common units held. No fractional Class A Units were issued in connection with the reverse unit split. If, as a result of the ~~operating partnership’s unsecured~~reverse unit split, a unitholder would otherwise have been entitled to a fractional Class A Unit, the number of Class A Units such unitholder received was rounded up or down to the nearest whole Class A Unit, with a fraction of one-half or less being rounded down. The reverse unit split resulted in a reduction of our previously outstanding common units from 97,152,665 common units to 4,857,605 Class A Units. All references to common units and per unit data for all periods presented in the accompanying condensed consolidated financial statements and notes ~~indentures.~~thereto have been adjusted to reflect the reverse unit split on a retroactive basis.

~~As described above,~~Class B Units

On the Effective Date, Ferrellgas ~~Partners’~~Partners issued 1.3 million Class B Units to the holders of the $357.0 million aggregate principal amount of its 8.625% senior unsecured notes due June 2020 ~~matured~~(the “Ferrellgas Partners Notes”) in exchange for such holders’ contribution of the Ferrellgas Partners Notes to Ferrellgas Partners as a capital contribution and in satisfaction of such holders’ claims in respect of the Ferrellgas Partners Notes. The terms of the Class B Units are set forth in the Sixth Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners, L.P. (the “Amended Ferrellgas Partners LPA”), which the general partner entered into on ~~June 15, 2020,~~the Effective Date and which amended and restated in its entirety the Fifth Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners, L.P.

Ferrellgas Partners may, subject to certain conditions, issue additional Class A Units to such parties as determined at the discretion of Ferrellgas Partners, upon consent by the holders of the requisite percentage of Class B Units as specified in the Amended Ferrellgas Partners LPA (the “Requisite Class B Units”), which refers to: (i) if the initial majority holder of Class B Units holds at least 50% of Class B Units, holders of at least 50% of the outstanding Class B Units, or (ii) if the initial majority holder of Class B Units holds less than 50% of Class B Units, holders of at least one-third of the outstanding Class B Units.

Table of Contents

Once holders of Class B Units receive distributions in the aggregate amount of $357.0 million (which was the outstanding principal amount of ~~those notes was due to~~the Ferrellgas Partners Notes), the Class B Units will be ~~paid on~~(i) convertible into Class A Units at the option of Ferrellgas Partners, if that ~~date, together with accrued interest~~distribution threshold is reached prior to the ~~maturity date. Although~~fifth anniversary of the Effective Date, or (ii) converted automatically into Class A Units, if the distribution threshold is reached on or after the fifth anniversary of the Effective Date, in each case at the applicable conversion rate set forth in the following table:


Year Post-Emergence	Conversion Factor
Year 1	1.75x
Year 2	2.00x
Year 3	3.50x
Year 4	4.00x
Year 5	5.00x
Year 6	6.00x
Year 7	7.00x
Year 8	10.00x
Year 9	12.00x
Year 10	25.00x

In the first five years after the Effective Date, Ferrellgas Partners may redeem the Class B Units, in full, at a price equal to an amount that will result in an internal rate of return with respect to the Class B Units equal to the sum of (i) 300 basis points and (ii) the internal rate of return for the Preferred Units as specified in the Amended Ferrellgas Partners LPA, subject to the minimum redemption price of $302.08 per unit, less any cash distributed prior to the redemption, if called in the first year after issuance. The total internal rate of return required to redeem the Class B Units is 15.85%, but that amount increases under certain circumstances, including if the operating partnership paid distributions on the Preferred Units in-kind rather than in cash for a certain number of quarters. There have not been any in-kind distributions through October 31, 2021.

During the first five years following the Effective Date, after Ferrellgas Partners has ~~some capacity~~distributed $356 million in distributions to holders of the Class B Units, Ferrellgas Partners will have the option to hold cash for six months at either Ferrellgas Partners or Ferrellgas Partners Finance Corp. for the sole purpose of redeeming the Class B Units. However, if the funds held are not used to redeem the Class B Units, the funds must either be distributed to holders of the Class B Units and, if applicable, holders of the Class A Units and the general partner or returned to the operating partnership.

Ferrellgas Partners will only be able to redeem the Class B Units to the extent it receives sufficient distributions from the operating partnership, and the operating partnership is limited in its ability to make distributions ~~under~~by the ~~operating partnership’s unsecured~~indentures that govern the 2026 Notes and ~~secured notes indentures, this capacity~~the 2029 Notes, the Credit Agreement and the OpCo LPA Amendment governing the Preferred Units.

The holders of Class B Units will ~~not allow~~have the right to acquire the general partner interests in Ferrellgas Partners and the operating partnership, ~~to make distributions to~~without the approval of the general partner, Ferrellgas Partners, ~~sufficient to pay~~ the ~~principal~~holders of ~~and accrued interest on Ferrellgas Partners’ unsecured senior notes due 2020 that was due at~~ the ~~maturity of those notes. Additionally, the restrictions in these indentures currently limit the ability of~~Class A Units or the operating partnership, if the Class B Units are still outstanding and have not been converted to ~~make distributions to~~Class A Units by the earlier of (i) a material breach of the covenants in favor of the Class B Units under the Amended Ferrellgas Partners LPA or the Amended OpCo LPA that is not cured within the time period specified therein and (ii) the 10th anniversary of the Effective Date.

Board Rights

The holders of Class B Units will be permitted to ~~enable it~~designate 1 independent director to ~~pay cash distributions to its unitholders.~~

~~Debt and interest expense reduction strategy~~

~~Ferrellgas continues to pursue~~the Board of the general partner in accordance with a ~~strategy to reduce its debt and interest expense. Opportunities include~~voting agreement among the ~~generation~~general partner, Ferrell Companies, Inc. ("FCI"), the sole stockholder of ~~additional cash flows through accretive acquisitions, continued restructuring or refinancing of existing indebtedness, selling additional assets, maintaining~~ the suspension of Ferrellgas’ common unit distributions, issuing equity or executing one or more debt exchanges. Ferrellgas expects to maintain its debt and interest expense reduction strategy until its consolidated leverage ratio reaches a level that it deems appropriate for its business. Ferrellgas engaged Moelis & Company LLC as its financial advisorgeneral partner, and the ~~law firm~~holders of ~~Squire Patton Boggs LLP to assist in its ongoing process to reduce existing debt~~the Class B Units and ~~address its debt maturities.~~the general partner's bylaws.

G. ~~Partners’ deficit~~Table of Contents

Class A Units

As of October 31, ~~2020~~2021 and July 31, ~~2020, limited partner units~~2021, Class A Units were beneficially owned by the following:


	October 31, 2021	July 31, 2021
Public Class A Unitholders (1)	3,480,621	3,480,621
Ferrell Companies (2)	1,126,468	1,126,468
FCI Trading Corp. (3)	9,784	9,784
Ferrell Propane, Inc. (4)	2,560	2,560
James E. Ferrell (5)	238,172	238,172

October 31, 2020

July 31, 2020
Public common unitholders (1)

69,612,939

69,612,939
Ferrell Companies (2)

22,529,361

22,529,361
FCI Trading Corp. (3)

195,686

195,686
Ferrell Propane, Inc. (4)

51,204

51,204
James E. Ferrell (5)

4,763,475

4,763,475

(1)	These ~~common units~~Class A Units are traded on the OTC Pink Market under the symbol “FGPR”.

(2)

Ferrell Companies is the owner of the general partner and an approximate 23% direct owner of Ferrellgas Partners’ ~~common units~~Class A Units and thus a related party. Ferrell Companies also beneficially owns ~~195,686~~9,784 and ~~51,204 common units~~2,560 Class A Units of Ferrellgas Partners held by FCI Trading Corp. ("(“FCI ~~Trading"~~Trading”) and Ferrell Propane, Inc. ("Ferrell Propane"), respectively, bringing Ferrell Companies’ total beneficial ownership of Class A Units to 23.4%.

(3)	FCI Trading is an affiliate of the general partner and thus a related party.

(4)	Ferrell Propane is controlled by the general partner and thus a related party.

(5)

James E. Ferrell is the ~~Interim~~ Chief Executive Officer and President of our general partner; and is the Chairman of the Board of Directors of our general partner and a related party. JEF Capital Management owns ~~4,758,859~~237,942 of these ~~common units~~Class A Units and is owned by the James E. Ferrell Revocable Trust Two and other family trusts, all of which James E. Ferrell and/or his family members are the trustees and beneficiaries. James E. Ferrell holds all voting common stock of JEF Capital Management. The remaining ~~4,616 common units~~230 Class A Units are held by Ferrell Resources

~~Table of Contents~~

Holdings, Inc., which is wholly-owned by the James E. Ferrell Revocable Trust One, for which James E. Ferrell is the trustee and sole beneficiary.

Together these Class A Units represent (i) a 99% limited partner economic interest in Ferrellgas Partners, excluding the economic interest attributable to the Class B Units, and (ii) an effective 98% economic interest in the operating partnership, excluding the economic interests attributable to the Class B Units and the Preferred Units. In liquidation, allocations and distributions will be made in accordance with each Class A Unitholder’s positive capital account.

The Class A Units of Ferrellgas Partners represent limited partner interests in Ferrellgas Partners, which give the holders thereof the right to participate in distributions made by Ferrellgas Partners, subject to the rights of holders of Class B Units, and to exercise the other rights or privileges available to such holders under the Amended Ferrellgas Partners LPA. Under the terms of the Amended Ferrellgas Partners LPA, holders of Class A Units have limited voting rights on matters affecting the business of Ferrellgas Partners. Generally, persons or groups owning 20% or more of Ferrellgas Partners’ outstanding Class A Units cannot vote any of their Class A Units in excess of the 20% threshold. However, this limitation does not apply under certain circumstances and does not apply to Class A Units owned by Ferrell Companies, our general partner and its affiliates, and this limitation expires on the later of (a) five years after the Effective Date and (b) the conversion of the Class B Units to Class A Units.

The Amended Ferrellgas Partners LPA allows the general partner to issue an unlimited number of additional general and limited partner interests of Ferrellgas Partners for such consideration and on such terms and conditions as shall be established by the general partner without the approval of any Class A Unitholders.

Partnership distributions

NoFerrellgas Partners did not declare or pay any distributions ~~will be paid~~ to ~~common unitholders~~Class A Unitholders or the general partner for the three months ended October 31, ~~2020.~~

2021. On October 8, 2021, Ferrellgas Partners made a cash distribution in the aggregate amount of approximately $49.9 million to its Class B Unitholders.

Accumulated other comprehensive income (loss) (“AOCI”)

See Note JK – Derivative instruments and hedging activities – for details regarding changes in ~~the~~ fair value ofon risk management financial derivatives recorded within AOCI for the three months ended October 31, ~~2020~~2021 and ~~2019.~~2020.

Table of Contents

General partner’s commitment to maintain its capital account

Ferrellgas’ partnership agreements allow the general partner to have an option to maintain its effective 2% general partner interest (excluding the interest attributable to the Class B Units and Preferred Units) concurrent with the issuance of other additional equity.

During the three months ended October 31, 2021, the general partner made non-cash contributions of $17.0 thousand to Ferrellgas to maintain its effective 2% general partner interest.

During the three months ended October 31, 2020, the general partner made non-cash contributions of $14.0 thousand to Ferrellgas to maintain its effective 2% general partner interest.

~~During the three months ended October 31, 2019, the general partner made non-cash contributions of $16.0 thousand to Ferrellgas to maintain its effective 2% general partner interest.~~

H.I. Revenue from contracts with customers

Disaggregation of revenue

Ferrellgas disaggregates revenues based upon the type of customer and on the type of revenue. The following table presents retail propane revenues, wholesale propane revenues and other revenues. Retail revenues result from sales to end use customers, wholesale revenues result from sales to or through resellers and all other revenues include sales of appliances and other materials, other fees charged to customers and equipment rental charges.

For the three months ended October 31,


2020

2019

Retail - Sales to End Users

$
174,645

$
180,417

Wholesale - Sales to Resellers

102,612

82,704

Other Gas Sales

3,792

10,264

Other

19,845

19,829

Propane and related equipment revenues

$
300,894

$
293,214


	For the three months ended October 31,
	2021		2020
Retail - Sales to End Users	$	252,510	$	174,645
Wholesale - Sales to Resellers		113,971		102,612
Other Gas Sales		6,223		3,792
Other		21,802		19,845
Propane and related equipment revenues	$	394,506	$	300,894

Contract assets and liabilities

Ferrellgas’ performance obligations are generally limited to the delivery of propane for our retail and wholesale contracts. Ferrellgas’ performance obligations with respect to sales of appliances and other materials and other revenues are limited to the delivery of the agreed upon good or service. Ferrellgas does not have material performance obligations that are delivered over time, thus all of our revenue is recognized at the time the goods, including propane, are delivered or installed. Ferrellgas offers “even pay” billing programs that can create customer deposits or advances, depending on whether Ferrellgas has delivered more propane than the customer has paid for or whether the customer has paid for more propane than what has been delivered. Revenue is recognized from these customer deposits or advances to customers at the time product is delivered. The advance or deposit is considered to be a contract asset or liability. Additionally, from time to time, we have customers that pay in advance for goods or services, and such amounts result in contract liabilities.

Ferrellgas incurs incremental commissions directly related to the acquisition or renewal of customer contracts. The commissions are calculated and paid based upon the number of gallons sold to the acquired or renewed customer. The total amount of commissions that we incur is not material, and the commissions are expensed commensurate with the deliveries to which they relate; therefore, Ferrellgas does not capitalize these costs.

~~Table of Contents~~

The following table presents the opening and closing balances of ~~Ferrellgas’~~our receivables, contract assets, and contract liabilities:


	October 31, 2021		July 31, 2021
Accounts receivable	$	175,871	$	138,757
Contract assets	$	5,283	$	10,074
Contract liabilities
Deferred revenue (1)	$	62,365	$	49,354

October 31, 2020

July 31, 2020
Accounts receivable

$
132,570

$
108,483
Contract assets

$
3,699

$
7,079
Contract liabilities


Deferred revenue (1)

$
52,220

$
42,911

(1)	Of the beginning balance of deferred revenue, ~~$11.4~~$10.5 million was recognized as revenue during the three months ended October 31, ~~2020.~~2021.

Table of Contents

Remaining performance obligations

Ferrellgas’ remaining performance obligations are generally limited to situations where its customers have remitted payment but have not yet received deliveries of propane. This most commonly occurs in Ferrellgas’ even pay billing programs and Ferrellgas expects that these balances will be recognized within a year or less as the customer takes delivery of propane.

I.J. Fair value measurements

Derivative financial instruments

The following table presents Ferrellgas’ financial assets and financial liabilities that are measured at fair value on a recurring basis for each of the fair value hierarchy levels, including both current and noncurrent portions, as of October 31, ~~2020~~2021 and July 31, ~~2020:~~2021:

Asset (Liability)

Quoted Prices in Active






Markets for Identical

Significant Other

Assets and Liabilities

Observable Inputs

Unobservable Inputs


(Level 1)

(Level 2)

(Level 3)

Total
October 31, 2020:








Assets:








Derivative financial instruments:








Commodity derivatives

$
—

$
7,161

$
—

$
7,161
Liabilities:






Derivative financial instruments:








Commodity derivatives

$
—

$
(1,557)

$
—

$
(1,557)

July 31, 2020:








Assets:








Derivative financial instruments:








Commodity derivatives

$
—

$
3,112

$
—

$
3,112
Liabilities:








Derivative financial instruments:








Commodity derivatives

$
—

$
(5,425)

$
—

$
(5,425)


	Asset (Liability)
	Quoted Prices in Active
	Markets for Identical		Significant Other
	Assets and Liabilities		Observable Inputs		Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
October 31, 2021:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	148,656	$	—	$	148,656
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(8,548)	$	—	$	(8,548)

July 31, 2021:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	94,244	$	—	$	94,244
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(4,458)	$	—	$	(4,458)

Methodology

The fair values of Ferrellgas’ non-exchange traded commodity derivative contracts are based upon indicative price quotations available through brokers, industry price publications or recent market transactions and related market indicators.

Other financial instruments

The carrying amounts of other financial instruments included in current assets and current liabilities (except for current maturities of long-term debt) approximate their fair values because of their short-term nature. At October 31, ~~2020~~2021 and

~~Table of Contents~~

July 31, ~~2020,~~2021, the estimated fair value of Ferrellgas’ long-term debt instruments was ~~$2,232.3~~$1,433.2 million and ~~$2,177.1~~$1,466.4 million, respectively. Ferrellgas estimates the fair value of long-term debt based on quoted market prices. The fair value of Ferrellgas’ consolidated debt obligations is a Level 2 valuation based on the observable inputs used for similar liabilities.

Ferrellgas has other financial instruments such as trade accounts receivable which could expose it to concentrations of credit risk. The credit risk from trade accounts receivable is limited because of a large customer base which extends across many different U.S. markets.

Table of Contents

J.K. Derivative instruments and hedging activities

Ferrellgas is exposed to certain market risks related to its ongoing business operations. These risks include exposure to changing commodity prices as well as fluctuations in interest rates. Ferrellgas utilizes derivative instruments to manage its exposure to fluctuations in commodity prices. Of these, the propane commodity derivative instruments are designated as cash flow hedges.

Derivative instruments and hedging activity

During the three months ended October 31, ~~2020~~2021 and ~~2019,~~2020, Ferrellgas did not recognize any gain or loss in earnings related to hedge ineffectiveness and did not exclude any component of financial derivative contract gains or losses from the assessment of hedge effectiveness related to commodity cash flow hedges.

The following tables provide a summary of the fair value of derivatives within Ferrellgas’ condensed consolidated balance sheets as of October 31, ~~2020~~2021 and July 31, ~~2020:~~2021:

Final
October 31, 2020

Maturity
Asset Derivatives

Liability Derivatives
Derivative Instrument

Date
Location

Fair value

Location

Fair value
Derivatives designated as hedging instruments

December 2021







Commodity derivatives-propane

Prepaid expenses and other current assets

$
6,656

Other current liabilities

$
1,506
Commodity derivatives-propane

Other assets, net

505

Other liabilities

51

Total

$
7,161

Total

$
1,557

Final

July 31, 2020

Final

October 31, 2021

Maturity

Asset Derivatives

Liability Derivatives

Maturity

Asset Derivatives

Liability Derivatives

Derivative Instrument

Date

Location

Fair value

Location

Fair value

Date

Location

Fair value

Location

Fair value

Derivatives designated as hedging instruments

December 2021

December 2023

Commodity derivatives-propane

Prepaid expenses and other current assets

2,846

Other current liabilities

5,029

Price risk management asset

129,389

Other current liabilities

7,650

Commodity derivatives-propane

Other assets, net

266

Other liabilities

396

Other assets, net

19,267

Other liabilities

898

Total

3,112

Total

5,425

Total

148,656

Total

8,548


	Final	July 31, 2021
	Maturity	Asset Derivatives			Liability Derivatives
Derivative Instrument	Date	Location	Fair value		Location	Fair value
Derivatives designated as hedging instruments	December 2021
Commodity derivatives-propane		Price risk management asset	$	78,001	Other current liabilities	$	3,429
Commodity derivatives-propane		Other assets, net		16,243	Other liabilities		1,029
		Total	$	94,244	Total	$	4,458

2024

Table of Contents

Ferrellgas’ exchange traded commodity derivative contracts require cash margin deposit as collateral for contracts that are in a negative mark-to-market position. These cash margin deposits will be returned if mark-to-market conditions improve or will be applied against cash settlement when the contracts are settled. Liabilities represent cash margin deposits received by Ferrellgas for contracts that are in a positive mark-to-market position. The following tables provide a summary of cash margin balances as of October 31, ~~2020~~2021 and July 31, ~~2020,~~2021, respectively:

October 31, 2020

Assets

Liabilities
Description

Location

Amount

Location

Amount
Margin Balances

Prepaid expense and other current assets

$
9,381

Other current liabilities

$
5,768

Other assets, net

544

Other liabilities

483

$
9,925



$
6,251


	July 31, 2020						October 31, 2021
	Assets			Liabilities			Assets			Liabilities
Description	Location	Amount		Location	Amount		Location	Amount		Location	Amount
Margin Balances	Prepaid expense and other current assets	$	14,398	Other current liabilities	$	510	Prepaid expense and other current assets	$	31,129	Other current liabilities	$	126,325
	Other assets, net		1,433	Other liabilities		—	Other assets, net		3,511	Other liabilities		18,392
		$	15,831		$	510		$	34,640		$	144,717


	July 31, 2021
	Assets			Liabilities
Description	Location	Amount		Location	Amount
Margin Balances	Prepaid expense and other current assets	$	21,068	Other current liabilities	$	79,178
	Other assets, net		3,036	Other liabilities		15,489
		$	24,104		$	94,667

The following tables provide a summary of the effect on Ferrellgas’ condensed consolidated statements of comprehensive income (loss) for the three months ended October 31, ~~2020~~2021 and ~~2019~~2020 due to derivatives designated as cash flow hedging instruments:


	For the three months ended October 31, 2020							For the three months ended October 31, 2021
				Amount of Gain (Loss)							Amount of Gain (Loss)
	Amount of Gain		Location of Gain (Loss)	Reclassified from				Amount of Gain		Location of Gain (Loss)	Reclassified from
	(Loss) Recognized in		Reclassified from	AOCI into Income				(Loss) Recognized in		Reclassified from	AOCI into Income
Derivative Instrument	AOCI		AOCI into Income	Effective portion		Ineffective portion		AOCI		AOCI into Income	Effective portion		Ineffective portion
Commodity derivatives	$	5,767	Cost of product sold- propane and other gas liquids sales	$	(2,150)	$	—	$	72,932	Cost of product sold- propane and other gas liquids sales	$	22,610	$	—
	$	5,767		$	(2,150)	$	—	$	72,932		$	22,610	$	—


	For the three months ended October 31, 2019							For the three months ended October 31, 2020
				Amount of Gain (Loss)							Amount of Gain (Loss)
	Amount of Gain (Loss)		Location of Gain (Loss)	Reclassified from				Amount of Gain (Loss)		Location of Gain (Loss)	Reclassified from
	Recognized in		Reclassified from	AOCI into Income				Recognized in		Reclassified from	AOCI into Income
Derivative Instrument	AOCI		AOCI into Income	Effective portion		Ineffective portion		AOCI		AOCI into Income	Effective portion		Ineffective portion
Commodity derivatives	$	(13,627)	Cost of product sold- propane and other gas liquids sales	$	(7,479)	$	—	$	5,767	Cost of product sold- propane and other gas liquids sales	$	(2,150)	$	—
	$	(13,627)		$	(7,479)	$	—	$	5,767		$	(2,150)	$	—

Table of Contents

The changes in derivatives included in AOCI for the three months ended October 31, ~~2020~~2021 and ~~2019~~2020 were as follows:


	For the three months ended October 31,
Gains and losses on derivatives included in AOCI	2021		2020
Beginning balance (1)	$	89,786	$	(2,313)
Change in value of risk management commodity derivatives		72,932		5,767
Reclassification of (gains) losses on commodity hedges to cost of sales - propane and other gas liquids sales, net		(22,610)		2,150
Ending balance (1)	$	140,108	$	5,604

For the three months ended October 31,
Gains and losses on derivatives included in AOCI

2020

2019
Beginning balance

$
(2,313)

$
(14,756)
Change in value of risk management commodity derivatives

5,767

(13,627)
Reclassification of losses on commodity hedges to cost of sales - propane and other gas liquids sales, net

2,150

7,479
Ending balance

$
5,604

$
(20,904)

(1)

Beginning balances in the table above include AOCI activity related to non-controlling interest of $0.9 million and $10.0 thousand for fiscal 2022 and 2021, respectively. Ending balances for the three months ended October 31, 2021 and October 31, 2020 include AOCI activity related to non-controlling interest of $1.4 million and $0.1 million, respectively.

Ferrellgas expects to reclassify net gains of approximately ~~$5.2~~$121.7 million to earnings during the next 12 months. These net gains are expected to be offset by ~~increased~~decreased margins on propane sales commitments Ferrellgas has with its customers that qualify for the normal purchase normal sale exception.

~~Table of Contents~~

During the three months ended October 31, ~~2020~~2021 and ~~2019,~~2020, Ferrellgas had no reclassifications to operations resulting from the 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 October 31, ~~2020,~~2021, Ferrellgas had financial derivative contracts covering ~~3.6~~7.2 million barrels of propane that were entered into as cash flow hedges of forward and forecasted purchases of propane.

Derivative financial instruments credit risk

Ferrellgas is exposed to credit loss in the event of nonperformance by counterparties to derivative financial and commodity instruments. Ferrellgas’ counterparties principally consist of major energy companies and major U.S. financial institutions. Ferrellgas maintains credit policies with regard to its counterparties that it believes reduce its overall credit risk. These policies include evaluating and monitoring its counterparties’ financial condition, including their credit ratings, and entering into agreements with counterparties that govern credit limits. Certain of these agreements call for the posting of collateral by the counterparty or by Ferrellgas in the forms of letters of credit, ~~parental~~parent guarantees or cash. Ferrellgas has concentrations of credit risk associated with derivative financial instruments held by certain derivative financial instrument counterparties. If these counterparties that make up the concentration failed to perform according to the terms of their contracts at October 31, ~~2020,~~2021, the maximum amount of loss due to credit risk that Ferrellgas would incur based upon the gross fair values of the derivative financial instruments is ~~$3.5 million.~~0.

From time to time Ferrellgas enters into derivative contracts that have credit-risk-related contingent features which dictate credit limits based upon Ferrellgas’ debt rating. There were no0 open derivative contracts with credit-risk-related contingent features as of October 31, ~~2020.~~2021.

Table of Contents

K.L. Transactions with related parties

Ferrellgas has no0 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 operations as follows:

For the three months ended October 31,

2020

2019

Operating expense

$
60,980

$
63,471

General and administrative expense

$
6,719

$
6,487


	For the three months ended October 31,
	2021		2020
Operating expense	$	64,949	$	60,980

General and administrative expense	$	6,229	$	6,719

See additional discussions about transactions with the general partner and related parties in Note GH – ~~Partners’ deficit.~~Equity.

22Term loan credit agreement with Ferrellgas Partners, L.P.

~~Table~~On January 8, 2021, Ferrellgas Partners, L.P. entered into a term loan credit agreement with Ferrellgas, L.P., pursuant to which Ferrellgas, L.P. extended to Ferrellgas Partners, L.P. an unsecured, non-amortizing term loan in the aggregate principal amount of ~~Contents~~$19.9 million. The term loan bears interest at a rate of 20% per annum, and all interest on the term loan will be added to the outstanding principal amount of the term loan. The term loan will mature on July 1, 2022. During July 2021, Ferrellgas Partners made an optional prepayment of $9.0 million principal amount of the term loan. The outstanding principal and accrued interest at October 31, 2021 was $13.8 million.

L.M. Contingencies and commitments

Litigation

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 and, prior to the sales of midstream operations in fiscal 2018, crude oil. As a result, at any given time, Ferrellgas can be threatened with or named as a defendant in various lawsuits arising in the ordinary course of business. Other than as discussed below, 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 consolidated financial condition, results of operations and cash flows of Ferrellgas.

Table of Contents

Ferrellgas has been named as a defendant, along with a competitor, in putative class action lawsuits filed in multiple jurisdictions. The lawsuits, which were consolidated in the Western District of Missouri on October 16, 2014, allege that Ferrellgas and a competitor coordinated in 2008 to reduce the fill level in barbeque cylinders and combined to persuade a common customer to accept that fill reduction, resulting in increased cylinder costs to direct customers and end-user customers in violation of federal and certain state antitrust laws. The lawsuits seek treble damages, attorneys’ fees, injunctive relief and costs on behalf of the putative class. These lawsuits have been coordinated for pretrial purposes by the multidistrict litigation panel. The Federal Court for the Western District of Missouri initially dismissed all claims brought by direct and indirect customers other than state law claims of indirect customers under Wisconsin, Maine and Vermont law. The direct customer plaintiffs filed an appeal, which resulted in a reversal of the district court’s dismissal. We filed a petition for a writ of certiorari which was denied. An appeal by the indirect customer plaintiffs resulted in the court of appeals affirming the dismissal of the federal claims and remanding the case to the district court to decide whether to exercise supplemental jurisdiction over the remaining state law claims. Thereafter, in August 2019, Ferrellgas reached a settlement with the direct customers, pursuant to which it agreed to pay a total of $6.25 million to resolve all claims asserted by the putative direct purchaser class. With respect to the indirect customers, the district court exercised supplemental jurisdiction over the remaining state law claims, but then granted in part Ferrellgas’ pleadings-based motion and dismissed 11 of the 24 remaining state law claims. As a result, there ~~are~~were 13 remaining state law claims brought by a putative class of indirect customers. On September 23, 2021 the court held an oral argument on the indirect purchaser plaintiffs’ motion for class certification. Thereafter, the court denied the indirect purchaser plaintiffs’ motion for class certification, and a final order on the motion was entered by the Court on November 9, 2021. At this point the only remaining claims are the 13 named plaintiffs’ individual state claims, which has the effect of substantially reducing the Ferrellgas potential liability. Ferrellgas believes it has strong defenses and intends to vigorously defend itself against these remaining claims. Ferrellgas does not believe loss is probable or reasonably estimable at this time related to the putative class action lawsuit.

Ferrellgas and Bridger Logistics, LLC (“Bridger”), have been named, along with ~~two~~2 former officers (“Rios and Gamboa”), in a lawsuit filed by Eddystone Rail Company ("Eddystone") on February 2, 2017 in the Eastern District of Pennsylvania (the "EDPA Lawsuit"). Eddystone indicated that it has prevailed in or settled an arbitration against Jamex Transfer Services (“JTS”), previously named Bridger Transfer Services, a former subsidiary of Bridger. The arbitration involved a claim against JTS for money due for deficiency payments under a contract for the use of an Eddystone facility used to offload crude from rail onto barges. Eddystone alleges that Ferrellgas transferred assets out of JTS prior to the sale of the membership interest in JTS to Jamex Transfer Holdings, and that those transfers should be avoided so that the assets can be used to satisfy the amount owed by JTS to Eddystone as a result of the arbitration. Eddystone also alleges that JTS was an “alter ego” of Bridger and Ferrellgas and that Bridger and Ferrellgas breached both an implicit contract as well as fiduciary duties allegedly owed to Eddystone as a creditor of JTS. Ferrellgas believes that Ferrellgas and Bridger have valid defenses to these claims and to Eddystone’s primary claim against JTS for breach of contract. ~~The lawsuit does not specify a specific amount of damages that~~If Eddystone ~~is seeking;~~ultimately prevails, however, Ferrellgas believes that the amount of ~~such~~ damages ~~if ultimately owed to Eddystone,~~awarded could be material to Ferrellgas. Ferrellgas intends to vigorously defend this claim.

On August 24, 2017, Ferrellgas filed a third-party complaint against JTS, Jamex Transfer Holdings, and other related persons and entities (the "Third-Party Defendants"), asserting claims for breach of contract, indemnification of any losses in the EDPA Lawsuit, tortious interference with contract, and contribution. On June 25, 2018, Ferrellgas entered into an agreement with the Third-Party Defendants which, among other things, resulted in a dismissal of the claims against the Third-Party Defendants from the lawsuit. ~~The~~

Virtually all discovery has been completed and the lawsuit is inproceeding toward the ~~discovery stage; as~~summary judgment stage. As such, management does not currently believe a loss is probable or reasonably estimable at this time. However, we may enter into settlement discussions at any time.

Long-term debt related commitments

Ferrellgas has long and short-term payment obligations under agreements such as the indentures governing its senior notes. See Note F – Debt – for a description of these debt obligations and a schedule of future maturities.

2328

Table of Contents

M.N. Net earnings (loss) per unitholders’ interest

Below is a calculation of the basic and diluted net loss per ~~common unitholders’~~Class A Unitholders’ interest in the condensed consolidated statements of operations for the periods indicated:

For the three months ended October 31,

2020

2019

Common unitholders’ interest in net loss

$
(45,601)

$
(44,891)

Weighted average common units outstanding (in thousands)

97,152.7

97,152.7

Basic and diluted net loss per common unit

$
(0.47)

$
(0.46)


	For the three months ended October 31,
	2021		2020

Class A Unitholders’ interest in net loss	$	(25,525)	$	(45,601)
Weighted average Class A Units outstanding (in thousands)		4,857.6		4,857.6
Basic and diluted net loss per Class A Unit	$	(5.25)	$	(9.39)

Class B Units considerations

N.The Class B Units meet the definition of a participating security and the two-class method is required. For any periods in which earnings are recognized, the earnings will be allocated between the Class B Units and the Class A Units on a 6-to-one basis. For any periods in which losses are recognized, no effect is given to the Class B Units as they do not contractually participate in the losses of Ferrellgas.

In addition, Ferrellgas has the option to redeem all, but not less than all, of the Class B Units outstanding at any time on or prior to the fifth anniversary of the Effective Date for cash. This call option does not impact the dilutive effect of net loss per Class A Unit due to the cash-only redemption provision, which is assumed, and therefore there would be no dilutive effect.

O. Subsequent events

Ferrellgas has evaluated events and transactions occurring after the balance sheet date through the date Ferrellgas’ condensed consolidated financial statements were issued and concluded that there were no events or transactions occurring during this period that ~~require~~required recognition or disclosure in its condensed consolidated financial ~~statements, except as follows.~~statements.

~~Transaction Support Agreement~~

On December 10, 2020, Ferrellgas Partners, Ferrellgas Partners Finance Corp., the operating partnership and additional Ferrellgas entities (collectively, the “Company Parties”) entered into a Transaction Support Agreement (the “TSA”) with certain holders of, or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims (collectively, the “Consenting Noteholders”) arising under, derived from or based upon the indenture governing the Ferrellgas Partners Notes due June 15, 2020. As of December 10, 2020, the Consenting Noteholders hold or represent, in the aggregate, approximately 74% of the outstanding amount of the Ferrellgas Partners Notes due June 15, 2020.

The TSA sets forth (i) a restructuring process to satisfy the obligations of Ferrellgas Partners and Ferrellgas Partners Finance Corp. under the Ferrellgas Partners Notes due June 15, 2020 (the “Ferrellgas Partners Transactions”), which will be effectuated through pre-packaged voluntary cases (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code filed by only Ferrellgas Partners and Ferrellgas Partners Finance Corp. and the confirmation of a pre-packaged plan of reorganization for Ferrellgas Partners and Ferrellgas Partners Finance Corp., and (ii) a refinancing process of the operating partnership, including but not limited to, replacement of the operating partnership’s existing unsecured notes due 2021, 2022 and 2023 (the “operating partnership Transactions” and, together with the Ferrellgas Partners Transactions, the “Transactions”), which will be consummated on the effective date (the “Effective Date”) of Ferrellgas Partners’ plan of reorganization that implements the Ferrellgas Partners Transactions (the “Plan”) and will close simultaneously with the Ferrellgas Partners Transactions effectuated under the Plan.

Generally, the TSA and the Transactions contemplate, among other things, the transactions and certain changes to the capital structure and governance of the Company Parties as described in more detail in the TSA.

Pursuant to the TSA, and subject to the terms and conditions thereof, the parties thereto have agreed to support, act in good faith and take all steps reasonably necessary and desirable to implement and consummate the Transactions until the TSA is terminated. The Consenting Noteholders have agreed, among other things, (i) to forbear from taking actions with respect to any default or event of default by the Company Parties under the indenture governing the Ferrellgas Partners Notes which arises solely as a result of the failure to make payments of the principal due on the Ferrellgas Partners Notes, and (ii) to vote in favor of any matter requiring approval to the extent necessary to implement the Transactions and the Plan.

2429

Table of Contents

obligation of Ferrellgas Partners and Ferrellgas Partners Finance Corp. to emerge from chapter 11 protection no later than April 4, 2021, unless that deadline is extended pursuant to the terms of the TSA.

The TSA also provides that the TSA may be terminated by the Required Consenting Noteholders (as defined therein) with respect to the Consenting Noteholders or by any Company Party with respect to the Company Parties upon the occurrence of certain events set forth therein. In particular, the Company Parties may terminate the TSA in the event the governing body of any Company Party determines, after consulting with counsel, (i) that continuing to pursue any of the Transactions in the manner contemplated by the TSA would be inconsistent with the exercise of its contractual or fiduciary duties or applicable law or (ii) in the exercise of its contractual or fiduciary duties, to pursue an alternative transaction proposal.

~~There is no assurance that the restructuring and refinancing processes described in the TSA will be consummated.~~

~~FERRELLGAS PARTNERS FINANCE CORP.~~

~~(a wholly-owned subsidiary of Ferrellgas Partners, L.P.)~~

~~CONDENSED BALANCE SHEETS~~

~~(unaudited)~~

October 31, 2020

July 31, 2020
ASSETS

Cash

$
1,000

$
1,000
Prepaid expenses and other current assets

—

1,850
Total assets

$
1,000

$
2,850

Contingencies and commitments (Note B)





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

38,920

38,846
Accumulated deficit

(38,920)

(36,996)
Total stockholder’s equity

$
1,000

$
2,850

~~See notes to condensed financial statements.~~

~~Table of Contents~~

FERRELLGAS PARTNERS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

CONDENSED ~~STATEMENTS OF OPERATIONS~~BALANCE SHEETS

(unaudited)

For the three months ended October 31,

2020

2019

General and administrative expense

$
1,924

$
891

Net loss

$
(1,924)

$
(891)


	October 31, 2021		July 31, 2021
ASSETS
Cash	$	1,000	$	1,000
Prepaid expenses and other current assets		—		—
Total assets	$	1,000	$	1,000

Contingencies and commitments (Note B)

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		39,486		39,486
Accumulated deficit		(39,486)		(39,486)
Total stockholder’s equity	$	1,000	$	1,000

See notes to condensed financial statements.

2630

Table of Contents

FERRELLGAS PARTNERS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)


	For the three months ended October 31,
	2021		2020
General and administrative expense	$	—	$	1,924

Net loss	$	—	$	(1,924)

See notes to condensed financial statements.

Table of Contents

FERRELLGAS PARTNERS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

For the three months ended October 31,


2020

2019
Cash flows from operating activities:




Net loss

$
(1,924)

$
(891)
Changes in operating assets and liabilities:




Prepaid expenses and other current assets

1,850

838
Cash used in operating activities

(74)

(53)

Cash flows from financing activities:




Capital contribution

74

53
Cash provided by financing activities

74

53

Net change in cash

—

—
Cash - beginning of period

1,000

1,000
Cash - end of period

$
1,000

$
1,000


	For the three months ended October 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	—	$	(1,924)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		—		1,850
Cash used in operating activities		—		(74)

Cash flows from financing activities:
Capital contribution		—		74
Cash provided by financing activities		—		74

Net change in cash		—		—
Cash - beginning of period		1,000		1,000
Cash - end of period	$	1,000	$	1,000

See notes to condensed financial statements.

2732

Table of Contents

FERRELLGAS PARTNERS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

(unaudited)

NOTES 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”~~(“Ferrellgas Partners”).

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

The Finance Corp. has nominal assets, does not conduct any operations and has no0 employees.

~~Going Concern~~

The accompanying condensed financial statements have been prepared on a going concern basis, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business. As discussed in Note B – Contingencies and commitments, the Finance Corp serves as co-issuer and co-obligor for debt securities of the Partnership. The Partnership has $357.0 million aggregate principal amount of unsecured senior notes due June 15, 2020, which the Partnership failed to repay, that are classified as current in its condensed consolidated financial statements. These obligations are only reported on the Partnership’s condensed consolidated balance sheet. The ability of the Partnership to restructure, refinance or otherwise satisfy these notes is uncertain considering the level of other outstanding indebtedness. Additionally, the Finance Corp. does not have sufficient cash reserves or the ability to generate sufficient future cash flows to satisfy its obligations as co-obligor of the debt securities of the Partnership. Given these concerns, we believe there is substantial doubt about the Finance Corp’s ability to continue as a going concern. The Partnership has engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist with the Partnership’s ongoing process to reduce existing debt and address its debt maturities. On December 10, 2020, the Partnership, Finance Corp., the operating partnership and additional Ferrellgas entities entered into a Transaction Support Agreement (the “TSA”) with certain holders of, or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims arising under, derived from or based upon the indenture governing the Ferrellgas Partners Notes due June 15, 2020. There is no assurance that the transactions contemplated by the TSA will be consummated and the outcome of Ferrellgas’ debt reduction strategy continues to remain uncertain. See Note C – Subsequent Events, for a discussion of the TSA and the transactions contemplated thereunder.

B. Contingencies and commitments

The Finance Corp. serves as co-issuer and co-obligor for debt securities of Ferrellgas Partners. At July 31, 2020, the ~~Partnership. The~~ Finance Corp. iswas liable as co-issuer and co-obligor for the $357.0 million aggregate principal amount of ~~the Partnership’s~~Ferrellgas Partners’ unsecured senior notes due June 15, 2020 (the “Ferrellgas Partners Notes”), which ~~the Partnership~~Ferrellgas Partners failed to repay, and which obligation iswas only reported on ~~the Partnership’s~~Ferrellgas Partners’ condensed consolidated balance sheet.

On March 30, 2021, Ferrellgas Partners issued 1.3 million of its Class B Units in exchange for the holders’ contribution of the Ferrellgas Partners Notes to Ferrellgas Partners as a capital contribution and in satisfaction of such holders’ claims in respect of the Ferrellgas Partners Notes. As of October 31, 2021, Ferrellgas Partners had no debt securities outstanding, and the Finance Corp. therefore was not liable as co-issuer for any such debt securities.

C. Subsequent events

The Finance Corp. has evaluated events and transactions occurring after the balance sheet date through the date the Finance Corp.’s condensed consolidated financial statements were issued and concluded that there were no events or transactions occurring during this period that ~~require~~required recognition or disclosure in its condensed consolidated financial ~~statements, except as follows.~~statements.

2833

Table of Contents

~~Transaction Support Agreement~~

On December 10, 2020, the Partnership, Finance Corp., the operating partnership and additional Ferrellgas entities (collectively, the “Company Parties”) entered into a Transaction Support Agreement (the “TSA”) with certain holders of, or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims (collectively, the “Consenting Noteholders”) arising under, derived from or based upon the indenture governing the Ferrellgas Partners Notes due June 15, 2020. As of December 10, 2020, the Consenting Noteholders hold or represent, in the aggregate, approximately 74% of the outstanding amount of the Ferrellgas Partners Notes due June 15, 2020.

The TSA sets forth (i) a restructuring process to satisfy the obligations of the Partnership and the Finance Corp. under the Ferrellgas Partners Notes due June 15, 2020 (the “Ferrellgas Partners Transactions”), which will be effectuated through pre-packaged voluntary cases (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code filed by only the Partnership and the Finance Corp. and the confirmation of a pre-packaged plan of reorganization for the Partnership and the Finance Corp., and (ii) a refinancing process of the operating partnership and Ferrellgas Finance Corp., including but not limited to, replacement of the operating partnership’s and Ferrellgas Finance Corp.’s existing unsecured notes due 2021, 2022 and 2023 (the “operating partnership Transactions” and, together with the Ferrellgas Partners Transactions, the “Transactions”), which will be consummated on the effective date (the “Effective Date”) of the Partnership’s and the Finance Corp.’s plan of reorganization that implements the Ferrellgas Partners Transactions (the “Plan”) and will close simultaneously with the Ferrellgas Partners Transactions effectuated under the Plan.

The TSA contains certain milestones relating to the commencement of the solicitation of acceptances of the Plan (the “Solicitation”), the refinancing process and the Chapter 11 Cases, which include the dates by which the Partnership and the Finance Corp. are required to commence the Solicitation and, thereafter, commence the Chapter 11 Cases or obtain certain approval orders of the United States Bankruptcy Court for the District of Delaware. In addition, the milestones include the obligation of the Partnership and the Finance Corp. to emerge from chapter 11 protection no later than April 4, 2021, unless that deadline is extended pursuant to the terms of the TSA.

~~There is no assurance that the restructuring and refinancing processes described in the TSA will be consummated.~~

~~Table of Contents~~

FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

October 31, 2020

July 31, 2020
ASSETS

Current assets:




Cash and cash equivalents (including $96,909 and $95,759 of restricted cash at October 31, 2020 and July 31, 2020, respectively)

$
299,522

$
333,755
Accounts and notes receivable, net (including $120,261 and $103,703 of accounts receivable pledged as collateral at October 31, 2020 and July 31, 2020, respectively)

119,488

101,438
Inventories

78,980

72,664
Prepaid expenses and other current assets

40,044

35,897
Total current assets

538,034

543,754

Property, plant and equipment, net

592,132

591,042
Goodwill, net

246,946

247,195
Intangible assets (net of accumulated amortization of $425,426 and $423,290 at October 31, 2020 and July 31, 2020, respectively)

101,812

104,049
Operating lease right-of-use assets

100,349

107,349
Other assets, net

73,522

74,748
Total assets

$
1,652,795

$
1,668,137

LIABILITIES AND PARTNERS' DEFICIT





Current liabilities:




Accounts payable

$
44,641

$
33,944
Current portion of long-term debt

502,095

502,095
Current operating lease liabilities

28,280

29,345
Other current liabilities

159,910

148,136
Total current liabilities

734,926

713,520

Long-term debt

1,647,106

1,646,396
Operating lease liabilities

83,337

89,022
Other liabilities

49,543

51,190
Contingencies and commitments (Note L)

Partners’ deficit:




Limited partner

(859,121)

(821,462)
General partner

(8,600)

(8,216)
Accumulated other comprehensive income (loss)

5,604

(2,313)
Total partners’ deficit

(862,117)

(831,991)
Total liabilities and partners’ deficit

$
1,652,795

$
1,668,137


	October 31, 2021		July 31, 2021
ASSETS
Current assets:
Cash and cash equivalents (including $11,500 of restricted cash at October 31, 2021 and July 31, 2021)	$	168,611	$	281,688
Accounts and notes receivable, net		163,473		131,574
Inventories		131,280		88,379
Price risk management asset		129,389		78,001
Prepaid expenses and other current assets		59,579		39,073
Total current assets		652,332		618,715

Property, plant and equipment, net		585,993		582,118
Goodwill, net		251,065		246,946
Intangible assets (net of accumulated amortization of $434,166 and $432,032 at October 31, 2021 and July 31, 2021, respectively)		103,277		100,743
Operating lease right-of-use assets		87,379		87,611
Loan receivable - Ferrellgas Partners, L.P.		17,670		17,001
Other assets, net		96,318		93,228
Total assets	$	1,794,034	$	1,746,362

LIABILITIES, MEZZANINE AND EQUITY

Current liabilities:
Accounts payable	$	80,233	$	47,913
Broker margin deposit liability		126,325		79,178
Current portion of long-term debt		2,079		1,670
Current operating lease liabilities		27,207		25,363
Other current liabilities		154,091		166,604
Total current liabilities		389,935		320,728

Long-term debt		1,446,895		1,444,890
Operating lease liabilities		72,117		74,349
Other liabilities		63,822		61,189
Contingencies and commitments (Note M)

Mezzanine equity:
Senior preferred units, net of issue discount and offering costs (700,000 units outstanding at October 31, 2021 and July 31, 2021)		651,349		651,349

Equity:
Limited partners		(961,061)		(887,043)
General partner		(9,131)		(8,886)
Accumulated other comprehensive income		140,108		89,786
Total equity		(830,084)		(806,143)
Total liabilities, mezzanine and equity	$	1,794,034	$	1,746,362

See notes to condensed consolidated financial statements.

3034

Table of Contents

FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(unaudited)

For the three months ended October 31,


2020

2019

Revenues:

Propane and other gas liquids sales

$
281,049

$
273,385

Other

19,845

19,829

Total revenues

300,894

293,214

Costs and expenses:





Cost of sales - propane and other gas liquids sales

137,627

134,028

Cost of sales - other

3,667

3,681

Operating expense - personnel, vehicle, plant and other

109,027

114,543

Operating expense - equipment lease expense

6,830

8,388

Depreciation and amortization expense

21,390

19,219

General and administrative expense

13,076

9,696

Non-cash employee stock ownership plan compensation charge

708

795

Loss on asset sales and disposals

813

2,235

Operating income

7,756

629

Interest expense

(46,528)

(36,877)

Other income (expense), net

108

(132)

Loss before income taxes

(38,664)

—
(36,380)

Income tax expense

87

518

Net loss

$
(38,751)

$
(36,898)


	For the three months ended October 31,
	2021		2020

Revenues:
Propane and other gas liquids sales	$	372,704	$	281,049
Other		21,802		19,845
Total revenues		394,506		300,894

Costs and expenses:
Cost of sales - propane and other gas liquids sales		220,538		137,627
Cost of sales - other		3,610		3,667
Operating expense - personnel, vehicle, plant and other		117,112		109,027
Operating expense - equipment lease expense		5,690		6,830
Depreciation and amortization expense		20,295		21,390
General and administrative expense		12,575		13,076
Non-cash employee stock ownership plan compensation charge		909		708
Loss on asset sales and disposals		1,410		813

Operating income		12,367		7,756

Interest expense		(25,395)		(46,528)
Other income, net		4,957		108

Loss before income taxes		(8,071)		(38,664)

Income tax expense		96		87

Net loss	$	(8,167)	$	(38,751)

See notes to condensed consolidated financial statements.

3135

Table of Contents

FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

For the three months ended October 31,


2020

2019

Net loss

$
(38,751)

$
(36,898)

Other comprehensive income (loss):





Change in value of risk management derivatives

5,767

(13,627)

Reclassification of losses on derivatives to earnings, net

2,150

7,479

Other comprehensive income (loss)

7,917

(6,148)

Comprehensive loss

$
(30,834)

$
(43,046)


	For the three months ended October 31,
	2021		2020

Net loss	$	(8,167)	$	(38,751)
Other comprehensive income:
Change in value of risk management derivatives		72,932		5,767
Reclassification of (gains) losses on derivatives to earnings, net		(22,610)		2,150
Other comprehensive income		50,322		7,917
Comprehensive income (loss)	$	42,155	$	(30,834)

See notes to condensed consolidated financial statements.

3236

Table of Contents

FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF PARTNERS’ DEFICIT

(in thousands)

(unaudited)


					Accumulated
					other		Total
	Limited		General		comprehensive		partners’
	partner		partner		income		equity
Balance at July 31, 2021	$	(887,043)	$	(8,886)	$	89,786	$	(806,143)
Contributions in connection with non-cash ESOP compensation charges		900		9		—		909
Distributions		(50,000)		—		—		(50,000)
Net earnings allocated to preferred units		(17,005)		—		—		(17,005)
Net loss		(7,913)		(254)		—		(8,167)
Other comprehensive income		—		—		50,322		50,322
Balance at October 31, 2021	$	(961,061)	$	(9,131)	$	140,108	$	(830,084)

Accumulated

other

Total

Limited

General

comprehensive

partners’


partner

partner

income (loss)

deficit
Balance at July 31, 2020

$
(821,462)

$
(8,216)

$
(2,313)

$
(831,991)
Contributions in connection with non-cash ESOP compensation charges

701

7

—

708
Net loss

(38,360)

(391)

—

(38,751)
Other comprehensive income

—

—

7,917

7,917
Balance at October 31, 2020

$
(859,121)

$
(8,600)

$
5,604

$
(862,117)


					Accumulated
					other		Total
	Limited		General		comprehensive		partners’
	partner		partner		income (loss)		equity
Balance at July 31, 2020	$	(821,462)	$	(8,216)	$	(2,313)	$	(831,991)
Contributions in connection with non-cash ESOP compensation charges		701		7		—		708
Net loss		(38,360)		(391)		—		(38,751)
Other comprehensive income		—		—		7,917		7,917
Balance at October 31, 2020		(859,121)		(8,600)		5,604		(862,117)

Accumulated

other

Total

Limited

General

comprehensive

partners’


partner

partner

loss

deficit
Balance at July 31, 2019

$
(758,186)

$
(7,570)

$
(14,647)

$
(780,403)
Contributions in connection with non-cash ESOP compensation charges

787

8

—

795
Cumulative adjustment for lease accounting standard

(1,361)

(14)

—

(1,375)
Distributions

(100)

(1)

—

(101)
Net loss

(36,525)

(373)

—

(36,898)
Other comprehensive loss

—

—

(6,148)

(6,148)
Balance at October 31, 2019

$
(795,385)

$
(7,950)

$
(20,795)

$
(824,130)

See notes to condensed consolidated financial statements.

3337

Table of Contents

FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

For the three months ended October 31,


2020

2019
Cash flows from operating activities:

Net loss

$
(38,751)

$
(36,898)
Reconciliation of net loss to net cash provided by (used in) operating activities:




Depreciation and amortization expense

21,390

19,219
Non-cash employee stock ownership plan compensation charge

708

795
Loss on asset sales and disposals

813

2,235
Provision for doubtful accounts

678

665
Deferred income tax expense (benefit)

(1)

554
Other

2,346

2,327
Changes in operating assets and liabilities, net of effects from business acquisitions:




Accounts and notes receivable, net of securitization

(18,728)

(14,410)
Inventories

(6,316)

(4,541)
Prepaid expenses and other current assets

(337)

(7,970)
Accounts payable

10,479

11,360
Accrued interest expense

7,129

26,469
Other current liabilities

6,154

8,214
Other assets and liabilities

2,946

(872)
Net cash provided by (used in) operating activities

(11,490)

7,147

Cash flows from investing activities:




Business acquisitions, net of cash acquired

—

(6,400)
Capital expenditures

(19,454)

(18,126)
Proceeds from sale of assets

1,407

835
Cash payments to construct assets in connection with future lease transactions

—

(16,879)
Cash receipts in connection with leased vehicles

—

5,863
Net cash used in investing activities

(18,047)

(34,707)

Cash flows from financing activities:




Distributions

—

(101)
Payments on long-term debt

(696)

(512)
Net additions to short-term borrowings

—

37,000
Net additions to collateralized short-term borrowings

—

11,000
Cash payments for principal portion of finance lease liability

(1,703)

(38)
Cash paid for financing costs and other

(2,297)

(1,102)
Net cash provided by (used in) financing activities

(4,696)

46,247

Net change in cash and cash equivalents

(34,233)

18,687
Cash and cash equivalents - beginning of period

333,755

11,046
Cash, cash equivalents and restricted cash - end of period

$
299,522

$
29,733


	For the three months ended October 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	(8,167)	$	(38,751)
Reconciliation of net loss to net cash provided by operating activities:
Depreciation and amortization expense		20,295		21,390
Non-cash employee stock ownership plan compensation charge		909		708
Loss on asset sales and disposals		1,410		813
Provision for expected credit losses		640		678
Deferred income tax expense (benefit)		3		(1)
Other		1,901		2,346
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts and notes receivable, net of securitization		(32,539)		(18,728)
Inventories		(42,901)		(6,316)
Prepaid expenses and other current assets		(20,506)		(337)
Accounts payable		32,119		10,479
Accrued interest expense		(20,627)		7,129
Other current liabilities		52,376		6,154
Other assets and liabilities		(148)		2,946
Net cash used in operating activities		(15,235)		(11,490)

Cash flows from investing activities:
Business acquisitions, net of cash acquired		(9,758)		—
Capital expenditures		(20,440)		(19,454)
Proceeds from sale of assets		641		1,407
Net cash used in investing activities		(29,557)		(18,047)

Cash flows from financing activities:
Distributions to Ferrellgas Partners		(50,000)		—
Preferred unit distributions		(15,673)		—
Payments on long-term debt		(595)		(696)
Cash payments for principal portion of finance lease liability		(1,698)		(1,703)
Cash paid for financing costs and other		(319)		(2,297)
Net cash used in financing activities		(68,285)		(4,696)

Net change in cash, cash equivalents and restricted cash		(113,077)		(34,233)
Cash, cash equivalents and restricted cash - beginning of period		281,688		333,755
Cash, cash equivalents and restricted cash - end of period	$	168,611	$	299,522

See notes to condensed consolidated financial statements.

3438

Table of Contents

FERRELLGAS, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, unless otherwise designated)

(unaudited)

A. Partnership organization and formation

Ferrellgas, L.P. (the “operating partnership”) is a limited partnership that owns and operates propane distribution and related assets. Ferrellgas Partners, L.P. (“Ferrellgas Partners”), is a ~~publicly traded limited partnership, holds an approximate 99%~~holding entity that conducts no operations and was formed to acquire and hold a limited partner interest in the operating partnership. Ferrellgas Partners and ~~consolidates, Ferrellgas, L.P.~~the holders of the Preferred Units (as defined in Note G – Preferred units) are the only limited partners of the operating partnership. Ferrellgas, Inc. (the “general partner”), a Delaware corporation and a wholly-owned subsidiary of Ferrell Companies, ~~Inc., a Kansas corporation (“Ferrell Companies”),~~ is the sole general partner of Ferrellgas Partners and ~~one of three general partners of~~the operating partnership and excluding the economic interests attributable to Ferrellgas ~~L.P. Ferrellgas, Inc. has retained~~Partners’ Class B Units and the operating partnership’s Preferred Units, owns an approximate 1% general partner economic interest in ~~Ferrellgas Partners~~each and, ~~also holds an approximate 1% general partner economic interest in Ferrellgas, L.P., representing~~therefore, an effective 2% general partner economic interest in the operating partnership.

Excluding the economic interests attributable to the Preferred Units, Ferrellgas ~~L.P. on a combined basis.~~

AsPartners owns an approximate 99% limited partner interest in the ~~sole~~operating partnership. Our general partner ~~of Ferrellgas Partners, Ferrellgas, Inc.~~ performs all management functions ~~required by Ferrellgas Partners. Ferrellgas Partners~~for us. The operating partnership and Ferrellgas ~~L.P.,~~Partners, collectively referred to as “Ferrellgas,” are both Delaware limited partnerships and are governed by their respective partnership agreements. These agreements contain specific provisions for the allocation of net earnings and loss to each of the partners for purposes of maintaining the partner capital accounts.

The term “general partner” (i) with respect to Ferrellgas Partners refers to Ferrellgas, Inc. and (ii) with respect to Ferrellgas, L.P. refers to (a) Ferrellgas, Inc., in the case of any economic general partner interest and (b) Ferrellgas, Inc., Ferrellgas GP II, LLC and Ferrellgas GP III, LLC, collectively, in the case of any voting general partner interest. As the general partners of Ferrellgas, L.P., Ferrellgas, Inc., Ferrellgas GP II, LLC and Ferrellgas GP III, LLC each have an equal vote and all general partner matters of Ferrellgas, L.P. are determined by the vote or consent of a majority of such entities. The general partners perform all management functions required by Ferrellgas, L.P. The general partner interests held by Ferrellgas GP II, LLC and Ferrellgas GP III, LLC are strictly voting and non-economic. Unless contractually provided for, creditors of Ferrellgas, L.P. have no recourse with regards to Ferrellgas Partners.

~~Ferrellgas, L.P.~~operating partnership owns a 100% equity interest in Ferrellgas Finance Corp., whose only business activity is to act as the co-issuer and co-obligor of debt securities issued by ~~Ferrellgas, L.P.~~the operating partnership.

~~Ferrellgas, L.P.~~The operating partnership is primarily engaged in the retail distribution of propane and related equipment sales. The propane distribution market is seasonal because propane is used primarily for heating in residential and commercial buildings. Ferrellgas ~~L.P.~~ serves residential, industrial/commercial, portable tank exchange, agricultural, wholesale and other customers in all 50 states, the District of Columbia, and Puerto Rico.

The condensed consolidated financial statements of ~~Ferrellgas, L.P.~~the operating partnership and subsidiaries 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 included in Ferrellgas, L.P.’s Annual Report on Form 10-K for fiscal ~~2020.~~

~~Going Concern~~

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business. Ferrellgas, L.P. has $500.0 million in unsecured notes due May 1, 2021, that are classified as current in its condensed consolidated financial statements. Additionally, Ferrellgas Partners has $357.0 million in unsecured notes due June 15, 2020, which Ferrellgas Partners failed to repay, that are classified as current in its condensed consolidated financial statements. Ferrellgas Partners’ ability to restructure, refinance or otherwise satisfy these notes is directly impacted by the cash flows of Ferrellgas, L.P. The ability of Ferrellgas Partners to restructure or refinance these notes is uncertain considering the level of other outstanding indebtedness. Given these concerns, Ferrellgas Partners believes2021.

3539

Table of Contents

there is substantial doubt about Ferrellgas, L.P.’s ability to continue as a going concern. Ferrellgas has engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist in its ongoing process to reduce existing debt and address its debt maturities. On December 10, 2020, Ferrellgas Partners, Ferrellgas Partners Finance Corp., Ferrellgas, L.P. and additional Ferrellgas entities entered into a Transaction Support Agreement (the “TSA”) with certain holders of, or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims arising under, derived from or based upon the indenture governing the Ferrellgas Partners Notes due June 15, 2020. There is no assurance that the transactions contemplated by the TSA will be consummated and the outcome of Ferrellgas’ debt reduction strategy continues to remain uncertain. See Note N – Subsequent Events, for a discussion of the TSA and the transactions contemplated thereunder. Additionally, see Note F – Debt below for further discussion of the outstanding debt.

B. Summary of significant accounting policies

(1) 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, 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 expected credit losses, fair value of reporting units, recoverability of long-lived assets, assumptions used to value business combinations, determination of incremental borrowing rate used to measure right-of-use asset and lease liability, fair values of derivative contracts and stock-based compensation calculations.

~~Update to accounting estimates:~~

~~On August 1, 2020 Ferrellgas, L.P. adopted Accounting Standards Update (“ASU”) 2016-13,~~ ~~Financial Instruments – Credit Losses (Topic 326)~~~~. As a result, we updated our significant accounting policies for the measurement of expected credit losses below.~~

~~Allowance for expected credit losses~~

Ferrellgas, L.P. closely monitors accounts receivable balances and estimates the allowance for expected credit losses. The estimate is primarily based on historical collection experience and other factors, including those related to current market conditions and events. The expected credit losses associated with accounts receivable have not historically been material and the adoption impact on Ferrellgas, L.P.’s allowance for expected credit losses was immaterial as of October 31, 2020.

(2) New accounting standards:

~~FASB Accounting Standard Update No. 2016-13~~No new accounting standards were adopted during the current quarter.

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326),~~ which requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. This standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. Ferrellgas, L.P. adopted the amended guidance effective August 1, 2020. The adoption of this standard did not have a material impact on the condensed consolidated financial statements.

~~Table of Contents~~

C. Leases

The following table provides the operating and financing ~~ROU~~right-of-use assets and lease liabilities as of October 31, ~~2020~~2021 and July 31, ~~2020:~~2021:


Leases	Classification		October 31, 2020		July 31, 2020	Classification		October 31, 2021		July 31, 2021
Assets
Operating lease assets	Operating lease right-of-use assets	$	100,349	$	107,349	Operating lease right-of-use assets	$	87,379	$	87,611
Financing lease assets	Other assets, net		39,753		41,426	Other assets, net		33,814		34,858
Total leased assets		$	140,102	$	148,775		$	121,193	$	122,469

Liabilities
Current
Operating	Current operating lease liabilities	$	28,280	$	29,345	Current operating lease liabilities	$	27,207	$	25,363
Financing	Other current liabilities		7,186		6,955	Other current liabilities		5,811		7,479
Noncurrent
Operating	Operating lease liabilities		83,337		89,022	Operating lease liabilities		72,117		74,349
Financing	Other liabilities		32,033		33,473	Other liabilities		27,801		28,029
Total leased liabilities		$	150,836	$	158,795		$	132,936	$	135,220

Table of Contents

The following table provides the lease expenses for the three months ended October 31, ~~2020~~2021 and ~~2019:~~2020:


		For the three months ended October 31,					For the three months ended October 31,
Leases expense	Classification	2020		2019		Classification	2021		2020

Operating lease expense	Operating expense - personnel, vehicle, plant and other	$	1,783	$	1,741	Operating expense - personnel, vehicle, plant and other	$	1,709	$	1,783
	Operating expense - equipment lease expense		6,442		7,607	Operating expense - equipment lease expense		5,232		6,442
	Cost of sales - propane and other gas liquids sales		526		389	Cost of sales - propane and other gas liquids sales		440		526
	General and administrative expense		282		266	General and administrative expense		473		282
Total operating lease expense			9,033		10,003			7,854		9,033

Short-term expense	Operating expense - personnel, vehicle, plant and other		2,033		1,954	Operating expense - personnel, vehicle, plant and other		1,808		2,033
	General and administrative expense		242		110	General and administrative expense		86		242
Total short-term expense			2,275		2,064			1,894		2,275

Variable lease expense	Operating expense - personnel, vehicle, plant and other		746		675	Operating expense - personnel, vehicle, plant and other		770		746
	Operating expense - equipment lease expense		388		733	Operating expense - equipment lease expense		458		388
Total variable lease expense			1,134		1,408			1,228		1,134

Finance lease expense:
Amortization of leased assets	Depreciation and amortization expense		2,165		40	Depreciation and amortization expense		851		2,165
Interest on lease liabilities	Interest expense		945		42	Interest expense		938		945
Total finance lease expense			3,110		82			1,789		3,110

Total lease expense (a)		$	15,552	$	13,557		$	12,765	$	15,552

~~Table of Contents~~

(a)

~~As of~~For the three months ended October 31, ~~2020~~2021 and ~~2019~~2020 Ferrellgas, L.P. has also recognized ~~$0.1~~$0.2 million and $0.1 million, respectively, of expense related to the accretion of lease exit costs associated with a crude oil storage agreement that is no longer being utilized, primarily due to the various ~~Midstream~~ dispositions and other significant transactions, and for which Ferrellgas, L.P. does not anticipate any future economic benefit.

Minimum annual payments under existing operating and finance lease liabilities as of October 31, ~~2020~~2021 are as follows:


Maturities of lease liabilities		Operating leases		Finance leases		Total		Operating leases		Finance leases		Total
2021	$	25,539	$	7,751	$	33,290
2022		27,163		9,709		36,872	$	23,351	$	6,607	$	29,958
2023		35,832		7,742		43,574		40,085		8,095		48,180
2024		18,150		7,173		25,323		20,801		7,869		28,670
2025		12,889		7,183		20,072		14,305		7,766		22,071
2026								5,663		6,913		12,576
Thereafter		21,532		10,655		32,187		17,746		4,943		22,689
Total lease payments	$	141,105	$	50,213	$	191,318	$	121,951	$	42,193	$	164,144
Less: Imputed interest		29,488		10,994		40,482		22,627		8,581		31,208
Present value of lease liabilities	$	111,617	$	39,219	$	150,836	$	99,324	$	33,612	$	132,936

Table of Contents

The following table represents the weighted-average remaining lease term and discount rate as of October 31, ~~2020:~~2021:


	As of October 31, 2020		As of October 31, 2021
Lease type	Weighted-average remaining lease term (years)	Weighted-average discount rate	Weighted-average remaining lease term (years)	Weighted-average discount rate
Operating leases	5.3	8.2%	4.6	7.9%
Finance leases	5.9	8.6%	5.2	8.6%

Cash flow information is presented below:


	For the three months ended October 31,				For the three months ended October 31,
	2020		2019		2021		2020
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	8,395	$	11,049	$	5,579	$	8,395

Cash paid for amounts included in the measurement of lease liabilities for financing leases:
Operating cash flows	$	877	$	42	$	768	$	877
Financing cash flows	$	1,703	$	38	$	1,698	$	1,703

D. Supplemental financial statement information

Inventories consist of the following:

October 31, 2020

July 31, 2020
Propane gas and related products

$
65,513

$
58,733
Appliances, parts and supplies, and other

13,467

13,931
Inventories

$
78,980

$
72,664


	October 31, 2021		July 31, 2021
Propane gas and related products	$	118,113	$	75,848
Appliances, parts and supplies, and other		13,167		12,531
Inventories	$	131,280	$	88,379

In addition to inventories on hand, Ferrellgas, L.P. enters into contracts to take delivery of propane for supply procurement purposes with terms that generally do not exceed 36 months. Most of these contracts call for payment based on market prices at the date of delivery. As of October 31, ~~2020,~~2021, Ferrellgas, L.P. had committed, for supply procurement purposes, to take delivery of approximately ~~1.7~~2.5 million gallons of propane at fixed prices.

~~Table of Contents~~

Prepaid expenses and other current assets consist of the following:

October 31, 2020

July 31, 2020
Broker margin deposit assets

$
9,381

$
14,398
Other

30,663

21,499
Prepaid expenses and other current assets

$
40,044

$
35,897


	October 31, 2021		July 31, 2021
Broker margin deposit assets	$	31,129	$	21,068
Other		28,450		18,005
Prepaid expenses and other current assets	$	59,579	$	39,073

Other current liabilities consist of the following:


	October 31, 2021		July 31, 2021
Accrued interest	$	8,468	$	29,095
Customer deposits and advances		48,442		35,734
Accrued payroll		15,117		11,104
Accrued insurance		12,698		28,143
Accrued senior preferred units distributions		17,345		16,013
Other		52,021		46,515
Other current liabilities	$	154,091	$	166,604

October 31, 2020

July 31, 2020
Accrued interest

$
41,640

$
34,511
Customer deposits and advances

40,898

32,257
Accrued payroll

13,431

18,375
Accrued insurance

10,994

14,796
Price risk management liabilities

1,506

5,029
Other

51,441

43,168
Other current liabilities

$
159,910

$
148,136

Table of Contents

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

For the three months ended October 31,

2020

2019

Operating expense - personnel, vehicle, plant and other

$
47,531

$
48,015

Depreciation and amortization expense

4,523

1,840

Operating expense - equipment lease expense

5,883

7,642

$
57,937

$
57,497


	For the three months ended October 31,
	2021		2020
Operating expense - personnel, vehicle, plant and other	$	54,447	$	47,531
Depreciation and amortization expense		2,535		4,523
Operating expense - equipment lease expense		4,535		5,883
	$	61,517	$	57,937

Cash and cash equivalents consist of the following:


	October 31, 2020		July 31, 2020		October 31, 2021		July 31, 2021
Cash and cash equivalents	$	202,613	$	237,996	$	157,111	$	270,188
Restricted cash (1)		96,909		95,759		11,500		11,500
Cash, cash equivalents and restricted cash	$	299,522	$	333,755	$	168,611	$	281,688

(1)

For purposes of the condensed consolidated statements of cash flows, Ferrellgas, L.P. considers cash equivalents to include all highly liquid debt instruments purchased with an original maturity of three months or less. Certain cash flow and significant non-cash activities are presented below:

For the three months ended October 31,


2020

2019
Cash paid for:

Interest

$
36,997

$
8,284
Income taxes

$
35

$
—
Non-cash investing and financing activities:

~~Table of Contents~~


					For the three months ended October 31,
					2021		2020
Cash paid for:
Interest					$	44,152	$	36,997
Income taxes					$	—	$	35
Non-cash investing and financing activities:
Liabilities incurred in connection with acquisitions	$	—	$	520	$	644	$	—
Change in accruals for property, plant and equipment additions	$	(65)	$	(43)	$	65	$	(65)
Lease liabilities arising from operating right-of-use assets	$	366	$	11,563	$	7,558	$	366
Lease liabilities arising from finance right-of-use assets	$	554	$	5,614	$	812	$	554
Accrued senior preferred units distributions					$	17,005	$	—

E. Accounts and notes receivable, net ~~and accounts receivable securitization~~

Accounts and notes receivable, net consist of the following:


	October 31, 2021		July 31, 2021
Accounts receivable	$	167,505	$	135,182
Note receivable		13,648		13,648
Less: Allowance for expected credit losses		(17,680)		(17,256)
Accounts and notes receivable, net	$	163,473	$	131,574

At October 31, 2020, $120.3 million of trade accounts receivable were pledged as collateral, but Ferrellgas, L.P. had no outstanding collateralized notes payable due to a commercial paper conduit. At July 31, 2020, $103.7 million of trade accounts receivable were pledged as collateral, but Ferrellgas, L.P. had no outstanding collateralized notes payable due to a commercial paper conduit. These accounts receivable pledged as collateral are bankruptcy remote from Ferrellgas, L.P. Ferrellgas, L.P. does not provide any guarantee or similar support to the collectability of these accounts receivable pledged as collateral.

As of October 31, 2020, Ferrellgas, L.P. had received no cash proceeds from trade accounts receivables securitized, with $26.0 million remaining capacity to receive additional proceeds or issue letters of credit. As of July 31, 2020, Ferrellgas, L.P. had received no cash proceeds from trade accounts receivables securitized, with $11.0 million remaining capacity to receive additional proceeds or issue letters of credit.

The agreement governing the accounts receivable securitization facility (the “Purchase Agreement”) requires the operating partnership to maintain a fixed charge coverage ratio of not less than 1.00x and a senior secured leverage ratio of not greater than 3.00x. The operating partnership was in compliance with these financial ratio requirements as of October 31, 2020. However, if at any time the operating partnership is not in compliance with these financial ratio requirements, Ferrellgas, L.P. will be unable to access the facility for working capital or other cash requirements and the facility may be terminated. This facility matures in May 2021 and includes an option, at Ferrellgas, L.P.’s request and consent, for the purchasers in their sole discretion to extend the facility for up to an additional three years.

4043

Table of Contents

F. Debt

Long-term debt

Long-term debt consists of the following:


	October 31, 2020		July 31, 2020		October 31, 2021		July 31, 2021
Unsecured senior notes
Fixed rate, 6.50%, due 2021 (1)	$	500,000	$	500,000
Fixed rate, 6.75%, due 2023 (2)		500,000		500,000
Fixed rate, 6.75%, due 2022, net of unamortized premium of $770 and $937 at October 31, 2020 and July 31, 2020, respectively (3)		475,770		475,937

Secured senior notes
Fixed rate, 10.00%, due 2025, net of unamortized premium of $3,424 and $3,573 at October 31, 2020 and July 31, 2020, respectively (4)		703,424		703,573
Fixed rate, 5.375%, due 2026 (1)					$	650,000	$	650,000
Fixed rate, 5.875%, due 2029 (1)						825,000		825,000

Notes payable
9.7% and 9.4% weighted average interest rate at October 31, 2020 and July 31, 2020, respectively, due 2020 to 2029, net of unamortized discount of $449 and $537 at October 31, 2020 and July 31, 2020, respectively		3,956		4,564
8.5% and 8.8% weighted average interest rate at October 31, 2021 and July 31, 2021, respectively, due 2021 to 2029, net of unamortized discount of $648 and $573 at October 31, 2021 and July 31, 2021, respectively						5,181		3,882
Total debt, excluding unamortized debt issuance and other costs		2,183,150		2,184,074		1,480,181		1,478,882
Unamortized debt issuance and other costs		(33,949)		(35,583)		(31,207)		(32,322)
Less: current portion of long-term debt		502,095		502,095		2,079		1,670
Long-term debt	$	1,647,106	$	1,646,396	$	1,446,895	$	1,444,890

(1)

~~During November 2010, Ferrellgas, L.P.~~On March 30, 2021 (the “Effective Date”), 2 wholly-owned subsidiaries of the operating partnership (referred to herein as the Escrow Issuers) issued ~~$500.0~~$650.0 million aggregate principal amount of ~~6.50%~~5.375% senior notes due ~~2021.These~~2026 (referred to herein as the “2026 Notes”) and $825.0 million aggregate principal amount of 5.875% senior notes ~~are general unsecured senior obligations of Ferrellgas, L.P.~~due 2029 (referred to herein as the “2029 Notes”). On the Effective Date and ~~are (i) effectively junior to all existing and future senior secured indebtedness of Ferrellgas, L.P., to~~immediately after the ~~extent~~issuance of the ~~value of~~2026 Notes and 2029 Notes by the ~~assets securing such debt,~~Escrow Issuers, (i) the Escrow Issuers were merged into the operating partnership and ~~(ii) structurally subordinated to all existing~~Ferrellgas Finance Corp., respectively, and ~~future indebtedness~~the operating partnership and Ferrellgas Finance Corp. assumed the obligations of the ~~Ferrellgas, L.P.’s subsidiaries.~~Escrow Issuers as co-issuers of the 2026 Notes and the 2029 Notes, and (ii) the general partner and certain subsidiaries of the operating partnership guaranteed the 2026 Notes and the 2029 Notes. The ~~senior notes~~2026 Notes and 2029 Notes bear interest from the date of issuance, payable semi-annually in arrears on ~~May~~October 1 and ~~November~~April 1 of each year. The ~~outstanding principal amount is due~~2026 Notes will mature on ~~May~~April 1, ~~2021.~~

~~(2)~~

During June 2015, Ferrellgas, L.P. issued $500.0 million aggregate principal amount of 6.75% senior notes due 2023. These notes are general unsecured senior obligations of Ferrellgas, L.P. and certain subsidiaries and are (i) effectively junior to all existing and future senior secured indebtedness of Ferrellgas, L.P. and such subsidiaries, to the extent of the value of the assets securing such debt, and (ii) structurally subordinated to all existing and future indebtedness and obligations of any subsidiary of Ferrellgas, L.P. that is not a guarantor of these notes. The senior notes bear interest from the date of issuance, payable semi-annually in arrears on June 15 and December 15 of each year. The outstanding principal amount is due on June 15, 2023. Ferrellgas, L.P. would incur prepayment penalties if it were to repay the notes prior to June 15, 2021.

~~(3)~~

During fiscal 2014, Ferrellgas, L.P. issued $475.0 million aggregate principal amount of 6.75% senior notes due 2022, $325.0 million of which was issued at par and $150.0 million of which was issued at 104% of par. These notes are general unsecured senior obligations of Ferrellgas, L.P. and are (i) effectively junior to all existing and future senior secured indebtedness of Ferrellgas, L.P., to the extent of the value of the assets securing such debt, and (ii) structurally subordinated to all existing and future indebtedness and obligations of Ferrellgas, L.P.’s subsidiaries. The senior notes bear interest from the date of issuance, payable semi-annually in arrears on January 15 and July 15 of each year. The outstanding principal amount is due on January 15, 2022.

~~(4)~~

During April 2020, Ferrellgas, L.P. issued $700.0 million aggregate principal amount of 10.00% senior secured first lien notes due 2025, $575.0 million of which was issued at par and $125.0 million of which was issued at 103% of par. These notes are senior secured obligations of Ferrellgas, L.P.2026, and the guarantors of such notes, including Ferrellgas Partners, the general partners of Ferrellgas, L.P. and certain subsidiaries, and are (i) effectively senior to all existing senior unsecured indebtedness of Ferrellgas, L.P. and the guarantors, to the

~~Table of Contents~~

extent of the value of the assets securing such debt, and (ii) structurally subordinated to all existing and future indebtedness and obligations of Ferrellgas Receivables, LLC, a special purpose subsidiary that does not guarantee the notes. The senior notes bear interest from the date of issuance, payable semiannually in arrears2029 Notes will mature on April 15 and October 15 of each year. The operating partnership would incur prepayment penalties if it were to repay the notes prior to April 15, 2024. The outstanding principal amount is due on April 15, 2025.1, 2029. See “–Senior unsecured notes” below for additional discussion.

~~The scheduled principal payments on long-term debt are as follows:~~

Payment due by fiscal year

Scheduled
principal payments
2021

$
501,425
2022

476,435
2023

500,999
2024

329
2025

700,199
Thereafter

19
Total

$
2,179,406

Senior secured revolving credit facility

~~Letters~~On the Effective Date, the operating partnership, the general partner and certain of credit outstanding at October 31, 2020 and July 31, 2020 totaled $127.1 million and $126.0 million, respectively, and were used to secure insurance arrangements, product purchases and commodity hedges. At October 31, 2020 and July 31, 2020, Ferrellgas, L.P. did not have in placethe operating partnership’s subsidiaries entered into a credit agreement (the “Credit Agreement”), which provides for a four-year revolving credit facility ~~providing~~(the “Credit Facility”) in an aggregate principal amount of up to $350.0 million, including a sublimit not to exceed $225.0 million for the issuance of letters of credit ~~and had $79.4~~for a period of 60 days after March 30, 2021, reducing to $200.0 million and $78.2 million, respectively, of restricted cash pledged as cash collateral for letters of credit outstanding. Additionally, at both October 31, 2020 and July 31, 2020, Ferrellgas, L.P. also issued letters of credit of $50.0 million by utilizing our liquidity available on the accounts receivable securitization facility.thereafter.

~~Forbearance Agreement with respect to Ferrellgas Partners’ 8.625% Unsecured Senior Notes due June 15, 2020~~

~~Financial covenants~~

~~The indenture governing the outstanding notes of Ferrellgas Partners~~general partner and the ~~agreements governing the outstanding notes of Ferrellgas, L.P. contain various covenants that limit Ferrellgas Partners’ ability~~direct and ~~the ability of specified~~indirect subsidiaries to, among other things, make restricted payments and incur additional indebtedness. The general partner believes that the most restrictive of these covenants are the restricted payments covenants discussed below.

~~Similar to the indenture governing the outstanding notes of Ferrellgas Partners, the indentures governing the outstanding notes~~ of the operating partnership ~~contain~~(other than Ferrellgas Finance Corp. and Ferrellgas Receivables, LLC) and a limited-recourse guaranty from Ferrellgas Partners (limited to its equity interests in the operating partnership). Additionally, all borrowings are secured, on a first priority basis, by substantially all of the assets of the operating partnership and its subsidiaries and all of the equity interests in the operating partnership held by the general partner and Ferrellgas Partners.

Table of Contents

The Credit Agreement contains customary representations, warranties, covenants and events of default.

The financial covenants in the Credit Agreement require the operating partnership to maintain: (1) a minimum interest coverage ratio (defined generally as the ratio of adjusted EBITDA to cash interest expense) of 2.50 to 1.00, (2) a maximum secured leverage ratio (defined generally as the ratio of total first priority secured indebtedness to adjusted EBITDA) of 2.50 to 1.00, and (3) a maximum total net leverage ratio (defined generally as the ratio of total indebtedness (net of unrestricted cash, subject to certain limits) to adjusted EBITDA) of 5.50 to 1.00 initially. The maximum total net leverage ratio adjusts to 5.25 to 1.00 starting with the quarter ending April 30, 2022, 5.00 to 1.00 starting with the quarter ending October 31, 2022, and 4.75 to 1.00 starting with the quarter ending April 30, 2023.

In addition to the financial covenants, the Credit Agreement includes covenants that may (or if not met will) restrict the ability of the operating partnership to, among other things: incur indebtedness or liens; effect certain fundamental changes, including mergers, consolidations, liquidations, dissolutions and changes in line of business; make certain restricted payments, including distributions to holders of Preferred Units, Ferrellgas ~~Partners. Under~~Partners and the general partner and redemptions of Preferred Units; make investments, loans or advances; dispose of assets; effect sale and leaseback transactions; enter into swap agreements; make optional payments and modifications of subordinated and other debt instruments; enter into transactions with affiliates; agree to negative pledge clauses and burdensome agreements; and effect amendments to organizational documents.

In particular, under these covenants, subject to ~~the limited exception described below,~~certain exceptions and additional requirements, the operating partnership is permitted to make cash distributions to holders of Preferred Units, Ferrellgas Partners and the general partner, redemptions of Preferred Units and other restricted payments (i) only in limited amounts specified in the Credit Agreement and (ii) only if availability under the Credit Facility exceeds the greater of $50.0 million and 15% of the Borrowing Base and the operating partnership’s total net leverage ratio is not greater than 5.0 to 1.0 (or 4.75 to 1.0 starting on April 30, 2023). As of October 31, 2021, the operating partnership is in compliance with the availability and total net leverage ratio requirements.

On June 11, 2021, the operating partnership, the general partner and certain of the operating partnership’s subsidiaries entered into a First Amendment to the Credit Agreement (the “Credit Agreement Amendment”), with an effective date of April 30, 2021. Among other matters, the Credit Agreement Amendment amended the minimum-interest-coverage-ratio covenant described above by (i) waiving compliance with the covenant for the trailing four fiscal quarters ended April 30, 2021 and (ii) annualizing the cash interest expense component of the covenant for (a) the fiscal quarter ended on July 31, 2021, (b) the two fiscal quarters ending October 31, 2021, and (c) the three fiscal quarters ending January 31, 2022.

Table of Contents

Senior unsecured notes

On the Effective Date, (i) the Escrow Issuers issued $650.0 million aggregate principal amount of 2026 Notes and $825.0 million aggregate principal amount of 2029 Notes, and (ii) the operating partnership and Ferrellgas Finance Corp. assumed the obligations of the Escrow Issuers as co-issuers of the 2026 Notes and the 2029 Notes upon the merger of the Escrow Issuers into the operating partnership and Ferrellgas Finance Corp., respectively. The operating partnership received aggregate net proceeds from the issuance and sale of the 2026 Notes and the 2029 Notes of approximately $1,441.2 million, after deducting the initial purchasers’ discount and estimated offering expenses. The operating partnership used such net proceeds, together with the net proceeds of the issuance and sale of the Preferred Units, as discussed in Note G – Preferred units, and cash on hand, (i) to redeem (or satisfy and discharge the indentures governing and subsequently redeem) all of the issued and outstanding 6.50% senior unsecured notes due 2021 (the “2021 Notes”), 6.75% senior unsecured notes due 2022 (the “2022 Notes”), 6.75% senior unsecured notes due 2023 (the “2023 Notes”), and 10.00% senior secured notes due 2025 (the “2025 Notes”), in the aggregate combined principal amount for all such notes of $2,175.0 million, and (ii) to repay all outstanding obligations under the agreement governing the accounts receivable securitization facility (the “Accounts Receivables Facility”) in connection with the termination of that facility.

The 2026 Notes and 2029 Notes are the senior unsecured obligations of the operating partnership and Ferrellgas Finance Corp. and are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the general partner and all domestic subsidiaries of the operating partnership other than Ferrellgas Finance Corp. and Ferrellgas Receivables, LLC.

The 2026 Notes may ~~not~~be redeemed prior to April 1, 2023 and the 2029 Notes may be redeemed prior to April 1, 2024 at the issuer’s option, in whole or in part, at a redemption price of par plus the applicable make-whole premium and accrued and unpaid interest. On and after April 1, 2023 and April 1, 2024, the 2026 Notes and the 2029 Notes, respectively, may be redeemed at the issuer’s option, in whole or in part, at the redemption prices set forth in the respective indenture governing such notes, plus accrued and unpaid interest. Beginning on April 1, 2025 and April 1, 2026, the 2026 Notes and 2029 Notes, respectively, may be redeemed at par plus accrued and unpaid interest.

The indentures governing the 2026 Notes and 2029 Notes contain customary affirmative and negative covenants restricting, among other things, the ability of the operating partnership and its restricted subsidiaries to: incur additional indebtedness and guarantee indebtedness; pay dividends or make aother distributions (including distributions to holders of Preferred Units, Ferrellgas Partners and the general partner) or repurchase or redeem their equity interests (including redemptions of Preferred Units); repurchase or redeem certain debt; make certain other restricted ~~payment unless its consolidated fixed charge coverage ratio (defined~~payments or investments; sell assets, incur liens, enter into transactions with affiliates, enter into agreements restricting the operating partnership’s subsidiaries’ ability to pay dividends; and consolidate, merge or sell all or substantially all of their assets. The indentures also restrict the ability of the general partner to engage in certain activities.

In particular, under these covenants, subject to certain exceptions and additional requirements, the operating partnership is permitted to make cash distributions to holders of Preferred Units, Ferrellgas Partners and the general partner, redemptions of Preferred Units and other restricted payments (i) only in limited amounts specified in the indentures and (ii) only if the operating partnership’s net leverage ratio (defined generally to mean the ratio of consolidated total net debt to trailing ~~four~~4 quarters consolidated EBITDA, ~~to consolidated interest expense,~~ both as adjusted for certain, specified items) is ~~at least 1.75x ,~~not greater than 5.0 to 1.0, on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events. ~~As of October 31, 2020,~~Further, if the operating partnership’s consolidated fixed charge coverage ratio ~~was 1.65x.~~

Under the covenants in the indentures governing Ferrellgas, L.P.’s unsecured notes, if the consolidated fixed charge coverage ratio is below 1.75x, Ferrellgas, L.P. may still make restricted payments in limited amounts determined under the indentures governing Ferrellgas, L.P.’s unsecured notes. The distributions made by Ferrellgas, L.P. on June 15, 2019 and December 15, 2019 for payment of interest on Ferrellgas Partners’ unsecured senior notes due June 2020 were made

~~Table of Contents~~

~~from capacity under this limited exception to the ratio requirement under the indentures governing Ferrellgas, L.P.’s unsecured notes.~~

The indenture governing Ferrellgas, L.P.’s senior secured first lien notes due 2025 contains a similar but, in some respects, a different restricted payments covenant. The covenant in the secured notes indenture provides for the same 1.75x consolidated fixed charge coverage ratio test as the unsecured notes indentures and a limited exception when that ratio is below 1.75x. In addition, the secured notes indenture also provides that, subject to a separate limited exception, described below, Ferrellgas, L.P. generally may not make a restricted payment unless Ferrellgas, L.P.’s consolidated leverage ratio (defined ~~in the secured notes indenture~~ generally to mean the ratio of ~~consolidated total debt to~~ trailing ~~four~~4 quarters consolidated EBITDA to consolidated fixed charges, both as adjusted for certain, specified items) is ~~no greater~~equal to or less than ~~5.5x, on~~1.75 to 1.00 (on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified ~~events. The consolidated leverage ratio test applies regardless~~events), the amount of ~~whether Ferrellgas, L.P.’s consolidated fixed coverage ratio~~distributions and other restricted payments the operating partnership is ~~at least 1.75x or below 1.75x.~~permitted to make under the indentures is further limited. As of October 31, ~~2020, Ferrellgas, L.P.’s consolidated~~2021, the operating partnership is in compliance with the total net leverage ratio ~~was substantially in excess of 5.5x. Additionally, the secured notes indenture provides for restricted payments under its limited exception to the consolidated~~and fixed charge coverage ratio ~~test~~requirements.

Table of Contents

The scheduled annual principal payments on long-term debt are as follows:


Payment due by fiscal year	Scheduled principal payments
2022	$	1,075
2023		1,709
2024		1,139
2025		930
2026		650,710
Thereafter		825,266
Total	$	1,480,829

Letters of credit outstanding at October 31, 2021 and July 31, 2021 totaled $97.5 million and $107.7 million, respectively, and were used to secure insurance arrangements, product purchases and commodity hedges. As of October 31, 2021, Ferrellgas, L.P. had available borrowing capacity under its Credit Facility of $252.5 million.

G. Preferred units

Table of Contents

Issuer Redemption Right

Investor Redemption Right

Change of Control

Fair Value of Embedded Derivatives

Distributions

Table of Contents

The Quarterly Distribution may be paid in cash or, at the election of the operating partnership "in kind" through the issuance of additional Preferred Units ("PIK Units") at the quarterly Distribution Rate plus an applicable premium that escalates each year from 75 bps to 300 bps so long as the Preferred Units remain outstanding. In the event the operating partnership fails to make any Quarterly Distribution in cash, such Quarterly Distribution will automatically be paid in PIK Units.

The Distribution Rate on the Preferred Units will increase upon violation of certain protective provisions for the benefit of Preferred Unit holders notwithstanding the cap mentioned above.

As of October 31, 2021, the Quarterly Distribution accrued was $17.3 million. $15.1 million of the Quarterly Distribution was paid in cash to holders of Preferred Units on November 15, 2021.

Tax Distributions

Additional Amounts for Certain Purchasers

The operating partnership is required to pay certain additional amounts of cash (the “Additional Amounts”) as necessary to certain holders of Preferred Units that hold their interests through a “blocker,” which is a U.S. entity that is ~~less than~~owned and organized by certain original purchasers of Preferred Units who are non-U.S. persons or tax exempt for U.S. tax purposes and is treated as a corporation for U.S. tax purposes. Only certain original purchasers of Preferred Units who hold their Preferred Units through such blockers are, and none of their transferees is, entitled to Additional Amounts. Additional Amounts are capped at the ~~capacity available under~~lesser of: (a) the ~~similar exception~~product of 20% multiplied by taxable income allocated to a “blocker” (as defined) divided by 0.8, and (b) the actual taxes payable by the “blocker” as a result of holding Senior Preferred Units.

Board Rights

Protective Provisions

The OpCo LPA Amendment and the Sixth Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners, L.P. include, among other things, certain covenants for the benefit of holders of Preferred Units applicable to the operating partnership and, in certain instances, Ferrellgas Partners, for so long as at least $35,000,000 of Preferred Units and PIK Units remain outstanding. These covenants include, among other things, limitations on (i) effecting a Change of Control, (ii) amending organizational documents, (iii) issuing certain equity securities, (iv) issuing Preferred Units, (v) filing for bankruptcy, (vi) non-ordinary course investments, and (vii) incurring certain levels of indebtedness.

Ranking and Liquidation Preference

The Preferred Units rank senior to any other class or series of equity interests of the operating partnership (including the partnership interests held by Ferrellgas Partners and the general partner). Upon a liquidation, dissolution or winding up of the operating partnership, each holder of Preferred Units will be entitled to receive, prior and in preference to any distribution of any assets of the operating partnership to the holders of any other class or series of equity interests in the ~~unsecured notes indentures. However, the secured notes indenture contains a separate exception to both the consolidated fixed charge coverage ratio test~~operating partnership (including Ferrellgas Partners and the ~~consolidated leverage ratio test that can be utilized~~general partner), an amount per Preferred Unit equal to the Redemption Price.

Table of Contents

Restrictions on Cash Distributions to Ferrellgas Partners and the General Partner

The operating partnership is permitted to make distributions of Available Cash (as defined in the Amended OpCo LPA) to Ferrellgas Partners only if (i) the operating partnership has made all required Quarterly Distributions (in cash or PIK Units), Tax Distributions and payments of Additional Amounts, (ii) the operating partnership has redeemed all PIK Units issued, (iii) the operating partnership’s consolidated net leverage (defined generally to mean the ratio of the operating partnership’s consolidated total net debt (including the total redemption price of all outstanding Preferred Units and PIK Units but excluding certain letters of credit and capital lease obligations) as of each Quarterly Distribution Date to trailing four quarters consolidated EBITDA, both as adjusted for certain, specified ~~restricted payments in a limited amount when Ferrellgas, L.P. does not meet either~~items) is below 7.25x through May 15, 2022 and 7.00x thereafter, net of cash, immediately before and after giving effect to such distribution, (iv) the ~~consolidated fixed charge coverage ratio test or the consolidated leverage ratio test. This separate exception under the secured notes indenture currently~~operating partnership has ~~capacity for such specified restricted payments that is substantially the same as the~~at least $100 million of liquidity, consisting of unrestricted cash on hand and available capacity under the ~~most restrictive of Ferrellgas, L.P.’s unsecured notes indentures.~~

~~As described above, Ferrellgas Partners’ unsecured notes due 2020 matured on June 15, 2020,~~Credit Agreement or any replacement thereof, and (v) the outstanding principal amount of those notes was due to be paid on that date, together with accrued interest to the maturity date. Although Ferrellgas, L.P. has some capacity to make distributions under Ferrellgas, L.P.’s unsecured and secured notes indentures, this capacity will not allow Ferrellgas, L.P. to make distributions to Ferrellgas Partners sufficient to pay the principal of and accrued interest on Ferrellgas Partners’ unsecured senior notes due 2020 due at the maturity of those notes. Additionally, the restrictionsoperating partnership is in these indentures currently limit the ability of Ferrellgas, L.P. to make distributions to Ferrellgas Partners to enable it to pay cash distributions to its unitholders. Ferrellgas Partners continues to complycompliance with the ~~restrictive covenants with respect to~~other protective provisions in the ~~$357.0 million aggregate principal amount of Ferrellgas Partners Notes due June 15, 2020 as Ferrellgas Partners continues to negotiate with the Forbearing Noteholders.~~OpCo LPA Amendment.

~~Debt and interest expense reduction strategy~~

Ferrellgas, L.P. continues to pursue a strategy to reduce its debt and interest expense. Opportunities include the generation of additional cash flows through accretive acquisitions, continued restructuring or refinancing of existing indebtedness, selling additional assets, maintaining the suspension of Ferrellgas Partners’ common unit distributions, issuing equity or executing one or more debt exchanges. Ferrellgas, L.P. expects to maintain its debt and interest expense reduction strategy until the consolidated leverage ratio reaches a level that it deems appropriate for its business. Ferrellgas, L.P. engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist in its ongoing process to reduce existing debt and address its debt maturities.

G.H. ~~Partners’ deficit~~Equity

Partnership distributions

Ferrellgas, L.P. has recognized the following distributions:

For the three months ended October 31,

2020

2019

Ferrellgas Partners

$
—

$
100

General partner

—

1


	For the three months ended October 31,
	2021		2020
Ferrellgas Partners	$	50,000	$	—
General partner		—		—

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

~~Table of Contents~~

Accumulated other comprehensive income (loss) (“AOCI”)

See Note JK – Derivative instruments and hedging activities for details regarding changes in ~~the~~ fair value ofon risk management financial derivatives recorded within AOCI for the three months ended October 31, ~~2020~~2021 and ~~2019.~~2020.

General partner’s commitment to maintain its capital account

Ferrellgas, L.P.’s partnership agreement allows the general partner to have an option to maintain its 1.0101% general partner interest (excluding the interest attributable to the Preferred Units) concurrent with the issuance of other additional equity.

During the three months ended October 31, 2021, the general partner made non-cash contributions of $9.0 thousand to Ferrellgas, L.P. to maintain its 1.0101% general partner interest.

During the three months ended October 31, 2020, the general partner made non-cash contributions of $7.0 thousand to Ferrellgas, L.P. to maintain its 1.0101% general partner interest.

~~During the three months ended October 31, 2019, the general partner made non-cash contributions~~50

Table of ~~$8.0 thousand to Ferrellgas, L.P. to maintain its 1.0101% general partner interest.~~Contents

H.I. Revenue from contracts with customers

Disaggregation of revenue

Ferrellgas, L.P. disaggregates revenues based upon the type of customer and on the type of revenue. The following table presents retail propane revenues, wholesale propane revenues and other revenues. Retail revenues result from sales to end use customers, wholesale revenues result from sales to or through resellers and all other revenues include sales of appliances and other materials, other fees charged to customers and equipment rental charges.


	For the three months ended October 31,
	2021		2020
Retail - Sales to End Users	$	252,510	$	174,645
Wholesale - Sales to Resellers		113,971		102,612
Other Gas Sales		6,223		3,792
Other		21,802		19,845
Propane and related equipment revenues	$	394,506	$	300,894

Contract assets and liabilities

Ferrellgas, L.P.’s performance obligations are generally limited to the delivery of propane for our retail and wholesale contracts. Ferrellgas, L.P.’s performance obligations with respect to sales of appliances and other materials and other revenues are limited to the delivery of the agreed upon good or service. Ferrellgas, L.P. does not have material performance obligations that are delivered over time, thus all of our revenue is recognized at the time the goods, including propane, are delivered or installed. Ferrellgas, L.P. offers “even pay” billing programs that can create customer deposits or advances, depending on whether Ferrellgas, L.P. has delivered more propane than the customer has paid for or whether the customer has paid for more propane than what has been delivered. Revenue is recognized from these customer deposits or advances to customers at the time product is delivered. The advance or deposit is considered to be a contract asset or liability. Additionally, from time to time, we have customers that pay in advance for goods or services, and such amounts result in contract liabilities.

Ferrellgas, L.P. incurs incremental commissions directly related to the acquisition or renewal of customer contracts. The commissions are calculated and paid based upon the number of gallons sold to the acquired or renewed customer. The total amount of commissions that we incur is not material, and the commissions are expensed commensurate with the deliveries to which they relate; therefore, Ferrellgas, L.P. does not capitalize these costs.

~~Table of Contents~~

The following table presents the opening and closing balances of ~~Ferrellgas, L.P.’s~~our receivables, contract assets, and contract liabilities:


	October 31, 2021		July 31, 2021
Accounts receivable	$	175,871	$	138,757
Contract assets	$	5,283	$	10,074
Contract liabilities
Deferred revenue (1)	$	62,365	$	49,354

October 31, 2020

July 31, 2020
Accounts receivable

$
132,570

$
108,483
Contract assets

$
3,699

$
7,079
Contract liabilities


Deferred revenue (1)

$
52,220

$
42,911

(1)	Of the beginning balance of deferred revenue, ~~$11.4~~$10.5 million was recognized as revenue during the three months ended October 31, ~~2020.~~2021.

Remaining performance obligations

Ferrellgas, L.P.’s remaining performance obligations are generally limited to situations where its customers have remitted payment but have not yet received deliveries of propane. This most commonly occurs in Ferrellgas, L.P.’s even pay billing programs and Ferrellgas ~~L.P.~~ expects that these balances will be recognized within a year or less as the customer takes delivery of propane.

Table of Contents

I.J. Fair value measurements

Derivative financial instruments

The following table presents Ferrellgas, L.P.’s financial assets and financial liabilities that are measured at fair value on a recurring basis for each of the fair value hierarchy levels, including both current and noncurrent portions, as of October 31, ~~2020~~2021 and July 31, ~~2020:~~2021:

Asset (Liability)

Quoted Prices in Active

Markets for Identical

Significant Other

Assets and Liabilities

Observable Inputs

Unobservable Inputs


(Level 1)

(Level 2)

(Level 3)

Total
October 31, 2020:

Assets:








Derivative financial instruments:








Commodity derivatives

$
—

$
7,161

$
—

$
7,161
Liabilities:








Derivative financial instruments:








Commodity derivatives

$
—

$
(1,557)

$
—

$
(1,557)

July 31, 2020:








Assets:








Derivative financial instruments:








Commodity derivatives

$
—

$
3,112

$
—

$
3,112
Liabilities:








Derivative financial instruments:








Commodity derivatives

$
—

$
(5,425)

$
—

$
(5,425)


	Asset (Liability)
	Quoted Prices in Active
	Markets for Identical		Significant Other
	Assets and Liabilities		Observable Inputs		Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
October 31, 2021:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	148,656	$	—	$	148,656
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(8,548)	$	—	$	(8,548)

July 31, 2021:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	94,244	$	—	$	94,244
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(4,458)	$	—	$	(4,458)

Methodology

The fair values of Ferrellgas, L.P.’s non-exchange traded commodity derivative contracts are based upon indicative price quotations available through brokers, industry price publications or recent market transactions and related market indicators.

Other financial instruments

~~Table of Contents~~

July 31, ~~2020,~~2021, the estimated fair value of Ferrellgas, L.P.’s long-term debt instruments was ~~$2,157.4~~$1,433.2 million and ~~$2,054.4~~$1,466.4 million, respectively. Ferrellgas, L.P. estimates the fair value of long-term debt based on quoted market prices. The fair value of ~~Ferrellgas, L.P.’s~~our consolidated debt obligations is a Level 2 valuation based on the observable inputs used for similar liabilities.

Ferrellgas, L.P. has other financial instruments such as trade accounts receivable which could expose it to concentrations of credit risk. The credit risk from trade accounts receivable is limited because of a large customer base which extends across many different U.S. markets.

J.K. Derivative instruments and hedging activities

Ferrellgas, L.P. is exposed to certain market risks related to its ongoing business operations. These risks include exposure to changing commodity prices as well as fluctuations in interest rates. Ferrellgas, L.P. utilizes derivative instruments to manage its exposure to fluctuations in commodity prices. Of these, the propane commodity derivative instruments are designated as cash flow hedges.

Table of Contents

Derivative instruments and hedging activity

During the three months ended October 31, ~~2020~~2021 and ~~2019,~~2020, Ferrellgas, L.P. did not recognize any gain or loss in earnings related to hedge ineffectiveness and did not exclude any component of financial derivative contract gains or losses from the assessment of hedge effectiveness related to commodity cash flow hedges.

The following tables provide a summary of the fair value of derivatives within Ferrellgas, L.P.’s condensed consolidated balance sheets as of October 31, ~~2020~~2021 and July 31, ~~2020:~~2021:

Final
October 31, 2020

Maturity
Asset Derivatives

Liability Derivatives
Derivative Instrument

Date
Location

Fair value

Location

Fair value
Derivatives designated as hedging instruments

December 2021

Commodity derivatives-propane

Prepaid expenses and other current assets

$
6,656

Other current liabilities

$
1,506
Commodity derivatives-propane

Other assets, net

505

Other liabilities

51

Total

$
7,161

Total

$
1,557

Final

July 31, 2020

Final

October 31, 2021

Maturity

Asset Derivatives

Liability Derivatives

Maturity

Asset Derivatives

Liability Derivatives

Derivative Instrument

Date

Location

Fair value

Location

Fair value

Date

Location

Fair value

Location

Fair value

Derivatives designated as hedging instruments

December 2021

December 2023

Commodity derivatives-propane

Prepaid expenses and other current assets

2,846

Other current liabilities

5,029

Price risk management asset

129,389

Other current liabilities

7,650

Commodity derivatives-propane

Other assets, net

266

Other liabilities

396

Other assets, net

19,267

Other liabilities

898

Total

3,112

Total

5,425

Total

148,656

Total

8,548


	Final	July 31, 2021
	Maturity	Asset Derivatives			Liability Derivatives
Derivative Instrument	Date	Location	Fair value		Location	Fair value
Derivatives designated as hedging instruments	December 2021
Commodity derivatives-propane		Price risk management asset	$	78,001	Other current liabilities	$	3,429
Commodity derivatives-propane		Other assets, net		16,243	Other liabilities		1,029
		Total	$	94,244	Total	$	4,458

~~Table of Contents~~

Ferrellgas, L.P.’s exchange traded commodity derivative contracts require cash margin deposit as collateral for contracts that are in a negative mark-to-market position. These cash margin deposits will be returned if mark-to-market conditions improve or will be applied against cash settlement when the contracts are settled. Liabilities represent cash margin deposits received by Ferrellgas, L.P. for contracts that are in a positive mark-to-market position. The following tables provide a summary of cash margin balances as of October 31, ~~2020~~2021 and July 31, ~~2020,~~2021, respectively:


	October 31, 2021
	Assets			Liabilities
Description	Location	Amount		Location	Amount
Margin Balances	Prepaid expense and other current assets	$	31,129	Other current liabilities	$	126,325
	Other assets, net		3,511	Other liabilities		18,392
		$	34,640		$	144,717


	July 31, 2021
	Assets			Liabilities
Description	Location	Amount		Location	Amount
Margin Balances	Prepaid expense and other current assets	$	21,068	Other current liabilities	$	79,178
	Other assets, net		3,036	Other liabilities		15,489
		$	24,104		$	94,667

Table of Contents

July 31, 2020

Assets

Liabilities
Description

Location

Amount

Location

Amount
Margin Balances

Prepaid expense and other current assets

$
14,398

Other current liabilities

$
510

Other assets, net

1,433

Other liabilities

—

$
15,831



$
510

The following tables provide a summary of the effect on Ferrellgas, L.P.’s condensed consolidated statements of comprehensive income (loss) for the three months ended October 31, ~~2020~~2021 and ~~2019~~2020 due to derivatives designated as cash flow hedging instruments:


	For the three months ended October 31, 2020							For the three months ended October 31, 2021
				Amount of Gain (Loss)							Amount of Gain (Loss)
			Location of Gain (Loss)	Reclassified from						Location of Gain (Loss)	Reclassified from
	Amount of Gain (Loss)		Reclassified from AOCI	AOCI into Income				Amount of Gain (Loss)		Reclassified from AOCI	AOCI into Income
Derivative Instrument	Recognized in AOCI		into Income	Effective portion		Ineffective portion		Recognized in AOCI		into Income	Effective portion		Ineffective portion
Commodity derivatives	$	5,767	Cost of product sold- propane and other gas liquids sales	$	(2,150)	$	—	$	72,932	Cost of product sold- propane and other gas liquids sales	$	22,610	$	—
	$	5,767		$	(2,150)	$	—	$	72,932		$	22,610	$	—


	For the three months ended October 31, 2019							For the three months ended October 31, 2020
				Amount of Gain (Loss)							Amount of Gain (Loss)
			Location of Gain (Loss)	Reclassified from						Location of Gain (Loss)	Reclassified from
	Amount of Gain (Loss)		Reclassified from AOCI	AOCI into Income				Amount of Gain (Loss)		Reclassified from AOCI	AOCI into Income
Derivative Instrument	Recognized in AOCI		into Income	Effective portion		Ineffective portion		Recognized in AOCI		into Income	Effective portion		Ineffective portion
Commodity derivatives	$	(13,627)	Cost of product sold- propane and other gas liquids sales	$	(7,479)	$	—	$	5,767	Cost of product sold- propane and other gas liquids sales	$	(2,150)	$	—
	$	(13,627)		$	(7,479)	$	—	$	5,767		$	(2,150)	$	—

The changes in derivatives included in AOCI for the three months ended October 31, ~~2020~~2021 and ~~2019~~2020 were as follows:


	For the three months ended October 31,
Gains and losses on derivatives included in AOCI	2021		2020
Beginning balance	$	89,786	$	(2,313)
Change in value of risk management commodity derivatives		72,932		5,767
Reclassification of (gains) losses on commodity hedges to cost of sales - propane and other gas liquids sales, net		(22,610)		2,150
Ending balance	$	140,108	$	5,604

Ferrellgas, L.P. expects to reclassify net gains of approximately ~~$5.2~~$121.7 million to earnings during the next 12 months. These net gains are expected to be offset by ~~increased~~decreased margins on propane sales commitments Ferrellgas, L.P. has with its customers that qualify for the normal purchase normal sale exception.

During the three months ended October 31, ~~2020~~2021 and ~~2019,~~2020, Ferrellgas, L.P. had no reclassifications to operations resulting from the 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.

~~Table of Contents~~

As of October 31, ~~2020,~~2021, Ferrellgas, L.P. had financial derivative contracts covering ~~3.6~~7.2 million barrels of propane that were entered into as cash flow hedges of forward and forecasted purchases of propane.

Derivative financial instruments credit risk

Ferrellgas, L.P. is exposed to credit loss in the event of nonperformance by counterparties to derivative financial and commodity instruments. Ferrellgas, L.P.’s counterparties principally consist of major energy companies and major U.S. financial institutions. Ferrellgas, L.P. maintains credit policies with regard to its counterparties that it believes reduce its overall credit risk. These policies include evaluating and monitoring its counterparties’ financial condition, including their credit ratings, and entering into agreements with counterparties that govern credit limits. Certain of these agreements call for the posting of collateral by the counterparty or by Ferrellgas, L.P. in the forms of letters of credit, ~~parental~~parent guarantees or cash. Ferrellgas, L.P. has concentrations of credit risk associated with derivative financial instruments held by certain derivative financial instrument counterparties. If these counterparties that make up the concentration failed to perform according to the terms of their contracts at October 31, ~~2020,~~2021, the maximum amount of loss due to credit risk that Ferrellgas, L.P. would incur based upon the gross fair values of the derivative financial instruments is ~~$3.5 million.~~0.

Table of Contents

From time to time Ferrellgas, L.P. enters into derivative contracts that have credit-risk-related contingent features which dictate credit limits based upon Ferrellgas, L.P.’s debt rating. There were no0 open derivative contracts with credit-risk-related contingent features as of October 31, ~~2020.~~2021.

K.L. Transactions with related parties

Ferrellgas, L.P. has no0 employees and is managed and controlled by its general partner. Pursuant to Ferrellgas, L.P.’s partnership agreement, the general partner is entitled to reimbursement for all direct and indirect expenses incurred or payments it makes on behalf of Ferrellgas, L.P. and all other necessary or appropriate expenses allocable to Ferrellgas, L.P. or otherwise reasonably incurred by its general partner in connection with operating Ferrellgas, L.P.’s business. These costs primarily include compensation and benefits paid to employees of the general partner who perform services on Ferrellgas, L.P.’s behalf and are reported in the condensed consolidated statements of operations as follows:

For the three months ended October 31,

2020

2019

Operating expense

$
60,980

$
63,471

General and administrative expense

$
6,719

$
6,487


	For the three months ended October 31,
	2021		2020
Operating expense	$	64,949	$	60,980

General and administrative expense	$	6,229	$	6,719

See additional discussions about transactions with the general partner and related parties in Note GH – ~~Partners’ deficit.~~Equity.

Term loan credit agreement with Ferrellgas Partners, L.P.

On January 8, 2021, Ferrellgas, L.P. entered into a term loan credit agreement pursuant to which Ferrellgas, L.P. extended to Ferrellgas Partners, L.P. an unsecured, non-amortizing term loan in the aggregate principal amount of $19.9 million. The term loan bears interest at a rate of 20% per annum, and all interest on the term loan will be added to the outstanding principal amount of the term loan. The term loan will mature on July 1, 2022. During July 2021, Ferrellgas Partners made an optional prepayment of $9.0 million principal amount of the term loan. The outstanding principal and accrued interest at October 31, 2021 was $13.8 million.

Table of Contents

L.M. Contingencies and commitments

Litigation

Ferrellgas, L.P.’s 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 and, prior to the sales of midstream operations in fiscal 2018, crude oil. As a result, at any given time, Ferrellgas, L.P. can be threatened with or named as a defendant in various lawsuits arising in the ordinary course of business. Other than as discussed below, Ferrellgas, L.P. 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 consolidated financial condition, results of operations and cash flows of Ferrellgas, L.P.

Ferrellgas, L.P. has been named as a defendant, along with a competitor, in putative class action lawsuits filed in multiple jurisdictions. The lawsuits, which were consolidated in the Western District of Missouri on October 16, 2014, allege that Ferrellgas and a competitor coordinated in 2008 to reduce the fill level in barbeque cylinders and combined to persuade a common customer to accept that fill reduction, resulting in increased cylinder costs to direct customers and end-user customers in violation of federal and certain state antitrust laws. The lawsuits seek treble damages, attorneys’

~~Table of Contents~~

fees, injunctive relief and costs on behalf of the putative class. These lawsuits have been coordinated for pretrial purposes by the multidistrict litigation panel. The Federal Court for the Western District of Missouri initially dismissed all claims brought by direct and indirect customers other than state law claims of indirect customers under Wisconsin, Maine and Vermont law. The direct customer plaintiffs filed an appeal, which resulted in a reversal of the district court’s dismissal. We filed a petition for a writ of certiorari which was denied. An appeal by the indirect customer plaintiffs resulted in the court of appeals affirming the dismissal of the federal claims and remanding the case to the district court to decide whether to exercise supplemental jurisdiction over the remaining state law claims. Thereafter, in August 2019, Ferrellgas, L.P. reached a settlement with the direct customers, pursuant to which it agreed to pay a total of $6.25 million to resolve all claims asserted by the putative direct purchaser class. With respect to the indirect customers, the district court exercised supplemental jurisdiction over the remaining state law claims, but then granted in part Ferrellgas’ pleadings-based motion and dismissed 11 of the 24 remaining state law claims. As a result, there ~~are~~were 13 remaining state law claims brought by a putative class of indirect customers. On September 23, 2021 the court held an oral argument on the indirect purchaser plaintiffs’ motion for class certification. Thereafter, the court denied the indirect purchaser plaintiffs’ motion for class certification, and a final order on the motion was entered by the Court on November 9, 2021. At this point the only remaining claims are the 13 named plaintiffs’ individual state claims, which has the effect of substantially reducing the Ferrellgas, L.P. potential liability. Ferrellgas, L.P. believes it has strong defenses and intends to vigorously defend itself against these remaining claims. Ferrellgas, L.P. does not believe loss is probable or reasonably estimable at this time related to the putative class action lawsuit.

Ferrellgas, L.P. and Bridger Logistics, LLC (“Bridger”), have been named, along with ~~two~~2 former officers (“Rios and Gamboa”), in a lawsuit filed by Eddystone Rail Company ("Eddystone") on February 2, 2017 in the Eastern District of Pennsylvania (the "EDPA Lawsuit"). Eddystone indicated that it has prevailed in or settled an arbitration against Jamex Transfer Services (“JTS”), previously named Bridger Transfer Services, a former subsidiary of Bridger. The arbitration involved a claim against JTS for money due for deficiency payments under a contract for the use of an Eddystone facility used to offload crude from rail onto barges. Eddystone alleges that Ferrellgas transferred assets out of JTS prior to the sale of the membership interest in JTS to Jamex Transfer Holdings, and that those transfers should be avoided so that the assets can be used to satisfy the amount owed by JTS to Eddystone as a result of the arbitration. Eddystone also alleges that JTS was an “alter ego” of Bridger and Ferrellgas and that Bridger and Ferrellgas breached both an implicit contract as well as fiduciary duties allegedly owed to Eddystone as a creditor of JTS. Ferrellgas believes that Ferrellgas and Bridger have valid defenses to these claims and to Eddystone’s primary claim against JTS for breach of contract. ~~The lawsuit does not specify a specific amount of damages that~~If Eddystone ~~is seeking;~~ultimately prevails, however, Ferrellgas believes that the amount of ~~such~~ damages ~~if ultimately owed to Eddystone,~~awarded, could be material to Ferrellgas. Ferrellgas intends to vigorously defend this claim.

Table of Contents

Long-term debt-related commitments

M. ~~Guarantor financial information~~

~~The $500.0 million aggregate principal amount of registered 6.75% senior notes due 2023 co-issued by~~ Ferrellgas, L.P. has long and Ferrellgas Finance Corp. are fully and unconditionally and jointly and severally guaranteed by all of Ferrellgas, L.P.’s 100% owned subsidiaries except: (i) Ferrellgas Finance Corp; (ii) certain special purposes subsidiaries formedshort-term payment obligations under agreements such as the indentures governing its senior notes. See Note F – Debt – for ~~use in connection with our accounts receivable securitization; and (iii) foreign subsidiaries. Guarantees~~a description of these ~~senior notes will be released under certain circumstances, including (i) in connection with any sale or other disposition~~debt obligations and a schedule of (a) all or substantially all of the assets of a guarantor or (b) all of the capital stock of such guarantor (including by way of merger or consolidation), in each case, to a person that is not Ferrellgas, L.P. or a restricted subsidiary of Ferrellgas, L.P., (ii) if Ferrellgas, L.P. designates any restricted subsidiary that is a guarantor as an unrestricted subsidiary, (iii) upon defeasance or discharge of the notes, (iv) upon the liquidation or dissolution of such guarantor, or (v) at such time as such guarantor ceases to guarantee any other indebtedness of either of the issuers and any other guarantor.future maturities.

The guarantor financial information discloses in separate columns the financial position, results of operations and the cash flows of Ferrellgas, L.P. (Parent), Ferrellgas Finance Corp. (co-issuer), Ferrellgas, L.P.’s guarantor subsidiaries on a combined basis, and Ferrellgas, L.P.’s non-guarantor subsidiaries on a combined basis. The dates and the periods presented in the guarantor financial information are consistent with the periods presented in Ferrellgas, L.P.’s condensed consolidated financial statements.

~~Table of Contents~~

~~FERRELLGAS, L.P. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING BALANCE SHEETS~~

~~(in thousands)~~

As of October 31, 2020


Ferrellgas, L.P.

Ferrellgas








(Parent and

Finance Corp.

Guarantor

Non-Guarantor

Co-Issuer)

(Co-Issuer)

Subsidiaries

Subsidiaries

Eliminations

Consolidated
ASSETS

Current assets:

Cash and cash equivalents

$
296,890

$
1

$
—

$
2,631

$
—

$
299,522
Accounts and notes receivable, net

15,547

—

—

103,941

—

119,488
Intercompany receivables

87,191

—

—

—

(87,191)

—
Inventories

78,980

—

—

—

—

78,980
Prepaid expenses and other current assets

40,044

—

—

—

—

40,044
Total current assets

518,652

1

—

106,572

(87,191)

538,034

Property, plant and equipment, net

592,132

—

—

—

—

592,132
Goodwill, net

246,946

—

—

—

—

246,946
Intangible assets, net

101,812

—

—

—

—

101,812
Investments in consolidated subsidiaries

37,821

—

—

—

(37,821)

—
Operating lease right-of-use assets

100,349

—

—

—

—

100,349
Other assets, net

71,029

—

2,255

238

—

73,522
Total assets

$
1,668,741

$
1

$
2,255

$
106,810

$
(125,012)

$
1,652,795

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)












Current liabilities:












Accounts payable

$
44,641

$
—

$
—

$
—

$
—

$
44,641
Intercompany payables

—

—

—

87,191

(87,191)

—
Current portion of long-term debt

502,095

—

—

—

—

502,095
Current operating lease liabilities

28,280

—

—

—

—

28,280
Other current liabilities

175,856

—

—

(15,946)

—

159,910
Total current liabilities

750,872

—

—

71,245

(87,191)

734,926

Long-term debt

1,647,106

—

—

—

—

1,647,106
Operating lease liabilities

83,337

—

—

—

—

83,337
Other liabilities

49,543

—

—

—

—

49,543
Contingencies and commitments













Partners' capital (deficit):












Partners' equity

(867,721)

1

2,255

35,565

(37,821)

(867,721)
Accumulated other comprehensive income

5,604

—

—

—

—

5,604
Total partners' capital (deficit)

(862,117)

1

2,255

35,565

(37,821)

(862,117)
Total liabilities and partners' capital (deficit)

$
1,668,741

$
1

$
2,255

$
106,810

$
(125,012)

$
1,652,795

~~Table of Contents~~

~~FERRELLGAS, L.P. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING BALANCE SHEETS~~

~~(in thousands)~~

As of July 31, 2020


Ferrellgas, L.P.

Ferrellgas








(Parent and

Finance Corp.

Guarantor

Non-Guarantor

Co-Issuer)

(Co-Issuer)

Subsidiaries

Subsidiaries

Eliminations

Consolidated
ASSETS












Current assets:












Cash and cash equivalents

$
332,244

$
1

$
—

$
1,510

$
—

$
333,755
Accounts and notes receivable, net

11,879

—

24

89,535

—

101,438
Intercompany receivables

69,980

—

—

—

(69,980)

—
Inventories

72,664

—

—

—

.

72,664
Prepaid expenses and other current assets

35,897

—

—

—

—

35,897
Total current assets

522,664

1

24

91,045

(69,980)

543,754

Property, plant and equipment, net

591,042

—

—

—

—

591,042
Goodwill, net

247,195

—

—

—

—

247,195
Intangible assets, net

104,049

—

—

—

—

104,049
Investments in consolidated subsidiaries

37,662

—

—

—

(37,662)

—
Operating lease right-of-use assets

107,349

—

—

—

—

107,349
Other assets, net

72,137

—

2,255

356

—

74,748
Total assets

$
1,682,098

$
1

$
2,279

$
91,401

$
(107,642)

$
1,668,137

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)












Current liabilities:












Accounts payable

$
33,944

$
—

$
—

$
—

$
—

$
33,944
Intercompany payables

—

—

—

69,980

(69,980)

—
Current portion of long-term debt

502,095

—

—

—

—

502,095
Current operating lease liabilities

29,345

—

—

—

—

29,345
Other current liabilities

162,097

—

—

(13,961)

—

148,136
Total current liabilities

727,481

—

—

56,019

(69,980)

713,520

Long-term debt

1,646,396

—

—

—

—

1,646,396
Operating lease liabilities

89,022

—

—

—

—

89,022
Other liabilities

51,190

—

—

—

—

51,190
Contingencies and commitments













Partners' capital (deficit):












Partners' equity

(829,678)

1

2,279

35,382

(37,662)

(829,678)
Accumulated other comprehensive income

(2,313)

—

—

—

—

(2,313)
Total partners' capital (deficit)

(831,991)

1

2,279

35,382

(37,662)

(831,991)
Total liabilities and partners' capital (deficit)

$
1,682,098

$
1

$
2,279

$
91,401

$
(107,642)

$
1,668,137

~~Table of Contents~~

~~FERRELLGAS, L.P. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS~~

~~(in thousands)~~

For the three months ended October 31, 2020


Ferrellgas, L.P.

Ferrellgas








(Parent and

Finance Corp.

Guarantor

Non-Guarantor

Co-Issuer)

(Co-Issuer)

Subsidiaries

Subsidiaries

Eliminations

Consolidated

Revenues:












Propane and other gas liquids sales

$
281,049

$
—

$
—

$
—

$
—

$
281,049
Other

19,845

—

—

—

—

19,845
Total revenues

300,894

—

—

—

—

300,894

Costs and expenses:










Cost of sales - propane and other gas liquids sales

137,627

—

—

—

—

137,627
Cost of sales - other

3,667

—

—

—

—

3,667
Operating expense - personnel, vehicle, plant and other

109,027

—

—

737

(737)

109,027
Operating expense - equipment lease expense

6,830

—

—

—

—

6,830
Depreciation and amortization expense

21,390

—

—

—

—

21,390
General and administrative expense

13,074

2

—

—

—

13,076
Non-cash employee stock ownership plan compensation charge

708

—

—

—

—

708
Loss on asset sales and disposals

813

—

—

—

—

813

Operating income (loss)

7,758

(2)

—

(737)

737

7,756

Interest expense

(45,901)

—

—

(627)

—

(46,528)
Other income (expense), net

129

—

(21)

1,679

(1,679)

108

Earnings (loss) before income taxes

(38,014)

(2)

(21)

315

(942)

(38,664)

Income tax expense

87

—

—

—

—

87
Equity in earnings (loss) of subsidiaries

292

—

—

—

(292)

—

Net earnings (loss)

(37,809)

(2)

(21)

315

(1,234)

(38,751)

Other comprehensive income

7,917

—

—

—

—

7,917

Comprehensive income (loss)

$
(29,892)

$
(2)

$
(21)

$
315

$
(1,234)

$
(30,834)

~~Table of Contents~~

~~FERRELLGAS, L.P. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS~~

~~(in thousands)~~

For the three months ended October 31, 2019


Ferrellgas, L.P.

Ferrellgas








(Parent and

Finance Corp.

Guarantor

Non-Guarantor

Co-Issuer)

(Co-Issuer)

Subsidiaries

Subsidiaries

Eliminations

Consolidated

Revenues:












Propane and other gas liquids sales

$
273,385

$
—

$
—

$
—

$
—

$
273,385
Other

19,829

—

—

—

—

19,829
Total revenues

293,214

—

—

—

—

293,214

Costs and expenses:












Cost of sales - propane and other gas liquids sales

134,028

—

—

—

—

134,028
Cost of sales - other

3,681

—

—

—

—

3,681
Operating expense - personnel, vehicle, plant and other

114,543

—

—

885

(885)

114,543
Operating expense - equipment lease expense

8,388

—

—

—

—

8,388
Depreciation and amortization expense

19,107

—

—

112

—

19,219
General and administrative expense

9,695

1

—

—

—

9,696
Non-cash employee stock ownership plan compensation charge

795

—

—

—

—

795
Loss on asset sales and disposals

2,235

—

—

—

—

2,235

Operating income (loss)

742

(1)

—

(997)

885

629

Interest expense

(35,691)

—

—

(1,186)

—

(36,877)
Other income (expense), net

(132)

—

—

720

(720)

(132)

Earnings (loss) before income taxes

(35,081)

(1)

—

(1,463)

165

(36,380)

Income tax expense

518

—

—

—

—

518
Equity in earnings (loss) of subsidiary

(1,464)

—

—

—

1,464

—

Net earnings (loss)

(37,063)

(1)

—

(1,463)

1,629

(36,898)

Other comprehensive loss

(6,148)

—

—

—

—

(6,148)

Comprehensive income (loss)

$
(43,211)

$
(1)

$
—

$
(1,463)

$
1,629

$
(43,046)

~~Table of Contents~~

~~FERRELLGAS, L.P. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS~~

~~(in thousands)~~

For the three months ended October 31, 2020


Ferrellgas, L.P.

Ferrellgas








(Parent and

Finance Corp.

Guarantor

Non-Guarantor

Co-Issuer)

(Co-Issuer)

Subsidiaries

Subsidiaries

Eliminations

Consolidated
Cash flows from operating activities:












Net cash provided by (used in) operating activities

$
(9,925)

$
(2)

$
3

$
(2,687)

$
1,121

$
(11,490)

Cash flows from investing activities:












Business acquisitions, net of cash acquired

—

—

—

—

—

—
Capital expenditures

(19,454)

—

—

—

—

(19,454)
Proceeds from sale of assets

1,407

—

—

—

—

1,407
Cash collected for purchase of interest in accounts receivable

—

—

—

153,131

(153,131)

—
Cash remitted to Ferrellgas, L.P. for accounts receivable

—

—

—

(152,010)

152,010

—
Intercompany loan to affiliate

(2,686)

—

—

—

2,686

—
Net cash provided by (used in) investing activities

(20,733)

—

—

1,121

1,565

(18,047)

Cash flows from financing activities:












Payments on long-term debt

(696)

—

—

—

—

(696)
Net changes in advances with consolidated entities

—

2

(3)

2,687

(2,686)

—
Cash payments for principal portion of finance lease liability

(1,703)

—

—

—

—

(1,703)
Cash paid for financing costs and other

(2,297)

—

—

—

—

(2,297)
Net cash provided by (used in) financing activities

(4,696)

2

(3)

2,687

(2,686)

(4,696)

Net change in cash and cash equivalents

(35,354)

—

—

1,121

—

(34,233)
Cash and cash equivalents - beginning of year

332,244

1

—

1,510

—

333,755
Cash, cash equivalents and restricted cash - end of year

$
296,890

$
1

$
—

$
2,631

$
—

$
299,522

~~Table of Contents~~

~~FERRELLGAS, L.P. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS~~

~~(in thousands)~~

For the three months ended October 31, 2019


Ferrellgas, L.P.

Ferrellgas








(Parent and

Finance Corp.

Guarantor

Non-Guarantor

Co-Issuer)

(Co-Issuer)

Subsidiaries

Subsidiaries

Eliminations

Consolidated
Cash flows from operating activities:












Net cash provided by (used in) operating activities

$
21,350

$
(1)

$
506

$
(3,708)

$
(11,000)

$
7,147

Cash flows from investing activities:












Business acquisitions, net of cash acquired

(6,400)

—

—

—

—

(6,400)
Capital expenditures

(18,126)

—

—

—

—

(18,126)
Proceeds from sale of assets

835

—

—

—

—

835
Cash collected for purchase of interest in accounts receivable

—

—

—

161,600

(161,600)

—
Cash remitted to Ferrellgas, L.P. for accounts receivable

—

—

—

(172,600)

172,600

—
Intercompany loan to affiliate

(3,203)

—

—

—

3,203

—
Cash payment to construct assets in connection with future lease transactions

(16,879)

—

—

—

—

(16,879)
Cash receipts in connection with leased vehicles

5,863

—

—

—

—

5,863
Net cash provided by (used in) investing activities

(37,910)

—

—

(11,000)

14,203

(34,707)

Cash flows from financing activities:












Distributions

(101)

—

—

—

—

(101)
Reductions in long-term debt

(512)

—

—

—

—

(512)
Net additions to short-term borrowings

37,000

—

—

—

—

37,000
Net additions to collateralized short-term borrowings

—

—

—

11,000

—

11,000
Net changes in advances with consolidated entries

—

1

(506)

3,708

(3,203)

—
Cash payments for principal portion of finance lease liability

(38)

—

—

—

—

(38)
Cash paid for financing costs and other

(1,102)

—

—

—

—

(1,102)
Net cash provided by (used in) financing activities

35,247

1

(506)

14,708

(3,203)

46,247

Net change in cash and cash equivalents

18,687

—

—

—

—

18,687
Cash and cash equivalents - beginning of year

11,045

1

—

—

—

11,046
Cash and cash equivalents - end of year

$
29,732

$
1

$
—

$
—

$
—

$
29,733

~~Table of Contents~~

N. Subsequent events

Ferrellgas, L.P. has evaluated events and transactions occurring after the balance sheet date through the date Ferrellgas, L.P.’s condensed consolidated financial statements were issued and concluded that there were no events or transactions occurring during this period that ~~require~~required recognition or disclosure in its condensed consolidated financial ~~statements, except as follows.~~statements.

~~Transaction Support Agreement~~

On December 10, 2020, Ferrellgas Partners, Ferrellgas Partners Finance Corp., Ferrellgas, L.P. and additional Ferrellgas entities (collectively, the “Company Parties”) entered into a Transaction Support Agreement (the “TSA”) with certain holders of, or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims (collectively, the “Consenting Noteholders”) arising under, derived from or based upon the indenture governing the Ferrellgas Partners Notes due June 15, 2020. As of December 10, 2020, the Consenting Noteholders hold or represent, in the aggregate, approximately 74% of the outstanding amount of the Ferrellgas Partners Notes due June 15, 2020.

The TSA sets forth (i) a restructuring process to satisfy the obligations of Ferrellgas Partners and Ferrellgas Partners Finance Corp. under the Ferrellgas Partners Notes due June 15, 2020 (the “Ferrellgas Partners Transactions”), which will be effectuated through pre-packaged voluntary cases (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code filed by only Ferrellgas Partners and Ferrellgas Partners Finance Corp. and the confirmation of a pre-packaged plan of reorganization for Ferrellgas Partners and Ferrellgas Partners Finance Corp., and (ii) a refinancing process of Ferrellgas, L.P., including but not limited to, replacement of Ferrellgas, L.P.’s existing unsecured notes due 2021, 2022 and 2023 (the “operating partnership Transactions” and, together with the Ferrellgas Partners Transactions, the “Transactions”), which will be consummated on the effective date (the “Effective Date”) of Ferrellgas Partners’ plan of reorganization that implements the Ferrellgas Partners Transactions (the “Plan”) and will close simultaneously with the Ferrellgas Partners Transactions effectuated under the Plan.

The TSA contains certain milestones relating to the commencement of the solicitation of acceptances of the Plan (the “Solicitation”), the refinancing process and the Chapter 11 Cases, which include the dates by which Ferrellgas Partners is required to commence the Solicitation and, thereafter, commence the Chapter 11 Cases or obtain certain approval orders of the United States Bankruptcy Court for the District of Delaware. In addition, the milestones include the obligation of Ferrellgas Partners and Ferrellgas Partners Finance Corp. to emerge from chapter 11 protection no later than April 4, 2021, unless that deadline is extended pursuant to the terms of the TSA.

~~There is no assurance that the restructuring and refinancing processes described in the TSA will be consummated.~~

~~Table of Contents~~

~~FERRELLGAS FINANCE CORP.~~

~~(a wholly-owned subsidiary of Ferrellgas, L.P.)~~

~~CONDENSED BALANCE SHEETS~~

~~(unaudited)~~

October 31, 2020

July 31, 2020
ASSETS




Cash

$
1,100

$
1,100
Prepaid expenses and other current assets

—

1,500
Total assets

$
1,100

$
2,600

Contingencies and commitments (Note B)





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

84,240

84,187
Accumulated deficit

(84,140)

(82,587)
Total stockholder's equity

$
1,100

$
2,600

~~See notes to condensed financial statements.~~

Table of Contents

FERRELLGAS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas, L.P.)

CONDENSED ~~STATEMENTS OF OPERATIONS~~BALANCE SHEETS

(unaudited)

For the three months ended October 31,

2020

2019

General and administrative expense

$
1,553

$
1,019

Net loss

$
(1,553)

$
(1,019)


	October 31, 2021		July 31, 2021
ASSETS
Cash	$	1,100	$	1,100
Prepaid expenses and other current assets		—		—
Total assets	$	1,100	$	1,100

Contingencies and commitments (Note B)

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		102,628		102,628
Accumulated deficit		(102,528)		(102,528)
Total stockholder's equity	$	1,100	$	1,100

See notes to condensed financial statements.

Table of Contents

FERRELLGAS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas, L.P.)

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)


	For the three months ended October 31,
	2021		2020
General and administrative expense	$	—	$	1,553

Net loss	$	—	$	(1,553)

See notes to condensed financial statements.

Table of Contents

FERRELLGAS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas, L.P.)

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

For the three months ended October 31,

2020

2019
Cash flows from operating activities:

Net loss

$
(1,553)

$
(1,019)
Changes in operating assets and liabilities:

Prepaid expenses and other current assets

1,500

966
Cash used in operating activities

(53)

(53)

Cash flows from financing activities:

Capital contribution

53

53
Cash provided by financing activities

53

53

Net change in cash

—

—
Cash - beginning of period

1,100

1,100
Cash - end of period

$
1,100

$
1,100


	For the three months ended October 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	—	$	(1,553)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		—		1,500
Cash used in operating activities		—		(53)

Cash flows from financing activities:
Capital contribution		—		53
Cash provided by financing activities		—		53

Net change in cash		—		—
Cash - beginning of period		1,100		1,100
Cash - end of period	$	1,100	$	1,100

See notes to condensed financial statements.

5960

Table of Contents

FERRELLGAS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas, L.P.)

(unaudited)

NOTES TO CONDENSED FINANCIAL STATEMENTS

A. Formation

Ferrellgas Finance Corp. (the “Finance Corp.”), a Delaware corporation, was formed on January 16, 2003, and is a wholly-owned subsidiary of Ferrellgas, L.P. (the “Partnership”).

The Partnership contributed $1,000 to the Finance Corp. on January 24, 2003 in exchange for 1,000 shares of common stock.

The Finance Corp. has nominal assets, does not conduct any operations and has no0 employees.

~~Going Concern~~

The accompanying condensed financial statements have been prepared on a going concern basis, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business. As discussed in Note B – Contingencies and commitments, the Finance Corp serves as co-issuer and co-obligor for debt securities of the Partnership. The Partnership has $500.0 million in unsecured notes due May 1, 2021 that are classified as current in its condensed consolidated financial statements. This obligation is only reported on the condensed consolidated balance sheet of the Partnership. The ability of the Partnership to restructure, refinance or otherwise satisfy these notes is uncertain considering the level of other outstanding indebtedness. The Finance Corp. does not have sufficient cash reserves or the ability to generate sufficient future cash flows to satisfy its obligations as co-obligor of the debt securities of the Partnership. Given these concerns, we believe there is substantial doubt about the Finance Corp’s ability to continue as a going concern. The Partnership has engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist in the Partnership’s ongoing process to reduce existing debt and address its debt maturities. On December 10, 2020, Ferrellgas Partners, Ferrellgas Partners Finance Corp., the Partnership, Finance Corp. and additional Ferrellgas entities entered into a Transaction Support Agreement (the “TSA”) with certain holders of, or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims arising under, derived from or based upon the indenture governing the Ferrellgas Partners Notes due June 15, 2020. There is no assurance that the transactions contemplated by the TSA will be consummated and the outcome of Ferrellgas’ debt reduction strategy continues to remain uncertain. See Note C – Subsequent Events, for a discussion of the TSA and the transactions contemplated thereunder.

B. Contingencies and commitments

The Finance Corp. serves as co-issuer and co-obligor for debt securities of the ~~Partnership. The~~operating partnership. At July 31, 2020, the Finance Corp. iswas liable as co-issuer and co-obligor for the operating partnership’s (i) ~~the~~ $500 million aggregate principal amount of ~~the Partnership’s~~ unsecured senior notes due 2021, (ii) ~~the~~ $475 million aggregate principal amount of ~~the Partnership’s~~ unsecured senior notes due 2022, ~~and~~ (iii) ~~the~~ $500 million aggregate principal amount of ~~the Partnership’s~~ unsecured senior notes due 2023, and (iv) $700 million aggregate principal amount of senior secured notes due 2025, which obligations were only reported on the operating partnership’s condensed consolidated balance sheet. The senior notes due 2021, senior notes due 2022 and senior notes due 2023 were redeemed on April 5, 2021, and the senior secured notes due 2025 were redeemed on March 30, 2021. As of October 31, 2021, the Finance Corp. was liable as co-issuer and co-obligor for the operating partnership’s (i) $650 million aggregate principal amount of unsecured senior notes due 2026 and (ii) $825 million aggregate principal amount of unsecured senior notes due 2029, each of which were issued on March 30, 2021 and which obligations are only reported on the ~~Partnership’s~~operating partnership’s condensed consolidated balance sheet.

C. Subsequent events

The ~~Partnership~~Finance Corp. has evaluated events and transactions occurring after the balance sheet date through the date the ~~Partnership’s~~Finance Corp.’s condensed consolidated financial statements were issued and concluded that there were no events or transactions occurring during this period that ~~require~~required recognition or disclosure in its condensed consolidated financial ~~statements, except as follows.~~

~~Table of Contents~~

~~Transaction Support Agreement~~statements.

On December 10, 2020, Ferrellgas Partners, Ferrellgas Partners Finance Corp., the Partnership, Finance Corp. and additional Ferrellgas entities (collectively, the “Company Parties”) entered into a Transaction Support Agreement (the “TSA”) with certain holders of, or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims (collectively, the “Consenting Noteholders”) arising under, derived from or based upon the indenture governing the Ferrellgas Partners Notes due June 15, 2020. As of December 10, 2020, the Consenting Noteholders hold or represent, in the aggregate, approximately 74% of the outstanding amount of the Ferrellgas Partners Notes due June 15, 2020.

The TSA sets forth (i) a restructuring process to satisfy the obligations of Ferrellgas Partners and Ferrellgas Partners Finance Corp. under the Ferrellgas Partners Notes due June 15, 2020 (the “Ferrellgas Partners Transactions”), which will be effectuated through pre-packaged voluntary cases (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code filed by only Ferrellgas Partners and Ferrellgas Partners Finance Corp. and the confirmation of a pre-packaged plan of reorganization for Ferrellgas Partners and Ferrellgas Partners Finance Corp., and (ii) a refinancing process of the Partnership and the Finance Corp., including but not limited to, replacement of the Partnership’s and the Finance Corp.’s existing unsecured notes due 2021, 2022 and 2023 (the “operating partnership Transactions” and, together with the Ferrellgas Partners Transactions, the “Transactions”), which will be consummated on the effective date (the “Effective Date”) of Ferrellgas Partners’ plan of reorganization that implements the Ferrellgas Partners Transactions (the “Plan”) and will close simultaneously with the Ferrellgas Partners Transactions effectuated under the Plan.

The TSA contains certain milestones relating to the commencement of the solicitation of acceptances of the Plan (the “Solicitation”), the refinancing process and the Chapter 11 Cases, which include the dates by which Ferrellgas Partners is required to commence the Solicitation and, thereafter, commence the Chapter 11 Cases or obtain certain approval orders of the United States Bankruptcy Court for the District of Delaware. In addition, the milestones include the obligation of Ferrellgas Partners and Ferrellgas Partners Finance Corp. to emerge from chapter 11 protection no later than April 4, 2021, unless that deadline is extended pursuant to the terms of the TSA.

~~There is no assurance that the restructuring and refinancing processes described in the TSA will be consummated.~~

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Overview~~

~~Our management’s discussion~~References and ~~analysis of financial condition and results of operations relates to Ferrellgas Partners and the operating partnership.~~

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, while Ferrellgas Finance Corp. serves as co-issuer and co-obligor for debt securities of the operating partnership. 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.Defined Terms

In this Item 2 of ~~the~~this Quarterly Report on Form 10-Q, unless the context indicates otherwise:

●

“us,” “we,” “our,” “ours,” “consolidated,” or ~~"Ferrellgas"~~“Ferrellgas” 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,~~“Class A Units” or “Class B 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 (except where the context indicates otherwise) with its consolidated subsidiaries, including Ferrellgas Finance Corp.;

●

our “general partner” ~~(i) with respect to Ferrellgas Partners~~ refers to Ferrellgas, Inc. and (ii) with respect to the operating partnership refers to (a) Ferrellgas, Inc., in the case of any economic general partner interest and (b) Ferrellgas, Inc., Ferrellgas GP II, LLC and Ferrellgas GP III, LLC, collectively, in the case of any voting general partner interest;;

●

“Ferrell Companies” refers to Ferrell Companies, Inc., the sole shareholder ~~or sole member, as applicable,~~ of our general ~~partners;~~partner;

●

“~~unitholders”~~Board of Directors” or “Board” refers to ~~holders~~the board of ~~common units~~directors of ~~Ferrellgas Partners;~~our general partner;

●

"GAAP" refers to accounting principles generally accepted in the United States;

●

“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 the volume of refined fuel sold;

●

“propane sales volume” refers to the volume of propane sold to our retail sales and wholesale sales customers;

●

“~~Ferrellgas Partners Notes”~~Class A Units” refers to the ~~$357.0 million aggregate principal amount~~Class A Units of ~~8.625% unsecured senior notes due June 15, 2020 co-issued by~~ Ferrellgas Partners, ~~and~~one of which was issued for every twenty of Ferrellgas ~~Partners Finance Corp.;~~Partners’ then-outstanding common units in a 1-for-20 reverse unit split effected on March 30, 2021;

●

“~~Notes”~~Class B Units” refers to the ~~notes~~Class B Units of Ferrellgas Partners;

●

“Preferred Units” refers to the Senior Preferred Units of the ~~condensed consolidated financial statements~~operating partnership;

●

“Unitholders” or “unitholders” refers to holders of Class A Units, holders of Class B Units or holders of Preferred Units, as indicated or as the context requires for each such reference; and

●

references to any fiscal year are to the fiscal year ended or ending on July 31 of the applicable year.

Also, the following terms are defined in this Item 2 of this Quarterly Report on Form 10-Q:

●

Amended Ferrellgas Partners ~~or the operating partnership, as applicable; and~~LPA

●

Credit Agreement

●

Credit Facility

Table of Contents

●

“fiscal 2021” means the fiscal year ended July 31, 2021, “fiscal 2020” means the fiscal year ended July 31, 2020, “fiscal 2019” means the fiscal year ended July 31, 2019, and “fiscal 2018” means the fiscal year ended July 31, 2018.Effective Date

●

Ferrellgas Partners Notes

●

OpCo LPA Amendment

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 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 traded on the OTC Pink Market 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 the senior notes co-issued by Ferrellgas Partners and Ferrellgas Partners Finance Corp.

Our general partner performs all management functions for us and our subsidiaries and holds an approximate 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 23.4% of our outstanding common units. Ferrell Companies is owned 100% by an employee stock ownership trust.

We file annual, quarterly, and current reports and other information with the Securities and Exchange Commission (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. Our SEC filings are also 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 audited historical consolidated financial statements and accompanying Notes thereto included in our Annual Report on Form 10-K for fiscal 2020 and in our unaudited 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 exists one material difference between Ferrellgas Partners and the operating partnership: Ferrellgas Partners has outstanding $357.0 million aggregate principal amount of 8.625% senior notes due June 15, 2020, and, accordingly, has interest expense that the operating partnership does not have. Ferrellgas Partners’ access to liquidity is dependent on distributions from the operating partnership. See the statements of operations in their respective condensed consolidated financial statements.

Cautionary Note Regarding 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 financial position 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 the risk factors that may affect our business, financial condition or results of operations include:

●

the effect of weather conditions on the demand for propane;

~~Table of Contents~~

●

the prices of wholesale propane, motor fuel and crude oil;

●

disruptions to the supply of propane;

●

competition from other industry participants and other energy sources;

●

energy efficiency and technology advances;

●

adverse changes in our relationships with our national tank exchange customers;

●

significant delays in the collection of accounts or notes receivable;

●

customer, counterparty, supplier or vendor defaults;

●

changes in demand for, and production of, hydrocarbon products;

●

disruptions to railroad operations on the railroads we use;

●

increased trucking and rail regulations;

●

inherent operating and litigation risks in gathering, transporting, handling and storing propane;

●

our inability to complete acquisitions or to successfully integrate acquired operations;

●

costs of complying with, or liabilities imposed under, environmental, health and safety laws;

●

the impact of pending and future legal proceedings;

●

the interruption, disruption, failure or malfunction of our information technology systems including due to cyber-attack;

Table of Contents

●

the impact of changes in tax law that could adversely affect the tax treatment of Ferrellgas Partners for federal income tax purposes;

●

economic and political instability, particularly in areas of the world tied to the energy industry;

●

disruptions in the capital and credit markets; and

●

access to available capital to meet our operating ~~requirements up to~~ and ~~including the refinancing and/or restructuring of maturing debt instruments; and~~

●

~~the impact of the inclusion in the report of our auditor of an “emphasis of matter” paragraph regarding substantial doubt as to our ability to continue as a going concern.~~debt-service requirements.

When considering any forward-looking statement, you should also keep in mind the risk factors set forth in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for fiscal ~~2020.~~2021 and in any more recent filings with the SEC. 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 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 on Form 10-Q.

Overview

Our management’s discussion and analysis of financial condition and results of operations relates to Ferrellgas Partners and the operating partnership.

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 Finance Corp. and Ferrellgas Finance Corp. have nominal assets, do not conduct any operations and have no employees other than officers. Our activities are primarily conducted through the operating partnership. Ferrellgas Partners Finance Corp. has served as co-issuer and co-obligor for debt securities of Ferrellgas Partners, while Ferrellgas Finance Corp., a subsidiary of the operating partnership, serves as co-issuer and co-obligor for debt securities of the operating partnership. 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.

Ferrellgas Partners and the Preferred Unitholders are the only limited partners of the operating partnership. Ferrellgas, Inc. is the sole general partner of Ferrellgas Partners and the operating partnership and, excluding the economic interests attributable to the Class B Units and the Preferred Units, owns an approximate 1% general partner economic interest in each, and, therefore, an effective 2% general partner economic interest in the operating partnership. Excluding the economic interests attributable to the Preferred Units, Ferrellgas Partners owns an approximate 99% limited partner interest in the operating partnership. For information regarding the economic and other terms of the Class B Units and the Preferred Units, see Note H – Equity and Note G – Preferred units – to our condensed consolidated financial statements included elsewhere herein.

Our Class A Units of Ferrellgas Partners are traded on the OTC Pink Market under the symbol “FGPR”.

Our general partner performs all management functions for us. The parent of our general partner, Ferrell Companies, currently beneficially owns approximately 23.4% of our outstanding Class A units. Ferrell Companies is owned 100% by an employee stock ownership trust.

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 the $357.0 million aggregate principal amount of Ferrellgas Partners’ unsecured senior notes due June 15, 2020 (the “Ferrellgas Partners Notes”) during the relevant historical periods.

Table of Contents

The following is a discussion of our historical financial condition and results of operations and should be read in conjunction with our audited historical consolidated financial statements and accompanying Notes thereto included in our Annual Report on Form 10-K for fiscal 2021 and in our unaudited historical condensed consolidated financial statements and accompanying Notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

●

Ferrellgas Partners entered into a term loan credit agreement with the operating partnership, pursuant to which the operating partnership extended to Ferrellgas Partners an unsecured, non-amortizing term loan in the aggregate principal amount of $19.9 million. The term loan bears interest at a rate of 20% per annum, and all interest on the term loan will be added to the outstanding principal amount of the term loan. The term loan will mature on July 1, 2022. During July 2021, Ferrellgas Partners made an optional prepayment of $9.0 million principal amount of the term loan. The outstanding principal and accrued interest at October 31, 2021 was $13.8 million. As of October 31, 2021, the operating partnership had additional intercompany receivables from Ferrellgas Partners not related to the term loan totaling $3.9 million.

Recent developments

COVID-19

The coronavirus disease 2019 (COVID-19), which has been declared by the World Health Organization as a “Public Health Emergency of International Concern,” continues to ~~spread and severely~~ impact the economy of the United States and other countries around the world. COVID-19 poses the risk that we or our employees, contractors, suppliers, customers and other business partners may be prevented from or limited in conducting business activities for an indefinite period of time. The outbreak of COVID-19 has already resulted in significant governmental measures being implemented to control the spread of the virus, including quarantines, travel restrictions, manufacturing restrictions, declarations of national emergency and states of emergency, business shutdowns and restrictions on the movement of people throughout the United States and the world. While some of our business operations and support systems are deemed essential in many jurisdictions, we are continuing to assess the impact that COVID-19 may have on our results of operations and financial condition and cannot at this time accurately predict what effects these conditions will have on our operations and sales due to uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak and the length of the travel restrictions and business closures imposed by governments in different jurisdictions. Additionally, initiatives we have implemented or may implement to slow and/or reduce the impact of COVID-19, such as using staggered start times for drivers, may increase our operating expenses and reduce the efficiency of our operations. Any of the foregoing events or other unforeseen consequences of public health epidemics may have further adverse impacts on U.S. and global economic conditions, including a general slowdown in the U.S. economy, which could decrease demand for our products and have a material adverse effect on our results of operations and financial condition.

~~Transaction Support Agreement~~

~~Table of Contents~~

orders of the United States Bankruptcy Court for the District of Delaware. In addition, the milestones include the obligation of Ferrellgas Partners and Ferrellgas Partners Finance Corp. to emerge from chapter 11 protection no later than April 4, 2021, unless that deadline is extended pursuant to the terms of the TSA.

~~There is no assurance that the restructuring and refinancing processes described in the TSA will be consummated.~~

~~Financial covenants~~

The indenture governing the outstanding notes of Ferrellgas Partners and the agreements governing the operating partnership’s indebtedness contain various covenants that limit our ability to, among other things, make restricted payments and incur additional indebtedness. Our general partner believes that the most restrictive of these covenants are the restricted payments covenants discussed below.

~~Ferrellgas Partners, L.P., the master limited partnership~~

The indenture governing the $357.0 million aggregate principal amount of outstanding notes of Ferrellgas Partners due June 15, 2020 contains a covenant that restricts the ability of Ferrellgas Partners to make certain restricted payments, including distributions on its common units. Ferrellgas Partners continues to comply with the restrictive covenants with

~~respect to the Ferrellgas Partners Notes due June 15, 2020 as Ferrellgas Partners continues to negotiate with the Forbearing Noteholders~~. Under this covenant, subject to the limited exception described below, Ferrellgas Partners may not make a restricted payment unless its consolidated fixed charge coverage ratio (defined in the indenture generally to mean the ratio of trailing four quarters consolidated EBITDA to consolidated interest expense, both as adjusted for certain, specified items) is at least 1.75x, on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events. As of October 31, 2020, Ferrellgas Partners’ consolidated fixed charge coverage ratio was 1.38x.

If the consolidated fixed charge coverage ratio is below 1.75x, Ferrellgas Partners may make restricted payments of up to $50.0 million in total over a sixteen quarter period. As a result of distributions paid to common unitholders in September 2017, December 2017, March 2018, June 2018 and September 2018, while this ratio was less than 1.75x, Ferrellgas Partners has used substantially all of its capacity under the limited exception and therefore is currently restricted by this covenant from making future restricted payments, including distributions to common unitholders. Accordingly, no distributions have been or will be paid to common unitholders for the three months ended October 31, 2020, and the general partner expects that this covenant will continue to prohibit Ferrellgas Partners from making common unit distributions unless and until the outstanding notes of Ferrellgas Partners due 2020 are restructured, refinanced or otherwise satisfied. While there can be no assurance of success, as part of our debt and interest expense reduction strategy, we are presently considering potential solutions to address the maturity of the outstanding notes of Ferrellgas Partners due June 15, 2020, as well as the upcoming maturity of the Ferrellgas, L.P.’s $500.0 million in unsecured notes due May 1, 2021. The potential solutions include, among others, restructuring, refinancing or a transaction to exchange new notes for some or all of these notes.

~~Ferrellgas, L.P., the operating partnership~~

~~Table of Contents~~

~~applicable, certain other specified events. As of October 31, 2020, the operating partnership’s consolidated fixed charge coverage ratio was 1.65x.~~

The indenture governing the operating partnership’s senior secured first lien notes due 2025 contains a similar but, in some respects, different restricted payments covenant. The covenant in the secured notes indenture provides for the same 1.75x consolidated fixed charge coverage ratio test as the unsecured notes indentures and a limited exception when that ratio is below 1.75x. In addition, the secured notes indenture also provides that, subject to a separate limited exception, described below, the operating partnership generally may not make a restricted payment unless the operating partnership’s consolidated leverage ratio (defined in the secured notes indenture generally to mean the ratio of consolidated total debt to trailing four quarters consolidated EBITDA, both as adjusted for certain, specified items) is no greater than 5.5x, on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events. The consolidated leverage ratio test applies regardless of whether the operating partnership’s consolidated fixed coverage ratio is at least 1.75x or below 1.75x. As of October 31, 2020, the operating partnership’s consolidated leverage ratio was substantially in excess of 5.5x. Additionally, the secured notes indenture provides for restricted payments under its limited exception to the consolidated fixed charge coverage ratio test that is less than the capacity available under the similar exception in the unsecured notes indentures. However, the secured notes indenture contains a separate exception to both the consolidated fixed charge coverage ratio test and the consolidated leverage ratio test that can be utilized to make certain specified restricted payments in a limited amount when the operating partnership does not meet either the consolidated fixed charge coverage ratio test or the consolidated leverage ratio test. This separate exception under the secured notes indenture currently has capacity for such specified restricted payments that is substantially the same as the capacity under the most restrictive of the operating partnership’s unsecured notes indentures.

As described above, Ferrellgas Partners’ unsecured notes due 2020 matured on June 15, 2020, and the outstanding principal amount of those notes was due to be paid on that date, together with accrued interest to the maturity date. Although the operating partnership has some capacity to make distributions under the operating partnership’s unsecured and secured notes indentures, this capacity will not allow the operating partnership to make distributions to Ferrellgas Partners sufficient to pay the principal of and accrued interest on Ferrellgas Partners’ unsecured senior notes due 2020 that was due at the maturity of those notes. Additionally, the restrictions in these indentures currently limit the ability of the operating partnership to make distributions to Ferrellgas Partners to enable it to pay cash distributions to its unitholders.

~~Debt and interest expense reduction strategy~~

We continue to pursue a strategy to reduce our debt and interest expense. Opportunities include the generation of additional cash flows through accretive acquisitions, continued restructuring or refinancing of existing indebtedness, selling additional assets, maintaining the suspension of Ferrellgas Partners’ common unit distributions, issuing equity or executing one or more debt exchanges. We expect to maintain our debt and interest expense reduction strategy until our consolidated leverage ratio reaches a level that we deem appropriate for our business.

Ferrellgas Partners has $357.0 million in unsecured notes due June 15, 2020, which Ferrellgas Partners failed to repay, that are classified as current in its condensed consolidated financial statements. Ferrellgas Partners’ ability to restructure, refinance or otherwise satisfy these notes is directly impacted by the cash flows of Ferrellgas, L.P. The ability of Ferrellgas Partners to restructure or refinance these notes is uncertain considering the level of other outstanding indebtedness.

~~Distributions~~

~~Table of Contents~~

~~distributions unless and until the outstanding notes of Ferrellgas Partners due 2020 are restructured, refinanced or otherwise satisfied.~~

How We Evaluate Our Operations

We evaluate our overall business performance based primarily on a metric we refer to as “Adjusted EBITDA”, which is not defined by GAAP and should not be considered an alternative to earnings measures defined by GAAP. We do not utilize depreciation, depletion and amortization expense in our key measures because we focus our performance management on cash flow generation and our revenue generating assets have long useful lives. For the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to ~~Net earnings (loss)~~net loss attributable to Ferrellgas Partners, L.P., the most directly comparable GAAP measure, see the subheading “Non-GAAP Financial Measures” below.

Table of Contents

Based on our propane sales volumes in fiscal ~~2020,~~2021, we believe that we are the second largest retail marketer of propane in the United States and a leading national provider of propane by portable tank exchange. We serve 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 retail distribution and sale of propane and related equipment and supplies with concentrations in the Midwest, Southeast, Southwest and Northwest regions of 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. Normal temperatures computed by us are the average of the last 10 years of information published by the National Oceanic and Atmospheric Administration. 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 primarily during the months of November through March (the “winter heating season”). 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 strong correlation between weather and customer usage, general economic conditions in the United States and the wholesale price of propane can have a significant impact on this correlation. Additionally, there is a natural time lag between the onset of cold weather and increased sales to customers. If the United States were to experience a cooling trend we could expect nationwide demand for propane to increase which could lead to greater sales, income and liquidity availability. Conversely, if the United States were to experience a continued warming trend, we could expect nationwide demand for propane for heating purposes to decrease which could lead to a reduction in our sales, income and liquidity availability as well as impact our ability to maintain compliance with our debt covenants.

We employ risk management activities that 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. We attempt to mitigate these price risks through the use of financial derivative instruments and forward propane purchase and sales contracts. 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.

Our open financial derivative propane purchase commitments are designated as hedges primarily for fiscal ~~2021~~2022 and 2023 sales commitments and, as of October 31, ~~2020,~~2021, we have experienced net mark-to-market gains of approximately ~~$5.6~~$140.1 million. Because these financial derivative purchase commitments qualify for hedge accounting treatment, the resulting asset, liability and related mark-to-market gains or losses are recorded on the condensed consolidated balance sheets as “Prepaid expenses and other current assets,” “Other assets, net,” “Other current liabilities,” "Other liabilities" and “Accumulated other comprehensive loss,” respectively, until settled. Upon settlement, realized gains or losses on these contracts will be reclassified to “Cost of sales-propane and other gas liquid sales” in the condensed consolidated statements of operations as the underlying inventory is sold. These financial derivative purchase commitment net gains are expected to be offset by decreased margins on propane sales commitments that qualify for the normal purchase normal sale exception. At October 31, ~~2020,~~2021, we estimate ~~92%~~77% of currently open financial derivative purchase commitments, the related propane sales commitments and the resulting gross margin will be realized into earnings during the next twelve months.

~~Table of Contents~~

Summary Discussion of Results of Operations:

Executive Overview

For the three months ended October 31, ~~2020~~2021 and ~~2019~~2020

During the three months ended October 31, ~~2020,~~2021, we recognized anet loss attributable to Ferrellgas Partners, L.P. of $8.6 million, compared to net loss attributable to Ferrellgas Partners, L.P. of $46.1 million ~~compared to a net loss attributable to Ferrellgas Partners, L.P. of $45.3 million~~ during the three months ended October 31, ~~2019.~~2020. This ~~slight increase~~decreased loss primarily reflects an ~~$8.5~~$8.7 million increase in “Gross margin – Propane and other gas liquid sales” and a $28.8 million decrease in “Interest expense.”

Table of Contents

“Interest expense” for Ferrellgas Partners decreased $28.8 million primarily due to (i) a decrease in interest on the Ferrellgas Partners Notes and (ii) lower interest expense ~~partially offset by an $7.1~~in 2021 as a result of the March 30, 2021 refinancing transactions.

Distributable cash flow attributable to equity investors increased to $15.3 million ~~increase in operating income. Operating income increased~~for the three months ended October 31, 2021 compared to $(22.4) million for the prior year period, primarily due to a ~~$4.1~~$32.6 million decrease in net cash interest expense and a $3.5 million increase in gross margin and a $2.1 million decrease in operating, general and administrative expenses. Interest expense increased primarily due to the net additional borrowings incurred in April 2020 related to the refinancing of our terminated Senior Secured Credit Facility with the issuance of the $700.0 million of notes due 2025 and to a lesser extent, increased interest rates on the new notes.Adjusted EBITDA.

Distributable cash flow ~~shortage decreased slightly~~excess increased to ~~$21.8~~$(2.4) million in the current period from ~~$22.7~~$(21.8) million in the prior year period, primarily due to a ~~$8.8~~$32.6 million ~~increase to our Adjusted EBITDA and a $1.3 million~~ decrease ~~in our maintenance capital expenditures, partially offset by a $9.1 million increase~~ in our net cash interest ~~expense.~~expense and a $3.5 million increase in Adjusted EBITDA, partially offset by a $17.0 million increase in distributions accrued or paid to preferred unitholders.

Consolidated Results of Operations


	Three months ended October 31,				Three months ended October 31,
(amounts in thousands)	2020		2019		2021		2020
Total revenues	$	300,894	$	293,214	$	394,506	$	300,894

Total cost of sales		141,294		137,709		224,148		141,294

Operating expense		109,027		114,543
Operating expense - personnel, vehicle, plant and other						117,112		109,027
Depreciation and amortization expense		21,390		19,219		20,295		21,390
General and administrative expense		13,080		9,695		12,575		13,080
Equipment lease expense		6,830		8,388
Operating expense - equipment lease expense						5,690		6,830
Non-cash employee stock ownership plan compensation charge		708		795		909		708
Loss on asset sales and disposals		813		2,235		1,410		813
Operating income		7,752		630		12,367		7,752
Interest expense		(54,226)		(45,697)		(25,395)		(54,226)
Other income (expense), net		108		(132)
Other income, net						4,264		108
Loss before income taxes		(46,366)		(45,199)		(8,764)		(46,366)
Income tax expense		87		518		96		87
Net loss		(46,453)		(45,717)		(8,860)		(46,453)
Net loss attributable to noncontrolling interest		(391)		(373)		(254)		(391)
Net loss attributable to Ferrellgas Partners, L.P.		(46,062)		(45,344)		(8,606)		(46,062)
Distribution to preferred unitholders						17,005		—
Less: General partner's interest in net loss		(461)		(453)		(86)		(461)
Common unitholders' interest in net loss	$	(45,601)	$	(44,891)
Class A Unitholders' interest in net loss					$	(25,525)	$	(45,601)

Non-GAAP Financial Measures

In this Quarterly Report we present the following Non-GAAP financial measures: Adjusted EBITDA, Distributable cash flow attributable to equity investors, Distributable cash flow attributable to ~~common unitholders,~~Class A and B Unitholders, and Distributable cash flow excess.

Adjusted EBITDA. Adjusted EBITDA for Ferrellgas Partners is calculated as net loss attributable to Ferrellgas Partners, L.P., plus the sum of the following: income tax expense, interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, loss on asset sales and disposals, other income, ~~(expense),~~ net, severance costs, legal fees and settlements related to non-core businesses, ~~lease accounting standard adjustment~~ and net loss attributable to noncontrolling interest. Management believes the presentation of this measure is relevant and useful because it allows investors to view the partnership’s performance in a manner similar to the method

~~Table of Contents~~

management uses, adjusted for items management believes make it easier to compare its results with other companies that have different financing and capital structures. ~~This method of calculating~~ Adjusted EBITDA, as management defines it, may not be comparable to ~~Adjusted EBITDA or~~ similarly titled measurements used by other companies. Items added into our calculation of Adjusted EBITDA that will not occur on a continuing basis may have associated cash payments. This method of calculating Adjusted EBITDA should be viewed in conjunction with measurements that are computed in accordance with GAAP.

Table of Contents

~~Distributable Cash Flow Attributable to Equity Investors~~Adjusted EBITDA. ~~Distributable cash flow attributable to equity investors~~Adjusted EBITDA for Ferrellgas Partners is calculated as ~~Adjusted EBITDA minus~~ net ~~cash~~loss attributable to Ferrellgas Partners, L.P., plus the sum of the following: income tax expense, interest expense, ~~maintenance capital expenditures~~depreciation and ~~cash paid for taxes, plus proceeds from certain~~amortization expense, non-cash employee stock ownership plan compensation charge, loss on asset ~~sales. Management considers distributable cash flow~~sales and disposals, other income, net, severance costs, legal fees and settlements related to non-core businesses, and net loss attributable to ~~equity~~noncontrolling interest. Management believes the presentation of this measure is relevant and useful because it allows investors ~~a meaningful measure of~~to view the partnership’s ~~ability~~performance in a manner similar to ~~declare~~the method management uses, adjusted for items management believes make it easier to compare its results with other companies that have different financing and ~~pay quarterly distributions to equity investors. Distributable cash flow attributable to equity investors,~~capital structures. Adjusted EBITDA, as management defines it, may not be comparable to ~~distributable cash flow attributable to equity investors or~~ similarly titled measurements used by other companies. Items added into our calculation of ~~distributable cash flow attributable to equity investors~~Adjusted EBITDA that will not occur on a continuing basis may have associated cash payments. ~~Distributable cash flow attributable to equity investors should be viewed in conjunction with measurements that are computed in accordance with GAAP.~~

~~Distributable Cash Flow Attributable to Common Unitholders~~. Distributable cash flow attributable to common unitholders is calculated as Distributable cash flow attributable to equity investors minus distributable cash flow attributable to general partner and noncontrolling interest. Management considers Distributable cash flow attributable to common unitholders a meaningful measureThis method of the partnership’s ability to declare and pay quarterly distributions to common unitholders. Distributable cash flow attributable to common unitholders, as management defines it, may not be comparable to distributable cash flow attributable to common unitholders or similarly titled measurements used by other companies. Items added into our calculation of distributable cash flow attributable to common unitholders that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to common unitholders should be viewed in conjunction with measurements that are computed in accordance with GAAP.

~~Distributable Cash Flow Excess (Shortage)~~. Distributable cash flow excess is calculated as Distributable cash flow attributable to common unitholders minus Distributions paid to common unitholders. Distributable cash flow excess, if any, is retained to establish reserves to reduce debt, fund capital expenditures and for other partnership purposes and any shortage is funded from previously established reserves, cash on hand or borrowings under our accounts receivable securitization facility or, previously, under our terminated Senior Secured Credit Facility. Management considers Distributable cash flow excess a meaningful measure of the partnership’s ability to effectuate those purposes. Distributable cash flow excess, as management defines it, may not be comparable to distributable cash flow excess or similarly titled measurements used by other companies. Items added into our calculation of distributable cash flow excess that will not occur on a continuing basis may have associated cash payments. Distributable cash flow excesscalculating Adjusted EBITDA should be viewed in conjunction with measurements that are computed in accordance with GAAP.

7067

Table of Contents

The following table reconciles Adjusted EBITDA, Distributable cash flow attributable to equity investors, Distributable cash flow attributable to common unitholders and Distributable cash flow excess (shortage) to Net loss attributable to Ferrellgas Partners, L.P., the most directly comparable GAAP measure, for the three and months ended October 31, 2020 and 2019:

Three months ended October 31,
(amounts in thousands)

2020

2019
Net loss attributable to Ferrellgas Partners, L.P.

$
(46,062)

$
(45,344)
Income tax expense

87

518
Interest expense

54,226

45,697
Depreciation and amortization expense

21,390

19,219
EBITDA

29,641

20,090
Non-cash employee stock ownership plan compensation charge

708

795
Loss on asset sales and disposals

813

2,235
Other income (expense), net

��
(108)

132
Legal fees and settlements related to non-core businesses

2,508

2,043
Severance costs

684

—
Lease accounting standard adjustment and other

—

170
Net loss attributable to noncontrolling interest

(391)

(373)
Adjusted EBITDA

33,855

25,092
Net cash interest expense (a)

(51,716)

(42,583)
Maintenance capital expenditures (b)

(5,177)

(6,467)
Cash paid for income taxes

(35)

—
Proceeds from certain asset sales

700

835
Distributable cash flow attributable to equity investors

(22,373)

(23,123)
Distributable cash flow attributable to general partner and non-controlling interest

575

462
Distributable cash flow attributable to common unitholders

(21,798)

(22,661)
Less: Distributions paid to common unitholders

—

—
Distributable cash flow shortage

$
(21,798)

$
(22,661)

~~(a)~~

Net cash interest expense is the sum of interest expense less non-cash interest expense and other income (expense), net. This amount includes interest expense related to the accounts receivable securitization facility.

~~(b)~~

~~Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment, and may include the purchase of assets that are typically leased.~~

~~Table of Contents~~

~~Operating Results for the three months ended October 31, 2020 and 2019~~

~~The following table summarizes propane sales volumes and Adjusted EBITDA results for the periods indicated:~~

2020

2019

Increase (Decrease)

As of October 31,

Retail customers

706,718

696,592

10,126

1
%
Tank exchange selling locations

62,226

55,952

6,274

11
%

(amounts in thousands)

Three months ended October 31,

Propane sales volumes (gallons):









Retail - Sales to End Users

118,018

129,901

(11,883)

(9)
%
Wholesale - Sales to Resellers

49,590

50,039

(449)

(1)
%

167,608

179,940

(12,332)

(7)
%
Revenues -









Propane and other gas liquids sales:









Retail - Sales to End Users

$
174,645

$
180,417

$
(5,772)

(3)
%
Wholesale - Sales to Resellers

102,612

82,704

19,908

24
%
Other Gas Sales (a)

3,792

10,264

(6,472)

(63)
%
Other (b)

19,845

19,829

16

0
%
Propane and related equipment revenues

$
300,894

$
293,214

$
7,680

3
%









Gross Margin -









Propane and other gas liquids sales gross margin: (c)









Retail - Sales to End Users (a)

$
90,734

$
97,936

$
(7,202)

(7)
%
Wholesale - Sales to Resellers (a)

52,688

41,421

11,267

27
%
Other (b)

16,178

16,148

30

0
%
Propane and related equipment gross profit

$
159,600

$
155,505

$
4,095

3
%









Operating, general and administrative expense (d)

$
122,107

$
124,238

$
(2,131)

(2)
%
Operating expense - equipment lease expense

6,830

8,388

(1,558)

(19)
%









Operating income

$
7,752

$
630

$
7,122

NM

Depreciation and amortization expense

21,390

19,219

2,171

11
%
Non-cash employee stock ownership plan compensation charge

708

795

(87)

(11)
%
Loss on asset sales and disposals

813

2,235

(1,422)

(64)
%
Legal fees and settlements related to non-core businesses

2,508

2,043

465

23
%
Severance costs

684

—

684

NM

Lease accounting standard adjustment and other (e)

—

170

(170)

NM

Adjusted EBITDA

$
33,855

$
25,092

$
8,763

35
%

~~NM – Not meaningful~~

~~(a)~~

~~Gross margin for Other Gas Sales is allocated to Gross margin "Retail - Sales to End Users" and "Wholesale - Sales to Resellers" based on the volumes in each respective category.~~

~~(b)~~

~~Other primarily includes various customer fee income and to a lesser extent appliance and material sales.~~

~~(c)~~

Gross margin from "Propane and other gas liquids sales" represents "Revenues - Propane and other gas liquids sales" less "Cost of sales - Propane and other gas liquids sales" and does not include depreciation and amortization.

~~(d)~~

Operating, general and administrative expense” above includes both the “Operating expense – personnel, vehicle, plant and other” and the “General and administrative expense” captions in the condensed consolidated statement of operations.

~~(e)~~

~~Lease accounting standard adjustment and other reflects the additional expense recognized in excess of cash paid.~~

~~Table of Contents~~

Propane sales volumes during the three months ended October 31, 2020 decreased 7%, or 12.3 million gallons, from the prior year period due to decreased sales volumes to retail customers. The decrease in propane sales volumes to retail customers was primarily due to the implementation of strategic initiatives that resulted in significant operating expense savings, but also resulted in fewer gallons delivered in the current period. These initiatives focus on more efficient deliveries that increase average gallons per stop but are not intended to impact gallons over time. Tank exchange gallons (which are classified as a “wholesale – sales to reseller” transaction) increased 27% due to increased residential demand for tank exchanges in connection with the change in customer usage, as well as increased sales of spare cylinder tanks, both influenced by the COVID-19 environment. This increase was offset by a 29% decline in volumes of bulk propane sold to our wholesale customers primarily due to the widespread slowdown of the economy due to COVID-19.

Our wholesale sales price per gallon partially correlates to the change in the wholesale market price of propane. The wholesale market price at major supply points in Mt. Belvieu, Texas during the three months ended October 31, 2020 averaged 16% more than the prior year period, while at the Conway, Kansas major supply point prices averaged 26% more than the prior year period. The wholesale market price at Mt. Belvieu, Texas averaged $0.51 and $0.44 per gallon during the three months ended October 31, 2020 and 2019, respectively, while the wholesale market price at Conway, Kansas averaged $0.48 and $0.38 per gallon during the three months ended October 31, 2020 and 2019, respectively. This increase in the wholesale cost of propane contributed to our increase in sales price per gallon and therefore revenues.

~~Revenues~~

Retail sales decreased $5.8 million compared to the prior year period. This decrease resulted from a $16.5 million decrease in sales volumes, partially offset by a $10.7 million increase in sales price per gallon, both as discussed above.

~~Wholesale sales increased $19.9 million compared to the prior year period. The increase in sales was primarily due to the increases in tank exchange sales volumes as discussed above.~~

~~Other gas sales decreased $6.5 million compared to the prior year period primarily due to decreased gallon sales for inventory management purposes.~~

~~Gross margin - Propane and other gas liquids sales~~

Gross margin increased $4.1 million primarily due to the increase in increased tank exchange sales volumes and to a lesser extent increased gross margin per gallon, partially offset by the decreased volumes sales, each as discussed above. The $11.3 million increase in wholesale gross margin primarily relates to increased tank exchange sales volumes, as discussed above and to a lesser extent increased gross margin per gallon due to the change in sales mix due to increased spare cylinder sales. The decrease in retail gross margin of $7.2 million resulted primarily from a $9.0 million decrease in sales volumes, as discussed above, partially offset by a $1.8 million increase in gross margin per gallon.

~~Operating income~~

Operating income increased $7.1 million primarily due to a $4.1 million increase in "Gross margin - Propane and other gas liquid sales", as discussed above, and a $2.1 million decrease in “Operating, general and administrative expense”. “Operating, general and administrative expense” decreased due to a $5.5 million decrease in “Operating expense – personnel, vehicle, plant and other”, partially offset by a $3.4 million increase in “General and administrative expense”. “Operating expense – personnel, vehicle, plant and other” decreased primarily due to a $3.6 million decrease in vehicle fuel and other vehicle costs, $3.1 million decrease in field personnel costs and $1.8 million in decreased plant and office costs, partially offset by a $2.9 million increase in general liability and workers compensation costs. “General and administrative expense” increased primarily due to a $3.2 million increase in legal costs.

Adjusted EBITDA

. Adjusted EBITDA for Ferrellgas Partners is calculated as net loss attributable to Ferrellgas Partners, L.P., plus the sum of the following: income tax expense, interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, loss on asset sales and disposals, other income, net, severance costs, legal fees and settlements related to non-core businesses, and net loss attributable to noncontrolling interest. Management believes the presentation of this measure is relevant and useful because it allows investors to view the partnership’s performance in a manner similar to the method management uses, adjusted for items management believes make it easier to compare its results with other companies that have different financing and capital structures. Adjusted EBITDA, as management defines it, may not be comparable to similarly titled measurements used by other companies. Items added into our calculation of Adjusted EBITDA that will not occur on a continuing basis may have associated cash payments. This method of calculating Adjusted EBITDA should be viewed in conjunction with measurements that are computed in accordance with GAAP.

Table of Contents

Distributable Cash Flow Attributable to Equity Investors. Distributable cash flow attributable to equity investors is calculated as Adjusted EBITDA minus net cash interest expense, maintenance capital expenditures and cash paid for income taxes, plus proceeds from certain asset sales. Management considers distributable cash flow attributable to equity investors a meaningful measure of Ferrellgas’ ability to declare and pay quarterly distributions to equity investors, including holders of the operating partnership’s Preferred Units. Distributable cash flow attributable to equity investors, as management defines it, may not be comparable to similarly titled measurements used by other companies. Items added into our calculation of distributable cash flow attributable to equity investors that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to equity investors should be viewed in conjunction with measurements that are computed in accordance with GAAP.

Distributable Cash Flow Attributable to Class A and B Unitholders. Distributable cash flow attributable to Class A and B Unitholders is calculated as Distributable cash flow attributable to equity investors minus distributions accrued or paid to Preferred Unitholders and distributable cash flow attributable to general partner and noncontrolling interest. Management considers Distributable cash flow attributable to Class A and B Unitholders a meaningful measure of the partnership’s ability to declare and pay quarterly distributions to Class A and B Unitholders. Distributable cash flow attributable to Class A and B Unitholders, as management defines it, may not be comparable to similarly titled measurements used by other companies. Items added into our calculation of distributable cash flow attributable to Class A and B Unitholders that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to Class A and B Unitholders should be viewed in conjunction with measurements that are computed in accordance with GAAP.

Distributable Cash Flow Excess. Distributable cash flow excess is calculated as Distributable cash flow attributable to Class A and B Unitholders minus Distributions paid to Class A and B Unitholders. Distributable cash flow excess, if any, is retained to establish reserves, to reduce debt, to fund capital expenditures and for other partnership purposes and any shortage is funded from previously established reserves, cash on hand or borrowings under our Credit Facility or, previously, under our terminated accounts receivable securitization facility. Management considers Distributable cash flow excess a meaningful measure of the partnership’s ability to effectuate those purposes. Distributable cash flow excess, as management defines it, may not be comparable to similarly titled measurements used by other companies. Items added into our calculation of distributable cash flow excess that will not occur on a continuing basis may have associated cash payments. Distributable cash flow excess should be viewed in conjunction with measurements that are computed in accordance with GAAP.

Table of Contents

The following table reconciles Adjusted EBITDA, Distributable cash flow attributable to equity investors, Distributable cash flow attributable to Class A and B Unitholders and Distributable cash flow excess to Net loss attributable to Ferrellgas Partners, L.P., the most directly comparable GAAP measure, for the three months ended October 31, 2021 and 2020:


	Three months ended October 31,
(amounts in thousands)	2021		2020
Net loss attributable to Ferrellgas Partners, L.P.	$	(8,606)	$	(46,062)
Income tax expense		96		87
Interest expense		25,395		54,226
Depreciation and amortization expense		20,295		21,390
EBITDA		37,180		29,641
Non-cash employee stock ownership plan compensation charge		909		708
Loss on asset sales and disposals		1,410		813
Other income, net		(4,264)		(108)
Severance costs		216		684
Legal fees and settlements related to non-core businesses		2,131		2,508
Net loss attributable to noncontrolling interest		(254)		(391)
Adjusted EBITDA		37,328		33,855
Net cash interest expense (a)		(19,119)		(51,716)
Maintenance capital expenditures (b)		(3,579)		(5,177)
Cash paid for income taxes		—		(35)
Proceeds from certain asset sales		641		700
Distributable cash flow attributable to equity investors		15,271		(22,373)
Less: Distributions accrued or paid to preferred unitholders		17,345		—
Distributable cash flow attributable to general partner and non-controlling interest		(340)		575
Distributable cash flow attributable to Class A and B Unitholders		(2,414)		(21,798)
Less: Distributions paid to Class A and B Unitholders		—		—
Distributable cash flow excess	$	(2,414)	$	(21,798)

(a)	Net cash interest expense is the sum of interest expense less non-cash interest expense and other income, net. This amount includes interest expense related to the terminated accounts receivable securitization facility.

(b)	Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment, and may from time to time include the purchase of assets that are typically leased.

Table of Contents

Operating Results for the three months ended October 31, 2021 and 2020

The following table summarizes propane sales volumes and Adjusted EBITDA results for the periods indicated:


	2021		2020		Increase (Decrease)
As of October 31,
Retail customers		686,752		706,718		(19,966)	(3)	%
Tank exchange selling locations		60,945		62,226		(1,281)	(2)	%

(amounts in thousands)
Three months ended October 31,
Propane sales volumes (gallons):
Retail - Sales to End Users		115,825		118,018		(2,193)	(2)	%
Wholesale - Sales to Resellers		44,055		49,590		(5,535)	(11)	%
		159,880		167,608		(7,728)	(5)	%
Revenues -
Propane and other gas liquids sales:
Retail - Sales to End Users	$	252,510	$	174,645	$	77,865	45	%
Wholesale - Sales to Resellers		113,971		102,612		11,359	11	%
Other Gas Sales (a)		6,223		3,792		2,431	64	%
Other (b)		21,802		19,845		1,957	10	%
Propane and related equipment revenues	$	394,506	$	300,894	$	93,612	31	%

Gross Margin -
Propane and other gas liquids sales gross margin: (c)
Retail - Sales to End Users (a)	$	100,282	$	90,734	$	9,548	11	%
Wholesale - Sales to Resellers (a)		51,884		52,688		(804)	(2)	%
Other (b)		18,192		16,178		2,014	12	%
Propane and related equipment gross profit	$	170,358	$	159,600	$	10,758	7	%

Operating, general and administrative expense (d)	$	129,687	$	122,107	$	7,580	6	%
Operating expense - equipment lease expense		5,690		6,830		(1,140)	(17)	%

Operating income	$	12,367	$	7,752	$	4,615	60	%

Depreciation and amortization expense		20,295		21,390		(1,095)	(5)	%
Non-cash employee stock ownership plan compensation charge		909		708		201	28	%
Loss on asset sales and disposals		1,410		813		597	73	%
Legal fees and settlements related to non-core businesses		2,131		2,508		(377)	(15)	%
Severance costs		216		684		(468)	NM
Adjusted EBITDA	$	37,328	$	33,855	$	3,473	10	%

NM – Not meaningful

(a)	Gross margin for Other Gas Sales is allocated to Gross margin "Retail - Sales to End Users" and "Wholesale - Sales to Resellers" based on the volumes in each respective category.

(b)	Other primarily includes various customer fee income and to a lesser extent appliance and material sales.

(c)	Gross margin from "Propane and other gas liquids sales" represents "Revenues - Propane and other gas liquids sales" less "Cost of sales - Propane and other gas liquids sales" and does not include depreciation and amortization.

(d)	“Operating, general and administrative expense” above includes both the “Operating expense – personnel, vehicle, plant and other” and the “General and administrative expense” captions in the condensed consolidated statement of operations.

Table of Contents

Propane sales volumes during the three months ended October 31, 2021 decreased 5%, or 7.7 million gallons, from the prior year period due to decreased sales volumes to retail customers and to decreased sales volumes to tank exchange customers.

Our wholesale sales price per gallon partially correlates to the change in the wholesale market price of propane. The wholesale market price at major supply points in Mt. Belvieu, Texas during the three months ended October 31, 2021 averaged 151% more than the prior year period, while at the Conway, Kansas major supply point prices averaged 169% more than the prior year period. The wholesale market price at Mt. Belvieu, Texas averaged $1.28 and $0.51 per gallon during the three months ended October 31, 2021 and 2020, respectively, while the wholesale market price at Conway, Kansas averaged $1.29 and $0.48 per gallon during the three months ended October 31, 2021 and 2020, respectively. This increase in the wholesale cost of propane contributed to our increase in sales price per gallon and therefore revenues.

Revenues

Retail sales increased ~~$8.8~~$77.9 million compared to the prior year period due to continued focus on the management of the sales lifecycle, from asset utilization through final mile optimization.

Wholesale sales increased $11.4 million compared to the prior year period as a result of an increase in volume in non-retail opportunities.

Other gas sales increased $2.4 million and other revenues increased $2.0 million compared to the prior year period, respectively. Both of these increases are primarily due to revenue from services to customers provided in support of final mile operations.

Gross margin - Propane and other gas liquids sales

Gross margin increased $8.7 million primarily due to a ~~$4.1~~$91.6 million increase in revenue, as discussed above, offset by an $82.9 million increase in related cost of sales as a result of increases in price per gallon.

Gross margin - other

Gross margin increased $2.0 million compared to the prior year period primarily due to increased miscellaneous fees billed to customers and increased tank rental income.

Operating income

Operating income increased $4.6 million primarily due to an $8.7 million increase in "Gross margin - Propane and other gas liquid sales", and a $2.0 million increase in “Gross margin – other,” both as discussed above, and a ~~$3.3~~$1.1 million decrease in “Operating expense – equipment lease expense”, which is partially offset by a $7.6 million increase in “Operating, general and administrative expense”. The decrease in “Operating expense – equipment lease expense” was due to our entering into more finance leases instead of operating leases, resulting in less lease expense and greater interest expense and amortization expense. “Operating, general and administrative expense” ~~decreased~~increased due to ~~a $6.1~~an $8.1 million ~~decrease~~increase in “Operating expense – personnel, vehicle, plant and other”, partially offset by a ~~$2.8~~$0.5 million ~~increase~~decrease in “General and administrative expense”. “Operating expense – personnel, vehicle, plant and other” ~~decreased~~increased primarily due to planned increases for workforce .

Adjusted EBITDA

Adjusted EBITDA increased $3.5 million primarily due to an $8.7 million increase in "Gross margin - Propane and other gas liquid sales", a ~~$3.6~~$2.0 million increase in “Gross margin – other,” and a $1.1 million decrease in ~~field~~

~~Table of Contents~~

~~personnel costs, a $3.6 million decrease in vehicle fuel and other vehicle costs and $1.8 million in decreased plant and office costs,~~“Operating expense – equipment lease expense”, each as discussed above, which is partially offset by a ~~$2.9~~$7.6 million increase in “Operating, general ~~liability~~ and ~~workers compensation costs. “General~~administrative expense”. “Operating, general and administrative expense” increased due to an $8.1 million increase in “Operating expense – personnel, vehicle, plant and other”, partially offset by a $0.5 million decrease in “General and administrative expense”. “Operating expense – personnel, vehicle, plant and other” increased primarily due to ~~a $2.7 million increase in legal costs.~~planned increases for workforce.

Table of Contents

Liquidity and Capital Resources

General

Our primary sources of liquidity and capital resources are cash flows from operating activities, our ~~accounts receivable securitization facility~~Credit Facility and funds received from sales of debt and equity securities. As of October 31, ~~2020,~~2021, our total liquidity was ~~$228.6~~$409.9 million, which iswas comprised of ~~$202.6~~$157.4 million in unrestricted cash and ~~$26.0~~$252.5 million of availability under our ~~accounts receivable securitization facility.~~Credit Facility. These sources of liquidity and ~~short term~~short-term capital resources are intended to fund our working capital requirements, acquisitions and capital expenditures, and may be used to repay or redeem outstanding indebtedness to the extent permitted by the covenants under the indentures governing our outstanding senior notes, including the covenants described under the “Financial Covenants” subheading above.expenditures. As of October 31, ~~2020,~~2021, letters of credit outstanding totaled ~~$127.1~~$97.5 million. Our access to ~~long term~~long-term capital resources, ~~in order~~ to ~~address our leverage,~~the extent needed to refinance debt or for other purposes, may be affected by our ability to access the capital markets, covenants in our debt agreements and other financial obligations, unforeseen demands on cash, or other events beyond our control.

As of October 31, ~~2020,~~2021, we had ~~$96.9~~$11.5 million of restricted cash ~~which includes $79.4 million~~consisting of ~~pledged cash collateral for letters of credit outstanding, an $11.5 million~~a cash deposit made with the administrative agent under ~~the~~our prior senior secured credit facility that was terminated ~~Senior Secured Credit Facility, and $6.0 million of additional pledged collateral.~~

We believe that the liquidity available from cash flows from operating activities, unrestricted cash, the accounts receivable securitization facility and proceeds from sales of debt and equity securities, combined with our debt and interest expense reduction initiatives, will be sufficient to meet our capital expenditure, working capital and letter of credit requirements. However, as discussed above, Ferrellgas Partners has $357.0 million in unsecured notes due June 15, 2020, which Ferrellgas Partners failed to repay, that are classified as current in its condensed consolidated financial statements. Additionally, the operating partnership has $500.0 million in unsecured notes due May 1, 2021, that are also classified as current in the condensed consolidated financial statements. Ferrellgas Partners’ ability to restructure, refinance or otherwise satisfy these notes is uncertain considering the level of other outstanding indebtedness. We have engaged Moelis & Company LLC as our financial advisor and the law firm of Squire Patton Boggs LLP to assist in our ongoing process to reduce existing debt and address our debt maturities.

~~Financial Covenants~~

As more fully described in this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations under the subheading “Financial Covenants” above, the indenture governing the outstanding notes of Ferrellgas Partners and the agreements governing the operating partnership’s indebtedness contain various covenants that limit our ability to, among other things, incur additional indebtedness and make distribution payments to our common unitholders. Given the limitations of these covenants, we continue to pursue a strategy to reduce our debt and interest expense. If we are unsuccessful with our strategy to reduce debt and interest expense, we will continue to be restricted from making distribution payments to our common unitholders.

~~We may not meet the applicable financial tests in future quarters if we were to experience:~~

●

~~significantly warmer than normal temperatures during the winter heating season;~~

●

~~significant and sustained increases in the wholesale cost of propane that we are unable to pass along to our customers;~~

●

~~a more volatile energy commodity cost environment;~~

●

~~an unexpected downturn in business operations;~~

~~Table of Contents~~

●

~~a significant delay in the collection of accounts or notes receivable;~~

●

~~a failure to execute our debt and interest expense reduction initiatives;~~

●

~~a change in customer retention or purchasing patterns due to economic or other factors in the United States;~~

●

~~a material downturn in the credit and/or equity markets; or~~

●

~~a large uninsured, unfavorable lawsuit judgment or settlement.~~

~~We may seek additional capital as part of our debt reduction strategy.~~

As discussed above, no distributions will be paid to common unitholders for the three months ended October 31, 2020, and the general partner expects that Ferrellgas Partners will continue to be prohibited from making common unit distributions unless and until the outstanding notes of Ferrellgas Partners due 2020 are restructured, refinanced or otherwise satisfied. Unless the indenture governing the outstanding notes due 2020 is amended or replaced, or Ferrellgas Partners’ consolidated fixed charge coverage ratio improves to at least 1.75x, this covenant will continue to restrict us from making common unit distributions.

~~Distributable Cash Flow~~

Distributable cash flow attributable to equity investors is reconciled to net earnings (loss) attributable to Ferrellgas Partners, L.P., the most directly comparable GAAP measure, in this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations under the subheading "Non-GAAP Financial Measures" above. A comparison of distributable cash flow attributable to equity investors to cash distributions paid to equity investors for the twelve months ended October 31, 2020 to the twelve months ended July 31, 2020 is as follows (in thousands):

Distributable

Cash reserves

Cash distributions


cash flow attributable

(deficiency) approved

paid to

DCF ratio

to equity investors

by our General Partner

equity investors

(a) (b)
Three months ended October 31, 2020

$
(22,373)

$
(22,373)

$
—

Fiscal 2020

63,702

63,544

158

Less: Three months ended October 31, 2019

(23,123)

(23,124)

1

Twelve months ended October 31, 2020

$
64,452

$
64,295

$
157

NM

Twelve months ended July 31, 2020

63,702

63,544

158

NM
Change

$
750

$
751

$
(1)

NM

~~(a)~~

~~DCF ratio is calculated as Distributable cash flow attributable to equity investors divided by Cash distributions paid to equity investors.~~

~~(b)~~

~~NM – Not Meaningful.~~

~~For the twelve months ended October 31, 2020, distributable cash flow attributable to equity investors increased $0.8 million compared to the twelve months ended July 31,~~April 2020. No cash distributions have been paid to our common unitholders since the three months ended October 31, 2018. Thus, cash reserves, which we utilize to meet future anticipated expenditures, increased by $64.3 million during the twelve months ended October 31, 2020, compared to an increase of $63.5 million in the twelve months ended July 31, 2020.

During periods of high volatility, our risk management activities may expose us to the risk of counterparty margin calls in amounts greater than we have the capacity to fund. Likewise, our counterparties may not be able to fulfill their margin calls from us or may default on the settlement of positions with us.

Our working capital requirements are subject to, among other things, the price of propane, delays in the collection of receivables, volatility in energy commodity prices, liquidity imposed by insurance providers, downgrades in our credit ratings, decreased trade credit, significant acquisitions, the weather, customer retention and purchasing patterns and other changes in the demand for propane. Relatively colder weather or higher propane prices during the winter heating season are factors that could significantly increase our working capital requirements.

~~Table~~Our material known cash requirements continue to be our long-term debt, including current portion, and fixed rate interest obligations. These obligations reflect the operating partnership’s issuance of ~~Contents~~the $650.0 million aggregate principal amount of 2026 Notes and the $825.0 million aggregate principal amount of 2029 Notes and the other transactions effected on the Effective Date.

Our ability to satisfy our obligations is dependent upon our future performance, which will be subject to prevailing weather, economic, financial and business conditions and other factors, many of which are beyond our control. Due to the seasonality of the retail propane distribution business, a significant portion of our propane operations and related products cash flows from operations is generated during the winter heating season. Our net cash provided by operating activities primarily reflects earnings from our business activities adjusted for depreciation and amortization and changes in our working capital accounts. Historically, we generate significantly lower net cash from operating activities in our first and fourth fiscal quarters as compared to the second and third fiscal quarters due to the seasonality of our propane operations and related equipment sales operations.

We believe that the liquidity available from cash flows from operating activities, unrestricted cash and the Credit Facility will be sufficient to meet our capital expenditure, working capital and letter of credit requirements for the foreseeable future.

Table of Contents

Distributable Cash Flow

Distributable cash flow attributable to equity investors is reconciled to net loss attributable to Ferrellgas Partners, L.P., the most directly comparable GAAP measure, in this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations under the subheading "Non-GAAP Financial Measures" above. A comparison of distributable cash flow attributable to equity investors to cash distributions accrued or paid to equity investors for the twelve months ended October 31, 2021 to the twelve months ended July 31, 2021 is as follows (in thousands):


	Distributable		Cash reserves		Cash distributions
	cash flow attributable		(deficiency) approved		accrued or paid to		DCF ratio
	to equity investors		by our General Partner		equity investors		(a) (b)
Three months ended October 31, 2021	$	15,271	$	(2,074)	$	17,345	0.9
Fiscal 2021		135,654		111,630		24,024
Less: Three months ended October 31, 2020		(22,373)		(22,373)		—
Twelve months ended October 31, 2021	$	173,298	$	131,929	$	41,369	4.2

Twelve months ended July 31, 2021		135,654		111,630		24,024	5.6
Change	$	37,644	$	20,299	$	17,345	2.2

(a)

DCF ratio is calculated as Distributable cash flow attributable to equity investors divided by Cash distributions accrued or paid to equity investors.

(b)

NM – Not Meaningful.

For the twelve months ended October 31, 2021, distributable cash flow attributable to equity investors increased $37.6 million compared to the twelve months ended July 31, 2021. As of October 31, 2021, the accrued quarterly distribution to Preferred Unitholders was $17.3 million. We paid $15.1 million of this distribution in November 2021. The remaining $2.2 million remains accrued as Tax Distributions as defined below under “Financing Activities – Distributions – Preferred unit distribution”. No cash distributions have been paid to our Class A Unitholders since the three months ended October 31, 2018. Thus, cash reserves, which we utilize to meet future anticipated expenditures, increased to $131.9 million during the twelve months ended October 31, 2021, compared to $111.6 million in the twelve months ended July 31, 2021.

Operating Activities

Ferrellgas Partners

Net cash used in operating activities was $15.3 million for the three months ended October 31, 2021, compared to net cash used in operating activities of $11.5 million for the three months ended October 31, ~~2020, compared to net cash provided by operating activities of $7.1 million for the three months ended October 31, 2019.~~2020. This ~~decrease~~increase in cash ~~provided~~used by operating activities was primarily due to a ~~$20.7~~$38.2 million increase in working capital requirements and a ~~$1.7~~$2.4 million ~~decrease in cash flow from operations, partially offset by a $3.8 million inflow~~outflow associated with other assets and other ~~liabilities.~~liabilities, partially offset by a $36.8 million increase in cash flow from operations.

The increase in working capital requirements for the three months ended October 31, ~~2020~~2021 compared to the three months ended October 31, ~~2019~~2020 was primarily due to a ~~$19.3~~$36.6 million ~~decrease~~increase in requirements for inventory partially due to rising propane prices in the current period, a $35.5 million increase in accrued interest expense related to the timing and nature of the restructuring transactions in March 2021 and the debt refinancing in April 2020, a ~~$4.3~~$20.2 million increase in requirements for prepaid expenses and other current assets and a $13.8 million increase in requirements for accounts and notes receivable due to rising propane prices in the ~~current~~ quarter that was partially offset by slight decreases in ~~the~~ volume of propane ~~sold,~~sold. These increases were partially offset by a ~~$1.8~~$46.2 million decrease in requirements for other current liabilities and a $21.6 million decrease in accounts payable.

The increase in cash flow from operations was primarily due to a $28.8 million decrease in "Interest expense", a $10.8 million increase in gross profit, and an increase of $4.2 million in “Other income, net”, partially offset by a net increase in “Operating expense – personnel, vehicle, plant and other” and “Operating expense – equipment lease expense” of $6.9 million.

Table of Contents

The operating partnership

Net cash used in operating activities was $15.2 million for the three months ended October 31, 2021, compared to net cash used in operating activities of $11.5 million for the three months ended October 31, 2020. This increase in cash used by operating activities was primarily due to a $30.5 million increase in working capital requirements and a $3.1 million outflow associated with other assets and other liabilities, partially offset by a $29.8 million increase in cash flow from operations.

The increase in working capital requirements for the three months ended October 31, 2021 compared to the three months ended October 31, 2020 was primarily due to a $36.6 million increase in requirements for inventory partially due to rising propane prices in the current period, a $27.8 million increase in accrued interest expense related to the timing and nature of the restructuring transactions in March 2021 and the debt refinancing in April 2020, a ~~$2.1~~$20.2 million increase in requirements for ~~other current liabilities, partially offset by a $7.7 million decrease in~~ prepaid expenses and other current ~~assets.~~

The decrease in cash flow from operations was primarily due to an $8.5 million increase in "Interest expense," as well as a $3.4 million increase in "General and administrative expense", partially offset by a net decrease in "Operating expense – personnel, vehicle, plant and other" and "Operating expense – equipment lease expense" of $7.1 millionassets, and a ~~$4.1 million increase in gross profit.~~

~~The operating partnership~~

Net cash used in operating activities was $11.5 million for the three months ended October 31, 2020, compared to net cash provided by operating activities of $7.1 million for the three months ended October 31, 2019. This decrease in cash provided by operating activities was primarily due to a $20.7 million increase in working capital requirements and a $1.2 million decrease in cash flow from operations, partially offset by a $3.8 million inflow associated with other assets and other liabilities.

The increase in working capital requirements for the three months ended October 31, 2020 compared to the three months ended October 31, 2019 was primarily due to a $19.3 million decrease in accrued interest expense, a $4.3$13.8 million increase in requirements for accounts and notes receivable due to rising propane prices in the ~~current~~ quarter that was partially offset by slight decreases in ~~the~~ volume of propane ~~sold,~~sold. These increases were partially offset by a ~~$1.8~~$46.2 million ~~increase in requirements for inventory partially due to rising propane prices in the current period, and a $2.1 million increase~~decrease in requirements for other current liabilities ~~partially offset by~~and a ~~$7.6~~$21.6 million decrease in ~~prepaid expenses and other current assets.~~

accounts payable.

The ~~decrease~~increase in cash flow from operations was primarily due to a ~~$9.7~~$21.1 million decrease in "Interest expense", a $10.8 million increase in ~~"Interest expense," as well as a $3.4~~gross profit, and an increase of $4.8 million ~~increase~~ in ~~"General and administrative expense"~~“Other income, net”, partially offset by a net ~~decrease~~increase in ~~"Operating~~“Operating expense – personnel, vehicle, plant and ~~other"~~other” and ~~"Operating~~“Operating expense – equipment lease ~~expense"~~expense” of ~~$7.1 million and a $4.1 million increase in gross profit.~~$6.9 million.

~~Table of Contents~~

Investing Activities

Ferrellgas Partners

Capital Requirements

Our business requires continual investments to upgrade or enhance existing operations and to ensure compliance with safety and environmental regulations. Capital expenditures for our business consist primarily of:

●

Maintenance capital expenditures. These capital expenditures include expenditures for betterment and replacement of property, plant and equipment, and may from time to time ~~may~~ include the purchase of assets that are typically leased, rather than to generate incremental distributable cash flow. Examples of maintenance capital expenditures include a routine replacement of a worn-out asset or replacement of major vehicle components; and

●

Growth capital expenditures. These expenditures are undertaken primarily to generate incremental distributable cash flow. Examples include expenditures for purchases of both bulk and portable propane tanks and other equipment to facilitate expansion of our customer base and operating capacity.

Net cash used in investing activities was $29.6 million for the three months ended October 31, 2021, compared to net cash used in investing activities of $18.0 million for the three months ended October 31, ~~2020, compared to net cash used in investing activities of $34.7 million for the three months ended October 31, 2019.~~2020. This ~~decrease~~increase in net cash used in investing activities was primarily due to a ~~$16.9~~$9.8 million ~~decrease in “Cash payments to construct assets in connection with future lease transactions” and a $6.4 million decrease~~increase in “Business acquisitions, net of cash acquired”~~, partially offset by a $5.9 million decrease in “Cash receipts in connection with leased vehicles”~~ and a ~~$1.3~~$1.0 million increase in “Capital expenditures”.

The increase in "Capital expenditures" was primarily due to a slight increase in maintenance capital expenditures, as growth capital expenditures remained flat during the three months ended October 31, 2020. The slight increase in maintenance capital expenditures was primarily related to the purchase of tank exchange plant equipment during the three months ended October 31, 2020.

Due to the mature nature of our operations we do not anticipate significant fluctuations in maintenance capital expenditures, with the exception of future decisions regarding lease versus buy financing options. However, future fluctuations in growth capital expenditures could occur due to the opportunistic nature of these projects.

The operating partnership

The investing activities discussed above also apply to the operating ~~partnership.~~partnership, other than the net activity of the term loan credit agreement with Ferrellgas Partners, L.P. See “Disclosures about Effects of Transactions with Related Parties” below for further discussion.

Table of Contents

Financing Activities

Ferrellgas Partners

Net cash used in financing activities was $68.3 million for the three months ended October 31, 2021, compared to net cash used in financing activities of $4.7 million for the three months ended October 31, ~~2020, compared to net~~2020. This increase in cash ~~provided by~~flow used in financing activities was primarily due to $15.7 million in preferred unit distributions and $50.0 million in distributions to Class B unitholders, both of ~~$46.3 million for~~which occurred in the three months ended October 31, 2019. This decrease in cash flow provided by financing activities was primarily due to a $48.0 million net decrease in short-term borrowings, a $1.7 million increase in cash payments for the principal portion of finance lease liabilities and a $1.2 million increase in cash paid for financing costs.2021.

Letters of credit outstanding at October 31, ~~2020~~2021 and July 31, ~~2020~~2021 totaled ~~$127.1~~$97.5 million and ~~$126.0~~$107.7 million, respectively, and were used to secure insurance arrangements, product purchases and commodity hedges. At October 31, 2020 and July 31, 2020 we had $79.4 million and $78.2 million of restricted cash pledged as cash collateral for letters of credit outstanding, respectively. Additionally, at both October 31, 2020 and July 31, 2020, we also issued letters of credit of $50.0 million by utilizing our liquidity available on the accounts receivable securitization facility.

~~Table of Contents~~

~~Accounts receivable securitization facility~~

We utilize an accounts receivable securitization facility for the purpose of providing additional short-term working capital funding, especially during the winter heating months. As part of this facility, we transfer an interest in a pool of our trade accounts receivable to Ferrellgas Receivables, LLC, a consolidated and wholly-owned, qualifying special purpose subsidiary, which in turn sells this interest to certain financial institutions. We remit daily to Ferrellgas Receivables, LLC funds collected on its pool of trade accounts receivables. Expenses associated with these accounts receivable securitization transactions are recorded in “Interest expense” in the condensed consolidated statements of operations. Additionally, borrowings and repayments associated with these transactions are recorded in “Cash flows from financing activities” in the condensed consolidated statements of cash flows.

Cash flows from our accounts receivable securitization facility decreased $11.0 million, as we reduced our net funding to zero from this facility during the three months ended October 31, 2020 as compared to receiving net funding of $11.0 million from this facility during the three months ended October 31, 2019. As noted above, during the fourth quarter of fiscal 2020, we issued letters of credit of $50.0 million by utilizing our liquidity available on the accounts receivable securitization facility. These letters of credit remain outstanding.

Our utilization of the accounts receivable securitization facility is limited by the amount of accounts receivable that we are permitted to securitize according to the agreement governing our accounts receivable securitization facility (the “Purchase Agreement”). As our trade accounts receivable increase during the winter heating season, the facility permits us to receive greater proceeds as eligible trade accounts receivable increase, thereby providing additional cash for working capital needs. Specifically, the aggregate amount of proceeds we are able to receive under the facility is equal to the lesser of (1) the balance of our eligible trade accounts receivable (reduced in certain circumstances based on the concentration of customers owing such accounts receivable) less specified reserve amounts and (2) the seasonally adjusted total commitments of the purchasers under the facility. The total commitments of the purchasers are $250.0 million during the months of December through March, $200.0 million during the months of November, April and May, and $150.0 million during the months of June through October. This facility matures in May 2021 and includes an option, at our request and consent, for the purchasers in their sole discretion to extend the facility for up to an additional three years.

As of October 31, ~~2020,~~2021, we had ~~no cash proceeds from~~available borrowing capacity under our ~~trade accounts receivables securitized, with $26.0 million remaining capacity to receive additional proceeds or issue letters~~Credit Facility of ~~credit.~~$252.5 million.

~~Distributions~~

~~No distribution will be made for the three months ended October 31, 2020.~~

The general partner expects that Ferrellgas Partners will continue to be prohibited from making common unit distributions for any future quarterly period unless and until the outstanding notes of Ferrellgas Partners due 2020 are restructured, refinanced or otherwise satisfied.

The operating partnership

The financing activities discussed above also apply to the operating partnership except for cash flows related to distributions paid, as discussed below.

~~Cash~~Distributions

Partnership distributions ~~paid~~

The Sixth Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners, L.P. (the “Amended Ferrellgas Partners LPA”) requires Ferrellgas Partners to make quarterly cash distributions of all of its “available cash”. Available cash is defined in the Amended Ferrellgas Partners LPA as, generally, the sum of Ferrellgas’ Partners cash receipts less consolidated cash disbursements and net changes in reserves established by our general partner for future requirements. In general, the amount of Ferrellgas Partners’ available cash depends primarily on whether and the extent to which Ferrellgas Partners receives cash distributions from the operating partnership, ~~did~~as such distributions generally would be Ferrellgas Partners’ only significant cash receipts.

Pursuant to the Amended Ferrellgas Partners LPA, while any Class B Units remain outstanding, any distributions by Ferrellgas Partners to its partners must be made such that the ratio of (i) the amount of distributions made to holders of Class B Units to (ii) the amount of distributions made to holders of Class A Units and the general partner is not less than 6:1. The Amended Ferrellgas Partners LPA permits Ferrellgas Partners, in the general partner’s discretion, to make distributions to the Class B Unitholders in a greater proportion than the minimum 6:1 ratio, including paying 100% of any such distribution Class B Unitholders. The Class B Units will not be convertible into Class A Units until Class B Unitholders receive distributions in the aggregate amount of $357.0 million (which was the outstanding principal amount of the Ferrellgas Partners Notes), and the rate at which Class B Units will convert into Class A Units increases annually. Additionally, the price at which Ferrellgas Partners may redeem the Class B Units during the first five years after March 30, 2021 (the “Effective Date”) is based on the Class B Unitholders’ receipt of a specified internal rate of return in respect of their Class B Units. This specified internal rate of return in respect of the Class B Units is 15.85%, but that amount increases under certain circumstances, including if the operating partnership paid distributions on the Preferred Units in-kind rather than in cash for a certain number of quarters. Accordingly, distributing cash to the Class B Unitholders in a greater proportion than the minimum 6:1 ratio could result in the Class B Units becoming convertible into Class A Units more quickly or at a lower conversion rate or reduce the redemption price for the Class B Units. For additional discussion of the terms of the Class B Units, see Note H – Equity in the notes to our condensed consolidated financial statements.

Table of Contents

For these reasons, although the general partner has not made any decisions or adopted any policy with respect to the allocation of future distributions by Ferrellgas Partners to its partners, the general partner may determine that it is advisable to pay more than the minimum amount of any distribution, up to 100% of the amount of such distribution, to Class B Unitholders. In fact, on October 8, 2021, Ferrellgas Partners made a cash distribution in the aggregate amount of approximately $49.9 million entirely to the Class B Unitholders, without making any distribution to Class A Unitholders and the general partner. In our Annual Report on Form 10-K for fiscal 2021, see “Risk Factors—Risks Inherent in an Investment in our Class A or Class B Units or our Debt Securities and Other Risks Related to Our Capital Structure and Financing Arrangements—If Ferrellgas Partners is permitted to make and makes distributions ~~during~~to its partners, while any Class B Units remain outstanding, Class B Unitholders collectively will receive at least approximately 85.7% of the aggregate amount of each such distribution and may receive up to 100% of any such distribution. Accordingly, while any Class B Units remain outstanding, Class A Unitholders may not receive any distributions and, in any case, will not receive collectively more than approximately 14.1% of any distribution.”

Ferrellgas Partners does not intend to pay any distributions to Class A Unitholders or the general partner for the three months ended October 31, ~~2020.~~ 2021.

The ~~operating partnership paid~~ability of Ferrellgas Partners to make cash distributions to its Class A Unitholders and Class B Unitholders is dependent on the receipt by Ferrellgas Partners of ~~$0.1 million during the three months ended October 31, 2019.~~

~~As described above, although~~cash distributions from the operating ~~partnership has some capacity to make distributions under~~partnership. For so long as any Preferred Units remain outstanding, the ~~operating partnership’s unsecured and secured notes indentures, this capacity will not allow~~amount of cash that otherwise would be available for distribution by the operating partnership to ~~make distributions to~~ Ferrellgas Partners ~~sufficient~~and the general partner will be reduced by the amount of cash distributions and other payments made by the operating partnership in respect of the Preferred Units, including payments to ~~pay~~redeem Preferred Units. Further, the indentures governing the 2026 Notes and 2029 Notes, the credit agreement (the “Credit Agreement”) that provides for a four-year revolving credit facility (the “Credit Facility”) in an aggregate principal amount of up to $350.0 million, and ~~accrued interest on Ferrellgas Partners’ unsecured senior notes due June 15, 2020~~the First Amendment to the Amended OpCo LPA which sets forth the preferences, rights, privileges and other terms governing the Preferred Units (the “OpCo LPA Amendment”) contain covenants that ~~was due at the maturity of those notes. Additionally, the restrictions in~~

~~Table of Contents~~

~~these indentures currently~~ limit the ability of the operating partnership to make distributions to Ferrellgas Partners and therefore effectively limit the ability of Ferrellgas Partners to ~~enable it~~make distributions to its Class A Unitholders and Class B Unitholders. See Note F – Debt and Note G – Preferred units for a discussion of these limitations. In our Annual Report on Form 10-K for fiscal 2021, see “Risk Factors—Risks Inherent in an Investment in our Class A or Class B Units or our Debt Securities and Other Risks Related to Our Capital Structure and Financing Arrangements—Our ability to make cash distributions to holders of Class A Units and Class B Units is dependent on the receipt by Ferrellgas Partners of cash distributions from the operating partnership, which are limited by our obligations under the Indentures, the Credit Agreement and the OpCo LPA Amendment and may be limited by a variety of other factors. Accordingly, we may be unable to make cash distributions to holders of Class A Units and Class B Units.”

Preferred unit distributions

The Quarterly Distribution may be paid in cash or, at the election of the operating partnership “in kind” through the issuance of additional Preferred Units (“PIK Units”) at the quarterly Distribution Rate plus an applicable premium that escalates each year from 75 bps to 300 bps so long as the Preferred Units remain outstanding. In the event the operating partnership fails to make any Quarterly Distribution in cash, such Quarterly Distribution will automatically be paid in PIK Units.

The Distribution Rate on the Preferred Units will increase upon violation of certain protective provisions for the benefit of Preferred Unit holders notwithstanding the cap mentioned above.

As of October 31, 2021, the Quarterly Distribution accrued was $17.3 million. On November 15, 2021, $15.1 million of the Quarterly Distribution was paid in cash to holders of Preferred Units. The remaining $2.2 million represents Tax Distributions accrued as defined below.

Table of Contents

Preferred unit tax distributions

For any quarter in which the operating partnership makes a Quarterly Distribution in PIK Units in lieu of cash, it shall make a subsequent cash tax distribution for such quarter in an amount equal to the (i) the lesser of (x) 25% and (y) the highest combined federal, state and local tax rate applicable for corporations organized in New York, multiplied by (ii) the excess (if any) of (A) one-fourth (1/4th) of the estimated taxable income to be allocated to the holders of Preferred Units for the year in which the Quarterly Tax Payment Date (which refers to certain specified dates that next follow a Quarterly Distribution date on which PIK Units were issued) occurs, over (B) any cash paid on the Quarterly Distribution date immediately preceding the Quarterly Tax Payment Date on which a quarterly tax amount would otherwise be paid (such amount, the "Tax Distribution"). Tax Distributions are treated as advances against, and reduce, future cash distributions for any reason, including payments in redemption of Preferred Units or PIK Units, or payments to the holders in their capacity as such pursuant to any side letter or other agreement.

Cash distributions paid

Ferrellgas Partners did not pay any cash distributions to its ~~unitholders.~~Class A Unitholders during the quarter ended October 31, 2021. On October 8, 2021, Ferrellgas Partners paid a cash distribution to holders of the Class B Units in the amount of $38.46 per Class B Unit or approximately $49.9 million in the aggregate. As permitted by the Amended Ferrellgas LPA as described above, Ferrellgas Partners made this distribution solely to Class B Unitholders without any contemporaneous distribution to Class A Unitholders and the general partner.

On September 14, 2021, the operating partnership paid a cash distribution to Ferrellgas Partners in the amount of approximately $49.9 million, which Ferrellgas Partners used to pay the October 8, 2021 distribution to its Class B Unitholders described above. The operating partnership also paid a cash distribution during the quarter ended October 31, 2021 in respect of its Preferred Units as discussed above under “—Preferred unit distributions.”

Cash distributions paid

The operating partnership paid cash distributions during the three months ended October 31, 2021 to Ferrellgas Partners and to holders of the Preferred Units as described above. The operating partnership did not pay any cash distributions of during the three months ended October 31, 2020.

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 agreements, 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 reimbursable costs, which totaled ~~$67.7~~$71.2 million for the three months ended October 31, ~~2020,~~2021, include operating expenses such as compensation and benefits paid to employees of our general partner who perform services on our behalf as well as related general and administrative expenses.

During the three months ended October 31, ~~2020,~~2021, the operating partnership paid distributions to Ferrellgas Partners as described above.

Term loan credit agreement between Ferrellgas Partners and the operating partnership ~~did not pay distributions.~~

As discussed ~~previously,~~in Note L – Transactions with related parties in the notes to the condensed consolidated financial statements of the operating partnership, on January 8, 2021 Ferrellgas Partners ~~continues to be not in compliance~~entered into a term loan credit agreement with the operating partnership, pursuant to which the operating partnership extended to Ferrellgas Partners an unsecured, non-amortizing term loan in the aggregate principal amount of $19.9 million. The term loan bears interest at a rate of 20% per annum, and all interest on the term loan will be added to the outstanding principal amount of the term loan. The term loan will mature on July 1, 2022. During July 2021, Ferrellgas Partners made an optional prepayment of $9.0 million principal amount of the term loan. The outstanding principal and accrued interest at October 31, 2021 was $13.8 million.

Table of Contents

Contractual Obligations

As of October 31, 2021, there have been no material changes to our contractual obligations and commitments from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations” in our Annual Report on Form 10-K for fiscal 2021. For additional information regarding our debt obligations, see Note F – Debt to our condensed consolidated ~~fixed charge coverage ratio under note indenture, and thus remains unable~~financial statements.

The operating partnership

The contractual obligations discussed above also apply to ~~make restricted payments, including distributions to unitholders.~~the operating partnership.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We did not enter into any risk management trading activities during the three months ended October 31, ~~2020.~~2021. Our remaining market risk sensitive instruments and positions have been determined to be “other than trading.”

Commodity price risk management

Our 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.~~companies on a short-term basis. We attempt to mitigate these price risks through the use of financial derivative instruments and forward propane purchase and sales contracts.

Our risk management strategy involves taking positions in the forward or financial markets that are equal and opposite to our 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 our gains or losses in the physical product markets are offset by our losses or gains in the forward or financial markets. ~~Propane~~Our propane related financial derivatives are designated as cash flow hedges.

Our risk management activities include the use of financial derivative instruments including, but not limited to, ~~price~~ futures, swaps, ~~options~~ and ~~basis swaps~~options to seek protection from adverse price movements and to minimize potential losses. We enter into these financial derivative instruments with brokers who are clearing members with the Intercontinental Exchange or the Chicago Mercantile Exchange and, to a lesser extent, directly with third parties in the over-the-counter market. We also enter into forward propane purchase and sales contracts with counterparties. These forward contracts qualify for the normal purchase normal ~~sale~~sales exception within GAAP guidance and are therefore not recorded on our financial statements until settled.

Transportation Fuel Price Risk

From time to time, our risk management activities also attempt to mitigate price risks related to the purchase of gasoline and diesel fuel for use in the transport of propane from supply or storage locations and from retail fueling stations. When employed, we attempt to mitigate these price risks through the use of financial derivative instruments.

When employed, our risk management strategy involves taking positions in the financial markets that are not more than the forecasted purchases of fuel for our internal use in ~~the~~supply and retail ~~and supply~~ propane delivery fleet in order to minimize the risk of decreased earnings from an adverse price change. This risk management strategy locks in our purchase price and is successful when our gains or losses in the physical product markets are offset by our losses or gains in the financial markets. Our transport fuel financial derivatives are not designated as cash flow hedges.

~~Table of Contents~~

Risk Policy and Sensitivity Analysis

Market risks associated with energy commodities are monitored daily by senior management for compliance with our commodity risk management policy. This policy includes an aggregate dollar loss limit and limits on the term of various contracts. We also utilize volume limits for various energy commodities and review our positions daily where we remain exposed to market risk, so as to manage exposures to changing market prices.

Table of Contents

We have prepared a sensitivity analysis to estimate the exposure to market risk of our energy commodity positions. Forward contracts, futures, swaps and options outstanding as of October 31, ~~2020~~2021 and July 31, ~~2020,~~2021, that were used in our risk management activities were analyzed assuming a hypothetical 10% adverse change in prices for the delivery month for all energy commodities. The potential loss in future earnings from these positions due to a 10% adverse movement in market prices of the underlying energy commodities was estimated at ~~$7.8~~$35.6 million and ~~$8.0~~$30.1 million as of October 31, ~~2020~~2021 and July 31, ~~2020,~~2021, respectively. The preceding hypothetical analysis is limited because changes in prices may or may not equal 10%, thus actual results may differ. Our sensitivity analysis does not include the anticipated transactions associated with these transactions, which we anticipate will be 100% effective.

Credit risk

We maintain credit policies with regard to our counterparties that we believe significantly reduce overall credit risk. These policies include evaluating and monitoring of counterparties’ financial condition (including credit ratings), and entering into agreements with counterparties that govern credit guidelines.

Our other counterparties principally consist of major energy companies that are suppliers, marketers, wholesalers, retailers and end users; and major U.S. financial institutions. The overall impact due to certain changes in economic, regulatory and other events may impact our overall exposure to credit risk, either positively or negatively in that counterparties may be similarly impacted. Based on our policies, exposures, credit and other reserves, management does not anticipate a material adverse effect on financial position or results of operations as a result of counterparty performance.

Interest rate risk

AtWe had variable rate indebtedness outstanding related to our letters of credit under our Credit Facility of $97.5 million and $107.7 million as of October 31, ~~2020, we~~2021 and July 31, 2021, respectively. We had no ~~variable rate or~~ collateralized note payable borrowings, as we ~~do not have a credit facility in place and had no outstanding collateralized notes payable on~~terminated our accounts receivable securitization ~~facility.~~facility on the Effective Date. Our results of operations, cash flows and financial condition could be materially adversely affected by significant increases in interest rates to the extent that we have variable rate indebtedness (including any disbursements or payments related to letters of credit) outstanding under our Credit Facility.

Critical accounting estimates

Our critical accounting estimates are disclosed under “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Form 10-K for fiscal 2021. During the three months ended October 31, 2021 no modifications were made to these critical accounting estimates.

ITEM 4. CONTROLS AND PROCEDURES

An evaluation was performed by the management of Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P., and Ferrellgas Finance Corp., with the participation of the principal executive officer and principal financial officer of our general partner, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures, as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act, were effective as of October 31, ~~2020.~~2021.

The management of Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P., and Ferrellgas Finance Corp. does not expect that our disclosure controls and procedures will prevent all errors and all fraud. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Based on the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the above mentioned partnerships and corporations have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events. Therefore, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Our disclosure controls and procedures are

Table of Contents

designed to provide such reasonable assurances of achieving our desired control objectives, and the principal executive officer and principal financial officer of our general partner have concluded, as of October 31, ~~2020,~~2021, that our disclosure controls and procedures are effective in achieving that level of reasonable assurance.

~~Table of Contents~~

During the most recent fiscal quarter ended October 31, 2020, progress continued on a plan that calls for modifications and enhancements to our internal controls over financial reporting in relation to our implementation of Salesforce.com applications and the impacts on our revenue cycle. Specifically, we implemented/modified internal controls surrounding revenue recognition.

~~Except as disclosed above,~~2021, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or Rule 15d-15(f) of the Exchange Act) during the fiscal quarter ended October 31, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For information regarding legal proceedings, see Note LM “Contingencies and commitments” in our condensed consolidated financial statements included in Item 1. “Financial Statements.”

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors set forth under Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for fiscal ~~2020.~~2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

OnWendel Parks assumed the principal financial officer responsibilities for the registrants effective December ~~11, 2020,~~15, 2021. Mr. Parks joined Ferrellgas ~~Inc. (the “General Partner”) entered into a Change~~as Corporate Controller in ~~Control Retention Bonus Letter Agreement (the “CIC Bonus Agreement”) with each~~November 2021. Before joining Ferrellgas, Mr. Parks served as Controller and Director of ~~Brian W. Herrmann, Interim Chief Financial Officer~~Finance at Hubbell Incorporated for approximately three years, and ~~Treasurer, and Tamria A. Zertuche, Senior Vice President and Chief Operating Officer (collectively, the “Named Executive Officers”).~~

Pursuant to the terms of each CIC Bonus Agreement, commencing on December 11, 2020 and continuing through the date of consummation of a “change in control” (as defined in the CIC Bonus Agreement) that occurs on or prior to ~~October 31, 2021 (the “Retention Period”),~~that he served as Division Controller at Danaher Corporation for approximately five years. Mr. Parks earned an MBA in Finance and a Bachelor’s in Accounting from the ~~General Partner will pay a change in control retention bonus in an amount equal~~University of North Carolina at Charlotte. Mr. Parks did not assume the principal financial officer responsibilities pursuant to ~~1.5 times each Named Executive Officer’s current base compensation rate, less applicable withholdings~~any arrangement or understanding between Mr. Parks and deductions required by law (the “Change in Control Retention Bonus”). Eligibility to receive the Change in Control Retention Bonus requires that the Change in Control occurs during the Retention Period and that the Named Executive Officer is employed on a continuous basis through the date of consummation of a Change in Control that occurs during the Retention Period.

~~For purposes of the CIC Bonus Agreement, “change in control” means, in summary, the occurrence of~~ (i) the acquisition by any person or group of persons (excluding the General Partner or its subsidiaries or any related employee benefit plan) of 33% or more of the combined voting power of the General Partner’s outstanding securities, (ii) the consummation of a merger or consolidation of the General Partner or any direct or indirect subsidiary of the General Partner with any other ~~corporation~~person. There are no family relationships between Mr. Parks and any previous or ~~other entity (subject to certain exceptions, including a merger~~current executive officers or consolidation involving a related party), (iii) approval of a plan of liquidation or winding up of the General Partner or agreement for sale or disposition of all of the General Partner’s assets (excluding sales to related parties), (iv) a change in the majority of the board of directors of the ~~General Partner, (v) Ferrell Companies, Inc. ceases~~registrants or our general partner. There has not been any transaction, nor is there any currently proposed transaction, that requires disclosure under Item 404(a) of Regulation S-K in connection with the foregoing. No changes to ~~beneficially own 51% of~~Mr. Parks’ compensation arrangements have been made or are contemplated in connection with the foregoing.

Table of Contents

economic interests in the capital stock of the General Partner, (vi) the General Partner ceases to manage and control Ferrellgas Partners, L.P. and Ferrellgas, L.P., (vii) Ferrellgas Partners, L.P. ceases to control 100% of Ferrellgas, L.P., and (viii) a change in control or similar event pursuant to the terms of any indebtedness of the General Partner, Ferrellgas Partners, L.P. or Ferrellgas, L.P.

~~Table of Contents~~

ITEM 6. EXHIBITS

The exhibits listed below are furnished as part of this Quarterly Report on Form 10-Q. Exhibits required by Item 601 of Regulation S-K of the Securities Act, which are not listed, are not applicable.


Exhibit Number		Description
2.1		Second Amended Prepackaged Joint Chapter 11 Plan of Reorganization of Ferrellgas Partners, L.P. and Ferrellgas Partners Finance Corp. Incorporated by reference to Exhibit 99.1 to our Quarterly Report on Form 10-Q filed March 8, 2021.
2.2		Transaction Support Agreement, dated December 10, 2020, by and among the Company Parties (as defined therein) and the Consenting Lenders (as defined therein). Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed December 11, 2020.
3.1		Certificate of Limited Partnership of Ferrellgas Partners, L.P. Incorporated by reference to Exhibit 3.1 to our Annual Report on Form 10-K filed September 29, 2015.
3.2		Fifth Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners, L.P. Incorporated by reference to Exhibit 3.14 to our Quarterly Report on Form 10-Q filed June 7, 2018.
*3.3		First Amendment to Fifth Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners, L.P., dated as of December 11, 2020. Incorporated by reference to Exhibit 3.3 to our Quarterly Report on Form 10-Q filed December 15, 2020.
3.4		Sixth Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners, L.P. dated as of March 30, 2021. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed April 5, 2021.
3.5		Certificate of Incorporation of Ferrellgas Partners Finance Corp. filed with the Delaware Division of Corporations on March 28, 1996. Incorporated by reference to Exhibit 3.6 to our registration statement on Form S-3 filed March 6, 2009.
~~3.5~~3.6		Bylaws of Ferrellgas Partners Finance Corp. adopted as of April 1, 1996. Incorporated by reference to Exhibit 3.7 to our registration statement on Form S-3 filed March 6, 2009.
~~3.6~~3.7		Certificate of Limited Partnership of Ferrellgas, L.P. Incorporated by reference to Exhibit 3.9 to our Annual Report on Form 10-K filed September 29, 2015.
~~3.7~~		Third Amended and Restated Agreement of Limited Partnership of Ferrellgas, L.P. dated as of April 7, 2004. Incorporated by reference to Exhibit 3.5 to our registration statement on Form S-3 filed March 6, 2009.
3.8		Fourth Amended and Restated Agreement of Limited Partnership of Ferrellgas, L.P., dated as of April 24, 2020. Incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K filed on April 27, 2020.
3.9		Fifth Amended and Restated Agreement of Limited Partnership of Ferrellgas, L.P., dated as of March 30, 2021. Incorporated by reference to Exhibit 3.2 of our Current Report on Form 8-K filed April 5, 2021.
3.10		First Amendment to the Fifth Amended and Restated Agreement of Limited Partnership of Ferrellgas, L.P., dated as of March 30, 2021. Incorporated by reference to Exhibit 3.3 of our Current Report on Form 8-K filed April 5, 2021.
3.11		Certificate of Incorporation of Ferrellgas Finance Corp. filed with the Delaware Division of Corporations on January 16, 2003. Incorporated by reference to Exhibit 3.8 to our registration statement on Form S-3 filed March 6, 2009.
~~3.10~~3.12		Bylaws of Ferrellgas Finance Corp. adopted as of January 16, 2003. Incorporated by reference to Exhibit 3.9 to our registration statement on Form S-3 filed March 6, 2009.
4.1		Specimen Certificate evidencing Common Units representing Limited Partner Interests. Incorporated by reference to Exhibit A of Exhibit 3.1 to our ~~registration statement on Form S-3 filed March 6, 2009.~~
~~4.2~~		Indenture dated as of November 4, 2013 with form of Note attached, by and among Ferrellgas, L.P., Ferrellgas Finance Corp. and U.S. Bank National Association, as trustee, relating to $475 million aggregate amount of the Registrant’s 6 3/4% Senior Notes due 2022. Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed November 5, 2013; File No. 001-11331; 000-50182; 000-50183 and 333-06693.
~~4.3~~		Indenture dated as of April 13, 2010, among Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp. and U.S. Bank National Association, as trustee, relating to $280 million aggregate amount of the Registrant’s 8 5/8% Senior Notes due 2020. Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed April ~~13, 2010; File No. 001-11331; 000-50182; 000-50183 and 333-06693.~~5, 2021.
~~4.4~~4.2		~~First Supplemental~~ Indenture relating to 5.375% Senior Notes due 2026, dated as of ~~April 13, 2010, with~~March 30, 2020 (with form of Note ~~attached, by and~~attached), among Ferrellgas ~~Partners, L.P.~~Escrow, LLC and FG Operating Finance Escrow Corp., ~~Ferrellgas Partners Finance Corp. and U.S. Bank National Association,~~ as trustee, relating to $280 million aggregate amount of the Registrant’s 8 5/8% Senior Notes due 2020. Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed April 13, 2010; File No. 001-11331; 000-50182; 000-50183 and 333-06693.
~~4.5~~		~~Second Supplemental Indenture dated as of January 30, 2017, by and among Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp.~~co-issuers, and U.S. Bank National Association, as trustee. Incorporated by reference to Exhibit ~~4.3 to~~4.1 of our Current Report on Form 8-K filed ~~January 30, 2017.~~April 5, 2021.
~~4.6~~4.3		Assumption Supplemental Indenture relating to 5.375% Senior Notes due 2026, dated as of ~~November 24, 2010, by and~~March 30, 2021, among Ferrellgas, L.P., and Ferrellgas Finance Corp. ~~and U.S. Bank National Association,~~, as ~~trustee, relating to $500 million aggregate amount of~~co-issuers, the ~~Registrant’s 6 1/2% Senior Notes due 2021. Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed November 30, 2010; File No. 001-11331; 000-50182; 000-50183 and 333-06693.~~
~~4.7~~		~~Indenture, dated June 8, 2015, by and among Ferrellgas, L.P., Ferrellgas, Finance Corp. the subsidiary~~ guarantors party thereto and U.S. Bank National Association, as ~~trustee, relating to $500 million aggregate amount of the Registrant’s 6 3/4% Senior Notes due 2023.~~trustee. Incorporated by reference to Exhibit ~~4.1 to our Current Report on Form 8-K filed June 8, 2015.~~

~~Table~~4.2 of ~~Contents~~

~~4.8~~		Indenture, dated as of April 16, 2020, by and among Ferrellgas, L.P., Ferrellgas Finance Corp., Ferrellgas Partners, L.P., Ferrellgas, Inc., the subsidiary guarantors party thereto and Delaware Trust Company, as trustee and collateral agent, relating to $700 million aggregate principal amount of 10% Senior Secured First Lien Notes due 2025. Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed April ~~17, 2020.~~5, 2021.
~~+10.1~~4.4		~~Financing~~Indenture relating to 5.875% Senior Notes due 2029, dated as of March 30, 2020 (with form of Note attached), among Ferrellgas Escrow, LLC and FG Operating Finance Escrow Corp., as co-issuers, and U.S. Bank National Association, as trustee. Incorporated by reference to Exhibit 4.4 of our Current Report on Form 8-K filed April 5, 2021.

Table of Contents

4.5		Assumption Supplemental Indenture relating to 5.875% Senior Notes due 2029, dated as of March 30, 2021, among Ferrellgas, L.P. and Ferrellgas Finance Corp., as co-issuers, the guarantors party thereto and U.S. Bank National Association, as trustee. Incorporated by reference to Exhibit 4.5 of our Current Report on Form 8-K filed April 5, 2021.
4.6		Investment Agreement, dated as of ~~May 4, 2018,~~March 30, 2021, among Ferrellgas, L.P., Ferrellgas, Inc. and the several purchasers named therein. Incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed April 5, 2021.
4.7		Voting Agreement, dated as of March 30, 2021, among Ferrellgas, Inc., asFerrell Companies, Inc., and the ~~general partner~~holders of Class B Units of Ferrellgas Partners, L.P. Incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K filed April 14, 2021.
4.8		Voting Agreement, dated as of March 30, 2021, among Ferrellgas, Inc., Ferrell Companies, Inc., and the purchasers of the Senior Preferred Units of Ferrellgas, L.P. Incorporated by reference to Exhibit 4.2 of our Current Report on Form 8-K filed April 14, 2021.
10.1		Credit Agreement, dated as of March 30, 2021, among Ferrellgas, L.P., Ferrellgas, Inc., certain subsidiaries of Ferrellgas, L.P., as guarantors, the lenders party thereto, ~~TPG Specialty Lending, Inc.~~and JPMorgan Chase Bank, N.A., as administrative agent ~~collateral agent~~ and ~~lead arranger, and PNC Bank, National Association, as syndication~~collateral agent. Incorporated by reference to Exhibit 10.1 toof our Current Report on Form 8-K filed ~~September 7, 2018.~~April 5, 2021.
10.2		~~Amended and Restated Receivable Sale~~First Amendment to the Credit Agreement, dated as of January 19, 2012, between Ferrellgas, L.P. and Blue Rhino Global Sourcing, Inc., as originators, and Ferrellgas Receivables, LLC, as buyer. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed January 20, 2012; File No. 001-11331; 000-50182; 000-50183 and 333-06693.
~~10.3~~		~~Receivables Purchase Agreement dated as of January 19, 2012,~~June 11, 2021, among ~~Ferrellgas Receivables, LLC, as seller,~~ Ferrellgas, L.P., ~~as servicer,~~Ferrellgas, Inc., the ~~purchasers from time to time~~lenders party ~~hereto, Fifth Third Bank~~thereto, and ~~SunTrust Bank, as co-agents, and Wells Fargo~~JPMorgan Chase Bank, N.A., as administrative agent and collateral agent. Incorporated by reference to Exhibit ~~10.2 to our Current Report on Form 8-K filed January 20, 2012; File No. 001-11331; 000-50182; 000-50183 and 333-06693.~~
~~10.4~~		First Amendment to Receivables Purchase Agreement dated as of April 30, 2012, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, the purchasers from time to time party hereto, Fifth Third Bank and SunTrust Bank, as co-agents, and Wells Fargo Bank, N.A., as administrative agent. Incorporated by reference to Exhibit 10.510.29 to our Quarterly Report on Form 10-Q filed June ~~8, 2012; File No. 001-11331; 000-50182; 000-50183 and 333-06693.~~
~~10.5~~		Second Amendment to Receivables Purchase Agreement dated as of April 1, 2014, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, the purchasers from time to time party hereto, Fifth Third Bank and SunTrust Bank, as co-agents, and Wells Fargo Bank, N.A., as administrative agent. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed April 4, 2014.
~~10.6~~		Third Amendment to Receivables Purchase Agreement dated as of July 27, 2016, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, the purchasers from time to time party hereto, Fifth Third Bank and SunTrust Bank, as co-agents, and Wells Fargo Bank, N.A., as administrative agent. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed July 27, 2016.
~~10.7~~		Fourth Amendment to Receivables Purchase Agreement dated as of September 27, 2016, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, the purchasers from time to time party hereto, Fifth Third Bank and SunTrust Bank, as co-agents, and Wells Fargo Bank, N.A., as administrative agent. Incorporated by reference to Exhibit 10.38 to our Current Report on Form 10-K filed September 28, 2016.
~~10.8~~		Amendment No. 5 to Receivables Purchase Agreement dated as of April 28, 2017, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, the purchasers from time to time party hereto, Fifth Third Bank and SunTrust Bank, as co-agents, and Wells Fargo Bank, N.A., as administrative agent. Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed May 2, 2017.
~~+ 10.9~~		~~Amendment No. 7 to Receivables Purchase Agreement, dated as of May~~ 14, 2018, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, the purchasers party thereto, Fifth Third Bank and PNC Bank, National Association, as co-agents, and Wells Fargo Bank, N.A. as administrative agent. Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed September 7, 2018.
~~10.10~~		Amendment No. 8 to Receivables Purchase Agreement, dated as of December 5, 2019, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, Fifth Third Bank and PNC Bank, National Association, as co-agents and purchasers, and Wells Fargo Bank, N.A. as administrative agent. Incorporated by reference to Exhibit 10.17 to our Quarterly Report on Form 10-Q filed December 6, 2019.
~~10.11~~		Amendment No. 9 to Receivables Purchase Agreement, dated as of April 10, 2020, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, Fifth Third Bank and PNC Bank, National Association, as co-agents and purchasers, and Wells Fargo Bank, N.A. as administrative agent. Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 8-K filed April 13, 2020.2021.
# ~~10.12~~10.3		Ferrell Companies, Inc. Supplemental Savings Plan, as amended and restated effective January 1, 2010. Incorporated by reference to Exhibit 10.14 to our Quarterly Report on Form 10-Q filed March 10, 2010; File No. 001-11331; 000-50182; 000-50183 and 333-06693.
# ~~10.13~~10.4		Ferrell Companies, Inc. 1998 Incentive Compensation Plan, as amended and restated effective October 11, 2004. Incorporated by reference to Exhibit 10.9 to our Annual Report on Form 10-K filed September 29,

~~Table of Contents~~

		2014.
# ~~10.14~~10.5		Amendment to Ferrell Companies, Inc. 1998 Incentive Compensation Plan, dated as of March 7, 2010. Incorporated by reference to Exhibit 10.7 to our Quarterly Report on Form 10-Q filed June 9, 2010; File No. 001-11331; 000-50182; 000-50183 and 333-06693.
# ~~10.15~~10.6		Employment, Confidentiality, and Noncompete Agreement dated as of July 17, 1998 by and among Ferrell Companies, Inc. as the company, Ferrellgas, Inc. as the company, James E. Ferrell as the executive and LaSalle National Bank as trustee of the Ferrell Companies, Inc. Employee Stock Ownership Trust. Incorporated by reference to Exhibit 10.11 to our Annual Report on Form 10-K filed September 29, 2014.
# ~~10.16~~10.7		Form of Director/Officer Indemnification Agreement, by and between Ferrellgas, Inc. and each director and executive officer. Incorporated by reference to Exhibit 10.16 to our Quarterly Report on Form 10-Q filed March 9, 2012; File No. 001-11331; 000-50182; 000-50183 and 333-06693.
# ~~10.17~~10.8		Ferrell Companies, Inc. 2015 Deferred Appreciation Rights Plan, dated as of July 31, 2015. Incorporated by reference to Exhibit 10.23 to our Annual Report on Form 10-K filed September 29, 2015.
~~10.18~~		First Amendment to Financing Agreement, dated as of June 6, 2019, by and among Ferrellgas, L.P., Ferrellgas, Inc., as the general partner of Ferrellgas, L.P., certain subsidiaries of Ferrellgas, L.P., as guarantors, the lenders party thereto, and TPG Specialty Lending, Inc., as collateral agent. Incorporated by reference to Exhibit 10.31 to our Quarterly Report on Form 10-Q filed June 10, 2019.
~~10.19~~		Second Amendment to Financing Agreement, dated as of November 7, 2019, by and among Ferrellgas, L.P., Ferrellgas, Inc., as the general partner of Ferrellgas, L.P., certain subsidiaries of Ferrellgas, L.P., as guarantors, the lenders party thereto, and TPG Specialty Lending, Inc., as collateral agent. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed November 12, 2019.
# ~~10.20~~10.9		Form of Indemnification Agreement, dated as of November 19, 2019, by and between Ferrellgas Partners, LP and each director and executive officer of Ferrellgas, Inc., its general partner. Incorporated by reference to Exhibit 10.34 to our Quarterly Report on Form 10-Q filed December 6, 2019.
# ~~10.21~~10.10		Change in Control Retention Bonus Letter Agreement with William E. Ruisinger, Chief Financial Officer and Treasurer. Incorporated by reference to Exhibit 10.21 in our Current Report on Form 8-K filed April 27, 2020.
~~# 10.22~~		Change in Control Retention Bonus Letter Agreement with Bryan J. Wright, Senior Vice President and Chief Operating Officer. Incorporated by reference to Exhibit 10.22 in our Current Report on Form 8-K filed April 27, 2020.
~~# 10.23~~		Change in Control Retention Bonus Letter Agreement Tamria A. Zertuche, Senior Vice President and Chief Information Officer. Incorporated by reference to Exhibit 10.23 in our Current Report on Form 8-K filed April 27, 2020.
~~10.24~~		Forbearance Agreement among Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp. and the beneficial owners dated June 7, 2020. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed June 11, 2020.
~~10.25~~		Transaction Support Agreement, dated December 10, 2020, by and among the Company Parties (as defined therein) and the Consenting Lenders (as defined therein). Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed December 11, 2020.
*# 10.26		~~Change in Control Retention Bonus Letter Agreement with Brian W. Herrmann, Interim Chief Financial Officer and Treasurer.~~
*# 10.27		Change in Control Retention Bonus Letter Agreement with Tamria A. Zertuche, Senior Vice President and Chief Operating Officer. Incorporated by reference to Exhibit 10.27 to our Quarterly Report on Form 10-Q filed December 15, 2020.
# 10.11		Offer Letter, effective as of December 30, 2020, by and among Ferrellgas, Inc. and James E. Ferrell. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed January 5, 2021.
# 10.12		Employment Agreement, dated as of December 31, 2020, by and among Ferrellgas, Inc. and James E. Ferrell. Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed January 5, 2021.
# 10.13		Executive Confidentiality and Restrictive Covenants Agreement, dated as of December 31, 2020, by and among Ferrellgas, Inc. and James E. Ferrell. Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed January 5, 2021.
10.14		Term Loan Credit Agreement, dated as of January 8, 2021, between Ferrellgas Partners, L.P., as the borrower, and Ferrellgas, L.P., as the lender. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed January 11, 2021.
# 10.15		Offer Letter, dated as of July 29, 2021, by and among Ferrellgas, Inc. and Dhiraj Cherian. Incorporated by reference to Exhibit 10.30 to our Annual Report on Form 10-K filed October 15, 2021.

Table of Contents

# 10.16		Executive Severance Agreement, dated as of September 20, 2021, by and among Ferrellgas, Inc. and Dhiraj Cherian. Incorporated by reference to Exhibit 10.31 to our Annual Report on Form 10-K filed October 15, 2021.
# 10.17		Ferrellgas, Inc. Short Term Incentive Plan, effective August 1, 2020. Incorporated by reference to Exhibit 10.32 to our Annual Report on Form 10-K filed October 15, 2021.
*# 10.18		Separation and Release Agreement, dated as of December 1, 2021, by and among Ferrellgas, Inc. and Dhiraj Cherian.
* 31.1		Certification of Ferrellgas Partners, L.P. pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
* 31.2		Certification of Ferrellgas Partners Finance Corp. pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
* 31.3		Certification of Ferrellgas, L.P. pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
* 31.4		Certification of Ferrellgas Finance Corp. pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
* 32.1		Certification of Ferrellgas Partners, L.P. pursuant to 18 U.S.C. Section 1350.
* 32.2		Certification of Ferrellgas Partners Finance Corp. pursuant to 18 U.S.C. Section 1350.
* 32.3		Certification of Ferrellgas, L.P. pursuant to 18 U.S.C. Section 1350.
* 32.4		Certification of Ferrellgas Finance Corp. pursuant to 18 U.S.C. Section 1350.
* 101.INS		XBRL Instance ~~Document.~~Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
* 101.SCH		XBRL Taxonomy Extension Schema Document.
* 101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

~~Table of Contents~~

* 101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
* 101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
* 101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.
* 104		The cover page from Ferrellgas Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2021, formatted in Inline XBRL and contained in Exhibit 101.

*	Filed herewith

#	Management contracts or compensatory plans.

+	Confidential treatment has been granted with respect to certain portions of this exhibit. Omitted portions have been filed separately with the SEC.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

8684

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on ~~its~~their behalf by the undersigned, thereunto duly authorized.


		FERRELLGAS PARTNERS, L.P.
		By Ferrellgas, Inc., its general partner

Date:	December 15, ~~2020~~2021	By	/s/ ~~Brian W. Herrmann~~James E. Ferrell
			~~Brian W. Herrmann~~James E. Ferrell
			Chief Executive Officer and President;
			~~Interim Chief Financial Officer; Treasurer~~Chairman of the Board of Directors

		By	/s/ Wendel Parks
			Wendel Parks
			Corporate Controller (Principal Financial and Accounting Officer)


		FERRELLGAS PARTNERS FINANCE CORP.

Date:	December 15, ~~2020~~2021	By	/s/ ~~Brian W. Herrmann~~James E. Ferrell
			~~Brian W. Herrmann~~James E. Ferrell
			~~Interim~~ Chief ~~Financial~~Executive Officer, President, and Sole Director

		By	/s/ Wendel Parks
			Wendel Parks
			Corporate Controller (Principal Financial and Accounting Officer)

		FERRELLGAS, L.P.
		By Ferrellgas, Inc., ~~Ferrellgas GP II, LLC and Ferrellgas GP III, LLC,~~ its general ~~partners~~partner

Date:	December 15, ~~2020~~2021	By	/s/ ~~Brian W. Herrmann~~James E. Ferrell
			~~Brian W. Herrmann~~James E. Ferrell
			~~Interim~~ Chief ~~Financial Officer; Treasurer~~Executive Officer and President; Chairman of the Board of Directors

		By	/s/ Wendel Parks
			Wendel Parks
			Corporate Controller (Principal Financial and Accounting Officer)


		FERRELLGAS FINANCE CORP.

Date:	December 15, ~~2020~~2021	By	/s/ ~~Brian W. Herrmann~~James E. Ferrell
			~~Brian W. Herrmann~~James E. Ferrell
			~~Interim~~ Chief ~~Financial~~Executive Officer, President, and Sole Director

		By	/s/ Wendel Parks
			Wendel Parks
			Corporate Controller (Principal Financial and Accounting Officer)

8785


	October 31, 2020		July 31, 2020
Accounts receivable pledged as collateral	$	120,261	$	103,703
Accounts receivable not pledged as collateral (including other reserves)		823		(825)
Note receivable		15,148		12,648
Other		37		36
Less: Allowance for expected credit losses		(16,781)		(14,124)
Accounts and notes receivable, net	$	119,488	$	101,438


	October 31, 2020	July 31, 2020
Public common unitholders (1)	69,612,939	69,612,939
Ferrell Companies (2)	22,529,361	22,529,361
FCI Trading Corp. (3)	195,686	195,686
Ferrell Propane, Inc. (4)	51,204	51,204
James E. Ferrell (5)	4,763,475	4,763,475


Payment due by fiscal year	Scheduled principal payments
2021	$	501,425
2022		476,435
2023		500,999
2024		329
2025		700,199
Thereafter		19
Total	$	2,179,406


	As of October 31, 2020
	Ferrellgas, L.P.		Ferrellgas
	(Parent and		Finance Corp.		Guarantor		Non-Guarantor
	Co-Issuer)		(Co-Issuer)		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	296,890	$	1	$	—	$	2,631	$	—	$	299,522
Accounts and notes receivable, net		15,547		—		—		103,941		—		119,488
Intercompany receivables		87,191		—		—		—		(87,191)		—
Inventories		78,980		—		—		—		—		78,980
Prepaid expenses and other current assets		40,044		—		—		—		—		40,044
Total current assets		518,652		1		—		106,572		(87,191)		538,034

Property, plant and equipment, net		592,132		—		—		—		—		592,132
Goodwill, net		246,946		—		—		—		—		246,946
Intangible assets, net		101,812		—		—		—		—		101,812
Investments in consolidated subsidiaries		37,821		—		—		—		(37,821)		—
Operating lease right-of-use assets		100,349		—		—		—		—		100,349
Other assets, net		71,029		—		2,255		238		—		73,522
Total assets	$	1,668,741	$	1	$	2,255	$	106,810	$	(125,012)	$	1,652,795

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
Accounts payable	$	44,641	$	—	$	—	$	—	$	—	$	44,641
Intercompany payables		—		—		—		87,191		(87,191)		—
Current portion of long-term debt		502,095		—		—		—		—		502,095
Current operating lease liabilities		28,280		—		—		—		—		28,280
Other current liabilities		175,856		—		—		(15,946)		—		159,910
Total current liabilities		750,872		—		—		71,245		(87,191)		734,926

Long-term debt		1,647,106		—		—		—		—		1,647,106
Operating lease liabilities		83,337		—		—		—		—		83,337
Other liabilities		49,543		—		—		—		—		49,543
Contingencies and commitments

Partners' capital (deficit):
Partners' equity		(867,721)		1		2,255		35,565		(37,821)		(867,721)
Accumulated other comprehensive income		5,604		—		—		—		—		5,604
Total partners' capital (deficit)		(862,117)		1		2,255		35,565		(37,821)		(862,117)
Total liabilities and partners' capital (deficit)	$	1,668,741	$	1	$	2,255	$	106,810	$	(125,012)	$	1,652,795


	As of July 31, 2020
	Ferrellgas, L.P.		Ferrellgas
	(Parent and		Finance Corp.		Guarantor		Non-Guarantor
	Co-Issuer)		(Co-Issuer)		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	332,244	$	1	$	—	$	1,510	$	—	$	333,755
Accounts and notes receivable, net		11,879		—		24		89,535		—		101,438
Intercompany receivables		69,980		—		—		—		(69,980)		—
Inventories		72,664		—		—		—		.		72,664
Prepaid expenses and other current assets		35,897		—		—		—		—		35,897
Total current assets		522,664		1		24		91,045		(69,980)		543,754

Property, plant and equipment, net		591,042		—		—		—		—		591,042
Goodwill, net		247,195		—		—		—		—		247,195
Intangible assets, net		104,049		—		—		—		—		104,049
Investments in consolidated subsidiaries		37,662		—		—		—		(37,662)		—
Operating lease right-of-use assets		107,349		—		—		—		—		107,349
Other assets, net		72,137		—		2,255		356		—		74,748
Total assets	$	1,682,098	$	1	$	2,279	$	91,401	$	(107,642)	$	1,668,137

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
Accounts payable	$	33,944	$	—	$	—	$	—	$	—	$	33,944
Intercompany payables		—		—		—		69,980		(69,980)		—
Current portion of long-term debt		502,095		—		—		—		—		502,095
Current operating lease liabilities		29,345		—		—		—		—		29,345
Other current liabilities		162,097		—		—		(13,961)		—		148,136
Total current liabilities		727,481		—		—		56,019		(69,980)		713,520

Long-term debt		1,646,396		—		—		—		—		1,646,396
Operating lease liabilities		89,022		—		—		—		—		89,022
Other liabilities		51,190		—		—		—		—		51,190
Contingencies and commitments

Partners' capital (deficit):
Partners' equity		(829,678)		1		2,279		35,382		(37,662)		(829,678)
Accumulated other comprehensive income		(2,313)		—		—		—		—		(2,313)
Total partners' capital (deficit)		(831,991)		1		2,279		35,382		(37,662)		(831,991)
Total liabilities and partners' capital (deficit)	$	1,682,098	$	1	$	2,279	$	91,401	$	(107,642)	$	1,668,137