Exhibit 99.3
FERRELLGAS, L.P.
INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
| Page |
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of April 30, 2018 | F-1 |
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Unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine months ended April 30, 2018 | F-2 |
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Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended July 31, 2017 | F-3 |
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Notes to Unaudited Pro Forma Condensed Consolidated Financial Information | F-4 |
FERRELLGAS, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On July 31, 2018, Ferrellgas Partners L.P. (“Ferrellgas Partners”) and Ferrellgas, L.P. (“the operating partnership”) completed the sale of a subsidiary and a group of assets (the “Disposition”), all of which had been included in Ferrellgas Partners’ and the operating partnership’s Midstream segment, for approximately $57.0 million in cash, subject to customary post-closing adjustments to working capital. The subsidiary sold was Bridger Environmental LLC, which encompasses all saltwater disposal operations previously operated by Ferrellgas Partners. The group of assets sold includes all assets associated with the crude oil trucking operations previously operated by Ferrellgas Partners. Additionally, the Disposition included the sale of two crude oil injection terminals.
The accompanying unaudited pro forma condensed consolidated financial information of the operating partnership has been prepared in accordance with Article 11 of Regulation S-X. The accompanying unaudited pro forma condensed consolidated balance sheet as of April 30, 2018, includes adjustments in the column “Midstream disposition” to give pro forma effect to the Disposition as if it had occurred on April 30, 2018. The accompanying unaudited pro forma condensed consolidated statements of operations for the nine months ended April 30, 2018 and the year ended July 31, 2017, include adjustments in the column “Midstream disposition” to give pro forma effect to the Disposition as if it occurred August 1, 2016. The terms “we”, “our”, “us”, and similar language used in this unaudited pro forma condensed consolidated financial information refer to Ferrellgas Partners and its subsidiaries.
This unaudited pro forma condensed consolidated financial information has been derived from our historical financial statements, which are included in our quarterly report on Form 10-Q for the quarter ended April 30, 2018, and our annual report on Form 10-K for the year ended July 31, 2017.
This unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and does not purport to represent what our actual results of operations would have been if the Disposition had occurred on the dates indicated, nor is it necessarily indicative of our future operating results or financial position. However, the pro forma adjustments included in this unaudited pro forma condensed consolidated financial information reflect estimates and assumptions that we believe to be reasonable.
Although pro forma adjustments for the following transactions were not required under Article 11 of Regulation S-X, we have included adjustments to give pro forma effect to the following transactions in our unaudited pro forma condensed consolidated financial information:
· In January 2018, we sold Bridger Energy, LLC for an $8.5 million secured promissory note due in May 2020. Adjustments to remove the historical results of operations for this disposition have been included in the column “Other Midstream dispositions” in the unaudited pro forma condensed consolidated statements of operations as if the disposition had occurred on August 1, 2016.
· During the third quarter of fiscal 2018, we sold 1,292 rail cars for approximately $51.3 million. The proceeds from the disposal were used to repay debt. Adjustments to remove the historical results of operations for this disposition have been included in the column “Other Midstream dispositions” in the unaudited pro forma condensed consolidated statements of operations as if the disposition had occurred on August 1, 2016.
· On May 4, 2018, the operating partnership executed a new $575.0 million senior secured credit facility to replace the previous $575.0 million senior secured credit facility that was scheduled to mature in October 2018. This new facility consists of a $300 million revolving line of credit, as
well as a $275 million term loan, both priced at LIBOR + 5.75% and maturing May 4, 2023. Adjustments have been included in the unaudited pro forma condensed consolidated balance sheet as if the refinancing had occurred on April 30, 2018 and in the unaudited pro forma condensed consolidated statements of operations as if the refinancing had occurred on August 1, 2016.
· On July 31, 2018, we sold certain crude oil terminal assets previously included in our Midstream segment for approximately $8.0 million in cash. Adjustments to remove the historical assets, liabilities and results of operations for this disposition have been included in the column “Other Midstream dispositions” in the unaudited pro forma condensed consolidated balance sheet as if the disposition had occurred on April 30, 2018 and in the unaudited pro forma condensed consolidated statements of operations as if the disposition had occurred on August 1, 2016.
· On July 27, 2018, we sold a group of assets encompassing an immaterial reporting unit within our Propane operations segment for approximately $26.6 million in cash, subject to customary post-closing adjustments to working capital. The reporting unit was engaged in the sale of certain lower margin equipment to large retailers. Adjustments to remove the historical assets, liabilities and results of operations for this disposition have been included in the column “Global Products disposition” in the unaudited pro forma condensed consolidated balance sheet as if the disposition had occurred on April 30, 2018 and in the unaudited pro forma condensed consolidated statements of operations as if the disposition had occurred on August 1, 2016.
FERRELLGAS, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF APRIL 30, 2018
(in thousands)
(unaudited)
| | Ferrellgas, L.P.
Historical | | Midstream
Disposition | | Other Midstream
Dispositions | | Global Products
Disposition | | Pro Forma
Adjustments | | Ferrellgas, L.P.
Pro Forma | |
ASSETS | | | | | | | | | | | | | |
Current Assets: | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 9,491 | | $ | — | | $ | — | | $ | (50 | ) | $ | 48,932 | (B) | $ | 144,873 | |
| | | | | | | | | | | 86,500 | (A) | | | |
Accounts and notes receivable | | 202,727 | | (2,033 | ) | (754 | ) | (17,706 | ) | — | | 182,234 | |
Inventories | | 85,062 | | (103 | ) | (110 | ) | (11,701 | ) | — | | 73,148 | |
Prepaid expenses and other current assets | | 44,059 | | (7,421 | ) | (52 | ) | (4,020 | ) | — | | 32,566 | |
Total Current Assets | | 341,339 | | (9,557 | ) | (916 | ) | (33,477 | ) | 135,432 | | 432,821 | |
| | | | | | | | | | — | | | |
Property, plant and equipment, net | | 637,688 | | (67,189 | ) | (16,743 | ) | (1,205 | ) | — | | 552,551 | |
Goodwill, net | | 246,098 | | — | | — | | — | | — | | 246,098 | |
Intangible assets, net | | 235,318 | | (95,493 | ) | — | | (16,648 | ) | — | | 123,177 | |
Other assets, net | | 72,094 | | (447 | ) | — | | (915 | ) | 15,064 | | 85,796 | |
Total Assets | | $ | 1,532,537 | | $ | (172,686 | ) | $ | (17,659 | ) | $ | (52,245 | ) | $ | 150,496 | | $ | 1,440,443 | |
| | | | | | | | | | | | | |
LIABILITIES AND PARTNERS’ CAPITAL | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | | | | |
Accounts payable | | $ | 52,472 | | $ | (110 | ) | $ | (365 | ) | $ | — | | $ | — | | $ | 51,997 | |
Other current liabilities | | 147,243 | | (264 | ) | (231 | ) | (1,565 | ) | — | | 145,183 | |
Other Note payables to 3rd party | | 104,000 | | — | | — | | — | | — | | 104,000 | |
Total Current Liabilities | | 303,715 | | (374 | ) | (596 | ) | (1,565 | ) | — | | 301,180 | |
| | | | | | | | | | — | | | |
Long-term debt | | 1,646,069 | | — | | — | | — | | 65,000 | (B) | 1,711,069 | |
Other liabilities | | 34,225 | | (210 | ) | — | | (4,400 | ) | — | | 29,615 | |
| | | | | | | | | | | | | |
Partners’ Capital | | (469,338 | ) | — | | — | | — | | (148,945 | )(A) | (619,287 | ) |
| | | | | | | | | | (1,004 | )(B) | | |
Accumulated other comprehensive income | | 17,866 | | — | | — | | — | | — | | 17,866 | |
Total Partners’ Capital | | (451,472 | ) | — | | — | | — | | (149,949 | ) | (601,421 | ) |
Total Liabilities and Partners’ Capital | | $ | 1,532,537 | | $ | (584 | ) | $ | (596 | ) | $ | (5,965 | ) | $ | (84,949 | ) | $ | 1,440,443 | |
| | | | | | | | | | | | | | | | | | | | |
F-1
FERRELLGAS, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED APRIL 30, 2018
(in thousands)
(unaudited)
| | Ferrellgas, L.P.
Historical | | Midstream
Disposition | | Other Midstream
Dispositions | | Global Products
Disposition | | Pro Forma
Adjustments | | Ferrellgas, L.P.
Pro Forma | |
Revenues: | | | | | | | | | | | | | |
Propane and other gas liquids sales | | $ | 1,346,299 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 1,346,299 | |
Midstream revenues and other | | 260,631 | | (68,826 | ) | (191,571 | ) | — | | — | | 234 | |
Other | | 118,691 | | — | | — | | (60,301 | ) | — | | 58,390 | |
Total revenues | | 1,725,621 | | (68,826 | ) | (191,571 | ) | (60,301 | ) | — | | 1,404,923 | |
| | | | | | | | | | | | | |
Costs and expenses: | | | | | | | | | | | | | |
Cost of product sold - propane/gas liquids | | 802,852 | | — | | — | | — | | — | | 802,852 | |
Cost of product sold - Midstream | | 229,710 | | (47,707 | ) | (179,817 | ) | — | | — | | 2,186 | |
Cost of product sold - other | | 54,339 | | — | | — | | (47,238 | ) | — | | 7,101 | |
Operating expenses | | 350,757 | | (18,668 | ) | (739 | ) | (7,938 | ) | — | | 323,412 | |
Depreciation and amortization | | 76,565 | | (15,664 | ) | (2,876 | ) | (1,837 | ) | — | | 56,188 | |
General and administrative | | 39,600 | | — | | (3,647 | ) | (900 | ) | — | | 35,053 | |
Equipment leases | | 20,828 | | — | | (251 | ) | (22 | ) | — | | 20,555 | |
ESOP expense | | 10,731 | | — | | — | | — | | — | | 10,731 | |
Goodwill Impairment | | 10,005 | | — | | — | | (10,005 | ) | — | | — | |
Loss on disposal of fixed assets | | 46,414 | | (2,174 | ) | — | | (45 | ) | — | | 44,195 | |
| | | | | | | | | | | | | |
Operating income | | 83,820 | | 15,387 | | (4,241 | ) | 7,684 | | — | | 102,650 | |
| | | | | | | | — | | | | | |
Interest expense | | (97,993 | ) | — | | — | | — | | (4,572 | )(C) | (102,565 | ) |
Other income, net | | 1,422 | | — | | (921 | ) | (11 | ) | — | | 490 | |
| | | | | | | | | | | | | |
Income (loss) before income tax exp | | (12,751 | ) | 15,387 | | (5,162 | ) | 7,673 | | (4,572 | ) | 575 | |
| | | | | | | | | | | | | |
Income tax expense | | 261 | | — | | (5 | ) | (82 | ) | — | | 174 | |
| | | | | | | | — | | | | | |
Net income (loss) | | $ | (13,012 | ) | $ | 15,387 | | $ | (5,157 | ) | $ | 7,755 | | $ | (4,572 | ) | $ | 401 | |
F-2
FERRELLGAS, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 2017
(in thousands)
(unaudited)
| | Ferrellgas, L.P.
Historical | | Midstream
Disposition | | Other Midstream
Dispositions | | Global Products
Disposition | | Pro Forma
Adjustments | | Ferrellgas, L.P.
Pro Forma | |
Revenues: | | | | | | | | | | | | | |
Propane and other gas liquids sales | | $ | 1,318,412 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 1,318,412 | |
Midstream revenues and other | | 466,703 | | (88,421 | ) | (376,267 | ) | — | | — | | 2,015 | |
Other | | 145,162 | | — | | — | | (75,382 | ) | — | | 69,780 | |
Total revenues | | 1,930,277 | | (88,421 | ) | (376,267 | ) | (75,382 | ) | — | | 1,390,207 | |
| | | | | | | | | | | | | |
Costs and expenses: | | | | | | | | | | | | | |
Cost of product sold - propane/gas liquids | | 694,155 | | — | | — | | — | | — | | 694,155 | |
Cost of product sold - Midstream | | 429,439 | | (58,588 | ) | (367,192 | ) | — | | — | | 3,659 | |
Cost of product sold - other | | 67,267 | | — | | — | | (58,972 | ) | — | | 8,295 | |
Operating expenses | | 432,413 | | (22,543 | ) | (3,644 | ) | (12,001 | ) | — | | 394,225 | |
Depreciation and amortization | | 103,351 | | (22,471 | ) | (5,647 | ) | (2,065 | ) | — | | 73,168 | |
General and administrative | | 49,478 | | — | | (3,463 | ) | (1,200 | ) | — | | 44,815 | |
Equipment leases | | 29,123 | | — | | (529 | ) | (35 | ) | — | | 28,559 | |
ESOP expense | | 15,088 | | — | | — | | — | | — | | 15,088 | |
Loss on disposal of fixed assets | | 14,457 | | (5,259 | ) | — | | — | | — | | 9,198 | |
| | | | | | | | | | | | | |
Operating income | | 95,506 | | 20,440 | | 4,208 | | (1,109 | ) | — | | 119,045 | |
| | | | | | | | | | | | | |
Interest expense | | (127,188 | ) | — | | — | | — | | (9,034 | )(C) | (136,222 | ) |
Other income, net | | 1,474 | | — | | (1,646 | ) | 1,022 | | — | | 850 | |
| | | | | | | | | | | | | |
Loss before income tax expense | | (30,208 | ) | 20,440 | | 2,562 | | (87 | ) | (9,034 | ) | (16,327 | ) |
| | | | | | | | | | | | | |
Income tax expense (benefit) | | (1,149 | ) | — | | (24 | ) | 1,390 | | — | | 217 | |
| | | | | | | | | | | | | |
Net loss | | $ | (29,059 | ) | $ | 20,440 | | $ | 2,586 | | $ | (1,477 | ) | $ | (9,034 | ) | $ | (16,544 | ) |
F-3
FERRELLGAS, L.P.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
Note A — Basis of presentation
The unaudited pro forma condensed consolidated balance sheet as of April 30, 2018, and the unaudited pro forma condensed consolidated statements of operations for the nine months ended April 30, 2018, and for the year ended July 31, 2017, are based on the historical financial statements of Ferrellgas, L.P. (the “operating partnership”).
This unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and does not purport to represent what our actual results of operations would have been if the various transactions had occurred on the dates indicated, nor is it necessarily indicative of our future operating results or financial position. However, the pro forma adjustments included in this unaudited pro forma condensed consolidated financial information reflect estimates and assumptions that we believe to be reasonable.
Preparation of the unaudited pro forma condensed consolidated financial information was based on assumptions considered appropriate by the operating partnership’s management. The unaudited pro forma condensed consolidated financial information is unaudited and is not necessarily indicative of the results which would have occurred if the various dispositions and the refinancing of our senior secured credit facility described above had been consummated on August 1, 2016 for the unaudited pro forma condensed consolidated statements of operations and on April 30, 2018 for the unaudited pro forma condensed consolidated balance sheet, nor does it purport to represent the future financial position and the results of operations for future periods. In management’s opinion, all adjustments necessary to reflect the pro forma effects of the various dispositions and the refinancing of our senior secured credit facility have been made.
Note B — Pro forma adjustments
The following is a description of the pro forma adjustments to the historical condensed consolidated financial statements:
(A) Adjustments related to the various dispositions to reflect the estimated net cash proceeds received and unaudited pro forma pre-tax losses based on the carrying values as of April 30, 2018, including (in millions):
Description of disposition | | Proceeds | | Pro forma pre-tax loss | |
Sale of saltwater disposal well operations, crude oil trucking operations, and two crude oil injection terminals | | $ | 57.0 | | $ | 115.1 | |
Sale of crude oil terminal assets | | | 8.0 | | | 9.1 | |
Sale of an immaterial reporting unit within our Propane operations segment | | | 26.6 | | | 19.7 | |
Transaction fees and other associated costs | | | (5.1 | ) | 5.1 | |
Total | | $ | 86.5 | | $ | 149.0 | |
(B) Adjustment to reflect the refinancing of the operating partnership’s credit facility on May 4, 2018, which included: (i) the issuance of a $275.0 million term loan; (ii) the repayment of $210.0 million of borrowings under the old senior secured credit facility as of April 30, 2018; (iii) payment of approximately $15.1 million in financing costs; and (iv) receipt of approximately $48.9 million in cash.
(C) Adjustment to reflect increase in interest expense following the refinancing of the operating partnership’s credit facility on May 4, 2018.
F-4
