UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended January 31, 2000
or
[ ] 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: 1-11331
333-06693
Ferrellgas Partners, L.P.
Ferrellgas Partners Finance Corp.
(Exact name of registrants as specified in their charters)
Delaware 43-1698480
Delaware 43-1742520
- ---------------------------- -------------------------------
(States or other jurisdictions of (I.R.S. Employer Identification Nos.)
incorporation or organization)
One Liberty Plaza, Liberty, Missouri 64068
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: (816) 792-1600
Indicate by check mark whether the registrant (1) has 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 registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
At March 15, 2000, the registrants had units or shares outstanding as follows:
Ferrellgas Partners, L.P. 31,307,116 Common Units
4,428,499 Senior Common Units
Ferrellgas Partners Finance Corp. 1,000 Common Stock
FERRELLGAS PARTNERS, L.P. and SUBSIDIARIES
FERRELLGAS PARTNERS FINANCE CORP.
Table of Contents
Page
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Ferrellgas Partners, L.P. and Subsidiaries
Consolidated Balance Sheets - January 31, 2000 and July 31, 1999 1
Consolidated Statements of Earnings -
Three and six months ended January 31, 2000 and 1999 2
Consolidated Statement of Partners' Capital -
Six months ended January 31, 2000 3
Consolidated Statements of Cash Flows -
Six months ended January 31, 2000 and 1999 4
Notes to Consolidated Financial Statements 5
Ferrellgas Partners Finance Corp.
Balance Sheets - January 31, 2000 and July 31, 1999 11
Statements of Earnings - Three and six months ended
January 31, 2000 and 1999 11
Statements of Cash Flows - Six months ended January 31, 2000 and 1999 12
Notes to Financial Statements 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
13
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 18
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 19
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 19
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 19
ITEM 4. SUBMISSION TO A VOTE OF SECURITIES HOLDERS 19
ITEM 5. OTHER INFORMATION 19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 19
ITEM 1. FINANCIAL STATEMENTS
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
January 31, July 31,
ASSETS 2000 1999
- ------------------------------------------------------------------------- ---------------- ------------
(unaudited)
Current Assets:
Cash and cash equivalents $ 25,156 $35,134
Accounts and notes receivable, net 161,566 58,380
Inventories 67,232 24,645
Prepaid expenses and other current assets 9,586 6,780
---------------- ------------
Total Current Assets 263,540 124,939
Property, plant and equipment, net 537,844 405,292
Intangible assets, net 264,072 118,117
Other assets, net 8,772 8,397
---------------- ------------
Total Assets $1,074,228 $656,745
================ ============
LIABILITIES AND PARTNERS' CAPITAL
- -------------------------------------------------------------------------
Current Liabilities:
Accounts payable $126,610 $60,754
Other current liabilities 75,510 48,266
Short-term borrowings 35,000 20,486
---------------- ------------
Total Current Liabilities 237,120 129,506
Long-term debt 708,202 583,840
Other liabilities 19,586 12,144
Contingencies and commitments - -
Minority interest 2,709 906
Partners' Capital:
Senior common unitholders (4,428,499 units oustanding
at January 31, 2000 - redeemable liquidation value - $177,139,946) 168,587 -
Common unitholders (31,307,116 and 14,710,765 units
outstanding at January 31, 2000 and July 31, 1999, respectively) (3,452) 1,215
Subordinated unitholders (0 and 16,593,721 units outstanding
at January 31, 2000 and July 31, 1999, respectively) - (10,516)
General partner (57,727) (59,553)
Accumulated other comprehensive income (797) (797)
---------------- ------------
Total Partners' Capital 106,611 (69,651)
---------------- ------------
Total Liabilities and Partners' Capital $1,074,228 $656,745
================ ============
See notes to consolidated financial statements.
1
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per-unit data)
(unaudited)
For the three months ended For the six months ended
--------------------------- -----------------------
January 31, January 31, January 31, January 31,
2000 1999 2000 1999
------------ --------------- ----------- -------------
Revenues:
Gas liquids and related product sales $316,025 $216,541 $457,532 $334,543
Other 24,970 13,536 46,202 25,873
-------------- ----------- ----------- -----------
Total revenues 340,995 230,077 503,734 360,416
Cost of product sold (exclusive of
depreciation, shown separately below) 178,028 101,328 263,353 160,040
-------------- ----------- ----------- -----------
Gross profit 162,967 128,749 240,381 200,376
Operating expense 69,341 56,240 126,518 107,952
Depreciation and amortization expense 13,916 11,806 25,999 23,117
Employee stock ownership plan compensation charge 1,026 800 2,053 1,690
General and administrative expense 5,960 4,197 11,143 8,865
Equipment lease expense 5,586 3,173 9,439 6,141
-------------- ----------- ----------- -----------
Operating income 67,138 52,533 65,229 52,611
Interest expense (14,697) (11,960) (27,278) (23,578)
Interest income 351 386 609 544
Loss on disposal of assets (33) (598) (129) (512)
-------------- ----------- ----------- -----------
Earnings before minority interest and
extraordinary item 52,759 40,361 38,431 29,065
Minority interest 573 446 467 371
-------------- ----------- ----------- -----------
Earnings before extraordinary item 52,186 39,915 37,964 28,694
Extraordinary loss on early extinguishment of debt,
net of minority interest of $130 - - - (12,786)
-------------- ----------- ----------- -----------
Net earnings 52,186 39,915 37,964 15,908
Paid in kind distribution to senior common unitholders 2,140 N/A 2,140 N/A
General partner's interest in net earnings 500 399 358 159
-------------- ----------- ----------- -----------
Limited partners' interest in net earnings $49,546 $39,516 $35,466 $15,749
============== =========== =========== ===========
Basic earnings per limited partner unit:
Earnings before extraordinary item $ 1.58 $ 1.26 $ 1.13 $ 0.91
Extraordinary loss - - - (0.41)
-------------- ----------- ----------- -----------
Net earnings $ 1.58 $ 1.26 $ 1.13 $ 0.50
============== =========== =========== ===========
Diluted earnings per limited partner unit:
Earnings before extraordinary item $ 1.58 $ 1.26 $ 1.13 $ 0.91
Extraordinary loss - - - (0.41)
-------------- ----------- ----------- -----------
Net earnings $ 1.58 $ 1.26 $ 1.13 $ 0.50
============== =========== =========== ===========
See notes to consolidated financial statements.
2
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(in thousands)
(unaudited)
Number of units Accumulated
--------------------------------- other
Sub- Senior Sub- compre- Total
Senior Common ordinated common Common ordinated General hensive partners'
unitholders unitholders unitholders unitholders unitholders unitholder partner income capital
----------- ----------- ------------ ----------- ---------- ----------- ------- -------- --------
August 1, 1999 - 14,710.8 16,593.7 $ - $ 1,215 $(10,516) $(59,553) $(797) $(69,651)
Conversion of
subordinated
units into
common units 16,593.7 (16,593.7) - (10,516) 10,516 - - -
Units issued in
connection -
with acquisitions
Common units 2.6 - 45 - - - 45
Senior Common units 4,375.0 - - 175,000 - - 1,768 - 176,768
Fees paid to
issue senior
common units (8,925) - - - - (8,925)
Accretion of
discount on senior
common units - - - 372 (368) - (4) - -
Contribution
from general
partner in
connection with
ESOP compensation
charge - - - - 2,013 - 20 - 2,033
Quarterly cash
distributios - - - - (31,307) - (316) - (31,623)
Accrued paid
in kind
distributions 53.5 2,140 (2,119) (21) -
Comprehensive
income:
Net earnings - - - - 37,585 - 379 - 37,964
--------
Comprehensive income 37,964
----------- ----------- ------------ ----------- ---------- ----------- ------- -------- --------
January 31, 2000 4,428.5 31,307.1 - $168,587 $(3,452) $ - $(57,727) $(797) $106,611
=========== =========== ============ =========== ========== =========== ======= ======== ========
See notes to consolidated financial statements.
3
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the six months ended
----------------------------
January January
31, 2000 31, 1999
------------- ---------------
Cash Flows From Operating Activities:
Net earnings $37,964 $15,908
Reconciliation of net earnings to net cash used in
operating activities:
Depreciation and amortization 25,999 23,117
Extraordinary loss, net of minority interest - 12,786
Employee stock ownership plan compensation charge 2,053 1,690
Other 2,821 2,837
Changes in operating assets and liabilities,
net of effects from business
acquisitions:
Accounts and notes receivable (79,282) (47,393)
Inventories (24,881) 5,084
Prepaid expenses and other current assets (1,828) (2,609)
Accounts payable 43,977 10,114
Other current liabilities 2,705 2,103
Other liabilities (41) 2,350
------------ ---------------
Net cash provided in operating activities 9,487 25,987
------------ ---------------
Cash Flows From Investing Activities:
Business acquisitions, net of cash acquired 54,827 (19,480)
Capital expenditures (13,597) (14,739)
Proceeds from sale leaseback transaction 25,000 -
Cash paid for acquisition transaction fees (13,294) -
Other 1,934 1,138
------------ ---------------
Net cash provided by (used in) investing activities 54,870 (33,081)
------------ ---------------
Cash Flows From Financing Activities:
Net additions to short-term borrowings 14,514 6,282
Additions to long-term debt 12,812 391,713
Reductions of long-term debt (72,552) (350,668)
Cash paid for debt and lease financing costs (659) (12,528)
Distributions (31,623) (31,612)
Cash contribution from general partner 3,571 -
Other (398) (399)
------------ ---------------
Net cash provided by (used in) financing activities (74,335) 2,788
------------ ---------------
Decrease in cash and cash equivalents (9,978) (4,306)
Cash and cash equivalents - beginning of period 35,134 16,961
------------ ---------------
Cash and cash equivalents - end of period $25,156 $12,655
============ ===============
Cash paid for interest $23,775 $20,935
============ ===============
See notes to consolidated financial statements.
4
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2000
(unaudited)
A. The financial statements of Ferrellgas Partners, L.P. and subsidiaries (the
"Partnership") reflect all adjustments which are, in the opinion of
management, necessary for a fair statement of the interim periods
presented. All adjustments to the financial statements were of a normal,
recurring nature. These financial statements should be read in conjunction
with the financial statements and related notes included in our Annual
Report on Form 10-K for the year ended July 31, 1999.
B. The preparation of financial statements in conformity with generally
accepted accounting principles ("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.
C. The propane industry is seasonal in nature with peak activity during the
winter months. Therefore, the results of operations for the periods ended
January 31, 2000 and January 31, 1999 are not necessarily indicative of the
results to be expected for a full year.
D. Inventories consist of:
January 31, July 31,
(in thousands) 2000 1999
--------------- ---------------
Liquefied propane gas and related products $45,791 $15,480
Appliances, parts and supplies 21,441 9,165
--------------- ---------------
$67,232 $24,645
=============== ===============
In addition to inventories on hand, the Partnership enters into contracts
to buy product for supply purposes. Nearly all such contracts have terms of
less than one year and most call for payment based on market prices at date
of delivery. All fixed price contracts have terms of less than one year. As
of January 31, 2000, the Partnership had committed to take delivery of
approximately 9,004,000 gallons at a fixed price for its estimated future
retail propane sales.
Property, plant and equipment, net consist of:
January 31, July 31,
(in thousands) 2000 1999
--------------- ---------------
Property, plant and equipment $787,708 $650,536
Less: accumulated depreciation 249,864 245,244
--------------- ---------------
$537,844 $405,292
=============== ===============
Intangible assets, net consist of:
January 31, July 31,
(in thousands) 2000 1999
--------------- ---------------
Intangible assets $413,079 $257,390
Less: accumulated amortization 149,007 139,273
--------------- ---------------
$264,072 $118,117
=============== ===============
5
E. Quarterly Distributions of Available Cash
The Partnership makes quarterly cash distributions to its Common Unitholders
of all of its "Available Cash", generally defined as consolidated cash
receipts less consolidated cash disbursements and net changes in reserves
established by the General Partner for future requirements. Reserves are
retained in order to provide for the proper conduct of the Partnership
business, or to provide funds for distributions with respect to any one or
more of the next four fiscal quarters. Distributions are made within 45 days
after the end of each fiscal quarter ending January, April, July and October
to holders of record on the applicable record date.
Distributions by the Partnership in an amount equal to 100% of its Available
Cash, as defined in its Amended and Restated Agreement of Limited
Partnership of Ferrellgas Partners, L.P. (the "Partnership Agreement"), will
generally be made 98% to the Senior Common Unitholders (see footnote G for
discussion of the in kind distribution paid to the Senior Common
Unitholders) and Common Unitholders (the "Unitholders") and 2% to the
General Partner, subject to the payment of incentive distributions to the
holders of Incentive Distribution Rights to the extent that certain target
levels of cash distributions are achieved. The Senior Common Units have
certain preference rights over the Common Units. See Notes G, I and K for
additional information about the Senior Common Units.
F. Long-term debt consists of:
January 31, July 31,
(in thousands) 2000 1999
---------------- ---------------
Senior Notes
Fixed rate, 7.16%, due 2005-2013 $350,000 $350,000
Fixed rate, 9.375%, due 2006 160,000 160,000
Bridge Loan
Floating rate, 8.0625%, due 2000 (refinanced with long-term
borrowings on February 28, 2000) (1) 183,000 -
Credit Agreement
Revolving credit loans, 8.5%, due 2001 - 58,314
Notes payable, 7.9% and 6.4% weighted average interest rates,
respectively, due 2000 to 2009 17,978 18,154
---------------- ---------------
710,978 586,468
Less: current portion 2,776 2,628
---------------- ---------------
$708,202 $583,840
================ ===============
(1) The bridge loan, assumed in connection with the acquisition of
Thermogas L.L.C. on December 17, 1999, (see Note J), has a stated
maturity date of June 30, 2000. At January 31, 2000, the loan was
incurring interest at LIBOR plus 2.25% or 8.0625%.
On December 17, 1999, in connection with the purchase of Thermogas L.L.C.
("Thermogas Acquisition") (see Note J), Ferrellgas, L.P. (the "Operating
Partnership" or "OLP") assumed a $183,000,000 bridge loan that was
originally issued by Thermogas L.L.C. ("Thermogas") and had a maturity date
of June 30, 2000. This loan is classified as long-term because it was
refinanced on a long-term basis on February 28, 2000. On this date, the OLP
issued $184,000,000 of fixed rate Senior Notes which have maturities ranging
from 2006 to 2009 and an average interest rate of 8.8%. The additional
$1,000,000 in borrowings was used to fund debt issuance costs.
6
On December 17, 1999, in connection with the Thermogas Acquisition, the OLP
paid off the balance remaining of $35,000,000 then outstanding on its
$38,000,000 unsecured credit facility used for acquisitions, capital
expenditures, and general corporate purposes. This outstanding credit
facility was then terminated, leaving the OLP with the $145,000,000 credit
facility as its only senior bank credit facility.
G. Partners' Capital
The Partnership's capital (after including the effect of 53,499 Senior
Common Units issued in order to pay the in-kind distribution) consists of
4,428,499 Senior Common Units and 31,307,116 Common Units representing the
entire limited partner interest, and a 1% General Partner interest. The
Partnership Agreement contains specific provisions for the allocation of
net earnings and loss to each of the partners for purposes of maintaining
the partner capital accounts.
In connection with the Thermogas Acquisition (See Note J) on December 17,
1999, the Partnership issued 4,375,000 Senior Common Units to Williams
Natural Gas Liquids, Inc. ("Williams" or "Seller") with a liquidating value
of $175,000,000 plus accrued and unpaid distributions. The Senior Common
Units entitle the holder to quarterly distributions from the MLP equivalent
to 10 percent per annum of the liquidating value. Distributions are payable
quarterly, in-kind, through issuance of additional Senior Common Units
until the earlier of February 1, 2002 or the occurrence of a Material
Event, as defined in the Partnership Agreement, ("Material Event") after
which distributions are payable in cash. The Senior Common Units are
redeemable by the Partnership at any time, in whole or in part, upon
payment in cash of the face value of the Senior Common Units and the amount
of any accrued but unpaid distributions.
Williams has the right, subject to certain events and conditions, to
convert any outstanding Senior Common Units into Common Units at the end of
two years or upon the occurrence of a Material Event. Such conversion
rights are contingent upon the Partnership not previously redeeming such
securities, the approval of the Partnership's common unitholders of the
conversion feature, and the passage of two years, among other conditions.
The Partnership has agreed that within 180 days after the closing of the
Thermogas Acquisition, it would submit to its common unitholders a proposal
to approve this common unit conversion feature and to approve an exemption
under the Partnership Agreement to enable Williams to vote the Common
Units, if such conversion were to occur. Ferrell Companies, Inc., which
holds a majority of the Partnership's Common Units, has agreed to vote in
favor of that proposal. The Partnership has also granted Williams demand
registration rights at the end of two years or upon the occurrence of a
Material Event with respect to any outstanding Senior Common Units (or
Common Units into which they may be convertible).
In a non-cash transaction, effective August 1, 1999, the Subordination
period ended and the Subordinated Units converted to Common Units. Certain
financial tests, which were primarily related to making the Minimum
Quarterly Distribution on all Units, were satisfied for each of the three
consecutive four quarter periods ending July 31, 1999.
The Partnership maintains a shelf registration statement for Common Units
representing limited partner interests in the Partnership. The Common Units
may be issued from time to time by the Partnership in connection with the
Partnership's acquisition
of other businesses, properties or securities in business combination
transactions. The Partnership also maintains another shelf registration
statement for the issuance of Common Units, Deferred Participation Units,
Warrants and Debt Securities. The Partnership Agreement allows the General
Partner to issue an unlimited number of additional Partnership general and
limited interests and other equity securities of the Partnership for such
consideration and on such terms and conditions as shall be established by
the General Partner without the approval of any Unitholders.
7
H. Contingencies and Commitments
The Partnership is threatened with or named as a defendant in various
lawsuits that, among other items, claim damages for product liability. 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 likely to have a material adverse effect on the
financial condition, results of operations or cash flows of the
Partnership.
On December 6, 1999, the OLP entered into, with Banc of America Leasing &
Capital LLC, as lender, and First Security Bank, as agent, a $25,000,000
sale leaseback facility involving a portion of the OLP's customer tanks.
This operating lease has a term that extends over three and one-half years
and may be extended for two additional one-year periods at the option of
the OLP, if such extension is approved by the lessor.
On December 17, 1999, immediately prior to the closing of the Thermogas
Acquisition (See Note J), Thermogas entered into, with Bank of America
Leasing & Capital LLC, as lender, and First Security Bank, as agent, a
$135,000,000 operating tank lease facility involving a portion of its
customer tanks. In connection with the Thermogas Acquisition, the OLP
assumed all obligations under the $135,000,000 operating tank lease
facility, which has terms and conditions similar to the December 6, 1999,
$25,000,000 operating tank lease facility discussed above.
Certain property and equipment is leased under noncancellable operating
leases which require fixed monthly rental payments and which expire at
various dates through 2018. Future minimum lease commitments for such
leases are $29,309,000 in 2000, $33,356,000 in 2001, $29,088,000 in 2002,
$23,765,000 in 2003, $4,971,000 in 2004 and $7,232,000 thereafter.
I. Partnership Distributions
On September 14, 1999, the Partnership paid a cash distribution of $0.50
per Common and Subordinated Unit for the quarter ended July 31, 1999. On
December 14, 1999, the Partnership paid a cash distribution of $0.50 per
Common Unit for the quarter ended October 31, 1999. On February 21, 2000,
the Partnership declared its second-quarter cash distribution of $0.50 per
Common Unit, payable March 14, 2000. Additionally, on February 21, 2000,
the Partnership declared an in-kind distribution to the Senior Common
Unitholders of $2,140,000, payable by the issuance of 53,499 additional
Senior Common Units. The Senior Common Unitholders will continue to receive
quarterly distributions in-kind through issuance of additional Senior
Common Units until the earlier of February 1, 2002 or the occurrence of a
Material Event, after which distributions are payable in cash.
J. Business Combinations
On December 17, 1999, the Partnership purchased Thermogas, a subsidiary of
Williams. At closing the Partnership entered into the following noncash
transactions: a) issued $175,000,000 in Senior Common Units to the seller,
b) assumed a $183,000,000 bridge loan, (see Note F) and c) assumed a
$135,000,000 operating tank lease (see Note H). After the conclusion of
these acquisition-related transactions, including the merger of the OLP and
Thermogas, the Partnership acquired $61,088,000 of cash which remained on
the Thermogas balance sheet at the acquisition date. The Partnership has
paid $13,294,000 in additional costs and fees related to the acquisition
between December 17, 1999 and January 31, 2000.
8
The total assets contributed to the OLP (at the Partnership's cost basis)
have been preliminarily allocated as follows: (i) working capital of
$9,148,000, (ii) property, plant and equipment of $149,878,000, (iii)
$60,200,000 to customer list, (iv) $18,500,000 to trademarks (v) $9,600,000
to assembled workforce and (vi) $56,559,000 to goodwill. The estimated fair
values and useful lives of assets acquired are based on a preliminary
valuation and are subject to final valuation adjustments. The Partnership
intends to continue its analysis of the net assets of Thermogas to
determine the final allocation of the total purchase price to the various
assets acquired. The transaction has been accounted for as a purchase and,
accordingly, the results of operations of Thermogas have been included in
the consolidated financial statements from the date of acquisition.
The following pro forma financial information assumes that the Thermogas
Acquisition occurred as of August 1, 1998:
Six months ended
--------------------------------
Pro Forma
January 31, January 31,
(in thousands, except per unit amounts) 2000 1999
--------------- ----------------
Total revenues $599,742 $493,094
Earnings before extraordinary item 20,814 23,822
Net earnings 20,814 11,036
Limited partners' interest in net earnings 20,606 10,926
Basic and diluted earnings per limited partner unit before extraordinary item $ 0.66 $ 0.75
Basic and diluted earnings per limited partner unit after extraordinary item $ 0.66 $ 0.35
K. Earnings Per Unit
Below is a calculation of the basic and diluted Common Units (and
Subordinated Units prior to August 1, 1999) used to calculate earnings per
basic and diluted earnings per unit on the Statement of Earnings.
(in thousands, except per unit data)
Three months ended Six months ended
January 31, January 31, January 31, January 31,
2000 1999 2000 1999
----- ----- ----- -----
Limited partners' interest in net
earnings $49,546 $39,516 $35,466 $15,749
---------------- ----------------- ----------------- ----------------
Weighted average common and
subordinated units outstanding 31,307.1 31,297.0 31,306.3 31,295.5
Basic earnings per unit before
extraordinary item $1.58 $1.26 $1.13 $0.91
================ ================= ================= ================
Basic earnings per unit $1.58 $1.26 $1.13 $0.50
================ ================= ================= ================
9
Three months ended Six months ended
January 31, January 31, January 31, January 31,
2000 1999 2000 1999
----- ----- ----- -----
Limited partners' interest in net
earnings $49,546 $39,516 $35,466 $15,749
---------------- ----------------- ----------------- ----------------
Weighted average common and
subordinated units outstanding
31,307.1 31,297.0 31,306.3 31,295.5
Dilutive securities - options 0.0 85.8 0.0 95.4
---------------- ----------------- ----------------- ----------------
Weighted average out-standing units
+ dilutive units 31,307.1 31,382.8 31,306.3 31,390.9
================ ================= ================= ================
Diluted earnings per unit before
extraordinary item $1.58 $1.26 $1.13 $0.91
================ ================= ================= ================
Diluted earnings per unit $1.58 $1.26 $1.13 $0.50
================ ================= ================= ================
For diluted earnings per unit purposes, the Senior Common Units have been
excluded as they are considered contingently issuable Common Units for which all
necessary conditions for their issuance have not been satisfied as of the end of
the reporting period.
10
FERRELLGAS PARTNERS FINANCE CORP.
(a wholly owned subsidiary of Ferrellgas Partners, L.P.)
BALANCE SHEETS
January 31, July 31,
ASSETS 2000 1999
- -------------------------------------------------------------------- ------------------ -------------------
(unaudited)
Cash $1,000 $1,000
------------------ -------------------
Total Assets $1,000 $1,000
================== ===================
STOCKHOLDER'S EQUITY
- --------------------------------------------------------------------
Common stock, $1.00 par value; 2,000 shares
authorized; 1,000 shares issued and outstanding $1,000 $1,000
Additional paid in capital 1,010 774
Accumulated deficit (1,010) (774)
------------------ -------------------
Total Stockholder's Equity $1,000 $1,000
================== ===================
STATEMENTS OF EARNINGS
(unaudited)
Three Months Ended Six Months Ended
-----------------------------------------------------------------------
January 31, January 31, January 31, January 31,
2000 1999 2000 1999
----------------- ------------------ ----------------- ----------------
General and administrative expense $ 50 $ 0 $ 236 $ 45
----------------- ------------------ ----------------- ----------------
Net loss $(50) $ 0 $(236) $(45)
================= ================== ================= ================
See notes to financial statements.
11
FERRELLGAS PARTNERS FINANCE CORP.
(A wholly owned subsidiary of Ferrellgas Partners, L.P.)
STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
--------------------------------------------------
January 31, January 31,
2000 1999
--------------------- ------------------------
Cash Flows From Operating Activities:
Net loss $(236) $(45)
--------------------- ------------------------
Cash used in operating activities (236) (45)
--------------------- ------------------------
Cash Flows From Financing Activities:
Capital contribution 236 45
--------------------- ------------------------
Cash provided by financing activities 236 45
--------------------- ------------------------
Change in cash - -
Cash - beginning of period 1,000 1,000
--------------------- ------------------------
Cash - end of period $1,000 $1,000
===================== ========================
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
January 31, 2000
(unaudited)
A. Ferrellgas Partners Finance Corp., a Delaware corporation, was formed on
March 28, 1996, and is a wholly owned subsidiary of Ferrellgas Partners,
L.P.
B. The financial statements reflect all adjustments which are, in the opinion
of management, necessary for a fair presentation of the interim periods
presented. All adjustments to the financial statements were of a normal,
recurring nature.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion of the results of operations and liquidity
and capital resources of Ferrellgas Partners, L.P. (the "Partnership" or "MLP").
Except for the $160,000,000 of 9 3/8% Senior Secured Notes issued in April 1996
by the MLP and the related interest expense, Ferrellgas, L.P. (the "Operating
Partnership" or "OLP") accounts for nearly all of the consolidated assets,
liabilities, sales and earnings of the MLP. When the discussion refers to the
consolidated MLP, the term Partnership will be used.
Ferrellgas Partners Finance Corp. has nominal assets and does not conduct
any operations. Accordingly, a discussion of the results of operations and
liquidity and capital resources is not presented.
Forward-looking statements
Certain statements included in this report that are not historical facts,
including statements of the belief that the OLP will have sufficient funds to
meet its obligations and to enable it to distribute to the MLP sufficient funds
to permit the MLP to meet its obligations with respect to the MLP Senior Notes
issued in April 1996, and sufficient funds to pay the required distribution on
both the Senior Common Units (see Note E in the Consolidated Financial
Statements included elsewhere in this report) and the Minimum Quarterly
Distribution ("MQD") ($0.50 per Unit) on all Common Units, are forward-looking
statements.
Such statements are subject to risks and uncertainties that could cause
actual results to differ materially from those expressed in or implied by the
statements. The risks and uncertainties and their effect on the Partnership's
operations include but are not limited to the following: a) the effect of
weather conditions on demand for propane, b) price and availability of propane
supplies, c) the availability of capacity to transport propane to market areas,
d) competition from other energy sources and within the propane industry, e)
operating risks incidental to transporting, storing, and distributing propane,
f) changes in interest rates, g) governmental legislation and regulations, h)
energy efficiency and technology trends and i) other factors that are discussed
in the Risk Factor section of the Partnership's most recent 1933 Act filing with
the Securities and Exchange Commission, Amendment No. 1 to Form S-3 Registration
Statement, as filed February 5, 1999.
Results of Operations
The propane industry is seasonal in nature with peak activity during the
winter months. Due to the seasonality of the business and the timing of business
acquisitions, results of operations for the six months ended January 31, 2000
and 1999, are not necessarily indicative of the results to be expected for a
full year. Other factors affecting the results of operations include competitive
conditions, demand for product, variations in weather and fluctuations in
propane prices. As the Partnership has grown through acquisitions, fixed costs
such as personnel costs, depreciation and interest expense have increased.
Historically, these fixed cost increases have caused net losses in the first and
fourth quarters and net income in the second and third quarters to be more
pronounced.
On December 17, 1999, the Partnership purchased Thermogas L.L.C. (the
"Thermogas Acquisition" or "Thermogas"), a subsidiary of Williams. During the
second quarter of fiscal 2000, the Partnership was able to identify the effect
of the Thermogas Acquisition on the results of operations, because the Thermogas
operations acquired are currently being operated separately from the existing
Ferrellgas operations. Beginning in the third quarter of fiscal 2000, the
Partnership will begin to implement its strategic and operating plans for the
integration of Thermogas into the Partnership's existing operations. These
integration actions will result in the merging of retail locations and the
related customer groups. Due to the extent of this integration, the Partnership
will be unable to quantify separately the effect of the Thermogas Acquisition in
the discussion of results of operations in future quarters.
13
Three Months Ended January 31, 2000 vs. January 31, 1999
Total Revenues. Total gas liquids and related product sales increased 45.9%
to $316,025,000 as compared to $216,541,000 in the second quarter of fiscal
1999, primarily due to the addition of Thermogas sales of $56,414,000 and
increased sales price per gallon. For the quarter, temperatures were 12% warmer
than normal and 3% warmer than last year as reported by the American Gas
Association.
Sales price per gallon increased due to the effect of a significant
increase in the wholesale cost of propane as compared to the prior period.
Retail volumes increased 25.0% to 314,044,000 gallons as compared to 251,246,000
gallons for the prior period, primarily due to the acquisition effect of
Thermogas sales of 64,566,000 gallons. Other revenues increased by $11,434,000
primarily due to favorable results from the trading operations.
Gross Profit. Gross profit increased 26.6% to $162,967,000 as compared to
$128,749,000 in the second quarter of fiscal 1999, primarily due to gross profit
of $26,383,000 generated from the acquired Thermogas operations and, to a lesser
extent, favorable results from the trading operations.
Operating Expenses. Operating expenses increased 23.3% to $69,341,000 as
compared to $56,240,000 in the second quarter of fiscal 1999 primarily due the
addition of $7,856,000 related to the acquired Thermogas operations, and, to a
lesser extent, merit salary and incentive increases.
Depreciation and Amortization. Depreciation and amortization expense
increased 17.9% to $13,916,000 as compared to $11,806,000 in the same quarter
last year primarily due to the addition of intangibles and property, plant and
equipment from the Thermogas Acquisition and other acquisitions of propane
businesses.
Equipment Lease Expense. Vehicle, tank and computer lease expense increased
by $2,413,000 primarily due to the addition of the $25,000,000 and $135,000,000
operating tank leases ("Tank Leases") during the quarter, and, to a lesser
extent, increased operating lease facilities for new vehicles and computers for
the retail locations. See Note H to the Consolidated Financial Statements
included elsewhere in this report for additional information regarding the Tank
Leases.
Interest Expense. Interest expense increased 22.9% to $14,697,000 as
compared to $11,960,000 in the second quarter of fiscal 1999. This increase is
primarily the result of increased borrowings related to the Thermogas
acquisition and, to a lesser extent, an increase in the overall average interest
rate paid by the Partnership. As a result of the Thermogas Acquisition which
closed on December 17, 1999, the OLP assumed $183,000,000 in debt and also
refinanced a portion of its existing revolving credit facility balances (see
Financing Activities following).
Six Months Ended January 31, 2000 vs. January 31, 1999
Total Revenues. Total gas liquids and related product sales increased 36.8%
to $457,532,000 as compared to $334,543,000 for the prior period, primarily due
to the addition of Thermogas sales of $56,414,000 and increased sales price per
gallon. For the fiscal year to date, temperatures were 11% warmer than normal
and 2% warmer than last year as reported by the American Gas Association.
Sales price per gallon increased due to the effect of a significant
increase in the wholesale cost of propane as compared to the prior period.
Retail volumes increased 18.1% to 467,473,000 gallons as compared to 395,928,000
gallons for the prior period, primarily due to the acquisition effect of
Thermogas sales of 64,566,000 gallons. Other revenues increased by $20,329,000
primarily due to favorable results from trading operations.
14
Gross Profit. Gross profit increased 20.0% to $240,381,000 as compared to
$200,376,000 in the year ago period, primarily due to gross profit of
$26,383,000 generated from the acquired Thermogas operations and, to a lesser
extent, increased favorable results from the trading operations.
Operating Expenses. Operating expenses increased 17.2% to $126,518,000 as
compared to $107,952,000 in the first half of fiscal 1999 primarily due to
operating expenses of $7,856,000 incurred due to the acquired Thermogas
operations, merit salary and incentive increases.
Depreciation and Amortization. Depreciation and amortization expense
increased 12.5% to $25,999,000 as compared to $23,117,000 for the same period
last year primarily due to the addition of intangibles and property, plant and
equipment from the Thermogas Acquisition and other acquisitions of propane
businesses.
Equipment Lease Expense. Vehicle, tank and computer lease expense increased
by $3,298,000 due to the addition of the Tank Leases, and increased operating
lease facilities for new vehicles and computers for retail locations. See Note H
to the Consolidated Financial Statements included elsewhere in this report for
additional information regarding the Tank Leases.
Interest Expense. Interest expense increased 15.7% to $27,278,000 as
compared to $23,578,000 in the first half of fiscal 1999. This increase is
primarily the result of increased borrowings related to the Thermogas
Acquisition and, to a lesser extent, an increase in the overall average interest
rate paid by the Partnership. As a result of the Thermogas Acquisition closed on
December 17, 1999, the OLP assumed $183,000,000 in debt and also refinanced a
portion of its existing revolving credit facility balances.
The extraordinary charge in fiscal 1999 is due primarily to the payment of
a $10,000,000 call premium related to the refinancing of $200,000,000 of fixed
rate debt on August 5, 1998. The remaining costs relate to the write off of
unamortized debt issuance costs related to refinancing of the fixed rate debt
and revolving credit facility balances. (See Financing Activities below)
Liquidity and Capital Resources
The ability of the MLP to satisfy its obligations is dependent upon future
performance, which will be subject to prevailing economic, financial, business
and weather conditions and other factors, many of which are beyond its control.
For the fiscal year ending July 31, 2000, the General Partner believes that the
OLP will have sufficient funds to meet its obligations and enable it to
distribute to the MLP sufficient funds to permit the MLP to meet its obligations
with respect to the $160,000,000 senior secured notes issued in April 1996 ("MLP
Senior Secured Notes") and pay the required distribution on the Senior Common
Units (see Note E in to the Consolidated Financial Statements included elsewhere
in this report) and enable it to distribute the minimum quarterly distribution
("MQD") on all Common Units.
The MLP Senior Secured Notes, the $350,000,000 OLP senior notes ("$350
million Senior Notes"), the $145,000,000 amended and restated OLP credit
facility ("Credit Facility"), the $184,000,000 OLP senior notes issued in
February 2000 ("$184 million Senior Notes") and the $25,000,000 and $135,000,000
OLP operating tank leases ("Tank Leases") (See Financing Activities following)
contain several financial tests which restrict the Partnership's ability to pay
distributions, incur indebtedness and engage in certain other business
transactions. These tests, in general, are based on the ratio of the MLP's and
OLP's consolidated cash flow to fixed charges, primarily interest expense.
Because the Partnership is more highly leveraged at the MLP than at the OLP, the
tests related to the MLP Senior Secured Notes are more sensitive to fluctuations
in consolidated cash flows and fixed charges. The most sensitive of the MLP
related tests restricts the Partnership's ability to make certain Restricted
Payments which include, but are not limited to, the payment of distributions to
unitholders.
15
Although the MLP's financial performance during fiscal both 1999 and the
first six months of fiscal 2000 have been adversely impacted by unseasonably
warmer temperatures, the Partnership believes it will continue to meet the MLP
Senior Secured Notes Restricted Payment test during fiscal 2000, in addition to
meeting the other financial tests in the MLP Senior Secured Notes, the $350
million Senior Notes, the $184 million Senior Notes, Credit Facility agreement
and the Tank Leases. However, if the OLP were to encounter any unexpected
downturns in business operations in the near future, it could result in the
Partnership not meeting certain financial tests in future quarters, including
but not limited to, the MLP Senior Secured Notes Restricted Payment test.
Depending on the circumstances, the Partnership would pursue alternatives to
permit the continued payment of the required distribution on the Senior Common
Units and payment of MQD to its Common Unitholders. No assurances can be given,
however, that such alternatives will be successful with respect to any given
quarter.
Future maintenance and working capital needs of the Partnership are
expected to be provided by cash generated from future operations, existing cash
balances and the working capital borrowing facility. In order to fund expansive
capital projects and future acquisitions, the OLP may borrow on existing bank
lines, the MLP or OLP may issue additional debt or the MLP may issue additional
equity securities, including, among others, Common Units.
Toward this purpose, on February 5, 1999, the MLP filed a shelf
registration statement with the Securities and Exchange Commission (the
"Commission") for the periodic sale of up to $300,000,000 in debt and/or equity
securities. The registered securities would be available for sale by the
Partnership in the future to fund acquisitions or to reduce indebtedness. Also,
the MLP maintains a shelf registration statement with the Commission for
2,010,484 Common Units representing limited partner interests in the MLP. The
Common Units may be issued from time to time by the MLP in connection with the
OLP's acquisition of other businesses, properties or securities in business
combination transactions.
In a non-cash transaction, on August 1, 1999, the subordination period
ended and the Subordinated Units converted to Common Units. This conversion is
more fully described in Note G of the Consolidated Financial Statements provided
herein.
Operating Activities. Cash provided by operating activities was $9,487,000
for the six months ended January 31, 2000, compared to $25,987,000 for the prior
period. This decrease in cash provided from operations is primarily due to the
net effect of increased wholesale cost of product on accounts receivable,
inventory, and accounts payable and to a lesser extent the timing of receipts
and payments related to trading activities.
Investing Activities. During the six months ended January 31, 2000, before
the effect of the Thermogas Acquisition, the Partnership made total acquisition
capital expenditures of $7,055,000. This amount was funded by $6,262,000 cash
payments, $601,000 of noncompete notes, $46,000 of Common Units issued and
$146,000 of other costs and consideration.
On December 17, 1999, the Partnership purchased Thermogas. At closing the
Partnership entered into the following noncash transactions: a) issued
$175,000,000 in Senior Common Units to the seller, b) assumed a $183,000,000
bridge loan, which was refinanced from the proceeds of the $184 million Senior
Notes issued on February 28, 2000, and c) assumed a $135,000,000 operating tank
lease. After the conclusion of these acquisition-related transactions, the
Partnership acquired $61,088,000 of cash which remained on the Thermogas balance
sheet. The Partnership has paid $13,294,000 in additional costs and fees related
to the acquisition between December 17, 1999 and January 31, 2000.
The Partnership has accrued $7,100,000 in exit costs which it expects to
incur over the next twelve months as it implements the integration of the
Thermogas operations. Other than future effects from the Thermogas Acquisition,
the Partnership does not have any material commitments of funds for capital
expenditures other than to support the current level of operations. In fiscal
2000, the Partnership does not expect a significant increase in growth and
maintenance capital expenditures resulting from the Thermogas Acquisition as
compared to fiscal 1999 levels.
16
During the six months ended January 31, 2000, the Partnership made growth
and maintenance capital expenditures of $13,597,000 consisting primarily of the
following: 1) additions to Partnership-owned customer tanks and cylinders, 2)
relocating and upgrading district plant facilities, 3) upgrading computer
equipment and software, and 4) vehicle lease buyouts. Capital requirements for
repair and maintenance of property, plant and equipment are relatively low since
technological change is limited and the useful lives of propane tanks and
cylinders, the Partnership's principal physical assets, are generally long.
The Partnership meets its vehicle and transportation equipment fleet needs
by leasing light and medium duty trucks, tractors and trailers. The General
Partner believes vehicle leasing is a cost-effective method for meeting the
Partnership's transportation equipment needs.
The Partnership continues seeking to expand its operations through
strategic acquisitions of smaller retail propane operations located throughout
the United States. These acquisitions will be funded through internal cash flow,
external borrowings or the issuance of additional Partnership interests.
Financing Activities. On February 28, 2000, the OLP issued $184 million of
privately placed unsecured senior notes ("$184 million Senior Notes"). The
proceeds of the $184 million Senior Notes, which include three series with
maturities ranging from year 2006 through 2009 and an average fixed interest
rate of 8.8%, were used to retire $183,000,000 of OLP bridge loan financing
assumed in connection with the Thermogas Acquisition.
On December 6, 1999, the OLP entered into, with Banc of America Leasing &
Capital, LLC. as lender and First Security Bank as agent, a $25,000,000 sale
leaseback facility involving a portion of the OLP's customer tanks. This
operating lease has a term that extends over three and one-half years and may be
extended for two additional one-year periods at the option of the OLP, if such
extension is approved by the lessor.
On December 17, 1999, immediately prior to the closing of the Thermogas
Acquisition (See Note J), Thermogas entered into, with Banc of America Leasing &
Capital, LLC as lender and First Security Bank as agent, a $135,000,000
operating tank lease facility involving a portion of its customer tanks. In
connection with the acquisition of Thermogas, the OLP assumed all obligations
under the $135,000,000 operating tank lease facility, which have terms and
conditions similar to the December 6, 1999, $25,000,000 operating tank lease
facility discussed above.
On August 4, 1998, the OLP issued the privately placed unsecured $350
million Senior Notes and entered into a Credit Facility with its existing banks.
The proceeds of the Senior Notes, which include five series with maturities
ranging from year 2005 through 2013 at an average fixed interest rate of 7.16%,
were used to redeem $200,000,000 of OLP fixed rate senior notes issued in July
1994, including a 5% call premium, and to repay outstanding indebtedness under
the former OLP revolving credit facility. On December 17, 1999, the OLP
terminated its Additional Credit Facility agreement that it had entered into on
April 30, 1999. This facility had provided for an unsecured facility for
acquisitions, capital expenditures, and general corporate purposes. The
outstanding Additional Credit Facility before its termination on December 17,
1999 was $35,000,000.
During the six months ended January 31, 2000, the Partnership borrowed
$14,514,000 from its credit facilities to fund working capital, business
acquisitions, and capital expenditure needs. At January 31, 2000, $35,000,000 of
borrowings were outstanding under the Credit Facility. These borrowings carried
an interest rate of LIBOR plus 2.0% or 8.19%. Letters of credit outstanding,
used primarily to secure obligations under certain insurance arrangements,
totaled $22,965,000. At January 31, 2000, the Operating Partnership had
$87,035,000 available for general corporate, acquisition and working capital
purposes under the Credit Facility. The current borrowing rate for future
borrowings under the Credit Facility is 1.75% plus LIBOR.
17
On February 21, 2000, the Partnership declared a cash distribution of $1.00
per Senior Common Unit payable by the issuance of 53,499 additional Senior
Common Units (see Notes G and I and K in the Consolidated Financial Statements
included elsewhere in this report for additional information regarding the
in-kind distributions to the Senior Common Unitholders) and $0.50 per Common
Unit, payable March 14, 2000.
Adoption of New Accounting Standards. The Financial Accounting Standards
Board ("FASB") recently issued Statement of Financial Accounting Standards No.
133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.
133"). SFAS No. 133, as amended by SFAS No. 137 is required to be adopted by the
Partnership for the first quarter of fiscal 2001. The Partnership is currently
assessing its impact on the Partnership's financial position, results of
operations and cash flows.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The market risk inherent in the Partnership's market risk sensitive
instruments and positions is the potential loss arising from adverse changes in
commodity prices. Additionally, the Partnership seeks to mitigate its interest
rate risk exposure on variable rate debt by entering into interest rate collar
agreements. After the issuance of the $184 million Senior Notes on February 28,
2000, the Partnership had $35,000,000 in variable rate debt and $25,000,000
notional amount of interest rate collar agreements effectively outstanding.
Thus, assuming a 100 basis point increase in the variable interest rate to the
Partnership, the interest rate risk related to the variable rate debt and the
associated interest rate collar agreements is not material to the financial
statements.
The Partnership's trading activities utilize certain types of energy
commodity forward contracts and swaps traded on the over-the-counter financial
markets and futures traded on the New York Mercantile Exchange ("NYMEX" or
"Exchange") to anticipate market movements, manage and hedge its exposure to the
volatility of floating commodity prices and to protect its inventory positions.
The Partnership's non-trading activities utilize certain over-the-counter energy
commodity options to limit overall price risk and to hedge its exposure to
inventory price movements.
Market risks associated with energy commodities are monitored daily for
compliance with the Partnership's trading policy. This policy includes specific
dollar exposure limits, limits on the term of various contracts and volume
limits for various energy commodities. The Partnership also utilizes loss limits
and daily review of open positions to manage exposures to changing market
prices.
Market and Credit Risk. NYMEX traded futures are guaranteed by the Exchange
and have nominal credit risk. The Partnership is exposed to credit risk
associated with futures, swaps and option transactions in the event of
nonperformance by counterparties. For each counterparty, the Partnership
analyzes the financial condition prior to entering into an agreement,
establishes credit limits and monitors the appropriateness of each limit. The
change in market value of Exchange-traded futures contracts requires daily cash
settlement in margin accounts with brokers. Forwards and most other
over-the-counter instruments are generally settled at the expiration of the
contract term.
Sensitivity Analysis. The Partnership has prepared a sensitivity analysis
to estimate the exposure to market risk of its energy commodity positions.
Forward contracts, futures, swaps and options were analyzed assuming a
hypothetical 10% change in forward prices for the delivery month for all energy
commodities. The potential loss in future earnings from these positions from a
10% adverse movement in market prices of the underlying energy commodities is
estimated at $2,200,000 as of January 31, 2000. The preceding hypothetical
analysis is limited because changes in prices may or may not equal 10%. Thus,
actual results may differ.
18
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On December 17, 1999, the Partnership purchased all of the member
interests in Thermogas from Williams Natural Gas Liquids, Inc. in
consideration for the issuance of Senior Common Units. (See Note J
in the Consolidated Financial Statement contained elsewhere in this
document.) The Senior Common Units represent limited partner
interests in the Partnership, and their face value was $175,000,000
million. Williams Natural Gas Liquids qualified as an accredited
investor (as that term is defined in Rule 501 of Regulation D) and
was the only purchaser of the Senior Common Units. As a result, the
issuance of Senior Common Units was exempted from the registration
requirements of the Securities Act pursuant to Rule 506 of
Regulation D.
The Senior Common Units entitle the holder to annual distributions
from the Partnership equivalent to 10 percent of face value.
Distributions are payable quarterly in kind through issuance of
further Senior Common Units until February 1, 2002, after which
distributions are payable in cash. Distributions are also payable in
cash upon the occurrence of a Material Event, as defined in the
Partnership Agreement. These distributions are made to the holders
of Senior Common Units in preference over holders of Common Units.
Williams has the right, subject to certain events and conditions, to
convert any outstanding Senior Common Units into Common Units either
at the end of two years or upon the occurrence of a Material Event,
as defined in the Partnership Agreement.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION TO A VOTE OF SECURITIES HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
2.1 Amendment No. 2 to Purchase Agreement dated as of
March 14, 2000, by and among Ferrellgas
Partners, L.P., Ferrellgas L.P., and Williams Natural
Gas Liquids, Inc.
3.1 Amendment to the Amended and Restated Agreement of Limited
Partnership of Ferrellgas Partners, L.P. dated as of March
14, 2000.
4.1 First Amendment to the Registration Rights Agreement dated
as of March 14, 2000, by and between Ferrellgas Partners,
L.P. and Williams Natural Gas Liquids, Inc.
19
(a) Exhibits (continued)
4.2 Ferrellgas, L.P. Note Purchase Agreement Dated as of
February 28, 2000 Re: $21,000,000 8.68%
Senior Notes, Series A, due August 1, 2006
$70,000,000 8.78% Senior Notes, Series B, due August 1,
2007, and $93,000,000 8.87% Senior Notes, Series C, due
August 1, 2009 .
27.1 Financial Data Schedule - Ferrellgas Partners, L.P.
(filed in electronic format only)
27.2 Financial Data Schedule -Ferrellgas Partners Finance Corp.
(filed in electronic format only)
(b) Reports on Form 8-K
The Partnership filed the following reports on Form 8-K during the
quarter ended January 31, 2000.
(1) Form 8-K dated November 9, 1999, announcing that Ferrellgas
Partners, L.P., entered into a definitive purchase agreement to
purchase Thermogas Company, a subsidiary of Williams (, for total
consideration of $432.5 million.
(2) Form 8-K dated November 12, 1999, announcing that Ferrellgas
Partners, L.P has signed an agreement to purchase Thermogas
Company, a subsidiary of Williams, for total consideration of
$432.5 million.
(3) Form 8-K dated December 7, 1999, reporting that Ferrellgas, Inc.,
the General Partner of Ferrellgas Partners, L.P., balance sheet
as of July 31, 1999, has been audited by an independent auditor.
(4) Form 8-K dated December 29, 1999, reporting that Ferrellgas
Partners, L.P. completed the acquisition of all of the member
interests in Thermogas L.L.C. from Williams
20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrants have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FERRELLGAS PARTNERS, L.P.
By Ferrellgas, Inc. (General Partner)
Date: March 16, 2000 By /s/ Kevin T. Kelly
-------------------------------------------------
Kevin T. Kelly
Vice President and Chief
Financial Officer (Principal
Financial and Accounting Officer)
FERRELLGAS PARTNERS FINANCE CORP.
Date: March 16, 2000 By /s/ Kevin T. Kelly
-------------------------------------------------
Kevin T. Kelly
Chief Financial Officer (Principal
Financial and Accounting Officer)
21
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
2.1 Amendment No. 2 to Purchase Agreement dated as of
March 14, 2000, by and among Ferrellgas
Partners, L.P., Ferrellgas L.P., and Williams Natural
Gas Liquids, Inc.
3.1 Amendment No. 1 to the Amended and Restated Agreement of
Limited Partnership of Ferrellgas Partners, L.P. dated as
of March 14, 2000.
4.1 First Amendment to the Registration Rights Agreement dated
as of March 14, 2000, by and between Ferrellgas Partners,
L.P. and Williams Natural Gas Liquids, Inc.
4.2 Ferrellgas, L.P. Note Purchase Agreement Dated as of
February 28, 2000 Re: $21,000,000 8.68%
Senior Notes, Series A, due August 1, 2006
$70,000,000 8.78% Senior Notes, Series B, due August 1,
2007, and $93,000,000 8.87% Senior Notes, Series C, due
August 1, 2009 .
27.1 Financial Data Schedule - Ferrellgas Partners, L.P.
(filed in electronic format only)
27.2 Financial Data Schedule - Ferrellgas Partners Finance
Corp. (filed in electronic format only)
22