Exhibit 99.15
Consolidated Balance Sheets
October 31, 2003 and July 31, 2003
Ferrellgas, Inc. and Subsidiaries
October 31, July 31,
ASSETS 2003 2003
- ---------------------------------------------------- ------------ ------------
Current Assets:
Cash and cash equivalents $ 13,536 $ 12,311
Accounts and notes receivable, net 63,495 56,742
Inventories 103,232 69,077
Prepaid expenses and other current assets 10,952 8,366
------------ ------------
Total Current Assets 191,215 146,496
Property, plant and equipment, net 739,905 741,792
Goodwill 363,134 363,134
Intangible assets, net 96,743 98,157
Other assets 9,463 8,897
------------ ------------
Total Assets $1,400,460 $1,358,476
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIENCY)
- ----------------------------------------------------
Current Liabilities:
Accounts payable $ 119,389 $ 59,454
Other current liabilities 74,951 89,666
Short-term borrowings 21,800 -
------------ ------------
Total Current Liabilities 216,140 149,120
Long-term debt 900,807 888,226
Deferred income taxes 2,337 2,401
Other liabilities 19,607 18,747
Contingencies and commitments (Note F) - -
Minority interest 152,216 171,220
Parent investment in subsidiary 183,689 201,466
Stockholder's Equity (Deficiency):
Common stock, $1 par value;
10,000 shares authorized; 990 shares issued 1 1
Additional paid-in-capital 13,865 13,824
Note receivable from parent (146,841) (146,864)
Retained earnings 60,926 62,303
Accumulated other comprehensive loss (2,287) (1,968)
------------ ------------
Total Stockholder's Equity (Deficiency) (74,336) (72,704)
------------ ------------
Total Liabilities and Stockholder's Equity (Deficiency) $1,400,460 $1,358,476
============ ============
See notes to these Condensed Consolidated Balance Sheets.
1
FERRELLGAS INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Ferrell Companies, Inc.)
NOTES TO CONDENSED CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 2003
(Dollars in thousands, unless otherwise designated)
(unaudited)
A. Organization
The accompanying condensed consolidated balance sheets and related notes
present the consolidated financial position of Ferrellgas, Inc. (the
"Company"), its subsidiaries and its general partnership interests in
Ferrellgas Partners, L.P ("Ferrellgas Partners") and Ferrellgas, L.P.
(collectively referred to as "Ferrellgas"). The Company is a wholly-owned
subsidiary of Ferrell Companies, Inc.
The condensed consolidated balance sheets of the Company reflect all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the interim period presented. All adjustments to the
condensed consolidated balance sheets were of a normal, recurring nature.
The information included in this report should be read in conjunction with
the consolidated balance sheets and accompanying notes included in the
Company's consolidated balance sheets as of July 31, 2003 and 2002.
B. Accounting estimates
The preparation of balance sheets 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 balance sheets. Actual results could differ
from these estimates. Significant estimates impacting the condensed
consolidated balance sheets 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
assets, residual values of tanks, amortization methods of intangible assets
and valuation methods of derivative commodity contracts.
C. Nature of operations
The Company is a holding entity that conducts no operations and has two
subsidiaries, Ferrellgas Partners and Ferrellgas Acquisition Company, LLC
("Ferrellgas Acquisition Company"). The Company owns a 100% equity interest
in Ferrellgas Acquisition Company. Limited operations are conducted by or
through Ferrellgas Acquisition Company, whose only purpose is to acquire
the tax liabilities of acquirees of Ferrellgas. The Company owns a 1%
general partner interest in Ferrellgas Partners. Ferrellgas, L.P. is the
only operating subsidiary of Ferrellgas Partners.
Ferrellgas is engaged primarily in the retail distribution of propane and
related equipment and supplies in the United States. The retail market is
seasonal because propane is used primarily for heating in residential and
commercial buildings. Ferrellgas serves more than one million residential,
industrial/commercial, agricultural and other customers.
2
D. Supplemental balance sheet information
Inventories consist of:
October 31, July 31,
2003 2003
------------ ---------
Propane gas and related products $ 84,956 $49,772
Appliances, parts and supplies 18,276 19,305
------------ ---------
$103,232 $69,077
============ =========
In addition to inventories on hand, the Company enters into contracts to
buy and sell product, primarily propane for supply procurement purposes.
Nearly all of these contracts have terms of less than one year and most
call for payment based on market prices at the date of delivery. All fixed
price contracts have terms of less than one year. As of October 31, 2003,
the Company had committed, for supply procurement purposes, to take net
delivery of approximately 5.0 million gallons of propane at a fixed price.
Property, plant and equipment, net consist of:
October 31, July 31,
2003 2003
----------- ----------
Property, plant and equipment $1,079,930 $1,075,689
Less: accumulated depreciation 340,025 333,897
----------- ----------
$ 739,905 $ 741,792
=========== ==========
During the three months ended October 31, 2003, the Company placed in
service $45.3 million of computer software, which will be depreciated using
the straight-line method over its estimated useful life of 5 years.
Intangible assets, net consist of:
October 31, 2003 July 31, 2003
------------------------------------------ ------------------------------------------
Gross Gross
carrying Accumulated carrying Accumulated
amount amortization Net amount amortization Net
------------ ---------------- ------------ ------------ ---------------- ------------
Customer lists $218,134 $(132,235) $85,899 $220,061 $(133,548) $86,513
Non-compete agreements 64,099 (53,255) 10,844 64,020 (52,376) 11,644
------------ ---------------- ------------ ------------ ---------------- ------------
$282,233 $(185,490) $96,743 $284,081 $(185,924) $98,157
============ ================ ============ ============ ================ ============
E. Accounts receivable securitization
At October 31, 2003, $62.5 million of the Company's accounts receivable had
been transferred compared with $42.5 million at July 31, 2003. The Company
had the ability to transfer, at its option, an additional $12.5 million of
its trade accounts receivable at October 31, 2003. The Company renewed this
facility effective September 23, 2003, for a 364-day commitment with Banc
One, NA. In accordance with SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," this
transaction is reflected in the condensed consolidated balance sheets as a
sale of accounts receivable and a retained interest in transferred accounts
receivable. The retained interest is classified on the condensed
consolidated balance sheets within "Accounts and notes receivable, net."
3
F. Contingencies
The Company'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. As a
result, at any given time, the Company is threatened with or named as a
defendant in various 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 will have a material adverse effect on the financial
condition of the Company. Currently, the Company is not a party to any
legal proceedings other than various claims and lawsuits arising in the
ordinary course of business.
G. Adoption of new accounting standards
The Financial Accounting Standards Board ("FASB") recently issued Statement
of Financial Accounting Standards ("SFAS") No. 150 "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity,"
FASB Financial Interpretation No. 46 "Consolidation of Variable Interest
Entities" and Emerging Issues Task Force ("EITF") 00-21 "Accounting for
Revenue Arrangements with Multiple Deliverables."
SFAS No. 150 establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both
liabilities and equity. It requires that an issuer classify a financial
instrument that is within its scope as a liability (or an asset in some
circumstances). Many of those instruments were previously classified as
equity. This statement is effective for financial instruments entered into
or modified after May 31, 2003, and otherwise is effective for the fiscal
year ending July 31, 2004. The Company has studied SFAS No. 150 and
believes it will not have a material effect on its financial position.
FASB Financial Interpretation No. 46 clarifies Accounting Research Bulletin
No. 51, "Consolidated Financial Statements." If certain conditions are met,
this interpretation requires the primary beneficiary to consolidate certain
variable interest entities in which equity investors lack the
characteristics of a controlling financial interest or do not have
sufficient equity investment at risk to permit the variable interest entity
to finance its activities without additional subordinated financial support
from other parties. For variable interest entities created or obtained
before February 1, 2003, the interpretation is effective for the first
fiscal year or interim period ending after December 15, 2003. The Company
currently believes it does not have any variable interest entities that
would be subject to this interpretation.
EITF No. 00-21 addresses how to account for arrangements that may involve
multiple revenue-generating activities, such as the delivery or performance
of multiple products, services, and/or rights to use assets. In applying
this guidance, separate contracts with the same party, entered into at or
near the same time, will be presumed to be a bundled transaction, and the
consideration will be measured and allocated to the separate units based on
their relative fair values. This consensus guidance will be applicable to
agreements entered into in quarters beginning after June 15, 2003. The
Company adopted this new accounting pronouncement beginning August 1, 2003.
The implementation of this pronouncement did not have a material impact on
the Company's financial position, because it does not enter into a
significant number of arrangements that may involve multiple
revenue-generating activities.
4
H. Transactions with related parties
JEF Capital Management, Inc. ("JEF Capital Management") is beneficially
owned by James E. Ferrell, the Chairman, President and Chief Executive
Officer of the Company, and thus is an affiliate. Ferrellgas Partners paid
senior unit distributions of $2.0 million to JEF Capital Management on both
September 12, 2003. and on December 15, 2003. See Note I - Subsequent
events - for disclosure of related party transactions with the Company and
JEF Capital Management after October 31, 2003, including the waiver given
by JEF Capital Management to Ferrellgas Partners.
Ferrell Companies is the sole shareholder of the Company and owns 17.8
million common units of Ferrellgas Partners. On both September 12, 2003 and
December 15, 2003, Ferrellgas Partners paid a common unit distribution of
$8.9 million to Ferrell Companies for the three month period ended July 31,
2003 and October 31, 2003, respectively See Note I - Subsequent events -
for disclosure of related party transactions with JEF Capital Management
after October 31, 2003.
Ferrell International Limited is beneficially owned by James E. Ferrell and
thus is an affiliate. Ferrellgas enters into transactions with Ferrell
International Limited in connection with Ferrellgas' risk management
activities and does so at market prices in accordance with Ferrellgas'
affiliate trading policy approved by the Company's Board of Directors.
These transactions include forward, option and swap contracts and are all
reviewed for compliance with the policy. Ferrellgas also provides limited
accounting services for Ferrell International Limited. There were no
amounts due from or due to Ferrell International Limited at October 31,
2003.
I. Subsequent events
Ferrellgas Partners' partnership agreement generally provides that it use
the cash proceeds of any offering of common units to redeem a portion of
its outstanding senior units, otherwise a "Material Event" would be deemed
to have occurred and JEF Capital Management, as the holder of the senior
units, would thereafter have specified rights, such as the right to convert
the senior units into common units or the right to register the senior
units. By letter agreement dated November 20, 2003, JEF Capital Management
agreed to waive the occurrence of a "Material Event" if Ferrellgas Partners
issues common units at any time and from time to time on or prior to March
31, 2004, and does not use the cash proceeds from such offering or
offerings to redeem a portion of the outstanding senior units. In
consideration of the granting of the waiver, Ferrellgas Partners agreed not
to redeem any outstanding senior units prior to March 31, 2004, and to
reimburse JEF Capital Management for its reasonable legal fees incurred in
connection with the execution of the waiver.
On December 1, 2003, Ferrellgas Partners received $47.4 million pursuant to
the issuance of 2.0 million common units to the public Ferrellgas then used
the net proceeds to reduce the borrowings outstanding under its bank credit
facility by approximately $38.3 million. The remaining proceeds will be
used for general partnership purposes, including the repayment of debt
incurred to fund prior acquisitions.
5