Exhibit 99.4
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The unaudited pro forma condensed combined balance sheet as of January 31,
2004, was prepared by combining our balance sheet at January 31, 2004 with Blue
Rhino Corporation's balance sheet at January 31, 2004, giving effect to the Blue
Rhino LLC contribution as though it had been completed on January 31, 2004. The
unaudited pro forma condensed combined statements of earnings for the periods
presented were prepared by combining our statements of earnings for the six
months ended January 31, 2004, and the year ended July 31, 2003, with Blue Rhino
Corporation's statements of operations for the six months ended January 31,
2004, and the year ended July 31, 2003, respectively, giving effect to the Blue
Rhino LLC contribution as though it had occurred on August 1, 2002. These
unaudited pro forma condensed combined financial statements do not give effect
to any restructuring costs or to any potential cost savings or other operating
efficiencies that could result from the integration of Blue Rhino LLC with our
operations.
The following unaudited pro forma condensed combined financial statements
give effect to the Blue Rhino LLC contribution under the purchase method of
accounting. These pro forma statements are presented for illustrative purposes
only. The pro forma adjustments are based upon available information and
assumptions that management believes are reasonable. These unaudited pro forma
condensed combined financial statements do not purport to represent what our
results of operations or financial position would actually have been if the Blue
Rhino LLC contribution had in fact occurred on such dates, nor do they purport
to project our results of operations or financial position for any future period
or as of any date. Under the purchase method of accounting, tangible and
identifiable intangible assets acquired and liabilities assumed are recorded at
their estimated fair values. The excess of the purchase price, including
estimated fees and expenses related to the Blue Rhino LLC contribution, over the
fair value of the net assets acquired is classified as goodwill in the
accompanying unaudited pro forma condensed combined balance sheet. The estimated
fair values and useful lives of assets acquired and liabilities assumed are
based on a preliminary valuation and are subject to final valuation adjustments.
We intend to continue our analysis of the net assets of Blue Rhino LLC to
determine the final allocation of the total purchase price to the various assets
acquired and the liabilities assumed.
Our consolidated historical financial statements for the year ended July
31, 2003, are derived from our audited consolidated financial statements
contained in our Form 10-K as filed with the SEC on October 21, 2003. Our
unaudited condensed consolidated historical financial statements for the six
months ended January 31, 2004, are derived from the unaudited condensed
consolidated financial statements contained in our Form 10-Q as filed with the
SEC on March 10, 2004. The historical financial statements of Blue Rhino
Corporation for the year ended July 31, 2003, are derived from audited
consolidated financial statements contained in Blue Rhino Corporation's Form
10-K as filed with the SEC on October 21, 2003. The unaudited condensed
historical financial statements of Blue Rhino Corporation for the six months
ended January 31, 2004, are derived from the unaudited condensed financial
statements contained in Blue Rhino Corporation's 10-Q as filed with the SEC on
March 11, 2004.
You should read the financial information in this section together with our
historical consolidated financial statements and accompanying notes contained in
our prior SEC filings, and Blue Rhino Corporation's historical consolidated
financial statements and accompanying notes contained in its prior SEC filings
or in this current report.
Unaudited Pro Forma Condensed Combined Balance Sheet (1)
January 31, 2004
(in thousands)
Ferrellgas
Partners, Blue Rhino
L.P. Corporation Pro Forma Pro Forma
ASSETS Historical (2) Historical (2) Adjustments (3) Combined
- ------------------------------------------------ ---------------- --------------- ------------- -----------
Current assets:
Cash and cash equivalents..................... $ 23,072 $ 2,351 $ - $ 25,423
Accounts and notes receivable, net............ 157,581 14,351 - 171,932
Inventories................................... 83,976 26,561 - 110,537
Prepaid expenses and other current assets..... 8,819 9,362 (2,077) (4) 16,104
---------------- --------------- ------------- -----------
Total current assets........................ 273,448 52,625 (2,077) 323,996
Property, plant and equipment, net.............. 698,457 85,499 (9,229) (5) 774,727
Goodwill........................................ 124,190 61,867 58,484 (6) 244,541
Intangible assets, net.......................... 110,067 1,254 175,028 (7) 286,349
Other assets.................................... 8,609 1,064 5,605 (8) 15,278
---------------- --------------- ------------- -----------
Total assets................................ $1,214,771 $ 202,309 $227,811 $1,644,891
================ =============== ============= ===========
Liabilities and Partners' Capital
- ------------------------------------------------
Current liabilities:
Accounts payable.............................. $ 116,813 $ 17,689 $ - $ 134,502
Other current liabilities..................... 71,185 11,995 (5,250) (9) 77,930
Short-term borrowings......................... 42,700 - (16,136) (10) 26,564
---------------- --------------- ------------- -----------
Total current liabilities................... 230,698 29,684 (21,386) 238,996
Long-term debt.................................. 900,396 33,357 185,691 (11) 1,119,444
Other liabilities and deferred credits.......... 19,728 5,042 (3,032) (12) 21,738
Contingencies and commitments................... - - - -
Minority interest............................... 2,853 2,027 (13) 4,880
Stockholders' equity
Common stock.................................. 18 (18) (14) -
Capital in excess of par...................... 133,062 (133,062) (14) -
Retained earnings............................. 538 (538) (14) -
Accumulated other comprehensive income (loss) 608 (608) (14) -
--------------- -------------
Total stockholders' equity.................. 134,226 (134,226) -
---------------
Total liabilities and stockholders' equity.. $ 202,309
===============
Partners' capital:
Senior unitholder ............................ 79,766 79,766
Common unitholders............................ 41,879 196,749 (15) 238,628
General partner unitholder.................... (58,736) 1,988 (16) (56,748)
Accumulated other comprehensive loss.......... (1,813) - (1,813)
---------------- ------------- -----------
Total partners' capital..................... 61,096 198,737 259,833
---------------- ------------- -----------
Total liabilities and partners' capital..... $1,214,771 $227,811 $1,644,891
================ ============= ===========
See Accompanying Notes to Unaudited Pro Forma
Condensed Combined Financial Statements.
Unaudited Pro Forma Condensed Combined Statement Of Earnings (1)
Six Months Ended January 31, 2004
(in thousands)
Ferrellgas
Partners, Blue Rhino
L.P. Corporation Pro Forma Pro Forma
Historical (2) Historical (2) Adjustments (3) Combined
---------------- --------------- ------------- -----------
Revenues............................................ $737,195 $ 108,512 $ - $845,707
Cost of product sold (exclusive of
depreciation, shown with amortization below)...... 446,148 84,507 (3,200) (17) 527,455
---------------- --------------- ------------- -----------
Gross profit........................................ 291,047 24,005 3,200 318,252
Operating expense................................... 152,283 - - 152,283
Depreciation and amortization expense............... 23,860 5,132 10,854 (17) 39,846
(18)
General and administrative expense.................. 15,873 14,846 - 30,719
Equipment lease expense............................. 9,243 - - 9,243
Employee stock ownership plan compensation charge... 3,948 - - 3,948
Loss on disposal of assets and other................ 3,552 145 - 3,697
---------------- --------------- ------------- -----------
Operating income.................................... 82,288 3,882 (7,654) 78,516
Interest expense.................................... (34,085) (1,261) (6,705) (19) (42,051)
Interest income..................................... 801 13 - 814
---------------- --------------- ------------- -----------
Earnings before minority interest and income
taxes............................................. 49,004 2,634 (14,359) 37,279
Minority interest................................... 595 - (127) (20) 468
Income taxes........................................ - 1,028 (1,759) (21) (731)
---------------- --------------- ------------- -----------
Earnings from continuing operations................. $ 48,409 $ 1,606 $(12,473) $ 37,542
================ =============== ============= ===========
See Accompanying Notes to Unaudited Pro Forma
Condensed Combined Financial Statements.
Unaudited Pro Forma Condensed Combined Statement Of Earnings (1)
Fiscal Year Ended July 31, 2003
(in thousands)
Ferrellgas
Partners, Blue Rhino
L.P. Corporation Pro Forma Pro Forma
Historical (2) Historical (2) Adjustments (3) Combined
---------------- --------------- ------------- -----------
Revenues........................................... $1,221,639 $258,222 $ - $1,479,861
Cost of product sold (exclusive of depreciation,
shown with amortization below)................... 690,969 196,084 (12,300) (17) 874,753
---------------- --------------- ------------- -----------
Gross profit....................................... 530,670 62,138 12,300 605,108
Operating expense.................................. 297,970 - - 297,970
Depreciation and amortization expense.............. 40,779 9,261 19,607 (17) 69,647
(22)
General and administrative expense................. 28,024 28,404 - 56,428
Equipment lease expense............................ 20,640 - - 20,640
Employee stock ownership plan compensation charge.. 6,778 - - 6,778
Loss on disposal of assets and other............... 6,679 (2,372) - 4,307
---------------- --------------- ------------- -----------
Operating income................................... 129,800 26,845 (7,307) 149,338
Interest expense................................... (63,665) (7,784) (7,961) (23) (79,410)
Interest income.................................... 1,291 141 - 1,432
Loss on investee................................... - (455) - (455)
Early extinguishment of debt expense............... (7,052) - - (7,052)
---------------- --------------- ------------- -----------
Earnings before minority interest and
income taxes..................................... 60,374 18,747 (15,268) 63,853
Minority interest.................................. 871 - (132) (20) 739
Income taxes....................................... - 2,217 (2,152) (21) 65
---------------- --------------- ------------- -----------
Earnings from continuing operations................ $ 59,503 $ 16,530 $(12,984) $63,049
================ =============== ============= ===========
See Accompanying Notes to Unaudited Pro Forma
Condensed Combined Financial Statements.
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
1. Presentation: The Blue Rhino LLC contribution was completed on April 21,
2004. These unaudited pro forma condensed combined financial statements do
not give effect to any restructuring costs, potential cost savings or other
operating efficiencies that are expected to result from the Blue Rhino LLC
contribution (see also footnote 24). The unaudited pro forma financial data
is not necessarily indicative of the operating results or financial
position that would have occurred had the Blue Rhino LLC contribution been
completed at the dates indicated, nor is it necessarily indicative of
future operating results or financial position. The purchase accounting
adjustments made in connection with the development of these unaudited pro
forma condensed combined financial statements are preliminary and have been
made solely for purposes of developing such pro forma financial
information.
2. The columns represent our unaudited condensed historical financial position
and results of operations, as well as those of Blue Rhino Corporation. Our
unaudited condensed balance sheet data reported on the unaudited pro forma
condensed combined balance sheet was derived from the information included
in our Form 10-Q as filed with the SEC on March 10, 2004. The Blue Rhino
Corporation unaudited condensed balance sheet data reported on the
unaudited pro forma condensed combined balance sheet was derived from the
information included in Blue Rhino Corporation's Form 10-Q as filed with
the SEC on March 11, 2004. Our unaudited condensed income statement data
reported on the unaudited pro forma condensed combined statement of
earnings for the six months ended January 31, 2004, and the year ended July
31, 2003, was derived from the information included in our Form 10-Q as
filed with the SEC on March 10, 2004, and our Form 10-K as filed with the
SEC on October 21, 2003, respectively. The Blue Rhino Corporation unaudited
condensed income statement data reported on the unaudited pro forma
condensed combined statement of earnings for the six months ended January
31, 2004, and the year ended July 31, 2003, was derived from the
information included in Blue Rhino Corporation's Form 10-Q as filed with
the SEC on March 11, 2004, and in Blue Rhino Corporation's Form 10-K as
filed with the SEC on October 21, 2003, respectively.
3. We have assumed for purposes of the unaudited pro forma condensed combined
balance sheet that the following transactions occurred on January 31, 2004,
and for purposes of the unaudited pro forma condensed combined statements
of earnings, that the following transactions occurred on August 1, 2002:
a. The Blue Rhino LLC contribution and ancillary transactions.
On April 20, 2004, FCI Trading Corp., an affiliate of Ferrellgas, Inc., our
general partner, acquired all of the outstanding common stock of Blue Rhino
Corporation in an all-cash merger. Pursuant to an Agreement and Plan of
Merger dated February 8, 2004, a subsidiary of FCI Trading merged with and
into Blue Rhino Corporation whereby the then current stockholders of Blue
Rhino Corporation were granted the right to receive a payment from FCI
Trading of $17.00 in cash for each share of Blue Rhino Corporation common
stock outstanding on April 20, 2004. FCI Trading thereafter became the sole
stockholder of Blue Rhino Corporation and immediately after the merger, FCI
Trading converted Blue Rhino Corporation into a limited liability company,
Blue Rhino LLC.
Pursuant to a Contribution Agreement dated February 8, 2004, FCI Trading
contributed on April 21, 2004 all of the membership interests in Blue Rhino
LLC to Ferrellgas, L.P. through a series of transactions and Ferrellgas,
L.P. assumed FCI Trading's obligation under the Agreement and Plan Of
Merger to pay the $17.00 per share to the former stockholders of Blue Rhino
Corporation together with other specific obligations. In consideration of
this contribution, Ferrellgas Partners issued 195,686 common units to FCI
Trading. Both we and FCI Trading have agreed to indemnify our general
partner from any damages incurred by our general partner in connection with
the assumption of any of the obligations described above. Also on April 21,
2004, subsequent to the contribution described above, Blue Rhino LLC merged
with and into Ferrellgas, L.P.
In addition to the payment of $17.00 per share to the former stockholders
of Blue Rhino Corporation, each vested stock option and warrant that
permits its holder to purchase common stock of Blue Rhino Corporation that
was outstanding immediately prior to the merger was converted into the
right to receive a cash payment from Blue Rhino Corporation equal to the
difference between $17.00 per share and the applicable exercise price of
the stock option or warrant. Unvested options and warrants not otherwise
subject to automatic accelerated vesting upon a change in control vested on
a pro rata basis through April 19, 2004, based on their original vesting
date. The total payment to the former Blue Rhino Corporation stockholders
for all common stock outstanding on April 20, 2004 and for those Blue Rhino
Corporation options and warrants then outstanding was approximately
$343million. A press release regarding the merger and contribution was
issued by us on April 20, 2004 and is filed as Exhibit 99.2 to this Current
Report and is hereby incorporated by reference into this description.
The consideration to be paid and preliminary purchase price allocation
based upon estimated fair values for the Blue Rhino LLC contribution are as
follows (in thousands):
Pro forma purchase price--
Assumption of liability for cash settlement
of the merger consideration................................ $318,443
Assumption of obligation related to stock
option and warrant plan of Blue Rhino LLC.................. 24,971
Common units issued to affiliate in exchange
for the contribution of membership interests
of Blue Rhino LLC to us................................... 4,685
Equity interest issued to general partner and
minority interest in exchange for contribution
of membership interests of Blue Rhino LLC to us
and our operating partnership.............................. 4,015
Assumption of liability related to replacement of
Mr. Prim's employment agreement............................ 2,500
Estimated acquisition-related costs and expenses,
including fees for consultants, attorneys,
accountants and other out-of-pocket costs.................. 1,700
Assumption of Blue Rhino LLC debt outstanding
on bank credit facility.................................... 37,900
---------
Total pro forma purchase price.............................. $394,214
=========
Allocation of purchase price --
Net working capital......................................... $ 26,114
Property, plant and equipment............................... 73,120
Identifiable intangible assets, including
customer lists, trademarks, patents, and
non-compete agreements..................................... 176,282
Goodwill.................................................... 120,351
Other assets................................................ 1,064
Long-term debt.............................................. (707)
Other liabilities and deferred credits...................... (2,010)
---------
Total pro forma allocation of purchase price.............. $394,214
=========
The foregoing pro forma purchase price is based upon the actual
amounts to be paid, fair values of liabilities to be assumed and
estimated remaining transaction-related costs. The preliminary
purchase price allocation is based on available information and
certain assumptions that management considers reasonable. The pro
forma allocation of purchase price will be based upon a final
determination of the fair market value of the net assets contributed
at closing as determined by valuations and other studies that are not
yet complete. The final purchase price allocation may differ from the
preliminary allocation.
b. The purchase of common units by Mr. James E. Ferrell, Chairman,
President and Chief Executive Officer of our general partner,
with an aggregate value of approximately $1.8 million.
c. Mr. Billy D. Prim, the Chairman and Chief Executive Officer of
Blue Rhino Corporation, entered into an employment agreement
dated February 8, 2004, with Ferrell Companies, Inc. and our
general partner that will become effective upon the closing of
the merger of a subsidiary of FCI Trading with and into Blue
Rhino Corporation in accordance with the terms of the Agreement
and Plan of Merger and that will supercede and replace Mr. Prim's
current employment agreement with Blue Rhino Corporation. The
replacement of Mr. Prim's current employment agreement will cost
$2.5 million. Mr. Prim has entered into a real property
contribution agreement with us dated February 8, 2004, pursuant
to which he will contribute to us real property in Yadkin County,
North Carolina currently leased to Blue Rhino Corporation in
exchange for common units with an aggregate value of $3.15
million.
d. Each of Mr. Prim and two additional Blue Rhino Corporation
stockholders entered into unit purchase agreements with us dated
February 8, 2004, pursuant to which they have agreed to purchase
common units with an aggregate value of $31 million.
e. Contribution of a portion of the membership interests in Blue
Rhino LLC valued at approximately $4.0 million by our general
partner to us and our operating partnership - At closing, our
general partner will contribute its membership interests in Blue
Rhino LLC to maintain its required 1% general partnership
interest in us and its required 1.0101% general partnership
interest in our operating partnership.
f. Issuance of $4.7 million of our common units to FCI Trading Corp.
for the contribution to us of its membership interests in Blue
Rhino LLC.
4. The pro forma adjustment to prepaid expenses and other current assets
reflect the elimination of the deferred income tax asset on Blue Rhino LLC
assets contributed to our operating partnership. The remaining deferred
income tax asset is related to Blue Rhino LLC assets contributed to a
taxable subsidiary of our operating partnership.
5. The pro forma adjustment to property, plant and equipment (in thousands):
Allocation of purchase price to property,
plant and equipment....................................... $73,120
Purchase of land from Mr. Prim............................. 3,150
Elimination of historical cost of property,
plant and equipment of Blue Rhino LLC..................... (85,499)
---------
Pro forma adjustment.................................. $ (9,229)
=========
6. The pro forma adjustment to goodwill (in thousands):
Goodwill associated with Blue Rhino LLC
contribution............................................. $120,351
Elimination of historical cost of goodwill
of Blue Rhino LLC........................................ (61,867)
---------
Pro forma adjustment................................. $ 58,484
=========
7. The pro forma adjustment to intangible assets, net (in thousands):
Intangible asset - trademarks associated with
Blue Rhino LLC contribution............................. $ 83,800
Intangible asset - customer list associated with
Blue Rhino LLC contribution ............................ 75,644
Intangible asset - patents associated with
Blue Rhino LLC contribution............................. 7,377
Intangible asset - noncompete agreements
associated with Blue Rhino LLC contribution............. 3,707
Intangible asset - other intangible assets
associated with Blue Rhino LLC contribution............. 5,754
Elimination of historical cost of intangibles
of Blue Rhino LLC...................................... (1,254)
---------
Pro forma adjustment................................ $175,028
=========
8. The pro forma adjustment to other assets reflects the debt issuance costs
incurred related to the issuance by subsidiaries of our operating
partnership of $250 million senior notes (described in footnote 11).
9. The pro forma adjustment to other current liabilities reflects the
repayment of some of Blue Rhino LLC's other current liabilities with
proceeds remaining from the issuance of common units.
10. The pro forma adjustment to short-term borrowings reflects the reduction in
borrowings with the proceeds remaining from our issuance of common units.
11. The pro forma adjustment to long-term debt (in thousands):
Issuance by subsidiaries of our operating partnership
of the $250 million senior notes net of discount............$ 249,093
Elimination of Blue Rhino LLC debt with proceeds from
the issuance of common units ............................... (32,650)
Reduction of our operating partnership's credit facility
borrowings classified as long-term from the issuance
of common units ............................................ (30,752)
----------
Pro forma adjustment.........................................$ 185,691
==========
12. The pro forma adjustment to other liabilities and deferred credits reflect
the elimination of some of the deferred income tax liability on Blue Rhino
LLC assets contributed to our operating partnership. The remaining deferred
income tax liability is related to Blue Rhino LLC assets contributed to a
taxable subsidiary of our operating partnership.
13. The pro forma adjustments to minority interest reflect the contribution
from our general partner of its membership interests in Blue Rhino LLC
(described in footnote 3).
14. The pro forma adjustments reflect the elimination of Blue Rhino
Corporation's stockholders' equity accounts.
15. The pro forma adjustments to common units (in thousands):
Common units issued to public, net of equity issuance fees.....$156,136
Common units issued in a private placement .................... 35,928
Common units issued to an affiliate............................ 4,685
--------
Pro forma adjustments.....................................$196,749
========
16. The pro forma adjustments to our general partner's capital reflects the
contribution from our general partner of its membership interests in Blue
Rhino LLC (described in footnote 3).
17. The pro forma adjustment to cost of goods sold reflects the change in
accounting policy for the purchase of cylinders and associated valves. Blue
Rhino Corporation's accounting policy expensed the cost of upgrading
cylinder valves and classified it as cost of goods sold. Blue Rhino
Corporation capitalized the cost of purchased cylinders and depreciated
cylinders over 25 years. Our accounting policy will result in the
capitalization of such valve costs and their depreciation over 2 years. The
cost of purchased cylinders will be depreciated over 20 years.
18. The pro forma adjustment to depreciation and amortization expense for the
six months ended January 31, 2004 (in thousands):
Elimination of historical depreciation and
amortization expense of Blue Rhino LLC..................... $(5,132)
Additional depreciation and amortization
expense reflecting the preliminary allocation
of purchase price:
Depreciation of amount allocated to property,
plant and equipment..................................... 3,482
Depreciation of amount allocated to cylinders
and associated valves................................... 6,400
Amortization of amount allocated to customer list
(15 year life).......................................... 2,521
Amortization of amount allocated to patents
(5 year life)........................................... 738
Amortization of amount allocated to noncompete
agreements (6 year life)................................ 309
Amortization of amount allocated to other
intangible assets (3-6 year life)....................... 2,536
---------
Pro forma adjustment.................................. $10,854
=========
19. The pro forma adjustment to interest expense for the six months ended
January 31, 2004 (in thousands):
Elimination of Blue Rhino LLC interest expense............ $1,261
Elimination of interest related to repayment
of a portion of our operating partnership's
credit facility at the existing average
interest rate of 3.4%.................................... 797
Additional interest expense related to--
Issuance by subsidiaries of our operating
partnership of $250 million senior notes net
of discount........................................... (8,483)
Amortization of debt issuance costs related
to the $250 million senior notes...................... (280)
--------
Pro forma adjustment................................ $(6,705)
========
The elimination of interest expense related to our operating partnership's
credit facility was determined based on
o repayment of $46.9 million of existing indebtedness with proceeds from
our issuance of common units and
o an average interest rate of 3.4%.
20. The pro forma adjustment to the minority interest in the consolidated
results reflects our general partner's interest in our operating
partnership.
21. The pro forma adjustment to the provision for income taxes reflects that we
and several of our subsidiaries are not subject to income tax and the
contribution of certain assets of Blue Rhino LLC into a taxable subsidiary
of our operating partnership.
22. The pro forma adjustment to depreciation and amortization expense for the
fiscal year ended July 31, 2003 (in thousands):
Elimination of historical depreciation and
amortization expense of Blue Rhino LLC................... $(9,261)
Additional depreciation and amortization
expense reflecting the preliminary allocation
of purchase price:
Depreciation of amount allocated to property,
plant and equipment................................... 6,959
Depreciation of amount allocated to cylinders
and associated valves................................. 9,700
Amortization of amount allocated to customer
list (15 year life)................................... 5,043
Amortization of amount allocated to patents
(5 year life)......................................... 1,475
Amortization of amount allocated to noncompete
agreements (6 year life).............................. 618
Amortization of amount allocated to other
intangible assets (3-6 year life)..................... 5,073
---------
Pro forma adjustment................................ $19,607
=========
23. The pro forma adjustment to interest expense for the fiscal year ended July
31, 2003 (in thousands):
Elimination of Blue Rhino LLC interest expense............. $ 7,784
Elimination of interest related to repayment
of a portion of our operating partnership's
credit facility at the existing average
interest rate of 3.8%..................................... 1,782
Additional interest expense related to--
Issuance by subsidiaries of our operating
partnership of $250 million senior notes net
of discount............................................ (16,966)
Amortization of debt issuance costs related to
the $250 million senior notes.......................... (561)
--------
Pro forma adjustment................................. $(7,961)
========
The elimination of interest expense related to our operating partnership's
credit facility was determined based on
o repayment of $46.9 million of existing indebtedness with proceeds from
our issuance of common units and
o an average interest rate of 3.8%.
24. The following forecast information has not been included in these unaudited
pro forma condensed combined financial statements but is presented as
follows to provide additional information about the Blue Rhino LLC
contribution.
We believe that:
o Blue Rhino LLC's counter-seasonal business activities and anticipated
future growth will provide us with the ability to better utilize our
seasonal resources;
o our over 600 retail locations will provide Blue Rhino LLC with a
network that complements its existing distributor network;
o we will achieve cost savings from the elimination of duplicative
general and administrative expenses, specifically insurance costs and
expenses related to Blue Rhino LLC's former status as a publicly-held
company; and
o Blue Rhino LLC will achieve savings by our provision of propane
procurement, storage and transportation logistics.
We believe that these cost saving opportunities can eliminate approximately $3
million of annual operating expense and $4 million of general and administrative
expense from the operations of Blue Rhino LLC based on the fiscal year used in
the unaudited pro forma condensed combined statement of earnings.