Exhibit 99.15
Condensed Consolidated Balance Sheets
As of January 31, 2004 and July 31, 2003
Ferrellgas, Inc. and Subsidiaries
FERRELLGAS, INC. AND SUBSIDIARIES
Table of Contents
Page
BALANCE SHEETS (unaudited)
Condensed Consolidated Balance Sheets 1
January 31, 2004 and July 31, 2003
Notes to Condensed Consolidated Balance Sheets 2
FERRELLGAS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Ferrell Companies, Inc.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
January 31, July 31,
ASSETS 2004 2003
- ------------------------------------------------------------------------------------ --------------- --------------
Current Assets:
Cash and cash equivalents $ 23,758 $ 12,311
Accounts and notes receivable, net 157,581 56,742
Inventories 83,976 69,077
Prepaid expenses and other current assets 8,900 8,366
--------------- --------------
Total Current Assets 274,215 146,496
Property, plant and equipment, net 754,230 741,792
Goodwill 363,134 363,134
Intangible assets, net 110,067 98,157
Other assets 8,650 8,897
--------------- --------------
Total Assets $1,510,296 $1,358,476
=============== ==============
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIENCY)
- ------------------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 116,813 $ 59,454
Other current liabilities 71,360 89,666
Short-term borrowings 42,700 -
--------------- --------------
Total Current Liabilities 230,873 149,120
Long-term debt 900,396 888,226
Deferred income taxes 2,401 2,401
Other liabilities 19,728 18,747
Contingencies and commitments (Note F) - -
Minority interest 225,512 171,220
Parent investment in subsidiary 204,706 201,466
Stockholder's Equity (Deficiency):
Common stock, $1 par value;
10,000 shares authorized; 990 shares issued 1 1
Additional paid-in-capital 14,268 13,824
Note receivable from parent (146,829) (146,864)
Retained earnings 61,053 62,303
Accumulated other comprehensive loss (1,813) (1,968)
--------------- --------------
Total Stockholder's Equity (Deficiency) (73,320) (72,704)
--------------- --------------
Total Liabilities and Stockholder's Equity (Deficiency) $1,510,296 $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
JANUARY 31, 2004
(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,
residual values of tanks, amortization methods of intangible assets and
valuation methods of intangible assets and 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.
D. Accounts receivable securitization
During the six months ended January 31, 2004, $26.0 million had been funded
from the Company's accounts receivable securitization facility. The Company
renewed this facility effective September 23, 2003, for a 364-day
commitment with Banc One, NA. At January 31, 2004, the Company did not have
any remaining capacity to transfer additional trade accounts receivable. 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 retained
interest in transferred accounts receivable. The retained interest is
classified on the condensed consolidated balance sheets within "Accounts
and notes receivable, net."
E. Supplemental financial statement information
Inventories consist of:
January 31, July 31,
2004 2003
---------------- -----------------
Propane gas and related products $65,461 $49,772
Appliances, parts and supplies 18,515 19,305
---------------- -----------------
$83,976 $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 January 31, 2004,
the Company had committed, for supply procurement purposes, to make net
delivery of approximately 4.1 million gallons of propane at a fixed price.
Property, plant and equipment, net consist of:
January 31, July 31,
2004 2003
---------------- -----------------
Property, plant and equipment $1,099,029 $1,075,689
Less: accumulated depreciation 344,799 333,897
---------------- -----------------
$ 754,230 $ 741,792
================ =================
During the six months ended January 31, 2004, The Company placed in service
$46.4 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:
January 31, 2004 July 31, 2003
-------------------------------------------- ------------------------------------------
Gross Gross
carrying Accumulated carrying Accumulated
amount amortization Net amount amortization Net
------------ ---------------- ------------ --------------- ---------------- ------------
Customer lists $230,203 $(134,337) $95,866 $220,061 $(133,548) $86,513
Non-compete agreements 68,228 (54,027) 14,201 64,020 (52,376) 11,644
------------ ---------------- ------------ --------------- ---------------- ------------
$298,431 $(188,364) $110,067 $284,081 $(185,924) $98,157
============ ================ ============ =============== ================ ============
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 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 ("FIN 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. In December 2003, the FASB issued a revision to FIN 46,
which addresses new effective dates and certain implementation issues. This
interpretation is generally effective for the periods ending after December
15, 2003. Among these issues is the addition of a scope exception for
certain entities that meet the definition of a business, provided certain
criteria are met. The Company currently believes it does not have any
variable interest entities that would be subject to this revised
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.
H. Transactions with related parties
JEF Capital Management ("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 $4.0 million and $5.6 million to JEF Capital Management
during the six months ended January 31, 2004 and 2003, respectively. On
January 31, 2004, Ferrellgas Partners accrued a senior unit distribution of
$2.0 million that Ferrellgas Partners paid to JEF Capital Management on
March 15, 2003.
Ferrell Companies is the sole shareholder of the Company and as of January
31, 2004, owned 17.8 million common units of Ferrellgas Partners. On
September 12, 2003, December 15, 2003, and March 15, 2004, Ferrellgas
Partners paid a common unit distribution of $8.9 million to Ferrell
Companies for the three month periods ended July 31, 2003, October 31,
2003, and January 31, 2004, respectively.
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, Inc. 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 February 25, 2004, JEF
Capital Management and Ferrellgas Partners extended the letter agreement
through December 31, 2004.
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 provides limited
accounting services for Ferrell International Limited.There were no amounts
due from or due to Ferrell International Limited at January 31, 2004.
I. Subsequent event - acquisition of Blue Rhino LLC
On April 20, 2004, FCI Trading Corp., a subsidiary of Ferrell Companies,
Inc., 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 0.2 million common units to
FCI Trading. Both Ferrellgas and FCI Trading have agreed to indemnify the
Company from any damages incurred by the Company 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. Finally, the Company received a contribution
of $4 million of membership interests in Blue Rhino LLC from FCI Trading
and subsequently contributed that membership interest to Ferrellgas in
order to maintain the Company's required 1% interest in Ferrellgas Partners
and its required 1.0101% general partnership interest in 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 $343
million.