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 April 30, 1996
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: 33-53379
33-53379-01
Ferrellgas, L.P.
Ferrellgas Finance Corp.
(Exact name of registrants as specified in their charters)
Delaware 43-1698481
Delaware 43-1677595
(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 registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
At May 15, 1996, Ferrellgas Finance Corp. had 1,000 shares of $1.00 par value
common stock outstanding.
FERRELLGAS, L.P.
FERRELLGAS FINANCE CORP.
Table of Contents
PART I - FINANCIAL INFORMATION
Page
ITEM 1. FINANCIAL STATEMENTS
FERRELLGAS, L.P. AND SUBSIDIARIES
Consolidated Balance Sheets - April 30, 1996 and July 31, 1995 1
Consolidated Statements of Earnings - 2
Three months and nine months ended April 30, 1996 and 1995
Consolidated Statements of Partners' Capital - 3
Nine months ended April 30, 1996
Consolidated Statements of Cash Flows - 4
Nine months ended April 30, 1996 and 1995
Notes to Consolidated Financial Statements 5
FERRELLGAS FINANCE CORP.
Balance Sheets - April 30, 1996 and July 31, 1995 7
Statements of Earnings - 7
Three months and nine months ended April 30, 1996 and 1995
Statements of Stockholder's Equity - Nine months ended April 30, 1996 8
Statements of Cash Flows - Nine months ended April 30, 1996 and 1995 8
Note to Financial Statements 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 13
ITEM 2. CHANGES IN SECURITIES 13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 13
ITEM 5. OTHER INFORMATION 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
SIGNATURES 14
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FERRELLGAS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
April 30, July 31,
ASSETS 1996 1995
------------------------------------------------------------------------ --------------- -------------
(unaudited)
Current Assets:
Cash and cash equivalents $ 87,809 $ 29,877
Accounts and notes receivable 80,639 58,239
Inventories 24,316 44,090
Prepaid expenses and other current assets 5,619 5,884
--------------- -------------
Total Current Assets 198,383 138,090
Property, plant and equipment, net 342,593 345,642
Intangible assets, net 98,697 86,886
Other assets, net 7,456 7,978
--------------- -------------
Total Assets $647,129 $578,596
=============== =============
LIABILITIES AND PARTNERS' CAPITAL
------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 44,912 $ 57,729
Other current liabilities 30,278 31,432
Short-term borrowings 0 20,000
--------------- -------------
Total Current Liabilities 75,190 109,161
Long-term debt 272,307 338,188
Other liabilities 12,288 11,398
Contingencies and commitments
Partners' Capital:
Limited partner 284,442 118,638
General partner 2,902 1,211
--------------- -------------
Total Partners' Capital 287,344 119,849
--------------- -------------
Total Liabilities and Partners' Capital $647,129 $578,596
=============== =============
See notes to consolidated financial statements.
1
FERRELLGAS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands)
(unaudited)
Three months ended Nine months ended
- -------------------------------------------------- ------------------------------ --------------------------------
April 30, April 30, April 30, April 30,
1996 1995 1996 1995
-------------- ------------- -------------- -------------
Revenues:
Gas liquids and related product sales $181,241 $162,821 $522,446 $483,290
Other 9,502 5,192 31,266 22,797
-------------- ------------- -------------- -------------
Total revenues 190,743 168,013 553,712 506,087
Cost of product sold (exclusive of
depreciation, shown separately below) 105,263 94,759 300,844 285,059
-------------- ------------- -------------- -------------
Gross profit 85,480 73,254 252,868 221,028
Operating expense 45,742 40,638 134,362 120,334
Depreciation and amortization expense 8,703 8,443 25,839 23,855
General and administrative expense 2,981 3,118 9,535 8,366
Vehicle lease expense 1,418 1,080 3,621 3,227
-------------- ------------- -------------- -------------
Operating income 26,636 19,975 79,511 65,246
Interest expense (8,400) (8,221) (26,608) (23,536)
Interest income 443 433 1,068 947
Loss on disposal of assets (314) (126) (1,084) (429)
-------------- ------------- -------------- -------------
Net earnings $18,365 $12,061 $52,887 $42,228
============== ============= ============== =============
See notes to consolidated financial statements.
2
FERRELLGAS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(in thousands)
(unaudited)
Limited General Total partner's
partner partner capital
----------------- ----------------- -----------------
July 31, 1995 $118,638 $1,211 $119,849
Cash contributed in connection with debt offering 156,000 1,592 157,592
Assets contributed in connection with acquisitions 614 6 620
Additions to capital in connection
with acquisitions 3,938 41 3,979
Quarterly distributions (47,103) (480) (47,583)
Net earnings 52,355 532 52,887
----------------- ----------------- -----------------
April 30, 1996 $284,442 $2,902 $287,344
================= ================= =================
See notes to consolidated financial statements.
3
FERRELLGAS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine months ended
------------------------------------
April 30, April 30,
1996 1995
----------------- -----------------
Cash Flows From Operating Activities:
Net earnings $52,887 $42,228
Reconciliation of net earnings to net
cash from operating activities:
Depreciation and amortization 25,839 23,855
Other 3,068 2,283
Changes in operating assets and liabilities net of effects from business
acquisitions:
Accounts and notes receivable (21,800) (10,344)
Inventories 20,062 19,505
Prepaid expenses and other current assets 429 (1,143)
Accounts payable (12,573) (6,270)
Other current liabilities (2,602) (4,568)
Other 704 (100)
----------------- -----------------
Net cash provided by operating activities 66,014 65,446
----------------- -----------------
Cash Flows From Investing Activities:
Business acquisitions (3,342) (17,135)
Capital expenditures (10,391) (13,273)
Other 1,427 456
----------------- -----------------
Net cash used by investing activities (12,306) (29,952)
----------------- -----------------
Cash Flows From Financing Activities:
Contribution from partners 158,372 135
Net reductions to short-term borrowings (20,000) (3,000)
Additions to long-term debt (exclusive of debt assumed in 7,752 60,000
acquisitions)
Reductions of long-term debt (94,319) (53,750)
Distributions (47,583) (36,369)
Other 2 (16)
----------------- -----------------
Net cash provided (used) by financing activities 4,224 (33,000)
----------------- -----------------
Increase in cash and cash equivalents 57,932 2,494
Cash and cash equivalents - beginning of period 29,877 14,535
================= =================
Cash and cash equivalents - end of period $87,809 $17,029
================= =================
Cash paid for interest $31,839 $17,153
================= =================
See notes to consolidated financial statements.
4
FERRELLGAS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1996
(unaudited)
A. The unaudited consolidated financial statements 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.
B. The propane industry is seasonal in nature because propane is used
primarily for heating in residential and commercial buildings. Therefore,
the results of operations for the periods ended April 30, 1996 and April
30, 1995 are not necessarily indicative of the results to be expected for a
full year.
C. Supplementary balance sheet information (in thousands)
Inventories consist of:
April 30, July 31,
1996 1995
----------------- -----------------
Liquefied propane gas and related products $17,483 $37,550
Appliances, parts and supplies 6,833 6,540
----------------- -----------------
$24,316 $44,090
================= =================
In addition to inventories on hand, Ferrellgas, L.P. (the "Operating
Partnership or "OLP") enters into contracts to buy product for supply
purposes. All such contracts have terms of less than one year and call for
payment based on market prices at date of delivery.
Property, plant and equipment, net consist of:
April 30, July 31,
1996 1995
------------------ -----------------
Property, plant and equipment $528,740 $521,110
Less: accumulated depreciation 186,147 175,468
------------------ -----------------
$342,593 $345,642
================== =================
Intangibles, net consist of:
April 30, July 31,
1996 1995
------------------ -----------------
Intangibles $188,166 $168,881
Less: accumulated amortization 89,469 81,995
------------------ -----------------
$ 98,697 $ 86,886
================== =================
5
D. On April 26, 1996, Ferrellgas Partners, L.P. (the "Partnership" or "MLP")
issued $160,000,000 of 9 3/8% Senior Notes due 2006 ("Senior Notes") see note G.
The Senior Notes will become guaranteed by the Operating Partnership on a senior
subordinated basis if certain conditions are met. The Operating Partnership's
Credit Agreement and the Operating Partnership Indenture currently prohibit the
Operating Partnership from guaranteeing any indebtedness unless, among meeting
oher conditions, the fixed charge coverage ratio for the Operating Partnership
meets certain levels at prescribed dates. Currently the OLP does not meet such
conditions and, therefore, there can be no assurance as to whether or when this
guarantee will occur.
E. The Partnership is threatened with or named as a defendant in various
lawsuits which, 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
results of operations, financial condition or liquidity of the Operating
Partnership.
F. Partners' capital is comprised of a 98.9899% limited partner interest held
by the MLP and a 1.0101% General Partner interest held by Ferrellgas, Inc.
In connection with the Senior Note offering mentioned above, the MLP
contributed $156,000,000 in cash to the OLP, thereby increasing its limited
partner interest. This cash will be used to retire outstanding indebtedness
and for future acquisitions. The General Partner then contributed
$1,592,000 in cash to the OLP to maintain its 1.0101% equity ownership.
G. On April 30, 1996, Ferrellgas, Inc. ("Ferrellgas"), the General
Partner of the Operating Partnership, consummated the purchase of all
of the stock of Skelgas Propane, Inc. ("Skelgas"), a subsidiary of
Superior Propane, Inc. of Toronto, Canada for a cash purchase price of
$89,650,000 including $21,200,000 of working capital). Ferrellgas
borrowed the funds for such purchase from Bank of America National Trust &
Savings Association ("BofA" and the "BofA Acquisition Loan").
As of May 1, 1996, Ferrellgas (i) caused Skelgas and each of its
subsidiaries to be merged into Ferrellgas and (ii) transferred all of the
assets of Skelgas and its subsidiaries to the Operating Partnership. In
exchange, the Operating Partnership assumed substantially all of the
liabilities, whether known or unknown, associated with Skelgas and its
subsidiaries and their propane business (excluding income tax liabilities).
In consideration of the retention by Ferrellgas of certain income tax
liabilities, the Partnership issued 41,203 Common Units to Ferrellgas. The
liabilities assumed by the Operating Partnership included the obligations
of Ferrellgas under the BofA Acquisition Loan. Immediately following the
transfer of assets and related transactions described above, the Operating
Partnership repaid the BofA Acquisition Loan with cash and borrowings under
the Operating Partnership's existing acquisition bank credit line. The
accompanying financial statements do not reflect this subsequent event.
6
FERRELLGAS FINANCE CORP.
(A wholly owned subsidiary of
Ferrellgas, L.P.)
BALANCE SHEETS
April 30, July 31,
ASSETS 1996 1995
---------------------------------------------------------------- ---------------- ----------------
(unaudited)
Cash $1,000 $697
---------------- ----------------
Total Assets $1,000 $697
================ ================
LIABILITIES AND STOCKHOLDER'S EQUITY
----------------------------------------------------------------
Payable to affiliate $ - $153
Common stock, $1.00 par value; 2,000 shares
authorized; 1,000 shares issued and outstanding 1,000 1,000
Additional paid in capital 545 -
Accumulated deficit (545) (456)
---------------- ----------------
Total Stockholder's Equity 1,000 544
---------------- ----------------
Total Liabilities and Stockholder's Equity $1,000 $697
================ ================
- -------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF EARNINGS
(unaudited)
Three Months Ended Nine Months Ended
---------------------------------------- ----------------------------------------
April 30, April 30, April 30, April 30,
1996 1995 1996 1995
------------------- ------------------- ------------------- -------------------
General and administrative
expense $ - $ - $ 89 $ 40
------------------- ------------------- ------------------- -------------------
Net earnings (loss) $ - $ - $(89) $(40)
=================== =================== =================== ===================
See note to financial statements.
7
FERRELLGAS FINANCE CORP.
(a wholly owned subsidiary of Ferrellgas, L.P.)
STATEMENTS OF STOCKHOLDER'S EQUITY
Common Stock Additional Total
------------------------------------ paid in Accumulated stockholder's
Shares Dollars capital deficit equity
----------------- ----------------- ----------------- --------------- -----------------
July 31, 1995 1,000 $1,000 $ - $(456) $ 544
Capital contribution 545 - 545
Net earnings (loss) - (89) (89)
----------------- ----------------- ----------------- --------------- -----------------
April 30, 1996 1,000 $1,000 $545 $(545) $1,000
================= ================= ================= =============== =================
- --------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended
---------------------------------
April 30, April 30,
1996 1995
----------------- ------------------
Cash Flows From Operating Activities:
Net earnings (loss) $ (89) $ (40)
----------------- ------------------
Cash used by operating activities (89) (40)
----------------- ------------------
Cash Flows From Financing Activities:
Capital contribution 545 -
Net payment to affiliate (153) -
----------------- ------------------
Cash provided by financing activities 392 -
----------------- ------------------
Increase (decrease) in cash 303 (40)
Cash - beginning of period 697 1,000
----------------- ------------------
================= ==================
Cash - end of period $1,000 $960
================= ==================
See note to financial statements.
- ------------------------------------------------------------------------
NOTE TO FINANCIAL STATEMENTS
APRIL 30, 1996
(unaudited)
The unaudited financial statements 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.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Unaudited)
The following is a discussion of the results of operations and liquidity
and capital resources of the Operating Partnership.
Ferrellgas 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.
Results of Operations
The propane industry is seasonal in nature with peak activity during the
winter months. Due to the seasonality of the business, results of operations for
the three and nine months ended April 30, 1996 and 1995, 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.
Three Months Ended April 30, 1996 vs. April 30, 1995
Total Revenues. Total revenues increased 13.5% to $190,743,000 as compared
to $168,013,000 for the prior period. The increase is principally due to the
impact of colder weather on retail propane volumes and increased sales price per
gallon partially offset by revenues from other operations (net trading
operations, wholesale propane marketing and chemical feedstocks marketing) which
decreased 21.2% to $27,932,000. For the quarter ended April 30, 1996, winter
temperatures, as reported by the American Gas Association, were 12.7% colder
than the same period last year and 5.5% colder than normal.
The decrease in revenues from other operations is primarily due to a
decrease in chemical feedstocks marketing revenues due to a decrease in sales
volume and selling price. Both volume and selling price decreased as a result of
decreased availability of product from refineries and decreased demand from
petrochemical companies.
Gross Profit. Gross profit increased 16.7% to $85,480,000 as compared to
$73,254,000 for the prior period. The increase is primarily due to a $8,294,000
increase in retail sales gross profit and a $3,932,000 increase in other
operations gross profit. Retail propane operations results improved primarily
due to colder weather that resulted in a 12.6% increase in gallons sold to
183,458,000 gallons as compared to 162,914,000 gallons for the prior period.
Other operations results improved due to the high market volatility impact on
trading operations and improved wholesale propane marketing.
Operating Expenses. Operating expenses increased 12.6% to $45,742,000 as
compared to $40,638,000 for the prior period. The increase is attributable
principally to higher payroll and delivery cost associated with higher retail
and wholesale volumes and incremental costs of acquisitions.
Depreciation and Amortization. Depreciation and amortization expense
increased 3.1% to $8,703,000 as compared to $8,443,000 for the prior period
primarily due to acquisitions of propane businesses.
Interest Expense. Interest expense increased 2.2% to $8,400,000 as compared
to $8,221,000 in the prior period. This increase is primarily the result of the
increase in the net borrowings from the Operating Partnership's revolving credit
loans, partially offset by lower interest rates.
9
Nine months ended April 30, 1996 vs. April 30, 1995
Total Revenues. Total revenues increased 9.4% to $553,712,000 as compared
to $506,087,000 for the prior period. The increase is primarily attributable to
the impact of colder weather on retail volumes and increased sales price per
gallon in the second and third quarters and acquisitions of propane businesses,
partially offset by declines in revenues from other operations (net trading
operations, wholesale propane marketing and chemical feedstocks marketing) which
decreased 22.9% to $84,433,000 and the impact of warmer weather in the first
quarter. To date, fiscal 1996 winter temperatures, as reported by the American
Gas Association, are 14.3% colder than the same period last year and 3.0% colder
than normal.
The decrease in revenues from other operations is primarily due to a
decrease in chemical feedstocks marketing revenues due to a decrease in sales
volume and selling price. Both volume and selling price decreased as a result of
decreased availability of product from refineries and decreased demand from
petrochemical companies.
Gross Profit. Gross profit increased 14.4% to $252,868,000 as compared with
$221,028,000 for the prior period. The increase is primarily attributable to a
$24,673,000 increase from retail sales gross profit. Retail operations results
increased primarily due to an increase in gallons sold to 557,897,000 gallons as
compared to 493,584,000 for the prior period and improved sales mix, partially
offset by a slight decrease in retail margins. The increase in gallons is
primarily attributable to favorable weather and acquisition related growth.
Increased sales to the residential customer base improved the sales mix, while
greater price competition by independent operators and some major marketers
slightly reduced overall gross margin per gallon. Other operations increased
gross profit primarily due to the impact of colder weather.
Operating Expenses. Operating expenses increased 11.7% to $134,362,000 as
compared to $120,334,000 for the prior period. The increase is primarily
attributable to acquisitions of propane businesses as well as general increases
in payroll and delivery costs associated with higher retail and wholesale
volumes.
Depreciation and Amortization. Depreciation and amortization expense
increased 8.3% to $25,839,000 as compared to $23,855,000 for the prior period
due primarily to acquisitions of propane businesses.
Interest Expense. Interest expense increased 13.1% to $26,608,000 as
compared to $23,536,000 in the prior period. This increase is primarily the
result of the increase in the net borrowings from the Operating Partnership's
revolving credit loans, partially offset by decreasing interest rates.
10
Liquidity and Capital Resources
The ability of the Operating Partnership 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, 1996, the General
Partner believes that the Operating Partnership will generate sufficient
Avaliable Cash to meet its obligations and enable it to distribute to the
Partnership sufficient cash to permit the Partnership to meet its obligations
and enable it to distribute the Minimum Quarterly Distribution ($0.50 per Unit)
on all of the Partnership's Common Units and Subordinated Units. In general,
Available Cash equals the OLP's net cash flow adjusted for cash reserves. Future
maintenance and working capital needs of the Operating 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 Operating Partnership may borrow on
existing bank lines or the MLP may issue additional Common Units. Toward this
purpose, the MLP maintains a shelf registration statement filed with the
Securities and Exchange Commission registering 2,400,000 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 Operating
Partnership's acquisition of other businesses, properties or securities in
business combination transactions.
Cash Flows From Operating Activities. Cash provided by operating activities
was $66,014,000 for the nine months ended April 30, 1996. This slight increase
of $568,000 as compared to the nine months ended April 30, 1995 is primarily due
to the increased net income offset by the increase in accounts receivable.
Accounts receivable increased due to the colder weather impact of increased
deliveries of product in the third quarter as compared to the same period last
year.
Cash Flows From Investing Activities. During the nine months ended April
30, 1996, the Operating Partnershipmade total acquisition capital expenditures
of $29,322,000 (including $1,015,000 of working capital). This amount was
financed by $3,342,000 cash, $20,956,000 debt incurred, $3,900,000 issuance of
MLP equity units, and $1,124,000 other costs and consideration. 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. See "Subsequent Event" below
for discussion of a significant acquisition consummated in May, 1996.
During the nine months ended April 30, 1996, the Operating Partnership made
aggregate growth and maintenance capital expenditures of $10,391,000 consisting
primarily of the following: 1) additions to Partnership-owned customer tanks and
cylinders, 2) vehicle lease buyouts, 3) relocating and upgrading district plant
facilities, and 4) development and upgrading computer equipment and software.
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 Operating Partnership's principal physical
assets, are generally primarily long. The Operating Partnership maintains its
vehicle and transportation equipment fleet by leasing light- and medium-duty
trucks and trailers. The General Partner believes vehicle leasing is a cost
effective method for meeting the Operating Partnership's transportation
equipment needs. The Operating Partnership does not have any material
commitments of funds (other than the "Subsequent Event" described below) for
capital expenditures other than to support the current level of operations.
11
Cash Flows From Financing Activities. On April 26, 1996, the Partnership
issued $160,000,000 of 9 3/8% Senior Secured Notes due 2006. In connection with
this debt offering, the MLP contributed the net proceeds of $156,000,000 to the
OLP. The General Partner then contributed $1,592,000 in cash to the OLP to
maintain its 1.0101% equity ownership. A portion of the net proceeds was used to
retire outstanding indebtedness of $88,800,000 under the Operating Partnership's
credit facility. The remaining cash was held in cash equivalents to be used for
future acquisitions. See "Subsequent Event" below for discussion of a
significant acquisition consummated in May, 1996.
The Partnership's Senior Notes mentioned above will become guaranteed by
the Operating Partnership on a senior subordinated basis if certain conditions
are met. The Operating Partnership's Credit Agreement and the Operating
Partnership Indenture governing the OLP's Senior Notes currently prohibit the
Operating Partnership from guaranteeing any indebtedness unless, among meeting
other conditions, the fixed charge coverage ratio for the Operating Partnership
meets certain levels at prescribed dates. Currently the OLP does not meet such
conditions and, therefore, there can be no assurance as to whether or when this
guarantee will occur.
The Operating Partnership distributed $47,583,000 to the MLP during the
nine months ended April 30, 1996 which allowed the MLP to distribute its Minimum
Quarterly Distribution to all of the MLP's Common Units and Subordinated Units.
Effects of Inflation. In the past the Partnership has generally been able
to adjust its sales price of product in response to market demand, cost of
product, competitive factors and other industry trends. Consequently, changing
prices as a result of inflationary pressures has not had a material adverse
effect on profitability although revenues may be affected. Inflation has not
materially impacted the results of operations and management does not believe
normal inflationary pressures will have a material adverse effect on the
profitability of the Partnership in the future.
Subsequent Event. On April 30, 1996, Ferrellgas purchased all of the
capital stock of Skelgas for a cash purchase price of $89,650,000 (including
$21,200,000 of working capital). As of May 1, 1996 Ferrellgas (i) caused Skelgas
and each of its subsidiaries to be merged into Ferrellgas and (ii) transferred
all of the assets of Skelgas and its subsidiaries to the Operating Partnership.
In exchange, the Operating Partnership assumed substantially all of the
liabilities, whether known or unknown, associated with Skelgas and its
subsidiaries and their propane business (excluding income tax liabilities). The
liabilities assumed by the Operating Partnership included the obligations of
Ferrellgas under the BofA Acquisition Loan. Immediately following the transfer
of assets and related transactions described above, the Operating Partnership
repaid the BofA Acquisition Loan with cash and borrowings under the Operating
Partnership's existing acquisition bank credit line.
12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
3.1 Amended and Restated Agreement of Limited Partnership of
Ferrellgas, L.P. dated as of April 23, 1996.
4.1 Indenture dated as of April 26, 1996, among Ferrellgas Partners,
L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P., and
American Bank National Association, as trustee, relating to
$160,000,000 aggregate principal amount of 9 3/8% Senior Secured
Notes due 2006 (Incorporated by reference to Exhibit 4.1 to the
Registrants' Current Report on Form 8-K filed May 6, 1996.)
27.1 Financial Data Schedule (filed in electronic format only)
(b) Reports on Form 8-K
The registrants filed the following reports on Form 8-K during the
quarter ended April 30, 1996:
(1) Form 8-K dated March 27, 1996, reporting the signing of a letter
of intent to acquire Skelgas.
(2) Form 8-K dated April 10, 1996, reporting a private placement of
debt securities to qualified institutional investors under Rule
144A.
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
FERRELLGAS, L.P.
By Ferrellgas, Inc. (General Partner)
Date: June 12, 1996 By /s/ Danley K. Sheldon
----------------------
Danley K. Sheldon
Senior Vice President and
Chief Financial Officer (Principal
Financial and Accounting Officer)
By Ferrellgas Finance Corp.
Date: June 12, 1996 By /s/ Danley K. Sheldon
----------------------
Danley K. Sheldon
Senior Vice President and
Chief Financial Officer (Principal
Financial and Accounting Officer)
14