FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) Quarterly Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For quarter ended April 30, 1994
Commission file number 33-38482
Ferrellgas, Inc.
Ferrell Companies, Inc.
One Liberty Oil Company
(Exact name of registrants as specified in their charters)
Delaware 73-1285864
Kansas 48-0587968
Missouri 43-1180681
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Nos.)
One Liberty Plaza, Liberty, Missouri 64068
(Address of principal executive offices)
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 ___
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of April 30, 1994:
Ferrellgas, Inc. - 990 shares of $1 par value common stock
Ferrell Companies, Inc.- 2,573,100 shares of Class A common stock
15,490 shares of $.01 par value Class M common stock
One Liberty Oil Company - 100 shares of $1 par value common stock
FERRELLGAS, INC.
FERRELL COMPANIES, INC.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Ferrellgas, Inc. and Subsidiaries
Consolidated Balance Sheet -
April 30, 1994, and July 31, 1993
Consolidated Statement of Earnings -
Three months ended April 30, 1994 and 1993
Consolidated Statement of Earnings -
Nine months ended April 30, 1994 and 1993
Consolidated Statement of Cash Flows -
Nine months ended April 30, 1994 and 1993
Notes to Consolidated Financial Statements
Ferrell Companies, Inc. and Subsidiaries
Consolidated Balance Sheet -
April 30, 1994, and July 31, 1993
Consolidated Statement of Earnings -
Three months ended April 30, 1994 and 1993
Consolidated Statement of Earnings -
Nine months ended April 30, 1994 and 1993
Consolidated Statement of Cash Flows -
Nine months ended April 30, 1994 and 1993
Notes to Consolidated Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FERRELLGAS, INC.
(a wholly-owned subsidiary of
Ferrell Companies, Inc.)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands except for share data)
April 30, July 31,
1994 1993
ASSETS (unaudited) (audited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $58,806 $32,706
Short-term investments 29,345 25,040
Accounts and notes receivable 55,869 52,190
Inventories 29,781 23,652
Prepaid expenses and other current assets 3,272 1,898
Receivable from parent and affiliate - 916
Total Current Assets 177,073 136,402
Property, plant and equipment 295,423 303,816
Intangible assets 65,569 72,537
Investment in Class B redeemable
common stock of parent 36,031 36,031
Other assets 22,017 21,833
Note receivable from parent 4,000 -
Deferred income taxes - 2,757
Total Assets $600,113 $573,376
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable $34,266 $32,946
Payable to parent and affiliate 91 -
Current portion of long-term debt 1,486 1,766
Accrued interest expense 17,237 10,374
Other current liabilities 19,829 16,908
Total Current Liabilities 72,909 61,994
Long-term debt 476,471 489,589
Other liabilities 10,534 10,434
Deferred income taxes 9,351 -
Stockholder's Equity:
Common stock, one dollar par value;
10,000 shares authorized; 990 shares issued 1 1
Additional paid-in capital 32,863 32,863
Accumulated deficit (2,016) (21,505)
Total Stockholder's Equity 30,848 11,359
Total Liabilities and Stockholder's Equity $600,113 $573,376
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FERRELLGAS, INC.
(a wholly-owned subsidiary of
Ferrell Companies, Inc.)
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(in thousands)
(unaudited)
For the three months ended
April 30, April 30,
1994 1993
(as restated)
<S> <C> <C>
Revenues:
Gas liquids and related product sales $140,606 $156,097
Other 5,735 4,209
Total Revenues 146,341 160,306
Costs and expenses:
Cost of product sold 73,347 87,050
Operating 38,761 40,257
Depreciation and amortization 6,910 7,601
General and administrative 2,256 2,428
Vehicle leases 1,059 1,271
Total costs and expenses 122,333 138,607
Operating income 24,008 21,699
Loss on disposal of assets (478) (428)
Interest income 1,098 925
Interest expense (14,409) (14,967)
Earnings before income taxes
and extraordinary loss 10,219 7,229
Income tax expense 3,906 2,822
Earnings before extraordinary loss 6,313 4,407
Loss on early extinguishment of
debt, net of $531 tax benefit 867 -
Net earnings $5,446 $4,407
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FERRELLGAS, INC.
(a wholly-owned subsidiary of
Ferrell Companies, Inc.)
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(in thousands)
(unaudited)
For the nine months ended
April 30, April 30,
1994 1993
(as restated)
<S> <C> <C>
Revenues:
Gas liquids and related product sales $430,401 $448,269
Other 20,076 20,033
Total Revenues 450,477 468,302
Costs and expenses:
Cost of product sold 229,326 256,736
Operating 112,687 112,553
Depreciation and amortization 21,688 23,238
General and administrative 8,128 7,385
Vehicle leases 3,203 3,682
Total costs and expenses 375,032 403,594
Operating income 75,445 64,708
Loss on disposal of assets (888) (947)
Interest income 2,791 2,333
Interest expense (44,233) (45,056)
Earnings before income taxes
and extraordinary loss 33,115 21,038
Income tax expense 12,759 8,253
Earnings before extraordinary loss 20,356 12,785
Loss on early extinguishment of
debt, net of $531 tax benefit 867 -
Net earnings $19,489 $12,785
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FERRELLGAS, INC.
(a wholly-owned subsidiary of
Ferrell Companies, Inc.)
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
For the nine months ended
April 30, April 30,
1994 1993
(as restated)
<S> <C> <C>
Cash Flows From Operating Activities:
Earnings before extraordinary loss $20,356 $12,785
Reconciliation of earnings to net
cash from operating activities:
Depreciation and amortization 21,688 23,238
Other 4,127 4,664
Decrease (increase) in assets:
Accounts and notes receivable (4,610) (4,023)
Inventories (6,129) 13,730
Prepaid expenses and other current assets (1,374) 206
Increase (decrease) in liabilities:
Accounts payable 1,320 (23,323)
Other current liabilities 10,278 11,959
Other liabilities (49) 151
Deferred income taxes 12,639 7,694
Net cash provided by operating activities 58,246 47,081
Cash Flows From Investing Activities:
Net short-term investment activity (4,305) (25,894)
Capital expenditures (8,330) (11,816)
Proceeds from asset sales 643 1,670
Additions to intangibles (62) (1)
Net additions to other assets (271) (2)
Net cash used by investing activities (12,325) (36,043)
Cash Flows From Financing Activities:
Reductions to long-term debt (13,336) (1,863)
Additional payments to retire debt (1,190) -
Additions to financing costs (53) (24)
Reacquisition of Class B redeemable
common stock - (3,218)
Net advances to related party (2,249) 585
Net advances to parent and affiliates (2,993) (274)
Net cash used by financing activities (19,821) (4,794)
Increase in Cash & Cash Equivalents 26,100 6,244
Cash and cash equivalents - beginning of year 32,706 27,959
Cash and Cash Equivalents - End of Period $58,806 $34,203
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
[FN]
FERRELLGAS, INC.
(a wholly-owned subsidiary of
Ferrell Companies, Inc.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED APRIL 30, 1994 AND 1993
(unaudited)
A. Reference should be made to the Notes to Financial
Statements for the fiscal years ending July 31, 1993,
1992 and 1991, included in the Ferrellgas, Inc. and
subsidiaries (the "Company") annual financial
statements on Form 10-K (Commission File No. 33-38482)
filed with the SEC.
B. Ferrellgas Partners, L.P. (the "Partnership"), was
formed, April 19, 1994, as a Delaware limited
partnership. The Partnership was formed to acquire,
own and operate the propane business and substantially
all of the assets of the Company. In order to simplify
the Partnership's obligations under the laws of several
jurisdictions in which the Partnership will conduct
business, the Partnership's activities will be
conducted through a subsidiary operating partnership,
Ferrellgas, L.P. (the "Operating Partnership"). The
Company will convey substantially all of its assets to
the Partnership (excluding cash, payables to or
receivables from affiliates and Ferrell Companies, Inc.
("Ferrell") and an investment in the Class B Stock of
Ferrell) and all liabilities, whether known or unknown,
associated with such assets (other than income tax
liabilities). The Partnership has not commenced
operations.
The Partnership intends to publicly offer 13,100,000
Common Units, representing limited partner interests in
the Partnership, to third parties and to concurrently
issue Common Units, Subordinated Units and Incentive
Distribution Rights, representing additional limited
partner interests in the Partnership, to the Company,
as well as a 2% general partner interest in the
Partnership and the Operating Partnership, on a
combined basis. The Company will make a dividend of
such Common Units, Subordinated Units and Incentive
Distribution Rights to its parent, Ferrell. Concurrent
with the closing of the sale of the Common Units to the
public, the Operating Partnership will issue
approximately $250,000,000 aggregate principal amount
of Senior Notes due 2001 (the "Senior Notes").
The Operating Partnership will assume the payment
obligations of the Company under the Series A and
Series C Floating Rate Senior Notes due 1996 (the
"Existing Floating Rate Senior Notes"), the Series B
and Series D Fixed Rate Senior Notes (the "Existing
Fixed Rate Senior Notes" together with the Existing
Floating Rate Senior Notes the "Existing Senior Notes")
and the 11 5/8% Senior
Subordinated Debentures (the "Existing Subordinated
Debentures"). Substantially all of this long-term debt
will be retired with the net proceeds from the sale by
the Partnership of the Common Units and the net
proceeds from the issuance of the Senior Notes to be
issued by the Operating Partnership concurrently with
the closing of the offering of the Common Units.
Concurrent with the closing of the offering of the
Common Units, the Company will consummate a tender
offer and consent solicitation with respect to the
Existing Subordinated Debentures. The consent
solicitation is necessary to modify the indenture
related to the Existing Subordinated Debentures in
order to permit the Company to consummate the
transactions contemplated in the offering of the Common
Units. All of the tendered Existing Subordinated
Debentures will be retired by the Operating
Partnership, as described above. The Operating
Partnership will agree with the Company to be primarily
responsible for the payment obligations of the Company
with respect to any Existing Subordinated Debentures
that are not tendered.
Concurrent with the closing of the offering of the
Common Units, the Company will mail to the holders of
the Existing Senior Notes a notice of redemption of all
outstanding Existing Senior Notes, pursuant to the
optional redemption provisions of the indenture
governing the Existing Senior Notes (the "Existing
Senior Notes Indenture"). The redemption date will be
30 days after the date of mailing such notice. The
Existing Senior Notes Indenture provides for a
redemption price equal to 100% of the principal amount
plus accrued and unpaid interest, if any, to the
redemption date plus, in the case of the Existing Fixed
Rate Notes, a premium which is based on certain yield
information for U.S. Treasury securities as of three
business days prior to the redemption date. The
Operating Partnership will deposit with the trustee on
the date of closing of the offering of the Common Units
an amount expected to be more than sufficient to pay
the redemption price. As a result of the contemplated
transactions during the 30-day period prior to the
redemption date, an event of default will exist under
the Existing Senior Notes Indenture. The holders of at
least 25% of the principal amount of the Existing
Senior Notes, therefore, will be entitled, by notice to
the Company and the trustee, to declare the unpaid
principal of, and accrued and unpaid interest and the
applicable premium on, the Existing Senior Notes to be
immediately due and payable. In the event of such a
redemption, the amount already deposited by the
Operating Partnership in payment of the redemption
price would be applied to pay the amount so declared
immediately due and payable.
C. The 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.
D. The propane industry is seasonal in nature with peak
activity during the winter months. Therefore, the
results of operations for the periods ended April 30,
1994 and 1993, are not necessarily indicative of the
results to be expected for a full year.
E. The Internal Revenue Service (IRS) has examined the
Company's consolidated income tax returns for the years
ended July 31, 1987 and 1986, and has proposed certain
adjustments which relate principally to the purchase
price allocations for an acquisition made during 1987.
The IRS has proposed to disallow $61 million of
deductions taken or to be taken for depreciation of
customer tanks for which the Company asserts the
methods and principles used during the valuation of the
customer tanks are defensible. Also, the IRS has
proposed to disallow $90 million of deductions for
amortization of customer relationships taken or to be
taken on the Company's consolidated income tax returns.
On April 20, 1993, the United States Supreme Court held
in Newark Morning Ledger v. United States that a
taxpayer may amortize customer based intangibles if
that taxpayer can prove such intangibles are capable of
being valued and the value diminishes over time. The
Company contends it has met this burden of proof and
feels this recent Supreme Court decision supports the
positions taken during the Company's allocation of
purchase price to customer relationships. The Company
intends to vigorously defend against these proposed
adjustments and is in the process of protesting these
adjustments through the appeals process of the IRS. At
this time, it is not possible to determine the ultimate
resolution of this matter.
F. In its previously issued consolidated financial
statements, the Company did not record the compensation
expense related to the Ferrell Companies, Inc. Long-
Term Incentive Plan (the "Plan"). Such charges
(credits) and the resulting liabilities were previously
recorded by Ferrell. The 1993 consolidated financial
statements have been restated to reflect compensation
charges (credits), net of income taxes, pursuant to the
Plan and any corresponding capital transaction with
Ferrell. The following is a summary of the principal
effects of the restatement:
Three months ended Nine months ended
April 30, 1993 April 30, 1993
As As
Previously As Previously As
Reported Restated Reported Restated
[S] [C] [C] [C] [C]
Summary of operations:
Interest income $ 990 $ 925 $ 2,508 $ 2,333
Earnings before income taxes 7,294 7,229 21,213 21,038
Income tax expense 2,847 2,822 8,320 8,253
Net earnings 4,447 4,407 12,893 12,785
[/FN]
<TABLE>
<CAPTION>
FERRELL COMPANIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands except for share data)
April 30, July 31,
1994 1993
ASSETS (unaudited) (audited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $61,806 $32,914
Short-term investments 29,345 25,040
Accounts and notes receivable 56,420 52,864
Inventories 29,781 23,652
Prepaid expenses and other current assets 3,296 1,903
Total Current Assets 180,648 136,373
Property, plant and equipment 295,474 303,867
Intangible assets 65,569 72,537
Other assets 23,052 22,877
Deferred income taxes - 2,421
Total Assets $564,743 $538,075
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable $34,372 $32,946
Current portion of long-term debt 1,486 1,951
Accrued interest expense 17,237 10,374
Other current liabilities 19,829 17,533
Total Current Liabilities 72,924 62,804
Long-term debt 476,471 489,589
Other liabilities 13,131 12,180
Deferred income taxes 9,558 -
Stockholders' Deficit:
Class A common stock, no par value;
3,550,000 shares authorized; 2,573,100 shares 211 211
issued
Class M common stock, $.01 par value;
30,000 shares authorized; 15,490 shares - -
issued
Additional paid-in capital 751 826
Accumulated deficit (8,303) (27,535)
Total Stockholders' Deficit (7,341) (26,498)
Total Liabilities and Stockholders' Deficit $564,743 $538,075 <FN>
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FERRELL COMPANIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(in thousands except per share data)
(unaudited)
For the three months ended
April 30, April 30,
1994 1993
(as restated)
<S> <C> <C>
Revenues:
Gas liquids and related product sales $140,606 $156,097
Other 5,737 4,209
Total Revenues 146,343 160,306
Costs and expenses:
Cost of product sold 73,347 87,050
Operating 38,761 40,257
Depreciation and amortization 6,910 7,601
General and administrative 2,340 2,492
Vehicle leases 1,059 1,271
Total costs and expenses 122,417 138,671
Operating income: 23,926 21,635
Loss on disposal of assets (478) (428)
Interest income 1,065 952
Interest expense (14,409) (14,933)
Earnings before income taxes
and extraordinary loss 10,104 7,226
Income tax expense 3,862 2,821
Earnings before extraordinary loss 6,242 4,405
Loss on early extinguishment of
debt, net of $531 tax benefit 867 -
Net earnings $5,375 $4,405
Net earnings (loss) per common share:
Earnings before extraordinary loss $2.40 $1.68
Extraordinary loss (0.33) -
Net earnings per share $2.07 $1.68
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FERRELL COMPANIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(in thousands)
(unaudited)
For the nine months ended
April 30, April 30,
1994 1993
(as restated)
<S> <C> <C>
Revenues:
Gas liquids and related product sales $430,401 $448,269
Other 20,081 20,039
Total Revenues 450,482 468,308
Costs and expenses:
Cost of product sold 229,326 256,736
Operating 112,687 112,553
Depreciation and amortization 21,688 23,238
General and administrative 8,428 7,631
Vehicle leases 3,203 3,682
Total costs and expenses 375,332 403,840
Operating income: 75,150 64,468
Loss on disposal of assets (888) (947)
Interest income 2,742 2,467
Interest expense (44,234) (44,952)
Earnings before income taxes
and extraordinary loss 32,770 21,036
Income tax expense 12,628 8,252
Earnings before extraordinary loss 20,142 12,784
Loss on early extinguishment of
debt, net of $531 tax benefit 867 -
Net earnings $19,275 $12,784
Net earnings (loss) per common share:
Earnings before extraordinary loss $7.76 $4.85
Extraordinary loss (0.33) -
Net earnings per share $7.43 $4.85
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FERRELL COMPANIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
For the nine months ended
April 30, April 30,
1994 1993
(as restated)
<S> <C> <C>
Cash Flows From Operating Activities:
Earnings before extraordinary loss $20,142 $12,784
Reconciliation of earnings to net
cash from operating activities:
Depreciation and amortization 21,688 23,238
Other 4,127 4,664
Decrease (increase) in assets:
Accounts and notes receivable (4,487) (4,014)
Inventories (6,129) 13,730
Prepaid expenses and other current assets (1,393) 1,702
Increase (decrease) in liabilities:
Accounts payable 1,426 (23,323)
Other current liabilities 9,653 11,845
Other liabilities 802 (1,977)
Deferred income taxes 12,510 7,694
Net cash provided by operating activities 58,339 46,343
Cash Flows From Investing Activities:
Net short-term investment activity (4,305) (25,894)
Capital expenditures (8,330) (11,816)
Proceeds from asset sales 643 1,670
Additions to intangibles (62) -
Net reductions (additions) to other assets (262) 69
Net cash used by investing activities (12,316) (35,971)
Cash Flows From Financing Activities:
Reductions to long-term debt (13,521) (1,885)
Additional payments to retire debt (1,190) -
Additions to financing costs (53) (24)
Reacquisition of Class B redeemable
common stock - (3,320)
Proceeds from issuance of Class M common
common stock 142 527
Reacquisition of Class M common stock (260) (48)
Net advances to related party (2,249) 585
Net cash used by financing activities (17,131) (4,165)
Increase in Cash & Cash Equivalents 28,892 6,207
Cash and cash equivalents - beginning of year 32,914 28,151
Cash and Cash Equivalents - End of Period $61,806 $34,358
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
[FN]
FERRELL COMPANIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED APRIL 30, 1994 AND 1993
(unaudited)
A. Reference should be made to the Notes to Consolidated
Financial Statements for the fiscal years ending July
31, 1993, 1992 and 1991, included in the Ferrell
Companies, Inc. and subsidiaries (the "Company") annual
financial statements on Form 10-K (Commission File No.
33-38482) filed with the SEC.
B. Ferrellgas Partners, L.P. (the "Partnership"), was
formed, April 19, 1994, as a Delaware limited
partnership. The Partnership was formed to acquire,
own and operate the propane business and substantially
all of the assets of Ferrellgas, Inc. and subsidiaries
("Ferrellgas"). In order to simplify the Partnership's
obligations under the laws of several jurisdictions in
which the Partnership will conduct business, the
Partnership's activities will be conducted through a
subsidiary operating partnership, Ferrellgas, L.P. (the
"Operating Partnership"). Ferrellgas will convey
substantially all of its assets to the Partnership
(excluding cash, payables to or receivables from
affiliates and Ferrell Companies, Inc. ("Ferrell") and
an investment in the Class B Stock of Ferrell) and all
liabilities, whether known or unknown, associated with
such assets (other than income tax liabilities). The
Partnership has not commenced operations.
The Partnership intends to publicly offer 13,100,000
Common Units, representing limited partner interests in
the Partnership, to third parties and to concurrently
issue Common Units, Subordinated Units and Incentive
Distribution Rights, representing additional limited
partner interests in the Partnership, to Ferrellgas, as
well as a 2% general partner interest in the
Partnership and the Operating Partnership, on a
combined basis. Ferrellgas will make a dividend of
such Common Units, Subordinated Units and Incentive
Distribution Rights to Ferrell. Concurrent with the
closing of the sale of the Common Units to the public,
the Operating Partnership will issue approximately
$250,000,000 aggregate principal amount of Senior Notes
due 2001 (the "Senior Notes").
The Operating Partnership will assume the payment
obligations of Ferrellgas under the Series A and Series
C Floating Rate Senior Notes due 1996 (the "Existing
Floating Rate Senior Notes"), the Series B and Series D
Fixed Rate Senior Notes (the "Existing Fixed Rate
Senior Notes" together with the Existing Floating Rate
Senior Notes the "Existing Senior Notes") and the 11
5/8% Senior Subordinated Debentures (the "Existing
Subordinated Debentures"). Substantially all of this
long-term debt will be retired with the net proceeds
from the sale by the Partnership of the Common Units
and the net proceeds from the issuance of the Senior
Notes to be issued by the Operating Partnership
concurrently with the closing of the offering of the
Common Units.
Concurrent with the closing of the offering of the
Common Units, Ferrellgas will consummate a tender offer
and consent solicitation with respect to the Existing
Subordinated Debentures. The consent solicitation is
necessary to modify the indenture related to the
Existing Subordinated Debentures in order to permit
Ferrellgas to consummate the transactions contemplated
in the offering of the Common Units. All of the
tendered Existing Subordinated Debentures will be
retired by the Operating Partnership, as described
above. The Operating Partnership will agree with
Ferrellgas to be primarily responsible for the payment
obligations of Ferrellgas with respect to any Existing
Subordinated Debentures that are not tendered.
Concurrent with the closing of the offering of the
Common Units, Ferrellgas will mail to the holders of
the Existing Senior Notes a notice of redemption of all
outstanding Existing Senior Notes, pursuant to the
optional redemption provisions of the indenture
governing the Existing Senior Notes (the "Existing
Senior Notes Indenture"). The redemption date will be
30 days after the date of mailing such notice. The
Existing Senior Notes Indenture provides for a
redemption price equal to 100% of the principal amount
plus accrued and unpaid interest, if any, to the
redemption date plus, in the case of the Existing Fixed
Rate Notes, a premium which is based on certain yield
information for U.S. Treasury securities as of three
business days prior to the redemption date. The
Operating Partnership will deposit with the trustee on
the date of closing of the offering of the Common Units
an amount expected to be more than sufficient to pay
the redemption price. As a result of the contemplated
transactions during the 30-day period prior to the
redemption date, an event of default will exist under
the Existing Senior Notes Indenture. The holders of at
least 25% of the principal amount of the Existing
Senior Notes, therefore, will be entitled, by notice to
Ferrellgas and the trustee, to declare the unpaid
principal of, and accrued and unpaid interest and the
applicable premium on, the Existing Senior Notes to be
immediately due and payable. In the event of such a
redemption, the amount already deposited by the
Operating Partnership in payment of the redemption
price would be applied to pay the amount so declared
immediately due and payable.
C. The 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.
D. The propane industry is seasonal in nature with peak
activity during the winter months. Therefore, the
results of operations for the periods ended April 30,
1994 and 1993, are not necessarily indicative of the
results to be expected for a full year.
E. The Internal Revenue Service (IRS) has examined the
Company's consolidated income tax returns for the years
ended July 31, 1987 and 1986, and has proposed certain
adjustments which relate principally to the purchase
price allocations for an acquisition made during 1987.
The IRS has proposed to disallow $61 million of
deductions taken or to be taken for depreciation of
customer tanks for which the Company asserts the
methods and principles used during the valuation of the
customer tanks are defensible. Also, the IRS has
proposed to disallow $90 million of deductions for
amortization of customer relationships taken or to be
taken on the Company's consolidated income tax returns.
On April 20, 1993, the United States Supreme Court held
in Newark Morning Ledger v. United States that a
taxpayer may amortize customer based intangibles if
that taxpayer can prove such intangibles are capable of
being valued and the value diminishes over time. The
Company contends it has met this burden of proof and
feels this recent Supreme Court decision supports the
positions taken during the Company's allocation of
purchase price to customer relationships. The Company
intends to vigorously defend against these proposed
adjustments and is in the process of protesting these
adjustments through the appeals process of the IRS. At
this time, it is not possible to determine the ultimate
resolution of this matter.
F. The Company has determined that the estimated value of
the Ferrell Companies, Inc. Long-Term Incentive Plan
and the corresponding compensation expense recorded in
its previously issued 1993 consolidated financial
statements were understated. Accordingly, the
consolidated financial statements for 1993 have been
restated. The following is a summary of the principal
effects of the restatement:
Three months ended Nine months ended
April 30, 1993 April 30, 1993
As As
Previously As Previously As
Reported Restated Reported Restated
[S] [C] [C] [C] [C]
Summary of operations:
Costs and expenses $138,671 $138,671 $402,916 $403,840
Operating income 21,635 21,635 65,392 64,468
Income tax expense 7,226 7,226 8,603 8,252
Net earnings 4,405 4,405 13,357 12,784
Net earnings per share $1.68 $1.68 $5.06 $4.85
[/FN]
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the historical
financial condition and results of operations of Ferrellgas,
Inc. and its subsidiaries (the "Company") and Ferrell
Companies, Inc. and its subsidiaries ("Ferrell"). The
discussion should be read in conjunction with the financial
statements and the notes thereto included elsewhere in this
Form 10-Q.
In its previously issued consolidated financial
statements, the Company did not record the compensation
expense related to the Ferrell Companies, Inc. Long-Term
Incentive Plan (the "Plan"). Such charges (credits) and the
resulting liabilities were previously recorded by Ferrell.
The accompanying consolidated financial statements are
restated to reflect compensation charges (credits), net of
income taxes, pursuant to the Plan and any corresponding
capital transaction with Ferrell. The effects of recording
the adjustments by Ferrellgas are reflected in the following
discussions of the Company's historical financial condition
and results of operations.
Results of Operations - the Company
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, 1994, 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, 1994 vs. April 30, 1993
Total Revenues. Total revenues decreased 8.7% to
$146,341,000 as compared with $160,306,000 for the prior
period. The overall decrease is attributable to revenues
from retail operations decreasing 6.1% to $128,716,000 and
by other operations (net trading operations, wholesale
propane marketing and chemical feedstocks marketing)
decreasing 24% to $17,625,000.
The decrease in revenues from retail operations results
primarily from decreases in sales volume and selling price.
The decrease in sales volume is due to warmer temperatures
than that which existed in the prior period while the
decrease in selling price is due to lower product cost. The
decrease in selling price and gallons sold, excluding the
effects of acquisitions, decreased revenue by $6,158,000 and
$3,032,000, respectively. Fiscal year 1994 and 1993
acquisitions increased revenues by $506,000.
The decrease in other operations revenue is primarily
attributable to wholesale propane marketing's decreased
product cost and sales volume as discussed previously for
retail operations and to chemical feedstocks decreased
product availability. These decreases are offset by
increased net trading results due to increased market
volatility relative to the prior period.
Gross Profit. Gross profit decreased 0.4% to $72,994,000
as compared with $73,256,000, for the prior period,
primarily due to a decrease in retail operations gross
profit due to decreased sales volume as discussed previously
and normal fluctuations in the Company's product mix. These
decreases are offset by an increase in net trading results
due to increased market volatility relative to the prior
period.
Operating Expense. Operating expenses decreased 3.7% to
$38,761,000 as compared with $40,257,000, for the prior
period, due to a decrease in general liability and worker's
compensation expense due to improved claims administration
and a decrease in sales and use tax audit assessments.
These decreases are primarily offset by an increase in
incentive compensation, variable labor, overtime, and
property repair expenses.
General and Administrative Expenses. General and
administrative expenses decreased 7.1% to $2,256,000 as
compared with $2,428,000 for the prior period due primarily
to increased capitalization of internal software development
costs.
Depreciation and Amortization. Depreciation expense
decreased 9.1% to $6,910,000 as compared with $7,601,000 for
the prior period due primarily to extending the useful life
of the Company's vehicles beyond the depreciable life and to
the reduction in the number of Company owned vehicles.
Net Interest Expense. Net interest expense decreased 5.2%
to $13,311,000 as compared with $14,042,000 for the prior
period due to the reacquisition of $11,900,000 and
$10,500,000 of senior notes in the third quarter of fiscal
year 1994 and the fourth quarter of fiscal year 1993,
respectively, offset by increased non-cash amortization of
financing costs.
Net Earnings. Net earnings increased 23.6% to $5,446,000
as compared with $4,407,000 for the prior period primarily
due to the decrease in operating, general and
administrative, and net interest expenses offset by the
extraordinary loss from early extinguishment of debt.
Nine Months Ended April 30, 1994 vs. April 30, 1993
Total Revenues. Total revenues decreased 3.8% to
$450,477,000 as compared with $468,302,000 for the prior
period. The overall decrease is attributable to revenues
from other operations (net trading operations, wholesale
propane marketing and chemical feedstocks marketing)
decreasing 23.1% to $56,237,000 and revenues from retail
operations decreasing 0.2% to $394,240,000.
The decrease in revenues from other operations is
primarily due to higher sales of chemical feedstocks in the
prior period resulting from sales of chemical feedstocks
that were designated for storage but were sold due to prior
period storage limitations. Additional decreases are the
result of lower product cost and sales volume for wholesale
propane marketing and decreased net trading results due to
reduced market volatility relative to the prior period.
The decrease in revenues from retail operations is
primarily due to a decrease in selling price offset by an
increase in sales volume due to cooler temperatures than
that which existed in the prior period. The volume of
gallons sold, excluding acquisitions, increased revenues by
$3,339,000. Fiscal year 1994 and 1993 acquisitions
increased revenues in the nine months ended, April 30, 1994,
by $1,659,000. These increases are offset by a $6,775,000
decrease in sales price due to lower product costs.
Gross Profit. Gross profit increased 4.5% to $221,151,000
as compared with $211,566,000 for the prior period,
primarily due to an increase in retail operations gross
profit. Retail operations results improved due to increased
sales volume as discussed previously and to margin increases
as a result of favorable changes in the competitive
pressures of the industry and to normal fluctuations in the
Company's product mix.
Operating Expense. Operating expenses increased 0.1% to
$112,687,000 as compared with $112,553,000, for the prior
period, primarily due to i) an increase in incentive
compensation expense and ii) an increase in overtime,
variable labor and vehicle expenses due to increased sales
volume. These increases are primarily offset by a decrease
in general liability and worker's compensation expense due
to improved claims administration and a decrease in sales
and use tax audit assessments.
General and Administrative Expenses. General and
administrative expenses increased 10.1% to $8,128,000 as
compared with $7,385,000 for the prior period due to
increased incentive compensation expense. This increase is
primarily offset by a reduction in facilities rent due to
the purchase of the Liberty, Missouri, corporate offices in
the second and third quarters of fiscal year 1993.
Depreciation and Amortization. Depreciation expense
decreased 6.7% to $21,688,000 as compared with $23,238,000
for the prior period due primarily to extending the life of
the Company's vehicles beyond the depreciable life and to
the reduction in the number of Company owned vehicles.
Net Interest Expense. Net interest expense decreased 3.0%
to $41,442,000 as compared with $42,723,000 for the prior
period due to the reacquisition of $11,900,000 and
$10,500,000 of senior notes in the third quarter of fiscal
year 1994 and the fourth quarter of fiscal year 1993,
respectively, offset by increased non-cash amortization of
financing costs.
Net Earnings. Net earnings increased 52.4% to $19,489,000
as compared with $12,785,000 for the prior period primarily
due to the increase in retail operations sales volume and
margins offset by increased operating and general and
administrative expenses and the fiscal year 1994
extraordinary loss from early extinguishment of debt.
Liquidity and Capital Resources - the Company
For the nine months ended April 30, 1994, the Company's
cash flow provided by operations (as measured by operating
income before depreciation and amortization) was
$97,133,000, which was sufficient to (i) make interest
payments and required reductions to existing debt and (ii)
make purchases of property, plant and equipment.
Cash Flows From Operating Activities. Cash provided by
operating activities increased to $58,246,000 for the nine
months ended April 30, 1994, as compared with $46,951,000
for the prior period. This increase is primarily
attributable to an increase in net earnings and accounts
payable offset by an increase in inventory.
Cash Flows From Investing Activities. During the nine
months ended April 30, 1994, the Company made aggregate
property, plant and equipment and other acquisition
expenditures of $8,417,000. Total capital expenditures are
essentially governed by the cash interest coverage ratio
covenants contained in the various debt agreements. These
covenants limit capital expenditures depending upon the
amount of cash flow and cash interest expense of the
Company.
The Company maintains its vehicle and transportation
equipment fleet by leasing light and medium duty trucks and
tractors. The Company believes vehicle leasing is a cost
effective method for obtaining transportation capacity.
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 Company's principal physical assets, are
generally long.
The Company invested in United States Treasury Bills and
U.S. Government obligations with remaining maturities, as of
April 30, 1994, ranging from four to ten months. These
investments are presented as short-term investments in the
Company's consolidated financial statements.
Cash Flows From Financing Activities. In the third
quarter of fiscal year 1994, the Company reacquired
$11,900,000 of the fixed rate senior notes, at an aggregate
price of 110% of face value, together with accrued interest.
The early extinguishment of senior notes resulted in an
extraordinary loss from debt premium and write-off of
financing costs of approximately $867,000, net of income tax
benefit of $531,000.
The Company currently has a $50,000,000 bank credit
facility that provides for a working capital facility and a
letter of credit facility. The facilities terminate July
31, 1995. At April 30, 1994, there were no borrowings
outstanding under the working capital facility and letters
of credit outstanding under the letter of credit facility,
which are primarily used to secure obligations under certain
insurance and leasing arrangements, totaled $32,778,000,
resulting in an available bank credit facility of
$17,222,000. The Company does not have any significant
commitments for fixed asset acquisitions, unusual working
capital commitments or contingent liabilities that might
materially affect short-term or long-term liquidity.
Effects of Inflation. In the past the Company has 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 the Company does not believe normal
inflationary pressures will have a material adverse effect
on the profitability of the Company in the future.
Adoption of New Accounting Standards. The Company
provides certain medical benefits to a closed group of
retired employees and their spouses. Effective, August 1,
1993, the Company adopted Statement of Financial Accounting
Standards No. 106 - Employers' Accounting for Post
Retirement Benefits Other Than Pensions. The Company
elected to amortize the accumulated obligation for
postretirement benefits over a period not to exceed the
remaining life expectancy of the plan participants (since
all of the plan participants are retired). The cumulative
effect and the effect on operations for the nine months
ended April 30, 1994, which result from adoption of the
standard were not material.
The Financial Accounting Standards Board has issued
Statement of Financial Accounting Standards No. 112 -
Employers' Accounting for Postemployment Benefits which is
effective for fiscal years beginning after December 15,
1993. This statement requires that employers recognize over
the service lives of employees the costs of postemployment
benefits if certain conditions are met. The Company does
not believe that adoption of the statement will have a
material impact on the financial condition or results of
operations of the Company.
The Financial Accounting Standards Board has issued
Statement of Financial Accounting Standards No. 115 -
Accounting for Certain Investments in Debt and Equity
Securities, which is effective for fiscal years beginning
after December 15, 1993. The statement addresses the
accounting and reporting for certain investments in debt and
equity securities and expands the use of value accounting
for those securities but retains the use of the amortized
cost method for investments that the Company has the
positive intent and ability to hold to maturity. The
Company does not believe that the adoption of this statement
will have a material effect on the results of operations or
financial condition of the Company.
Pro Forma Financial Condition
The Company currently anticipates that the transactions
described in Note B to the Financial Statements will be
completed during its fourth fiscal quarter. Upon the
consummation of such transaction, the Partnership will own
and operate the propane business and substantially all of
the assets of the Company. In connection with the
acquisition of such business and assets, the Partnership
will assume all of the liabilities, whether known or
unknown, associated with such business and assets (other
than income tax liabilities).
The ability of the Partnership to satisfy its obligations
will be dependent upon future performance, which will be
subject to prevailing economic conditions and to financial,
business and weather conditions and other factors, many of
which are beyond its control. Future capital needs of the
Partnership are expected to be provided by future
operations, existing cash balances and the working capital
facility. The Partnership may incur additional indebtedness
in order to fund possible future acquisitions.
The Senior Notes. The following is a summary of the terms
of the Senior Notes, which will be issued pursuant to an
Indenture (the "Indenture"). The Senior Notes will be
unsecured general obligations of the Operating Partnership
and will be recourse to the General Partner in its capacity
as the general partner of the Operating Partnership. The
Senior Notes will mature in 2001 and will not require any
mandatory redemption or sinking fund payment prior to
maturity. The Senior Notes are redeemable at the option of
the Operating Partnership, in whole or in part, at any time
on or after four years from issuance at redemption prices
specified in the Indenture, plus accrued and unpaid interest
to the date of redemption. Upon the occurrence of certain
events constituting a "Change of Control" (as defined in the
Indenture), including if James E. Ferrell or his affiliates
do not control the Company, other than in certain limited
circumstances, holders of the Senior Notes will have the
right to require the Operating Partnership to purchase each
such holder's Senior Notes, in whole or in part, at a
purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest to the date of
purchase.
The Indenture will contain customary covenants applicable
to the Operating Partnership and its subsidiaries, including
limitations on the ability of the Operating Partnership and
its subsidiaries to, among other things, incur additional
indebtedness (other than certain permitted indebtedness) and
issue preferred interests, create liens, incur dividend and
other payment restrictions affecting subsidiaries, enter
into mergers, consolidations or sales of all or
substantially all assets, make asset sales and enter into
transactions with affiliates. Under the Indenture, the
Operating Partnership will be permitted to make cash
distributions in an amount in such fiscal quarter not to
exceed Available Cash of the Operating Partnership (as
defined in the Indenture) for the immediately preceding
fiscal quarter. Such restrictions are not anticipated to
preclude the Partnership from making distributions of at
least the Minimum Quarterly Distribution on all Common Units
in each quarter during the Subordination Period. In
addition, the Operating Partnership will be prohibited from
making any distribution to the Partnership if a default or
event of default exists or would exist upon making such
distribution or if it fails to meet the cash flow coverage
test set forth therein.
Credit Facility. Immediately prior to the closing of the
transactions, the Operating Partnership expects to enter
into a three year unsecured credit facility (the "Credit
Facility") with a group of commercial banks, providing a
maximum $185 million commitment for borrowings and letters
of credit. The Credit Facility will consist of (i) a $100
million revolving line of credit which will be available to
fund working capital requirements, of which up to $50
million will be available to issue standby and commercial
letters of credit, and (ii) and $85 million revolving credit
and term facility (the "Capital Facility"), of which up to
$25 million will be on a non-revolving term basis and will
be available to retire existing indebtedness of Ferrellgas
upon the closing of the transactions, and the remainder will
be available on a revolving basis for possible future
acquisitions and other expansive activities. In connection
with the transactions to be consummated at the closing of
the Transactions, the Operating Partnership expects to
borrow approximately $10 million under the Credit Facility
to establish an initial cash balance of $20 million. Any
unused portion of the $25 million tranche will become
available under the revolving Capital Facility. At the end
of the three year term, borrowings outstanding under the
Capital Facility may be converted, at the option of the
borrower, into a three year term loan which will amortize in
twelve equal quarterly principal installments beginning on
September 30, 1997. At the Operating Partnership's option,
amounts outstanding under the Credit Facility will bear
interest based on the reserve-adjusted LIBOR plus a margin
percentage of the agent bank's reference rate and the
current Federal Funds Rate plus 1/2%.
Entering into the Credit Facility is conditioned on, among
other things, the successful public offering of the Common
Units and the Senior Notes, the cancellation of Ferrellgas'
current $50 million revolving credit facility, and the
execution of satisfactory documentation. The Credit
Facility will contain covenants and default provisions usual
and customary to similar credit facilities, which covenants
and default provisions are anticipated to be similar to
those for the Senior Notes.
Results of Operations, Liquidity and Capital Resources -
Ferrell
Virtually all of Ferrell's operating activities occur
through its subsidiaries. Ferrell's principal assets
consist almost entirely of its ownership of the stock of its
subsidiaries. The results of Ferrell's operations are,
therefore, largely determined by the results of operations
of its principal operating subsidiary, the Company. See
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS as it relates to the Company.
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
The exhibits listed on the accompanying Exhibit
Index are filed as part of this report. Exhibits
required by Item 601 of Regulation S-K that are
not listed are not applicable.
(b) Reports on Form 8-K.
Reports on Form 8-K were filed on May 3 and 11,
1994 and are incorporated herein by reference.
The contents of the reports are summarized below:
In a Form 8-K report filed May 3, 1994, the
Registrants reported that the Company, acting as
general partner of Ferrellgas Partners, L.P. (the
"Partnership") and Ferrellgas, L.P. (the
"Operating Partnership"), two newly formed
Delaware limited partnerships, caused to be filed
with the Securities and Exchange Commission (i) a
registration statement with respect to the
proposed offering of 13.1 million Common Units
representing limited partner interests of the
Partnership, and (ii) a registration statement
with respect to the proposed offering of Senior
Notes due 2001 of the Operating Partnership in the
aggregate principal amount of $250 million.
In a Form 8-K report filed May 11, 1994, the
Registrants reported that the Company commenced a
tender offer (the "Offer") to purchase all of its
outstanding 11 5/8% Senior Subordinated Debentures
due 2003 (the "Debentures") for a cash purchase
price equal to 110.5% of their principal amount,
plus interest up to, but not including, the
expiration date of the offer. In addition, the
Company is soliciting consents (the
"Solicitation") to certain proposed amendments
(the "Proposed Amendments") to the Debentures for
an additional payment of $20 in cash for each
$1,000 principal amount of Debentures for which
consents are received.
In a Form 8-K report filed June 6, 1994, the
Registrants reported that the Company extended the
expiration date of its previously announced Offer
and Solicitation, described in the Form 8-K report
filed May 11, 1994, to midnight New York City
time, on Wednesday, June 15, 1994. No other
amendments were made to the terms of the Offer or
the Solicitation. In addition, the Company (after
being notified by the depository that the Company
had received, pursuant to the Offer, tenders and
consents to the Proposed Amendments from holders
representing 100% of the Debentures outstanding)
announced, June 2, 1994, its intention to file the
supplemental indenture providing for the Proposed
Amendments.
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, Inc.
Ferrell Companies, Inc.
One Liberty Oil Company
(Registrants)
Date: June 7, 1994 By Danley K. Sheldon
Chief Financial Officer
and Assistant Secretary
(Principal Financial and
Accounting Officer)
EXHIBIT INDEX
Exhibit No. Description
* 4.1 Purchase Agreement, dated as of
July 1, 1990, among the Company, Ferrell, Liberty Oil
and the purchasers of the Senior Notes, and a list of
the Exhibits thereto.
* 4.2 Indenture, dated as of July 1,
1990, among the Company, Ferrell, Liberty Oil and
State Street Bank and Trust Company of Connecticut,
N.A., as Trustee (which includes the form of Note as
Exhibit A).
* 4.3 First Supplemental Indenture, dated
as of December 20, 1990, among the Company, Ferrell,
Liberty Oil and State Street Bank and Trust Company
of Connecticut, N.A., as Trustee.
* 4.4 Second Supplemental Indenture,
dated as of February 28, 1991, among the Company,
Ferrell, Liberty Oil and State Street Bank and Trust
Company of Connecticut, N.A., as Trustee.
* 4.5 Third Supplemental Indenture, dated
as of March 20, 1991, among the Company, Ferrell,
Liberty Oil and State Street Bank and Trust Company
of Connecticut, N.A., as Trustee.
*** 4.6 Fourth Supplemental Indenture,
dated as of December 12, 1991, among the Company,
Ferrell, Liberty Oil and State Street Bank and Trust
Company of Connecticut, N.A., as Trustee.
*** 4.7 Form of $250,000,000 11 5/8% Senior
Subordinated Debenture Indenture due 2003, dated as
of December 1, 1991, between the Company and Norwest
Bank Minnesota, National Association, as Trustee.
** 4.8 Fifth Supplemental Indenture, dated
as of March 8, 1993, among the Company, Ferrell,
Liberty Oil and State Street Bank and Trust Copany of
Connecticut, N.A., as Trustee. (Series A Floating,
Series B Fixed.)
** 4.9 Sixth Supplemental Indenture, dated
as of October 19, 1993, among the Company, Ferrell,
Liberty Oil and State Street Bank and Trust Company
of Connecticut, N.A., as Trustee. (Series A
Floating, Series B Fixed.)
11 Statement regarding computation of
per share earnings.
** 24.1 Consent of Smith, Gill, Fisher &
Butts, a Professional Corporation.
** 24.2 Consent of Deloitte & Touche.
* 24.3 Consent of Kevin K. Nunnick &
Associates, Inc.
* Previously filed as an exhibit to the Company's
and the Guarantors' Registration Statement on Form S-1
(Commission File No. 33-38482) and incorporated herein
by reference.
** Previously filed as an Exhibit to the Company's
and the Guarantors' Registration Statement on Form S-1
(Commission File No. 33-39932) and incorporated herein
by reference.
*** Previously filed as an Exhibit to the Company's
Registration Statement on Form S-1 (Commission File
No. 33-43727) and incorporated herein by reference.
<TABLE>
<CAPTION>
FERRELL COMPANIES, INC. AND SUBSIDIARIES EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
FOR THE THREE AND NINE MONTHS ENDED APRIL 30, 1994 AND 1993
(in thousands except per share data)
(unaudited)
April 30, 1993
April 30, 1994 (as restated)
Three Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
<S> <C> <C> <C> <C>
Net Earnings Per Common Share
Earnings before extraordinary loss $6,242 $20,142 $4,405 $12,784
Extraordinary loss (867) (867) - -
Net earnings $5,375 $19,275 $4,405 $12,784
Weighted average common
stock equivalent 2,593 2,595 2,617 2,638
Earnings before extraordinary loss $2.40 $7.76 $1.68 $4.85
Extraordinary loss (.33) (.33) - -
Net earnings per common share 2.07 $7.43 $1.68 $4.85
Common Stock Equivalents
Class A Common Stock 2,573 2,573 2,573 2,573
Class B Common Stock - A) - A) 23 47
Class M Common Stock 17 19 19 17
Unexercised Class M Options 3 3 2 1
Weighted Average Common
Stock Equivalents 2,593 2,595 2,617 2,638
<FN>
A) The final outstanding Class B redeemable common stock shares were
purchased by Ferrellgas in the third quarter of fiscal year 1993.
</FN>
</TABLE>
