FERRELLGAS, L.P.
December 13, 1994
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Mail Stop 7-2
Washington, D.C. 20549
RE: Ferrellgas, L.P.
Quarterly Report on Form 10-Q
Commission File Number 33-53379
Gentlemen:
Pursuant to Section 13 or 15(d) of the Securities and Exchange
Act of 1934, Ferrellgas, L.P. transmits for filing its Quarterly
Report on Form 10-Q for the quarter ended October 31, 1994. The
filing has been effected through the EDGAR electronic filing
system under Ferrellgas, L.P.'s CIK No. 0000922359. Pursuant to
Rule 302 of Regulation S-T, the Form 10-Q has been executed by
typing the name of the signatory, with a manually signed
signature page retained in Ferrellgas, L.P.'s files.
By copy of this letter (i) a conforming paper copy of the
electronically filed Form 10-Q will be made pursuant to Rule
901(d) of Regulation S-T no later than six business days after
the EDGAR submission and (ii) one manually signed copy and one
conformed copy of the Form 10-Q are being filed with the New York
Stock Exchange.
If any questions should arise in connection with this submission,
please call the undersigned at (816) 792-6809.
Very truly yours,
George L. Shuck
Director of Administration Services
/st
Enclosures
cc: Vincent Patten Conformed paper copy
to:
New York Stock Exchange Filer Support, SEC
Operations Center
6432 General Green Way
Alexandria, Virginia
22312-2413
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 the quarter ended October 31, 1994
Commission file number 33-53379
Ferrellgas Partners, L.P.
Ferrellgas, L.P.
Ferrellgas Finance Corp.
(Exact name of registrants as specified in their charters)
Delaware 43-1675728
Delaware 43-1676206
Delaware 43-1677595
(States or other jurisdictions of(I.R.S. Employer Ide
ntification 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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which
registered
Common Units New York Stock Exchange
Securities registered pursuant to section 12(g) of the Act: None
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 October 31, 1994:
At October 14, 1994, the registrants had units and shares of
common stock outstanding as follows:
Ferrellgas Partners, L.P. - 14,100,000 Common Units
16,593,721Subordinated Units
Ferrellgas Finance Corp. - 1,000 Shares of $1 par value
common stock
FERRELLGAS PARTNERS, L.P.
FERRELLGAS, L.P.
FERRELLGAS FINANCE CORP.
Table of Contents
Page
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Ferrellgas Partners, L.P. and Subsidiary
Consolidated Balance Sheet -
October 31, 1994, and July 31, 1994 1
Consolidated Statement of Operations -
Three months ended October 31, 1994 and
Pro Forma October 31, 1993 2
Consolidated Statement of Partners' Capital
Three months ended October 31, 1994 3
Consolidated Statement of Cash Flows -
Three months ended October 31, 1994 4
Notes to Consolidated Financial Statements 5
Ferrellgas, L.P. and Subsidiaries
Consolidated Balance Sheet -
October 31, 1994, and July 31, 1994 7
Consolidated Statement of Operations -
Three months ended October 31, 1994 and
Pro Forma October 31, 1993 8
Consolidated Statement of Cash Flows -
Three months ended October 31, 1994 9
Notes to Consolidated Financial Statements 10
Ferrellgas Finance Corp.
Balance Sheet -
October 31, 1994, and July 31, 1994 12
Statement of Operations -
Three months ended October 31, 1994 and
Pro Forma October 31, 1993 13
Statement of Cash Flows -
Three months ended October 31, 1994 14
Notes to Financial Statements 15
TABLE OF CONTENTS (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 18
ITEM 2. CHANGES IN SECURITIES 18
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 18
ITEM 5. OTHER INFORMATION 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 18
<TABLE>
<CAPTION>
ITEM 1: FINANCIAL STATEMENTS
FERRELLGAS PARTNERS, L.P. AND SUBSIDARY
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
October 31, July 31,
1994 1994
----------- ----------
(unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $13,093 $14,535
Accounts and notes receivable 68,098 50,780
Inventories 68,251 43,562
Prepaid expenses and other current assets 3,509 2,042
Receivable from general partner 309 -
--------- ---------
Total Current Assets 153,260 110,919
Property, plant and equipment, net 293,483 294,765
Intangible assets, net 61,025 63,291
Other assets, net 8,154 8,218
--------- ---------
Total Assets $515,922 $477,193
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Accounts payable $66,480 $46,368
Other current liabilities 26,199 26,590
Short-term borrowing 23,000 3,000
Payable to general partner - 13
--------- --------
Total Current Liabilities 115,679 75,971
Long-term debt 266,886 267,062
Other liabilities 11,398 11,528
Minority interest 1,232 1,239
Partners' Capital
Common unitholders (units issued - 14,100,000) 81,944 84,532
Subordinated unitholder (units issued - 16,593,721) 96,436 99,483
General partner (57,653) (62,622)
--------- ---------
Total Partners' Capital 120,727 121,393
--------- ---------
Total Liabilities and Partners' Capital $515,922 $477,193
========= =========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FERRELLGAS PARTNERS, L.P. AND SUBSIDARY
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except unit data)
(unaudited)
Three Months Ended
October 31, October 31,
1994 1993
----------- -----------
(Pro Forma)
<S> <C> <C>
Revenues:
Gas liquids and related product sales $111,784 $103,960
Other 7,629 6,254
-------- --------
Total revenues 119,413 110,214
-------- --------
Costs and expenses:
Cost of product sold 67,411 60,515
Operating 35,051 33,276
Depreciation and amortization 7,147 7,523
General and administrative 2,314 2,443
Vehicle leases 1,040 1,105
-------- --------
Total costs and expenses 112,963 104,862
-------- --------
Operating income 6,450 5,352
Loss on disposal of assets (194) (214)
Interest income 169 150
Interest expense (7,098) (7,230)
Minority interest 7 20
--------- ---------
Net loss ($666) ($1,922)
========= =========
Net loss per limited partner unit (before special
allocation - see note D) ($0.02) ($0.06)
======= =========
Number of units used in computation 30,693,721 30,693,721
=========== ===========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FERRELLGAS PARTNERS, L.P. AND SUBSIDARY
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(in thousands, except unit data)
(unaudited)
Number of units Total
-------------------------- General partners'
Common Subordinated Common Subordinated partner capital
---------- ------------ ------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance August 1, 1994 14,100,000 16,593,721 $84,532 $99,483 ($62,622) $121,393
Reallocate prior year
operating loss - - (2,286) (2,690) 4,976 -
Net loss - - (302) (357) (7) (666)
---------- ------------ -------- ------------ -------- ---------
Balance October 31, 1994 14,100,000 16,593,721 $81,944 $96,436 ($57,653) $120,727
========== ============ ======== ============ ======== =========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FERRELLGAS PARTNERS, L.P. AND SUBSIDARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
Three Months
Ended
October 31,
1994
-----------
<S> <C>
Cash Flows From Operating Activities:
Net loss ($666)
Reconciliation of net loss to net
cash from operating activities:
Depreciation and amortization 7,147
Other 749
Increase in assets:
Accounts and notes receivable (17,545)
Inventories (24,689)
Prepaid expenses and other current assets (1,542)
Increase (decrease) in liabilities:
Accounts payable 20,112
Other current liabilities (353)
Other liabilities (159)
--------
Net cash used by operating activities (16,946)
--------
Cash Flows From Investing Activities:
Capital expenditures (3,844)
Proceeds from asset sales 188
Net additions to other assets (286)
--------
Net cash used by investing activities (3,942)
--------
Cash Flows From Financing Activities:
Additions to short-term borrowing 20,000
Reductions of long-term debt (225)
Minority activity (7)
Net advances to general partner (322)
--------
Net cash provided by financing activities 19,446
--------
Decrease in cash and cash equivalents (1,442)
Cash and cash equivalents - beginning of period 14,535
--------
Cash and cash equivalents - end of period $13,093
========
<FN>
See notes to consolidated financial statements.
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 1994 AND 1993
(unaudited)
A. Reference should be made to the Notes to Consolidated
Financial Statements for the period ending July 31, 1994,
(specifically Notes A and N regarding organization and
formation and pro forma earnings) included in the Ferrellgas
Partners, L.P. and Subsidiary (the "Partnership") annual
financial statements on Form 10-K (Commission File No.
33-53379) filed with the SEC.
B. 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.
C. The propane industry is seasonal in nature with peak
activity during the winter months. Therefore, the results of
operations for the periods ended October 31, 1994 and pro
forma October 31, 1993, are not necessarily indicative of the
results to be expected for a full year.
D. The Agreement of Limited Partnership of Ferrellgas Partners,
L.P. (the "Partnership Agreement") contains specific
provisions for the allocation of net income and loss to each
of the partners for purposes of maintaining the partner
capital accounts. In addition, the Partnership Agreement
contains a special provision to allocate the first year's
taxable operating loss ($5,026,000) 100% to the general
partner and reallocate, based on ownership percentages, an
amount equal to 99% of this net loss ($4,976,000) to the
limited partners in the following taxable year. The special
allocation of the prior year taxable operating loss to the
limited partners will result in an additional loss per limited
partner unit of $.16 for the tax year ending July 31, 1995.
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, after taking
into consideration the Partnership's insurance coverage and
its existing reserves, management is of the opinion that there
are no known uninsured claims or known contingent claims that
are likely to have a material adverse effect on the results of
operations or financial condition of the Partnership.
In connection with the formation of the Partnership, the
General Partner contributed certain assets including customer
relationships and customer tanks. The Internal Revenue
Service ("IRS") has examined the General Partner's
consolidated income tax returns for the years ended July 31,
1987 and 1986, and has proposed certain adjustments which
relate to these contributed assets. If the IRS were
successful, the amount of amortization and depreciation
available to the General Partner could be adversely affected.
At this time, it is not possible to determine the ultimate
resolution of this matter and the impact, if any, to the
consolidated financial statements of the Partnership.
F. The financial information summarized below reflects the
results of the business previously owned by Ferrellgas, Inc.,
the predecessor company.
Three months ended
October 31, 1993
(unaudited; in thousands)
Total revenues $ 110,214
Total costs and expenses 104,737
----------
Operating income 5,477
Loss on disposal of assets (214)
Interest income 759
Interest expense (14,907)
Income tax benefit 3,348
----------
Net loss $ (5,537)
==========
G. On October 14, 1994, the General Partner adopted the
Ferrellgas, Inc. Unit Option Plan (the "Unit Option Plan"),
which authorizes the issuance of options (the "Unit Options")
covering up to 750,000 Subordinated Units to certain officers
and employees of the General Partner, of which 657,000 options
were granted at that date. The Unit Options granted have an exercise
price of $16.80 per Subordinated Unit, will vest over a three
to five year period (depending on the employee) and will
expire on the tenth anniversary of the date of grant. Upon
conversion of 100% of the Subordinated Units held by the
General Partner and its affiliates, the Unit Options granted
will convert to Common Unit Options.
H. On November 1, 1994, the General Partner purchased all of
the capital stock of Vision Energy Resources, Inc. ("Vision")
for a cash purchase price of $45 million. Immediately
following the closing of the purchase of Vision, the General
Partner (i) caused Vision and each of its subsidiaries to be
merged into the General Partner (except for a trucking
subsidiary which dividended substantially all of its assets to
the General Partner) and (ii) transferred all of the assets of
Vision and its subsidiaries to the Operating Partnership. In
exchange, the Operating Partnership assumed substantially all
of the liabilities, whether known or unknown, associated with
Vision and its subsidiaries (excluding income tax
liabilities). In consideration of the retention by the
General Partner of the Vision income tax liabilities, the
Partnership issued 138,392 Common Units to the General
Partner.
I. On November 14, 1994, the Partnership filed Amendment No. 1
to Form S-1 Registration Statement with the Securities and
Exchange Commission to register 2,400,000 Common Units
representing limited partner interests in the Partnership.
The registration statement was declared effective November 15,
1994. The Common Units may be issued from time to time by the
Partnership in exchange for other businesses, properties or
securities in business combination transactions.
J. On November 18, 1994, the Partnership declared an initial
cash distribution of $0.65 per unit, payable December 14,
1994. This initial distribution covers the period from July
5, 1994, when the Partnership began operations, to October 31,
1994, the end of the first full fiscal quarter. The
distribution has, accordingly, been prorated.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FERRELLGAS, L.P. AND SUBSIDARIES
CONSOLIDATED BALANCE SHEET
(in thousands)
October 31, July 31,
1994 1994
----------- ---------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $13,093 $14,535
Accounts and notes receivable 68,098 50,780
Inventories 68,251 43,562
Prepaid expenses and other current assets 3,509 2,042
Receivable from general partner 309 -
-------- --------
Total Current Assets 153,260 110,919
Property, plant and equipment, net 293,483 294,765
Intangible assets, net 61,025 63,291
Other assets, net 8,154 8,218
-------- --------
Total Assets $515,922 $477,193
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Accounts payable $66,480 $46,368
Other current liabilities 26,199 26,590
Short-term borrowing 23,000 3,000
Payable to general partner - 13
-------- --------
Total Current Liabilities 115,679 75,971
Long-term debt 266,886 267,062
Other liabilities 11,398 11,528
Partners' Capital
Limited partner 120,727 121,393
General partner 1,232 1,239
-------- --------
Total Partners' Capital 121,959 122,632
-------- --------
Total Liabilities and Partners' Capital $515,922 $477,193
======== ========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FERRELLGAS, L.P. AND SUBSIDARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands)
(unaudited)
Three Months Ended
----------------------------
October 31, October 31,
1994 1993
----------- -----------
(Pro Forma)
<S> <C> <C>
Revenues:
Gas liquids and related product sales $111,784 $103,960
Other 7,629 6,254
--------- ---------
Total revenues 119,413 110,214
--------- ---------
Costs and expenses:
Cost of product sold 67,411 60,515
Operating 35,051 33,276
Depreciation and amortization 7,147 7,523
General and administrative 2,314 2,443
Vehicle leases 1,040 1,105
--------- ---------
Total costs and expenses 112,963 104,862
--------- ---------
Operating income 6,450 5,352
Loss on disposal of assets (194) (214)
Interest income 169 150
Interest expense (7,098) (7,230)
--------- ---------
Net loss ($673) ($1,942)
========= =========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FERRELLGAS, L.P. AND SUBSIDARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
Three Months
Ended
October 31,
1994
-----------
<S> <C>
Cash Flows From Operating Activities:
Net loss ($673)
Reconciliation of net loss to net
cash from operating activities:
Depreciation and amortization 7,147
Other 749
Increase in assets:
Accounts and notes receivable (17,545)
Inventories (24,689)
Prepaid expenses and other current assets (1,542)
Increase (decrease) in liabilities:
Accounts payable 20,112
Other current liabilities (353)
Other liabilities (159)
--------
Net cash used by operating activities (16,953)
--------
Cash Flows From Investing Activities:
Capital expenditures (3,844)
Proceeds from asset sales 188
Net additions to other assets (286)
--------
Net cash used by investing activities (3,942)
--------
Cash Flows From Financing Activities:
Additions to short-term borrowing 20,000
Reductions of long-term debt (225)
Net advance to general partner (322)
--------
Net cash provided by financing activities 19,453
--------
Decrease in cash and cash equivalents (1,442)
Cash and cash equivalents - beginning of period 14,535
--------
Cash and cash equivalents - end of period $13,093
========
<FN>
See notes to consolidated financial statements.
FERRELLGAS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 1994 AND 1993
(unaudited)
A. Reference should be made to the Notes to Consolidated
Financial Statements for the period ending July 31, 1994,
(specifically Notes A and M regarding organization and
formation and pro forma earnings) included in the Ferrellgas,
L.P. and Subsidiaries (the " Operating Partnership") annual
financial statements on Form 10-K (Commission File No.
33-53379) filed with the SEC.
B. 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.
C. The propane industry is seasonal in nature with peak
activity during the winter months. Therefore, the results of
operations for the periods ended October 31, 1994 and pro
forma October 31, 1993, are not necessarily indicative of the
results to be expected for a full year.
D. 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, after taking
into consideration the Partnership's insurance coverage and
its existing reserves, management is of the opinion that there
are no known uninsured claims or known contingent claims that
are likely to have a material adverse effect on the results of
operations or financial condition of the Partnership.
In connection with the formation of the Partnership, the
General Partner contributed certain assets including customer
relationships and customer tanks. The Internal Revenue
Service ("IRS") has examined the General Partner's
consolidated income tax returns for the years ended July 31,
1987 and 1986, and has proposed certain adjustments which
relate to these contributed assets. If the IRS were
successful, the amount of amortization and depreciation
available to the General Partner could be adversely affected.
At this time, it is not possible to determine the ultimate
resolution of this matter and the impact, if any, to the
consolidated financial statements of the Partnership.
E. The financial information summarized below reflects the
results of the business previously owned by Ferrellgas, Inc.,
the predecessor company.
Three months ended
October 31, 1993
(unaudited; in thousands)
Total revenues $ 110,214
Total costs and expenses 104,737
----------
Operating income 5,477
Loss on disposal of assets (214)
Interest income 759
Interest expense (14,907)
Income tax benefit 3,348
----------
Net loss $ (5,537)
==========
F. On November 1, 1994, the General Partner purchased all of
the capital stock of Vision Energy Resources, Inc. ("Vision")
for a cash purchase price of $45 million. Immediately
following the closing of the purchase of Vision, the General
Partner (i) caused Vision and each of its subsidiaries to be
merged into the General Partner (except for a trucking
subsidiary which dividended substantially all of its assets to
the General Partner) and (ii) transferred all of the assets of
Vision and its subsidiaries to the Operating Partnership. In
exchange, the Operating Partnership assumed substantially all
of the liabilities, whether known or unknown, associated with
Vision and its subsidiaries (excluding income tax
liabilities). In consideration of the retention by the
General Partner of the Vision income tax liabilities, the
Partnership issued 138,392 Common Units to the General
Partner.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FERRELLGAS FINANCE CORP.
(a wholly owned subsidiary of Ferrellgas, L.P.)
BALANCE SHEET
October 31, July 31,
1994 1994
(unaudited)
----------- --------
<S> <C> <C>
ASSETS
Cash $960 $1,000
-------- -------
Total Assets $960 $1,000
======== =======
STOCKHOLDER'S EQUITY AND ACCUMULATED DEFICIT
Common stock, $1.00 par value; 2,000 shares
authorized; 1,000 shares issued and outstanding $1,000 $1,000
Accumulated deficit (40) -
------- -------
Total Stockholder's Equity $960 $1,000
======= =======
<FN>
See notes to financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FERRELLGAS FINANCE CORP.
(a wholly owned subsidiary of Ferrellgas, L.P.)
STATEMENT OF OPERATIONS
(unaudited)
Three Months
Ended
October 31,
1994
------------
<S> <C>
Revenues $ -
General and administrative expense 40
------
Net loss ($40)
======
<FN>
See notes to financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FERRELLGAS FINANCE CORP.
(a wholly owned subsidiary of Ferrellgas, L.P.)
STATEMENT OF CASH FLOWS
(unaudited)
Three Months
Ended
October 31,
1994
-----------
<S> <C>
Cash Flows From Operating Activities:
---------
Cash used by operating activities ($40)
---------
Cash Flows From Investing Activities:
---------
Cash provided by investing activities -
---------
Cash Flows From Financing Activities:
---------
Cash provided by financing activities -
---------
Decrease in Cash (40)
Cash - beginning of period 1,000
---------
Cash - end of period $960
=========
<FN>
See notes to financial statements.
FERRELLGAS FINANCE CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 1994
(unaudited)
A. Reference should be made to the Notes to Financial
Statements for the period ending July 31, 1994, included in
the Ferrellgas Finance Corp. annual financial statements on
Form 10-K (Commission File No. 33-53379) filed with the SEC.
B. 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the historical and pro
forma results of operations and liquidity and capital resources
of the Operating Partnership. Since the Operating Partnership
accounts for all of the consolidated assets, sales and earnings
of the Partnership, a separate discussion of the results of
operations and liquidity and capital resources of the Partnership
is not presented.
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 months ended
October 31, 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 October 31, 1994 vs. Pro Forma October 31,
1993
Total Revenues. Total revenues increased 8.3% to
$119,413,000 as compared to $110,214,000 for the prior period.
The increase is attributable to revenues from other operations
(net trading operations, wholesale propane marketing and chemical
feedstocks marketing) increasing 55.4% to $26,215,000.
The increase in revenues from other operations is primarily
due to an increase in chemical feedstocks marketing due to an
increase in sales volume and selling price. Both volume and
price increased as a result of increased demand from customers
who use chemical feedstocks in their manufacturing processes.
These customers are primarily petrochemical companies who make
products such as plastics.
Gross Profit. Gross profit increased 4.6% to $52,002,000 as
compared with $49,699,000 for the prior period. The increase is
attributable to an increase in both retail and other operations
gross profit. Retail operations results improved due to an
increase in gallons sold to 122,309,000 gallons as compared to
120,076,000 for the prior period along with a slight increase in
retail margins. Other operations gross profit increased
primarily due to stronger margins and increased sales volume due
to an active market for trading operations and an increase in
sales volumes for chemical feedstocks operations as previously
discussed.
Operating Expenses. Operating expenses increased 5.3% to
$35,051,000 as compared to $33,276,000 for the prior period. The
increase is primarily attributable to general increases in
operating costs. Personnel costs, which includes payroll, taxes,
benefits and other related costs, increased due to an increase in
wage rates and an increase in overtime and variable labor due to
an increased number of tanks installed at customer locations this
year compared to the prior period. Parts and equipment costs
related to installation of new tanks increased also. Vehicle
expenses increased due to increased emphasis on completing
planned preventive maintenance and repairs during the first
quarter of the fiscal year. Advertising and marketing programs
expense increased due to preparation and distribution of program
materials to retail locations earlier in the fiscal year as
compared to the prior period.
Depreciation and Amortization. Depreciation and
amortization expense decreased 5.0% to $7,147,000 as compared to
$7,523,000 for the prior period due primarily to extending the
use of vehicles used in retail operations beyond their original
estimated useful life and to a reduction in the number of owned
vehicles.
Net Loss. Net loss decreased to $673,000 as compared to
$1,942,000 for the prior period primarily due to the increase in
gross profit and slight reductions in depreciation and
amortization, general and administrative and vehicle lease
expenses offset by increased operating expenses.
Liquidity and Capital Resources
On November 1, 1994, the General Partner completed the
acquisition of Vision Energy Resources, Inc. ("Vision") for a
cash purchase price of $45 million. Following the closing of the
acquisition, the General Partner transferred the net assets
(excluding income tax liabilities) of Vision to the Operating
Partnership.
On November 14, 1994, the Partnership filed Amendment No. 1
to Form S-1 Registration Statement with the Securities and
Exchange Commission to register 2,400,000 Common Units
representing limited partner interests in the Partnership. The
registration statement was declared effective November 15, 1994.
The Common Units may be issued from time to time by the
Partnership in exchange for other businesses, properties or
securities in business combination transactions.
On November 18, 1994, the Partnership declared an initial
cash distribution of $0.65 per unit, payable December 14, 1994.
This initial distribution covers the period from July 5, 1994,
when the Partnership began operations, to October 31, 1994, the
end of the first full fiscal quarter.
Cash Flows From Operating Activities. Cash used by
operating activities was $16,953,000 for the three months ended
October 31, 1994. This cash was primarily used to purchase
inventory for sale to customers.
Cash Flows From Investing Activities. During the three
months ended October 31, 1994, the Operating Partnership made
aggregate property, plant and equipment and other acquisition
expenditures of $3,844,000. The Operating Partnership maintains
its vehicle and transportation equipment fleet by leasing light
and medium duty trucks and tractors. The General Partner
believes vehicle leasing is a cost effective method for financing
transportation equipment. 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 long.
Cash Flows From Financing Activities. During the three
months ended October 31, 1994, the Operating Partnership borrowed
$20,000,000 from its Credit Facility. These borrowings, along
with cash provided by operations, were used to fund purchases of
propane inventory for sale to customers and purchases of
property, plant and equipment.
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.
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
* 2.1 Stock Purchase Agreement dated September 30, 1994,
between Ferrellgas, Inc. and Bell Atlantic
Enterprises International, Inc.
*23.1 Consent of Deloitte & Touche, LLP
*23.2 Consent of Andrews & Kurth
*23.3 Consent of Andrews & Kurth
*23.4 Consent of Coopers & Lybrand
* Incorporated by reference to the same numbered Exhibit to
the Registrant's Registration Statement on Form S-1
(Registration No. 33-55185).
(b) Reports on Form 8-K.
The registrants filed the following reports on Form 8-K
during the quarter ended October 31, 1994:
(a) Form 8-K dated August 15, 1994, reporting the closing
of the initial offering of Common Units by Ferrellgas Partners,
L.P. and filing as exhibits certain executed agreements related
thereto;
(b) Form 8-K dated September 26, 1994, reporting under Item
5 the election of two additional directors to the Board of
Directors of Ferrellgas, Inc.; and
(c) Form 8-K dated October 4, 1994, reporting under Item 5
that Ferrellgas, Inc. had entered into a definitive stock
purchase agreement for the purchase of all of the outstanding
capital stock of Vision Energy Resources, Inc.
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 PARTNERS, L.P.
FERRELLGAS, L.P.
By: Ferrellgas, Inc. (General
Partner)
Date: December 13, 1994 By: /s/ Danley K. Sheldon
Danley K. Sheldon
Senior Vice President/
Chief Financial Officer
(Principal Financial and
Accounting Officer)
FERRELLGAS FINANCE CORP.
Date: December 13, 1994 /s/ Danley K. Sheldon
By: Danley K. Sheldon
Senior Vice President/
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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