SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: November 10, 1994 Date of Earliest Event Report: November 1, 1994 FERRELLGAS PARTNERS, L.P. FERRELLGAS, L.P. FERRELLGAS FINANCIAL CORP. - - ------------------------------------------------------------------------------- (Exact name of registrants as specified in their charters) DELAWARE - - ------------------------------------------------------------------------------- (State or other jurisdictions of incorporation or organization) 1-11331 43-1675728 33-53379 43-1676206 33-53379 43-1677595 - - ------------------------- ------------------------------------ (Commission File Numbers) (I.R.S. Employer Identification Nos.) One Liberty Plaza, Liberty, Missouri 64068 - - -------------------------------------------------------------------------------- (Address of principal executive offices, including zip code) (816) 792-1600 - - -------------------------------------------------------------------------------- (Registrants' telephone number, including area code) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial statements of businesses acquired. The consolidated financial statements of Vision Energy Resources, Inc. as of December 31, 1993 and for the fiscal year ended December 31, 1993 (audited), together with the report of Coopers & Lybrand LLP with respect thereto, and as of July 31, 1994 and for the seven month period ended July 31, 1994 (unaudited), are filed as Exhibit 99.2 to this Current Report. (b) Pro forma financial information. The unaudited pro forma consolidated financial statements of Ferrellgas Partners, L.P. and Vision Energy Resources, Inc. as of July 31, 1994 and for the fiscal year ended July 31, 1994 are filed as Exhibit 99.3 to this Current Report. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FERRELLGAS PARTNERS, L.P. By: FERRELLGAS, INC. By /s/ DANLEY K. SHELDON ------------------------------- Danley K. Sheldon Senior Vice President and Chief Financial Officer Date: December 1, 1994 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FERRELLGAS, L.P. BY: FERRELLGAS, INC. BY: /S/ DANLEY K. SHELDON ------------------------------------ Danley K. Sheldon Senior Vice President Chief Financial Officer DATE: December 1, 1994 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FERRELLGAS FINANCE CORP. BY /S/ DANLEY K. SHELDON ---------------------------------- Danley K. Sheldon Senior Vice President and Chief Financial Officer DATE: December 1, 1994 5 EXHIBIT INDEX - - ---------- *This information appears only in the manually signed original of this Current Report on Form 8-K. 6
SEQUENTIAL EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE NO.* - - ----------- -------------------------- ---------- 99.2 Consolidated financial statements of Vision 7 Energy Resources, Inc. as of December 31, 1994 and for the fiscal year ended December 31, 1993 (audited), together with the report of Coopers & Lybrand LLP with respect thereto, and as of July 31, 1994 and for the seven month period ended July 31, 1994 (unaudited) 99.3 Pro forma consolidated financial statements of 19 Ferrellgas Partners, L.P. and Vision Energy Resources, Inc. as of July 31, 1994 and for the fiscal year ended July 31, 1994 (unaudited)
REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholder and Board of Directors of Vision Energy Resources, Inc.: We have audited the accompanying consolidated balance sheet of Vision Energy Resources, Inc. and Subsidiaries (the "Company"), as of December 31, 1993, and the related consolidated statement of operations and accumulated deficit and the consolidated statement of cash flows for the year then ended. These financial statements are the responsibility of the management of the Company. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 1993, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with generally accepted accounting principles. As discussed in Note 5 to the financial statements, the Company changed its method of accounting for income taxes in 1993. Coopers & Lybrand L.L.P. 2400 Eleven Penn Center Philadelphia, Pennsylvania October 31, 1994 1 VISION ENERGY RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET DECEMBER 31, 1993 The accompanying notes are an integral part of these consolidated financial statements. 2
ASSETS ------ Current assets: Accounts receivable, net of allowance for doubtful accounts of $300,000...................................................... $ 7,853,000 Inventories.................................................... 7,255,000 Current deferred income taxes.................................. 654,000 Prepaid expenses and other current assets...................... 440,000 ------------ Total current assets......................................... 16,202,000 Property, plant and equipment, net of accumulated depreciation... 29,099,000 Goodwill......................................................... 22,062,000 Other assets..................................................... 1,397,000 ------------ Total assets................................................. $ 68,760,000 ============ LIABILITIES AND SHAREHOLDER'S EQUITY ------------------------------------ Current liabilities: Cash overdraft................................................. $ 577,000 Accounts payable and accrued expenses.......................... 6,661,000 Accrued payroll and related expenses........................... 849,000 Deferred revenue............................................... 2,517,000 Income taxes currently payable................................. 913,000 Due to affiliate............................................... 4,711,000 Note payable................................................... 400,000 ------------ Total current liabilities.................................... 16,628,000 Deferred income taxes............................................ 1,041,000 Other liabilities................................................ 3,740,000 ------------ Total Liabilities............................................ 21,409,000 Commitments and contingent liabilities Shareholder's equity: Common Stock, $1 par value; 1,000 shares authorized, 100 shares issued and outstanding and additional paid-in capital......... 67,092,000 Accumulated deficit............................................ (19,741,000) ------------ Total shareholder's equity................................... 47,351,000 ------------ Total liabilities and shareholder's equity................... $ 68,760,000 ============ VISION ENERGY RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT FOR THE YEAR ENDED DECEMBER 31, 1993 The accompanying notes are an integral part of these consolidated financial statements. 3
Product sales revenues............................................ $ 71,762,000 Cost and expenses: Cost of product................................................. 46,766,000 Operating expenses.............................................. 16,402,000 General and administrative expenses............................. 5,829,000 Depreciation and amortization................................... 7,239,000 Provision for environmental remediation......................... 2,950,000 ------------ 79,186,000 ------------ Operating loss................................................ (7,424,000) ------------ Other income (expense): Interest and other income, net.................................. 637,000 Interest expense................................................ (199,000) ------------ Loss from operations before income taxes...................... (6,986,000) Income tax benefit................................................ 2,256,000 ------------ Net loss...................................................... (4,730,000) Accumulated deficit, beginning of year............................ (15,011,000) ------------ Accumulated deficit, end of year.................................. $(19,741,000) ============ VISION ENERGY RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1993 The accompanying notes are an integral part of these consolidated financial statements. 4
Cash flows from operating activities: Net loss........................................................ $(4,730,000) Non-cash items included in loss from operations: Depreciation and amortization................................. 7,239,000 Change in deferred taxes...................................... (2,130,000) Provision for environmental clean-up.......................... 2,950,000 Provision for doubtful accounts............................... 263,000 Gain on sale of fixed assets.................................. (137,000) Provision for inventory obsolescence.......................... 150,000 Changes in assets and liabilities: Increase in accounts receivable............................... (557,000) Increase in inventories....................................... (2,580,000) Decrease in prepaid expenses and other current assets......... 9,000 Increase in accounts payable and accrued expenses............. 4,882,000 Decrease in accrued payroll and related expenses.............. (115,000) Increase in deferred revenue.................................. 437,000 Increase in income taxes currently payable.................... 812,000 ----------- 10,822,000 ----------- Net cash provided by operating activities................... 6,493,000 ----------- Cash flows from investing activities: Proceeds from disposal of property, plant and equipment......... 678,000 Payments for capital expenditures............................... (2,757,000) ----------- Net cash used by investing activities....................... (2,079,000) ----------- Cash flows from financing activities: Repayment of borrowing from affiliate........................... (2,651,000) Cash overdraft.................................................. (1,727,000) Other........................................................... (36,000) ----------- Net cash used by financing activities....................... (4,414,000) ----------- Net decrease in cash and cash equivalents................... -- Cash and cash equivalents at beginning of year.................... -- ----------- Cash and cash equivalents at end of year.......................... -- =========== Supplement disclosure of cash flow information: Cash paid (received) during the year for interest and income taxes: Interest...................................................... $ 17,000 Income taxes.................................................. (452,000) VISION ENERGY RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Consolidation: The consolidated financial statements include the accounts of Vision Energy Resources, Inc. and its wholly owned subsidiaries (the "Company"). The Company, an indirectly wholly owned subsidiary of Bell Atlantic Corporation (Bell Atlantic), maintains its accounts in accordance with generally accepted accounting principles. All significant intercompany balances and transactions have been eliminated. Inventory: Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out method. Property, Plant and Equipment: Property, plant and equipment are stated at cost. The provision for depreciation is based principally on the straight-line method by using the following estimated remaining service lives: buildings and improvements, 20 to 40 years; petroleum gas equipment, 9 years; office equipment and furniture, 5 to 13 years; and transportation equipment, 4 to 6 years. Gain or loss on sale of property, plant and equipment is reflected currently in operating results. Goodwill: Goodwill, which includes the excess of the purchase price over the value of identifiable net assets of acquired companies at the date of their acquisition, is being amortized on a straight-line basis over a forty-year period. Goodwill amortization for the year ended December 31, 1993 was $630,000. Other Assets: Other assets consist primarily of covenants not to compete and deferred organizational expenses, which are being amortized over 60 months. Amortization of other assets for the year ended December 31, 1993 was $863,000. Deferred Revenue: The Company enters into arrangements to provide customers with specified quantities of product at specified prices. Cash received in advance of product delivery is recorded as deferred revenue and sales revenues are recorded as product is delivered. 5 VISION ENERGY RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Income Taxes: The Company is included in Bell Atlantic's consolidated federal income tax return. The Company is allocated income tax assets, liabilities, expense, benefits and credits resulting from the effects of its transactions in the consolidated federal income tax provision determined in accordance with Statement of Financial Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes" (Statement No. 109). As a result of this allocation method, the Company recognizes benefits currently for net operating losses (NOLs) and NOL carryforwards that would not have been recognizable on a separate tax return basis. The federal portion of income taxes currently payable is due to Bell Atlantic. 2. INVENTORIES: 3. PROPERTY, PLANT AND EQUIPMENT:
Inventories consist of: Liquified petroleum gas..................................... $5,732,000 Merchandise and appliances.................................. 930,000 Bulk fuels and oil.......................................... 353,000 Other....................................................... 240,000 ---------- $7,255,000 ========== Depreciation expense for the year ended December 31, 1993 was $5,746,000. 6
Property, plant and equipment consist of: Land and buildings........................................ $ 6,866,000 Liquified petroleum gas equipment......................... 37,834,000 Furniture and fixtures.................................... 1,434,000 Transportation equipment.................................. 6,409,000 ------------ 52,543,000 Less, Accumulated depreciation.......................... (23,444,000) ------------ $ 29,099,000 ============ VISION ENERGY RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 4. LEASES AND RENTALS: At December 31, 1993, the Company was committed under operating leases for the rental of office space, operating equipment and operating sites. Rental expense for operating leases amounted to $534,000 in 1993. The following is a schedule of future minimum rental payments under operating leases as of December 31, 1993: 5. INCOME TAXES: During 1993, the Company adopted Statement No. 109 retroactively to January 1, 1992. Financial statements for periods commencing on or after that date have been restated. Statement No. 109 requires the determination of deferred taxes using the liability method. Under the liability method, deferred taxes are provided on book and tax basis differences and deferred tax balances are adjusted to reflect enacted changes in income tax rates. Prior to 1992, the Company accounted for income taxes based on the provisions of Accounting Principles Board Opinion No. 11. The Omnibus Budget Reconciliation Act of 1993, which was enacted in August 1993, increased the federal corporate income tax rate from 34% to 35%, effective January 1, 1993. In the third quarter of 1993, the Company recorded a charge to the tax provision of $45,000 for the effect of the 1% rate increase on the deferred tax balances as of January 1, 1993. The components of income tax expense (benefit) at December 31, 1993, are as follows:
1994............................................................. $307,000 1995............................................................. 94,000 1996............................................................. 11,000 1997............................................................. 8,000 1998............................................................. 6,000 -------- $426,000 ======== 7
Current: Federal.................................................... $ (156,000) State...................................................... 30,000 ----------- (126,000) Deferred: Federal.................................................... (1,956,000) State...................................................... (174,000) ----------- (2,130,000) ----------- Total.................................................. $(2,256,000) =========== VISION ENERGY RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The provision for income taxes varies from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The difference is attributable to the following factors: At December 31, 1993, the significant components of deferred tax assets and liabilities were as follows:
Statutory federal income tax rate................................. (35.0)% State income taxes, net of federal income tax effect.............. (1.3) Goodwill amortization............................................. 3.1 Effect of Omnibus Reconciliation Act of 1993...................... 0.6 Other............................................................. 0.3 ----- Effective income tax rate......................................... (32.3)% ===== At December 31, 1993, net operating loss carryforwards for federal income tax purposes (federal NOLs) were approximately $11,434,000. The federal NOLs arose prior to the merger of the Company's parent, Metro Mobile CTS Inc. (MMCTS) with Bell Atlantic and expire from 2001 to 2006. 8
Deferred tax assets: Environmental reserves and other estimated liabilities...... $1,576,000 Net operating loss carryforwards............................ 4,658,000 Other....................................................... 253,000 ---------- 6,487,000 Valuation allowance......................................... (460,000) ---------- Net deferred tax assets................................. 6,027,000 ---------- Deferred tax liabilities: Depreciation and amortization............................... 5,941,000 Other....................................................... 473,000 ---------- Gross deferred tax liabilities.......................... 6,414,000 ---------- Net deferred tax liabilities............................ $ 387,000 ========== VISION ENERGY RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Federal tax law restricts the future utilization of the federal NOLs, permitting them to offset only the future taxable income earned by the MMCTS subconsolidated group. Future utilization of the federal NOLs could also be restricted by virtue of the "change in ownership" rules contained in Section 382 of the Internal Revenue Code of 1986. Based on projections of future taxable income of MMCTS and the Company's existing deferred tax liabilities, the Company expects to realize the future tax benefit of all federal NOL carryforwards. Also, at December 31, 1992, net operating loss carryovers for state income tax purposes (state NOLs) were approximately $8,938,000. The state NOLs expire from 1996 to 2003. Utilization of the state NOLs are subject to restrictions similar to the restrictions on the federal NOLs described above, applied in each state jurisdiction. The valuation allowances relate to the state NOLs. 6. EMPLOYEE BENEFIT PLANS: The Company participates in a Bell Atlantic Saving Plan which allows employees to invest up to 16% of their salary through a payroll deduction. The Company will contribute 50% of the employee's contribution, up to 6% of their salary. In 1993, the Company contributed $114,000 to the Plan. 7. TRANSACTION WITH AFFILIATES: The Company has entered into a short-term borrowing arrangement with an affiliate which bears interest at a rate which approximates the affiliate's average daily cost of funds (3.51% at December 31, 1993). The Company recognized interest expense of $157,000 in 1993. During 1993, the Company paid $1,000,000 in fees to Bell Atlantic in return for various administrative, legal, cash management, tax and financial planning services. 9 VISION ENERGY RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 8. COMMITMENTS: At December 31, 1993, the Company was committed to sell 5,337,000 gallons of propane for $3,488,000 under fixed price sales agreements and owned sufficient inventory to fulfill these sales commitments. 9. CONTINGENT LIABILITIES: One of the Company's subsidiaries holds title to land that had been occupied by a coal gasification plant. In 1992, the EPA performed a site inspection and shallow soil and groundwater testing. In 1984, the Florida Department of Environmental Protection asked the Company to submit a preliminary contamination assessment plan and to perform a contamination assessment to confirm the EPA findings. Based on information developed to date in connection with this assessment, the Company provided a reserve in 1993 of $2,800,000 for the estimated remediation costs of this site. On October 28, 1994, the Company transferred ownership of this property to Bell Atlantic Ventures XXV, Inc. which is an indirect subsidiary of Bell Atlantic. 10. SUBSEQUENT EVENTS (UNAUDITED): Effective November 1, 1994, the Company expects to be sold by Bell Atlantic, to Ferrellgas, Inc. for approximately $45 million. 10 VISION ENERGY RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET JULY 31, 1994 (IN THOUSANDS) (UNAUDITED) 11
ASSETS JULY 1994 ------ --------- Current assets: Cash and cash equivalents.......................................... $ 28 Accounts and notes receivable...................................... 5,294 Inventories........................................................ 6,535 Prepaid or refundable income taxes................................. 1,449 Prepaid expenses and other current assets.......................... 462 -------- Total Current Assets............................................. 13,768 -------- Property, plant and equipment, net of accumulated depreciation....... $ 26,553 Intangible assets.................................................... 21,723 Other assets......................................................... 906 -------- Total assets..................................................... $ 62,950 ======== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current Liabilities: Accounts payable and accrued expenses.............................. $ 9,405 Interest payable................................................... 78 Due to affiliate................................................... 4,259 Note payable....................................................... 489 -------- Total current liabilities........................................ 14,231 -------- Other liabilities.................................................... 2,950 Shareholder's equity: Common stock, $1 par value; 1,000 shares authorized, 100 shares issued and outstanding and additional paid in capital............. 67,092 Accumulated Deficit................................................ (21,323) -------- Total shareholders' equity....................................... 45,769 -------- Total liabilities and stockholders' equity....................... $ 62,950 ======== VISION ENERGY RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT FOR THE SEVEN MONTHS ENDED JULY 31, 1994 (IN THOUSANDS) (UNAUDITED) 12
Revenues: Gas liquids and related product sales.............................. $ 30,167 Other.............................................................. 6,109 -------- Total revenues................................................... 36,276 Costs and expenses: Cost of product sold............................................... 20,674 Operating.......................................................... 10,528 Depreciation and amortization...................................... 4,037 General and administrative......................................... 2,828 Governance fee..................................................... 467 -------- Total costs and expenses......................................... 38,534 -------- Operating loss....................................................... (2,258) Interest income.................................................... 182 Interest expense................................................... (100) -------- Loss before income taxes............................................. (2,176) Income tax expense (benefit)......................................... (594) -------- Net loss............................................................. (1,582) Accumulated deficit--Beginning of year............................... (19,741) -------- Accumulated deficit--End of year..................................... $(21,323) ======== VISION ENERGY CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SEVEN MONTHS ENDED JULY 31, 1994 (IN THOUSANDS) (UNAUDITED) 13
Cash flows from operating activities: Net Loss............................................................ $(1,582) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization..................................... 4,038 Provision for doubtful accounts................................... 165 Gain on sale of fixed assets...................................... (104) Change in assets & liabilities: Decrease in accounts receivable................................... 2,394 Decrease in inventory............................................. 719 Increase in prepaid expenses & other current assets............... (22) Decrease in accounts payable & accrued liabilities................ (1,027) Decrease in income taxes payable--current......................... (1,723) Decrease in deferred taxes........................................ (1,059) Increase in interest payable...................................... 23 ------- 3,404 ------- Net cash provided by operating activities............................. $ 1,822 ------- Cash flows from investing activities: Proceeds from disposal of property, plant and equipment............. 368 Capital expenditures................................................ (943) Other............................................................... 18 ------- Net cash (used) in investing activities............................... (557) ======= Cash flows from financing activities: Repayment of borrowing from affiliate............................... (452) Repayment of long term debt......................................... (208) Cash overdraft...................................................... (577) ------- Net cash used by financing activities................................. (1,237) ======= Net increase in cash and cash equivalents............................. 28 Cash and cash equivalents at beginning of period...................... -- ------- Cash and cash equivalents at end of period............................ $ 28 ======= Supplemental disclosures of cash flow information: Cash paid during the period for interest and income taxes: Interest.......................................................... $ 77 Income taxes...................................................... 2,188
FERRELLGAS PARTNERS, L.P. PRO FORMA BALANCE SHEET AS OF JULY 31, 1994 (IN THOUSANDS) (UNAUDITED) 1
PURCHASE PRICE OTHER PARTNERSHIP ALLOCATION PRO FORMA PARTNERSHIP HISTORICAL VISION ADJUSTMENTS ADJUSTMENTS PRO FORMA ----------- -------- -------------- ----------- ----------- ASSETS Current Assets: Cash and cash equivalents.......... $ 14,535 $ 28 $ $ -- $ 14,563 Accounts and notes receivable........... 50,780 5,294 -- 56,074 Inventories........... 43,562 6,535 -- 50,097 Prepaid/refundable income taxes......... -- 1,449 (1,449)(B) -- -- Prepaid expenses and other current assets. 2,042 462 -- 2,504 -------- -------- -------- -------- -------- Total Current Assets............. 110,919 13,768 (1,449) -- 123,238 Property, plant and equipment............ 294,765 26,553 21,310 (A) 342,628 Intangible assets..... 63,291 21,723 (14,533)(A),(C) -- 70,481 Other Assets.......... 8,218 906 (906)(B) -- 8,218 -------- -------- -------- -------- -------- Total Assets........ $477,193 $ 62,950 $ 4,422 $ -- $544,565 ======== ======== ======== ======== ======== LIABILITIES AND PARTNERS' CAPITAL Current Liabilities: Accounts payable...... $ 46,368 9,405 $ 2,000 (D) -- $ 57,773 Other current liabilities.......... 26,590 78 -- -- 26,668 Short-term borrowing.. 3,000 489 -- 3,489 Due to general partner/affiliate.... 13 4,259 (4,259)(B) -- 13 -------- -------- -------- -------- -------- Total Current Liabilities........ 75,971 14,231 (2,259) -- 87,943 Long-term debt........ 267,062 -- -- 45,000 (F) 312,062 Other liabilities..... 11,528 2,950 (2,950)(B) -- 11,528 Deferred taxes........ -- -- 10,400 (E) (10,400)(E) -- Minority interest..... 1,239 -- -- 73 (G) 1,312 Stockholder's Equity/Partners' Capital: Common stock.......... -- 67,092 -- (67,092)(H) -- Accumulated deficit... -- (21,323) 6,777 (A) 22,092 (H) -- 4,854 (B) (2,000)(D) (10,400)(E) Common unitholders...... 84,532 -- -- 3,687 (G) 91,319 -- -- 3,100 (I) Subordinated unitholder. 99,483 -- -- 3,468 (G) 102,951 General partner......... (62,622) -- -- 72 (G) (62,550) -------- -------- -------- -------- -------- Total Stockholder's Equity/ Partners' Capital............ 121,393 45,769 (769) (34,673) 131,720 -------- -------- -------- -------- -------- Total Liabilities and Stockholder's Equity/ Partners' Capital............ $477,193 $ 62,950 $ 4,422 $ -- $544,565 ======== ======== ======== ======== ======== FERRELLGAS PARTNERS, L.P. PRO FORMA STATEMENT OF EARNINGS (IN THOUSANDS, EXCEPT UNIT AMOUNTS) (UNAUDITED) 2
PRO FORMA YEAR ENDED JULY 31, 1994 ----------------------------------------------- PRO FORMA PARTNERSHIP PARTNERSHIP VISION ADJUSTMENTS PRO FORMA ----------- ------- ----------- ----------- Revenues: Gas liquids and related product sales......................... $ 499,696 $57,337 -- $ 557,033 Other.......................... 26,860 10,899 -- 37,759 ---------- ------- ------ ---------- Total revenues............... 526,556 68,236 -- 594,792 Costs and Expenses: Cost of product sold........... 269,306 41,540 -- 310,846 Operating...................... 145,136 17,148 (2,026)(J) 160,258 Depreciation and amortization.. 28,835 7,052 (3,441)(K) 32,446 General and administrative..... 10,358 5,683 (3,502)(L) 12,539 Vehicle Leases................. 4,290 -- -- 4,290 ---------- ------- ------ ---------- Total costs and expenses..... 457,925 71,423 (8,969) 520,379 ---------- ------- ------ ---------- Operating Income (loss).......... 68,631 (3,187) 8,969 74,413 Loss on disposal of assets..... (1,312) 108 -- (1,204) Interest income................ 1,123 129 -- 1,252 Interest expense............... (28,130) (200) (1,954)(M) (30,284) Minority interest-continuing operations.................... (403) -- (39) (442) ---------- ------- ------ ---------- Earnings from continuing operations before extraordinary item............ 39,909 (3,150) 6,976 43,735 ========== ======= ====== ========== General partner's interest in earnings from continuing operations.................... 399 437 ---------- ---------- Limited partners' interest in earnings from continuing operations.................... $ 39,510 $ 43,298 ========== ========== Earnings from continuing operations per limited partner unit.......................... $ 1.29 $ 1.40 ========== ========== Weighted average number of limited partner units outstanding................... 30,694,721 30,832,113 ========== ========== FERRELLGAS PARTNERS, L.P. NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 1994 (UNAUDITED) On September 30, 1994, Ferrellgas, Inc. ("the General Partner or Ferrellgas" and Bell Atlantic Enterprises International, Inc. ("Bell") entered into a Stock Purchase Agreement (the "Agreement") pursuant to which Ferrellgas agreed to purchase all of the capital stock of Vision Energy Resources, Inc. ("Vision") from Bell for a cash purchase price of $45,000,000. This transaction was consummated on November 1, 1994. Immediately following the closing of the purchase of Vision, Ferrellgas (i) caused Vision and each of its subsidiaries to be merged into Ferrellgas (except for a trucking subsidiary which dividended substantially all of its assets to Ferrellgas) and (ii) transferred all of the assets of Vision and its subsidiaries at historical cost to Ferrellgas, LP (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). The liabilities assumed by the Operating Partnership included the obligations of Ferrellgas under a $45,000,000 loan agreement with Bank of America National Trust & Savings Association (BofA), pursuant to which Ferrellgas borrowed funds to pay the purchase price for Vision. The Operating Partnership repaid the loan immediately after the transfer of assets with funds borrowed under its Credit Facility. In consideration of the retention by Ferrellgas of the Vision income tax liabilities, Ferrellgas Partners, L.P. (the "Partnership") issued 138,392 Common Units to Ferrellgas. The purchase of Vision was structured as a purchase by Ferrellgas rather than the Partnership as the tax consequences of such a structure were more advantageous to the Partnership than other alternatives. The total purchase price recorded by the Partnership is approximately $57,400,000 and is derived from the following (i) cash purchase price of $45,000,000, in an agreed upon level (ii) deferred tax liability of approximately $10,400,000 which is retained by the General Partner, and (iii) additional transaction costs estimated to be approximately $2,000,000. The pro forma consolidated balance sheet is based on the historical financial position of the Partnership and Vision as of July 31, 1994 contained elsewhere in this Prospectus. The pro forma consolidated statement of earnings for the fiscal year ended July 31, 1994 is derived from the historical statement of operations of the General Partner for the eleven months ended June 30, 1994 (the Predecessor) and the statement of operations of the Partnership for the one month ended July 31, 1994, contained elsewhere in this Prospectus, and the statement of operations of Vision for the twelve months ended July 31, 1994. The following pro forma adjustments have been prepared as if the transactions effected for the acquisition of Vision had taken place on July 31, 1994, in the case of the pro forma consolidated balance sheet, or as of August 1, 1993, in the case of the pro forma consolidated statement of earnings for the fiscal year ended July 31, 1994. The adjustments are based upon currently available information and certain estimates and assumptions, and therefore the actual adjustments will differ from the pro forma adjustments. However, management believes that the assumptions provide a reasonable basis for presenting the significant effects of the transactions as contemplated and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the pro forma financial information. (A) Reflects the allocation of the total purchase price from the acquisition of Vision. In addition, pursuant to the Agreement, Bell has guaranteed that Vision shall have a minimum level of working capital within a range of $2,250,000 to $3,150,000 at the closing date. According, the purchase price is reconciled as follows (in thousands): 3
Allocation of purchase price: Working capital: Cash........................................................... $ 28 Accounts and notes receivable.................................. 5,294 Inventories.................................................... 6,535 Prepaid expenses............................................... 462 Accounts payable............................................... (9,405) Other current liabilities...................................... (78) Short-term borrowings.......................................... (489) ------- $ 2,347 Pro forma working capital settlement from Bell................... -- ------- Total working capital guaranteed by Bell..................... $ 2,347 ------- Property, plant and equipment.................................... 47,863 Intangible assets................................................ 7,190 ------- Total purchase price to the Partnership...................... $57,400 ======= (B) Reflects the elimination of certain assets and liabilities which were not conveyed or assumed by the Partnership. (C) Reflects the elimination of Vision intangible assets of $21,723,000 consisting of goodwill and other assets (consisting primarily of non-compete covenants and organization costs), offset by the allocation of purchase price of $7,190,000 to intangible assets, as described in Note (A). (D) Reflects the accrual of additional transaction costs, included in the purchase price allocation, as described in Note (A). (E) Reflects the deferred taxes associated with the purchase price of the assets acquired over their respective income tax basis, which will not be assumed by the Partnership. Such liability is retained by the General Partner. (F) Reflects the assumption of long-term borrowings of $45,000,000 under the Credit Facility in connection with the acquisition of Vision by the General Partner. (G) Reflects the General Partner's contribution of $7,300,000 to the Partnership, representing the excess of historical cost of the assets over the liabilities conveyed and/or consideration received from the Partnership. The allocation to each partner is based on the relative partnership ownership percentages following the closing of the Vision acquisition as follows: (1) 1.01% minority interest to Ferrellgas, Inc. for its general partner interest in Ferrellgas, L.P., the Operating Partnership; (2) 0.99% general partner interest to Ferrellgas, Inc. as general partner of the Partnership (3) 45.26% limited partner interest in the Partnership to Common Unitholders; and (4) 52.74% limited partner interest in the Partnership to the Subordinated Unitholder. (H) Reflects the elimination of the capital stock and accumulated deficit of Vision following the acquisition by the General Partner. (I) Reflects the issuance of 138,392 Common Units at market value to the General Partner in connection with the conveyance of the assets and liabilities (except income tax liabilities) of Vision to the Partnership. The additional Common Units represent the net present value of the future tax liabilities to be paid by the General Partner. (J) Reflects operating expense savings of approximately $2,414,000 from the reduction of Vision staff and the consolidation of certain Vision retail marketing locations with existing Partnership retail marketing sites, offset by an increase in Partnership retail overhead expenses of $388,000. (K) Reflects a decrease in depreciation and amortization as a result of establishing new useful lives of the property, plant and equipment acquired from Vision, reduction in the amortization of intangible assets (as described in Note (C), offset by the increase in depreciation from the increase in the cost of the property, plant and equipment to the Partnership. (L) Reflects the general and administrative savings of approximately $3,748,000 from the reduction of staff and closure of the Vision headquarters and elimination of corporate overhead allocation from Bell offset by an increase in Partnership administrative overhead expenses of $246,000. (M) Reflects the increase in interest expense of approximately $2,109,000 related to the additional indebtedness of $45,000,000 under the Credit Facility at an effective interest rate of approximately 4.89%, offset by the elimination of interest expense from Bell credit line borrowings of approximately $155,000. 4