- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended January 31, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from __________ to __________
Commission file number: 1-11331
FERRELLGAS PARTNERS, L.P.
(Exact name of registrants as specified in their charters)
Delaware 43-1698480
- ---------------------------- -------------------------------
(States or other jurisdictions of (I.R.S. Employer Identification Nos.)
incorporation or organization)
One Liberty Plaza, Liberty, Missouri 64068
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: (816) 792-1600
Indicate by check mark whether the registrant (1) has 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 registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
At February 15, 1996, the registrant had units outstanding as follows:
Ferrellgas Partners, L.P. - 14,540,810 Common Units
16,593,721 Subordinated Units
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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 Sheets - January 31, 1996 and July 31, 1995 1
Consolidated Statements of Earnings -
Three months and six months ended January 31, 1996 and 1995 2
Consolidated Statements of Partners' Capital -
Six months ended January 31, 1996 3
Consolidated Statements of Cash Flows -
Six months ended January 31, 1996 and 1995 4
Notes to Consolidated Financial Statements 5
FERRELLGAS, L.P. AND SUBSIDIARIES
Consolidated Balance Sheets - January 31, 1996 and July 31, 1995 7
Consolidated Statements of Earnings - 8
Three months and six months ended January 31, 1996 and 1995
Consolidated Statements of Partners' Capital -
Six months ended January 31, 1996 9
Consolidated Statements of Cash Flows -
Six months ended January 31, 1996 and 1995 10
Notes to Consolidated Financial Statements 11
FERRELLGAS FINANCE CORP.
Balance Sheets - January 31, 1996 and July 31, 1995 12
Statements of Earnings -
Three months and six months ended January 31, 1996 and 1995 12
Statements of Stockholder's Equity - Six months ended
January 31, 1996 13
Statements of Cash Flows - Six months ended January 31, 1996
and 1995 13
Note to Financial Statements 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 17
ITEM 2. CHANGES IN SECURITIES 17
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 17
ITEM 5. OTHER INFORMATION 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 17
SIGNATURES 18
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
January 31, July 31,
ASSETS 1996 1995
- --------------------------------------------------------------------------- ----------------- -----------------
(unaudited)
Current Assets:
Cash and cash equivalents $ 22,253 $ 29,877
Accounts and notes receivable 135,462 58,239
Inventories 37,587 44,090
Prepaid expenses and other current assets 6,593 5,884
----------------- -----------------
Total Current Assets 201,895 138,090
Property, plant and equipment, net 339,217 345,642
Intangible assets, net 86,817 86,886
Other assets, net 7,731 7,978
----------------- -----------------
Total Assets $635,660 $578,596
================= =================
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 93,991 $ 57,729
Other current liabilities 37,107 31,433
Short-term borrowings 19,000 20,000
----------------- -----------------
Total Current Liabilities 150,098 109,162
Long-term debt 347,186 338,188
Other liabilities 12,438 11,398
Minority interest 1,274 1,211
Partners' Capital:
Common unitholders, (14,540,810 and 14,398,942
units outstanding in January 1996 and July 1995, respectively) 89,032 84,489
Subordinated unitholders (16,593,721 units outstanding
in both January 1996 and July 1995) 93,248 91,824
General partner (57,616) (57,676)
----------------- -----------------
Total Partners' Capital 124,664 118,637
----------------- -----------------
Total Liabilities and Partners' Capital $635,660 $578,596
================= =================
See notes to consolidated financial statements.
1
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per unit data)
(unaudited)
Three months ended Six months ended
----------------------------------- -----------------------------------
January 31, January 31, January 31, January 31,
1996 1995 1996 1995
----------------- ----------------- ----------------- -----------------
Revenues:
Gas liquids and related product sales $226,676 $208,685 $341,205 $320,469
Other 11,705 9,976 21,764 17,605
----------------- ----------------- ----------------- -----------------
Total revenues 238,381 218,661 362,969 338,074
Cost of product sold (exclusive of
depreciation, shown separately below) 126,472 122,889 195,581 190,300
----------------- ----------------- ----------------- -----------------
Gross profit 111,909 95,772 167,388 147,774
Operating expense 47,750 44,646 88,620 79,697
Depreciation and amortization expense 8,810 8,265 17,136 15,412
General and administrative expense 3,119 2,934 6,554 5,248
Vehicle lease expense 1,117 1,107 2,203 2,147
----------------- ----------------- ----------------- -----------------
Operating income 51,113 38,820 52,875 45,270
Interest expense (9,196) (8,217) (18,208) (15,315)
Interest income 369 345 625 514
Loss on disposal of assets (386) (109) (770) (303)
----------------- ----------------- ----------------- -----------------
Earnings before minority interest 41,900 30,839 34,522 30,166
Minority interest 424 312 349 305
----------------- ----------------- ----------------- -----------------
Net earnings 41,476 30,527 34,173 29,861
General partner's interest in net earnings 415 305 342 299
----------------- ----------------- ----------------- -----------------
Limited partners' interest in net earnings $ 41,061 $ 30,222 $ 33,831 $ 29,562
================= ================= ================= =================
Net earnings per limited partner unit $ 1.32 $ 0.98 $ 1.09 $ 0.96
================= ================= ================= =================
Weighted average number of units outstanding 31,135 30,956 31,085 30,824
================= ================= ================= =================
See notes to consolidated financial statements.
2
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(in thousands)
(unaudited)
------------------------------
Number of units
------------------------------
Total
Sub- Sub- General partners'
Common ordinated Common ordinated partner capital
------------ --------------- --------------- ---------------- -------------- --------------
July 31, 1995 14,398.9 16,593.7 $84,489 $91,824 $ (57,676) $118,637
Common units issued
in connection with
acquisitions 141.9 3,200 32 3,232
Quarterly distributions (14,470) (16,594) (314) (31,378)
Net earnings 15,813 18,018 342 34,173
------------ --------------- --------------- ---------------- -------------- --------------
January 31, 1996 14,540.8 16,593.7 $89,032 $93,248 $(57,616) $124,664
============ =============== =============== ================ ============== ==============
See notes to consolidated financial statements.
3
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six months ended
------------------------------------
January 31, January 31,
1996 1995
---------------- ----------------
Cash Flows From Operating Activities:
Net earnings $34,173 $29,861
Reconciliation of net earnings to net
cash from operating activities:
Depreciation and amortization 17,136 15,412
Other 2,475 1,514
Changes in operating assets and liabilities net of effects from business
acquisitions:
Accounts and notes receivable (77,355) (43,304)
Inventories 6,631 837
Prepaid expenses and other current assets (744) (1,492)
Accounts payable 36,986 43,287
Other current liabilities 5,082 4,281
Other liabilities 1,041 71
---------------- ----------------
Net cash provided by operating activities 25,425 50,467
---------------- ----------------
Cash Flows From Investing Activities:
Business acquisitions (3,079) (15,693)
Capital expenditures (7,218) (9,216)
Other 1,288 49
---------------- ----------------
Net cash used by investing activities (9,009) (24,860)
---------------- ----------------
Cash Flows From Financing Activities:
Net reductions to short-term borrowings (1,000) (3,000)
Additions to long-term debt 7,752 60,000
Reductions of long-term debt (354) (45,784)
Distributions (31,378) (20,348)
Other 940 (193)
---------------- ----------------
Net cash used by financing activities (24,040) (9,325)
---------------- ----------------
(Decrease) Increase in cash and cash equivalents (7,624) 16,282
Cash and cash equivalents - beginning of period 29,877 14,535
================ ================
Cash and cash equivalents - end of period $22,253 $30,817
================ ================
Cash paid for interest $16,996 $ 2,571
================ ================
See notes to consolidated financial statements.
4
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1996
Unaudited
A. The unaudited consolidated financial statements reflect all adjustments
which are, in the opinion of management, necessary for a fair statement of
the interim periods presented. All adjustments to the financial statements
were of a normal recurring nature.
B. The propane industry is seasonal in nature because propane is used
primarily for heating in residential and commercial buildings. Therefore,
the results of operations for the periods ended January 31, 1996 and
January 31, 1995 are not necessarily indicative of the results to be
expected for a full year.
C. Supplemental balance sheet information (in thousands)
Inventories consist of:
January 31, July 31,
1996 1995
---------------- -----------------
Liquefied propane gas and related products $30,865 $37,550
Appliances, parts and supplies 6,722 6,540
---------------- -----------------
$37,587 $44,090
================ =================
In addition to inventories on hand, the Partnership enters into contracts
to buy product for supply purposes. All such contracts have terms of less
than one year and call for payment based on market prices at date of
delivery.
Property, plant and equipment, net consist of:
January 31, July 31,
1996 1995
----------------- -----------------
Property, plant and equipment $523,721 $521,110
Less: accumulated depreciation 184,504 175,468
---------------- -----------------
$339,217 $345,642
================= =================
Intangibles, net consist of:
January 31, July 31,
1996 1995
----------------- -----------------
Intangibles $173,565 $168,881
Less: accumulated amortization 86,748 81,995
---------------- -----------------
$ 86,817 $ 86,886
================= =================
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, management is of the opinion that there are no known claims or
contingent claims that are likely to have a material adverse effect on the
results of operations, financial condition or liquidity of the Partnership.
5
E. Summary of distributions to Unitholders
Cash
Distribution
Quarter Ending Declaration Date Record Date Paid Date Per Unit
-------------- ---------------- ----------- --------- --------
10/31/94 11/18/94 11/30/94 12/14/94 $0.65 (a)
01/31/95 02/17/95 02/28/95 03/14/95 $0.50
04/30/95 05/19/95 05/31/95 06/12/95 $0.50
07/31/95 08/16/95 08/31/95 09/13/95 $0.50
10/31/95 11/17/95 11/30/95 12/14/95 $0.50
(a) This initial cash distribution covered the period from July 5, 1994,
when the Partnership began operations, to October 31, 1994, the end of the
first full fiscal quarter. Accordingly, the distribution was prorated.
6
FERRELLGAS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
January 31, July 31,
ASSETS 1996 1995
------------------------------------------------------------------------ --------------- -------------
(unaudited)
Current Assets:
Cash and cash equivalents $ 22,253 $ 29,877
Accounts and notes receivable 135,462 58,239
Inventories 37,587 44,090
Prepaid expenses and other current assets 6,593 5,884
--------------- -------------
Total Current Assets 201,895 138,090
Property, plant and equipment, net 339,217 345,642
Intangible assets, net 86,817 86,886
Other assets, net 7,731 7,978
--------------- -------------
Total Assets $635,660 $578,596
=============== =============
LIABILITIES AND PARTNERS' CAPITAL
------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 93,991 $ 57,729
Other current liabilities 37,106 31,432
Short-term borrowings 19,000 20,000
--------------- -------------
Total Current Liabilities 150,097 109,161
Long-term debt 347,186 338,188
Other liabilities 12,438 11,398
Partners' Capital:
Limited partner 124,665 118,638
General partner 1,274 1,211
--------------- -------------
Total Partners' Capital 125,939 119,849
--------------- -------------
Total Liabilities and Partners' Capital $635,660 $578,596
=============== =============
See notes to consolidated financial statements.
7
FERRELLGAS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands)
(unaudited)
Three months ended Six months ended
-------------------------------------- ---------------------------------
January 31, January 31, January 31, January 31,
1996 1995 1996 1995
---------------- ------------------- ---------------- ---------------
Revenues:
Gas liquids and related product sales $226,676 $208,685 $341,205 $320,469
Other 11,705 9,976 21,764 17,605
---------------- ------------------- --------------- ---------------
Total revenues 238,381 218,661 362,969 338,074
Cost of product sold (exclusive of
depreciation, shown separately below) 126,472 122,889 195,581 190,300
---------------- ------------------- --------------- ---------------
Gross profit 111,909 95,772 167,388 147,774
Operating expense 47,750 44,645 88,620 79,696
Depreciation and amortization expense 8,810 8,265 17,136 15,412
General and administrative expense 3,119 2,934 6,554 5,248
Vehicle lease expense 1,117 1,107 2,203 2,147
---------------- ------------------- --------------- ---------------
Operating income 51,113 38,821 52,875 45,271
Interest expense (9,196) (8,217) (18,208) (15,315)
Interest income 369 345 625 514
Loss on disposal of assets (386) (109) (770) (303)
---------------- ------------------- --------------- ---------------
Net earnings $ 41,900 $ 30,840 $ 34,522 $ 30,167
================ =================== =============== ===============
See notes to consolidated financial statements.
8
FERRELLGAS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(in thousands)
(unaudited)
Limited General Total partners'
partner partner capital
----------------- ----------------- -----------------
July 31, 1995 $118,638 $1,211 $119,849
Additions to capital in connection
with acquisitions 3,232 34 3,266
Quarterly distributions (31,378) (320) (31,698)
Net earnings 34,173 349 34,522
----------------- ----------------- -----------------
January 31, 1996 $124,665 $1,274 $125,939
================= ================= =================
See notes to consolidated financial statements.
9
FERRELLGAS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six months ended
------------------------------------
January 31, January 31,
1996 1995
----------------- -----------------
Cash Flows From Operating Activities:
Net earnings $34,522 $30,167
Reconciliation of net earnings to net
cash from operating activities:
Depreciation and amortization 17,136 15,412
Other 2,126 1,514
Changes in operating assets and liabilities net of effects from business
acquisitions:
Accounts and notes receivable (77,355) (43,304)
Inventories 6,631 837
Prepaid expenses and other current assets (744) (1,492)
Accounts payable 36,986 43,287
Other current liabilities 5,082 4,280
Other 1,041 71
----------------- -----------------
Net cash provided by operating activities 25,425 50,772
----------------- -----------------
Cash Flows From Investing Activities:
Business acquisitions (3,079) (15,693)
Capital expenditures (7,218) (9,216)
Other 1,288 49
----------------- -----------------
Net cash used by investing activities (9,009) (24,860)
----------------- -----------------
Cash Flows From Financing Activities:
Net reductions to short-term borrowings (1,000) (3,000)
Additions to long-term debt 7,752 60,000
Reductions of long-term debt (354) (45,784)
Distributions (31,698) (20,556)
Other 1,260 (290)
----------------- -----------------
Net cash used by financing activities (24,040) (9,630)
----------------- -----------------
(Decrease) Increase in cash and cash equivalents (7,624) 16,282
Cash and cash equivalents - beginning of period 29,877 14,535
================= =================
Cash and cash equivalents - end of period $22,253 $30,817
================= =================
Cash paid for interest $16,996 $ 2,571
================= =================
See notes to consolidated financial statements.
10
FERRELLGAS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1996
(unaudited)
A. The unaudited consolidated financial statements reflect all adjustments
which are, in the opinion of management, necessary for a fair statement of
the interim periods presented. All adjustments to the financial statements
were of a normal recurring nature.
B. The propane industry is seasonal in nature because propane is used
primarily for heating in residential and commercial buildings. Therefore,
the results of operations for the periods ended January 31, 1996 and
January 31, 1995 are not necessarily indicative of the results to be
expected for a full year.
C. Supplementary balance sheet information (in thousands)
Inventories consist of:
January 31, July 31,
1996 1995
----------------- -----------------
Liquefied propane gas and related products $30,865 $37,550
Appliances, parts and supplies 6,722 6,540
----------------- -----------------
$37,587 $44,090
================= =================
In addition to inventories on hand, the Partnership enters into contracts
to buy product for supply purposes. All such contracts have terms of less
than one year and call for payment based on market prices at date of
delivery.
Property, plant and equipment, net consist of:
January 31, July 31,
1996 1995
------------------ -----------------
Property, plant and equipment $523,721 $521,110
Less: accumulated depreciation 184,504 175,468
----------------- -----------------
$339,217 $345,642
================== =================
Intangibles, net consist of:
January 31, July 31,
1996 1995
------------------ -----------------
Intangibles $173,565 $168,881
Less: accumulated amortization 86,748 81,995
----------------- -----------------
$ 86,817 $ 86,886
================== =================
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, management is of the opinion that there are no known claims or
contingent claims that are likely to have a material adverse effect on the
results of operations, financial condition or liquidity of the Partnership.
11
FERRELLGAS FINANCE CORP.
(A wholly owned subsidiary of Ferrellgas, L.P.)
BALANCE SHEETS
January 31, July 31,
ASSETS 1996 1995
---------------------------------------------------------------- ---------------- ----------------
(unaudited)
Cash $1,000 $697
---------------- ----------------
Total Assets $1,000 $697
================ ================
LIABILITIES AND STOCKHOLDER'S EQUITY
----------------------------------------------------------------
Payable to affiliate $ - $153
Common stock, $1.00 par value; 2,000 shares
authorized; 1,000 shares issued and outstanding 1,000 1,000
Additional paid in capital 545 -
Accumulated deficit (545) (456)
---------------- ----------------
Total Stockholder's Equity 1,000 544
---------------- ----------------
Total Liabilities and Stockholder's Equity $1,000 $697
================ ================
- -----------------------------------------------------------------------------------------------------------------------
STATEMENTS OF EARNINGS
(unaudited)
Three Months Ended Six Months Ended
----------------------------------- -----------------------------------
January 31, January 31, January 31, January 31,
1996 1995 1996 1995
---------------- ----------------- ----------------- -----------------
General and administrative expense $ - $ - $ 89 $ 40
---------------- ----------------- ----------------- -----------------
Net earnings (loss) $ - $ - $(89) $(40)
================ ================= ================= =================
See note to financial statements.
12
FERRELLGAS FINANCE CORP.
(a wholly owned subsidiary of Ferrellgas, L.P.)
STATEMENTS OF STOCKHOLDER'S EQUITY
Common Stock
------------------------------------
Additional Total
paid in Accumulated stockholder's
Shares Dollars capital deficit equity
----------------- ----------------- ----------------- --------------- -----------------
July 31, 1995 1,000 $1,000 $ - $(456) $ 544
Capital contribution 545 - 545
Net earnings (loss) - (89) (89)
----------------- ----------------- ----------------- --------------- -----------------
January 31, 1996 1,000 $1,000 $545 $(545) $1,000
================= ================= ================= =============== =================
- -----------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
---------------------------------
January 31, January 31,
1996 1995
----------------- ------------------
Cash Flows From Operating Activities:
Net earnings (loss) $ (89) $ (40)
----------------- ------------------
Cash used by operating activities (89) (40)
----------------- ------------------
Cash Flows From Financing Activities:
Capital contribution 545 -
Net payment to affiliate (153) -
----------------- ------------------
Cash provided by financing activities 392 -
----------------- ------------------
Increase (decrease) in cash 303 (40)
Cash - beginning of period 697 1,000
----------------- -----------------
Cash - end of period $1,000 $960
================= ==================
See note to financial statements.
- --------------------------------------------------------------------------------------------------------------------
NOTE TO FINANCIAL STATEMENTS
JANUARY 31, 1996
(unaudited)
The unaudited financial statements reflect all adjustments which are, in the
opinion of management, necessary for a fair statement of the interim periods
presented. All adjustments to the financial statements were of a normal
recurring nature.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Unaudited)
The following is a discussion of the results of operations and liquidity
and capital resources of the Ferrellgas, L.P. (the "Operating Partnership").
Because the Operating Partnership accounts for all of the consolidated assets,
sales and earnings of the Ferrellgas Partners, L.P. (the "Partnership" or
"MLP"), 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 and six months ended January 31, 1996 and 1995, are not necessarily
indicative of the results to be expected for a full year. Other factors
affecting the results of operations include competitive conditions, demand for
product, variations in weather and fluctuations in propane prices.
Three Months Ended January 31, 1996 vs. January 31, 1995
Total Revenues. Total revenues increased 9.0% to $238,381,000 as compared
to $218,661,000 for the prior period. The increase is principally due to the
impact of colder weather on retail propane operations partially offset by
declines in chemical feedstocks activity. For the quarter ended January 31,
1996, winter temperatures, as reported by the American Gas Association, were
17.5% colder than the same period last year and 2.6% colder than normal. Weak
petrochemical demand as compared to the prior period contributed to the
$19,229,000 decline in chemical feedstocks revenues.
Gross Profit. Gross profit increased 16.8% to $111,909,000 as compared to
$95,772,000 for the prior period primarily due to favorable retail performance.
Retail propane operations results improved due to a 16.7% increase in gallons
sold to 243,070,000 gallons as compared to 208,361,000 for the prior period.
These favorable results are attributable to the colder weather, partially offset
by aggressive pricing strategies by competitors, higher cost of product and warm
weather in the western third of the country.
Operating Expenses. Operating expenses increased 7.0% to $47,750,000 as
compared to $44,645,000 for the prior period. The increase is attributable to
principally incremental costs of acquisition and higher retail volumes.
Depreciation and Amortization. Depreciation and amortization expense
increased 6.6% to $8,810,000 as compared to $8,265,000 for the prior period
primarily due to acquisitions of propane businesses.
Interest Expense. Interest expense increased 11.9% to $9,196,000 as
compared to $8,217,000 in the prior period. This increase is primarily the
result of the increase in the net borrowings from the Partnership's revolving
credit loans, partially offset by lower interest rates.
14
Six months ended January 31, 1996 vs. January 31, 1995
Total Revenues. Total revenues increased 7.4% to $362,969,000 as compared
to $338,074,000 for the prior period. The increase is primarily attributable to
the impact of colder weather on retail operations in the second quarter and
acquisitions of propane businesses, partially offset by declines in chemical
feedstocks activity and warmer weather in the first quarter. To date, fiscal
1996 winter temperatures, as reported by the American Gas Association, are 16.9%
colder than the same period last year and 2.0% colder than normal. The
$26,552,000 decrease in chemical feedstocks marketing revenues is due to a
decrease in sales volume and selling price. Both volume and price decreased as a
result of decreased availability of product from refineries and decreased demand
from petrochemical companies.
Gross Profit. Gross profit increased 13.3% to $167,388,000 as compared with
$147,774,000 for the prior period. The increase is primarily attributable to an
increase in retail operations gross profit partially offset by a decrease in
trading gross profit. Retail operations results increased due to a increase in
gallons sold to 374,439,000 gallons as compared to 330,670,000 for the prior
period, partially offset by a decrease in retail margins. The increase in
gallons is primarily attributable to favorable weather and acquisition related
growth, while margins have been reduced by greater price competition by
independent operators and some major marketers. Other operations gross profit
decreased primarily due to relatively weaker margins.
Operating Expenses. Operating expenses increased 11.2% to $88,620,000 as
compared to $79,696,000 for the prior period. The increase is primarily
attributable to acquisitions of propane businesses as well as general increases
in various components of operating expenses due to increased retail activity.
Depreciation and Amortization. Depreciation and amortization expense
increased 11.2% to $17,136,000 as compared to $15,412,000 for the prior period
due primarily to acquisitions of propane businesses.
Interest Expense. Interest expense increased 18.9% to $18,208,000 as
compared to $15,315,000 in the prior period. This increase is primarily the
result of the increase in the net borrowings from the Partnership's revolving
credit loans, partially offset by decreasing interest rates.
Liquidity and Capital Resources
The ability of the Operating Partnership to satisfy its obligations is
dependent upon future performance, which will be subject to prevailing economic,
financial, business and weather conditions and other factors, many of which are
beyond its control. For the fiscal year ending July 31, 1996, the General
Partner believes that the Operating Partnership will generate sufficient Cash
from Operations (as defined in the Partnership Agreement) to meet its
obligations and enable it to distribute the Minimum Quarterly Distribution
($0.50 per Unit) on all Common Units and Subordinated Units. Future maintenance
and working capital needs of the Operating Partnership are expected to be
provided by cash generated from future operations, existing cash balances and
the working capital borrowing facility. In order to fund expansive capital
projects and future acquisitions, the Operating Partnership may borrow on
existing bank lines or the MLP may issue additional Common Units. Toward this
purpose, the MLP maintains a shelf registration statement filed with the
Securities and Exchange Commission registering 2,400,000 Common Units
representing limited partner interests in the MLP. The Common Units may be
issued from time to time by the MLP in connection with the Operating
Partnership's acquisition of other businesses, properties or securities in
business combination transactions.
15
The Partnership declared and paid its first quarter cash distribution of
$0.50 per unit on November 17, 1995 and December 14, 1995, respectively. On
February 20, 1996, the Partnership declared its second quarter cash distribution
of $0.50 per unit, payable March 14, 1996.
Cash Flows From Operating Activities. Cash provided by operating activities
was $25,425,000 for the six months ended January 31, 1996. This decrease of
$25,347,000 as compared to the six months ended January 31, 1995 is primarily
due to the increase in accounts receivable due to the timing of increased
deliveries of product at the end of the second quarter and the increase in
accounts receivable from trading activity.
Cash Flows From Investing Activities. During the six months ended January
31, 1996, the Operating Partnership made aggregate growth and maintenance
capital expenditures of $7,218,000 consisting primarily of the following: 1)
additions to Partnership-owned customer tanks and cylinders, 2) vehicle lease
buyouts, 3) relocating and upgrading district plant facilities, and 4)
development and upgrading computer equipment and software. Capital requirements
for repair and maintenance of property, plant and equipment are relatively low
since technological change is limited and the useful lives of propane tanks and
cylinders, the Operating Partnership's principal physical assets, are generally
long. The Operating Partnership maintains its vehicle and transportation
equipment fleet by leasing light- and medium-duty trucks and trailers. The
General Partner believes vehicle leasing is a cost effective method for meeting
the Partnership's transportation equipment needs. The Partnership does not have
any material commitments of funds for capital expenditures other than to support
the current level of operations.
During the six months ended January 31, 1996, the Operating Partnership
made total acquisition capital expenditures of $7,100,000 (including working
capital acquired of $494,000). This amount was funded by $3,079,000 cash,
$3,200,000 issuance of MLP equity units, and $821,000 other costs and
consideration. The Partnership continues seeking to expand its operations
through strategic acquisitions of smaller retail propane operations located
throughout the United States. These acquisitions will be funded through internal
cash flow, external borrowings or the issuance of additional Partnership
interests.
Cash Flows From Financing Activities. During the six months ended January
31, 1996, the Operating Partnership borrowed $6,752,000 from its Credit Facility
to fund business acquisitions, capital expenditures and seasonal working capital
needs.
Effects of Inflation. In the past the Partnership has generally been able
to adjust its sales price of product in response to market demand, cost of
product, competitive factors and other industry trends. Consequently, changing
prices as a result of inflationary pressures has not had a material adverse
effect on profitability although revenues may be affected. Inflation has not
materially impacted the results of operations and management does not believe
normal inflationary pressures will have a material adverse effect on the
profitability of the Partnership in the future.
16
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
27 Financial Data Schedule (filed in electronic format only)
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months ended
January 31, 1996.
17
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 thereunto duly authorized.
FERRELLGAS PARTNERS, L.P.
By Ferrellgas, Inc. (General Partner)
Date: March 12, 1996 By /s/ Danley K. Sheldon
------------------------
Danley K. Sheldon
Senior Vice President and
Chief Financial Officer (Principal
Financial and Accounting Officer
18
5
0000922358
Ferrellgas Partners, L.P.
1,000
U.S. Dollars
3-MOS
JUL-31-1996
NOV-01-1995
JAN-31-1996
1
22,253
0
135,462
0
37,587
201,895
523,721
184,504
635,660
150,098
347,186
182,280
0
0
(57,616)
635,660
226,676
238,381
126,472
184,149
0
0
9,196
41,476
0
41,476
0
0
0
41,476
1.32
1.32
1. For the MLP, the Common and Subordinated are considered to possess the
characteristics of Common Stock. Note that both are included in the
determination of EPS providing support for such a classification.
2. For the OLP, ownership is maintained by the MLP and GP. Thus, there is no
market and no relevant characteristics of either Common or Preferred Stock.
Classification is reasonable.
3. Ferrell Finance has no income statement items other than totals as their only
costs are G&A, and such costs are not required in the Financial Data Schedule.
4. A determination was made that Deprec. & Amort. and Vehicle leases are more
appropriately reflected as costs and expenses related to sales and revenues.
Therefore, there will be no amounts reported for item 5-03(b)3 "other
costs/expenses".
