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 October 31, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
Commission file numbers: 1-11331
333-06693
FERRELLGAS PARTNERS, L.P.
FERRELLGAS PARTNERS FINANCE CORP.
------------------------------------------------------------
(Exact name of registrants as specified in their charters)
Delaware 43-1698480
Delaware 43-1742520
------------------ ----------------------------------
(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 November 23, 1997, the registrants had units or shares outstanding as
follows:
Ferrellgas Partners, L.P. - 14,699,678 Common Units
16,593,721 Subordinated Units
Ferrellgas Partners
Finance Corp. 1,000 Common Stock
FERRELLGAS PARTNERS, L.P.
FERRELLGAS PARTNERS FINANCE CORP.
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
Consolidated Balance Sheets - October 31, 1997 and
July 31, 1997 1
Consolidated Statements of Earnings -
Three months ended October 31, 1997 and 1996 2
Consolidated Statement of Partners' Capital -
Three months ended October 31, 1997 3
Consolidated Statements of Cash Flows -
Three months ended October 31, 1997 and 1996 4
Notes to Consolidated Financial Statements 5
FERRELLGAS PARTNERS FINANCE CORP.
Balance Sheets - October 31, 1997 and July 31, 1997 7
Statements of Earnings - Three months ended October 31, 1997
and 1996 7
Statements of Cash Flows - Three months ended October 31, 1997
and 1996 8
Notes to Financial Statements 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 12
ITEM 2. CHANGES IN SECURITIES 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12
ITEM 5. OTHER INFORMATION 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
October 31, July 31,
ASSETS 1997 1997
- ------ ------------ --------
(unaudited)
Current Assets:
Cash and cash equivalents $ 9,336 $ 14,788
Accounts and notes receivable 77,266 61,835
Inventories 42,912 43,112
Prepaid expenses and other current assets 15,520 8,906
-------- --------
Total Current Assets 145,034 128,641
Property, plant and equipment, net 404,935 405,736
Intangible assets, net 111,257 112,058
Other assets, net 10,283 10,641
-------- --------
Total Assets $671,509 $657,076
======== ========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Current Liabilities:
Accounts payable $ 63,596 $ 39,322
Other current liabilities 39,264 49,422
Short-term borrowings 44,546 21,786
-------- --------
Total Current Liabilities 147,406 110,530
Long-term debt 492,022 487,334
Other liabilities 12,511 12,354
Contingencies and commitments
Minority interest 1,839 2,075
Partners' Capital:
Common unitholders (14,699,678 and 14,612,580 units
outstanding at October 1997 and July 1997,
respectively) 41,386 52,863
Subordinated unitholders (16,593,721 units outstanding
at both October 1997 and July 1997) 35,033 50,337
General partner (58,688) (58,417)
-------- --------
Total Partners' Capital 17,731 44,783
-------- --------
Total Liabilities and Partners' Capital $671,509 $657,076
======== ========
See notes to consolidated financial statements
1
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per unit data)
(unaudited)
For the three months ended
---------------------------
October 31, October 31,
1997 1996
------------ ------------
Revenues:
Gas liquids and related product sales $143,051 $156,764
Other 10,154 11,096
-------- --------
Total revenues 153,205 167,860
Cost of product sold (exclusive of
depreciation, shown separately below) 86,616 101,075
-------- --------
Gross profit 66,589 66,785
Operating expense 50,065 48,967
Depreciation and amortization expense 11,537 10,831
General and administrative expense 4,421 3,767
Vehicle lease and tank expense 2,312 1,480
-------- --------
Operating income (loss) (1,746) 1,740
Interest expense (12,124) (11,602)
Interest income 397 379
Gain (loss) on disposal of assets 66 (880)
-------- --------
Loss before minority interest (13,407) (10,363)
Minority interest (96) (65)
-------- --------
Net loss (13,311) (10,298)
General partner's interest in net loss (133) (103)
-------- --------
Limited partners' interest in net loss $(13,178) $(10,195)
======== ========
Net loss per limited partner unit $ (0.42) $ (0.33)
======== ========
Weighted average number of units outstanding 31,221.4 31,206.3
======== ========
See notes to consolidated financial statements
2
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(in thousands)
(unaudited)
Number of units
----------------------- Total
Sub- Sub- General partners'
Common ordinated Common ordinated partner capital
---------- ---------- ------- --------- --------- --------
July 31, 1997 14,612.6 16,593.7 $52,863 $50,337 $(58,417) $ 44,783
Common units issued in
connection with
acquisitions 87.1 0 2,000 0 20 2,020
Quarterly distributions (7,306) (8,297) (158) (15,761)
Net loss (6,171) (7,007) (133) (13,311)
----------- ---------- ------- ------- -------- --------
October 31, 1997 14,699.7 16,593.7 $41,386 $35,033 $(58,688) $ 17,731
=========== ========== ======= ======= ======== ========
See notes to consolidated financial statements.
3
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the three months ended
-------------------------------------
October 31, October 31,
1997 1996
----------- ------------
Cash Flows From Operating Activities:
Net loss $(13,311) $(10,298)
Reconciliation of net loss to net cash from
operating activities:
Depreciation and amortization 11,537 10,831
Other 952 1,730
Changes in operating assets and liabilities
net of effects from business acquisitions:
Accounts and notes receivable (15,869) (25,032)
Inventories (422) (13,864)
Prepaid expenses and other current assets (6,614) (3,080)
Accounts payable 23,726 40,237
Other current liabilities (9,840) 6,164
Other liabilities 157 (134)
-------- --------
Net cash provided (used) by operating activities (9,684) 6,554
-------- --------
Cash Flows From Investing Activities:
Business acquisitions (2,744) (8,247)
Capital expenditures (4,480) (3,832)
Other 958 933
-------- --------
Net cash used by investing activities (6,266) (11,146)
-------- --------
Cash Flows From Financing Activities:
Net additions to short-term borrowings 22,760 15,253
Additions to long-term debt 3,853 12,747
Reductions of long-term debt (234) (337)
Distributions (15,761) (15,761)
Other (120) (271)
-------- --------
Net cash provided by financing activities 10,498 11,631
-------- --------
Increase (decrease) in cash and cash equivalents (5,452) 7,039
Cash and cash equivalents - beginning of period 14,788 13,770
-------- --------
Cash and cash equivalents - end of period $ 9,336 $ 20,809
======== ========
Cash paid for interest $ 12,923 $ 10,795
======== ========
See notes to consolidated financial statements
4
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1997
(UNAUDITED)
A. 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.
B. The preparation of financial statements in conformity with generally accepted
accounting principles ("GAAP") requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reported period. Actual results could differ from these estimates.
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, 1997 and October 31, 1996 are not necessarily indicative of the
results to be expected for a full year.
D. Inventories consist of:
October 31, July 31,
(in thousands) 1997 1997
---------- --------
Liquefied propane gas and related products $ 35,231 $ 35,351
Appliances, parts and supplies 7,681 7,761
---------- --------
$ 42,912 $ 43,112
========== ========
In addition to inventories on hand, the Partnership enters into contracts to
buy product for supply purposes. Nearly all such contracts have terms of less
than one year and most call for payment based on market prices at date of
delivery. All fixed price contracts have terms less than one year.
Property, plant and equipment, net consist of:
October 31, July 31,
(in thousands) 1997 1997
---------- ---------
Property, plant and equipment $ 620,013 $ 614,974
Less: accumulated depreciation 215,078 209,238
---------- --------
$ 404,935 $ 405,736
========== ========
Intangible assets, net consist of:
October 31, July 31,
(in thousands) 1997 1997
----------- --------
Intangible assets $ 224,008 $ 221,269
Less: accumulated amortization 112,751 109,211
---------- --------
$ 111,257 $ 112,058
========== ========
E. The Partnership is threatened with or named as a defendant in various
lawsuits which, among other items, claim damages for product liability. It is
not possible to determine the ultimate disposition of these matters; however,
management is of the opinion that there are no known claims or contingent
claims that are likely to have a material adverse effect on the results of
operations or financial condition of the Partnership.
5
F. On September 12, 1997, the Partnership paid a cash distribution of $0.50 per
Common and Subordinated Unit for the quarter ended July 31, 1997. On November
17, 1997, the Partnership declared its first-quarter cash distribution of
$0.50 per Common and Subordinated Unit, payable December 12, 1997.
6
FERRELLGAS PARTNERS FINANCE CORP.
(a wholly owned subsidiary of Ferrellgas Partners, L.P.)
BALANCE SHEETS
OCTOBER 31, JULY 31,
ASSETS 1997 1997
- ------ ---------- --------
(UNAUDITED)
Cash $ 1,000 $ 1,000
--------- -------
TOTAL ASSETS $ 1,000 $ 1,000
========= =======
STOCKHOLDER'S EQUITY
- --------------------
Common stock, $1.00 par value; 2,000 shares
authorized; 1,000 shares issued and outstanding $ 1,000 $ 1,000
Additional paid in capital 327 327
Accumulated deficit (327) (327)
--------- -------
TOTAL STOCKHOLDER'S EQUITY $ 1,000 $ 1,000
========= =======
STATEMENT OF EARNINGS
(unaudited)
THREE MONTHS ENDED
-------------------------
OCTOBER 31, OCTOBER 31,
1997 1996
----------- -----------
General and administrative expense $ 0 $ 51
----------- -----------
NET LOSS $ 0 $ (51)
=========== ===========
See notes to financial statements.
7
FERRELLGAS PARTNERS FINANCE CORP.
(A wholly owned subsidiary of Ferrellgas Partners, L.P.)
STATEMENT OF CASH FLOWS
(unaudited)
THREE MONTHS ENDED
-----------------------
OCTOBER 31, OCTOBER 31,
1997 1996
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ 0 $ (51)
---------- ---------
Cash used by operating activities 0 (51)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution 0 51
---------- ---------
Cash provided by financing activities 0 51
---------- ---------
Increase in cash - -
Cash - beginning of period 1,000 1,000
---------- ---------
CASH - END OF PERIOD $ 1,000 $ 1,000
========== =========
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
(UNAUDITED)
A. Ferrellgas Partners Finance Corp., a Delaware corporation, was formed on
March 28, 1996, and is a wholly-owned subsidiary of Ferrellgas Partners, L.P.
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.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion of the results of operations and liquidity and
capital resources of Ferrellgas Partners, L.P. (the "Partnership" or "MLP").
Except for the $160,000,000 of 9 3/8% Senior Secured Notes issued in April 1996
by the MLP (the "MLP Senior Notes") and the related interest expense,
Ferrellgas, L.P. (the "Operating Partnership" or "OLP") accounts for nearly all
of the consolidated assets, liabilities, sales and earnings of the MLP. When the
discussion refers to the consolidated MLP, the term Partnership will be used.
Ferrellgas Partners 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.
Statements included in this report that are not historical facts, including a
statement concerning the Partnership's belief that the OLP will have sufficient
funds to meet its obligations to enable it to distribute to the MLP sufficient
funds to permit the MLP to meet its obligations with respect to the MLP Senior
Notes issued in April 1996, and to enable it to distribute the Minimum Quarterly
Distribution ($0.50 per Unit) on all Common Units and Subordinated Units, are
forward-looking statements.
Such statements are subject to risks and uncertainties that could cause actual
results to differ materially from those expressed in or implied by the
statements. The risks and uncertainties include but are not limited to the
following and their effect on the Partnership's operations: a) the effect of
weather conditions on demand for propane, b) price and availability of propane
supplies, c) the availability of capacity to transport propane to market areas,
d) competition from other energy sources and within the propane industry, e)
operating risks incidental to transporting, storing, and distributing propane,
f) changes in interest rates g) governmental legislation and regulations, h)
energy efficiency and technology trends and (i) other factors that are discussed
in the Partnership's filings with the Securities and Exchange Commission.
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, 1997 and 1996, 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. As the Partnership has
grown through acquisitions, fixed costs such as personnel costs, depreciation
and interest expense have increased. Over time, these fixed cost increases have
caused losses in the first and fourth quarters and net income in the second and
third quarters to be more pronounced.
THREE MONTHS ENDED OCTOBER 31, 1997 VS. OCTOBER 31, 1996
Total Revenues. Total revenues decreased 8.7% to $153,205,000 as compared to
$167,860,000 in the first quarter of fiscal 1997, primarily due to decreased
retail propane volumes and sales price per gallon and a decrease in revenues
from other operations (wholesale marketing, chemical feedstocks marketing and
net trading operations), partially offset by an increase sales volume due to the
effect of acquisitions.
Retail volumes decreased 4.8% to 154,495,000 gallons as compared to
162,281,000 gallons for the prior year, primarily due to a delay in deliveries
of retail gallons caused by a lack of sustained cold weather and due to a
reduction in demand for crop drying gallons compared to the same quarter last
year. Revenues from other operations decreased by $6,102,000 primarily due to
decreased wholesale marketing sales price per gallon and volumes related to a
weaker demand for agricultural gallons as compared to the same quarter as last
year.
9
Gross Profit. Gross profit decreased 0.3% to $66,589,000 as compared to
$66,785,000 in the first quarter of fiscal 1997, primarily due to the effect of
decreased retail propane volumes and a decrease in volumes in wholesale
marketing, trading and chemical feedstocks marketing operations offset by the
effect of increased retail margins and the effect of acquisitions.
Operating Expenses. Operating expenses increased 2.2% to $50,065,000 as
compared to $48,967,000 in the first quarter of fiscal 1997 primarily due to
acquisition related increases in personnel costs, plant and office expenses, and
vehicle and other expenses.
Depreciation and Amortization. Depreciation and amortization expense increased
6.5% to $11,537,000 as compared to $10,831,000 in the first quarter of fiscal
1997 primarily due to acquisitions of propane businesses.
Interest expense. Interest expense increased 4.5% to $12,124,000 as compared
to $11,602,000 in the first quarter of fiscal 1997. This increase is primarily
the result of increased borrowings, partially offset by a small decrease in the
overall average interest rate paid by the Partnership on its borrowings.
LIQUIDITY AND CAPITAL RESOURCES
The ability of the MLP 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, 1998, the General Partner believes that the
OLP will have sufficient funds to meet its obligations and enable it to
distribute to the MLP sufficient funds to permit the MLP to meet its obligations
with respect to the MLP Senior Notes issued in April 1996, 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 MLP 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 OLP may borrow on
existing bank lines or the MLP may issue additional Common Units. Toward this
purpose the MLP maintains a shelf registration statement with the Securities and
Exchange Commission for 1,800,322 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 OLP's acquisition of other businesses, properties or
securities in business combination transactions.
Operating Activities. Cash used by operating activities was $(9,684,000) for
the three months ended October 31, 1997, compared to cash provided by operating
activities of $6,554,000 for the prior period. This decrease is primarily due to
a decrease in volumes from other operations during the quarter as compared to
the first quarter of last year and its affect on accounts receivable and
accounts payable, and due to the timing of payments for purchases of inventory.
Investing Activities. During the three months ended October 31, 1997, the
Partnership made total acquisition capital expenditures of $5,270,000. This
amount was funded by $2,744,000 cash payments (including $619,000 for transition
costs previously accrued for fiscal 1997 acquisitions), $2,000,000 of common
units issued and $1,145,000 of noncompete notes.
During the three months ended October 31, 1997, the Partnership made growth
and maintenance capital expenditures of $4,480,000 consisting primarily of the
following: 1) relocating and upgrading district plant facilities, 2) additions
to Partnership-owned customer tanks and cylinders, 3) vehicle lease buyouts, and
4) 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 Partnership's principal physical assets, are generally long.
10
The Partnership meets its vehicle and transportation equipment fleet needs by
leasing light and medium duty trucks and tractors. The General Partner believes
vehicle leasing is a cost effective method for meeting the Partnership's
transportation equipment needs. 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. The Partnership does not have any material commitments of
funds for capital expenditures other than to support the current level of
operations. In fiscal 1998, the Partnership expects growth and maintenance
capital expenditures to increase slightly over fiscal 1997 levels.
Financing Activities. During the three months ended October 31, 1997, the
Partnership borrowed $26,613,000 from its Credit Facility to fund working
capital, business acquisitions, and capital expenditure needs. At October 31,
1997, $113,150,000 of borrowings were outstanding under the revolving portion of
the Credit Facility. Letters of credit outstanding, used primarily to secure
obligations under certain insurance arrangements, totaled $24,791,000. At
October 31, 1997, the Operating Partnership had $67,059,000 available for
general corporate, acquisition and working capital purposes under the Credit
Facility. On November 17, 1997, the Partnership declared a cash distribution of
$0.50 per Common and Subordinated Unit, payable December 12, 1997.
Adoption of New Accounting Standards: The Financial Accounting Standards Board
recently issued the following new accounting standards: Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share", SFAS No. 130
"Reporting Comprehensive Income" and SFAS No. 131 "Disclosures About Segments of
an Enterprise and Related Information."
SFAS No. 128 is required to be adopted by the Partnership during the three-
month period ending January 31, 1998. The adoption of this statement is not
expected to have a material effect on the calculation of earnings per unit. SFAS
Nos. 130 and 131 are required to be adopted by the Partnership for the fiscal
year ended July 31, 1998. The adoption of both standards is not expected to
have a material effect on the Partnership's financial position or results of
operations.
11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS
3.1 Agreement of Limited Partnership of Ferrellgas Partners, L.P.
(Incorporated by reference to the same numbered Exhibit to the
Partnership's Current Report on Form 8-K filed August 15, 1994.)
3.2 Articles of Incorporation for Ferrellgas Partners Finance Corp.
(Incorporated by reference to the same numbered Exhibit to the
Partnership's Current Report on Form 8-K filed August 15, 1994.)
3.3 Bylaws of Ferrellgas Partners Finance Corp. (Incorporated by
reference to the same numbered Exhibit to the Partnership's
Quarterly Report on Form 10-Q filed June 13, 1997
10.1 First Amendment to Amended and Restated Credit Agreement dated
as of November 7, 1997, among Ferrellgas, L.P., Stratton
Insurance Company, Inc., Ferrellgas, Inc., Bank of America
National Trust and Savings Association, as agent, and the other
financial institutions party thereto.
27.1 Financial Data Schedule for Ferrellgas Partners, L.P. (filed in
electronic format only)
27.2 Financial Data Schedule for Ferrellgas Partners Finance Corp.
(B) REPORTS ON FORM 8-K
None.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have 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: November 25, 1997 By /s/ Danley K. Sheldon
-----------------------------------
Danley K. Sheldon
Senior Vice President and
Chief Financial Officer (Principal
Financial and Accounting Officer)
FERRELLGAS PARTNERS FINANCE CORP.
Date: November 25, 1997 By /s/ Danley K. Sheldon
----------------------------------
Danley K. Sheldon
Senior Vice President and
Chief Financial Officer (Principal
Financial and Accounting Officer)
13
EXHIBIT 10.1
FIRST AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment"), dated as of November 7, 1997, is entered into by and among
FERRELLGAS, L.P., a Delaware limited partnership (the "Borrower"), STRATTON
INSURANCE COMPANY, INC., a Vermont corporation and a wholly-owned subsidiary of
Borrower ("Stratton"), FERRELLGAS, INC., a Delaware corporation and the sole
general partner of Borrower (the "General Partner"), each of the financial
institutions that is a signatory to this Amendment (collectively, the "Banks")
and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent for the
Banks (in such capacity, the "Agent"), and amends that certain Amended and
Restated Credit Agreement dated as of July 31, 1996 (as the same is in effect
immediately prior to the effectiveness of this Amendment, the "Existing Credit
Agreement" and as the same may be amended, supplemented or modified and in
effect from time to time, the "Credit Agreement"), by and among the Borrower,
Stratton, the General Partner, the Agent and the Banks from time to time party
to the Credit Agreement. Capitalized terms used and not otherwise defined in
this Amendment shall have the same meanings in this Amendment as set forth in
the Credit Agreement, and the rules of interpretation set forth in Section 1.02
of the Credit Agreement shall be applicable to this Amendment.
RECITAL
The Borrower has requested that the Banks amend Section 8.12(d) under
the Existing Credit Agreement, and the Banks are willing to agree to so amend
the Existing Credit Agreement on the terms and subject to the conditions set
forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements set forth below and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
SECTION 1. Amendment. On the terms of this Amendment and subject to
the satisfaction of the conditions precedent set forth below in Section 2,
Section 8.12(d) of the Existing Credit Agreement is amended in its entirety as
follows:
"(d) such Restricted Payment (other than (x) Restricted
Payments described in clause (i) of the first paragraph of this
Section 8.12 made during the fiscal quarter ending January 31, 1997
that do not exceed $26,000,000 in the aggregate or (y) any Restricted
Payments described in clauses (iii) or (iv) of the first paragraph of
this Section 8.12), the amount of which, if made other than with cash,
to be determined in accordance with clause (c) of this Section 8.12,
shall not exceed an amount equal to the excess of (A) Consolidated
Cash Flow of the Borrower and its Subsidiaries for the period from and
after October 31, 1996 through and including the last day of the
fiscal quarter ending immediately
preceding the date of the proposed Restricted Payment (the
"Determination Period") over (B) the sum of Consolidated Interest
Expense of the Borrower and its Subsidiaries for the Determination
Period plus all capital expenditures (other than Growth-Related
Capital Expenditures) made by the Borrower and its Subsidiaries during
the Determination Period plus the aggregate of all other Restricted
Payments (other than (x) Restricted Payments described in clause (i)
of the first paragraph of this Section 8.12 made during the fiscal
quarter ending January 31, 1997 that do not exceed $26,000,000 in the
aggregate or (y) any Restricted Payments described in clauses (iii) or
(iv) of the first paragraph of this Section 8.12) made by the Borrower
and its Subsidiaries during the period from and after October 31, 1996
through and including the date of the proposed Restricted Payment plus
(C) $30,000,000; and"
SECTION 2. Conditions to Effectiveness. The amendment set forth in
Section 1 of this Amendment shall become effective only upon the satisfaction of
all of the following conditions precedent on or prior to November 7, 1997 (the
date of satisfaction of all such conditions being referred to as the "Amendment
Effective Date"):
(a) On or before the Amendment Effective Date, the Borrower shall
deliver to the Agent, on behalf of the Banks, this Amendment, duly executed and
delivered by the Borrower, the General Partner, Stratton, Ferrellgas Finance
Corp. ("Finance Corp."), the Banks and the Agent.
(b) On or before the Amendment Effective Date, all corporate,
partnership and other proceedings taken or to be taken in connection with the
transactions contemplated by this Amendment, and all documents incidental
thereto, shall be reasonably satisfactory in form and substance to the Agent and
its counsel, and the Agent and such counsel shall have received all such
counterpart originals or certified copies of such documents as they may
reasonably request.
(c) All governmental actions or filings necessary for the execution,
delivery and performance of this Amendment shall have been made, taken or
obtained, and no order, statutory rule, regulation, executive order, decree,
judgment or injunction shall have been enacted, entered, issued, promulgated or
enforced by any court or other governmental entity which prohibits or restricts
the transactions contemplated by this Amendment nor shall any action have been
commenced or threatened seeking any injunction or any restraining or other order
to prohibit, restrain, invalidate or set aside the transactions contemplated by
this Amendment.
(d) The representations and warranties set forth in this Amendment
shall be true and correct as of the Amendment Effective Date.
SECTION 3. Representations and Warranties. In order to induce the
Banks to enter into this Amendment and to amend the Existing Credit Agreement in
the manner provided in this Amendment, the Borrower, the General Partner,
Finance Corp. and Stratton represent and warrant to each Bank as of the
Amendment Effective Date as follows:
2
(a) Power and Authority. The Borrower, the General Partner, Stratton and
Finance Corp. have all requisite corporate or partnership power and authority to
enter into this Amendment and to carry out the transactions contemplated by, and
perform their respective obligations under, the Existing Credit Agreement as
amended by this Amendment (hereafter referred to as the "Amended Credit
Agreement").
(b) Authorization of Agreements. The execution and delivery of this
Amendment by the Borrower, the General Partner, Stratton and Finance Corp. and
the performance of the Amended Credit Agreement by the Borrower, the General
Partner, Stratton and Finance Corp. have been duly authorized by all necessary
action, and this Amendment has been duly executed and delivered by the Borrower,
the General Partner, Stratton and Finance Corp.
(c) Enforceability. The Amended Credit Agreement constitutes the legal,
valid and binding obligation of the Borrower, the General Partner, Stratton and
Finance Corp. enforceable against the Borrower, the General Partner, Stratton
and Finance Corp. in accordance with its terms, except as may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights in general. The enforceability of the obligations of the
Borrower, the General Partner, Stratton and Finance Corp. hereunder is subject
to general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(d) No Conflict. The execution and delivery by the Borrower, the General
Partner, Stratton and Finance Corp. of this Amendment and the performance by the
Borrower, the General Partner, Stratton and Finance Corp. of the Amended Credit
Agreement do not and will not (i) contravene, in any material respect, any
provision of any law, regulation, decree, ruling, judgment or order that is
applicable to the Borrower, the General Partner, Stratton or Finance Corp., as
the case may be, or their respective properties or other assets, (ii) result in
a breach of or constitute a default under the charter, bylaws or other
organizational documents of the Borrower, the General Partner, Stratton, or
Finance Corp., as the case may be, or any material agreement, indenture, lease
or instrument binding upon the Borrower, the General Partner, Stratton, or
Finance Corp., or their respective properties or other assets or (iii) result in
the creation or imposition of any Liens on their respective properties other
than as permitted under the Credit Agreement.
(e) Governmental Consents. No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by the
Borrower, the General Partner, Stratton or Finance Corp. of this Amendment.
(f) Representations and Warranties in the Credit Agreement. The
Borrower, the General Partner and Stratton confirm that as of the Amendment
Effective Date the representations and warranties contained in Article VI of the
Credit Agreement are (before and after giving effect to this Amendment) true and
correct in all material respects (except to the
3
extent any such representation and warranty is expressly stated to have been
made as of a specific date, in which case it shall be true and correct as of
such specific date) and that no Default has occurred and is continuing.
(g) Subsidiaries. As of the Amendment Effective Date, the Borrower has
no Subsidiaries other than Finance Corp and Stratton.
SECTION 4. Miscellaneous.
(a) Reference to and Effect on the Existing Credit Agreement and the
Other Basic Documents.
(i) Except as specifically amended by this Amendment and the
documents executed and delivered in connection herewith, the Existing
Credit Agreement and the other Loan Documents shall remain in full force
and effect and are hereby ratified and confirmed.
(ii) The execution and delivery of this Amendment and performance
of the Amended Credit Agreement shall not, except as expressly provided
herein, constitute a waiver of any provision of, or operate as a waiver of
any right, power or remedy of the Banks under, the Existing Credit
Agreement or any of the other Loan Documents.
(iii) Upon the conditions precedent set forth herein being
satisfied, this Amendment shall be construed as one with the Existing
Credit Agreement, and the Existing Credit Agreement shall, where the
context requires, be read and construed throughout so as to incorporate
this Amendment.
(b) Fees and Expenses. The Borrower, the General Partner and Stratton
acknowledge that all costs, fees and expenses incurred in connection with this
Amendment will be paid in accordance with Section 11.04 of the Existing Credit
Agreement.
(c) Headings. Section and subsection headings in this Amendment are
included for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose or be given any substantive effect.
(d) Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(e) Governing Law. This Amendment shall be governed by and construed
according to the laws of the State of New York.
4
IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of
the date first above written.
FERRELLGAS, L.P., a Delaware limited
partnership
By: FERRELLGAS, INC.
Its: General Partner
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
FERRELLGAS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
STRATTON INSURANCE COMPANY, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
AGENT
-----
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Agent
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
5
BANKS
-----
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
NATIONSBANK OF TEXAS, N.A.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
WELLS FARGO BANK, N.A.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
THE BANK OF NOVA SCOTIA
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
BANKBOSTON, N.A. (FORMERLY KNOWN AS
THE FIRST NATIONAL BANK OF BOSTON)
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
BANQUE PARIBAS
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
6
UNION BANK OF CALIFORNIA, N.A.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
THE BANK OF NEW YORK
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
CAISSE NATIONALE DE CREDIT AGRICOLE
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
The undersigned hereby acknowledges and consents to the foregoing First
Amendment to Amended and Restated Credit Agreement, makes the representations
and warranties set forth in the foregoing First Amendment to Amended and
Restated Credit Agreement, reaffirms the terms of its Amended and Restated
Continuing Guaranty with Bank of America National Trust and Savings Association,
as Agent and acknowledges that such Amended and Restated Continuing Guaranty
remains in full force and effect in accordance with its terms.
FERRELLGAS FINANCE CORP.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
7
5
1,000
0000922358
FERRELLGAS PARTNERS L.P.
3-MOS
JUL-31-1998
AUG-01-1997
OCT-31-1997
9,336
0
78,500
1,234
42,912
145,034
620,013
215,078
671,509
147,406
492,022
0
0
76,419
(58,688)
671,509
143,051
153,205
86,616
150,530
0
0
12,124
(13,311)
0
(13,311)
0
0
0
(13,311)
(0.42)
(0.42)
5
0001012493
FERRELLGAS PARTNERS FINANCE CORP.
3-MOS
JUL-31-1998
AUG-01-1997
OCT-31-1997
1,000
0
0
0
0
1,000
0
0
1,000
0
0
0
0
1,000
0
1,000
0
0
0
0
0
0
0
(0)
0
(0)
0
0
0
(0)
0
0
