Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp. Yes x☒ No ☐¨

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Units	FGP	New York Stock Exchange

At November 30, ~~2018,~~2019, the registrants had common units or shares of common stock outstanding as follows:



Ferrellgas Partners, L.P.	97,152,665	~~97,152,665~~	Common Units
Ferrellgas Partners Finance Corp.	1,000	~~1,000~~	Common Stock
Ferrellgas, L.P.	n/a	n/a	~~n/a~~
Ferrellgas Finance Corp.	1,000	~~1,000~~	Common Stock

Documents Incorporated by Reference: None

EACH OF FERRELLGAS PARTNERS FINANCE CORP. AND FERRELLGAS FINANCE CORP. MEET THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION

H(1)(A) AND (B) OF FORM ~~10-Q~~10‑Q AND ARE THEREFORE, WITH RESPECT TO EACH SUCH REGISTRANT, FILING THIS FORM ~~10-Q~~10‑Q WITH THE REDUCED DISCLOSURE FORMAT.

Table of Contents

FERRELLGAS PARTNERS, L.P.

FERRELLGAS PARTNERS FINANCE CORP.

FERRELLGAS, L.P.

FERRELLGAS FINANCE CORP.

TABLE OF CONTENTS

	Page

	PART I - FINANCIAL INFORMATION	~~Page~~
ITEM 1.	FINANCIAL STATEMENTS (unaudited)

	Ferrellgas Partners, L.P. and Subsidiaries
	Condensed Consolidated Balance Sheets – October 31, ~~2018~~2019 and July 31, ~~2018~~2019	4 3
	Condensed Consolidated Statements of Operations – Three months ended October 31, ~~2018~~2019 and ~~2017~~2018	5 4
	Condensed Consolidated Statements of Comprehensive Loss – Three months ended October 31, ~~2018~~2019 and ~~2017~~2018	6 5
	Condensed Consolidated Statement of Partners’ Deficit – Three months ended October 31, 2019 and 2018	7 6
	Condensed Consolidated Statements of Cash Flows – Three months ended October 31, ~~2018~~2019 and ~~2017~~2018	8 7
	Notes to Condensed Consolidated Financial Statements	9 8

	Ferrellgas Partners Finance Corp.
	Condensed Balance Sheets – October 31, ~~2018~~2019 and July 31, ~~2018~~2019	26
	Condensed Statements of Operations – Three months ended October 31, ~~2018~~2019 and ~~2017~~2018	26 27
	Condensed Statements of Cash Flows – Three months ended October 31, ~~2018~~2019 and ~~2017~~2018	27 28
	Notes to Condensed Financial Statements	28 29

	Ferrellgas, L.P. and Subsidiaries
	Condensed Consolidated Balance Sheets – October 31, ~~2018~~2019 and July 31, ~~2018~~2019	29 30
	Condensed Consolidated Statements of Operations – Three months ended October 31, ~~2018~~2019 and ~~2017~~2018	30 31
	Condensed Consolidated Statements of Comprehensive Loss – Three months ended October 31, ~~2018~~2019 and ~~2017~~2018	31 32
	Condensed Consolidated Statement of Partners’ Deficit – Three months ended October 31, 2019 and 2018	32 33
	Condensed Consolidated Statements of Cash Flows – Three months ended October 31, ~~2018~~2019 and ~~2017~~2018	33 34
	Notes to Condensed Consolidated Financial Statements	34 35

	Ferrellgas Finance Corp.
	Condensed Balance Sheets – October 31, ~~2018~~2019 and July 31, ~~2018~~2019	56 58
	Condensed Statements of Operations – Three months ended October 31, ~~2018~~2019 and ~~2017~~2018	56

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM ~~1. FINANCIAL STATEMENTS~~1.FINANCIAL STATEMENTS (unaudited)

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
October 31, 2018 July 31, 2018
ASSETS
Current assets:
Cash and cash equivalents $ 63,188
$ 119,311
Accounts and notes receivable, net (including $137,560 and $120,079 of accounts receivable pledged as collateral at October 31, 2018 and July 31, 2018, respectively) 136,189
126,054
Inventories 106,560
83,694
Prepaid expenses and other current assets 34,003
34,862
Total current assets 339,940
363,921

Property, plant and equipment, net 566,078
557,723
Goodwill, net 247,478
246,098
Intangible assets (net of accumulated amortization of $403,690 and $399,629 at October 31, 2018 and July 31, 2018, respectively) 117,452
120,951
Other assets, net 72,842
74,588
Total assets $ 1,343,790
$ 1,363,281

LIABILITIES AND PARTNERS' DEFICIT

Current liabilities:

Accounts payable $ 59,664
$ 46,820
Short-term borrowings —
32,800
Collateralized note payable 90,000
58,000
Other current liabilities 185,968
142,025
Total current liabilities 335,632
279,645

Long-term debt 2,081,243
2,078,637
Other liabilities 38,654
39,476
Contingencies and commitments (Note K)

Partners' deficit:

Common unitholders (97,152,665 units outstanding at October 31, 2018 and July 31, 2018) (1,041,971 ) (978,503 )
General partner unitholder (989,926 units outstanding at October 31, 2018 and July 31, 2018) (70,433 ) (69,792 )
Accumulated other comprehensive income 8,050
20,510
Total Ferrellgas Partners, L.P. partners' deficit (1,104,354 ) (1,027,785 )
Noncontrolling interest (7,385 ) (6,692 )
Total partners' deficit (1,111,739 ) (1,034,477 )
Total liabilities and partners' deficit $ 1,343,790
$ 1,363,281
See notes to condensed consolidated financial statements.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
(unaudited)

For the three months ended October 31,
2018 2017
Revenues:
Propane and other gas liquids sales $ 334,966
$ 302,758
Midstream operations —
120,760
Other 17,343
31,137
Total revenues 352,309
454,655

Costs and expenses:
Cost of sales - propane and other gas liquids sales 204,136
179,515
Cost of sales - midstream operations —
108,125
Cost of sales - other 3,047
13,702
Operating expense 110,331
110,462
Depreciation and amortization expense 18,992
25,732
General and administrative expense 14,179
13,164
Equipment lease expense 7,863
6,741
Non-cash employee stock ownership plan compensation charge 2,748
3,962
Loss on asset sales and disposals 4,504
895

Operating loss (13,491 ) (7,643 )

Interest expense (43,878 ) (40,807 )
Other income, net 19
511

Loss before income taxes (57,350 ) (47,939 )

Income tax expense 158
377

Net loss (57,508 ) (48,316 )

Net loss attributable to noncontrolling interest (493 ) (401 )

Net loss attributable to Ferrellgas Partners, L.P. (57,015 ) (47,915 )

Less: General partner's interest in net loss (570 ) (479 )

Common unitholders' interest in net loss $ (56,445 ) $ (47,436 )

Basic and diluted net loss per common unit $ (0.58 ) $ (0.49 )

Cash distributions declared per common unit $ —
$ 0.10
See notes to condensed consolidated financial statements.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)

For the three months ended October 31,
2018 2017

Net loss $ (57,508 ) $ (48,316 )
Other comprehensive income (loss):
Change in value of risk management derivatives (8,154 ) 22,449
Reclassification of gains on derivatives to earnings, net (4,433 ) (3,949 )
Other comprehensive income (loss) (12,587 ) 18,500
Comprehensive loss (70,095 ) (29,816 )
Less: Comprehensive loss attributable to noncontrolling interest (620 ) (215 )
Comprehensive loss attributable to Ferrellgas Partners, L.P. $ (69,475 ) $ (29,601 )
See notes to condensed consolidated financial statements.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' DEFICIT
(in thousands)
(unaudited)

Number of units Accumulated other comprehensive income Total
Ferrellgas
Partners, L.P. partners'
deficit Total partners'
deficit

Common
unitholders General partner unitholder Common
unitholders General partner unitholder Non-controlling
interest
Balance at July 31, 2018 97,152.7
989.9
$ (978,503 ) $ (69,792 ) $ 20,510
$ (1,027,785 ) $ (6,692 ) $ (1,034,477 )
Contributions in connection with non-cash ESOP compensation charges —
—
2,693
27
—
2,720
28
2,748
Distributions —
—
(9,716 ) (98 ) —
(9,814 ) (101 ) (9,915 )
Net loss —
—
(56,445 ) (570 ) —
(57,015 ) (493 ) (57,508 )
Other comprehensive loss —
—
—
—
(12,460 ) (12,460 ) (127 ) (12,587 )
Balance at October 31, 2018 97,152.7
989.9
$ (1,041,971 ) $ (70,433 ) $ 8,050
$ (1,104,354 ) $ (7,385 ) $ (1,111,739 )
See notes to condensed consolidated financial statements.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the three months ended October 31,
2018 2017
Cash flows from operating activities:
Net loss $ (57,508 ) $ (48,316 )
Reconciliation of net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense 18,992
25,732
Non-cash employee stock ownership plan compensation charge 2,748
3,962
Loss on asset sales and disposals 4,504
895
Unrealized gain on derivative instruments —
1,607
Provision for doubtful accounts 519
693
Deferred income tax expense 150
364
Other 3,193
2,238
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts and notes receivable, net of securitization (10,654 ) (23,862 )
Inventories (22,866 ) (33,160 )
Prepaid expenses and other current assets (6,391 ) (6,936 )
Accounts payable 13,159
13,496
Accrued interest expense 31,987
32,438
Other current liabilities 6,677
39,550
Other assets and liabilities (2,124 ) (768 )
Net cash provided by (used in) operating activities (17,614 ) 7,933

Cash flows from investing activities:
Business acquisitions, net of cash acquired (4,625 ) (13,867 )
Capital expenditures (23,433 ) (20,154 )
Proceeds from sale of assets 1,061
1,208
Other (292 ) —
Net cash used in investing activities (27,289 ) (32,813 )

Cash flows from financing activities:
Distributions (9,814 ) (9,813 )
Proceeds from issuance of long-term debt —
23,580
Payments on long-term debt (281 ) (281 )
Net reductions in short-term borrowings (32,800 ) (5,879 )
Net additions to collateralized short-term borrowings 32,000
19,000
Cash paid for financing costs (224 ) (287 )
Noncontrolling interest activity (101 ) (100 )
Net cash provided by (used in) financing activities (11,220 ) 26,220

Net change in cash and cash equivalents (56,123 ) 1,340
Cash and cash equivalents - beginning of period 119,311
5,760
Cash and cash equivalents - end of period $ 63,188
$ 7,100
See notes to condensed consolidated financial statements.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)


	October 31, 2019		July 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	29,805	$	11,054
Accounts and notes receivable, net (including $118,164 and $106,145 of accounts receivable pledged as collateral at October 31, 2019 and July 31, 2019, respectively)		123,841		107,596
Inventories		84,995		80,454
Prepaid expenses and other current assets		50,582		42,275
Total current assets		289,223		241,379

Property, plant and equipment, net		598,887		596,723
Goodwill, net		247,195		247,195
Intangible assets (net of accumulated amortization of $416,512 and $414,210 at October 31, 2019 and July 31, 2019, respectively)		108,493		108,557
Operating lease right-of-use assets		124,047		—
Other assets, net		75,443		69,105
Total assets	$	1,443,288	$	1,262,959

LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Accounts payable	$	44,421	$	33,364
Short-term borrowings		80,000		43,000
Collateralized note payable		73,000		62,000
Current portion of long-term debt		358,080		631,756
Current operating lease liabilities		33,832		—
Other current liabilities		187,731		138,237
Total current liabilities		777,064		908,357

Long-term debt		1,731,920		1,457,004
Operating lease liabilities		88,773		—
Other liabilities		36,915		36,536
Contingencies and commitments (Note L)

Partners' deficit:
Common unitholders (97,152,665 units outstanding at October 31, 2019 and July 31, 2019)		(1,091,704)		(1,046,245)
General partner unitholder (989,926 units outstanding at October 31, 2019 and July 31, 2019)		(70,935)		(70,476)
Accumulated other comprehensive loss		(20,598)		(14,512)
Total Ferrellgas Partners, L.P. partners' deficit		(1,183,237)		(1,131,233)
Noncontrolling interest		(8,147)		(7,705)
Total partners' deficit		(1,191,384)		(1,138,938)
Total liabilities and partners' deficit	$	1,443,288	$	1,262,959

See notes to condensed consolidated financial statements.

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FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except unit data)

(unaudited)


	For the three months ended October 31,
	2019		2018
Revenues:
Propane and other gas liquids sales	$	273,385	$	334,966
Other		19,829		17,343
Total revenues		293,214		352,309

Costs and expenses:
Cost of sales - propane and other gas liquids sales		134,028		204,136
Cost of sales - other		3,681		3,047
Operating expense - personnel, vehicle, plant and other		114,543		110,331
Operating expense - equipment lease expense		8,388		7,863
Depreciation and amortization expense		19,219		18,992
General and administrative expense		9,695		14,179
Non-cash employee stock ownership plan compensation charge		795		2,748
Loss on asset sales and disposals		2,235		4,504

Operating income (loss)		630		(13,491)

Interest expense		(45,697)		(43,878)
Other income (expense), net		(132)		19

Loss before income taxes		(45,199)		(57,350)

Income tax expense		518		158

Net loss		(45,717)		(57,508)

Net loss attributable to noncontrolling interest		(373)		(493)

Net loss attributable to Ferrellgas Partners, L.P.		(45,344)		(57,015)

Less: General partner's interest in net loss		(453)		(570)

Common unitholders' interest in net loss	$	(44,891)	$	(56,445)

Basic and diluted loss per common unit	$	(0.46)	$	(0.58)

Cash distributions declared per common unit	$	—	$	—

See notes to condensed consolidated financial statements.

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FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)


	For the three months ended October 31,
	2019		2018

Net loss	$	(45,717)	$	(57,508)
Other comprehensive income (loss):
Change in value of risk management derivatives		(13,627)		(8,154)
Reclassification of (gains) losses on derivatives to earnings, net		7,479		(4,433)
Other comprehensive loss		(6,148)		(12,587)
Comprehensive loss		(51,865)		(70,095)
Less: Comprehensive loss attributable to noncontrolling interest		(435)		(620)
Comprehensive loss attributable to Ferrellgas Partners, L.P.	$	(51,430)	$	(69,475)

See notes to condensed consolidated financial statements.

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FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF PARTNERS’ DEFICIT

(in thousands)

(unaudited)


	Number of units						Accumulated		Total Ferrellgas
		General			General		other		Partner, L.P.
	Common	Partner	Common		Partner		comprehensive		partners’		Non-controlling		Total partners’
	unitholders	unitholder	unitholders		unitholder		income (loss)		deficit		interest		deficit
Balance at July 31, 2019	97,152.7	989.9	$	(1,046,245)	$	(70,476)	$	(14,512)	$	(1,131,233)	$	(7,705)	$	(1,138,938)

Contributions in connection with non-cash ESOP compensation charges	—	—		779		8		—		787		8		795
Distributions	—	—		—		—		—		—		(1)		(1)
Cumulative adjustment for lease accounting standard	—	—		(1,347)		(14)		—		(1,361)		(14)		(1,375)
Net loss	—	—		(44,891)		(453)		—		(45,344)		(373)		(45,717)
Other comprehensive loss	—	—		—		—		(6,086)		(6,086)		(62)		(6,148)
Balance at October 31, 2019	97,152.7	989.9	$	(1,091,704)	$	(70,935)	$	(20,598)	$	(1,183,237)	$	(8,147)	$	(1,191,384)


	Number of units						Accumulated		Total Ferrellgas
		General			General		other		Partner, L.P.
	Common	Partner	Common		Partner		comprehensive		partners’		Non-controlling		Total partners’
	unitholders	unitholder	unitholders		unitholder		income (loss)		deficit		interest		deficit
Balance at July 31, 2018	97,152.7	989.9	$	(978,503)	$	(69,792)	$	20,510	$	(1,027,785)	$	(6,692)	$	(1,034,477)

Contributions in connection with non-cash ESOP compensation charges	—	—		2,693		27		—		2,720		28		2,748
Distributions	—	—		(9,716)		(98)		—		(9,814)		(101)		(9,915)
Net loss	—	—		(56,445)		(570)		—		(57,015)		(493)		(57,508)
Other comprehensive loss	—	—		—		—		(12,460)		(12,460)		(127)		(12,587)
Balance at October 31, 2018	97,152.7	989.9	$	(1,041,971)	$	(70,433)	$	8,050	$	(1,104,354)	$	(7,385)	$	(1,111,739)

See notes to condensed consolidated financial statements.

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FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	For the three months ended October 31,
	2019		2018
Cash flows from operating activities:
Net loss	$	(45,717)	$	(57,508)
Reconciliation of net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense		19,219		18,992
Non-cash employee stock ownership plan compensation charge		795		2,748
Loss on asset sales and disposals		2,235		4,504
Provision for doubtful accounts		665		519
Deferred income tax expense		554		150
Other		3,450		3,193
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts and notes receivable, net of securitization		(14,410)		(10,654)
Inventories		(4,541)		(22,866)
Prepaid expenses and other current assets		(8,008)		(6,391)
Accounts payable		11,360		13,159
Accrued interest expense		34,167		31,987
Other current liabilities		8,214		6,677
Other assets and liabilities		(872)		(2,124)
Net cash provided by (used in) operating activities		7,111		(17,614)

Cash flows from investing activities:
Business acquisitions, net of cash acquired		(6,400)		(4,625)
Capital expenditures		(18,126)		(23,433)
Proceeds from sale of assets		835		1,061
Cash payments to construct assets in connection with future lease transactions		(16,879)		—
Cash receipts in connection with leased vehicles		5,863		—
Other		—		(292)
Net cash used in investing activities		(34,707)		(27,289)

Cash flows from financing activities:
Distributions		—		(9,814)
Payments on long-term debt		(512)		(281)
Net additions to (reductions in) short-term borrowings		37,000		(32,800)
Net additions to collateralized short-term borrowings		11,000		32,000
Cash paid for financing costs and other		(1,140)		(224)
Noncontrolling interest activity		(1)		(101)
Net cash provided by (used in) financing activities		46,347		(11,220)

Net change in cash and cash equivalents		18,751		(56,123)
Cash and cash equivalents - beginning of period		11,054		119,311
Cash and cash equivalents - end of period	$	29,805	$	63,188

See notes to condensed consolidated financial statements.

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FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per unit data, unless otherwise designated)

(unaudited)

A. Partnership organization and formation

Ferrellgas Partners, L.P. (“Ferrellgas Partners”) was formed April 19, 1994, and is a publicly traded limited partnership, owning an approximate 99% limited partner interest in Ferrellgas, L.P. (the "operating partnership"). Ferrellgas Partners and the operating partnership, collectively referred to as “Ferrellgas,” are both Delaware limited partnerships and are governed by their respective partnership agreements. Ferrellgas Partners was formed to acquire and hold a limited partner interest in the operating partnership. As of October 31, ~~2018,~~2019, Ferrell Companies, Inc. ("Ferrell Companies") beneficially owns 22.8 million Ferrellgas Partners common units. Ferrellgas, Inc. (the "general partner"), a wholly-owned subsidiary of Ferrell Companies, has retained an approximate 1% general partner interest in Ferrellgas Partners and also holds an approximate 1% general partner interest in the operating partnership, representing an effective 2% general partner interest in Ferrellgas on a combined basis. As general partner, it performs all management functions required by Ferrellgas. Unless contractually provided for, creditors of the operating partnership have no recourse with regards to Ferrellgas Partners.

Ferrellgas Partners is a holding entity that conducts no operations and has two subsidiaries, Ferrellgas Partners Finance Corp. and the operating partnership. Ferrellgas Partners owns a 100% equity interest in Ferrellgas Partners Finance Corp., whose only business activity is to act as the co-issuer and co-obligor of debt issued by Ferrellgas Partners. The operating partnership is the only operating subsidiary of Ferrellgas Partners.

Ferrellgas is primarily engaged in the retail distribution of propane and related equipment sales. The propane distribution market is seasonal because propane is used primarily for heating in residential and commercial buildings. Ferrellgas serves residential, industrial/commercial, portable tank exchange, agricultural, wholesale and other customers in all 50 states, the District of Columbia, and Puerto Rico.

Due to seasonality, the results of operations for the three months ended October 31, ~~2018~~2019 are not necessarily indicative of the results to be expected for the full fiscal year ending July 31, ~~2019.~~

2020.

The condensed consolidated financial statements of Ferrellgas reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the interim periods presented. All adjustments to the condensed consolidated financial statements were of a normal recurring nature. ~~Certain prior period amounts have been reclassified to conform to the current period presentation.~~ The information included in this Quarterly Report on Form ~~10-Q~~10‑Q should be read in conjunction with (i) the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (ii) the consolidated financial statements and accompanying notes included in ~~Ferrellgas'~~Ferrellgas’ Annual Report on Form ~~10-K~~10‑K for fiscal ~~2018~~2019..

Going Concern

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business. Ferrellgas Partners has $357.0 million in unsecured notes due June 15, 2020 that are classified as current in the condensed consolidated financial statements. The ability of Ferrellgas Partners to restructure, refinance or otherwise satisfy these notes is uncertain considering the level of other outstanding indebtedness. Given these concerns, Ferrellgas Partners believes there is substantial doubt about the entity’s ability to continue as a going concern. Ferrellgas has engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist in our ongoing process to address our upcoming debt maturities. The successful outcome of Ferrellgas’ debt reduction strategy continues to remain uncertain. Additionally, see Note F – Debt below for further discussion of the outstanding debt.

B. Summary of significant accounting policies

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accruals that have been established for contingent liabilities, pending claims and legal actions arising in the normal course of business, useful lives of property, plant and equipment, ~~assets,~~ residual values of tanks, capitalization of customer tank installation costs, amortization methods of intangible assets, valuation methods used to value sales returns and allowances, allowance for doubtful accounts, fair value of reporting units, recoverability of long-lived assets, assumptions used to value business combinations, fair values of derivative contracts and stock-based compensation calculations.

(2) New accounting standards:

FASB Accounting Standard Update No. ~~2014-09~~

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update ("ASU") 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The issuance is part of a joint effort by the FASB and the International Accounting Standards Board ("IASB") to enhance financial reporting by creating common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards ("IFRS") and, thereby, improving the consistency of requirements, comparability of practices and usefulness of disclosures. Upon adoption, Ferrellgas applied ASU 2014-09 only to contracts that were not completed, referred to as open contracts.

Ferrellgas adopted ASU 2014-09 beginning on August 1, 2018 using the modified retrospective method. This method requires that the cumulative effect of initially applying ASU 2014-09 be recognized in partner’s deficit at the date of adoption, August 1, 2018. ASU 2014-09 has not materially impacted Ferrellgas’ consolidated financial statements, and as a result there was no cumulative effect to record as of the date of adoption. Results for reporting periods beginning after August 1, 2018 are presented under ASU 2014-09, while amounts reported for prior periods have not been adjusted and continue to be reported under accounting standards in effect for those periods. See Note G - Revenue from contracts with customers for additional information related to revenues and contract costs, including qualitative and quantitative disclosures required under ASU 2014-09.

~~FASB Accounting Standard Update No. 2016-02~~

2016‑02

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 isbecame effective for ~~fiscal years~~Ferrellgas for its annual reporting period beginning ~~after December 15, 2018,~~August 1, 2019, including interim periods within that reporting period. Ferrellgas adopted the standard using the transition relief option in ASU 2018-11, “Leases: Targeted Improvements” which, among other things, provides entities with an option to recognize the cumulative-effect adjustment from the modified retrospective application to the opening balance of retained earnings in the period of adoption and consequently, to continue to report comparative periods in compliance with the prior guidance (ASC 840).

Ferrellgas elected the short-term lease recognition exemption for all leases that qualify, meaning it does not recognize right-of-use assets or lease liabilities for those ~~fiscal years.~~leases. Ferrellgas ~~is currently evaluating~~also elected the ~~impact~~practical expedient to not separate lease and non-lease components for its most significant leasing activity, which includes vehicle and real estate leases.

Additionally, Ferrellgas elected the package of ~~its pending adoption~~three practical expedients which allows entities to not reassess initial direct costs, lease classification for existing or expired leases, and lease definition for existing or expired contracts as of ~~ASU 2016-02 on~~ the consolidated financial statements. Ferrellgas has formed an implementation team, completed training on the new standard, and is working on its implementation process for the new standard. Ferrellgas believes that the adoptioneffective date of ~~this standard, which will be effective for Ferrellgas~~ August 1, ~~2019, will result in material increases~~2019. Ferrellgas did not, however, elect the hindsight method practical expedient which would have allowed it to ~~right of use assets~~reassess lease terms and ~~lease liabilities on our consolidated balance sheet.~~

impairment.

FASB Accounting Standard Update No. ~~2016-13~~

2016‑13

In June 2016, the FASB issued ASU ~~2016-13,~~2016‑13, Financial Instruments - Credit Losses (Topic 326), which requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. This standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Entities will apply the ~~standard's~~standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. Ferrellgas is currently evaluating the impact of its pending adoption of this standard on the consolidated financial statements.

FASB Accounting Standard Update No. ~~2017-12~~

2017‑12

In August 2017, the FASB issued ASU ~~2017-12,~~2017‑12, Financial Instruments - Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities, which is intended to improve the financial reporting for hedging relationships to better portray the economic results of an ~~entity's~~entity’s risk management activities in its financial statements. This standard isbecame effective for ~~fiscal years~~Ferrellgas for its annual reporting period beginning after December 15, 2018, including interim periods within those fiscal years. Ferrellgas is currently evaluating the impact of its pending adoption of this standard on the consolidated financial statements.

~~FASB Accounting Standard Update No. 2018-15~~

In August ~~2018, the FASB issued ASU 2018-15,~~ ~~Intangibles - Goodwill and Other - Internal-use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract~~ which is intended to clarify the accounting for implementation costs related to a cloud computing arrangement that is a service contract. This standard is effective for fiscal years beginning after December 15,1, 2019, including interim periods within ~~those fiscal years.~~ that reporting period. Ferrellgas ~~is currently evaluating~~applied ASU No. 2017-12 using a modified retrospective approach for cash flow hedges existing at the ~~impact~~date of ~~its pending~~adoption and prospectively for the presentation and disclosure guidance. The adoption of this standard did not have a material impact on our consolidated financial statements.

C. Leases

Ferrellgas determines if an arrangement is a lease or contains a lease at inception. Ferrellgas leases certain transportation and computer equipment and real estate, predominantly through operating leases. Ferrellgas has an immaterial amount of leases in which it is the lessor. Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the lease commencement date. Ferrellgas determines the lease term by assuming the exercise of renewal options that are reasonably certain. The lease term is used to determine whether a lease is finance or operating and is

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used to calculate rent expense. Additionally, the depreciable life of leased assets and leasehold improvements is limited by the expected lease term. Operating lease balances are classified as operating lease right-of-use (“ROU”) assets, and current and long-term operating lease liabilities on Ferrellgas’ condensed consolidated ~~financial statements.~~balance sheet. Ferrellgas has an immaterial amount of finance leases that are included in “Other assets, net”, “Other current liabilities”, and “Other liabilities” on its condensed consolidated balance sheet.

ROU assets represent Ferrellgas’ right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of Ferrellgas’ leases do not provide an implicit discount rate, Ferrellgas uses its incremental borrowing rate adjusted for the lease term to represent the rate it would have to pay to borrow on a collateralized basis based on the information available at the commencement date in determining the present value of lease payments. Ferrellgas’ lease terms may include options to extend or terminate the lease and it will adjust the life of the lease when it is reasonably certain that it will exercise these options.

Ferrellgas has lease agreements with lease and non-lease components, which are generally accounted for as a single lease component. Ferrellgas has variable lease components, including lease payments with payment escalation based on the Consumer Price Index, and other variable items, such as common area maintenance and taxes.

Key assumptions include the discount rate, the impact of purchase options and renewal options on Ferrellgas’ lease term, as well as the assessment of residual value guarantees.

Ferrellgas’ transportation equipment leases generally have purchase options. However, in most circumstances Ferrellgas is not certain if it will exercise the purchase option. As circumstances dictate, it may instead return the existing equipment to the lessor and sign a new lease. Ferrellgas’ transportation equipment leases often contain residual value guarantees, but they are not reflected in Ferrellgas’ lease liabilities as its lease rates are such that residual value guarantees are not expected to be owed at the end of its leases.

Ferrellgas’ real estate leases will often have an option to extend the lease, but it is typically not reasonably certain of exercising options to extend. As customer demand changes over time, Ferrellgas typically maintains the ability to move to more advantageous locations, relocate to other leased and owned locations, or discontinue service from particular locations.

The following table provides the operating and financing ROU assets and lease liabilities as of October 31, 2019:


Leases	Classification		October 31, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	124,047
Financing lease assets	Other assets, net		5,719
Total leased assets		$	129,766

Liabilities
Current
Operating	Current operating lease liabilities	$	33,832
Financing	Other current liabilities		1,817
Noncurrent
Operating	Operating lease liabilities		88,773
Financing	Other liabilities		3,949
Total leased liabilities		$	128,371

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The following table provides the lease expenses for the three months ended October 31, 2019:


Leases Expense	Classification	For the three months ended October 31,
		2019

Operating lease expense	Operating expenses - personnel, vehicle, plant and other	$	1,741
	Operating expense - equipment lease expense		7,607
	Cost of sales - propane and other gas liquids sales		389
	General and administrative expense		266
Total operating lease expense		$	10,003

Short-term expense	Operating expenses - personnel, vehicle, plant and other	$	1,954
	General and administrative expense		110
Total short-term expense		$	2,064

Variable lease expense	Operating expenses - personnel, vehicle, plant and other	$	675
	Operating expense - equipment lease expense		733
Total variable lease expense		$	1,408

Finance lease expense
Amortization of leased assets	Depreciation and amortization expense	$	40
Interest on lease liabilities	Interest expense		42
Total finance lease expense		$	82

Total lease expense		$	13,557

Minimum annual payments under existing operating and finance lease liabilities as of October 31, 2019 are as follows:


Maturities of lease liabilities		Operating leases		Finance leases		Total
2020	$	31,711	$	1,233	$	32,944
2021		35,187		1,568		36,755
2022		25,864		1,177		27,041
2023		19,938		893		20,831
2024		17,092		812		17,904
Thereafter		34,326		1,735		36,061
Total lease payments	$	164,118	$	7,418	$	171,536
Less: Imputed interest		41,513		1,652		43,165
Present value of lease liabilities	$	122,605	$	5,766	$	128,371

The following table represents the weighted-average remaining lease term and discount rate as of October 31, 2019:


	As of October 31, 2019
Lease type	Weighted-average remaining lease term (years)	Weighted-average discount rate
Operating leases	5.7	8.2%
Finance leases	5.8	8.0%

Cash flow information is presented below:


	For the three months ended October 31,
	2019
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	11,049

Cash paid for amounts included in the measurement of lease liabilities for financing leases:
Operating cash flows	$	42
Financing cash flows	$	28

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C.D. Supplemental financial statement information

Inventories consist of the following:


	October 31, 2019		July 31, 2019
Propane gas and related products	$	70,067	$	66,001
Appliances, parts and supplies, and other		14,928		14,453
Inventories	$	84,995	$	80,454

October 31, 2018 July 31, 2018
Propane gas and related products $ 93,195
$ 71,180
Appliances, parts and supplies, and other 13,365
12,514
Inventories $ 106,560
$ 83,694

In addition to inventories on hand, Ferrellgas enters into contracts to take delivery of propane for supply procurement purposes with terms that generally do not exceed 36 months. Most of these contracts call for payment based on market prices at the date of delivery. As of October 31, ~~2018~~,2019, Ferrellgas had committed, for supply procurement purposes, to ~~take delivery of~~deliver approximately ~~32.0~~1.3 million gallons of propane at fixed ~~prices.~~prices, net of contracts to take delivery.

Prepaid expenses and other current assets consist of the following:


	October 31, 2019		July 31, 2019
Broker margin deposit assets	$	33,519	$	25,028
Other		17,063		17,247
Prepaid expenses and other current assets	$	50,582	$	42,275

Other assets, net consist of the following:


	October 31, 2019		July 31, 2019
Notes receivable, less current portion	$	13,809	$	16,216
Other		61,634		52,889
Other assets, net	$	75,443	$	69,105

October 31, 2018 July 31, 2018
Notes receivable, less current portion $ 27,569
$ 27,491
Other 45,273
47,097
Other assets, net $ 72,842
$ 74,588

Other current liabilities consist of the following:


	October 31, 2019		July 31, 2019
Accrued interest	$	54,651	$	20,484
Customer deposits and advances		35,625		24,686
Accrued payroll		23,918		17,356
Accrued insurance		13,980		18,524
Price risk management liabilities		19,745		14,198
Other		39,812		42,989
Other current liabilities	$	187,731	$	138,237

October 31, 2018 July 31, 2018
Accrued interest
$ 54,210
$ 22,222
Customer deposits and advances 34,056
22,829
Other 97,702
96,974
Other current liabilities $ 185,968
$ 142,025

Shipping and handling expenses are classified in the following condensed consolidated statements of operations line items:


	For the three months ended October 31,
	2019		2018
Operating expense - personnel, vehicle, plant and other	$	48,015	$	47,443
Depreciation and amortization expense		1,840		1,072
Operating expense - equipment lease expense		7,642		7,519
	$	57,497	$	56,034

For the three months ended October 31,
2018 2017
Operating expense $ 47,443
$ 43,314
Depreciation and amortization expense 1,072
1,112
Equipment lease expense 7,519
6,069
Total shipping and handling expenses $ 56,034
$ 50,495

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Certain cash flow and significant non-cash activities are presented below:


	For the three months ended October 31,
	2019		2018
Cash paid (refunded) for:
Interest	$	8,284	$	8,930
Income taxes	$	—	$	2
Non-cash investing and financing activities:
Liabilities incurred in connection with acquisitions	$	520	$	1,096
Change in accruals for property, plant and equipment additions	$	(43)	$	(315)
Right-of-use assets arising from operating and finance lease liabilities	$	17,177	$	—

For the three months ended October 31,
2018 2017
Cash paid for:
Interest $ 8,930
$ 6,129
Income taxes $ 2
$ 6
Non-cash investing and financing activities:
Liabilities incurred in connection with acquisitions $ 1,096
$ 1,232
Change in accruals for property, plant and equipment additions $ (315 ) $ 140

D.E. Accounts and notes receivable, net and accounts receivable securitization

Accounts and notes receivable, net consist of the following:


	October 31, 2019		July 31, 2019
Accounts receivable pledged as collateral	$	118,164	$	106,145
Accounts receivable not pledged as collateral (including other reserves)		2,817		1,218
Note receivable		5,292		2,660
Other		36		36
Less: Allowance for doubtful accounts		(2,468)		(2,463)
Accounts and notes receivable, net	$	123,841	$	107,596

October 31, 2018 July 31, 2018
Accounts receivable pledged as collateral $ 137,560
$ 120,079
Accounts receivable 1,191
8,272
Note receivable - current portion 132
132
Other 27
26
Less: Allowance for doubtful accounts (2,721 ) (2,455 )
Accounts and notes receivable, net $ 136,189
$ 126,054

At October 31, ~~2018, $137.6~~2019, $118.2 million of trade accounts receivable were pledged as collateral against ~~$90.0~~$73.0 million of collateralized notes payable due to a commercial paper conduit. At July 31, ~~2018, $120.1~~2019, $106.1 million of trade accounts receivable were pledged as collateral against ~~$58.0~~$62.0 million of collateralized notes payable due to the commercial paper conduit. These accounts receivable pledged as collateral are bankruptcy remote from the operating partnership. The operating partnership does not provide any guarantee or similar support to the collectability of these accounts receivable pledged as collateral.

As of October 31, ~~2018,~~2019, Ferrellgas had received cash proceeds of ~~$90.0~~$73.0 million from trade accounts receivables securitized, with no remaining capacity to receive additional proceeds or issue letters of credit. As of July 31, ~~2018,~~2019, Ferrellgas had received

cash proceeds of ~~$58.0~~$62.0 million from trade accounts receivables securitized, with no remaining capacity to receive additional proceeds. Borrowings under the accounts receivable securitization facility had a weighted average interest rate of ~~5.3%~~5.2% and ~~5.2%~~5.5% as of October 31, ~~2018~~2019 and July 31, ~~2018,~~2019, respectively.

E.F. Debt

Short-term borrowings

Ferrellgas classifies borrowings on the ~~revolving line of credit~~Revolving Facility portion of its Senior Secured Credit Facility (each, as defined below) as short-term because they are primarily used to fund working capital needs that management intends to pay down within the twelve month period following the balance sheet date. As of October 31, ~~2018, there were no amounts classified as short-term borrowings. As of~~2019 and July 31, ~~2018, $32.8~~2019, $80.0 million ~~was~~and $43.0 million, respectively, were classified as short-term borrowings. For further discussion see the “Senior secured credit facilities” section below.

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Long-term debt

Long-term debt consists of the following:


	October 31, 2019		July 31, 2019
Senior notes
Fixed rate, 6.50%, due 2021 (1)	$	500,000	$	500,000
Fixed rate, 6.75%, due 2023 (2)		500,000		500,000
Fixed rate, 6.75%, due 2022, net of unamortized premium of $1,455 and $1,633 at October 31, 2019 and July 31, 2019, respectively (3)		476,455		476,633
Fixed rate, 8.625%, due 2020, net of unamortized discount of $668 and $1,319 at October 31, 2019 and July 31, 2019, respectively (4)		356,332		355,681

Senior secured term loan
Variable interest rate, Term Loan, expected to mature May 2023 (5)		275,000		275,000

Notes payable
10.4% and 10.7% weighted average interest rate at October 31, 2019 and July 31, 2019, respectively, due 2020 to 2029, net of unamortized discount of $683 and $711 at October 31, 2019 and July 31, 2019, respectively		6,080		5,962
Total debt, excluding unamortized debt issuance and other costs		2,113,867		2,113,276
Unamortized debt issuance and other costs		(23,867)		(24,516)
Less: current portion of long-term debt		358,080		631,756
Long-term debt	$	1,731,920	$	1,457,004

(1)

During November 2010, the operating partnership issued $500.0 million in aggregate principal amount of 6.50% senior notes due 2021. These notes are general unsecured senior obligations of the operating partnership and are effectively junior to all existing and future senior secured indebtedness of the operating partnership, to the extent of the value of the assets securing such debt. The senior notes bear interest from the date of issuance, payable semi-annually in arrears on May 1 and November 1 of each year. The outstanding principal amount is due on May 1, 2021.

(2)

During June 2015, the operating partnership issued $500.0 million in aggregate principal amount of 6.75% senior notes due 2023. These notes are general unsecured senior obligations of the operating partnership and are effectively junior to all existing and future senior secured indebtedness of the operating partnership, to the extent of the value of the assets securing such debt. The senior notes bear interest from the date of issuance, payable semi-annually in arrears on June 15 and December 15 of each year. The operating partnership would incur prepayment penalties if it were to repay the notes prior to June 2021.

(3)

During fiscal 2014, the operating partnership issued $475.0 million in aggregate principal amount of 6.75% senior notes due 2022. These notes are general unsecured senior obligations of the operating partnership and are effectively junior to all existing and future senior secured indebtedness of the operating partnership, to the extent of the value of the assets securing such debt. The senior notes bear interest from the date of issuance, payable semi-annually in arrears on January 15 and July 15 of each year.

(4)

During January 2017, Ferrellgas Partners issued $175.0 million in aggregate principal amount of additional 8.625% unsecured senior notes due 2020, issued at 96% of par. Ferrellgas Partners contributed the net proceeds from the offering of approximately $166.1 million to the operating partnership, which used such amounts to repay borrowings under its previous senior secured credit facility. During April 2010, Ferrellgas Partners issued $280.0 million of its fixed rate senior notes. During March 2011, Ferrellgas Partners redeemed $98.0 million of these fixed rate senior notes. These notes are general unsecured senior obligations of Ferrellgas Partners and are structurally subordinated to all existing and future indebtedness and obligations of the operating partnership. The unsecured senior notes bear interest from the date of issuance, payable semi-annually in arrears on June 15 and December 15 of each year.

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(5)

The Senior Secured Credit Facility, including the Term Loan, will mature on the earlier of (i) May 4, 2023 and (ii) the date that is 90 days prior to the earliest maturity date of any series of the operating partnership’s outstanding notes after giving effect to any extensions or refinancings thereof. As of July 31, 2019, the earliest maturity date of any series of the operating partnership’s outstanding notes was May 1, 2021, except for the reclassification of the Term Loan from long-term to current. As of October 31, 2019, the Term Loan was reclassified to long-term.

Senior secured credit facilities

On May 4, 2018, the operating partnership entered into a new $575.0 million senior secured credit facility ~~section below.~~

(the “Senior Secured Credit Facility”), consisting of a $300.0 million revolving line of credit ~~facilities~~

(the “Revolving Facility”) and a $275.0 million term loan (the “Term Loan”), which mature on the earlier of (i) May 4, 2023 and (ii) the date that is 90 days prior to the earliest maturity date of any series of the operating partnership’s outstanding notes after giving effect to any extensions or refinancings thereof. As of this filing, the earliest maturity date of any series of the operating partnership’s outstanding notes is May 1, 2021. Revolving Facility borrowings bear interest at the Prime Rate + 4.75% and Term Loan borrowings bear interest at LIBOR + 5.75%. The Revolving Facility, as amended, includes a $140.0 million sublimit for the issuance of letters of credit.Borrowings under the Senior Secured Credit Facility are available for working capital needs, capital expenditures and other general partnership purposes, including the refinancing of existing indebtedness and acquisitions, within certain limits.

The Term Loan does not include any scheduled principal payments and the Revolving Facility does not have any scheduled commitment reductions before maturity; however, the Term Loan requires prepayments pursuant to the following: 1) certain asset sales, 2) 50% of any excess cash flow, as defined by the Term Loan, in any fiscal year beginning with fiscal year 2019, 3) certain insurance proceeds, and 4) certain tax refunds.

On June 6, 2019, the operating partnership entered into a first amendment to the financing agreement governing its Senior Secured Credit Facility. Among other matters, the first amendment updated the calculation of the fixed charge coverage ratio for purposes of the fixed charge coverage ratio in the agreement to exclude certain maintenance capital expenditures related to the purchase during fiscal 2019 of new propane delivery trucks which have historically been leased. The first amendment provides that up to a specified amount of such maintenance capital expenditures will not be deducted from consolidated EBITDA for purposes of the calculation.

On November 7, 2019, the operating partnership entered into a second amendment (the “Second Amendment”) to the financing agreement governing its Senior Secured Credit Facility. Among other matters, the Second Amendment (i) increased from $125.0 million to $140.0 million the sub-limit for issuance of letters of credit that exists within the $300.0 million Revolving Facility; and (ii) modified a component of the fixed charge coverage ratio calculation to exclude payments related to the manufacture of vehicles used for propane delivery or related service up to specified amounts if operating lease commitments sufficient to cover such excluded amounts have been obtained and those payments are in fact reimbursed under such operating leases within nine months thereafter. In addition, the Second Amendment provided waivers for any event of default that has or would otherwise arise with respect to the delivery of an unqualified report of Grant Thornton LLP as to going concern with respect to the audited financial statements of Ferrellgas, L.P. and with respect to the timely delivery of financial information for fiscal 2019, thereby resolving the disagreement with the agent under the Senior Secured Credit Facility regarding alleged events of default described in the Annual Report on Form 10-K for fiscal 2019. As a result of the Second Amendment, the Term Loan was reclassified from current to long-term, consistent with its underlying maturity.

The Senior Secured Credit Facility is secured with substantially all of the assets of Ferrellgas, L.P. and its subsidiaries, and Ferrellgas Partners’ and the general partner’s partnership interests in Ferrellgas, L.P., and contains various affirmative and negative covenants and default provisions, as well as requirements with respect to the maintenance of specified financial ratios and limitations on the making of loans and investments.

As of October 31, ~~2018,~~2019, the operating partnership had borrowings of $275.0 million under the Term Loan at aan interest rate of ~~8.01%~~7.89%, which was classified as long-term debt, and no$80.0 million of borrowings under the Revolving ~~Facility.~~Facility at a weighted average interest rate of 9.09%, which was classified as short-term borrowings. As of October 31, ~~2018, Ferrellgas~~2019, the operating partnership had available borrowing capacity under ~~its~~the Revolving Facility of ~~$186.9~~$101.9 million. As of July 31, ~~2018,~~2019, the operating partnership had borrowings of $275.0 million under the Term Loan at aan interest rate of ~~7.86%~~8.16%, which was classified as ~~long-term debt,~~current, and ~~$32.8~~$43.0 million under the Revolving Facility at aan interest rate of ~~9.75%~~9.47%, which was

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classified as short-term borrowings. As of July 31, ~~2018, Ferrellgas~~2019, the operating partnership had available borrowing capacity under ~~its~~the Revolving Facility of ~~$159.3~~$155.1 million.

Letters of credit outstanding at October 31, ~~2018~~2019 and July 31, ~~2018~~2019 totaled ~~$113.1~~$118.1 million and ~~$107.9~~$101.9 million, respectively, and were used to secure insurance arrangements, product purchases and commodity hedges. At October 31, ~~2018,~~2019, Ferrellgas had remaining available letter of credit ~~remaining~~ capacity of ~~$11.9 million.~~$6.9 million (or $21.9 million, if the Second Amendment had been effective as of October 31, 2019). At July 31, ~~2018,~~2019, Ferrellgas had remaining available letter of credit ~~remaining~~ capacity of ~~$17.1~~$23.1 million.

~~Debt and interest expense reduction and refinancing strategy~~

Ferrellgas continues to execute on a strategy to further reduce its debt and interest expense. This strategy included entering into the new Senior Secured Credit Facility and amending its accounts receivable securitization facility in May 2018 and certain asset sales during fiscal 2018. Ferrellgas continues to evaluate all available options to address its leverage.

Financial covenants

The indenture governing the outstanding notes of Ferrellgas Partners and the agreements governing the operating partnership’s indebtedness contain various covenants that limit Ferrellgas ~~Partners'~~Partners’ ability and the ability of specified subsidiaries to, among other things, make restricted payments and incur additional indebtedness. The general partner believes that the most restrictive of these covenants isare the ~~consolidated fixed charge coverage ratio, as defined~~restricted payments covenants in the indenture governing the outstanding notes of Ferrellgas Partners and the ~~consolidated fixed charge coverage ratio, as defined in the~~ indentures governing the outstanding notes of the operating ~~partnership.~~

~~Consolidated fixed charge coverage ratio -~~ partnership, which are discussed below.

Ferrellgas Partners, L.P., the master limited partnership

~~Before~~

Under this covenant, subject to the limited exception described below, Ferrellgas Partners may not make a restricted payment ~~(as defined~~unless its consolidated fixed charge coverage ratio (defined in the indenture generally to mean the ratio of trailing four quarters consolidated EBITDA to consolidated interest expense, both as adjusted for certain, specified items) is at least 1.75x, on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events. As of October 31, 2019, Ferrellgas ~~Partners indenture) can be made by Ferrellgas Partners, Ferrellgas Partners must be in compliance with~~Partners’ consolidated fixed charge coverage ratio was 1.35x.

If the consolidated fixed charge coverage ratio ~~covenant under the~~is below 1.75x, Ferrellgas Partners ~~indenture. If Ferrellgas Partners is unable to make restricted payments, Ferrellgas Partners will not have the ability to make distributions to Ferrellgas Partners common unitholders.~~

This covenant requires that the ratio of trailing four quarters EBITDA to interest expense (both as adjusted for certain, specified items) of Ferrellgas Partners be at least 1.75x before a restricted payment (as defined in the indenture) can be made by Ferrellgas Partners. If this ratio were to drop below 1.75x, the indenture allows Ferrellgas Partners tomay make restricted payments of up to $50.0 million in total over a sixteen quarter ~~period while below this ratio. As of October 31, 2018, the ratio was 1.40x.~~period. As a result of distributions paid to common unitholders in September 2017, December 2017, March 2018, June 2018, and September 2018, while this ratio was less than 1.75x, Ferrellgas Partners has used substantially all of its capacity under the limited exception and therefore is currently restricted by this covenant from making future restricted payments, including distributions to common unitholders. Accordingly, no distributions have been or will be paid to common unitholders ~~in December 2018~~ for the three months ended October 31, ~~2018. Unless~~2019, and, unless this indenture is amended or replaced or ~~our~~Ferrellgas Partners’ consolidated fixed charge coverage ratio improves to at least 1.75x, this covenant will continue to ~~restrict us~~prohibit Ferrellgas Partners from making common unit ~~distributions for our quarter ending January 31, 2019 and beyond.~~

~~Consolidated fixed charge coverage ratio -~~ distributions.

Ferrellgas, L.P., the operating partnership

~~Before a restricted payment (as defined in~~

Similar to the indenture governing the outstanding notes of Ferrellgas Partners, the indentures governing the outstanding notes of the operating ~~partnership) can~~partnership contain covenants that restrict the ability of the operating partnership to make certain restricted payments, including distributions to Ferrellgas Partners. Under these covenants, subject to the limited exception described below, the operating partnership may not make a restricted payment unless its consolidated fixed charge coverage ratio (defined in the indentures generally to mean the ratio of trailing four quarters consolidated EBITDA to consolidated interest expense, both as adjusted for certain, specified items) is at least 1.75x on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events. As of October 31, 2019, the operating partnership’s consolidated fixed charge coverage ratio was 1.68x.

If the consolidated fixed charge coverage ratio is below 1.75x, the operating partnership may make restricted payments in limited amounts determined under the indentures.If the operating partnership’s consolidated fixed charge coverage ratio remains below 1.75x, the distribution to be made by the operating partnership on December 15, 2019 for payment of interest on Ferrellgas Partners’ unsecured senior notes due 2020 would be made from capacity under the limited exception to ~~Ferrellgas Partners,~~the ratio requirement.

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Although the operating partnership ~~must be in compliance with~~believes that its remaining capacity under the ~~consolidated fixed charge coverage~~limited exception to the ratio ~~covenant~~requirement under the operating ~~partnership indentures. If~~partnership’s indentures, and its ability to comply with the ~~operating partnership is unable to make restricted payments, Ferrellgas Partners~~limitations on distributions under our Senior Secured Credit Facility, will ~~not have the ability~~allow it to make distributions to Ferrellgas Partners ~~common unitholders or make~~to cover interest payments on Ferrellgas Partners’ unsecured senior notes due ~~2020.~~

The covenant requires that the ratio of trailing four quarters EBITDA to interest expense (both as adjusted for certain, specified items) of the operating partnership be at least 1.75x before a restricted payment (as defined in the indentures) can be made by the operating partnership. If this ratio were to drop below 1.75x, the indentures allow the operating partnership to make restricted payments with certain limitations. If it were in violation of the covenant as of October 31, 2018, the operating partnership believes that it would have sufficient capacity within these limitations to satisfy the current restricted payment requirements of Ferrellgas Partners2020 through the maturity of those notes, the ~~unsecured senior notes due 2020.~~ restrictions in these debt agreements may prevent the operating partnership from making distributions to Ferrellgas Partners to enable it to pay cash distributions to its unitholders.

Debt and interest expense reduction and refinancing strategy

Ferrellgas continues to pursue a strategy to further reduce its debt and interest expense. Achievements under this strategy during fiscal 2018 included entering into the Senior Secured Credit Facility, amending our accounts receivable securitization facility and selling certain assets. Other opportunities include the generation of additional cash flows organically or through accretive acquisitions, restructuring or refinancing existing indebtedness, selling additional assets, maintaining the suspension of Ferrellgas’ common unit distributions, issuing equity or executing one or more debt exchanges. Ferrellgas expects to maintain its debt and interest expense reduction strategy until its consolidated leverage ratio reaches a level that it deems appropriate for its business. During fiscal 2019, Ferrellgas engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist us in our ongoing process to address our upcoming debt maturities.

G. Partners’ deficit

As of October 31, ~~2018, the ratio was 1.77x; the margin allows for approximately $1.1 million of additional interest expense or approximately $2.0 million less EBITDA.~~

F. ~~Partners' deficit~~

~~As of October 31, 2018~~2019 and July 31, ~~2018,~~2019, Ferrellgas Partners limited partner units, which are listed on the New York Stock Exchange under the symbol “FGP,” were beneficially owned by the following:


	October 31, 2019	July 31, 2019
Public common unitholders (1)	69,612,939	69,612,939
Ferrell Companies (2)	22,529,361	22,529,361
FCI Trading Corp. (3)	195,686	195,686
Ferrell Propane, Inc. (4)	51,204	51,204
James E. Ferrell (5)	4,763,475	4,763,475

(1)

These common units are listed on the New York Stock Exchange under the symbol “FGP”.

(2)

Ferrell Companies is the owner of the general partner and is an approximate 23.2% direct owner of Ferrellgas Partners’ common units and thus a related party. Ferrell Companies also beneficially owns 195,686 and 51,204 common units of Ferrellgas Partners held by FCI Trading Corp. ("FCI Trading") and Ferrell Propane, Inc. ("Ferrell Propane"), respectively, bringing Ferrell Companies’ beneficial ownership to 23.4% at October 31, 2019.

(3)

FCI Trading is an affiliate of the general partner and thus a related party.

(4)

Ferrell Propane is controlled by the general partner and thus a related party.

(5)

James E. Ferrell is the Interim Chief Executive Officer and President of our general partner; and is the Chairman of the Board of Directors of our general partner and a related party. JEF Capital Management owns 4,758,859 of these common units and is owned by the James E. Ferrell Revocable Trust Two and other family trusts, all of which James E. Ferrell and/or his family members or their related entities are the trustees and beneficiaries. James E. Ferrell holds all voting common stock of JEF Capital Management. The remaining 4,616 common units are held by Ferrell Resources Holdings, Inc., which is wholly-owned by the James E. Ferrell Revocable Trust One, for which James E. Ferrell is the trustee and sole beneficiary.

October 31, 2018 July 31, 2018
Public common unitholders 69,612,939
69,612,939
Ferrell Companies (1) 22,529,361
22,529,361
FCI Trading Corp. (2) 195,686
195,686
Ferrell Propane, Inc. (3) 51,204
51,204
James E. Ferrell (4) 4,763,475
4,763,475

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(1) Ferrell Companies is the owner of the general partner and is an approximate 23% direct owner of Ferrellgas Partners' common units and thus a related party. Ferrell Companies also beneficially owns 195,686 and 51,204 common units of Ferrellgas Partners held by FCI Trading Corp. ("FCI Trading") and Ferrell Propane, Inc. ("Ferrell Propane"), respectively, bringing Ferrell Companies' beneficial ownership to 23.4% at October 31, 2018.

~~(2) FCI Trading is an affiliate of the general partner and thus a related party.~~

~~(3) Ferrell Propane is controlled by the general partner and thus a related party.~~

(4) James E. Ferrell is the Interim Chief Executive Officer and President of our general partner; and is the Chairman of the Board of Directors of our general partner and a related party. JEF Capital Management owns 4,758,859 of these common units and is owned by the James E. Ferrell Revocable Trust Two and other family trusts, all of which James E. Ferrell and/or his family members are the trustees and beneficiaries. James E. Ferrell holds all voting common stock of JEF Capital Management. The remaining 4,616 common units are held by Ferrell Resources Holdings, Inc., which is wholly-owned by the James E. Ferrell Revocable Trust One, for which James E. Ferrell is the trustee and sole beneficiary.

Partnership distributions ~~paid~~

Ferrellgas Partners has ~~paid~~recognized the following distributions:


	For the three months ended October 31,
	2019		2018
Public common unitholders	$	—	$	6,962
Ferrell Companies		—		2,253
FCI Trading Corp.		—		20
Ferrell Propane, Inc.		—		5
James E. Ferrell		—		476
General partner		—		98
	$	—	$	9,814

For the three months ended October 31,
2018 2017
Public common unitholders $ 6,962
$ 6,961
Ferrell Companies 2,253
2,253
FCI Trading Corp. 20
20
Ferrell Propane, Inc. 5
5
James E. Ferrell 476
476
General partner 98
98
$ 9,814
$ 9,813

Ferrellgas Partners paid cash distributions ~~during the three months ended October 31, 2018 and 2017~~ as detailed in the table above. Ferrellgas Partners did not declare a cash distribution ~~during November 2018~~ related to the three months ended October 31, 2019. Ferrellgas has not paid any cash distributions to our unitholders since the distribution paid in the first quarter of fiscal 2019 for the three months ended July 31, 2018. As discussed in Note EF – Debt, Ferrellgas Partners was not ~~in compliance with~~permitted, pursuant to the consolidated fixed charge coverage ratio under its note indenture, ~~and thus was unable~~ to make restricted payments, including distributions to unitholders.

See additional discussions about transactions with related parties in Note JK – Transactions with related parties.

Accumulated other comprehensive income (loss)(“AOCI”)

See Note IJ – Derivative instruments and hedging activities – for details regarding changes in the fair value of risk management financial derivatives recorded within AOCI for the three months ended October 31, ~~2018~~2019 and ~~2017.~~

2018.

General partner’s commitment to maintain its capital account

Ferrellgas’ partnership agreements allow the general partner to have an option to maintain its effective 2% general partner interest concurrent with the issuance of other additional equity.

During the three months ended October 31, 2019, the general partner made non-cash contributions of $16 thousand to Ferrellgas to maintain its effective 2% general partner interest.

During the three months ended October 31, 2018, the general partner made non-cash contributions of $0.1 million to Ferrellgas to maintain its effective 2% general partner interest.

~~During the three months ended October 31, 2017, the general partner made non-cash contributions of $0.1 million to Ferrellgas to maintain its effective 2% general partner interest.~~

G.H. Revenue from contracts with customers

~~Ferrellgas adopted ASU 2014-09 beginning on August 1, 2018 using the modified retrospective method.~~

Ferrellgas earns revenue from contracts with customers primarily through the distribution of propane, as well as through the sale of propane related equipment and supplies. Revenues from propane and other gas liquids sales are comprised of revenue earned from the delivery of propane to tanks on customers’ premises, from the delivery of propane filled cylinders to customers, or from the sale of portable propane tanks to nationwide and local retailers and end use customers. Other revenues primarily include sales of appliances and other materials as well as other fees charged to customers. ~~Upon adoption, Ferrellgas applied ASU 2014-09 only to contracts that were not completed.~~

Contracts with customers

Ferrellgas’ contracts with customers are principally for the bulk delivery of propane to tanks, delivery of propane filled cylinders or the delivery of portable propane tanks to retailers. Ferrellgas sells propane to a wide variety of customers, including residential, industrial/commercial, portable tank exchange, agricultural, wholesale and others. Ferrellgas’ performance obligations in these contracts are generally limited to the delivery of propane, ~~thus~~and therefore revenues from these contracts are earned at the time product is delivered, or in the case of some of Ferrellgas’ portable tank exchange retailers who have consignment agreements, at the time the tanks are sold to the end use customer. Payment is generally

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due within 30 days. Revenues from sales of propane are included in Propane and other gas liquids sales on the consolidated statements of operations.

Typically, Ferrellgas bills customers upon delivery and payment is generally due within 30 days. With its residential customers, Ferrellgas offers customers the ability to spread their annual heating costs over a longer period, typically twelve months. Customers who opt to spread their heating costs over a longer period are referred to as “even-pay” customers.

Ferrellgas charges other amounts to customers associated with the delivery of propane including hazardous materials fees and fuel surcharge fees. In some regions, Ferrellgas also sells appliances and related parts and fittings as well as other retail propane related services. Ferrellgas charges on an annual basis tank and equipment rental charges for customers that are using our equipment to store propane. Other revenues associated with deliveries of propane are earned at the time product is delivered. Revenues associated with sales of appliances and other materials or services are earned at the time of delivery or installation. Revenues associated with tank and equipment rentals are generally recognized on a straight-line basis over one year.

Accounting estimates related to recognition of revenue require that Ferrellgas make estimates and assumptions about various factors including credits issued for completed sales, future returns and total consideration payable in instances where we have customer incentives payable to the customer.

Disaggregation of revenue

Ferrellgas disaggregates revenues based upon the type of customer and on the type of revenue. The following table presents retail propane revenues, wholesale propane revenues and other revenues. Retail revenues result from sales to end use customers, wholesale revenues result from sales to or through resellers and all other revenues include sales of appliances and other materials, other fees charged to customers and equipment rental charges.


	For the three months ended October 31,
	2019		2018
Retail - Sales to End Users	$	180,417	$	217,764
Wholesale - Sales to Resellers		82,704		93,944
Other Gas Sales		10,264		23,258
Other		19,829		17,343
Propane and related equipment revenues	$	293,214	$	352,309

For the three months ended October 31, 2018
Retail - Sales to End Users $ 217,764
Wholesale - Sales to Resellers 93,944
Other Gas Sales 23,258
Other 17,343
Propane and related equipment revenues $ 352,309

Contract assets and liabilities

Ferrellgas’ performance obligations are generally limited to the delivery of propane for our retail and wholesale contracts. Ferrellgas’ performance obligations with respect to sales of appliances and other materials and other revenues are limited to the delivery of the agreed upon good or service. Ferrellgas does not have material performance obligations that are delivered over time, thus all of our revenue is recognized at the time the goods, including propane, are delivered or installed. Ferrellgas offers “even pay” billing programs that can create customer deposits or advances, depending on whether Ferrellgas has delivered more propane than the customer has paid for or whether the customer has paid for more propane than what has been delivered. Revenue is recognized from these customer deposits or advances to customers at the time product is delivered. The advance or deposit is considered to be a contract asset or liability. Additionally, from time to time, we have customers that pay in advance for goods or services, and such amounts result in contract liabilities.

Ferrellgas incurs incremental commissions directly related to the acquisition or renewal of customer contracts. The commissions are calculated and paid based upon the number of gallons sold to the acquired or renewed customer. The total amount of commissions that we incur is not material, and the commissions are expensed commensurate with the deliveries to which they ~~relate, thus~~relate; therefore, Ferrellgas does not capitalize these costs.

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The following table presents the opening and closing balances of ~~our~~Ferrellgas Partners’ receivables, contract assets, and contract liabilities:


	October 31, 2019		July 31, 2019
Accounts receivable	$	119,609	$	96,450
Contract assets	$	6,700	$	13,609
Contract liabilities
Deferred revenue (1)	$	43,821	$	31,974

October 31, 2018 July 31, 2018
Accounts receivable $ 125,864
$ 119,818

Contract assets $ 13,046
$ 8,691

Contract liabilities
Deferred revenue (1) $ 42,880
$ 29,933

(1)

Of the beginning balance of deferred revenue, $9.2 million was recognized as revenue during the three months ended October 31, 2019.

~~(1) Of the beginning balance of deferred revenue, $8.7 million was recognized as revenue during the quarter ended October 31, 2018.~~

Remaining performance obligations

~~Ferrellgas'~~

Ferrellgas’ remaining performance obligations are generally limited to situations where its customers have remitted payment but have not yet received deliveries of propane. This most commonly occurs in Ferrellgas’ even pay billing programs and Ferrellgas expects that these balances will be recognized within a year or less as the customer takes delivery of propane.

H.I. Fair value measurements

Derivative financial instruments

The following table presents Ferrellgas’ financial assets and financial liabilities that are measured at fair value on a recurring basis for each of the fair value hierarchy levels, including both current and noncurrent portions, as of October 31, ~~2018~~2019 and July 31, ~~2018~~:2019:


	Asset (Liability)
	Quoted Prices in Active
	Markets for Identical		Significant Other
	Assets and Liabilities		Observable Inputs		Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
October 31, 2019:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	453	$	—	$	453
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(21,358)	$	—	$	(21,358)

July 31, 2019:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	1,259	$	—	$	1,259
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(16,015)	$	—	$	(16,015)

Asset (Liability)
Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Total
October 31, 2018:
Assets:
Derivative financial instruments:
Commodity derivatives $ —
$ 15,302
$ —
$ 15,302
Liabilities:
Derivative financial instruments:
Commodity derivatives $ —
$ (7,331 ) $ —
$ (7,331 )

July 31, 2018:
Assets:
Derivative financial instruments:
Commodity derivatives $ —
$ 22,470
$ —
$ 22,470
Liabilities:
Derivative financial instruments:
Commodity derivatives $ —
$ (1,910 ) $ —
$ (1,910 )

Methodology

The fair values of Ferrellgas’ non-exchange traded commodity derivative contracts are based upon indicative price quotations available through brokers, industry price publications or recent market transactions and related market indicators.

Other financial instruments

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the note receivable financial ~~instruments~~instrument classified in "Other assets, net" on the condensed consolidated balance sheets, ~~are~~is approximately ~~$23.6~~$13.3 million, or ~~$4.0~~$0.5 million less than ~~their~~its carrying amount as of October 31, ~~2018.~~2019. The estimated fair ~~values~~value of ~~these notes~~the note receivable ~~were~~was calculated using a discounted cash flow method which relied on significant unobservable inputs. At October 31, ~~2018~~2019 and July 31, ~~2018,~~2019, the estimated fair value of Ferrellgas’ long-term debt instruments was ~~$1,899.5~~$1,735.5 million and ~~$1,935.1~~$1,824.6 million, respectively. Ferrellgas estimates the fair value of long-term debt based on quoted market prices. The fair value of our consolidated debt obligations is a Level 2 valuation based on the observable inputs used for similar liabilities.

Ferrellgas has other financial instruments such as trade accounts receivable which could expose it to concentrations of credit risk. The credit risk from trade accounts receivable is limited because of a large customer base which extends across many different U.S. markets.

I.J. Derivative instruments and hedging activities

Ferrellgas is exposed to certain market risks related to its ongoing business operations. These risks include exposure to changing commodity prices as well as fluctuations in interest rates. Ferrellgas utilizes derivative instruments to manage its exposure to fluctuations in commodity prices. Of these, the propane commodity derivative instruments are designated as cash flow hedges. Prior to the sale of Bridger Energy, LLC in January 2018, all other commodity derivative instruments were neither qualified nor were designated as cash flow hedges, therefore, changes in their fair value were recorded currently in earnings. Ferrellgas also periodically utilizes derivative instruments to manage its exposure to fluctuations in interest rates.

Derivative instruments and hedging activity

During the three months ended October 31, ~~2018~~2019 and ~~2017,~~2018, Ferrellgas did not recognize any gain or loss in earnings related to hedge ineffectiveness and did not exclude any component of financial derivative contract gains or losses from the assessment of hedge effectiveness related to commodity cash flow hedges.

The following tables provide a summary of the fair value of derivatives in Ferrellgas’ condensed consolidated balance sheets as of October 31, ~~2018~~2019 and July 31, ~~2018~~: 2019:


	Final	October 31, 2019
	Maturity	Asset Derivatives			Liability Derivatives
Derivative Instrument	Date	Location	Fair value		Location	Fair value
Derivatives designated as hedging instruments	December 2021
Commodity derivatives-propane		Prepaid expenses and other current assets	$	444	Other current liabilities	$	19,745
Commodity derivatives-propane		Other assets, net		9	Other liabilities		1,613
		Total	$	453	Total	$	21,358


	Final	July 31, 2019
	Maturity	Asset Derivatives			Liability Derivatives
Derivative Instrument	Date	Location	Fair value		Location	Fair value
Derivatives designated as hedging instruments	December 2021
Commodity derivatives-propane		Prepaid expenses and other current assets	$	910	Other current liabilities	$	14,198
Commodity derivatives-propane		Other assets, net		349	Other liabilities		1,817
		Total	$	1,259	Total	$	16,015

October 31, 2018
Asset Derivatives Liability Derivatives
Derivative Instrument Location Fair value Location Fair value
Derivatives designated as hedging instruments
  Commodity derivatives-propane Prepaid expenses and other current assets $ 12,379
Other current liabilities $ 6,894
  Commodity derivatives-propane Other assets, net 2,923
Other liabilities 437
Total $ 15,302
Total $ 7,331

July 31, 2018
Asset Derivatives Liability Derivatives
Derivative Instrument Location Fair value Location Fair value
Derivatives designated as hedging instruments
  Commodity derivatives-propane Prepaid expenses and other current assets $ 17,123
Other current liabilities $ 1,832
  Commodity derivatives-propane Other assets, net 5,347
Other liabilities 78

Total $ 22,470
Total $ 1,910

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~~Ferrellgas'~~

Ferrellgas’ exchange traded commodity derivative contracts require cash margin deposit as collateral for contracts that are in a negative mark-to-market position. These cash margin deposits will be returned if mark-to-market conditions improve or will be applied against cash settlement when the contracts are settled. Liabilities represent cash margin deposits received by Ferrellgas for contracts that are in a positive mark-to-market position. The following tables provide a summary of cash margin balances as of October 31, ~~2018~~2019 and July 31, ~~2018,~~2019, respectively:


	October 31, 2019
	Assets			Liabilities
Description	Location	Amount		Location	Amount
Margin Balances	Prepaid expense and other current assets	$	33,519	Other current liabilities	$	2,112
	Other assets, net		2,674	Other liabilities		—
		$	36,193		$	2,112


	July 31, 2019
	Assets			Liabilities
Description	Location	Amount		Location	Amount
Margin Balances	Prepaid expense and other current assets	$	25,028	Other current liabilities	$	1,217
	Other assets, net		2,969	Other liabilities		—
		$	27,997		$	1,217

October 31, 2018
Assets Liabilities
Description Location Amount Location Amount
Margin Balances Prepaid expenses and other current assets $ 4,265
Other current liabilities $ 6,605
Other assets, net 1,083
Other liabilities 1,778
$ 5,348
$ 8,383

July 31, 2018
Assets Liabilities
Description Location Amount Location Amount
Margin Balances Prepaid expenses and other current assets $ 2,851
Other current liabilities $ 12,308
Other assets, net 927
Other liabilities 4,235
$ 3,778
$ 16,543

~~The following table provides a summary of the effect on Ferrellgas' condensed consolidated statements of operations for the three months ended~~ ~~October 31, 2018~~ ~~and~~ ~~2017~~ ~~due to derivatives that were designated as fair value hedging instruments:~~

Amount of Gain Recognized on Derivative Amount of Interest Expense Recognized on Fixed-Rate Debt (Related Hedged Item)
Derivative Instrument Location of Amounts Recognized on Derivative For the three months ended October 31, For the three months ended October 31,
2018 2017 2018 2017
Interest rate swap agreements Interest expense $ —
$ 138
$ —
$ (2,275 )

The following tables provide a summary of the effect on Ferrellgas’ condensed consolidated statements of comprehensive income (loss) for the three months ended October 31, ~~2018~~2019 and ~~2017~~2018 due to derivatives designated as cash flow hedging instruments:


	For the three months ended October 31, 2019
				Amount of Gain (Loss)
	Amount of Gain		Location of Gain (Loss)	Reclassified from
	(Loss) Recognized in		Reclassified from	AOCI into Income
Derivative Instrument	AOCI		AOCI into Income	Effective portion		Ineffective portion
Commodity derivatives	$	(13,627)	Cost of product sold- propane and other gas liquids sales	$	(7,479)	$	—
	$	(13,627)		$	(7,479)	$	—


	For the three months ended October 31, 2018
				Amount of Gain (Loss)
	Amount of Gain (Loss)		Location of Gain (Loss)	Reclassified from
	Recognized in		Reclassified from	AOCI into Income
Derivative Instrument	AOCI		AOCI into Income	Effective portion		Ineffective portion
Commodity derivatives	$	(8,154)	Cost of sales-propane and other gas liquids sales	$	4,433	$	—
	$	(8,154)		$	4,433	$	—

For the three months ended October 31, 2018
Derivative Instrument Amount of Gain (Loss) Recognized in AOCI Location of Gain (Loss) Reclassified from AOCI into Income Amount of Gain (Loss) Reclassified from AOCI into Income
Effective portion Ineffective portion
Commodity derivatives $ (8,154 ) Cost of sales-propane and other gas liquids sales $ 4,433
$ —
$ (8,154 ) $ 4,433
$ —

For the three months ended October 31, 2017
Derivative Instrument Amount of Gain (Loss) Recognized in AOCI Location of Gain (Loss) Reclassified from AOCI into Income Amount of Gain (Loss) Reclassified from AOCI into Income
Effective portion Ineffective portion
Commodity derivatives $ 22,323
Cost of sales-propane and other gas liquids sales $ 4,132
$ —
Interest rate swap agreements 126
Interest expense (183 ) —
$ 22,449
$ 3,949
$ —

The following table provides a summary of the effect on Ferrellgas' condensed consolidated statements of operations for the three months ended October 31, 2017 due to the change in fair value of derivatives not designated as hedging instruments:

For the three months ended October 31, 2017
Derivatives Not Designated as Hedging Instruments Amount of Gain (Loss) Recognized in Income Location of Gain (Loss) Recognized in Income
Commodity derivatives - crude oil $ (1,390 ) Cost of sales - midstream operations

The changes in derivatives included in AOCI for the three months ended October 31, ~~2018~~2019 and ~~2017~~2018 were as follows:


	For the three months ended October 31,
Gains and losses on derivatives included in AOCI	2019		2018
Beginning balance	$	(14,756)	$	20,560
Change in value of risk management commodity derivatives		(13,627)		(8,154)
Reclassification of (gains) losses on commodity hedges to cost of sales - propane and other gas liquids sales, net		7,479		(4,433)
Ending balance	$	(20,904)	$	7,973

For the three months ended October 31,
Gains and losses on derivatives included in AOCI 2018 2017
Beginning balance $ 20,560
$ 14,648
Change in value of risk management commodity derivatives (8,154 ) 22,323
Reclassification of gains on commodity hedges to cost of sales - propane and other gas liquids sales, net (4,433 ) (4,132 )
Change in value of risk management interest rate derivatives —
126
Reclassification of losses on interest rate hedges to interest expense —
183
Ending balance $ 7,973
$ 33,148

Ferrellgas expects to reclassify net ~~gains~~losses related to the risk management commodity derivatives of approximately ~~$5.5~~$19.3 million to earnings during the next 12 months. These net ~~gains~~losses are expected to be offset by ~~decreased~~increased margins on propane sales commitments Ferrellgas has with its customers that qualify for the normal purchase normal ~~sales~~sale exception.

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During the three months ended October 31, ~~2018~~2019 and ~~2017,~~2018, Ferrellgas had no reclassifications to operations resulting from the discontinuance of any cash flow hedges arising from the probability of the original forecasted transactions not occurring within the originally specified period of time defined within the hedging relationship.

As of October 31, ~~2018~~,2019, Ferrellgas had financial derivative contracts covering ~~4.2~~4.5 million ~~barrels~~gallons of propane that were entered into as cash flow hedges of forward and forecasted purchases of propane.

Derivative financial instruments credit risk

Ferrellgas is exposed to credit loss in the event of nonperformance by counterparties to derivative financial and commodity instruments. Ferrellgas’ counterparties principally consist of major energy companies and major U.S. financial institutions. Ferrellgas maintains credit policies with regard to its counterparties that it believes ~~reduces~~reduce its overall credit risk. These policies include evaluating and monitoring its counterparties’ financial condition, including their credit ratings, and entering into agreements with counterparties that govern credit limits. Certain of these agreements call for the posting of collateral by the counterparty or by Ferrellgas in the forms of letters of credit, parent guarantees or cash. Ferrellgas has concentrations of credit risk associated with derivative financial instruments held by certain derivative financial instrument counterparties. If these counterparties that make up the concentration failed to perform according to the terms of their contracts at October 31, ~~2018,~~2019, the maximum amount of loss due to credit risk that Ferrellgas would incur is ~~$9.7 million,~~zero, which is based upon the gross fair values of the derivative financial instruments.

From time to time Ferrellgas enters into derivative contracts that have credit-risk-related contingent features which dictate credit limits based upon ~~Ferrellgas'~~Ferrellgas’ debt rating. There were no open derivative contracts with credit-risk-related contingent features as of October 31, ~~2018.~~

2019.

J.K. Transactions with related parties

Ferrellgas has no employees and is managed and controlled by its general partner. Pursuant to Ferrellgas’ partnership agreements, the general partner is entitled to reimbursement for all direct and indirect expenses incurred or payments it makes on behalf of Ferrellgas and all other necessary or appropriate expenses allocable to Ferrellgas or otherwise reasonably incurred by the general partner in connection with operating Ferrellgas’ business. These costs primarily include compensation and benefits paid to employees of the general partner who perform services on Ferrellgas’ behalf and are reported in the condensed consolidated statements of operations as follows:


	For the three months ended October 31,
	2019		2018
Operating expense	$	63,471	$	59,958

General and administrative expense	$	6,487	$	6,112

For the three months ended October 31,
2018 2017
Operating expense $ 59,958
$ 57,351

General and administrative expense $ 6,112
$ 7,508

See additional discussions about transactions with the general partner and related parties in Note FG – Partners’ deficit.

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K.L. Contingencies and commitments

Litigation

Ferrellgas’ operations are subject to all operating hazards and risks normally incidental to handling, storing, transporting and otherwise providing for use by consumers of combustible liquids such as propane and, prior to the sales of midstream operations in fiscal 2018, crude oil. As a result, at any given time, Ferrellgas can be threatened with or named as a defendant in various lawsuits arising in the ordinary course of business. Other than as discussed below, Ferrellgas is not a party to any legal proceedings other than various claims and lawsuits arising in the ordinary course of business. 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 reasonably expected to have a material adverse effect on the consolidated financial condition, results of operations and cash flows of Ferrellgas.

Ferrellgas has been named as a defendant, along with a competitor, in putative class action lawsuits filed in multiple jurisdictions. The lawsuits, which were consolidated in the Western District of Missouri on October 16, 2014, allege that Ferrellgas and a competitor coordinated in 2008 to reduce the fill level in barbeque cylinders and combined to persuade a common customer to accept that fill reduction, resulting in increased cylinder costs to direct customers and end-user customers in violation of federal and certain state antitrust laws. The lawsuits seek treble damages, attorneys’ fees, injunctive relief and costs on behalf of the putative class. These lawsuits have been ~~consolidated into one case~~coordinated for pretrial purposes by athe multidistrict litigation panel. The Federal Court for the Western District of Missouri initially dismissed all claims brought by direct and indirect customers other than state law claims of indirect customers under Wisconsin, Maine and Vermont law. The direct customer plaintiffs filed an

appeal, which resulted in a reversal of the district court’s dismissal. We filed a petition for a writ of certiorari which was denied. An appeal by the indirect customer plaintiffs resulted in the court of appeals affirming the dismissal of the federal claims and remanding the case to the district court to decide whether to exercise supplemental jurisdiction over the remaining state law claims. Thereafter, in August 2019, Ferrellgas reached a settlement with the direct customers, pursuant to which it agreed to pay a total of $6.25 million to resolve all claims asserted by the putative direct purchaser class. With respect to the indirect customers, the district court exercised supplemental jurisdiction over the remaining state law claims, but then granted in part Ferrellgas’ pleadings-based motion and dismissed 11 of the 24 remaining state law claims. As a result, there are 13 remaining state law claims brought by a putative class of indirect customers. Ferrellgas believes it has strong defenses ~~to the claims~~ and intends to vigorously defend itself against ~~the consolidated case.~~these remaining claims. Ferrellgas does not believe loss is probable or reasonably estimable at this time related to the putative class action lawsuit.

Ferrellgas has been named, along with several current and former officers, in several class action lawsuits alleging violations of certain securities laws based on alleged materially false and misleading statements in certain of our public disclosures. The lawsuits, the first of which was filed on October 6, 2016 in the Southern District of New York, seek unspecified compensatory damages. Derivative lawsuits with similar allegations have been filed naming Ferrellgas and several current and former officers and directors as defendants. On April 2, 2018, the securities class action lawsuits were dismissed with prejudice. On April 30, 2018, the plaintiffs filed a notice of appeal to the United States Court of Appeals for the Second Circuit and the parties are preparing appellate briefs. At this time the derivative lawsuits remain stayed by agreement. Ferrellgas believes that it has defenses and will vigorously defend these cases. Ferrellgas does not believe loss is probable or reasonably estimable at this time related to the putative class action lawsuits or the derivative actions.

Ferrellgas and Bridger Logistics, LLC, have been named, along with two former officers, in a lawsuit filed by Eddystone Rail Company ("Eddystone") on February 2, 2017 in the Eastern District of Pennsylvania (the "EDPA Lawsuit"). Eddystone indicated that it has prevailed in or settled an arbitration against Jamex Transfer Services (“JTS”), ~~then~~previously named Bridger Transfer Services, a former subsidiary of Bridger Logistics, LLC (“Bridger”). The arbitration involved a claim against JTS for money due for deficiency payments under a contract for the use of an Eddystone facility used to offload crude from rail onto barges. Eddystone alleges that Ferrellgas transferred assets out of JTS prior to the sale of the membership interest in JTS to Jamex Transfer Holdings, and that those transfers should be avoided so that the assets can be used to satisfy the amount owed by JTS to Eddystone ~~under~~as a result of the arbitration. Eddystone also alleges that JTS was an “alter ego” of Bridger and ~~Ferrellgas.~~Ferrellgas and that Bridger and Ferrellgas breached fiduciary duties owed to Eddystone as a creditor of JTS. Ferrellgas believes that Ferrellgas and Bridger have valid defenses to these claims and to Eddystone’s primary claim against JTS ~~on the contract claim.~~for breach of contract. The lawsuit does not specify a specific amount of damages that Eddystone is seeking; however, Ferrellgas believes that the amount of such ~~damage claims,~~damages, if ultimately owed to Eddystone, could be material to Ferrellgas. Ferrellgas intends to vigorously defend this claim. ~~The lawsuit is in its early stages; as such, management does not currently believe a loss is probable or reasonably estimable at this time.~~ On August 24, 2017, Ferrellgas filed a third-party complaint against JTS, Jamex Transfer Holdings, and other related persons and entities (the "Third-Party Defendants"), asserting claims for breach of contract, indemnification of any losses in the EDPA Lawsuit, tortious interference with contract, and contribution. On June 25, 2018, Ferrellgas entered into an agreement with the Third-Party Defendants which, among other things, resulted in a dismissal of the claims against the Third-Party Defendants from the lawsuit.

The lawsuit is in the discovery stage; as such, management does not currently believe a loss is probable or reasonably estimable at this timeL. .

M. Net earnings (loss) per common unit

Ferrellgas Partners is currently restricted by its debt covenants from making distributions to common unitholders. See Note F – Debt – for details regarding these restrictions. Below is a calculation of the basic and diluted net earnings (loss)

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per common unit in the condensed consolidated statements of operations for the periods indicated. In accordance with guidance issued by the FASB regarding participating securities and the two-class method, Ferrellgas calculates net earnings (loss) per common unit for each period presented according to distributions declared and participation rights in undistributed earnings, as if all of the earnings or loss for the period had been distributed according to the incentive distribution rights in the Ferrellgas partnership agreement. Due to the seasonality of the propane business, the dilutive effect of the two-class method typically impacts only the three months ending January 31. In periods with undistributed earnings above certain levels, the calculation according to the two-class method results in an increased allocation of undistributed earnings to the general partner and a dilution of the earnings to the limited partners as follows:


	Ratio of total distributions payable to:
Quarterly distribution per common unit	Common unitholder		General partner
$0.56 to $0.63	86.9	%	13.1	%
$0.64 to $0.82	76.8	%	23.2	%
$0.83 and above	51.5	%	48.5	%

There was no dilutive effect resulting from this method ~~based~~ on basic and diluted net earnings (loss) per common unit for the three months ended October 31, ~~2018~~2019 or ~~2017.~~

2018.

In periods with net losses, the allocation of the net losses to the limited partners and the general partner will be determined based on the same allocation basis specified in Ferrellgas Partners’ partnership agreement that would apply to periods in which there were no undistributed earnings. Additionally, there are no dilutive securities in periods with net losses.


	For the three months ended October 31,
	2019		2018

Common unitholders’ interest in net loss	$	(44,891)	$	(56,445)
Weighted average common units outstanding (in thousands)		97,152.7		97,152.7
Basic and diluted net loss per common unit	$	(0.46)	$	(0.58)

For the three months ended October 31,
2018 2017
(in thousands, except per common unit amounts)
Common unitholders’ interest in net loss $ (56,445 ) $ (47,436 )

Weighted average common units outstanding - basic and diluted 97,152.7
97,152.7

Basic and diluted net loss per common unit $ (0.58 ) $ (0.49 )

M. ~~Segment reporting~~

~~As of October 31, 2018, Ferrellgas has one reportable operating segment: propane operations and related equipment sales. All remaining activities are included in Corporate and other.~~

~~Following is a summary of segment information for the three months ended October 31, 2018 and 2017:~~

Three months ended October 31, 2018
Propane operations and related equipment sales Corporate and other Total
Segment revenues $ 352,309
$ —
$ 352,309
Direct costs (1) 323,594
10,874
334,468
Adjusted EBITDA $ 28,715
$ (10,874 ) $ 17,841

Three months ended October 31, 2017
Propane operations and related equipment sales Corporate and other Total
Segment revenues $ 333,895
$ 120,760
$ 454,655
Direct costs (1) 303,329
125,110
428,439
Adjusted EBITDA $ 30,566
$ (4,350 ) $ 26,216

(1) Direct costs are comprised of "cost of sales-propane and other gas liquids sales", "cost of sales- midstream operations", "cost of sales-other", "operating expense", "general and administrative expense", and "equipment lease expense" less "severance charge", "legal fees and settlements", "unrealized (non-cash) losses on changes in fair value of derivatives not designated as hedging instruments" and "multi-employer pension plan withdrawal settlement".

~~Following is a reconciliation of Ferrellgas' total segment performance measure to condensed consolidated net loss:~~

Three months ended October 31,
2018 2017
Net loss attributable to Ferrellgas Partners, L.P. $ (57,015 ) $ (47,915 )
Income tax expense 158
377
Interest expense 43,878
40,807
Depreciation and amortization expense 18,992
25,732
EBITDA 6,013
19,001
Non-cash employee stock ownership plan compensation charge 2,748
3,962
Loss on asset sales and disposals 4,504
895
Other income, net (19 ) (511 )
Severance costs —
1,663
Legal fees and settlements 3,564
—
Unrealized (non-cash) loss on changes in fair value of derivatives not designated as hedging instruments —
1,607
Multi-employer pension plan withdrawal settlement 1,524
—
Net loss attributable to noncontrolling interest (493 ) (401 )
Adjusted EBITDA $ 17,841
$ 26,216

~~Following are total assets by segment:~~

Assets October 31, 2018 July 31, 2018
Propane operations and related equipment sales $ 1,238,171
$ 1,196,084
Corporate and other 105,619
167,197
Total consolidated assets $ 1,343,790
$ 1,363,281

~~Following are capital expenditures by segment:~~

Three months ended October 31, 2018
Propane operations and related equipment sales Corporate and other Total
Capital expenditures:
Maintenance $ 4,880
$ 360
$ 5,240
Growth 16,384
—
16,384
Total $ 21,264
$ 360
$ 21,624

Three months ended October 31, 2017
Propane operations and related equipment sales Corporate and other Total
Capital expenditures:
Maintenance $ 8,351
$ 242
$ 8,593
Growth 9,688
664
10,352
Total $ 18,039
$ 906
$ 18,945

N. Subsequent events

Ferrellgas evaluated events and transactions occurring after the balance sheet date through the date ~~Ferrellgas'~~Ferrellgas’ condensed consolidated financial statements were issued and concluded that there were no events or transactions occurring during this period that require recognition or disclosure in its condensed consolidated financial ~~statements.~~statements except as described below.

On November 7, 2019, the operating partnership entered into a second amendment to the financing agreement governing its Senior Secured Credit Facility. See Note F – Debt for further discussion.

On December 5, 2019, the operating partnership entered into an eighth amendment to its accounts receivable securitization facility in order to align certain deliverables under the accounts receivable securitization facility with similar requirements under the second amendment to the financing agreement governing the Senior Secured Credit Facility, noted above.

FERRELLGAS PARTNERS FINANCE CORP.
(a wholly-owned subsidiary of Ferrellgas Partners, L.P.)
CONDENSED BALANCE SHEETS
(unaudited)
October 31, 2018 July 31, 2018
ASSETS

Cash $ 1,000
$ 1,000
Prepaid expenses and other current assets —
1,850
Total assets $ 1,000
$ 2,850

Contingencies and commitments (Note B)

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 29,112
29,020
Accumulated deficit (29,112 ) (27,170 )
Total stockholder's equity $ 1,000
$ 2,850
See notes to condensed financial statements.

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FERRELLGAS PARTNERS FINANCE CORP.
(a wholly-owned subsidiary of Ferrellgas Partners, L.P.)
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)

For the three months ended October 31,
2018 2017

General and administrative expense $ 1,941
$ 50

Net loss $ (1,941 ) $ (50 )
See notes to condensed financial statements.

FERRELLGAS PARTNERS FINANCE CORP.
(a wholly-owned subsidiary of Ferrellgas Partners, L.P.)
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
For the three months ended October 31,
2018 2017
Cash flows from operating activities:
Net loss $ (1,941 ) $ (50 )
Changes in operating assets and liabilities:
Prepaid expenses and other current assets 1,850
—
Cash used in operating activities (91 ) (50 )

Cash flows from financing activities:
Capital contribution 91
50
Cash provided by financing activities 91
50

Net change in cash —
—
Cash - beginning of period 1,000
1,000
Cash - end of period $ 1,000
$ 1,000
See notes to condensed financial statements.

FERRELLGAS PARTNERS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

CONDENSED BALANCE SHEETS

(unaudited)


	October 31, 2019		July 31, 2019
ASSETS
Cash	$	1,000	$	1,000
Prepaid expenses and other current assets		1,021		1,858
Total assets	$	2,021	$	2,858

Contingencies and commitments (Note B)

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		33,081		33,027
Accumulated deficit		(32,060)		(31,169)
Total stockholder’s equity	$	2,021	$	2,858

See notes to condensed financial statements.

~~(unaudited)~~

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FERRELLGAS PARTNERS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)


	For the three months ended October 31,
	2019		2018
General and administrative expense	$	891	$	1,941

Net loss	$	(891)	$	(1,941)

See notes to condensed financial statements.

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FERRELLGAS PARTNERS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)


	For the three months ended October 31,
	2019		2018
Cash flows from operating activities:
Net loss	$	(891)	$	(1,941)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		838		1,850
Cash used in operating activities		(53)		(91)

Cash flows from financing activities:
Capital contribution		53		91
Cash provided by financing activities		53		91

Net change in cash		—		—
Cash - beginning of period		1,000		1,000
Cash - end of period	$	1,000	$	1,000

See notes to condensed financial statements.

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FERRELLGAS PARTNERS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

(unaudited)

NOTES TO CONDENSED FINANCIAL STATEMENTS

A. Formation

Ferrellgas Partners Finance Corp. (the “Finance Corp.”), a Delaware corporation, was formed on March 28, 1996, and is a wholly-owned subsidiary of Ferrellgas Partners, L.P. (the “Partnership”).

The condensed financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the interim periods presented. All adjustments to the condensed financial statements were of a normal recurring nature.

The Finance Corp. has nominal assets, does not conduct any operations and has no employees.

Going Concern

The accompanying condensed financial statements have been prepared on a going concern basis, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business. As discussed in Note B – Contingencies and commitments, the Finance Corp serves as co-issuer and co-obligor for debt securities of the Partnership. The Partnership has $357.0 million aggregate principal amount of unsecured senior notes due June 15, 2020 that are classified as current. This obligation is only reported on the Partnership’s condensed consolidated balance sheet. The ability of the Partnership to restructure, refinance or otherwise satisfy these notes is uncertain considering the level of other outstanding indebtedness. Additionally, the Finance Corp. does not have sufficient cash reserves or the ability to generate sufficient future cash flows to satisfy its obligations as co-obligor of the debt securities of the Partnership. Given these concerns, the Finance Corp. believes there is substantial doubt about the entity’s ability to continue as a going concern. The Partnership has engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist with the Partnership’s ongoing process to address its upcoming debt maturities. The successful outcome of the Partnership’s debt reduction strategy continues to remain uncertain.

B. Contingencies and commitments

The Finance Corp. serves as co-issuer and co-obligor for debt securities of the Partnership.

The ~~indenture governing the senior unsecured notes contains various restrictive covenants applicable to the Partnership~~Finance Corp. is liable as co-issuer and its subsidiaries, the most restrictive relating to additional indebtedness and restricted payments. As of October 31, 2018, the Partnership is in compliance with all requirements, tests, limitations and covenants related to this debt agreement, exceptco-obligor for the ~~consolidated fixed charge coverage ratio.~~

~~The indenture governing the outstanding notes~~$357 million aggregate principal amount of the ~~Partnership includes a~~Partnership’s unsecured senior notes due June 15, 2020, which obligation is only reported on the Partnership’s consolidated fixed charge coverage ratio test for the incurrence of debt and the making of restricted payments. This covenant requires that the ratio of trailing four quarters EBITDA to interest expense (both as adjusted for certain, specified items) of the Partnership be at least 1.75x before a restricted payment (as defined in the indenture) can be made by the Partnership. If this ratio were to drop below 1.75x, the indenture allows the Partnership to make restricted payments of up to $50.0 million in total over a 16 quarter period while below this ratio. As of October 31, 2018, the ratio was 1.40x. As a result of distributions paid to common unitholders in September 2017, December 2017, March 2018, June 2018, and September 2018 while this ratio was less than 1.75x, Ferrellgas Partners, L.P. is currently restricted by this covenant from making future restricted payments, including distributions to common unitholders. Accordingly, no distributions will be paid to common unitholders in December 2018 for the three months ended October 31, 2018. Unless this indenture is amended or replaced, or the Partnership's consolidated fixed charge coverage ratio improves to at least 1.75x, this covenant will continue to restrict us from making common unit distributions for the quarter ending January 31, 2019 and beyond.balance sheet.

FERRELLGAS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)

October 31, 2018 July 31, 2018
ASSETS
Current assets:
Cash and cash equivalents $ 63,093
$ 119,308
Accounts and notes receivable, net (including $137,560 and $120,079 of accounts receivable pledged as collateral at October 31, 2018 and July 31, 2018, respectively) 136,189
126,054
Inventories 106,560
83,694
Prepaid expenses and other current assets 33,940
34,830
Total current assets 339,782
363,886

Property, plant and equipment, net 566,078
557,723
Goodwill, net 247,478
246,098
Intangible assets (net of accumulated amortization of $403,690 and $399,629 at October 31, 2018 and July 31, 2018, respectively) 117,452
120,951
Other assets, net 72,842
74,588
Total assets $ 1,343,632
$ 1,363,246

LIABILITIES AND PARTNERS' DEFICIT

Current liabilities:

Accounts payable $ 59,664
$ 46,820
Short-term borrowings —
32,800
Collateralized note payable 90,000
58,000
Other current liabilities 174,336
138,091
Total current liabilities 324,000
275,711

Long-term debt 1,729,724
1,728,137
Other liabilities 38,654
39,476
Contingencies and commitments (Note K)

Partners' deficit:

Limited partner (749,411 ) (693,896 )
General partner (7,481 ) (6,915 )
Accumulated other comprehensive income 8,146
20,733
Total partners' deficit (748,746 ) (680,078 )
Total liabilities and partners' deficit $ 1,343,632
$ 1,363,246
See notes to condensed consolidated financial statements.

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FERRELLGAS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)

For the three months ended October 31,
2018 2017
Revenues:
Propane and other gas liquids sales $ 334,966
$ 302,758
Midstream operations —
120,760
Other 17,343
31,137
Total revenues 352,309
454,655

Costs and expenses:
Cost of sales - propane and other gas liquids sales 204,136
179,515
Cost of sales - midstream operations —
108,125
Cost of sales - other 3,047
13,702
Operating expense 110,331
110,462
Depreciation and amortization expense 18,992
25,732
General and administrative expense 14,175
13,164
Equipment lease expense 7,863
6,741
Non-cash employee stock ownership plan compensation charge 2,748
3,962
Loss on asset sales and disposals 4,504
895

Operating loss (13,487 ) (7,643 )

Interest expense (35,195 ) (32,196 )
Other income, net 19
511

Loss before income taxes (48,663 ) (39,328 )

Income tax expense 151
371

Net loss $ (48,814 ) $ (39,699 )
See notes to condensed consolidated financial statements.

FERRELLGAS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)

For the three months ended October 31,
2018 2017

Net loss $ (48,814 ) $ (39,699 )
Other comprehensive income (loss):
Change in value of risk management derivatives (8,154 ) 22,449
Reclassification of gains on derivatives to earnings, net (4,433 ) (3,949 )
Other comprehensive income (loss) (12,587 ) 18,500
Comprehensive loss $ (61,401 ) $ (21,199 )
See notes to condensed consolidated financial statements.

FERRELLGAS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' DEFICIT
(in thousands)
(unaudited)
Accumulated
other Total
Limited General comprehensive partners'
partner partner income deficit

Balance at July 31, 2018 $ (693,896 ) $ (6,915 ) $ 20,733
$ (680,078 )
Contributions in connection with non-cash ESOP compensation charges 2,720
28
—
2,748
Distributions (9,914 ) (101 ) —
(10,015 )
Net loss (48,321 ) (493 ) —
(48,814 )
Other comprehensive loss —
—
(12,587 ) (12,587 )
Balance at October 31, 2018 $ (749,411 ) $ (7,481 ) $ 8,146
$ (748,746 )
See notes to condensed consolidated financial statements.

FERRELLGAS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the three months ended October 31,
2018 2017
Cash flows from operating activities:
Net loss $ (48,814 ) $ (39,699 )
Reconciliation of net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense 18,992
25,732
Non-cash employee stock ownership plan compensation charge 2,748
3,962
Loss on asset sales and disposals 4,504
895
Unrealized gain on derivative instruments —
1,607
Provision for doubtful accounts 519
693
Deferred income tax expense 150
364
Other 2,174
1,325
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts and notes receivable, net of securitization (10,654 ) (23,862 )
Inventories (22,866 ) (33,160 )
Prepaid expenses and other current assets (6,361 ) (6,885 )
Accounts payable 13,159
13,496
Accrued interest expense 24,290
24,740
Other current liabilities 6,677
39,839
Other assets and liabilities (2,124 ) (1,057 )
Net cash provided by (used in) operating activities (17,606 ) 7,990

Cash flows from investing activities:
Business acquisitions, net of cash acquired (4,625 ) (13,867 )
Capital expenditures (23,433 ) (20,154 )
Proceeds from sale of assets 1,061
1,208
Other (292 ) —
Net cash used in investing activities (27,289 ) (32,813 )

Cash flows from financing activities:
Distributions (10,015 ) (9,913 )
Proceeds from issuance of long-term debt —
23,580
Payments on long-term debt (281 ) (281 )
Net reductions in short-term borrowings (32,800 ) (5,879 )
Net additions to collateralized short-term borrowings 32,000
19,000
Cash paid for financing costs (224 ) (287 )
Net cash provided by (used in) financing activities (11,320 ) 26,220

Net change in cash and cash equivalents (56,215 ) 1,397
Cash and cash equivalents - beginning of period 119,308
5,701
Cash and cash equivalents - end of period $ 63,093
$ 7,098
See notes to condensed consolidated financial statements.

FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)


	October 31, 2019		July 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	29,733	$	11,046
Accounts and notes receivable, net (including $118,164 and $106,145 of accounts receivable pledged as collateral at October 31, 2019 and July 31, 2019, respectively)		123,841		107,596
Inventories		84,995		80,454
Prepaid expenses and other current assets		50,426		42,157
Total current assets		288,995		241,253

Property, plant and equipment, net		598,887		596,723
Goodwill, net		247,195		247,195
Intangible assets (net of accumulated amortization of $416,512 and $414,210 at October 31, 2019 and July 31, 2019, respectively)		108,493		108,557
Operating lease right-of-use assets		124,047		—
Other assets, net		75,443		69,105
Total assets	$	1,443,060	$	1,262,833

LIABILITIES AND PARTNERS' DEFICIT

Current liabilities:
Accounts payable	$	44,421	$	33,364
Short-term borrowings		80,000		43,000
Collateralized note payable		73,000		62,000
Current portion of long-term debt		2,230		277,029
Current operating lease liabilities		33,832		—
Other current liabilities		176,099		134,303
Total current liabilities		409,582		549,696

Long-term debt		1,731,920		1,457,004
Operating lease liabilities		88,773		—
Other liabilities		36,915		36,536
Contingencies and commitments (Note L)

Partners’ deficit:
Limited partner		(795,385)		(758,186)
General partner		(7,950)		(7,570)
Accumulated other comprehensive loss		(20,795)		(14,647)
Total partners’ deficit		(824,130)		(780,403)
Total liabilities and partners’ deficit	$	1,443,060	$	1,262,833

See notes to condensed consolidated financial statements.

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FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(unaudited)


	For the three months ended October 31,
	2019		2018

Revenues:
Propane and other gas liquids sales	$	273,385	$	334,966
Other		19,829		17,343
Total revenues		293,214		352,309

Costs and expenses:
Cost of sales - propane and other gas liquids sales		134,028		204,136
Cost of sales - other		3,681		3,047
Operating expense - personnel, vehicle, plant and other		114,543		110,331
Operating expense - equipment lease expense		8,388		7,863
Depreciation and amortization expense		19,219		18,992
General and administrative expense		9,696		14,175
Non-cash employee stock ownership plan compensation charge		795		2,748
Loss on asset sales and disposals		2,235		4,504

Operating income (loss)		629		(13,487)

Interest expense		(36,877)		(35,195)
Other income (expense), net		(132)		19

Loss before income taxes		(36,380)		(48,663)

Income tax expense		518		151

Net Loss	$	(36,898)	$	(48,814)

See notes to condensed consolidated financial statements.

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FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)


	For the three months ended October 31,
	2019		2018

Net loss	$	(36,898)	$	(48,814)
Other comprehensive income (loss):
Change in value of risk management derivatives		(13,627)		(8,154)
Reclassification of (gains) losses on derivatives to earnings, net		7,479		(4,433)
Other comprehensive loss		(6,148)		(12,587)
Comprehensive loss	$	(43,046)	$	(61,401)

See notes to condensed consolidated financial statements.

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FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF PARTNERS’ DEFICIT

(in thousands)

(unaudited)


					Accumulated
					other		Total
	Limited		General		comprehensive		partners’
	partner		partner		loss		deficit
Balance at July 31, 2019	$	(758,186)	$	(7,570)	$	(14,647)	$	(780,403)

Contributions in connection with non-cash ESOP compensation charges		787		8		—		795
Cumulative adjustment for lease accounting standard		(1,361)		(14)		—		(1,375)
Distributions		(100)		(1)		—		(101)
Net loss		(36,525)		(373)		—		(36,898)
Other comprehensive loss		—		—		(6,148)		(6,148)
Balance at October 31, 2019	$	(795,385)	$	(7,950)	$	(20,795)	$	(824,130)


					Accumulated
					other		Total
	Limited		General		comprehensive		partners’
	partner		partner		income (loss)		deficit
Balance at July 31, 2018	$	(693,896)	$	(6,915)	$	20,733	$	(680,078)

Contributions in connection with non-cash ESOP and stock and unit-based compensation charges		2,720		28		—		2,748
Distributions		(9,914)		(101)		—		(10,015)
Net loss		(48,321)		(493)		—		(48,814)
Other comprehensive loss		—		—		(12,587)		(12,587)
Balance at October 31, 2018	$	(749,411)	$	(7,481)	$	8,146	$	(748,746)

See notes to condensed consolidated financial statements.

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FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	For the three months ended October 31,
	2019		2018
Cash flows from operating activities:
Net loss	$	(36,898)	$	(48,814)
Reconciliation of net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense		19,219		18,992
Non-cash employee stock ownership plan compensation charge		795		2,748
Loss on asset sales and disposals		2,235		4,504
Provision for doubtful accounts		665		519
Deferred income tax expense		554		150
Other		2,327		2,174
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts and notes receivable, net of securitization		(14,410)		(10,654)
Inventories		(4,541)		(22,866)
Prepaid expenses and other current assets		(7,970)		(6,361)
Accounts payable		11,360		13,159
Accrued interest expense		26,469		24,290
Other current liabilities		8,214		6,677
Other assets and liabilities		(872)		(2,124)
Net cash provided by (used in) operating activities		7,147		(17,606)

Cash flows from investing activities:
Business acquisitions, net of cash acquired		(6,400)		(4,625)
Capital expenditures		(18,126)		(23,433)
Proceeds from sale of assets		835		1,061
Cash payments to construct assets in connection with future lease transactions		(16,879)		—
Cash receipts in connection with leased vehicles		5,863		—
Other		—		(292)
Net cash used in investing activities		(34,707)		(27,289)

Cash flows from financing activities:
Distributions		(101)		(10,015)
Payments on long-term debt		(512)		(281)
Net additions to (reductions in) short-term borrowings		37,000		(32,800)
Net additions to collateralized short-term borrowings		11,000		32,000
Cash paid for financing costs and other		(1,140)		(224)
Net cash provided by (used in) financing activities		46,247		(11,320)

Net change in cash and cash equivalents		18,687		(56,215)
Cash and cash equivalents - beginning of period		11,046		119,308
Cash and cash equivalents - end of period	$	29,733	$	63,093

See notes to condensed consolidated financial statements.

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FERRELLGAS, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, unless otherwise designated)

(unaudited)

A. Partnership organization and formation

Ferrellgas, L.P. is a limited partnership that owns and operates propane distribution and related ~~assets, crude oil transportation and logistics related assets and salt water disposal wells in south Texas.~~assets. Ferrellgas Partners, L.P. (“Ferrellgas Partners”), a publicly traded limited partnership, holds an approximate 99% limited partner interest in, and consolidates, Ferrellgas, L.P. Ferrellgas, Inc. (the “general partner”), a wholly-owned subsidiary of Ferrell Companies, Inc. (“Ferrell Companies”), holds an approximate 1% general partner interest in Ferrellgas, L.P. and performs all management functions required by Ferrellgas, L.P.

Ferrellgas Partners and Ferrellgas, L.P., collectively referred to as “Ferrellgas,” are governed by their respective partnership agreements. These agreements contain specific provisions for the allocation of net earnings and loss to each of the partners for purposes of maintaining the partner capital accounts.

Ferrellgas, L.P. owns a 100% equity interest in Ferrellgas Finance Corp., whose only business activity is to act as the co-issuer and co-obligor of debt issued by Ferrellgas, L.P.

Ferrellgas, L.P. is primarily engaged in the retail distribution of propane and related equipment sales. The propane distribution market is seasonal because propane is used primarily for heating in residential and commercial buildings. Ferrellgas serves residential, industrial/commercial, portable tank exchange, agricultural, wholesale and other customers in all 50 states, the District of Columbia, and Puerto Rico.

2020.

The condensed consolidated financial statements of Ferrellgas, L.P. and subsidiaries reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the interim periods presented. All adjustments to the condensed consolidated financial statements were of a normal recurring nature. ~~Certain prior period amounts have been reclassified to conform to the current period presentation.~~ The information included in this Quarterly Report on Form ~~10-Q~~10‑Q should be read in conjunction with (i) the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (ii) the consolidated financial statements and accompanying notes included in Ferrellgas, L.P.’s Annual Report on Form ~~10-K~~10‑K for fiscal ~~2018~~2019.

Going Concern

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business. Ferrellgas Partners has $357.0 million in unsecured notes due June 15, 2020 that are classified as current in its condensed consolidated financial statements. Ferrellgas Partners’ ability to restructure, refinance or otherwise satisfy these notes is directly impacted by the cash flows of Ferrellgas, L.P. The ability of Ferrellgas Partners to restructure or refinance these notes is uncertain considering the level of other outstanding indebtedness. In certain circumstances, the failure to repay the $357.0 million in unsecured notes on their contractual maturity date may result in an event of default under the operating partnership’s Senior Secured Credit Facility and the indentures governing the operating partnership’s outstanding notes. Given these concerns, Ferrellgas, L.P., believes there is substantial doubt about the entity’s ability to continue as a going concern. Ferrellgas has engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist with its ongoing process to address its upcoming debt maturities. The successful outcome of Ferrellgas’ debt reduction strategy continues to remain uncertain. Additionally, see Note F – Debt below for further discussion of the outstanding debt.

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B. Summary of significant accounting policies

(1)Accounting estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“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. Significant estimates impacting the condensed consolidated financial statements include accruals that have been established for contingent liabilities, pending claims and legal actions arising in the normal course of business, useful lives of property, plant and equipment, ~~assets,~~ residual values of tanks, capitalization of customer tank installation costs, amortization methods of intangible assets, valuation methods used to value sales returns and allowances, allowance for doubtful accounts, fair value of reporting units, recoverability of long-lived assets, assumptions used to value business combinations, fair values of derivative contracts and stock-based compensation calculations.

(2) New accounting standards:

FASB Accounting Standard Update No. ~~2014-09~~

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update ("ASU") 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The issuance is part of a joint effort by the FASB and the International Accounting Standards Board ("IASB") to enhance financial reporting by creating common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards ("IFRS") and, thereby, improving the consistency of requirements, comparability of practices and usefulness of disclosures. Upon adoption, Ferrellgas, L.P. applied ASU 2014-09 only to contracts that were not completed, referred to as open contracts.

Ferrellgas, L.P. adopted ASU 2014-09 beginning on August 1, 2018 using the modified retrospective method. This method requires that the cumulative effect of initially applying ASU 2014-09 be recognized in partner’s deficit at the date of adoption, August 1, 2018. ASU 2014-09 has not materially impacted Ferrellgas, L.P.’s consolidated financial statements, and as a result there was no cumulative effect to record as of the date of adoption. Results for reporting periods beginning after August 1, 2018 are presented under ASU 2014-09, while amounts reported for prior periods have not been adjusted and continue to be reported under accounting standards in effect for those periods. See Note G - Revenue from contracts with customers for additional

~~information related to revenues and contract costs, including qualitative and quantitative disclosures required under ASU 2014-09.~~

~~FASB Accounting Standard Update No. 2016-02~~

2016‑02

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 isbecame effective for ~~fiscal years~~Ferrellgas, L.P. for its annual reporting period beginning ~~after December 15, 2018,~~August 1, 2019, including interim periods within ~~those fiscal years.~~that reporting period. Ferrellgas, L.P. ~~is currently evaluating~~adopted the ~~impact~~standard using the transition relief option in ASU 2018-11, “Leases: Targeted Improvements” which, among other things, provides entities with an option to recognize the cumulative-effect adjustment from the modified retrospective application to the opening balance of ~~its pending~~retained earnings in the period of adoption ~~of ASU 2016-02 on~~and consequently, to continue to report comparative periods in compliance with the ~~consolidated financial statements.~~ prior guidance (ASC 840).

Ferrellgas, L.P. ~~has formed an implementation team, completed training on~~elected the ~~new standard, and is working on its implementation process~~short-term lease recognition exemption for ~~the new standard.~~all leases that qualify, meaning it does not recognize right-of-use assets or lease liabilities for those leases. Ferrellgas, L.P. ~~believes that~~also elected the ~~adoption of this standard,~~practical expedient to not separate lease and non-lease components for its most significant leasing activity, which ~~will be effective for~~includes vehicle and real estate leases.

Additionally, Ferrellgas, L.P. elected the package of three practical expedients which allows entities to not reassess initial direct costs, lease classification for existing or expired leases, and lease definition for existing or expired contracts as of the effective date of August 1, ~~2019, will result in material increases~~2019. Ferrellgas, L.P. did not, however, elect the hindsight method practical expedient which would have allowed it to ~~right of use assets~~reassess lease terms and ~~lease liabilities on our consolidated balance sheet.~~

impairment.

FASB Accounting Standard Update No. ~~2016-13~~

2016‑13

In June 2016, the FASB issued ASU ~~2016-13,~~2016‑13, Financial Instruments - Credit Losses (Topic 326), which requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. This standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Entities will apply the ~~standard's~~standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. Ferrellgas, L.P. is currently evaluating the impact of its pending adoption of this standard on the consolidated financial statements.

FASB Accounting Standard Update No. ~~2017-12~~

2017‑12

In August 2017, the FASB issued ASU ~~2017-12,~~2017‑12, Financial Instruments - Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities, which is intended to improve the financial reporting for hedging relationships to better portray the economic results of an ~~entity's~~entity’s risk management activities in its financial statements. This standard isbecame effective for ~~fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.~~ Ferrellgas, L.P. ~~is currently evaluating the impact of~~for its ~~pending adoption of this standard on the consolidated financial statements.~~

~~FASB Accounting Standard Update No. 2018-15~~

Inannual reporting period beginning August ~~2018, the FASB issued ASU 2018-15,~~ ~~Intangibles - Goodwill and Other - Internal-use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract~~ which is intended to clarify the accounting for implementation costs related to a cloud computing arrangement that is a service contract. This standard is effective for fiscal years beginning after December 15,1, 2019, including interim periods within ~~those fiscal years.~~ that reporting period. Ferrellgas, L.P. ~~is currently evaluating~~applied ASU No. 2017-12 using a modified retrospective approach for cash flow hedges existing at the ~~impact~~date of ~~its pending~~adoption and prospectively for the presentation and disclosure guidance. The adoption of this standard did not have a material impact on our consolidated financial statements.

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C. Leases

Ferrellgas, L.P. determines if an arrangement is a lease or contains a lease at inception. Ferrellgas, L.P. leases certain transportation and computer equipment and real estate, predominantly through operating leases. Ferrellgas, L.P. has an immaterial amount of leases in which it is the lessor. Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the lease commencement date. Ferrellgas, L.P. determines the lease term by assuming the exercise of renewal options that are reasonably certain. The lease term is used to determine whether a lease is finance or operating and is used to calculate rent expense. Additionally, the depreciable life of leased assets and leasehold improvements is limited by the expected lease term. Operating lease balances are classified as operating lease right-of-use (“ROU”) assets, and current and long-term operating lease liabilities on Ferrellgas, L.P.’s condensed consolidated ~~financial statements.~~balance sheet. Ferrellgas, L.P. has an immaterial amount of finance leases that are included in “Other assets, net”, “Other current liabilities”, and “Other liabilities” on its condensed consolidated balance sheet.

ROU assets represent Ferrellgas, L.P. right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of Ferrellgas, L.P.’s leases do not provide an implicit discount rate, Ferrellgas, L.P. uses its incremental borrowing rate adjusted for the lease term to represent the rate it would have to pay to borrow on a collateralized basis based on the information available at the commencement date in determining the present value of lease payments. Ferrellgas, L.P.’s lease terms may include options to extend or terminate the lease and it will adjust the life of the lease when it is reasonably certain that it will exercise these options.

Ferrellgas, L.P. has lease agreements with lease and non-lease components, which are generally accounted for as a single lease component. Ferrellgas, L.P. has variable lease components, including lease payments with payment escalation based on the Consumer Price Index, and other variable items, such as common area maintenance and taxes.

Key assumptions include the discount rate, the impact of purchase options and renewal options on Ferrellgas, L.P.’s lease term, as well as the assessment of residual value guarantees.

Ferrellgas, L.P.’s transportation equipment leases generally have purchase options. However, in most circumstances Ferrellgas, L.P. is not certain if it will exercise the purchase option. As circumstances dictate, it may instead return the existing equipment to the lessor and sign a new lease. Ferrellgas, L.P.’s transportation equipment leases often contain residual value guarantees, but they are not reflected in Ferrellgas, L.P.’s lease liabilities as its lease rates are such that residual value guarantees are not expected to be owed at the end of its leases.

Ferrellgas, L.P.’s real estate leases will often have an option to extend the lease, but it is typically not reasonably certain of exercising options to extend. As customer demand changes over time, Ferrellgas, L.P. typically maintains the ability to move to more advantageous locations, relocate to other leased and owned locations, or discontinue service from particular locations.

The following table provides the operating and financing ROU assets and lease liabilities as of October 31, 2019:


Leases	Classification		October 31, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	124,047
Financing lease assets	Other assets, net		5,719
Total leased assets		$	129,766

Liabilities
Current
Operating	Current operating lease liabilities	$	33,832
Financing	Other current liabilities		1,817
Noncurrent
Operating	Operating lease liabilities		88,773
Financing	Other liabilities		3,949
Total leased liabilities		$	128,371

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The following table provides the lease expenses for the three months ended October 31, 2019:


Leases Expense	Classification	For the three months ended October 31,
		2019

Operating lease expense	Operating expenses - personnel, vehicle, plant and other	$	1,741
	Operating expense - equipment lease expense		7,607
	Cost of sales - propane and other gas liquids sales		389
	General and administrative expense		266
Total operating lease expense		$	10,003

Short-term expense	Operating expenses - personnel, vehicle, plant and other	$	1,954
	General and administrative expense		110
Total short-term expense		$	2,064

Variable lease expense	Operating expenses - personnel, vehicle, plant and other	$	675
	Operating expense - equipment lease expense		733
Total variable lease expense		$	1,408

Finance lease expense
Amortization of leased assets	Depreciation and amortization expense	$	40
Interest on lease liabilities	Interest expense		42
Total finance lease expense		$	82

Total lease expense		$	13,557

Minimum annual payments under existing operating and finance lease liabilities as of October 31, 2019 are as follows:


Maturities of lease liabilities		Operating leases		Finance leases		Total
2020	$	31,711	$	1,233	$	32,944
2021		35,187		1,568		36,755
2022		25,864		1,177		27,041
2023		19,938		893		20,831
2024		17,092		812		17,904
Thereafter		34,326		1,735		36,061
Total lease payments	$	164,118	$	7,418	$	171,536
Less: Imputed interest		41,513		1,652		43,165
Present value of lease liabilities	$	122,605	$	5,766	$	128,371

The following table represents the weighted-average remaining lease term and discount rate as of October 31, 2019:


	As of October 31, 2019
Lease type	Weighted-average remaining lease term (years)	Weighted-average discount rate
Operating leases	5.7	8.2%
Finance leases	5.8	8.0%

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Cash flow information is presented below:


	For the three months ended October 31,
	2019
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	11,049

Cash paid for amounts included in the measurement of lease liabilities for financing leases:
Operating cash flows	$	42
Financing cash flows	$	28

C.D. Supplemental financial statement information

Inventories consist of the following:


	October 31, 2019		July 31, 2019
Propane gas and related products	$	70,067	$	66,001
Appliances, parts and supplies, and other		14,928		14,453
Inventories	$	84,995	$	80,454

October 31, 2018 July 31, 2018
Propane gas and related products $ 93,195
$ 71,180
Appliances, parts and supplies, and other 13,365
12,514
Inventories $ 106,560
$ 83,694

In addition to inventories on hand, Ferrellgas, L.P. enters into contracts to take delivery of propane for supply procurement purposes with terms that generally do not exceed 36 months. Most of these contracts call for payment based on market prices at the date of delivery. As of October 31, ~~2018,~~2019, Ferrellgas, L.P. had committed, for supply procurement purposes, to ~~take delivery of~~deliver approximately ~~32.0~~1.3 million gallons of propane at fixed ~~prices.~~prices, net of contracts to take delivery.

Prepaid expenses and other current assets consist of the following:


	October 31, 2019		July 31, 2019
Broker margin deposit assets	$	33,519	$	25,028
Other		16,907		17,129
Prepaid expenses and other current assets	$	50,426	$	42,157

Other assets, net consist of the following:


	October 31, 2019		July 31, 2019
Notes receivable, less current portion	$	13,809	$	16,216
Other		61,634		52,889
Other assets, net	$	75,443	$	69,105

October 31, 2018 July 31, 2018
Notes receivable, less current portion $ 27,569
$ 27,491
Other 45,273
47,097
Other assets, net $ 72,842
$ 74,588

Other current liabilities consist of the following:


	October 31, 2019		July 31, 2019
Accrued interest	$	43,019	$	16,550
Customer deposits and advances		35,625		24,686
Accrued payroll		23,918		17,356
Accrued insurance		13,980		18,524
Price risk management liabilities		19,745		14,198
Other		39,812		42,989
Other current liabilities	$	176,099	$	134,303

October 31, 2018 July 31, 2018
Accrued interest $ 42,578
$ 18,288
Customer deposits and advances 34,056
22,829
Other 97,702
96,974
Other current liabilities $ 174,336
$ 138,091

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Shipping and handling expenses are classified in the following condensed consolidated statements of operations line items:


	For the three months ended October 31,
	2019		2018
Operating expense - personnel, vehicle, plant and other	$	48,015	$	47,443
Depreciation and amortization expense		1,840		1,072
Operating expense - equipment lease expense		7,642		7,519
	$	57,497	$	56,034

Certain cash flow and significant non-cash activities are presented below:


	For the three months ended October 31,
	2019		2018
Cash paid (refunded) for:
Interest	$	8,284	$	8,930
Income taxes	$	—	$	(5)
Non-cash investing and financing activities:
Liabilities incurred in connection with acquisitions	$	520	$	1,096
Change in accruals for property, plant and equipment additions	$	(43)	$	(315)
Right-of-use assets arising from operating and finance lease liabilities	$	17,177	$	—

For the three months ended October 31,
2018 2017
Cash paid (refunded) for:
Interest $ 8,930
$ 6,129
Income taxes $ (5 ) $ —
Non-cash investing and financing activities:
Liabilities incurred in connection with acquisitions $ 1,096
$ 1,232
Change in accruals for property, plant and equipment additions $ (315 ) $ 140

D.E. Accounts and notes receivable, net and accounts receivable securitization

Accounts and notes receivable, net consist of the following:


	October 31, 2019		July 31, 2019
Accounts receivable pledged as collateral	$	118,164	$	106,145
Accounts receivable not pledged as collateral (including other reserves)		2,817		1,218
Note receivable		5,292		2,660
Other		36		36
Less: Allowance for doubtful accounts		(2,468)		(2,463)
Accounts and notes receivable, net	$	123,841	$	107,596

At October 31, ~~2018, $137.6~~2019, $118.2 million of trade accounts receivable were pledged as collateral against ~~$90.0~~$73.0 million of collateralized notes payable due to a commercial paper conduit. At July 31, ~~2018, $120.1~~2019, $106.1 million of trade accounts receivable were pledged as collateral against ~~$58.0~~$62.0 million of collateralized notes payable due to the commercial paper conduit. These accounts receivable pledged as collateral are bankruptcy remote from Ferrellgas, L.P. Ferrellgas, L.P. does not provide any guarantee or similar support to the collectability of these accounts receivable pledged as collateral.

As of October 31, ~~2018,~~2019, Ferrellgas, L.P. had received cash proceeds of ~~$90.0~~$73.0 million from trade accounts receivables securitized, with no remaining capacity to receive additional proceeds or issue letters of credit. As of July 31, ~~2018,~~2019, Ferrellgas, L.P. had received cash proceeds of ~~$58.0~~$62.0 million from trade accounts receivables securitized, with no remaining capacity to receive additional proceeds. Borrowings under the accounts receivable securitization facility had a weighted average interest rate of ~~5.3%~~5.2% and ~~5.2%~~5.5% as of October 31, ~~2018~~2019 and July 31, ~~2018,~~2019, respectively.

E.F. Debt

Short-term borrowings

Ferrellgas, L.P. classifies borrowings on the ~~revolving line of credit~~Revolving Facility portion of its Senior Secured Credit Facility (each, as defined below) as short-term because they are primarily used to fund working capital needs that management intends to pay down within the twelve month period following the balance sheet date. As of October 31, ~~2018, there were no amounts classified as short-term borrowings. As of~~2019 and July 31, ~~2018, $32.8~~2019,

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$80.0 million ~~was~~and $43.0 million, respectively, were classified as short-term borrowings. For further discussion see the “Senior secured credit facilities” section below.

Long-term debt

Long-term debt consists of the following:


	October 31, 2019		July 31, 2019
Senior notes
Fixed rate, 6.50%, due 2021 (1)	$	500,000	$	500,000
Fixed rate, 6.75%, due 2023 (2)		500,000		500,000
Fixed rate, 6.75%, due 2022, net of unamortized premium of $1,455 and $1,633 at October 31, 2019 and July 31, 2019, respectively (3)		476,455		476,633

Senior secured term loan
Variable interest rate, Term Loan, expected to mature May 2023 (4)		275,000		275,000

Notes payable
10.4% and 10.7% weighted average interest rate at October 31, 2019 and July 31, 2019, respectively, due 2020 to 2029, net of unamortized discount of $683 and $711 at October 31, 2019 and July 31, 2019, respectively		6,080		5,962
Total debt, excluding unamortized debt issuance and other costs		1,757,535		1,757,595
Unamortized debt issuance and other costs		(23,385)		(23,562)
Less: current portion of long-term debt		2,230		277,029
Long-term debt	$	1,731,920	$	1,457,004

(1)

During November 2010, Ferrellgas, L.P. issued $500.0 million in aggregate principal amount of 6.50% senior notes due 2021.These notes are general unsecured senior obligations of Ferrellgas, L.P. and are effectively junior to all existing and future senior secured indebtedness of Ferrellgas, L.P., to the extent of the value of the assets securing such debt. The senior notes bear interest from the date of issuance, payable semi-annually in arrears on May 1 and November 1 of each year. The outstanding principal amount is due on May 1, 2021.

(2)

During June 2015, Ferrellgas, L.P. issued $500.0 million in aggregate principal amount of 6.75% senior notes due 2023. These notes are general unsecured senior obligations of Ferrellgas, L.P. and are effectively junior to all existing and future senior secured indebtedness of Ferrellgas, L.P., to the extent of the value of the assets securing such debt. The senior notes bear interest from the date of issuance, payable semi-annually in arrears on June 15 and December 15 of each year. Ferrellgas, L.P. would incur prepayment penalties if it were to repay the notes prior to June 2021.

(3)

During fiscal 2014, Ferrellgas, L.P. issued $475.0 million in aggregate principal amount of 6.75% senior notes due 2022. These notes are general unsecured senior obligations of Ferrellgas, L.P. and are effectively junior to all existing and future senior secured indebtedness of Ferrellgas, L.P., to the extent of the value of the assets securing such debt. The senior notes bear interest from the date of issuance, payable semi-annually in arrears on January 15 and July 15 of each year.

(4)

Senior secured credit facilities

On May 4, 2018, Ferrellgas, L.P. entered into a new $575.0 million senior secured credit facility ~~section below.~~(the “Senior Secured Credit Facility”), consisting of a $300.0 million revolving line of credit (the “Revolving Facility”) and a $275.0 million

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term loan (the “Term Loan”) which mature on the earlier of (i) May 4, 2023 and (ii) the date that is 90 days prior to the earliest maturity date of any series of the operating partnership’s outstanding notes after giving effect to any extensions or refinancings thereof. As of this filing, the earliest maturity date of any series of the operating partnership’s outstanding notes is May 1, 2021. Revolving Facility borrowings bear interest at the Prime Rate + 4.75% and Term Loan borrowings bear interest at LIBOR + 5.75%. The Revolving Facility, as amended, includes a $140.0 million sublimit for the issuance of letters of credit.Borrowings under the Senior Secured Credit Facility are available for working capital needs, capital expenditures and other general partnership purposes, including the refinancing of existing indebtedness and acquisitions, within certain limits.

On June 6, 2019, Ferrellgas, L.P. entered into a first amendment to the financing agreement governing its Senior Secured Credit Facility. Among other matters, the first amendment updated the calculation of the fixed charge coverage ratio for purposes of the fixed charge coverage ratio in the agreement to exclude certain maintenance capital expenditures related to the purchase during fiscal 2019 of new propane delivery trucks which have historically been leased. The first amendment provides that up to a specified amount of such maintenance capital expenditures will not be deducted from consolidated EBITDA for purposes of the calculation.

On November 7, 2019, Ferrellgas, L.P. entered into a second amendment (the “Second Amendment”) to the financing agreement governing its Senior Secured Credit Facility. Among other matters, the Second Amendment (i) increased from $125.0 million to $140.0 million the sub-limit for issuance of letters of credit ~~facilities~~

that exists within the $300.0 million Revolving Facility; and (ii) modified a component of the fixed charge coverage ratio calculation to exclude payments related to the manufacture of vehicles used for propane delivery or related service up to specified amounts if operating lease commitments sufficient to cover such excluded amounts have been obtained and those payments are in fact reimbursed under such operating leases within nine months thereafter. In addition, the Second Amendment provided waivers for any event of default that has or would otherwise arise with respect to the delivery of an unqualified report of Grant Thornton LLP as to going concern with respect to the audited financial statements of Ferrellgas, L.P. and with respect to the timely delivery of financial information for fiscal 2019, thereby resolving the disagreement with the agent under the Senior Secured Credit Facility regarding alleged events of default described in the Annual Report on Form 10-K for fiscal 2019. As a result of the Second Amendment, the Term Loan was reclassified from current to long-term, consistent with its underlying maturity.

As of October 31, ~~2018,~~2019, Ferrellgas, L.P. had borrowings of $275.0 million under the Term Loan at aan interest rate of ~~8.01%~~7.89%, which was classified as long-term debt, and no$80.0 million of borrowings under the Revolving ~~Facility.~~Facility, at a weighted average interest rate of 9.09%, which was classified as short-term borrowings. As of October 31, ~~2018,~~2019, Ferrellgas, L.P. had available borrowing capacity under ~~its~~the Revolving Facility of ~~$186.9~~$101.9 million. As of July 31, ~~2018,~~2019, Ferrellgas, L.P. had borrowings of $275.0 million under the Term Loan at aan interest rate of ~~7.86%~~8.16%, which was classified as ~~long-term debt,~~current, and ~~$32.8~~$43.0 million under the Revolving Facility at aan interest rate of ~~9.75%~~9.47%, which was classified as short-term borrowings. As of July 31, ~~2018,~~2019, Ferrellgas, L.P. had available borrowing capacity under ~~its~~the Revolving Facility of ~~$159.3~~$155.1 million.

Letters of credit outstanding at October 31, ~~2018~~2019 and July 31, ~~2018~~2019 totaled ~~$113.1~~$118.1 million and ~~$107.9~~$101.9 million, respectively, and were used to secure insurance arrangements, product purchases and commodity hedges. At October 31, ~~2018,~~2019, Ferrellgas, L.P. had remaining available letter of credit ~~remaining~~ capacity of ~~$11.9 million.~~$6.9 million (or $21.9 million, if the Second Amendment had been effective as of October 31, 2019). At July 31, ~~2018,~~2019, Ferrellgas, L.P. had remaining available letter of credit ~~remaining~~ capacity of ~~$17.1~~$23.1 million.

~~Debt and interest expense reduction and refinancing strategy~~

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Ferrellgas, L.P. continues to execute on a strategy to further reduce its debt and interest expense. This strategy included entering into the new Senior Secured Credit Facility and amending its accounts receivable securitization facility in May 2018 and certain asset sales during fiscal 2018. Ferrellgas, L.P. continues to evaluate all available options to address its leverage.

Financial covenants

The indenture governing the outstanding notes of Ferrellgas Partners and the agreements governing ~~Ferrellgas, L.P.’s~~the operating partnership’s indebtedness contain various covenants that limit Ferrellgas ~~L.P.'s~~Partners’ ability and the ability of specified subsidiaries to, among other things, make restricted payments and incur additional indebtedness. The general partner believes that the most restrictive of these covenants isare the ~~consolidated fixed charge coverage ratio, as defined~~restricted payments covenants in the indenture governing the outstanding notes of the operating partnership, which are discussed below.

Similar to the indenture governing the outstanding notes of Ferrellgas Partners, the indentures governing the outstanding notes of the operating partnership contain covenants that restrict the ability of the operating partnership to make certain restricted payments, including distributions to Ferrellgas ~~L.P.~~

~~Before~~Partners. Under these covenants, subject to the limited exception described below, the operating partnership may not make a restricted payment ~~(as defined~~unless its consolidated fixed charge coverage ratio (defined in the indentures ~~governing~~generally to mean the ~~outstanding notes~~ratio of ~~Ferrellgas, L.P.) can be made by Ferrellgas, L.P.~~trailing four quarters consolidated EBITDA to ~~Ferrellgas Partners, Ferrellgas, L.P. must be in compliance with~~consolidated interest expense, both as adjusted for certain, specified items) is at least 1.75x , on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events. As of October 31, 2019, the operating partnership’s consolidated fixed charge coverage ratio was 1.68x.

If the consolidated fixed charge coverage ratio ~~covenant under~~is below 1.75x, the ~~Ferrellgas, L.P. indentures. If Ferrellgas, L.P. is unable to~~operating partnership may make restricted payments in limited amounts determined under the indentures. If the operating partnership’s consolidated fixed charge coverage ratio remains below 1.75x, the distribution to be made by the operating partnership on December 15, 2019 for payment of interest on Ferrellgas ~~Partners~~Partners’ unsecured senior notes due 2020 would be made from capacity under the limited exception to the ratio requirement.

Although the operating partnership believes that its remaining capacity under the limited exception to the ratio requirement under the operating partnership’s indentures, and its ability to comply with the limitations on distributions under our Senior Secured Credit Facility, will ~~not have the ability~~allow it to make distributions to ~~its common unitholders or make~~Ferrellgas Partners to cover interest payments on ~~its~~Ferrellgas Partners’ unsecured senior notes due ~~2020.~~

The covenant requires that the ratio of trailing four quarters EBITDA to interest expense (both as adjusted for certain, specified items) of Ferrellgas, L.P. be at least 1.75x before a restricted payment (as defined in the indentures) can be made by Ferrellgas, L.P.. If this ratio were to drop below 1.75x, the indentures allow Ferrellgas, L.P. to make restricted payments with certain limitations. If it were in violation of the covenant as of October 31, 2018, Ferrellgas, L.P. believes that it would have sufficient capacity within these limitations to satisfy the current restricted payment requirements of Ferrellgas Partners2020 through the maturity of those notes, the ~~unsecured senior notes due 2020. As of October 31,~~restrictions in these debt agreements may prevent the operating partnership from making distributions to Ferrellgas Partners to enable it to pay cash distributions to its unitholders.

Debt and interest expense reduction and refinancing strategy

Ferrellgas, L.P. continues to pursue a strategy to further reduce its debt and interest expense. Achievements under this strategy during fiscal 2018 included entering into the ~~ratio was 1.77x;~~Senior Secured Credit Facility, amending our accounts receivable securitization facility and selling certain assets. Other opportunities include the ~~margin allows for approximately $1.1 million~~generation of additional cash flows organically or through accretive acquisitions, restructuring or refinancing existing indebtedness, selling additional assets, maintaining the suspension of Ferrellgas Partners’ common unit distributions, issuing equity or executing one or more debt exchanges. Ferrellgas, L.P. expects to maintain its debt and interest expense ~~or approximately $2.0 million less EBITDA.~~

reduction strategy until the consolidated leverage ratio reaches a level that it deems appropriate for its business. During fiscal 2019, Ferrellgas, L.P. engaged F.Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist with its ongoing process to address its upcoming debt maturities.

G. Partners’ deficit

Partnership distributions ~~paid~~

Ferrellgas, L.P. has ~~paid~~recognized the following distributions:


	For the three months ended October 31,
	2019		2018
Ferrellgas Partners	$	100	$	9,914
General partner		1		101
	$	101	$	10,015

For the three months ended October 31,
2018 2017
Ferrellgas Partners $ 9,914
$ 9,813
General partner 101
100
$ 10,015
$ 9,913

See additional discussions about transactions with related parties in Note JK – Transactions with related parties.

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Accumulated other comprehensive income (loss)(“AOCI”)

2018.

General partner’s commitment to maintain its capital account

Ferrellgas, L.P.’s partnership agreement allows the general partner to have an option to maintain its 1.0101% general partner interest concurrent with the issuance of other additional equity.

During the three months ended October 31, 2019, the general partner made non-cash contributions of $8 thousand to Ferrellgas, L.P. to maintain its 1.0101% general partner interest.

During the three months ended October 31, 2018, the general partner made non-cash contributions of $0.1 million to Ferrellgas, L.P. to maintain its 1.0101% general partner interest.

~~During the three months ended October 31, 2017, the general partner made non-cash contributions of $0.1 million to Ferrellgas, L.P. to maintain its 1.0101% general partner interest.~~

G.H. Revenue from contracts with customers

~~Ferrellgas, L.P. adopted ASU 2014-09 beginning on August 1, 2018 using the modified retrospective method.~~

Ferrellgas, L.P. earns revenue from contracts with customers primarily through the distribution of propane, as well as through the sale of propane related equipment and supplies. Revenues from propane and other gas liquids sales are comprised of revenue earned from the delivery of propane to tanks on customers’ premises, from the delivery of propane filled cylinders to customers, or from the sale of portable propane tanks to nationwide and local retailers and end use customers. Other revenues primarily include sales of appliances and other materials as well as other fees charged to customers. ~~Upon adoption, Ferrellgas, L.P. applied ASU 2014-09 only to contracts that were not completed.~~

Contracts with customers

Ferrellgas, L.P.'s’s contracts with customers are principally for the bulk delivery of propane to tanks, delivery of propane filled cylinders or the delivery of portable propane tanks to retailers. Ferrellgas, L.P. sells propane to a wide variety of customers, including residential, industrial/commercial, portable tank exchange, agricultural, wholesale and others. Ferrellgas, L.P.'s’s performance obligations in these contracts are generally limited to the delivery of propane, ~~thus~~and therefore revenues from these contracts are earned at the time product is delivered or in the case of some of Ferrellgas, L.P.’s portable tank exchange retailers who have consignment agreements, at the time the tanks are sold to the end use customer. Payment is generally due within 30 days. Revenues from sales of propane are included in Propane and other gas liquids sales on the consolidated statements of operations.

Typically, Ferrellgas, L.P. bills customers upon delivery and payment is generally due within 30 days. With its residential customers, Ferrellgas, L.P offers customers the ability to spread their annual heating costs over a longer period, typically twelve months. Customers who opt to spread their heating costs over a longer period are referred to as “even-pay” customers.

Ferrellgas, L.P. charges other amounts to customers associated with the delivery of propane including hazardous materials fees and fuel surcharge fees. In some regions, Ferrellgas, L.P. also sells appliances and related parts and fittings as well as other retail propane related services. Ferrellgas, L.P. charges on an annual basis tank and equipment rental charges for customers that

are using our equipment to store propane. Other revenues associated with deliveries of propane are earned at the time product is delivered. Revenues associated with sales of appliances and other materials or services are earned at the time of delivery or installation. Revenues associated with tank and equipment rentals are generally recognized on a straight-line basis over one year.

Accounting estimates related to recognition of revenue require that Ferrellgas, L.P. make estimates and assumptions about various factors including credits issued for completed sales, future returns and total consideration payable in instances where we have customer incentives payable to the customer.

Disaggregation of revenue

Ferrellgas, L.P. disaggregates revenues based upon the type of customer and on the type of revenue. The following table presents retail propane revenues, wholesale propane revenues and other revenues. Retail revenues result from sales to

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end use customers, wholesale revenues result from sales to or through resellers and all other revenues include sales of appliances and other materials, other fees charged to customers and equipment rental charges.


	For the three months ended October 31,
	2019		2018
Retail - Sales to End Users	$	180,417	$	217,764
Wholesale - Sales to Resellers		82,704		93,944
Other Gas Sales		10,264		23,258
Other		19,829		17,343
Propane and related equipment revenues	$	293,214	$	352,309

Contract assets and liabilities

Ferrellgas, L.P.'s’s performance obligations are generally limited to the delivery of propane for our retail and wholesale contracts. Ferrellgas, L.P.’s performance obligations with respect to sales of appliances and other materials and other revenues are limited to the delivery of the agreed upon good or service. Ferrellgas, L.P. does not have material performance obligations that are delivered over time, thus all of our revenue is recognized at the time the goods, including propane, are delivered or installed. Ferrellgas, L.P. offers “even pay” billing programs that can create customer deposits or advances, depending on whether Ferrellgas, L.P. has delivered more propane than the customer has paid for or whether the customer has paid for more propane than what has been delivered. Revenue is recognized from these customer deposits or advances to customers at the time product is delivered. The advance or deposit is considered to be a contract asset or liability. Additionally, from time to time, we have customers that pay in advance for goods or services, and such amounts result in contract liabilities.

Ferrellgas, L.P. incurs incremental commissions directly related to the acquisition or renewal of customer contracts. The commissions are calculated and paid based upon the number of gallons sold to the acquired or renewed customer. The total amount of commissions that we incur is not material and the commissions are expensed commensurate with the deliveries to which they ~~relate, thus~~relate; therefore, Ferrellgas, L.P. does not capitalize these costs.

The following table presents the opening and closing balances of ~~our~~its receivables, contract assets, and contract liabilities:


	October 31, 2019		July 31, 2019
Accounts receivable	$	119,609	$	96,450
Contract assets	$	6,700	$	13,609
Contract liabilities
Deferred revenue (1)	$	43,821	$	31,974

October 31, 2018 July 31, 2018
Accounts receivable $ 125,864
$ 119,818

Contract assets $ 13,046
$ 8,691

Contract liabilities
Deferred revenue (1) $ 42,880
$ 29,933

(1)

Of the beginning balance of deferred revenue, $9.2 million was recognized as revenue during the three months ended October 31, 2019.

~~(1) Of the beginning balance of deferred revenue, $8.7 million was recognized as revenue during the quarter ended October 31, 2018.~~

Remaining performance obligations

Ferrellgas, L.P.'s’s remaining performance obligations are generally limited to situations where its customers have remitted payment but have not yet received deliveries of propane. This most commonly occurs in Ferrellgas, L.P.’s even pay billing

programs and Ferrellgas, L.P. expects that these balances will be recognized within a year or less as the customer takes delivery of propane.

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H.I. Fair value measurements

Derivative financial instruments

The following table presents Ferrellgas, L.P.’s financial assets and financial liabilities that are measured at fair value on a recurring basis for each of the fair value hierarchy levels, including both current and noncurrent portions, as of October 31, ~~2018~~2019 and July 31, ~~2018~~:2019:


	Asset (Liability)
	Quoted Prices in Active
	Markets for Identical		Significant Other
	Assets and Liabilities		Observable Inputs		Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
October 31, 2019:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	453	$	—	$	453
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(21,358)	$	—	$	(21,358)

July 31, 2019:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	1,259	$	—	$	1,259
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(16,015)	$	—	$	(16,015)

Asset (Liability)
Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs
(Level 2) Unobservable Inputs (Level 3) Total
October 31, 2018:
Assets:
Derivative financial instruments:
Commodity derivatives $ —
$ 15,302
$ —
$ 15,302
Liabilities:
Derivative financial instruments:
Commodity derivatives $ —
$ (7,331 ) $ —
$ (7,331 )

July 31, 2018:
Assets:
Derivative financial instruments:
Commodity derivatives $ —
$ 22,470
$ —
$ 22,470
Liabilities:
Derivative financial instruments:
Commodity derivatives $ —
$ (1,910 ) $ —
$ (1,910 )

Methodology

The fair values of Ferrellgas, L.P.’s non-exchange traded commodity derivative contracts are based upon indicative price quotations available through brokers, industry price publications or recent market transactions and related market indicators.

Other financial instruments

The carrying amounts of other financial instruments included in current assets and current liabilities (except for current maturities of long-term debt) approximate their fair values because of their short-term nature. The estimated fair value of ~~various~~the note receivable financial ~~instruments~~instrument classified in "Other assets, net" on the condensed consolidated balance sheets, ~~are~~is approximately ~~$23.6~~$13.3 million, or ~~$4.0~~$0.5 million less than ~~their~~its carrying amount as of October 31, ~~2018.~~2019. The estimated fair ~~values~~value of ~~these notes~~the note receivable ~~were~~was calculated using a discounted cash flow method which relied on significant unobservable inputs. At October 31, ~~2018~~2019 and July 31, ~~2018,~~2019, the estimated fair value of Ferrellgas, L.P.’s long-term debt instruments was ~~$1,572.9~~$1,514.2 million and ~~$1,591.5~~$1,562.2 million, respectively. Ferrellgas, L.P. estimates the fair value of long-term debt based on quoted market prices. The fair value of our consolidated debt obligations is a Level 2 valuation based on the observable inputs used for similar liabilities.

Ferrellgas, L.P. has other financial instruments such as trade accounts receivable which could expose it to concentrations of credit risk. The credit risk from trade accounts receivable is limited because of a large customer base which extends across many different U.S. markets.

I.J. Derivative instruments and hedging activities

Ferrellgas, L.P. is exposed to certain market risks related to its ongoing business operations. These risks include exposure to changing commodity prices as well as fluctuations in interest rates. Ferrellgas, L.P. utilizes derivative instruments to manage its

exposure to fluctuations in commodity prices. Of these, the propane commodity derivative instruments are designated as cash flow hedges. ~~Prior to the sale~~

Table of Bridger Energy, LLC in January 2018, all other commodity derivative instruments were neither qualified nor were designated as cash flow hedges, therefore, changes in their fair value were recorded currently in earnings. Ferrellgas, L.P. also periodically utilizes derivative instruments to manage its exposure to fluctuations in interest rates.Contents

Derivative instruments and hedging activity

During the three months ended October 31, ~~2018~~2019 and ~~2017,~~2018, Ferrellgas, L.P. did not recognize any gain or loss in earnings related to hedge ineffectiveness and did not exclude any component of financial derivative contract gains or losses from the assessment of hedge effectiveness related to commodity cash flow hedges.

The following tables provide a summary of the fair value of derivatives in Ferrellgas, L.P.’s condensed consolidated balance sheets as of October 31, ~~2018~~2019 and July 31, ~~2018:~~ 2019:


	Final	October 31, 2019
	Maturity	Asset Derivatives			Liability Derivatives
Derivative Instrument	Date	Location	Fair value		Location	Fair value
Derivatives designated as hedging instruments	December 2021
Commodity derivatives-propane		Prepaid expenses and other current assets	$	444	Other current liabilities	$	19,745
Commodity derivatives-propane		Other assets, net		9	Other liabilities		1,613
		Total	$	453	Total	$	21,358


	Final	July 31, 2019
	Maturity	Asset Derivatives			Liability Derivatives
Derivative Instrument	Date	Location	Fair value		Location	Fair value
Derivatives designated as hedging instruments	December 2021
Commodity derivatives-propane		Prepaid expenses and other current assets	$	910	Other current liabilities	$	14,198
Commodity derivatives-propane		Other assets, net		349	Other liabilities		1,817
		Total	$	1,259	Total	$	16,015

Ferrellgas, L.P.'s’s exchange traded commodity derivative contracts require cash margin deposit as collateral for contracts that are in a negative mark-to-market position. These cash margin deposits will be returned if mark-to-market conditions improve or will be applied against cash settlement when the contracts are settled. Liabilities represent cash margin deposits received by Ferrellgas, L.P. for contracts that are in a positive mark-to-market position. The following tables provide a summary of cash margin balances as of October 31, ~~2018~~2019 and July 31, ~~2018~~,2019, respectively:


	October 31, 2019
	Assets			Liabilities
Description	Location	Amount		Location	Amount
Margin Balances	Prepaid expense and other current assets	$	33,519	Other current liabilities	$	2,112
	Other assets, net		2,674	Other liabilities		—
		$	36,193		$	2,112


	July 31, 2019
	Assets			Liabilities
Description	Location	Amount		Location	Amount
Margin Balances	Prepaid expense and other current assets	$	25,028	Other current liabilities	$	1,217
	Other assets, net		2,969	Other liabilities		—
		$	27,997		$	1,217

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~~The following table provides a summary of the effect on Ferrellgas, L.P.’s condensed consolidated statements of operations for the three months ended~~ ~~October 31, 2018~~ ~~and~~ ~~2017~~ ~~due to derivatives that were designated as fair value hedging instruments:~~

Amount of Gain Recognized on Derivative
Amount of Interest Expense Recognized on Fixed-Rate Debt (Related Hedged Item)
Derivative Instrument Location of Amounts Recognized on Derivative For the three months ended October 31, For the three months ended October 31,
2018 2017 2018 2017
Interest rate swap agreements Interest expense $ —
$ 138
$ —
$ (2,275 )

The following tables provide a summary of the effect on Ferrellgas, L.P.’s condensed consolidated statements of comprehensive income (loss) for the three months ended October 31, ~~2018~~2019 and ~~2017~~2018 due to derivatives designated as cash flow hedging instruments:


	For the three months ended October 31, 2019
				Amount of Gain (Loss)
			Location of Gain (Loss)	Reclassified from
	Amount of Gain (Loss)		Reclassified from AOCI	AOCI into Income
Derivative Instrument	Recognized in AOCI		into Income	Effective portion		Ineffective portion
Commodity derivatives	$	(13,627)	Cost of product sold- propane and other gas liquids sales	$	(7,479)	$	—
	$	(13,627)		$	(7,479)	$	—


	For the three months ended October 31, 2018
				Amount of Gain (Loss)
			Location of Gain (Loss)	Reclassified from
	Amount of Gain (Loss)		Reclassified from AOCI	AOCI into Income
Derivative Instrument	Recognized in AOCI		into Income	Effective portion		Ineffective portion
Commodity derivatives	$	(8,154)	Cost of product sold- propane and other gas liquids sales	$	4,433	$	—
	$	(8,154)		$	4,433	$	—

The following table provides a summary of the effect on Ferrellgas, L.P.'s condensed consolidated statements of operations for the three months ended October 31, 2017 due to the change in fair value of derivatives not designated as hedging instruments:

The changes in derivatives included in AOCI for the three months ended October 31, ~~2018~~2019 and ~~2017~~2018 were as follows:


	For the three months ended October 31,
Gains and losses on derivatives included in AOCI	2019		2018
Beginning balance	$	(14,756)	$	20,560
Change in value of risk management commodity derivatives		(13,627)		(8,154)
Reclassification of (gains) losses on commodity hedges to cost of sales - propane and other gas liquids sales, net		7,479		(4,433)
Ending balance	$	(20,904)	$	7,973

Ferrellgas, L.P. expects to reclassify net ~~gains~~losses related to the risk management commodity derivatives of approximately ~~$5.5~~$19.3 million to earnings during the next 12 months. These net ~~gains~~losses are expected to be offset by ~~decreased~~increased margins on propane sales commitments Ferrellgas, L.P. has with its customers that qualify for the normal purchase normal ~~sales~~sale exception.

During the three months ended October 31, ~~2018~~2019 and ~~2017,~~2018, Ferrellgas, L.P. had no reclassifications to operations resulting from the discontinuance of any cash flow hedges arising from the probability of the original forecasted transactions not occurring within the originally specified period of time defined within the hedging relationship.

As of October 31, ~~2018,~~2019, Ferrellgas, L.P. had financial derivative contracts covering ~~4.2~~4.5 million ~~barrels~~gallons of propane that were entered into as cash flow hedges of forward and forecasted purchases of propane.

Derivative financial instruments credit risk

Ferrellgas, L.P. is exposed to credit loss in the event of nonperformance by counterparties to derivative financial and commodity instruments. Ferrellgas, L.P.’s counterparties principally consist of major energy companies and major U.S. financial institutions. Ferrellgas, L.P. maintains credit policies with regard to its counterparties that it believes ~~reduces~~reduce its overall credit risk. These policies include evaluating and monitoring its counterparties’ financial condition, including their credit ratings, and entering into agreements with counterparties that govern credit limits. Certain of these agreements call for the posting of collateral by the counterparty or by Ferrellgas, L.P. in the forms of letters of credit, parent guarantees or cash. Ferrellgas, L.P. has concentrations of credit risk associated with derivative financial instruments held by certain derivative financial instrument counterparties. If these counterparties that make up the concentration failed to perform according to the terms of their contracts at October 31, ~~2018,~~2019, the maximum amount of loss due to credit risk that Ferrellgas, L.P. would incur is ~~$9.7 million,~~zero, which is based upon the gross fair values of the derivative financial instruments.

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From time to time Ferrellgas, L.P. enters into derivative contracts that have credit-risk-related contingent features which dictate credit limits based upon Ferrellgas, L.P.’s debt rating. There were no open derivative contracts with credit-risk-related contingent features as of October 31, ~~2018.~~

2019.

J.K. Transactions with related parties

Ferrellgas, L.P. has no employees and is managed and controlled by its general partner. Pursuant to Ferrellgas, L.P.’s partnership agreement, the general partner is entitled to reimbursement for all direct and indirect expenses incurred or payments it makes on behalf of Ferrellgas, L.P. and all other necessary or appropriate expenses allocable to Ferrellgas, L.P. or otherwise reasonably incurred by the general partner in connection with operating Ferrellgas, L.P.’s business. These costs primarily include compensation and benefits paid to employees of the general partner who perform services on Ferrellgas, L.P.’s behalf and are reported in the condensed consolidated statements of operations as follows:


	For the three months ended October 31,
	2019		2018
Operating expense	$	63,471	$	59,958

General and administrative expense	$	6,487	$	6,112

For the three months ended October 31,
2018 2017
Operating expense $ 59,958
$ 57,351

General and administrative expense $ 6,112
$ 7,508

See additional discussions about transactions with the general partner and related parties in Note FG – Partners’ deficit.

K.L. Contingencies and commitments

Litigation

Ferrellgas, L.P.'s’s operations are subject to all operating hazards and risks normally incidental to handling, storing, transporting and otherwise providing for use by consumers of combustible liquids such as propane and, prior to the sales of midstream operations in fiscal 2018, crude oil. As a result, at any given time, Ferrellgas, L.P. can be threatened with or named as a defendant in various lawsuits arising in the ordinary course of business. Other than as discussed below, Ferrellgas, L.P. is not a party to any legal proceedings other than various claims and lawsuits arising in the ordinary course of business. 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 reasonably expected to have a material adverse effect on the consolidated financial condition, results of operations and cash flows of Ferrellgas, L.P.

Ferrellgas, L.P. has been named as a defendant, along with a competitor, in putative class action lawsuits filed in multiple jurisdictions. The lawsuits, which were consolidated in the Western District of Missouri on October 16, 2014, allege that Ferrellgas ~~L.P.~~ and a competitor coordinated in 2008 to reduce the fill level in barbeque cylinders and combined to persuade a common customer to accept that fill reduction, resulting in increased cylinder costs to direct customers and end-user customers in violation of federal and certain state antitrust laws. The lawsuits seek treble damages, attorneys’ fees, injunctive relief and costs on behalf of the putative class. These lawsuits have been ~~consolidated into one case~~coordinated for pretrial purposes by athe multidistrict litigation panel. The Federal Court for the Western District of Missouri initially dismissed all claims brought by direct and indirect customers other than state law claims of indirect customers under Wisconsin, Maine and Vermont law. The direct customer plaintiffs filed an

appeal, which resulted in a reversal of the district court’s dismissal. We filed a petition for a writ of certiorari which was denied. An appeal by the indirect customer plaintiffs resulted in the court of appeals affirming the dismissal of the federal claims and remanding the case to the district court to decide whether to exercise supplemental jurisdiction over the remaining state law claims. Thereafter, in August 2019, Ferrellgas, L.P. reached a settlement with the direct customers, pursuant to which it agreed to pay a total of $6.25 million to resolve all claims asserted by the putative direct purchaser class. With respect to the indirect customers, the district court exercised supplemental jurisdiction over the remaining state law claims, but then granted in part Ferrellgas’ pleadings-based motion and dismissed 11 of the 24 remaining state law claims. As a result, there are 13 remaining state law claims brought by a putative class of indirect customers. Ferrellgas, L.P. believes it has strong defenses ~~to the claims~~ and intends to vigorously defend itself against ~~the consolidated case.~~these remaining claims. Ferrellgas, L.P. does not believe loss is probable or reasonably estimable at this time related to the putative class action lawsuit.

Ferrellgas, L.P. has been named, along with several current and former officers, in several class action lawsuits alleging violations of certain securities laws based on alleged materially false and misleading statements in certain of our public disclosures. The lawsuits, the first of which was filed on October 6, 2016 in the Southern District of New York, seek unspecified compensatory damages. Derivative lawsuits with similar allegations have been filed naming Ferrellgas, L.P. and several current and former officers and directors as defendants. On April 2, 2018, the securities class action lawsuits were dismissed with prejudice. On April 30, 2018, the plaintiffs filed a notice of appeal to the United States Court of Appeals for the Second Circuit and the parties are preparing appellate briefs. At this time the derivative lawsuits remain stayed by agreement. Ferrellgas, L.P. believes that it has defenses and will vigorously defend these cases. Ferrellgas, L.P. does not believe loss is probable or reasonably estimable at this time related to the putative class action lawsuits or the derivative actions.

Ferrellgas, L.P. and Bridger Logistics, LLC, have been named, along with two former officers, in a lawsuit filed by Eddystone Rail Company ("Eddystone") on February 2, 2017 in the Eastern District of Pennsylvania (the "EDPA

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Lawsuit"). Eddystone indicated that it has prevailed in or settled an arbitration against Jamex Transfer Services (“JTS”), ~~then~~previously named Bridger Transfer Services, a former subsidiary of Bridger Logistics, LLC (“Bridger”). The arbitration involved a claim against JTS for money due for deficiency payments under a contract for the use of an Eddystone facility used to offload crude from rail onto barges. Eddystone alleges that Ferrellgas ~~L.P.~~ transferred assets out of JTS prior to the sale of the membership interest in JTS to Jamex Transfer Holdings, and that those transfers should be avoided so that the assets can be used to satisfy the amount owed by JTS to Eddystone ~~under~~as a result of the arbitration. Eddystone also alleges that JTS was an “alter ego” of Bridger and Ferrellgas ~~L.P.~~and that Bridger and Ferrellgas ~~L.P.~~breached fiduciary duties owed to Eddystone as a creditor of JTS. Ferrellgas believes that Ferrellgas ~~L.P.~~ and Bridger have valid defenses to these claims and to Eddystone’s primary claim against JTS ~~on the contract claim.~~for breach of contract. The lawsuit does not specify a specific amount of damages that Eddystone is seeking; however, Ferrellgas ~~L.P.~~ believes that the amount of such ~~damage claims,~~damages, if ultimately owed to Eddystone, could be material to Ferrellgas. Ferrellgas ~~L.P. Ferrellgas, L.P.~~ intends to vigorously defend this claim. ~~The lawsuit is in its early stages; as such, management does not currently believe a loss is probable or reasonably estimable at this time.~~ On August 24, 2017, Ferrellgas ~~L.P.~~ filed a third-party complaint against JTS, Jamex Transfer Holdings, and other related persons and entities (the "Third-Party Defendants"), asserting claims for breach of contract, indemnification of any losses in the EDPA Lawsuit, tortious interference with contract, and contribution. On June 25, 2018, Ferrellgas ~~L.P.~~ entered into an agreement with the Third-Party Defendants which, among other things, resulted in a dismissal of the claims against the Third-Party Defendants from the lawsuit.

L. ~~Segment reporting~~

~~As of October 31, 2018, Ferrellgas, L.P. has one reportable operating segment: propane operations and related equipment sales. All remaining activities are included~~ The lawsuit is in ~~Corporate and other.~~

~~Following~~the discovery stage; as such, management does not currently believe a loss is ~~a summary of segment information for the three months ended October 31, 2018 and 2017:~~

Three months ended October 31, 2018
Propane operations and related equipment sales Corporate and other Total
Segment revenues $ 352,309
$ —
$ 352,309
Direct costs (1) 323,594
10,870
334,464
Adjusted EBITDA $ 28,715
$ (10,870 ) $ 17,845

Three months ended October 31, 2017
Propane operations and related equipment sales Corporate and other Total
Segment revenues $ 333,895
$ 120,760
$ 454,655
Direct costs (1) 303,329
125,110
428,439
Adjusted EBITDA $ 30,566
$ (4,350 ) $ 26,216

~~Following is a reconciliation of Ferrellgas, L.P.'s total segment performance measure to condensed consolidated net loss:~~

Three months ended October 31,
2018 2017
Net loss $ (48,814 ) $ (39,699 )
Income tax expense 151
371
Interest expense 35,195
32,196
Depreciation and amortization expense 18,992
25,732
EBITDA 5,524
18,600
Non-cash employee stock ownership plan compensation charge 2,748
3,962
Loss on asset sales and disposals 4,504
895
Other income, net (19 ) (511 )
Severance costs —
1,663
Legal fees and settlements 3,564
—
Unrealized (non-cash) loss on changes in fair value of derivatives not designated as hedging instruments —
1,607
Multi-employer pension plan withdrawal settlement 1,524
—
Adjusted EBITDA $ 17,845
$ 26,216

~~Following are total assets by segment:~~

Assets October 31, 2018 July 31, 2018
Propane operations and related equipment sales $ 1,238,171
$ 1,196,084
Corporate and other 105,461
167,162
Total consolidated assets $ 1,343,632
$ 1,363,246

probable or reasonably estimable at this time.

~~Following are capital expenditures by segment:~~

M.N. Guarantor financial information

The $500.0 million aggregate principal amount of 6.75% senior notes due 2023 co-issued by Ferrellgas, L.P. and Ferrellgas Finance Corp. are fully and unconditionally and jointly and severally guaranteed by all of Ferrellgas, L.P.’s 100% owned subsidiaries except: (i) Ferrellgas Finance Corp; (ii) certain special purposes subsidiaries formed for use in connection with our accounts receivable securitization; and (iii) foreign subsidiaries. Guarantees of these senior notes will be released under certain circumstances, including (i) in connection with any sale or other disposition of (a) all or substantially all of the assets of a guarantor or (b) all of the capital stock of such guarantor (including by way of merger or consolidation), in each case, to a person that is not Ferrellgas, L.P. or a restricted subsidiary of Ferrellgas, L.P., (ii) if Ferrellgas, L.P. designates any restricted subsidiary that is a guarantor as an unrestricted subsidiary, (iii) upon defeasance or discharge of the notes, (iv) upon the liquidation or dissolution of such guarantor, or (v) at such time as such guarantor ceases to guarantee any other indebtedness of either of the issuers and any other guarantor.

The guarantor financial information discloses in separate columns the financial position, results of operations and the cash flows of Ferrellgas, L.P. (Parent), Ferrellgas Finance Corp. (co-issuer), Ferrellgas, L.P.’s guarantor subsidiaries on a combined basis, and Ferrellgas, L.P.’s non-guarantor subsidiaries on a combined basis. The dates and the periods presented in the guarantor financial information are consistent with the periods presented in Ferrellgas, L.P.’s condensed consolidated financial statements.

FERRELLGAS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
(in thousands)
As of October 31, 2018
Ferrellgas, L.P. (Parent and Co-Issuer) Ferrellgas Finance Corp. (Co-Issuer) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ 62,786
$ 1
$ 306
$ —
$ —
$ 63,093
Accounts and notes receivable, net (3,710 ) —
263
139,636
—
136,189
Intercompany receivables (8,469 ) —
—
—
8,469
—
Inventories 106,560
—
—
—
—
106,560
Prepaid expenses and other current assets 31,491
—
2,446
3
—
33,940
Total current assets 188,658
1
3,015
139,639
8,469
339,782

Property, plant and equipment, net 566,044
—
34
—
—
566,078
Goodwill, net 247,478
—
—
—
—
247,478
Intangible assets, net 117,452
—
—
—
—
117,452
Intercompany receivables —
—
—
—
—
—
Investments in consolidated subsidiaries 59,917
—
—
—
(59,917 ) —
Other assets, net 68,850
—
2,875
1,117
—
72,842
Total assets $ 1,248,399
$ 1
$ 5,924
$ 140,756
$ (51,448 ) $ 1,343,632

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:

Accounts payable $ 59,552
$ —
$ —
$ 112
$ —
$ 59,664
Short-term borrowings —
—
—
—
—
—
Collateralized note payable —
—
—
90,000
—
90,000
Intercompany payables —
—
(192 ) (8,277 ) 8,469
—
Other current liabilities 169,282
—
2,660
2,394
—
174,336
Total current liabilities 228,834
—
2,468
84,229
8,469
324,000

Long-term debt 1,729,724
—
—
—
—
1,729,724
Other liabilities 38,587
—
67
—
—
38,654
Contingencies and commitments

Partners' capital (deficit):

Partners' equity (756,892 ) 1
3,389
56,527
(59,917 ) (756,892 )
Accumulated other comprehensive income 8,146
—
—
—
—
8,146
Total partners' capital (deficit) (748,746 ) 1
3,389
56,527
(59,917 ) (748,746 )
Total liabilities and partners' capital (deficit) $ 1,248,399
$ 1
$ 5,924
$ 140,756
$ (51,448 ) $ 1,343,632

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FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)


	As of October 31, 2019
	Ferrellgas, L.P.		Ferrellgas
	(Parent and		Finance Corp.		Guarantor		Non-Guarantor
	Co-Issuer)		(Co-Issuer)		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	29,732	$	1	$	—	$	—	$	—	$	29,733
Accounts and notes receivable, net		7,891		—		30		115,920		—		123,841
Intercompany receivables		(7,736)		—		—		—		7,736		—
Inventories		84,995		—		—		—		—		84,995
Prepaid expenses and other current assets		50,426		—		—		—		—		50,426
Total current assets		165,308		1		30		115,920		7,736		288,995

Property, plant and equipment, net		598,887		—		—		—		—		598,887
Goodwill, net		247,195		—		—		—		—		247,195
Intangible assets, net		108,493		—		—		—		—		108,493
Investments in consolidated subsidiaries		55,600		—		—		—		(55,600)		—
Operating lease right-of-use assets		124,047		—		—		—		—		124,047
Other assets, net		72,517		—		2,255		671		—		75,443
Total assets	$	1,372,047	$	1	$	2,285	$	116,591	$	(47,864)	$	1,443,060

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
Accounts payable	$	44,421	$	—	$	—	$	—	$	—	$	44,421
Short-term borrowings		80,000		—		—		—		—		80,000
Collateralized note payable		—		—		—		73,000		—		73,000
Intercompany payables		—		—		—		(7,736)		7,736		—
Current portion of long-term debt		2,230		—		—		—		—		2,230
Current operating lease liabilities		33,832		—		—		—		—		33,832
Other current liabilities		178,086		—		13		(2,000)		—		176,099
Total current liabilities		338,569		—		13		63,264		7,736		409,582

Long-term debt		1,731,920		—		—		—		—		1,731,920
Operating lease liabilities		88,773		—		—		—		—		88,773
Other liabilities		36,915		—		—		—		—		36,915
Contingencies and commitments

Partners' capital (deficit):
Partners' equity		(803,335)		1		2,272		53,327		(55,600)		(803,335)
Accumulated other comprehensive loss		(20,795)		—		—		—		—		(20,795)
Total partners' capital (deficit)		(824,130)		1		2,272		53,327		(55,600)		(824,130)
Total liabilities and partners' capital (deficit)	$	1,372,047	$	1	$	2,285	$	116,591	$	(47,864)	$	1,443,060

FERRELLGAS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
(in thousands)
As of July 31, 2018
Ferrellgas, L.P. (Parent and Co-Issuer) Ferrellgas Finance Corp. (Co-Issuer) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ 119,133
$ 1
$ 174
$ —
$ —
$ 119,308
Accounts and notes receivable, net (3,420 ) —
9,395
120,079
—
126,054
Intercompany receivables 15,660
—
—
—
(15,660 ) —
Inventories 83,694
—
—
—
—
83,694
Prepaid expenses and other current assets 34,050
—
775
5
—
34,830
Total current assets 249,117
1
10,344
120,084
(15,660 ) 363,886

Property, plant and equipment, net 557,689
—
34
—
—
557,723
Goodwill, net 246,098
—
—
—
—
246,098
Intangible assets, net 120,951
—
—
—
—
120,951
Intercompany receivables —
—
—
—
—
—
Investments in consolidated subsidiaries 59,937
—
—
—
(59,937 ) —
Other assets, net 63,411
—
9,961
1,216
—
74,588
Total assets $ 1,297,203
$ 1
$ 20,339
$ 121,300
$ (75,597 ) $ 1,363,246

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:

Accounts payable $ 45,171
$ —
$ 1,547
$ 102
$ —
$ 46,820
Short-term borrowings 32,800
—
—
—
—
32,800
Collateralized note payable —
—
—
58,000
—
58,000
Intercompany payables —
—
(143 ) 15,803
(15,660 ) —
Other current liabilities 131,702
—
6,036
353
—
138,091
Total current liabilities 209,673
—
7,440
74,258
(15,660 ) 275,711

Long-term debt 1,728,137
—
—
—
—
1,728,137
Other liabilities 39,471
—
5
—
—
39,476
Contingencies and commitments

Partners' capital (deficit):

Partners' equity (700,811 ) 1
12,894
47,042
(59,937 ) (700,811 )
Accumulated other comprehensive income 20,733
—
—
—
—
20,733
Total partners' capital (deficit) (680,078 ) 1
12,894
47,042
(59,937 ) (680,078 )
Total liabilities and partners' capital (deficit) $ 1,297,203
$ 1
$ 20,339
$ 121,300
$ (75,597 ) $ 1,363,246

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FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)


	As of July 31, 2019
	Ferrellgas, L.P.		Ferrellgas
	(Parent and		Finance Corp.		Guarantor		Non-Guarantor
	Co-Issuer)		(Co-Issuer)		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	11,045	$	1	$	—	$	—	$	—	$	11,046
Accounts and notes receivable, net		(3,912)		—		35		111,473		—		107,596
Intercompany receivables		(5,650)		—		—		—		5,650		—
Inventories		80,454		—		—		—		—		80,454
Prepaid expenses and other current assets		42,158		—		(1)		—		—		42,157
Total current assets		124,095		1		34		111,473		5,650		241,253

Property, plant and equipment, net		596,724		—		(1)		—		—		596,723
Goodwill, net		247,195		—		—		—		—		247,195
Intangible assets, net		108,557		—		—		—		—		108,557
Investments in consolidated subsidiaries		52,999		—		—		—		(52,999)		—
Other assets, net		65,447		—		2,875		783		—		69,105
Total assets	$	1,195,017	$	1	$	2,908	$	112,256	$	(47,349)	$	1,262,833

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
Accounts payable	$	33,252	$	—	$	—	$	112	$	—	$	33,364
Short-term borrowings		43,000		—		—		—		—		43,000
Collateralized note payable		—		—		—		62,000		—		62,000
Intercompany payables		—		—		(192)		(5,458)		5,650		—
Current portion of long-term debt		277,029		—		—		—		—		277,029
Other current liabilities		128,666		—		20		5,617		—		134,303
Total current liabilities		481,947		—		(172)		62,271		5,650		549,696

Long-term debt		1,457,004		—		—		—		—		1,457,004
Other liabilities		36,469		—		67		—		—		36,536
Contingencies and commitments

Partners' capital (deficit):
Partners' equity		(765,756)		1		3,013		49,985		(52,999)		(765,756)
Accumulated other comprehensive income		(14,647)		—		—		—		—		(14,647)
Total partners' capital (deficit)		(780,403)		1		3,013		49,985		(52,999)		(780,403)
Total liabilities and partners' capital (deficit)	$	1,195,017	$	1	$	2,908	$	112,256	$	(47,349)	$	1,262,833

FERRELLGAS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(in thousands)

For the three months ended October 31, 2018
Ferrellgas, L.P. (Parent and Co-Issuer) Ferrellgas Finance Corp. (Co-Issuer) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated

Revenues:
Propane and other gas liquids sales $ 334,966
$ —
$ —
$ —
$ —
$ 334,966
Other 17,343
—
—
—
—
17,343
Total revenues 352,309
—
—
—
—
352,309

Costs and expenses:
Cost of sales - propane and other gas liquids sales 204,136
—
—
—
—
204,136
Cost of sales - other 3,047
—
—
—
—
3,047
Operating expense 110,331
—
—
1,017
(1,017 ) 110,331
Depreciation and amortization expense 18,881
—
—
111
—
18,992
General and administrative expense 14,173
2
—
—
—
14,175
Equipment lease expense 7,863
—
—
—
—
7,863
Non-cash employee stock ownership plan compensation charge 2,748
—
—
—
—
2,748
Loss on asset sales and disposals 1,996
—
2,508
—
—
4,504

Operating loss (10,866 ) (2 ) (2,508 ) (1,128 ) 1,017
(13,487 )

Interest expense (34,348 ) —
—
(847 ) —
(35,195 )
Other income, net 19
—
—
2,203
(2,203 ) 19

Earnings (loss) before income taxes (45,195 ) (2 ) (2,508 ) 228
(1,186 ) (48,663 )

Income tax expense 151
—
—
—
—
151
Equity in earnings of subsidiary (2,282 ) —
—
—
2,282
—

Net earnings (loss) (47,628 ) (2 ) (2,508 ) 228
1,096
(48,814 )

Other comprehensive loss (12,587 ) —
—
—
—
(12,587 )

Comprehensive income (loss) $ (60,215 ) $ (2 ) $ (2,508 ) $ 228
$ 1,096
$ (61,401 )

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FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)


	For the three months ended October 31, 2019
	Ferrellgas, L.P.		Ferrellgas
	(Parent and		Finance Corp.		Guarantor		Non-Guarantor
	Co-Issuer)		(Co-Issuer)		Subsidiaries		Subsidiaries		Eliminations		Consolidated

Revenues:
Propane and other gas liquids sales	$	273,385	$	—	$	—	$	—	$	—	$	273,385
Other		19,829		—		—		—		—		19,829
Total revenues		293,214		—		—		—		—		293,214

Costs and expenses:
Cost of sales - propane and other gas liquids sales		134,028		—		—		—		—		134,028
Cost of sales - other		3,681		—		—		—		—		3,681
Operating expense - personnel, vehicle, plant and other		114,543		—		—		885		(885)		114,543
Depreciation and amortization expense		19,107		—		—		112		—		19,219
General and administrative expense		9,695		1		—		—		—		9,696
Operating expense - equipment lease expense		8,388		—		—		—		—		8,388
Non-cash employee stock ownership plan compensation charge		795		—		—		—		—		795
Loss on asset sales and disposals		2,235		—		—		—		—		2,235

Operating income (loss)		742		(1)		—		(997)		885		629

Interest expense		(35,691)		—		—		(1,186)		—		(36,877)
Other income (expense), net		(132)		—		—		720		(720)		(132)

Earnings (loss) before income taxes		(35,081)		(1)		—		(1,463)		165		(36,380)

Income tax expense		518		—		—		—		—		518
Equity in earnings (loss) of subsidiaries		(1,464)		—		—		—		1,464		—

Net earnings (loss)		(37,063)		(1)		—		(1,463)		1,629		(36,898)

Other comprehensive loss		(6,148)		—		—		—		—		(6,148)

Comprehensive income (loss)	$	(43,211)	$	(1)	$	—	$	(1,463)	$	1,629	$	(43,046)

FERRELLGAS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(in thousands)

For the three months ended October 31, 2017
Ferrellgas, L.P. (Parent and Co-Issuer) Ferrellgas Finance Corp. (Co-Issuer) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated

Revenues:
Propane and other gas liquids sales $ 302,117
$ —
$ 641
$ —
$ —
$ 302,758
Midstream operations —
—
120,760
—
—
120,760
Other 16,677
—
14,460
—
—
31,137
Total revenues 318,794
—
135,861
—
—
454,655

Costs and expenses:
Cost of sales - propane and other gas liquids sales 178,819
—
696
—
—
179,515
Cost of sales - midstream operations —
—
108,125
—
—
108,125
Cost of sales - other 2,709
—
10,993
—
—
13,702
Operating expense 101,232
—
9,263
1,182
(1,215 ) 110,462
Depreciation and amortization expense 18,347
—
7,313
72
—
25,732
General and administrative expense 10,755
2
2,407
—
—
13,164
Equipment lease expense 6,648
—
93
—
—
6,741
Non-cash employee stock ownership plan compensation charge 3,962
—
—
—
—
3,962
Loss on asset sales and disposals 908
—
(13 ) —
—
895

Operating loss (4,586 ) (2 ) (3,016 ) (1,254 ) 1,215
(7,643 )

Interest expense (20,394 ) —
(11,185 ) (617 ) —
(32,196 )
Other income, net 215
—
296
1,215
(1,215 ) 511

Loss before income taxes (24,765 ) (2 ) (13,905 ) (656 ) —
(39,328 )

Income tax expense (benefit) (10 ) —
381
—
—
371
Equity in loss of subsidiary (14,944 ) —
—
—
14,944
—

Net loss (39,699 ) (2 ) (14,286 ) (656 ) 14,944
(39,699 )

Other comprehensive income 18,500
—
—
—
—
18,500

Comprehensive loss $ (21,199 ) $ (2 ) $ (14,286 ) $ (656 ) $ 14,944
$ (21,199 )

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FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)


	For the three months ended October 31, 2018
	Ferrellgas, L.P.		Ferrellgas
	(Parent and		Finance Corp.		Guarantor		Non-Guarantor
	Co-Issuer)		(Co-Issuer)		Subsidiaries		Subsidiaries		Eliminations		Consolidated

Revenues:
Propane and other gas liquids sales	$	334,966	$	—	$	—	$	—	$	—	$	334,966
Other		17,343		—		—		—		—		17,343
Total revenues		352,309		—		—		—		—		352,309

Costs and expenses:
Cost of sales - propane and other gas liquids sales		204,136		—		—		—		—		204,136
Cost of sales - other		3,047		—		—		—		—		3,047
Operating expense		110,331		—		—		1,017		(1,017)		110,331
Depreciation and amortization expense		18,881		—		—		111		—		18,992
General and administrative expense		14,173		2		—		—		—		14,175
Equipment lease expense		7,863		—		—		—		—		7,863
Non-cash employee stock ownership plan compensation charge		2,748		—		—		—		—		2,748
Loss on asset sales and disposals		1,996		—		2,508		—		—		4,504

Operating income (loss)		(10,866)		(2)		(2,508)		(1,128)		1,017		(13,487)

Interest expense		(34,348)		—		—		(847)		—		(35,195)
Other income (expense), net		19		—		—		2,203		(2,203)		19

Earnings (loss) before income taxes		(45,195)		(2)		(2,508)		228		(1,186)		(48,663)

Income tax expense		151		—		—		—		—		151
Equity in earnings (loss) of subsidiary		(2,282)		—		—		—		2,282		—

Net earnings (loss)		(47,628)		(2)		(2,508)		228		1,096		(48,814)

Other comprehensive loss		(12,587)		—		—		—		—		(12,587)

Comprehensive income (loss)	$	(60,215)	$	(2)	$	(2,508)	$	228	$	1,096	$	(61,401)

FERRELLGAS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(in thousands)

For the three months ended October 31, 2018
Ferrellgas, L.P. (Parent and Co-Issuer) Ferrellgas Finance Corp. (Co-Issuer) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operating activities $ 11,666
$ (2 ) $ 19,961
$ (17,231 ) $ (32,000 ) $ (17,606 )

Cash flows from investing activities:
Business acquisitions, net of cash acquired (4,625 ) —
—
—
—
(4,625 )
Capital expenditures (23,433 ) —
—
—
—
(23,433 )
Proceeds from sale of assets 1,061
—
—
—
—
1,061
Cash collected for purchase of interest in accounts receivable —
—
—
242,912
(242,912 ) —
Cash remitted to Ferrellgas, L.P. for accounts receivable —
—
—
(274,912 ) 274,912
—
Net changes in advances with consolidated entities 2,585
—
—
—
(2,585 ) —
Other (292 ) —
—
—
—
(292 )
Net cash used in investing activities (24,704 ) —
—
(32,000 ) 29,415
(27,289 )

Cash flows from financing activities:
Distributions (10,015 ) —
—
—
—
(10,015 )
Payments on long-term debt (281 ) —
—
—
—
(281 )
Net reductions in short-term borrowings (32,800 ) —
—
—
—
(32,800 )
Net additions to collateralized short-term borrowings —
—
—
32,000
—
32,000
Net changes in advances with parent —
2
(19,829 ) 17,242
2,585
—
Cash paid for financing costs (213 ) —
—
(11 ) —
(224 )
Net cash provided by (used in) financing activities (43,309 ) 2
(19,829 ) 49,231
2,585
(11,320 )

Net change in cash and cash equivalents (56,347 ) —
132
—
—
(56,215 )
Cash and cash equivalents - beginning of year 119,133
1
174
—
—
119,308
Cash and cash equivalents - end of year $ 62,786
$ 1
$ 306
$ —
$ —
$ 63,093

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FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)


	For the three months ended October 31, 2019
	Ferrellgas, L.P.		Ferrellgas
	(Parent and		Finance Corp.		Guarantor		Non-Guarantor
	Co-Issuer)		(Co-Issuer)		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operating activities	$	21,350	$	(1)	$	506	$	(3,708)	$	(11,000)	$	7,147

Cash flows from investing activities:
Business acquisitions, net of cash acquired		(6,400)		—		—		—		—		(6,400)
Capital expenditures		(18,126)		—		—		—		—		(18,126)
Proceeds from sale of assets		835		—		—		—		—		835
Cash collected for purchase of interest in accounts receivable		—		—		—		161,600		(161,600)		—
Cash remitted to Ferrellgas, L.P. for accounts receivable		—		—		—		(172,600)		172,600		—
Intercompany loan to affiliate		(3,203)		—		—		—		3,203		—
Cash payments to construct assets in connection with future lease transactions		(16,879)		—		—		—		—		(16,879)
Cash receipts in connection with leased vehicles		5,863		—		—		—		—		5,863
Other		—		—		—		—		—		—
Net cash used in investing activities		(37,910)		—		—		(11,000)		14,203		(34,707)

Cash flows from financing activities:
Distributions		(101)		—		—		—		—		(101)
Reductions in long-term debt		(512)		—		—		—		—		(512)
Net additions to short-term borrowings		37,000		—		—		—		—		37,000
Net additions to collateralized short-term borrowings		—		—		—		11,000		—		11,000
Cash payments on lease liabilities		—		—		—		—		—		—
Net changes in advances with consolidated entities		—		1		(506)		3,708		(3,203)		—
Cash paid for financing costs and other		(1,140)		—		—		—		—		(1,140)
Net cash provided by (used in) financing activities		35,247		1		(506)		14,708		(3,203)		46,247

Net change in cash and cash equivalents		18,687		—		—		—		—		18,687
Cash and cash equivalents - beginning of year		11,045		1		—		—		—		11,046
Cash and cash equivalents - end of year	$	29,732	$	1	$	—	$	—	$	—	$	29,733

FERRELLGAS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(in thousands)

For the three months ended October 31, 2017
Ferrellgas, L.P. (Parent and Co-Issuer) Ferrellgas Finance Corp. (Co-Issuer) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operating activities $ 23,305
$ (2 ) $ (22,294 ) $ 25,981
$ (19,000 ) $ 7,990

Cash flows from investing activities:
Business acquisitions, net of cash acquired (13,867 ) —
—
—
—
(13,867 )
Capital expenditures (19,429 ) —
(725 ) —
—
(20,154 )
Proceeds from sale of assets 1,208
—
—
—
—
1,208
Cash collected for purchase of interest in accounts receivable —
—
—
203,291
(203,291 ) —
Cash remitted to Ferrellgas, L.P. for accounts receivable —
—
—
(222,291 ) 222,291
—
Net changes in advances with consolidated entities 3,088
—
—
—
(3,088 ) —
Net cash provided by (used in) investing activities (29,000 ) —
(725 ) (19,000 ) 15,912
(32,813 )

Cash flows from financing activities:
Distributions (9,913 ) —
—
—
—
(9,913 )
Proceeds from increase in long-term debt 23,580
—
—
—
—
23,580
Payments on long-term debt (281 ) —
—
—
—
(281 )
Net reductions in short-term borrowings (5,879 ) —
—
—
—
(5,879 )
Net additions to collateralized short-term borrowings —
—
—
19,000
—
19,000
Net changes in advances with parent —
2
22,891
(25,981 ) 3,088
—
Cash paid for financing costs (287 ) —
—
—
—
(287 )
Net cash provided by (used in) financing activities 7,220
2
22,891
(6,981 ) 3,088
26,220

Net change in cash and cash equivalents 1,525
—
(128 ) —
—
1,397
Cash and cash equivalents - beginning of year 5,327
1
373
—
—
5,701
Cash and cash equivalents - end of year $ 6,852
$ 1
$ 245
$ —
$ —
$ 7,098

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FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)


	For the three months ended October 31, 2018
	Ferrellgas, L.P.		Ferrellgas
	(Parent and		Finance Corp.		Guarantor		Non-Guarantor
	Co-Issuer)		(Co-Issuer)		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operating activities	$	11,666	$	(2)	$	19,961	$	(17,231)	$	(32,000)	$	(17,606)

Cash flows from investing activities:
Business acquisitions, net of cash acquired		(4,625)		—		—		—		—		(4,625)
Capital expenditures		(23,433)		—		—		—		—		(23,433)
Proceeds from sale of assets		1,061		—		—		—		—		1,061
Cash collected for purchase of interest in accounts receivable		—		—		—		242,912		(242,912)		—
Cash remitted to Ferrellgas, L.P. for accounts receivable		—		—		—		(274,912)		274,912		—
Net changes in advances with consolidated entities		2,585		—		—		—		(2,585)		—
Other		(292)		—		—		—		—		(292)
Net cash provided by (used in) investing activities		(24,704)		—		—		(32,000)		29,415		(27,289)

Cash flows from financing activities:
Distributions		(10,015)		—		—		—		—		(10,015)
Proceeds from increase in long-term debt		—		—		—		—		—		—
Payments on long-term debt		(281)		—		—		—		—		(281)
Net reductions in short-term borrowings		(32,800)		—		—		—		—		(32,800)
Net additions to collateralized short-term borrowings		—		—		—		32,000		—		32,000
Net changes in advances with parent		—		2		(19,829)		17,242		2,585		—
Cash paid for financing costs		(213)		—		—		(11)		—		(224)
Net cash provided by (used in) financing activities		(43,309)		2		(19,829)		49,231		2,585		(11,320)

Net change in cash and cash equivalents		(56,347)		—		132		—		—		(56,215)
Cash and cash equivalents - beginning of year		119,133		1		174		—		—		119,308
Cash and cash equivalents - end of year	$	62,786	$	1	$	306	$	—	$	—	$	63,093

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N. Subsequent events

Ferrellgas, L.P. evaluated events and transactions occurring after the balance sheet date through the date Ferrellgas, L.P.'s’s condensed consolidated financial statements were issued and concluded that there were no events or transactions occurring during this period that require recognition or disclosure in its condensed consolidated financial ~~statements.~~statements except as described below.

On November 7, 2019, Ferrellgas, L.P. entered into a second amendment to the financing agreement governing its Senior Secured Credit Facility. See Note F – Debt for further discussion.

On December 5, 2019, Ferrellgas, L.P. entered into an eighth amendment to its accounts receivable securitization facility in order to align certain deliverables under the accounts receivable securitization facility with similar requirements under the second amendment to the financing agreement governing the Senior Secured Credit Facility, noted above.

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FERRELLGAS FINANCE CORP.
(a wholly-owned subsidiary of Ferrellgas, L.P.)
CONDENSED BALANCE SHEETS
(unaudited)
October 31, 2018 July 31, 2018
ASSETS

Cash $ 1,100
$ 1,100
Prepaid expenses and other current assets —
1,500
Total assets $ 1,100
$ 2,600

Contingencies and commitments (Note B)

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 72,602
72,552
Accumulated deficit (72,502 ) (70,952 )
Total stockholder's equity $ 1,100
$ 2,600
See notes to condensed financial statements.

FERRELLGAS FINANCE CORP.
(a wholly-owned subsidiary of Ferrellgas, L.P.)
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)

For the three months ended October 31,
2018 2017

General and administrative expense $ 1,550
$ 1,550

Net loss $ (1,550 ) $ (1,550 )
See notes to condensed financial statements.

FERRELLGAS FINANCE CORP.
(a wholly-owned subsidiary of Ferrellgas, L.P.)
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
For the three months ended October 31,
2018 2017
Cash flows from operating activities:
Net loss $ (1,550 ) $ (1,550 )
Changes in operating assets and liabilities:

Other current assets 1,500
1,500
Cash used in operating activities (50 ) (50 )

Cash flows from financing activities:
Capital contribution 50
50
Cash provided by financing activities 50
50

Net change in cash —
—
Cash - beginning of period 1,100
1,100
Cash - end of period $ 1,100
$ 1,100
See notes to condensed financial statements.

FERRELLGAS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas, L.P.)

CONDENSED BALANCE SHEETS

(unaudited)


	October 31, 2019		July 31, 2019
ASSETS
Cash	$	1,100	$	1,100
Prepaid expenses and other current assets		875		1,841
Total assets	$	1,975	$	2,941

Contingencies and commitments (Note B)

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		78,571		78,518
Accumulated deficit		(77,596)		(76,577)
Total stockholder's equity	$	1,975	$	2,941

See notes to condensed financial statements.

~~(unaudited)~~

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FERRELLGAS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas, L.P.)

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)


	For the three months ended October 31,
	2019		2018
General and administrative expense	$	1,019	$	1,550

Net loss	$	(1,019)	$	(1,550)

See notes to condensed financial statements.

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FERRELLGAS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas, L.P.)

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)


	For the three months ended October 31,
	2019		2018
Cash flows from operating activities:
Net loss	$	(1,019)	$	(1,550)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		966		1,500
Cash used in operating activities		(53)		(50)

Cash flows from financing activities:
Capital contribution		53		50
Cash provided by financing activities		53		50

Net change in cash		—		—
Cash - beginning of period		1,100		1,100
Cash - end of period	$	1,100	$	1,100

See notes to condensed financial statements.

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FERRELLGAS FINANCE CORP.

(a wholly-owned subsidiary of Ferrellgas, L.P.)

(unaudited)

NOTES TO CONDENSED FINANCIAL STATEMENTS

A. Formation

Ferrellgas Finance Corp. (the “Finance Corp.”), a Delaware corporation, was formed on January 16, 2003, and is a wholly-owned subsidiary of Ferrellgas, L.P. (the “Partnership”).

The Finance Corp. has nominal assets, does not conduct any operations and has no employees.

Going Concern

The accompanying condensed financial statements have been prepared on a going concern basis, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business. As discussed in Note B – Contingencies and commitments, the Finance Corp serves as co-issuer and co-obligor for debt securities of the Partnership. Ferrellgas Partners has $357.0 million aggregate principal amount of unsecured senior notes due June 15, 2020 that are classified as current in its consolidated financial statements. This obligation is only reported on the consolidated balance sheet of Ferrellgas Partners. The ability of Ferrellgas Partners to restructure, refinance or otherwise satisfy these notes is uncertain considering the level of other outstanding indebtedness. In certain circumstances, the failure to repay the $357 million in unsecured notes on their contractual maturity date may result in an event of default under the Partnership’s Senior Secured Credit Facility and the indentures governing the Partnership’s outstanding notes. Additionally, the Finance Corp. does not have sufficient cash reserves or the ability to generate sufficient future cash flows to satisfy its obligations as co-obligor of the debt securities of the Partnership.Given these concerns, the Finance Corp. believes there is substantial doubt about the entity’s ability to continue as a going concern. The Partnership has engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist with the Partnership’s ongoing process to address its upcoming debt maturities. The successful outcome of the Partnership’s debt reduction strategy continues to remain uncertain.

B. Contingencies and commitments

The Finance Corp. serves as co-issuer and co-obligor for debt securities of the Partnership.

The ~~indentures governing~~Finance Corp. is liable as co-issuer and co-obligor for (i) the $500 million aggregate principal amount of the Partnership’s unsecured senior notes ~~agreements contains various restrictive covenants applicable to~~due 2021, (ii) the ~~Partnership~~$475 million aggregate principal amount of the Partnership’s unsecured senior notes due 2022, and ~~its subsidiaries,~~(iii) the ~~most restrictive relating to additional indebtedness and restricted payments. As~~$500 million aggregate principal amount of ~~October 31, 2018,~~ the ~~Partnership is in compliance with all requirements, tests, limitations and covenants related to these debt agreements.~~Partnership’s unsecured senior notes due 2023, which obligations are only reported on the Partnership’s consolidated balance sheet.


~~ITEM 2.~~	~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~Overview~~

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Our management’s discussion and analysis of financial condition and results of operations relates to Ferrellgas Partners and the operating partnership.

Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp. have nominal assets, do not conduct any operations and have no employees other than officers. Ferrellgas Partners Finance Corp. serves as co-issuer and co-obligor for debt securities of Ferrellgas Partners, while Ferrellgas Finance Corp. serves as co-issuer and co-obligor for debt securities of the operating partnership. Accordingly, and due to the reduced disclosure format, a discussion of the results of operations, liquidity and capital resources of Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp. is not presented.

In this Item 2 of the Quarterly Report on Form ~~10-Q,~~10‑Q, unless the context indicates otherwise:

“us,” “we,” “our,” “ours,” “consolidated,” or "Ferrellgas" are references exclusively to Ferrellgas Partners, L.P. together with its consolidated subsidiaries, including Ferrellgas Partners Finance Corp., Ferrellgas, L.P. and Ferrellgas Finance Corp., except when used in connection with “common units,” in which case these terms refer to Ferrellgas Partners, L.P. without its consolidated subsidiaries;

“Ferrellgas Partners” refers to Ferrellgas Partners, L.P. itself, without its consolidated subsidiaries;

the “operating partnership” refers to Ferrellgas, L.P., together with its consolidated subsidiaries, including Ferrellgas Finance Corp.;

our “general partner” refers to Ferrellgas, Inc.;

~~“Ferrellgas Partners” refers to Ferrellgas Partners, L.P. itself, without its consolidated subsidiaries;~~

“Ferrell Companies” refers to Ferrell Companies, Inc., the sole shareholder of our general partner;

“unitholders” refers to holders of common units of Ferrellgas Partners;

~~the “operating partnership” refers to Ferrellgas, L.P., together with its consolidated subsidiaries, including Ferrellgas Finance Corp.;~~

"GAAP" refers to accounting principles generally accepted in the United States;

“retail sales” refers to Propane and other gas liquid sales: Retail - Sales to End Users or the volume of propane sold primarily to our residential, industrial/commercial and agricultural customers;

~~our “general partner” refers to Ferrellgas, Inc.;~~

“wholesale sales” refers to Propane and other gas liquid sales: Wholesale - Sales to Resellers or the volume of propane sold primarily to our portable tank exchange customers and bulk propane sold to wholesale customers;

“other gas sales” refers to Propane and other gas liquid sales: Other Gas Sales or the volume of bulk propane sold to other third-party propane distributors or marketers and the volume of refined fuel sold;

~~“Ferrell Companies” refers to Ferrell Companies, Inc., the sole shareholder of our general partner;~~

“propane sales volume” refers to the volume of propane sold to our retail sales and wholesale sales customers;

“Notes” refers to the notes of the condensed consolidated financial statements of Ferrellgas Partners or the operating partnership, as applicable; and

~~“unitholders” refers to holders of common units of Ferrellgas Partners;~~

“fiscal 2021” means the fiscal year ended July 31, 2021, “fiscal 2020” means the fiscal year ended July 31, 2020, “fiscal 2019” means the fiscal year ended July 31, 2019, and “fiscal 2018” means the fiscal year ended July 31, 2018.

~~"GAAP" refers to accounting principles generally accepted in the United States;~~

“other gas sales” refers to Propane and other gas liquid sales: Other Gas Sales or the volume of bulk propane sold to other third party propane distributors or marketers and the volume of refined fuel sold;

~~“propane sales volume” refers to the volume of propane sold to our retail sales and wholesale sales customers;~~

~~"Jamex" refers to Jamex Marketing, LLC;~~

~~“Notes” refers to the notes of the condensed consolidated financial statements of Ferrellgas Partners or the operating partnership, as applicable;~~

Ferrellgas Partners is a holding entity that conducts no operations and has two direct subsidiaries, Ferrellgas Partners Finance Corp. and the operating partnership. Ferrellgas Partners’ only ~~significant~~ assets are its approximate 99% limited partnership interest in the operating partnership and its 100% equity interest in Ferrellgas Partners Finance Corp. The common units

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of Ferrellgas Partners are listed on the New York Stock Exchange and our activities are primarily conducted through the operating partnership.

The operating partnership was formed on April 22, 1994, and accounts for substantially all of our consolidated assets, sales and operating earnings, except for interest expense related to the senior notes co-issued by Ferrellgas Partners and Ferrellgas Partners Finance Corp.

Our general partner performs all management functions for us and our subsidiaries and holds aan approximate 1% general partner interest in Ferrellgas Partners and an approximate 1% general partner interest in the operating partnership. The parent company of our general partner, Ferrell Companies, beneficially owns approximately ~~23%~~23.4% of our outstanding common units. Ferrell Companies is owned 100% by an employee stock ownership trust.

We file annual, quarterly, and ~~other~~current reports and other information with the Securities and Exchange Commission (the "SEC"). You may read and download our SEC filings over the Internet from several commercial document retrieval services as well as at the SEC’s website at www.sec.gov. ~~Because our common units are traded on the New York Stock Exchange under the ticker symbol “FGP,” we also provide our~~Our SEC filings and particular other information to the New York Stock Exchange. You may obtain copies of these filings and such other information at the offices of the New York Stock Exchange located at 11 Wall Street, New York, New York 10005. In addition, our SEC filings are also available on our website at www.ferrellgas.com at no cost as soon as reasonably practicable after our electronic filing or furnishing thereof with the SEC. Please note that any Internet addresses provided in this Quarterly Report on Form ~~10-Q~~10‑Q are for informational purposes only and are not intended to be hyperlinks. Accordingly, no information found and/or provided at such Internet addresses is intended or deemed to be incorporated by reference herein.

The following is a discussion of our historical financial condition and results of operations and should be read in conjunction with our historical consolidated financial statements and accompanying Notes thereto included in our Annual Report on Form ~~10-K~~10‑K for fiscal ~~2018~~2019 and in our historical condensed consolidated financial statements and accompanying Notes thereto included elsewhere in this Quarterly Report on Form ~~10-Q.~~

10‑Q.

The discussions set forth in the “Results of Operations” and “Liquidity and Capital Resources” sections generally refer to Ferrellgas Partners and its consolidated subsidiaries. However, in these discussions there ~~exist~~exists one material difference between Ferrellgas Partners and the operating partnership: ~~because~~ Ferrellgas Partners has outstanding $357.0 million in aggregate principal amount of 8.625% senior notes due ~~fiscal~~June 15, 2020, ~~the two partnerships incur different amounts of~~and accordingly has interest expense that the operating partnership does not have. Ferrellgas Partners’ access to liquidity is dependent on ~~their outstanding indebtedness.~~distributions from the operating partnership. See the statements of operations in their respective condensed consolidated financial statements.

Cautionary Note Regarding Forward-looking Statements

Statements included in this report include forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. These statements often use words such as “anticipate,” “believe,” “intend,” “plan,” “projection,” “forecast,” “strategy,” “position,” “continue,” “estimate,” “expect,” “may,” “will,” or the negative of those terms or other variations of them or comparable terminology. These statements often discuss plans, strategies, events or developments that we expect or anticipate will or may occur in the future and are based upon the beliefs and assumptions of our management and on the information currently available to them. In particular, statements, express or implied, concerning our future operating results or our ability to generate sales, income or cash flow are forward-looking statements.

Forward-looking statements are not guarantees of performance. You should not put undue reliance on any forward-looking statements. All forward-looking statements are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially from those expressed in or implied by these forward-looking statements. Many of the factors that will affect our future results are beyond our ability to control or predict. Some of the risk factors that may affect our business, financial condition or results of operations include:

the effect of weather conditions on the demand for propane;

the prices of wholesale propane, motor fuel and crude oil;

~~the effect~~

disruptions to the supply of propane;

competition from other industry participants and other energy sources;

Table of ~~weather conditions on the demand for propane;~~Contents

~~the prices of wholesale propane, motor fuel and crude oil;~~

energy efficiency and technology advances;

~~disruptions to the supply of propane;~~

adverse changes in our relationships with our national tank exchange customers;

~~competition from other industry participants and other energy sources;~~

significant delays in the collection of accounts or notes receivable;

~~energy efficiency and technology advances;~~

customer, counterparty, supplier or vendor defaults;

~~adverse changes in our relationships with our national tank exchange customers;~~

changes in demand for, and production of, hydrocarbon products;

~~significant delays in the collection of accounts or notes receivable;~~

disruptions to railroad operations on the railroads we use;

~~customer, counterparty, supplier or vendor defaults;~~

increased trucking and rail regulations;

~~changes in demand for, and production of, hydrocarbon products;~~

inherent operating and litigation risks in gathering, transporting, handling and storing propane;

~~increased trucking and rail regulations;~~

our inability to complete acquisitions or to successfully integrate acquired operations;

~~inherent operating and litigation risks in gathering, transporting, handling and storing propane;~~

costs of complying with, or liabilities imposed under, environmental, health and safety laws;

~~our inability to complete acquisitions or to successfully integrate acquired operations;~~

the impact of pending and future legal proceedings;

~~costs of complying with, or liabilities imposed under, environmental, health and safety laws;~~

the interruption, disruption, failure or malfunction of our information technology systems including due to cyber attack;

~~the impact of pending and future legal proceedings;~~

the impact of changes in tax law that could adversely affect the tax treatment of Ferrellgas Partners for federal income tax purposes;

~~the interruption, disruption, failure or malfunction of our information technology systems including due to cyber attack;~~

economic and political instability, particularly in areas of the world tied to the energy industry;

~~the impact of changes in tax law that could adversely affect the tax treatment of Ferrellgas Partners for federal income tax purposes;~~

disruptions in the capital and credit markets;

~~economic and political instability, particularly in areas of the world tied~~

access to available capital to meet our operating requirements up to ~~the energy industry;~~ and including the refinancing of maturing debt instruments; and

~~disruptions in the capital and credit markets.~~

the impact of the inclusion in the report of our auditor of an “emphasis of matter” paragraph regarding substantial doubt as to our ability to continue as a going concern.

When considering any forward-looking statement, you should also keep in mind the risk factors set forth in “Item 1A. Risk Factors” of our Annual Report on Form ~~10-K~~10‑K for fiscal ~~2018.~~2019. Any of these risks could impair our business, financial condition or results of operations. Any such impairment may affect our ability to make distributions to our unitholders or pay interest on the principal of any of our debt securities. In addition, the trading price of our securities could decline as a result of any such impairment.

Except for our ongoing obligations to disclose material information as required by federal securities laws, we undertake no obligation to update any forward-looking statements or risk factors after the date of this Quarterly Report on Form ~~10-Q.~~

10‑Q.

Recent developments

We have engaged Moelis & Company LLC as our financial advisor and the law firm of Squire Patton Boggs LLP to assist us in our ongoing process to address our upcoming debt maturities.

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$125.0 million to $140.0 million the sub-limit for issuance of letters of credit that exists within the $300.0 million Revolving Facility; and (ii) modified a component of the fixed charge coverage ratio calculation to exclude payments related to the manufacture of vehicles used for propane delivery or related service up to specified amounts if operating lease commitments sufficient to cover such excluded amounts have been obtained and those payments are in fact reimbursed under such operating leases within nine months thereafter. In addition, the Second Amendment provided waivers for any event of default that has or would otherwise arise with respect to the delivery of an unqualified report of Grant Thornton LLP as to going concern with respect to the audited financial statements of Ferrellgas, L.P. and with respect to the timely delivery of financial information for fiscal 2019, thereby resolving the disagreement with the agent under the Senior Secured Credit Facility regarding alleged events of default described in the Annual Report on Form 10-K for fiscal 2019. As a result of the Second Amendment, the Term Loan was reclassified from current to long-term, consistent with its underlying maturity.

Debt and interest expense reduction and refinancing strategy

We continue to ~~execute on~~pursue a strategy to further reduce our debt and interest expense. ~~This~~Achievements under this strategy ~~included entering into the new Senior Secured Credit Facility and~~during fiscal 2018 include refinancing our senior secured credit facility, amending ~~its~~our accounts receivable securitization facility, ~~in May 2018~~ and selling certain ~~asset sales during~~assets. Other opportunities include the generation of additional cash flows organically or through accretive acquisitions, restructuring or refinancing existing indebtedness, selling additional assets, maintaining the suspension of Ferrellgas Partners’ common unit distributions, issuing equity or executing one or more debt exchanges. We expect to maintain our debt and interest expense reduction strategy until our consolidated leverage ratio reaches a level that we deem appropriate for our business. During fiscal ~~2018. We continue~~2019, we engaged Moelis & Company LLC as our financial advisor and the law firm of Squire Patton Boggs LLP to ~~evaluate all available options~~assist us with our ongoing process to address our ~~leverage. We are in the process of engaging a financial advisor to assist us in executing this strategy.~~

upcoming debt maturities.

Financial covenants

The indenture governing the outstanding notes of Ferrellgas Partners and the agreements governing the operating partnership’s indebtedness contain various covenants that limit our ability ~~and its subsidiaries~~ to, among other things, make restricted payments and incur additional indebtedness. Our general partner believes that the most restrictive of these covenants isare the ~~consolidated fixed charge coverage ratio, as defined~~restricted payments covenants in the indenture governing the outstanding notes of Ferrellgas ~~Partners.~~Partners and the indentures governing the outstanding notes of the operating partnership, which are discussed below.

~~Consolidated fixed charge coverage ratio -~~

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Ferrellgas Partners, L.P., the master limited partnership

~~Before~~

The indenture governing the outstanding notes of Ferrellgas Partners due June 15, 2020 contains a covenant that restricts the ability of Ferrellgas Partners to make certain restricted payments, including distributions on its common units. Under this covenant, subject to the limited exception described below, Ferrellgas Partners may not make a restricted payment ~~(as defined~~unless its consolidated fixed charge coverage ratio (defined in the indenture generally to mean the ratio of trailing four quarters consolidated EBITDA to consolidated interest expense, both as adjusted for certain, specified items) is at least 1.75x, on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events. As of October 31, 2019, Ferrellgas ~~Partners indenture) can be made by Ferrellgas Partners, Ferrellgas Partners must be in compliance with~~Partners’ consolidated fixed charge coverage ratio was 1.35x.

This covenant requires that the ratio of trailing four quarters EBITDA to interest expense (both as adjusted for certain, specified items) of Ferrellgas Partners be at least 1.75x before a restricted payment (as defined in the indenture) can be made by Ferrellgas Partners. If this ratio were to drop below 1.75x, the indenture allows Ferrellgas Partners tomay make restricted payments of up to $50.0 million in total over a sixteen quarter ~~period while below this ratio. As of October 31, 2018, the ratio was 1.40x.~~period. As a result of distributions paid to common unitholders in September 2017, December 2017, March 2018, June 2018 and September 2018, while this ratio was less than 1.75x, Ferrellgas Partners has used substantially all of its capacity under the limited exception and therefore is currently restricted by this covenant from making future restricted payments, including distributions to common unitholders. Accordingly, no distributions have been or will be paid to common unitholders ~~in December 2018~~ for the three months ended October 31, ~~2018. Unless~~2019, and, unless this indenture is amended or replaced or ~~our~~Ferrellgas Partners’ consolidated fixed charge coverage ratio improves to at least 1.75x this covenant will continue to ~~restrict us~~prohibit Ferrellgas Partners from making common unit ~~distributions~~distributions. While there can be no assurance of successfully resolving the distribution limitation under this covenant, we are presently considering potential solutions to address the limitation on distributions. The potential solutions include, among others, restructuring, refinancing or a transaction to exchange new notes for ~~our quarter ending January 31, 2019 and beyond.~~

~~Consolidated fixed charge coverage ratio -~~ some or all of the outstanding notes of Ferrellgas Partners due June 15, 2020.

Ferrellgas, L.P., the operating partnership

~~Before a restricted payment (as defined in~~

Similar to the indenture governing the outstanding notes of Ferrellgas Partners, the indentures governing the outstanding notes of the operating ~~partnership) can~~partnership contain covenants that restrict the ability of the operating partnership to make certain restricted payments, including distributions to Ferrellgas Partners. Under these covenants, subject to the limited exception described below, the operating partnership may not make a restricted payment unless its consolidated fixed charge coverage ratio (defined in the indentures generally to mean the ratio of trailing four quarters consolidated EBITDA to consolidated interest expense, both as adjusted for certain, specified items) is at least 1.75x, on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events. As of October 31, 2019, the operating partnership’s consolidated fixed charge coverage ratio was 1.68x.

If the consolidated fixed charge coverage ratio is below 1.75x, the operating partnership may make restricted payments in limited amounts determined under the indentures. If the operating partnership’s consolidated fixed charge coverage ratio remains below 1.75x, the distribution to be made by the operating partnership on December 15, 2019 for payment of interest on Ferrellgas Partners’ unsecured senior notes due 2020 would be made from capacity under the limited exception to ~~Ferrellgas Partners,~~the ratio requirement.

The covenant requires that the ratio of trailing four quarters EBITDA to interest expense (both as adjusted for certain, specified items) of the operating partnership be at least 1.75x before a restricted payment (as defined in the indentures) can be made by the operating partnership. If this ratio were to drop below 1.75x, the indentures allow the operating partnership to make restricted payments with certain limitations. If it were in violation of the covenant as of October 31, 2018, the operating partnership believes that it would have sufficient capacity within these limitations to satisfy the current restricted payment requirements of Ferrellgas Partners2020 through the maturity of those notes, the ~~unsecured senior notes due 2020. As of October 31, 2018,~~restrictions in these debt agreements may prevent the ~~ratio was 1.77x; the margin allows for approximately $1.1 million of additional interest expense or approximately $2.0 million less EBITDA.~~

operating partnership from making distributions to Ferrellgas Partners to enable it to pay cash distributions to its unitholders.

Distributions

As discussed above, no distributions will be paid to common unitholders in December ~~2018~~2019 for the three months ended October 31, ~~2018.~~2019. Unless the indenture governing ~~the outstanding~~ Ferrellgas ~~Partners~~Partners’ unsecured senior notes due 2020 is amended or replaced, if our consolidated fixed charge coverage ratio under that indenture does not improve to at least 1.75x, this covenant will not allow us to make common unit distributions for our quarter ending ~~January~~October 31, 2019 and beyond.

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How We Evaluate Our Operations

We evaluate our overall business performance based primarily on ~~Adjusted EBITDA.~~a metric we refer to as “Adjusted EBITDA”, which is not defined by GAAP and should not be considered an alternative to earnings measures defined by GAAP. We do not utilize depreciation, depletion and amortization expense in our key measures because we focus our performance management on cash flow generation and our revenue generating assets have long useful lives.

~~Propane operations~~ For the definition of Adjusted EBITDA and ~~related equipment sales~~

a reconciliation of Adjusted EBITDA to Net earnings (loss) attributable to Ferrellgas Partners, L.P., the most directly comparable GAAP measure, see the subheading “Non-GAAP Financial Measures” below.

Based on our propane sales volumes in fiscal ~~2018,~~2019, we believe that we are the second largest retail marketer of propane in the United States and a leading national provider of propane by portable tank exchange. We serve residential, industrial/commercial, portable tank exchange, agricultural, wholesale and other customers in all 50 states, the District of Columbia and Puerto Rico. Our operations primarily include the distribution and sale of propane and related equipment and supplies with concentrations in the Midwest, Southeast, Southwest and Northwest regions of the United States.

We use information on temperatures to understand how our results of operations are affected by temperatures that are warmer or colder than normal. Normal temperatures computed by us are the average of the last 10 years of information published by the National Oceanic and Atmospheric Administration. Based on this information we calculate a ratio of actual heating degree days to normal heating degree days. Heating degree days are a general indicator of weather impacting propane usage.

Weather conditions have a significant impact on demand for propane for heating purposes primarily during the months of November through March (the “winter heating season”). Accordingly, the volume of propane used by our customers for this purpose is directly affected by the severity of the winter weather in the regions we serve and can vary substantially from year to year. In any given region, sustained warmer-than-normal temperatures will tend to result in reduced propane usage, while sustained colder-than-normal temperatures will tend to result in greater usage. Although there is a strong correlation between weather and customer usage, general economic conditions in the United States and the wholesale price of propane can have a significant impact on this correlation. Additionally, there is a natural time lag between the onset of cold weather and increased sales to customers. If the United States were to experience a cooling trend we could expect nationwide demand for propane to increase which could lead to greater sales, income and liquidity availability. Conversely, if the United States were to experience a continued warming trend, we could expect nationwide demand for propane for heating purposes to decrease which could lead to a reduction in our sales, income and liquidity availability as well as impact our ability to maintain compliance with our debt covenants.

We employ risk management activities that attempt to mitigate price risks related to the purchase, storage, transport and sale of propane generally in the contract and spot markets from major domestic energy companies. We attempt to mitigate these price risks through the use of financial derivative instruments and forward propane purchase and sales contracts. We enter into propane sales commitments with a portion of our customers that provide for a contracted price agreement for a specified period of time. These commitments can expose us to product price risk if not immediately hedged with an offsetting propane purchase commitment.

Our open financial derivative propane purchase commitments are designated as hedges primarily for fiscal ~~2019~~2020 and ~~2020~~2021 sales commitments and, as of October 31, ~~2018,~~2019, have experienced net mark-to-market ~~gains~~losses of approximately ~~$8.0~~$20.9 million. Because these financial derivative purchase commitments qualify for hedge accounting treatment, the resulting asset, liability and related mark-to-market gains or losses are recorded on the condensed consolidated balance sheets as “Prepaid expenses and other current assets,” "Other assets, net," “Other current liabilities,” "Other liabilities" and “Accumulated other comprehensive ~~income,~~loss,” respectively, until settled. Upon settlement, realized gains or losses on these contracts will be reclassified to “Cost of sales-propane and other gas liquid sales” in the condensed consolidated statements of operations as the underlying inventory is sold. These financial derivative purchase commitment net ~~gains~~losses are expected to be offset by ~~decreased~~increased margins on propane sales commitments that qualify for the normal purchase normal sale exception. At October 31, ~~2018,~~2019, we estimate ~~81%~~90% of currently open financial derivative purchase commitments, the related propane sales commitments and the resulting gross margin will be realized into earnings during the next twelve months.

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Summary Discussion of Results of Operations:

~~Items Impacting the Comparability of Our Financial Results~~

~~Our current and future results of operations will not be comparable to our historical results of operations for the periods presented due to the following transactions:~~

During July 2018, we completed the sale of a subsidiary and a group of assets within the Midstream operations segment. The subsidiary sold was Bridger Environmental LLC, which encompassed all saltwater disposal activities previously operated by us. The group of assets sold included all assets, excluding working capital, associated with the crude oil trucking operations previously operated by us. Additionally, the sale included two crude oil injection terminals.

~~During the third quarter of fiscal 2018, we sold all 1,292 rail tank cars utilized in our Midstream operations segment.~~

~~During the second quarter of fiscal 2018, we completed the sale of Bridger Energy, LLC, included in our Midstream operations segment.~~

~~During July 2018, we completed the sale of a group of assets encompassing an immaterial reporting unit within our Propane operations segment that sold lower margin propane related equipment.~~

~~Operating loss and adjusted EBITDA associated with these divestitures in the first quarter of fiscal 2018 was $3.0 million and $7.2 million, respectively.~~

Executive Overview

For the three months ended October 31, ~~2018 and 2017~~

2019

During the three months ended October 31, ~~2018,~~2019, we generated net loss attributable to Ferrellgas Partners L.P. of ~~$57.0~~$45.3 million, compared to net loss attributable to Ferrellgas Partners L.P. of ~~$47.9~~$57.0 million during the three months ended October 31, ~~2017.~~

~~Our~~2018. The decrease in net loss attributable to Ferrellgas Partners principally reflects an $8.5 million increase in gross margin on propane ~~operations~~ and other gas liquid sales and decreased general and administrative costs, partially offset by slightly higher operating expenses. These results reflect the effects of legal fees and settlements related ~~equipment sales segment generated operating income~~to non-core businesses of ~~$6.9~~$2.0 million ~~during~~and $3.6 million, in the three months ended October 31, 2019 and 2018, ~~compared to operating income of $11.2 million earned during the three months ended October 31, 2017.~~respectively. The decrease in operating income is primarily due to a $6.1 million increase in "Operating, general and administrative expense", a $3.1 million decrease in "Gross margin - other" and a $1.4 million increase in "Equipment lease expense", partially offset by a $7.6 million increase in "Gross margin - Propane and other gas liquid sales". The increase in "Operating, general and administrative expense" and "Gross margin - Propane and other gas liquid sales" primarily resulted from a 4% increase in retail customer count. The impact of the sale of a group of assets that sold lower margin propane related equipment resulted in the decrease in "Gross margin - other".

~~Our corporate and other operations recognized an operating loss of $20.4 million during the three months~~three-month period ended October 31, 2018 ~~compared to an operating loss~~also includes $1.5 million of ~~$18.9 million recognized during~~expenses associated with the three months ended October 31, 2017. This increase in operating loss was primarily due to increased corporate costs of $1.7 million, partially offset by the $0.2 million decrease in operating loss related to our midstream operations. Corporate costs increased primarily due to a $3.7 million increase in legal costs, partially offset by a $1.2 million decrease in non-cash employee stock ownershipmulti-employer pension plan ~~compensation costs.~~

~~“Interest expense” for Ferrellgas increased $3.1 million primarily due to increased interest rates on our secured credit facility.~~

Distributable cash flow attributable to equity investors decreased to $(27.4) million in the current period from $(19.3) million in the prior period primarily due to an $8.4 million decrease in our Adjusted EBITDA which was primarily due to various asset sales in fiscal 2018 encompassing our former midstream operations.

~~Distributable cash flow shortage increased to $36.6 million in the current period from $28.7 million in the prior period, primarily due to an $8.4 million decrease in our Adjusted EBITDA.~~

~~Consolidated Results of Operations~~

Three months ended October 31,
(amounts in thousands) 2018 2017
Total revenues $ 352,309
$ 454,655

Total cost of sales 207,183
301,342

Operating expense 110,331
110,462
Depreciation and amortization expense 18,992
25,732
General and administrative expense 14,179
13,164
Equipment lease expense 7,863
6,741
Non-cash employee stock ownership plan compensation charge 2,748
3,962
Loss on asset sales and disposals 4,504
895
Operating loss (13,491 ) (7,643 )
Interest expense (43,878 ) (40,807 )
Other income, net 19
511
Loss before income taxes (57,350 ) (47,939 )
Income tax expense 158
377
Net loss (57,508 ) (48,316 )
Net loss attributable to noncontrolling interest (493 ) (401 )
Net loss attributable to Ferrellgas Partners, L.P. (57,015 ) (47,915 )
Less: General partner's interest in net loss (570 ) (479 )
Common unitholders' interest in net loss $ (56,445 ) $ (47,436 )

withdrawal settlement.

Non-GAAP Financial Measures

In this Quarterly Report we present ~~three primary~~the following non-GAAP financial measures: Adjusted EBITDA, Distributable cash flow attributable to equity investors, ~~and~~ Distributable cash flow attributable to common ~~unitholders.~~

unitholders, and Distributable cash flow excess.

Adjusted EBITDA. Adjusted EBITDA is calculated as net loss attributable to Ferrellgas Partners, L.P., ~~less~~plus the sum of the following: income tax expense, ~~(benefit),~~ interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, loss on asset sales and disposals, other income (expense), net, ~~severance costs,~~ legal fees and settlements related to non-core businesses, multi-employer pension withdrawal settlement, ~~unrealized (non-cash) loss on changes in fair value of derivatives not designated as hedging instruments,~~lease accounting standard adjustment, and net loss attributable to noncontrolling interest. Management believes the presentation of this measure is relevant and useful because it allows investors to view the ~~partnership's~~partnership’s performance in a manner similar to the method management uses, adjusted for items management believes ~~makes~~make it easier to compare its results with other companies that have different financing and capital structures. This method of calculating Adjusted EBITDA may not be ~~consistent with~~comparable to Adjusted EBITDA or similarly titled measurements used by other corporations and partnerships. Items added into our calculation of adjusted EBITDA that will not occur on a continuing basis may have associated cash payments. This method of ~~other companies and~~calculating Adjusted EBITDA should be viewed in conjunction with measurements that are computed in accordance with GAAP.

Distributable Cash Flow Attributable to Equity Investors. Distributable cash flow attributable to equity investors is calculated as Adjusted EBITDA minus net cash interest expense, maintenance capital expenditures and cash paid for taxes, plus proceeds from certain asset sales. Management considers distributable cash flow attributable to equity investors a meaningful measure of the partnership’s ability to declare and pay quarterly distributions to equity investors. Distributable cash flow attributable to equity investors, as management defines it, may not be comparable to distributable cash flow attributable to equity investors or similarly titled measurements used by other corporations and partnerships. Items added into our calculation of distributable cash flow attributable to equity investors that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to equity investors ~~may not be consistent with that of other companies and~~ should be viewed in conjunction with measurements that are computed in accordance with GAAP.

Distributable Cash Flow Attributable to Common Unitholders. Distributable cash flow attributable to common unitholders is calculated as Distributable cash flow attributable to equity investors minus distributable cash flow attributable to general partner and noncontrolling interest. Management considers ~~distributable~~Distributable cash flow attributable to common unitholders a meaningful measure of the partnership’s ability to declare and pay quarterly distributions to common unitholders. Distributable cash flow attributable to common unitholders, as management defines it, may not be comparable to distributable cash flow attributable to common unitholders or similarly titled measurements used by other corporations and partnerships. Items added into our calculation of distributable cash flow attributable to common unitholders that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to common unitholders ~~may not be consistent with that of other companies and~~ should be viewed in conjunction with measurements that are computed in accordance with GAAP.

Distributable Cash Flow Excess. Distributable cash flow excess is calculated as Distributable cash flow attributable to common unitholders minus Distributions paid to common unitholders. Distributable cash flow excess, if any, is retained

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to establish reserves to reduce debt, fund capital expenditures and for other partnership purposes and any shortage is funded from previously established reserves, cash on hand or borrowings under our Senior Secured Credit Facility or accounts receivable securitization facility. Management considers Distributable cash flow excess a meaningful measure of the partnership’s ability to effectuate those purposes. Distributable cash flow excess, as management defines it, may not be comparable to distributable cash flow excess or similarly titled measurements used by other corporations and partnerships. Items added into our calculation of distributable cash flow excess that will not occur on a continuing basis may have associated cash payments. Distributable cash flow excess should be viewed in conjunction with measurements that are computed in accordance with GAAP.

The following table ~~summarizes~~reconciles EBITDA, Adjusted EBITDA, Distributable cash flow attributable to equity investors, ~~and~~ Distributable cash flow attributable to common unitholders and Distributable cash flow excess to Net loss attributable to Ferrellgas Partners, L.P., the most directly comparable GAAP measure, for the three months ended October 31, ~~2018~~2019 and ~~2017, respectively:~~2018:


	Three months ended October 31,
(amounts in thousands)	2019		2018
Net loss attributable to Ferrellgas Partners, L.P.	$	(45,344)	$	(57,015)
Income tax expense		518		158
Interest expense		45,697		43,878
Depreciation and amortization expense		19,219		18,992
EBITDA		20,090		6,013
Non-cash employee stock ownership plan compensation charge		795		2,748
Loss on asset sales and disposals		2,235		4,504
Other income (expense), net		132		(19)
Legal fees and settlements related to non-core businesses		2,043		3,564
Multi-employer pension plan withdrawal settlement		—		1,524
Lease accounting standard adjustment		170		—
Net loss attributable to noncontrolling interest		(373)		(493)
Adjusted EBITDA		25,092		17,841
Net cash interest expense (a)		(42,583)		(40,899)
Maintenance capital expenditures (b)		(6,467)		(5,385)
Cash paid for taxes		—		(2)
Proceeds from certain asset sales		835		1,061
Distributable cash flow attributable to equity investors		(23,123)		(27,384)
Distributable cash flow attributable to general partner and non-controlling interest		462		548
Distributable cash flow attributable to common unitholders		(22,661)		(26,836)
Less: Distributions paid to common unitholders		—		9,715
Distributable cash flow excess/(shortage)	$	(22,661)	$	(36,551)

Three months ended October 31,
(amounts in thousands) 2018 2017
Net loss attributable to Ferrellgas Partners, L.P. $ (57,015 ) $ (47,915 )
Income tax expense 158
377
Interest expense 43,878
40,807
Depreciation and amortization expense 18,992
25,732
EBITDA 6,013
19,001
Non-cash employee stock ownership plan compensation charge 2,748
3,962
Loss on asset sales and disposals 4,504
895
Other income, net (19 ) (511 )
Severance costs —
1,663
Legal fees and settlements 3,564
—
Multi-employer pension plan withdrawal settlement 1,524
—
Unrealized (non-cash) loss on changes in fair value of derivatives not designated as hedging instruments —
1,607
Net loss attributable to noncontrolling interest (493 ) (401 )
Adjusted EBITDA 17,841
26,216
Net cash interest expense (a) (40,899 ) (38,057 )
Maintenance capital expenditures (b) (5,385 ) (8,704 )
Cash paid for taxes (2 ) (6 )
Proceeds from asset sales 1,061
1,208
Distributable cash flow shortage attributable to equity investors (27,384 ) (19,343 )
Distributable cash flow shortage attributable to general partner and non-controlling interest (548 ) (387 )
Distributable cash flow shortage attributable to common unitholders (26,836 ) (18,956 )
Less: Distributions paid to common unitholders 9,715
9,715
Distributable cash flow shortage (c) $ (36,551 ) $ (28,671 )


(a)		Net cash interest expense is the sum of interest expense less non-cash interest expense and other income (expense), net. This amount includes interest expense related to the accounts receivable securitization facility.


(b)		Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and ~~equipment.~~equipment, and may include the purchase of assets that are typically leased.


~~(c)~~	Distributable cash flow shortages are funded from previously established reserves, cash on hand or borrowings under our secured credit facility or accounts receivable securitization facility. Distributable cash flow excess, if any, is retained to establish reserves for future distributions, reduce debt, fund capital expenditures and for other partnership purposes.

~~Segment~~

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Operating Results for the three months ended October 31, ~~2018~~2019 and ~~2017~~

~~Propane operations and related equipment sales~~

2018

The following table summarizes propane sales volumes and ~~the~~ Adjusted EBITDA results ~~of our propane operations and related equipment sales segment~~ for the periods indicated:


	2019		2018		Increase (Decrease)
As of October 31,
Retail customers		696,592		678,209		18,383	3	%
Tank exchange selling locations		55,952		53,809		2,143	4	%

(amounts in thousands)
Three months ended October 31,
Propane sales volumes (gallons):
Retail - Sales to End Users		129,901		129,667		234	0	%
Wholesale - Sales to Resellers		50,039		48,960		1,079	2	%
		179,940		178,627		1,313	1	%
Revenues -
Propane and other gas liquids sales:
Retail - Sales to End Users	$	180,417	$	217,764	$	(37,347)	(17)	%
Wholesale - Sales to Resellers		82,704		93,944		(11,240)	(12)	%
Other Gas Sales (a)		10,264		23,258		(12,994)	(56)	%
Other (b)		19,829		17,343		2,486	14	%
Propane and related equipment revenues	$	293,214	$	352,309	$	(59,095)	(17)	%

Gross Margin -
Propane and other gas liquids sales: (c)
Retail - Sales to End Users (a)	$	97,936	$	90,475	$	7,461	8	%
Wholesale - Sales to Resellers (a)		41,421		40,355		1,066	3	%
Other (b)		16,148		14,296		1,852	13	%
Propane and related equipment gross margin	$	155,505	$	145,126	$	10,379	7	%

Operating, general and administrative expense (d)	$	124,238	$	124,510	$	(272)	(0)	%
Operating expense - equipment lease expense		8,388		7,863		525	7	%

Operating income (loss)	$	630	$	(13,491)	$	14,121	NM	��

Depreciation and amortization expense		19,219		18,992		227	1	%
Non-cash employee stock ownership plan compensation charge		795		2,748		(1,953)	(71)	%
Loss on asset sales and disposals		2,235		4,504		(2,269)	(50)	%
Multi-employer pension plan withdrawal settlement		—		1,524		(1,524)	NM
Legal fees and settlements related to non-core businesses		2,043		3,564		(1,521)	(43)	%
Lease accounting standard adjustment (e)		170		—		170	NM
Adjusted EBITDA	$	25,092	$	17,841	$	7,251	41	%

(a)

Gross margin for Other Gas Sales is allocated to Gross margin "Retail - Sales to End Users" and "Wholesale - Sales to Resellers" based on the volumes in each respective category.

2018 2017 Increase (Decrease)
As of October 31,
Retail customers 678,209
653,719
24,490
4 %
Tank exchange selling locations 53,809
47,985
5,824
12 %

(amounts in thousands)
Three months ended October 31,
Propane sales volumes (gallons):
Retail - Sales to End Users 129,667
119,294
10,373
9 %
Wholesale - Sales to Resellers 48,960
53,429
(4,469 ) (8 )%
178,627
172,723
5,904
3 %

Revenues -
Propane and other gas liquids sales:
Retail - Sales to End Users $ 217,764
$ 183,794
$ 33,970
18 %
Wholesale - Sales to Resellers 93,944
98,429
(4,485 ) (5 )%
Other Gas Sales (a) 23,258
20,535
2,723
13 %
Other (b) 17,343
31,137
(13,794 ) (44 )%
Propane and related equipment revenues $ 352,309
$ 333,895
$ 18,414
6 %

Gross Margin -
Propane and other gas liquids sales: (c)
Retail - Sales to End Users (a) $ 90,475
$ 78,431
$ 12,044
15 %
Wholesale - Sales to Resellers (a) 40,355
44,812
(4,457 ) (10 )%
Other (b) 14,296
17,435
(3,139 ) (18 )%
Propane and related equipment gross margin $ 145,126
$ 140,678
$ 4,448
3 %

Operating, general and administrative expense (d) $ 110,331
$ 104,265
$ 6,066
6 %
Equipment lease expense 7,604
6,205
1,399
23 %

Operating income $ 6,867
$ 11,212
$ (4,345 ) (39 )%
Depreciation and amortization expense 18,341
18,088
253
1 %
Loss on asset sales and disposals 1,983
908
1,075
118 %
Severance costs
—

358

(358 )
(100 )%
Multi-employer pension plan withdrawal settlement 1,524
—
1,524
NM
Adjusted EBITDA $ 28,715
$ 30,566
$ (1,851 ) (6 )%

(b)

Other primarily includes appliance and material sales, and various customer fee income.

(c)

Gross margin from "Propane and other gas liquids sales" represents "Revenues - Propane and other gas liquids sales" less "Cost of sales - Propane and other gas liquids sales" and does not include depreciation and amortization.

~~(a) Gross margin for Other Gas Sales is allocated to Gross margin "Retail - Sales to End Users" and "Wholesale - Sales to Resellers" based on the volumes in each respective category.~~

(d)

Operating, general and administrative expense” above includes both the “Operating expense – personnel, vehicle, plant and other” and the “General and administrative expense” captions in the condensed consolidated statement of operations.

~~(b) Other primarily includes appliance and material sales, and to a lesser extent various customer fee income.~~

(e)

Lease accounting standard adjustment reflects the additional expense recognized in excess of cash paid.

(c) Gross margin from "Propane and other gas liquids sales" represents "Revenues - Propane and other gas liquids sales" less "Cost of sales - Propane and other gas liquids sales" and does not include depreciation and amortization.

(d) Operating, general, and administrative expenses are included in the calculation of Adjusted EBITDA. General and administrative expenses include only certain items that were directly attributable to the ~~propane operations and related equipment sales~~ ~~segment.~~

Propane sales volumes during the three months ended October 31, ~~2018~~2019 increased 3%1%, or ~~5.9~~1.3 million gallons, from the prior year period due to increased sales volumes to both retail ~~customers of 10.4 million gallons, partially offset by a decrease of 4.5 million gallons to~~and wholesale customers. The increase in propane sales volumes to retail customers was primarily due to the 4%3% increase in retail customer count.

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Our wholesale sales price per gallon ~~largely~~partially correlates to the change in the wholesale market price of propane. The wholesale market price at major supply points in Mt. Belvieu, Texas ~~major supply point~~ during the three months ended October 31, ~~2018~~2019 averaged ~~15% greater~~56% less than the prior year period, while at the Conway, Kansas major supply point prices averaged 5%51% less than the prior period. The wholesale market price at Mt. Belvieu, Texas averaged ~~$0.99~~$0.44 and ~~$0.86~~$0.99 per gallon during the three months ended October 31, ~~2018~~2019 and ~~2017,~~2018, respectively, while the wholesale market price at Conway, Kansas averaged ~~$0.78~~$0.38 and ~~$0.82~~$0.78 per gallon during the three months ended October 31, 2019 and 2018, ~~and 2017,~~ respectively.

This decrease in the wholesale cost of propane contributed to our decrease in revenues, but an increase in gross margin.

Revenues

Retail sales ~~increased $34.0~~decreased $37.3 million compared to the prior period. This ~~increase~~decrease resulted from ~~an $18.0~~a $37.7 million ~~increase~~decrease in sales price per ~~gallon and $16.0 million in increased sales volumes, as discussed above.~~

gallon.

Wholesale sales decreased ~~$4.5~~$11.2 million compared to the prior period. This decrease primarily resulted from ~~an $3.1~~a $13.7 million decrease in sales ~~volumes.~~

price per gallon partially offset by a $2.4 million increase in sales volumes, as discussed above, and due to the impact of increased competitive pressures related to fixed priced contracts, some of which are long term. This is a trend that continues from the prior year period.

Other gas sales ~~increased $2.7~~decreased $13.0 million compared to the prior year period primarily due to ~~an increase in~~decreased sales price per ~~gallon, as discussed above.~~

gallon.

Other ~~sales decreased $13.8~~revenues increased $2.5 million compared to the prior year period primarily due to increased fees from service labor related to the ~~sale of our lower margin propane related equipment business at the end of fiscal 2018.~~

3% increase in retail customer count as discussed above.

Gross margin - Propane and other gas liquids sales

Gross margin increased ~~$7.6~~$8.5 million primarily due to the increase in gross margin per gallon, ~~sales~~ as discussed above. The increase in retail gross margin of ~~$12.0~~$7.5 million resulted from an increase in gross margin and to a ~~combination of increases~~lesser extent an increase in retail customer counts, as discussed ~~above and an~~above. The $1.1 million increase ~~in gross margin per gallon. The $4.4 million decrease~~ in wholesale gross margin primarily relates to increased volumes, as discussed above, partially offset by decreased gross margin per ~~gallon.~~

gallon due to the impact of increased competitive pressures on the sales price per gallon, as discussed above.

Gross margin - other

Gross margin ~~decreased $3.1~~increased $1.9 million compared to the prior year period primarily due to increased fees from service labor related to the ~~sale of our lower margin propane related equipment business at the end of fiscal 2018.~~

3% increase in retail customer count as discussed above.

Operating income

Operating income ~~decreased $4.3~~increased $14.1 million primarily due to a $6.1 million increase in "Operating, general and administrative expense", a $3.1 million decrease in "Gross margin - other", as discussed above and a $1.4 million increase in "Equipment lease expense", partially offset by a $7.6an $8.5 million increase in "Gross margin - Propane and other gas liquid sales", as discussed ~~above.~~above, a $2.3 million decrease in “Loss on asset sales and disposals”, a $2.0 million decrease in “Non-cash employee stock ownership plan compensation charge” and a $0.3 million decrease in “Operating, general and administrative expense”. "Operating, general and administrative expense" decreased due to a $4.5 million decrease in “General and administrative expense”, partially offset by a $4.2 million increase in “Operating expense – personnel, vehicle, plant and other”. “General and administrative expense” decreased primarily due to a $4.4 million decrease in legal costs. “Operating expense – personnel, vehicle, plant and other” increased primarily due to a ~~$4.9~~$3.8 million increase in field personnel costs, a ~~$1.5~~$0.7 million increase in plant and office costs, and a $0.5 million increase in vehicle and fuel costs, partially offset by a previous $1.5 million pension settlement charge associated with the withdrawal from a multi-employer pension plan ~~and a $1.0 million increase in general liability and workers compensation costs, partially offset by $3.0 million of costs incurred~~that was not repeated in the ~~prior year period related to a business sold in fiscal 2018. Equipment lease expense increased due to our efforts to upgrade our vehicle fleet.~~

current period.

Adjusted EBITDA

Adjusted EBITDA ~~decreased $1.9~~increased $7.3 million primarily due to $4.9 million increase in "Operating, general and administrative expense", a $3.1 million decrease in "Gross margin - other" and a $1.4 million increase in "Equipment lease expense", partially offset by a $7.6an $8.5 million increase in "Gross margin - Propane and other gas liquid sales", ~~all~~ as discussed ~~above.~~above, and a $1.9 million increase in “Gross margin – other” as discussed above, partially offset by a $2.8 million increase in “Operating, general and administrative”. "Operating, general and administrative expense" increased due to a $5.8 million increase in “Operating expense – personnel, vehicle, plant and other”, partially offset by a $3.0 million decrease in “General and administrative expense”. “Operating expense – personnel, vehicle,

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plant and other” increased primarily due to a ~~$4.9~~$3.8 million increase in field personnel costs, a ~~$1.5~~$0.7 million increase in plant and office costs, and a $0.5 million increase in vehicle and fuel ~~costs~~costs. “General and ~~a $1.0 million increase in general liability and workers compensation costs, partially offset by $3.0 million of costs incurred in the prior year period related to a business sold in fiscal 2018.~~

~~Corporate and other operations~~

~~The following table summarizes the financial results of our corporate operations for the periods indicated. Prior period amounts also include results of our midstream operations.~~

(amounts in thousands)
Three months ended October 31, 2018 2017 Increase (Decrease)
Volumes (barrels):
Crude oil hauled —
12,150
(12,150 ) NM
Crude oil sold —
1,829
(1,829 ) NM
Salt water volume processed —
4,940
(4,940 ) NM

Revenues -
Crude oil and other logistics $ —
$ 17,341
$ (17,341 ) NM
Crude oil sales —
99,019
(99,019 ) NM
Other —
4,400
(4,400 ) NM

$ —
$ 120,760
$ (120,760 ) NM

Gross margin - (a)
Crude oil and other logistics $ —
$ 10,956
$ (10,956 ) NM
Crude oil sales —
649
(649 ) NM
Other —
1,030
(1,030 ) NM

$ —
$ 12,635
$ (12,635 ) NM

Operating, general, and administrative expenses $ 14,179
$ 19,361
$ (5,182 ) (27 )%
Equipment lease expense 259
536
(277 ) (52 )%

Operating loss $ (20,358 ) $ (18,855 ) $ (1,503 ) (8 )%
  Depreciation and amortization expense 651
7,644
(6,993 ) (91 )%
  Non-cash employee stock ownership plan compensation charge
2,748

3,962

(1,214 )
(31 )%
  Loss (gain) on asset sales and disposals 2,521
(13 ) 2,534
NM
  Legal fees and settlements 3,564
—
3,564
NM
  Severance costs —
1,305
(1,305 ) NM
  Unrealized (non-cash) gain on changes in fair value of derivatives not designated as hedging instruments —
1,607
(1,607 ) NM
Adjusted EBITDA $ (10,874 ) $ (4,350 ) $ (6,524 ) NM

~~NM - Not meaningful~~

~~(a) Gross margin represents "Revenues - Midstream operations" less "Cost of sales - Midstream operations" and does not include depreciation and amortization.~~

In various dispositions that occurred during fiscal 2018, we sold our midstream businesses, thus much of the significant variances reported above result from the cessation of the midstream business by the end of fiscal 2018.

~~Operating loss~~

Operating loss increased by $1.5 million during the three months ended October 31, 2018 as compared to the three months ended October 31, 2017. This increase in operating loss was primarily due to increased corporate costs of $1.7 million, partially offset by the $0.2 million decrease in operating loss related to our midstream operations. Corporate costs increasedadministrative expense” decreased primarily due to a ~~$3.7 million increase in legal costs, partially offset by a $1.2~~$2.9 million decrease in ~~non-cash employee stock ownership plan compensation~~legal costs.

~~Adjusted EBITDA~~

~~Adjusted EBITDA decreased $6.5 million primarily due to the $6.9 million decrease in Adjusted EBITDA reported by Midstream operations in fiscal 2018.~~

Liquidity and Capital Resources

General

Our primary sources of liquidity and capital resources are cash flows from operating activities, borrowings under our ~~secured credit facility~~Senior Secured Credit Facility and our accounts receivable securitization facility and funds received from sales of debt and equity securities. As of October 31, ~~2018,~~2019, our total liquidity was ~~$250.1~~$131.7 million, which is comprised of ~~$63.2~~$29.8 million in cash and ~~$186.9~~$101.9 million of availability under our ~~secured credit~~Senior Secured Credit Facility and accounts receivable securitization facility. These sources of liquidity and short term capital resources are intended to fund our working capital requirements, letter of credit requirements, ~~debt service payments,~~and acquisition and capital ~~expenditures and distributions~~expenditures. Our access to ~~our unitholders. Our liquidity and~~long term capital resources, in order to address our leverage, may be affected by our ability to access the capital markets, covenants in our debt agreements, unforeseen demands on cash, or other events beyond our control.

We have engaged Moelis & Company LLC as our financial advisor and the law firm of Squire Patton Boggs LLP to assist us in our ongoing process to address our upcoming debt maturities.

Financial Covenants

As more fully described in this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations under the subheading “Financial Covenants”, above, the indenture governing the outstanding notes of Ferrellgas Partners and the agreements governing the operating partnership’s indebtedness contain various covenants that limit our ability to, among other things, incur additional indebtedness and make distribution payments to our common unitholders. Given the limitations of these covenants, we continue to ~~execute on~~pursue a strategy to reduce our debt and interest expense. If we are unsuccessful with our strategy to further reduce debt and interest expense, we ~~may~~will continue to be restricted from making distribution payments to our common unitholders.

We may not meet the applicable financial tests in future quarters if we were to experience:

significantly warmer than normal temperatures during the winter heating season;

significant and sustained increases in the wholesale cost of propane that we are unable to pass along to our customers;

~~significantly warmer than normal temperatures during the winter heating season;~~

a more volatile energy commodity cost environment;

~~significant and sustained increases in the wholesale cost of propane that we are unable to pass along to our customers;~~

an unexpected downturn in business operations;

~~a more volatile energy commodity cost environment;~~

a significant delay in the collection of accounts or notes receivable;

~~an unexpected downturn in business operations;~~

a failure to execute our debt and interest expense reduction and refinancing initiatives;

~~a significant delay in the collection of accounts or notes receivable;~~

a change in customer retention or purchasing patterns due to economic or other factors in the United States;

~~a failure to execute our debt and interest expense reduction and refinancing initiatives;~~

a material downturn in the credit and/or equity markets; or

~~a change in customer retention or purchasing patterns due to economic or other factors in the United States;~~

a large uninsured, unfavorable lawsuit judgment or settlement.

~~a material downturn in the credit and/or equity markets; or~~

~~a large uninsured, unfavorable lawsuit judgment or settlement.~~

We may seek additional capital as part of our debt reduction strategy.

As discussed above, no distributions will be paid to common unitholders in December ~~2018~~2019 for the three months ended October 31, ~~2018.~~2019. Unless the indenture governing the outstanding notes due 2020 is amended or replaced, ifor the Ferrellgas ~~Partners'~~Partners’ consolidated fixed charge coverage ratio ~~does not improve~~improves to at least 1.75x, this covenant will ~~not allow~~continue to restrict us ~~to make~~from making common unit ~~distributions for our quarter ending January 31, 2019 and beyond.~~distributions.

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Distributable Cash Flow

Distributable cash flow attributable to equity investors is reconciled to net ~~loss~~earnings (loss) attributable to Ferrellgas Partners, L.P., the most directly comparable GAAP measure, in this Item 2. ~~Management's~~Management’s Discuss and Analysis of Financial Condition and Results of Operations under the subheading "Non-GAAP Financial ~~Measures."~~Measures" above. A comparison of distributable cash flow attributable to equity investors to cash distributions paid to equity investors for the twelve months ended October 31, ~~2018~~2019 to the twelve months ended July 31, ~~2018~~2019 is as follows (in thousands):


	Distributable		Cash reserves		Cash distributions
	cash flow attributable		(deficiency) approved		paid to
	to equity investors		by our General Partner		equity investors		DCF ratio (a)
Three months ended October 31, 2019	$	(23,123)	$	(23,124)	$	1
Fiscal 2019		22,567		12,338		10,229
Less: Three months ended October 31, 2018		(27,384)		(37,299)		9,915
Twelve months ended October 31, 2019	$	26,828	$	26,513	$	315	NM

Twelve months ended July 31, 2019		22,567		12,338		10,229	2.21
Change	$	4,261	$	14,175	$	(9,914)	NM

(a)

DCF ratio is calculated as Distributable cash flow attributable to equity investors divided by Cash distributions paid to equity investors.

(b)

NM – Not Meaningful.

Distributable Cash Flow to equity investors Cash reserves (deficiency) approved by our General Partner Cash distributions paid to equity investors DCF ratio
Three months ended October 31, 2018 $ (27,384 ) $ (37,299 ) $ 9,915

For the year ended July 31, 2018 62,904
22,934
39,970

Less: Three months ended October 31, 2017 (19,343 ) (29,256 ) 9,913

Twelve months ended October 31, 2018 $ 54,863
$ 14,891
$ 39,972
1.37

Twelve months ended July 31, 2018 62,904
22,934
39,970
1.57
Change $ (8,041 ) $ (8,043 ) $ 2
(0.20 )

For the twelve months ended October 31, ~~2018,~~2019, distributable cash flow attributable to equity investors ~~decreased $8.0~~increased $4.3 million compared to the twelve months ended July 31, ~~2018.~~2019. Cash distributions paid to equity investors ~~were unchanged, because both the number of common units outstanding and our annual distribution rate had not changed~~decreased by $9.9 million during that twelve month ~~period. Our distribution coverage ratio decreased to 1.37 for~~period, because no distributions have been paid since the ~~twelve~~three months ended October 31, 2018, ~~compared~~which were declared in connection with the ~~twelve months~~three month period ended July 31, ~~2018.~~2018. Cash reserves, which we utilize to meet future anticipated expenditures, increased by ~~$14.9~~$26.5 million during the twelve months ended October 31, ~~2018~~2019 compared to an increase of ~~$22.9~~$12.3 million in the twelve months ended July 31, ~~2018.~~

2019.

We believe that the liquidity available from ~~our cash on hand,~~ cash flows from operating activities, our ~~senior secured credit facility,~~Senior Secured Credit Facility, and the accounts receivable securitization facility, combined with our other debt and interest expense reduction initiatives, will be sufficient to meet our capital expenditure, working capital and letter of credit requirements.

During periods of high volatility, our risk management activities may expose us to the risk of counterparty margin calls in amounts greater than we have the capacity to fund. Likewise, our counterparties may not be able to fulfill their margin calls from us or may default on the settlement of positions with us.

Our working capital requirements are subject to, among other things, the price of propane, delays in the collection of receivables, volatility in energy commodity prices, liquidity imposed by insurance providers, downgrades in our credit ratings, decreased trade credit, significant acquisitions, the weather, customer retention and purchasing patterns and other changes in the demand for propane. Relatively colder weather or higher propane prices during the winter heating season are factors that could significantly increase our working capital requirements.

Our ability to satisfy our obligations is dependent upon our future performance, which will be subject to prevailing weather, economic, financial and business conditions and other factors, many of which are beyond our control. Due to the seasonality of the retail propane distribution business, a significant portion of our propane operations and related products cash flows from operations is generated during the winter heating season. Our net cash provided by operating activities primarily reflects earnings from our business activities adjusted for depreciation and amortization and changes in our working capital accounts. Historically, we generate significantly lower net cash from operating activities in our first and fourth fiscal quarters as compared to the second and third fiscal quarters due to the seasonality of our propane operations and related equipment sales operations.

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Operating Activities

Ferrellgas Partners

Net cash provided by operating activities was $7.1 million for the three months ended October 31, 2019, compared to net cash used in operating activities ~~was~~of $17.6 million for the three months ended October 31, ~~2018, compared to net~~2018. This increase in cash provided by ~~operating activities of $7.9 million for the three months ended October 31, 2017. This decrease in cash provided by~~

operating activities was primarily due to a ~~$9.6~~$14.9 million ~~increase~~decrease in working capital requirements, ~~and a $14.6~~an $8.6 million ~~decrease in cash flow from operations.~~

~~The decrease~~increase in cash flow from operations ~~is primarily due to a $8.2 million decrease in gross margin, as well as a net increase in "General and administrative expense" and "Equipment lease expense" of $2.1 million,~~ and a ~~$3.1~~$1.3 million ~~increase in "Interest expense," due to increased interest rates on our new secured credit facility.~~

inflow associated with other assets and other liabilities.

The ~~increase~~decrease in working capital requirements for the three months ended October 31, ~~2018~~2019 compared to the three months ended October 31, ~~2017~~2018 was primarily due to ~~a $33.2 million increase in requirements for other current liabilities due primarily to~~ an ~~increase in margin deposits paid by us during the three months ended October 31, 2018 compared to the three months ended October 31, 2017, partially offset by a $13.2~~$18.3 million decrease in requirements for ~~accounts receivable in our propane operations and related equipment sales segment~~ inventory due to declining propane prices in the current quarter compared to the prior quarter, partially offset by a $3.8 million increase in requirements for accounts and notes receivable, partially due to increases in the volume of propane ~~sold, and~~sold.

The increase in cash flow from operations is primarily due to a ~~$10.3~~$10.4 million increase in gross profit, a $2.3 million decrease in ~~requirements~~“Loss on asset sales and disposals”, partially offset by a $1.8 million increase in "Interest expense," due to increased borrowings on our Senior Secured Credit Facility, and by anet increase in "Operating expense – personnel, plant, vehicle and other", "General and administrative expense" and "Operating expense – equipment lease expense" of $0.3 million.

The operating partnership

Net cash provided by operating activities was $7.1 million for ~~inventory primarily resulting from increases in Midstream inventory in~~ the three months ended October 31, ~~2017.~~

~~The operating partnership~~

~~Net~~2019, compared to net cash used in operating activities ~~was~~of $17.6 million for the three months ended October 31, ~~2018, compared to net cash provided by operating activities of $8.0 million for the three months ended October 31, 2017.~~2018. This ~~decrease~~increase in cash provided by operating activities was primarily due to a ~~$9.9~~$14.9 million ~~increase~~decrease in working capital requirements, ~~a $14.6~~an $8.6 million ~~decrease~~increase in cash flow from operations and a ~~$1.1~~$1.3 million ~~outflow~~inflow associated with other assets and other liabilities.

The decrease in cash flow from operations is primarily due to a $8.2 million decrease in gross margin, as well as a net increase in "General and administrative expense" and "Equipment lease expense" of $2.1 million, and a $3.0 million increase in "Interest expense," due to increased interest rates on our new secured credit facility.

~~The increase~~ in working capital requirements for the three months ended October 31, ~~2018~~2019 compared to the three months ended October 31, ~~2017~~2018 was primarily due to ~~a $33.2 million increase in requirements for other current liabilities due primarily to~~ an ~~increase in margin deposits paid by us during the three months ended October 31, 2018 compared to the three months ended October 31, 2017, partially offset by a $13.2~~$18.3 million decrease in requirements for ~~accounts receivable in our propane operations and related equipment sales segment~~ inventory due to declining propane prices in the current quarter compared to the prior quarter, partially offset by a $3.8 million increase in requirements for accounts and notes receivable, partially due to increases in the volume of propane ~~sold, and~~sold.

The increase in cash flow from operations is primarily due to a ~~$10.3~~$10.4 million increase in gross profit, a $2.3 million decrease in ~~requirements for inventory primarily resulting from increases~~“Loss on asset sales and disposals”, partially offset by a $1.7 million increase in ~~Midstream inventory~~"Interest expense," due to increased borrowings on our Senior Secured Credit Facility, and by anet increase in ~~the three months ended October 31, 2017.~~

"Operating expense – personnel, plant, vehicle and other", "General and administrative expense" and "Operating expense – equipment lease expense" of $0.3 million.

Investing Activities

Ferrellgas Partners

Capital Requirements

Our business requires continual investments to upgrade or enhance existing operations and to ensure compliance with safety and environmental regulations. Capital expenditures for our business consist primarily of:

Maintenance capital expenditures. These capital expenditures include expenditures for betterment and replacement of property, plant and equipment, and from time to time may include the purchase of assets that are typically leased, rather than to generate incremental distributable cash flow. Examples of maintenance capital expenditures include a routine replacement of a worn-out asset or replacement of major vehicle components; and

Growth capital expenditures. These expenditures are undertaken primarily to generate incremental distributable cash flow. Examples include expenditures for purchases of both bulk and portable propane tanks and other equipment to facilitate expansion of our customer base and operating capacity.

~~Maintenance capital expenditures. These capital expenditures include expenditures for betterment and replacement~~

Table of property, plant and equipment rather than to generate incremental distributable cash flow. Examples of maintenance capital expenditures include a routine replacement of a worn-out asset or replacement of major vehicle components; andContents

Net cash used in investing activities was $34.7 million for the three months ended October 31, 2019, compared to net cash used in investing activities of $27.3 million for the three months ended October 31, ~~2018, compared to net cash used in investing activities of $32.8 million for the three months ended October 31, 2017.~~2018. This ~~decrease~~increase in net cash used in investing activities is primarily due to a ~~$9.2~~ $16.9 million ~~decrease~~increase in "Cash payments to construct assets in connection with future lease transactions" and a $1.8 million increase in "Business acquisitions, net of cash acquired", partially offset by a ~~$3.3~~$5.9 million increase in ~~"Capital~~“Cash receipts in connection with leased vehicles” and a $5.3 million decrease in "Capital expenditures".

The ~~increase~~decrease in "Capital expenditures" is primarily due to ~~increases~~decreases in growth capital expenditures, partially offset by ~~decreases~~increases in maintenance capital expenditures ~~in our Propane operations and related equipment sales segment~~ during the three

months ended October 31, ~~2018.The increase~~2019. The decrease in growth capital expenditures is primarily due to expenditures for the construction of new ~~plants and a continued increase in the number of cylinders and cages purchased to support increases in~~portable tank exchange ~~sales and selling locations.~~ production plants that occurred during the three months ended October 31, 2018. This ~~increase~~decrease was partially offset by ~~a decrease~~an increase in maintenance capital expenditures, primarily due to ~~a reduction~~an increase in lease buyouts on propane delivery trucks and the purchase of new propane delivery trucks, compared to the three months ended October 31, ~~2017.~~

The decrease in "Business acquisitions, net of cash acquired" is attributable to three smaller acquisitions by our Propane operations and related equipment sales segment during the three months ended October 31, 2018 compared to the acquisitions completed during the three months ended October 31, 2017.

2018.

Due to the mature nature of our ~~Propane~~ operations ~~and related equipment sales operations segment,~~ we do not anticipate significant fluctuations in maintenance capital ~~expenditures.~~expenditures, with the exception of future decisions regarding lease versus buy financing options. However, future fluctuations in growth capital expenditures could occur due to the opportunistic nature of these projects.

The operating partnership

The investing activities discussed above also apply to the operating partnership.

Financing Activities

Ferrellgas Partners

Net cash provided by financing activities was $46.3 million for the three months ended October 31, 2019, compared to net cash used in financing activities ~~was~~of $11.2 million for the three months ended October 31, ~~2018, compared to net cash provided by financing activities of $26.2 million for the three months ended October 31, 2017.~~2018. This ~~decrease~~increase in cash flow provided by financing activities was primarily due to a ~~$23.6~~$48.8 million ~~decrease~~net increase in ~~proceeds from long-term debt~~short-term borrowings and a ~~$13.9~~$9.8 million ~~net decrease~~reduction in ~~proceeds from short-term borrowings.~~

~~Distributions~~

~~During the three months ended October 31, 2018, Ferrellgas Partners~~distributions, partially offset by a $0.9 million increase in cash paid ~~the quarterly per unit distributions on all common units of $0.10 in connection with the distributions declared~~ for the three month period ended July 31, 2018. Total distributions paid to common unitholders during the three months ended October 31, 2018, including the related general partner distributions, was $9.8 million. As discussed above, no distribution on common units or the related general partner distribution will be made in December 2018 for the three months ended October 31, 2018 or for any future quarterly period until Ferrellgas Partners' fixed charge coverage ratio is at least 1.75x, or the indenture governing the notes of Ferrellgas Partners is amended or replaced.

~~Secured~~financing costs.

Senior secured credit facility

The Senior Secured Credit Facility consists of a $300.0 million revolving line of credit (the "Revolving Facility") as well as a $275.0 million term loan (the "Term Loan"), which mature on the earlier of (i) May 4, ~~2023.~~2023 and (ii) the date that is 90 days prior to the earliest maturity date of any series of the operating partnership’s outstanding notes after giving effect to any extensions or refinancings thereof. As of this filing, the earliest maturity date of any series of the operating partnership’s outstanding notes is May 1, 2021. The Revolving Facility borrowings bear interest at the Prime Rate + 4.75% and Term Loan borrowings bear interest at LIBOR + 5.75%. The Revolving Facility, as amended, includes a ~~$125.0~~$140.0 million sublimit for the issuance of letters of credit. Borrowings under the Senior Secured Credit Facility are available for working capital needs, capital expenditures and other general partnership purposes, including the refinancing of existing indebtedness and acquisitions, within certain limits.

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increased from $125.0 million to $140.0 million the sub-limit for issuance of letters of credit that exists within the $300.0 million Revolving Facility; and (ii) modified a component of the fixed charge coverage ratio calculation to exclude payments related to the manufacture of vehicles used for propane delivery or related service up to specified amounts if operating lease commitments sufficient to cover such excluded amounts have been obtained and those payments are in fact reimbursed under such operating leases within nine months thereafter. In addition, the Second Amendment provided waivers for any event of default that has or would otherwise arise with respect to the delivery of an unqualified report of Grant Thornton LLP as to going concern with respect to the audited financial statements of Ferrellgas, L.P. and with respect to the timely delivery of financial information for fiscal 2019, thereby resolving the disagreement with the agent under the Senior Secured Credit Facility regarding alleged events of default described in the Annual Report on Form 10-K for fiscal 2019. As a result of the Second Amendment, the Term Loan was reclassified from current to long-term, consistent with its underlying maturity.

The Senior Secured Credit Facility is secured with substantially all of the assets of the operating partnership and its subsidiaries, and Ferrellgas Partners’ and the general partner’s partnership interests in the operating partnership, and contains various affirmative and negative covenants and default provisions, as well as requirements with respect to the maintenance of specified financial ratios and limitations on the making of loans and investments.

As of October 31, 2018, the operating partnership had outstanding borrowings of $275.0 million under the Term Loan at a rate of 8.01%, which was classified as long-term debt and no borrowings under the Revolving Facility. As of October 31, 2018, Ferrellgas had available borrowing capacity under the Revolving Facility of $186.9 million. As of July 31, 2018,2019, the operating partnership had borrowings of $275.0 million under the Term Loan at aan interest rate of ~~7.86%~~7.89%, which was classified as long-term debt,

and ~~$32.8~~$80.0 million under the Revolving Facility, at a weighted average interest rate of ~~9.75%~~9.09%. As of October 31, 2019, Ferrellgas had available borrowing capacity under the Revolving Facility of $101.9 million. As of July 31, 2019, the operating partnership had borrowings of $275.0 million under the Term Loan at an interest rate of 8.16%, which was classified as currentand $43.0 million under the Revolving Facility at a weighted average interest rate of 9.47%, which was classified as short-term borrowings. As of July 31, ~~2018,~~2019, Ferrellgas had available borrowing capacity under ~~its~~the Revolving Facility of ~~$159.3~~$155.1 million.

Letters of credit outstanding at October 31, ~~2018~~2019 totaled ~~$113.1~~$118.1 million and were used to secure insurance arrangements, product purchases, and commodity hedges. At October 31, ~~2018, we~~2019, Ferrellgas had remaining available letter of credit capacity of ~~$11.9 million.~~

$6.9 million (or $21.9 million, if the Second Amendment had been effective as of October 31, 2019).

Accounts receivable securitization

Ferrellgas Receivables is a consolidated subsidiary. Expenses associated with accounts receivable securitization transactions are recorded in “Interest expense” in the condensed consolidated statements of operations. Additionally, borrowings and repayments associated with these transactions are recorded in “Cash flows from financing activities” in the condensed consolidated statements of cash flows.

Cash flows from our accounts receivable securitization facility ~~increased $13.0~~decreased $21.0 million, as we received net funding of $11.0 million from this facility during the three months ended October 31, 2019 as compared to receiving net funding of $32.0 million from this facility during the three months ended October 31, ~~2018 as compared to receiving net funding of $19.0 million from this facility during the three months ended October 31, 2017.~~

2018.

Our utilization of the accounts receivable securitization facility is limited by the amount of accounts receivable that we are permitted to securitize according to the facility agreement. As of October 31, ~~2018,~~2019, we had received cash proceeds of ~~$90.0~~$73.0 million related to the securitization of our trade accounts receivable, with no remaining capacity to receive additional proceeds. As of October 31, ~~2018,~~2019, the weighted average interest rate was ~~5.3%~~5.2%. As our trade accounts receivable increase during the winter heating season, the securitization facility permits us to receive greater proceeds as eligible trade accounts receivable increase, thereby providing additional cash for working capital needs.

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On December 5, 2019, we entered into an eighth amendment to the accounts receivable securitization facility in order to align certain deliverables under the accounts receivable securitization facility with similar requirements under the financing agreement governing the Senior Secured Credit Facility.

Distributions

During the three months ended October 31, 2018, Ferrellgas Partners paid a per unit distribution on all common units of $0.10 in connection with the distributions declared for the three month period ended July 31, 2018. No distribution on common units was made for the three month periods ended October 31, 2018, January 31, 2019, April 30, 2019, July 31, 2019 or October 31, 2019.

Total distributions paid to common unitholders during fiscal 2019, including the related general partner distributions, was $9.8 million. As discussed above, no distribution on common units was made in December 2018, March 2019, June 2019, September 2019 and will not be made in December 2019 for the three months ended October 31, 2019 or for any future quarterly period until Ferrellgas Partners’ fixed charge coverage ratio is at least 1.75x, or the indenture governing the notes of Ferrellgas Partners is amended or replaced.

The operating partnership

The financing activities discussed above also apply to the operating partnership except for cash flows related to distributions paid, as discussed below.

~~Distributions~~

Cash distribution paid

The operating partnership paid cash distributions of ~~$10.0~~$0.1 million and ~~$9.9~~$10.0 million during the three months ended October 31, ~~2018~~2019 and ~~2017,~~2018, respectively. The operating partnership ~~expects~~is scheduled to ~~pay cash distributions~~make a distribution of ~~$15.6~~$15.4 million to Ferrellgas Partners inL.P. and $0.2 million to the general partner on December ~~2018~~15, 2019 related to ~~allow it to pay its semi-annual interest on its 8.625% senior notes.~~

the three month period ended October 31, 2019.

Disclosures about Effects of Transactions with Related Parties

We have no employees and are managed and controlled by our general partner. Pursuant to our partnership agreements, our general partner is entitled to reimbursement for all direct and indirect expenses incurred or payments it makes on our behalf, and all other necessary or appropriate expenses allocable to us or otherwise reasonably incurred by our general partner in connection with operating our business. These reimbursable costs, which totaled ~~$66.1~~$70.0 million for the three months ended October 31, ~~2018,~~2019, include operating expenses such as compensation and benefits paid to employees of our general partner who perform services on our behalf as well as related general and administrative expenses.

~~Related party common unitholder information consisted of the following:~~

Common unit ownership at Distributions (in thousands) paid during the three months ended
October 31, 2018 October 31, 2018
Ferrell Companies (1) 22,529,361
$ 2,253
FCI Trading Corp. (2) 195,686
20
Ferrell Propane, Inc. (3) 51,204
5
James E. Ferrell (4) 4,763,475
476

Ferrellgas Partners held by FCI Trading Corp. ("FCI Trading") and Ferrell Propane, Inc. ("Ferrell Propane"), respectively, bringing Ferrell Companies' beneficial ownership to 23.4% at October 31, 2018.

~~(2) FCI Trading is an affiliate of the general partner and thus a related party.~~

~~(3) Ferrell Propane is controlled by the general partner and thus a related party.~~

(4) James E. Ferrell is the Interim Chief Executive Officer and President of the general partner; and is Chairman of the Board of Directors of the general partner and thus a related party. JEF Capital Management owns 4,758,859 of these common units and is wholly-owned by the James E. Ferrell Revocable Trust Two and other family trusts, all of which James E. Ferrell and/or his family members are the trustees and beneficiaries. James E. Ferrell holds all voting common stock of JEF Capital Management. The remaining 4,616 common units are held by Ferrell Resources Holding, Inc., which is wholly-owned by the James E. Ferrell Revocable Trust One, for which James E. Ferrell is the trustee and sole beneficiary.

During the three months ended October 31, ~~2018,~~2019, Ferrellgas Partners and the operating partnership together paid the general partner distributions of ~~$0.2 million.~~

$1.0 thousand.

As discussed previously, Ferrellgas Partners ~~was~~continues to be not in compliance with the consolidated fixed charge coverage ratio under its note indenture, and thus ~~was~~remains unable to make restricted payments, including distributions to unitholders.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We did not enter into any risk management trading activities during the three months ended October 31, ~~2018.~~2019. Our remaining market risk sensitive instruments and positions have been determined to be “other than trading.”

Commodity price risk management

Our risk management activities primarily attempt to mitigate price risks related to the purchase, storage, transport and sale of propane generally in the contract and spot markets from major domestic energy companies. We attempt to mitigate these price risks through the use of financial derivative instruments and forward propane purchase and sales contracts.

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Our risk management strategy involves taking positions in the forward or financial markets that are equal and opposite to our positions in the physical products market in order to minimize the risk of financial loss from an adverse price change. This risk management strategy is successful when our gains or losses in the physical product markets are offset by our losses or gains in the forward or financial markets. Propane related financial derivatives are designated as cash flow hedges.

Our risk management activities include the use of financial derivative instruments including, but not limited to, price futures, swaps, options ~~futures~~ and basis swaps to seek protection from adverse price movements and to minimize potential losses. We enter into these financial derivative instruments ~~directly with third parties in the over-the-counter market and~~ with brokers who are clearing members with the Intercontinental Exchange or the Chicago Mercantile ~~Exchange.~~Exchange and, to a lesser extent, directly with third parties in the over-the-counter market. We also enter into forward propane purchase and sales contracts with counterparties. These forward contracts qualify for the normal purchase normal ~~sales~~sale exception within GAAP guidance and are therefore not recorded on our financial statements until settled.

Transportation Fuel Price Risk

From time to time, our risk management activities also attempt to mitigate price risks related to the purchase of gasoline and diesel fuel for use in the transport of propane from retail fueling stations. When employed, we attempt to mitigate these price risks through the use of financial derivative instruments.

When employed, our risk management strategy involves taking positions in the financial markets that are not more than the forecasted purchases of fuel for our internal use in the retail and supply propane delivery fleet in order to minimize the risk of decreased earnings from an adverse price change. This risk management strategy locks in our purchase price and is successful when our gains or losses in the physical product markets are offset by our losses or gains in the financial markets. Our transport fuel financial derivatives are not designated as cash flow hedges.

Risk Policy and Sensitivity Analysis

Market risks associated with energy commodities are monitored daily by senior management for compliance with our commodity risk management policy. This policy includes an aggregate dollar loss limit and limits on the term of various contracts. We also utilize volume limits for various energy commodities and review our positions daily where we remain exposed to market risk, so as to manage exposures to changing market prices.

We have prepared a sensitivity analysis to estimate the exposure to market risk of our energy commodity positions. Forward contracts, futures, swaps and options outstanding as of October 31, ~~2018~~2019 and July 31, ~~2018,~~2019, that were used in our risk management activities were analyzed assuming a hypothetical 10% adverse change in prices for the delivery month for all energy commodities. The potential loss in future earnings from these positions due to a 10% adverse movement in market prices of the underlying energy commodities was estimated at ~~$16.2~~$9.3 million and ~~$13.7~~$8.0 million as of October 31, ~~2018~~2019 and July 31, ~~2018,~~2019, respectively. The preceding hypothetical analysis is limited because changes in prices may or may not equal 10%, thus actual results may differ. Our sensitivity analysis does not include the anticipated transactions associated with these transactions, which we anticipate will be 100% effective.

Credit risk

We maintain credit policies with regard to our counterparties that we believe significantly ~~minimize~~reduce overall credit risk. These policies include ~~an evaluation~~evaluating and monitoring of counterparties’ financial condition (including credit ratings), and entering into agreements with counterparties that govern credit guidelines.

Our other counterparties principally consist of major energy companies ~~who~~that are suppliers, marketers, wholesalers, retailers and end ~~users~~users; and major U.S. financial institutions. The overall impact due to certain changes in economic, regulatory and other events may impact our

overall exposure to credit risk, either positively or negatively in that counterparties may be similarly impacted. Based on our policies, exposures, credit and other reserves, management does not anticipate a material adverse effect on financial position or results of operations as a result of counterparty performance.

~~On June 25, 2018, the FGP Parties and Mr. Ballengee entered into an Omnibus Agreement (the “Omnibus Agreement~~”) that, among other things, terminated and cancelled the Original Secured Promissory Note, the Affiliate Guaranty, the Security Agreement, the Jamex Entities Note Guaranty, the Working Capital Note and the Jamex Entities WCF Guaranty. In connection with the termination and cancellation

Table of such agreements, (1) Mr. Ballengee and Jamex paid Bridger $16.3 million towards the remaining balance due under the Original Secured Promissory Note and Mr. Ballengee executed a new unsecured promissory note in favor of the operating partnership with an original principal amount of $18.3 million (the “~~New Promissory Note~~”), (2) Bacchus executed a guaranty agreement to guarantee Mr. Ballengee’s obligations under the New Promissory Note, (3) the Partnership agreed to dismiss without prejudice certain indemnification claims against Jamex and any affiliates of Jamex related to the Eddystone litigation and to toll the statute of limitations with respect thereto, and to dismiss with prejudice the tortious interference claim asserted by the Partnership against Mr. Ballengee related to the Eddystone litigation, and (4) Mr. Ballengee agreed to dismiss with prejudice, or cause to be dismissed, all counterclaims by him or his affiliates, as the case may be, with respect to such actions. If we are unable to collect the amounts owed under the New Promissory Note, it could have a material and adverse impact on our cash flows, liquidity and results of operations.Contents

Interest rate risk

At October 31, ~~2018,~~2019, we had a total of ~~$365.0~~$428.0 million in variable rate ~~secured credit facility~~Senior Secured Credit Facility and collateralized note payable borrowings. Thus, assuming a one percent increase in our variable interest rate, our interest rate risk related to these borrowings would result in a reduction to future earnings of ~~$3.7~~$4.3 million for the twelve months ending October 31, ~~2019.~~2020. The preceding hypothetical analysis is limited because changes in interest rates may or may not equal one percent, thus actual results may differ. Our results of operations, cash flows and financial condition could be materially adversely affected by significant increases in interest rates.

ITEM 4. CONTROLS AND PROCEDURES

An evaluation was performed by the management of Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P., and Ferrellgas Finance Corp., with the participation of the principal executive officer and principal financial officer of our general partner, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures, as defined in Rules ~~13a-15(e)~~13a‑15(e) or ~~15d-15(e)~~15d‑15(e) under the Exchange Act, were ~~effective.~~

effective as of October 31, 2019.

The management of Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P., and Ferrellgas Finance Corp. does not expect that our disclosure controls and procedures will prevent all errors and all fraud. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Based on the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the above mentioned partnerships and corporations have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events. Therefore, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Our disclosure controls and procedures are designed to provide such reasonable assurances of achieving our desired control objectives, and the principal executive officer and principal financial officer of our general partner have concluded, as of October 31, ~~2018,~~2019, that our disclosure controls and procedures are effective in achieving that level of reasonable assurance.

During the most recent fiscal quarter ended October 31, ~~2018,~~2019, there have been no changes in our internal control over financial reporting (as defined in Rule ~~13a-15(f)~~13a‑15(f) or Rule ~~15d-15(f)~~15d‑15(f) of the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We implemented internal controls to ensure we adequately evaluated our lease contracts and properly assessed the impact of the new accounting standard related to leases on our financial statements to facilitate its adoption on August 1, 2019. There were no significant changes to our internal control over financial reporting due to the adoption of the new standard.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Our operations are subject to all operating hazards and risks normally incidental to handling, storing, transporting and otherwise providing for use by consumers of combustible liquids such as propane and, prior to the sales of midstream operations in fiscal 2018, crude oil. As a result, at any given time, we can be threatened with or named as a defendant in various lawsuits arising in the ordinary course of business. Other than as discussed below, we are not a party to any legal proceedings other than various claims and lawsuits arising in the ordinary course of business. 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 reasonably expected to have a material adverse effect on our consolidated financial condition, results of operations and cash flows.

We have been named as a defendant, along with a competitor, in putative class action lawsuits filed in multiple jurisdictions. The lawsuits, which were consolidated in the Western District of Missouri on October 16, 2014, allege that weFerrellgas and a competitor coordinated in 2008 to reduce the fill level in barbeque cylinders and combined to persuade a common customer to accept that fill reduction, resulting in increased cylinder costs to direct customers and end-user

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customers in violation of federal and certain state antitrust laws. The lawsuits seek treble damages, attorneys’ fees, injunctive relief and costs on behalf of the putative class. These lawsuits have been ~~consolidated into one case~~coordinated for pretrial purposes by athe multidistrict litigation panel. The Federal Court for the Western District of Missouri initially dismissed all claims brought by direct and indirect customers other than state law claims of indirect customers under Wisconsin, Maine and Vermont law. The direct customer plaintiffs filed an appeal, which resulted in a reversal of the district court’s dismissal. We filed a petition for a writ of certiorari which was denied. An appeal by the indirect customer plaintiffs resulted in the court of appeals affirming the dismissal of the federal claims and remanding the case to the district court to decide whether to exercise supplemental jurisdiction over the remaining state law claims. Thereafter, in August 2019, we reached a settlement with the direct customers, pursuant to which it agreed to pay a total of $6.25 million to resolve all claims asserted by the putative direct purchaser class. With respect to the indirect customers, the district court exercised supplemental jurisdiction over the remaining state law claims, but then granted in part our pleadings-based motion and dismissed 11 of the 24 remaining state law claims. As a result, there are 13 remaining state law claims brought by a putative class of indirect customers. We believe we have strong defenses ~~to the claims~~ and intend to vigorously defend against ~~the consolidated case.~~these remaining claims. We do not believe loss is probable or reasonably estimable at this time related to the putative class action lawsuit.

We have been named, along with several current and former officers, in several class action lawsuits alleging violations of certain securities laws based on alleged materially false and misleading statements in certain of our public disclosures. The lawsuits, the first of which was filed on October 6, 2016 in the Southern District of New York, seek unspecified compensatory damages. Derivative lawsuits with similar allegations have been filed naming Ferrellgas and several current and former officers and directors as defendants. On April 2, 2018, the securities class action lawsuits were dismissed with prejudice. On April 30, 2018, the plaintiffs filed a notice of appeal to the United States Court of Appeals for the Second Circuit and the parties are preparing appellate briefs. At this time the derivative lawsuits remain stayed by agreement. We believe that we have defenses and will vigorously defend these cases. We do not believe loss is probable or reasonably estimable at this time related to the putative class action lawsuits or the derivative actions.

We and Bridger Logistics, LLC, have been named, along with two former officers, in a lawsuit filed by Eddystone Rail Company ("Eddystone") on February 2, 2017 in the Eastern District of Pennsylvania (the "EDPA Lawsuit"). Eddystone indicated that it has prevailed in or settled an arbitration against Jamex Transfer Services (“JTS”), ~~then~~previously named Bridger Transfer Services, a former subsidiary of Bridger Logistics, LLC (“Bridger”). The arbitration involved a claim against JTS for money due for deficiency payments under a contract for the use of an Eddystone facility used to offload crude from rail onto barges. Eddystone alleges that weFerrellgas transferred assets out of JTS prior to the sale of the membership interest in JTS to Jamex Transfer Holdings, and that those transfers should be avoided so that the assets can be used to satisfy the amount owed by JTS to Eddystone ~~under~~as a result of the arbitration. Eddystone also alleges that JTS was an “alter ego” of Bridger and ~~Ferrellgas.~~Ferrellgas and that Bridger and Ferrellgas breached fiduciary duties owed to Eddystone as a creditor of JTS. We believe that we and Bridger have valid defenses to these claims and to Eddystone’s primary claim against JTS ~~on the contract claim.~~for breach of contract. The lawsuit does not specify a specific amount of damages that Eddystone is seeking; however, we believe that the amount of such ~~damage claims,~~damages, if ultimately owed to Eddystone, could be ~~material.~~material to Ferrellgas. We intend to vigorously defend this claim. ~~The lawsuit is in its early stages; as such, management does not currently believe a loss is probable or reasonably estimable at this time.~~ On August 24, 2017, we filed a third-party complaint against JTS, Jamex Transfer Holdings, and other related persons and entities (the "Third-Party Defendants"), asserting claims for breach of contract, indemnification of any losses in the EDPA Lawsuit, tortious interference with contract, and contribution. On June 25, 2018, we entered into an agreement with the Third-Party Defendants which, among other things, resulted in a dismissal of the claims against the Third-Party Defendants from the lawsuit.

The lawsuit is in the discovery stage; as such, management does not currently believe a loss is probable or reasonably estimable at this time.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors set forth under Part I, Item 1A. "Risk Factors" in our Annual Report on Form ~~10-K~~10‑K for fiscal ~~2018.~~

~~ITEM 2.~~

2019.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None.~~

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

~~None.~~

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Notice of Proposed Voluntary Dismissal of Derivative Action

~~None.~~

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On March 16, 2017, plaintiff Justin Pierce ("Plaintiff") filed his Verified Class and Derivative Action Complaint in the U.S. District Court for the District of Kansas, Pierce v. Ferrell, et al., Case No. 17 Civ. 02160 (JWL) (GEB), against our general partner, Ferrellgas, Inc., and certain of the general partner's current and former officers (the "Derivative Action"). The Derivative Action alleges causes of action for breach of contract and breach of the duty of good faith and fair dealing against the defendants in connection with disclosures and alleged failures to disclose information regarding the Company's acquisition of Bridger Logistics, LLC ("Bridger") and Bridger's operations and performance, which was the subject of an earlier-filed securities class action pending in the U.S. District Court for the Southern District of New York, In re Ferrellgas Partners, L.P. SecuritiesLitigation, No. 1:16-CV-07840 RJS (the "Securities Action").

Because the disclosure claims in the Securities Action were based on the same essential facts and issues, the parties to the Derivative Action agreed to stay proceedings pending resolution of the Securities Action. On March 30, 2018, the Securities Action was dismissed with prejudice on a motion to dismiss, and, on April 24, 2019, the dismissal of the Securities Action was affirmed by the U.S. Court of Appeals for the Second Circuit.

In light of the dismissal of the Securities Action, Plaintiff has sought leave to voluntarily dismiss the Derivative Action without prejudice. On August 2, 2019, the parties filed a Stipulation and Proposed Order for Voluntary Dismissal.

Ferrellgas unitholders are hereby advised:

Ferrellgas unitholders may intervene and continue prosecution of the Derivative Action. Any unitholder who wishes to intervene must file a motion with the U.S. District Court for the District of Kansas, 500 State Avenue, Rm 259, Kansas City, Kansas 66101, not later than 45 days after the date of the filing of this quarterly report. Any motion to intervene must be filed in writing, and must include: (i) the caption of the Derivative Action; (ii) the name of the unitholder; (iii) proof or certification of the date the intervening unitholder purchased Ferrellgas unit(s), and that the intervening unitholder has held its common unit(s) continuously since the date of purchase; and (iv) a statement of the basis for the intervention.

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ITEM 6. EXHIBITS

The exhibits listed below are furnished as part of this Quarterly Report on Form ~~10-Q.~~10‑Q. Exhibits required by Item 601 of Regulation S-K of the Securities Act, which are not listed, are not applicable.


Exhibit Number		Description
3.1	~~Exhibit~~ ~~Number~~	~~Description~~
	~~3.1~~	Certificate of Limited Partnership of Ferrellgas Partners, L.P. Incorporated by reference to Exhibit 3.1 to our Annual Report on Form ~~10-K~~10‑K filed September 29, 2015.
3.2	~~3.2~~	Fifth Amended and Restated Agreement of Limited Partnership ~~Agreement~~ of Ferrellgas Partners, L.P. Incorporated by reference to Exhibit 3.14 to our Quarterly Report on Form 10-Q filed June 7, 2018.
3.3	~~3.3~~	Certificate of Incorporation of Ferrellgas Partners Finance Corp. filed with the Delaware Division of Corporations on March 28, 1996. Incorporated by reference to Exhibit 3.6 to our registration statement on Form ~~S-3~~S‑3 filed March 6, 2009.
3.4	~~3.4~~	Bylaws of Ferrellgas Partners Finance Corp. adopted as of April 1, 1996. Incorporated by reference to Exhibit 3.7 to our registration statement on Form ~~S-3~~S‑3 filed March 6, 2009.
3.5	~~3.5~~	Certificate of Limited Partnership of Ferrellgas, L.P. Incorporated by reference to Exhibit 3.9 to our Annual Report on Form ~~10-K~~10‑K filed September 29, 2015.
3.6	~~3.6~~	Third Amended and Restated Agreement of Limited Partnership of Ferrellgas, L.P. dated as of April 7, 2004. Incorporated by reference to Exhibit 3.5 to our registration statement on Form ~~S-3~~S‑3 filed March 6, 2009.
3.7	~~3.7~~	Certificate of Incorporation of Ferrellgas Finance Corp. filed with the Delaware Division of Corporations on January 16, 2003. Incorporated by reference to Exhibit 3.8 to our registration statement on Form ~~S-3~~S‑3 filed March 6, 2009.
3.8	~~3.8~~	Bylaws of Ferrellgas Finance Corp. adopted as of January 16, 2003. Incorporated by reference to Exhibit 3.9 to our registration statement on Form ~~S-3~~S‑3 filed March 6, 2009.
4.1	~~4.1~~	Specimen Certificate evidencing Common Units representing Limited Partner Interests. Incorporated by reference to Exhibit A of Exhibit 3.1 to our registration statement on Form ~~S-3~~S‑3 filed March 6, 2009.
4.2	~~4.2~~	Indenture dated as of November 4, 2013 with form of Note attached, by and among Ferrellgas, L.P., Ferrellgas Finance Corp. and U.S. Bank National Association, as trustee, relating to $475 million aggregate amount of the Registrant’s 6 3/4% Senior Notes due 2022. Incorporated by reference to Exhibit 4.1 to our Current Report on Form ~~8-K~~8‑K filed November 5, 2013; File No. ~~001-11331; 000-50182; 000-50183~~001‑11331; 000‑50182; 000‑50183 and ~~333-06693.~~333‑06693.
4.3	~~4.3~~	Indenture dated as of April 13, 2010, among Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp. and U.S. Bank National Association, as trustee, relating to $280 million aggregate amount of the Registrant’s 8 5/8% Senior Notes due 2020. Incorporated by reference to Exhibit 4.1 to our Current Report on Form ~~8-K~~8‑K filed April 13, 2010; File No. ~~001-11331; 000-50182; 000-50183~~001‑11331; 000‑50182; 000‑50183 and ~~333-06693.~~333‑06693.
4.4	~~4.4~~	First Supplemental Indenture dated as of April 13, 2010, with form of Note attached, by and among Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp. and U.S. Bank National Association, as trustee, relating to $280 million aggregate amount of the Registrant’s 8 5/8% Senior Notes due 2020. Incorporated by reference to Exhibit 4.2 to our Current Report on Form ~~8-K~~8‑K filed April 13, 2010; File No. ~~001-11331; 000-50182; 000-50183~~001‑11331; 000‑50182; 000‑50183 and ~~333-06693.~~333‑06693.
4.5	~~4.5~~	Second Supplemental Indenture dated as of January 30, 2017, by and among Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp. and U.S. Bank National Association, as trustee. Incorporated by reference to Exhibit 4.3 to our Current Report on Form ~~8-K~~8‑K filed January 30, 2017.
4.6	~~4.6~~	Indenture dated as of November 24, 2010, by and among Ferrellgas, L.P., Ferrellgas Finance Corp. and U.S. Bank National Association, as trustee, relating to $500 million aggregate amount of the Registrant’s 6 1/2% Senior Notes due 2021. Incorporated by reference to Exhibit 4.1 to our Current Report on Form ~~8-K~~8‑K filed November 30, 2010; File No. ~~001-11331; 000-50182; 000-50183~~001‑11331; 000‑50182; 000‑50183 and ~~333-06693.~~333‑06693.
4.7	~~4.7~~	Registration Rights Agreement dated as of December 17, 1999, by and between Ferrellgas Partners, L.P. and Williams Natural Gas Liquids, Inc. Incorporated by reference to Exhibit 4.6 to our Annual Report on Form ~~10-K~~10‑K filed September 29, 2014.
4.8	~~4.8~~	First Amendment to Registration Rights Agreement dated as of March 14, 2000, by and between Ferrellgas Partners, L.P. and Williams Natural Gas Liquids, Inc. Incorporated by reference to Exhibit 4.7 to our Annual Report on Form ~~10-K~~10‑K filed September 29, 2014.

Table of Contents

4.9

~~4.9~~

Second Amendment to Registration Rights Agreement dated as of April 6, 2001, by and between Ferrellgas Partners, L.P. and The Williams Companies, Inc. Incorporated by reference to Exhibit 4.8 to our Annual Report on Form ~~10-K~~10‑K filed September 29, 2014.

4.10

~~4.10~~

Third Amendment to Registration Rights Agreement dated as of June 29, 2005, by and between Ferrellgas Partners, L.P. and JEF Capital Management, Inc. Incorporated by reference to Exhibit 4.13 to our Quarterly Report on Form ~~10-Q~~10‑Q filed June 9, 2010; File No. ~~001-11331; 000-50182; 000-50183~~001‑11331; 000‑50182; 000‑50183 and ~~333-06693.~~333‑06693.

4.11

~~4.11~~

Indenture, dated June 8, 2015, by and among Ferrellgas, L.P., Ferrellgas, Finance Corp. the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee, relating to $500 million aggregate amount of the Registrant’s 6 3/4% Senior Notes due 2023. Incorporated by reference to Exhibit 4.1 to our Current Report on Form ~~8-K~~8‑K filed June 8, 2015.


4.12
		~~4.12~~	Registration Rights Agreement dated as of January 30, 2017 by and among Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the initial purchasers referred to therein. Incorporated by reference to Exhibit 4.4 to our Current Report on Form ~~8-K~~8‑K filed January 30, 2017.
10.1		~~10.1~~	Credit Agreement dated as of November 2, 2009, among Ferrellgas, L.P. as the borrower, Ferrellgas, Inc. as the general partner of the borrower, Bank of America, N.A. as administrative agent, swing line lender and L/C issuer, and the lenders party hereto. Incorporated by reference to Exhibit 10.1 to our Annual Report on Form ~~10-K~~10‑K filed September 29, 2014.
10.2		~~10.2~~	Amendment No. 1 to Credit Agreement dated as of September 23, 2011, by and among Ferrellgas, L.P. as the borrower, Ferrellgas, Inc. as the general partner of the borrower, Bank of America, N.A. as administrative agent, swing line lender and L/C issuer, and the lenders party hereto. Incorporated by reference to Exhibit 10.2 to our Annual Report on Form ~~10-K~~10‑K filed September 26, 2011; File No. ~~001-11331; 000-50182; 000-50183~~001‑11331; 000‑50182; 000‑50183 and ~~333-06693.~~333‑06693.
10.3		~~10.3~~	Amendment No. 2 to Credit Agreement dated as of October 21, 2013, by and among Ferrellgas, L.P. as the borrower, Ferrellgas, Inc. as the general partner of the borrower, Bank of America, N.A. as administrative agent, swing line lender and L/C issuer, and the lenders party hereto. Incorporated by reference to Exhibit 10.1 to our Current Report on Form ~~8-K~~8‑K filed October 23, 2013; File No. ~~001-11331; 000-50182; 000-50183~~001‑11331; 000‑50182; 000‑50183 and ~~333-06693.~~333‑06693.
10.4		~~10.4~~	Amendment No. 3 to Credit Agreement dated as of June 6, 2014, by and among Ferrellgas, L.P. as the borrower, Ferrellgas, Inc. as the general partner of the borrower, Bank of America, N.A. as administrative agent, swing line lender and L/C issuer, and the lenders party hereto. Incorporated by reference to Exhibit 10.1 to our Current Report on Form ~~8-K~~8‑K filed June 9, 2014.
10.5		~~10.5~~	Amendment No. 4 to Credit Agreement and Amendment No. 2 to Security Agreement, dated as of May 29, 2015, by and among Ferrellgas, L.P. as the borrower, Ferrellgas, Inc. as the general partner of the borrower, Bank of America, N.A. as administrative agent, swing line lender and L/C issuer, and the lenders party hereto. Incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form ~~10-Q~~10‑Q filed June 9, 2015.
10.6		~~10.6~~	Amendment No. 5 to Credit Agreement dated as of September 27, 2016, by and among Ferrellgas, L.P. as the borrower, Ferrellgas, Inc. as the general partner of the borrower, Bank of America, N.A. as administrative agent, swing line lender and L/C issuer, and the lenders party hereto. Incorporated by reference to Exhibit 10.37 to our Current Report on Form ~~10-K~~10‑K filed September 28, 2016.
10.7		~~10.7~~	Amendment No. 6 to Credit Agreement and Amendment No. 3 to Security Agreement, dated as of April 28, 2017, by and among Ferrellgas, L.P. as the borrower, Ferrellgas, Inc. as the general partner of the borrower, Bank of America, N.A. as administrative agent, swing line lender and L/C issuer, and the lenders party hereto. Incorporated by reference to Exhibit 10.1 to our Current Report on Form ~~8-K~~8‑K filed May 2, 2017.
+10.8	+	~~10.8~~	Financing Agreement, dated as of May 4, 2018, among Ferrellgas, L.P., Ferrellgas, Inc., as the general partner of Ferrellgas, L.P., certain subsidiaries of Ferrellgas, L.P., as guarantors, the lenders party thereto, TPG Specialty Lending, Inc. as administrative agent, collateral agent and lead arranger, and PNC Bank, National Association, as syndication agent. Incorporated by reference to Exhibit 10.1 to our Current Report on Form ~~8-K~~8‑K filed September 7, 2018.
10.9		~~10.9~~	Amended and Restated Receivable Sale Agreement dated as of January 19, 2012, between Ferrellgas, L.P. and Blue Rhino Global Sourcing, Inc., as originators, and Ferrellgas Receivables, LLC, as buyer. Incorporated by reference to Exhibit 10.1 to our Current Report on Form ~~8-K~~8‑K filed January 20, 2012; File No. ~~001-11331; 000-50182; 000-50183~~001‑11331; 000‑50182; 000‑50183 and ~~333-06693.~~333‑06693.

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10.10		~~10.10~~	Receivables Purchase Agreement dated as of January 19, 2012, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, the purchasers from time to time party hereto, Fifth Third Bank and SunTrust Bank, as co-agents, and Wells Fargo Bank, N.A., as administrative agent. Incorporated by reference to Exhibit 10.2 to our Current Report on Form ~~8-K~~8‑K filed January 20, 2012; File No. ~~001-11331; 000-50182; 000-50183~~001‑11331; 000‑50182; 000‑50183 and ~~333-06693.~~333‑06693.
10.11		~~10.11~~	First Amendment to Receivables Purchase Agreement dated as of April 30, 2012, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, the purchasers from time to time party hereto, Fifth Third Bank and SunTrust Bank, as co-agents, and Wells Fargo Bank, N.A., as administrative agent. Incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form ~~10-Q~~10‑Q filed June 8, 2012; File No. ~~001-11331; 000-50182; 000-50183~~001‑11331; 000‑50182; 000‑50183 and ~~333-06693.~~333‑06693.
10.12		~~10.12~~	Second Amendment to Receivables Purchase Agreement dated as of April 1, 2014, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, the purchasers from time to time party hereto, Fifth Third Bank and SunTrust Bank, as co-agents, and Wells Fargo Bank, N.A., as administrative agent. Incorporated by reference to Exhibit 10.1 to our Current Report on Form ~~8-K~~8‑K filed April 4, 2014.
10.13		~~10.13~~	Third Amendment to Receivables Purchase Agreement dated as of July 27, 2016, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, the purchasers from time to time party hereto, Fifth Third Bank and SunTrust Bank, as co-agents, and Wells Fargo Bank, N.A., as administrative agent. Incorporated by reference to Exhibit 10.1 to our Current Report on Form ~~8-K~~8‑K filed July 27, 2016.
10.14		~~10.14~~	Fourth Amendment to Receivables Purchase Agreement dated as of September 27, 2016, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, the purchasers from time to time party hereto, Fifth Third Bank and SunTrust Bank, as co-agents, and Wells Fargo Bank, N.A., as administrative agent. Incorporated by reference to Exhibit 10.38 to our Current Report on Form ~~10-K~~10‑K filed September 28, 2016.
10.15		~~10.15~~	Amendment No. 5 to Receivables Purchase Agreement dated as of April 28, 2017, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, the purchasers from time to time party hereto, Fifth Third Bank and SunTrust Bank, as co-agents, and Wells Fargo Bank, N.A., as administrative agent. Incorporated by reference to Exhibit 10.2 to our Current Report on Form ~~8-K~~8‑K filed May 2, 2017.
+ 10.16	+	~~10.16~~	Amendment No. 7 to Receivables Purchase Agreement, dated as of May 14, 2018, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, the purchasers party thereto, Fifth Third Bank and PNC Bank, National Association, as co-agents, and Wells Fargo Bank, N.A. as administrative agent. Incorporated by reference to Exhibit 10.2 to our Current Report on Form ~~8-K~~8‑K filed September 7, 2018.
* 10.17	#	~~10.17~~ Amendment No. 8 to Receivables Purchase Agreement, dated as of December 5, 2019, among Ferrellgas Receivables, LLC, as seller, Ferrellgas, L.P., as servicer, Fifth Third Bank and PNC Bank, National Association, as co-agents and purchasers, and Wells Fargo Bank, N.A. as administrative agent.
# 10.18		Ferrell Companies, Inc. Supplemental Savings Plan, as amended and restated effective January 1, 2010. Incorporated by reference to Exhibit 10.14 to our Quarterly Report on Form ~~10-Q~~10‑Q filed March 10, 2010; File No. ~~001-11331; 000-50182; 000-50183~~001‑11331; 000‑50182; 000‑50183 and ~~333-06693.~~333‑06693.
# 10.19	#	~~10.18~~	Ferrell Companies, Inc. 1998 Incentive Compensation Plan, as amended and restated effective October 11, 2004. Incorporated by reference to Exhibit 10.9 to our Annual Report on Form ~~10-K~~10‑K filed September 29, 2014.


# 10.20
	#	~~10.19~~	Amendment to Ferrell Companies, Inc. 1998 Incentive Compensation Plan, dated as of March 7, 2010. Incorporated by reference to Exhibit 10.7 to our Quarterly Report on Form ~~10-Q~~10‑Q filed June 9, 2010; File No. ~~001-11331; 000-50182; 000-50183~~001‑11331; 000‑50182; 000‑50183 and ~~333-06693.~~333‑06693.
# 10.21	#	~~10.20~~	Employment, Confidentiality, and Noncompete Agreement dated as of July 17, 1998 by and among Ferrell Companies, Inc. as the company, Ferrellgas, Inc. as the company, James E. Ferrell as the executive and LaSalle National Bank as trustee of the Ferrell Companies, Inc. Employee Stock Ownership Trust. Incorporated by reference to Exhibit 10.11 to our Annual Report on Form ~~10-K~~10‑K filed September 29, 2014.
# 10.22	#	~~10.21~~	Form of Director/Officer Indemnification Agreement, by and between Ferrellgas, Inc. and each director and executive officer. Incorporated by reference to Exhibit 10.16 to our Quarterly Report on Form ~~10-Q~~10‑Q filed March 9, 2012; File No. ~~001-11331; 000-50182; 000-50183~~001‑11331; 000‑50182; 000‑50183 and ~~333-06693.~~333‑06693.
# 10.23	#	~~10.22~~	Ferrell Companies, Inc. 2015 Deferred Appreciation Rights Plan, dated as of July 31, 2015. Incorporated by reference to Exhibit 10.23 to our Annual Report on Form ~~10-K~~10‑K filed September 29, 2015.
# 10.24	#	~~10.23~~	Employment agreement dated July 10, 2015 by and between Ferrellgas, Inc. as the company and Alan C. Heitmann as the executive. Incorporated by reference to Exhibit 99.1 to our Current Report on Form ~~8-K~~8‑K filed July 15, 2015.
# 10.25	#	~~10.24~~	Employment agreement dated as of May 28, 2015 by and between Ferrellgas, Inc. as the company and Thomas M. Van Buren as the executive. Incorporated by reference to Exhibit 10.27 to our Annual Report on Form ~~10-K~~10‑K filed September 29, 2015.

Table of Contents

# 10.26	#	~~10.25~~	Thomas M. Van Buren Agreement and Release. Incorporated by reference to Exhibit 10.1 to our Current Report on Form ~~8-K~~8‑K filed September 15, 2017.
10.27		~~10.26~~	Purchase Agreement dated January 24, 2017 by and among Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P., Ferrellgas, Inc. and the initial purchasers named therein. Incorporated by reference to Exhibit 10.1 to our Current Report on Form ~~8-K~~8‑K filed January 30, 2017.
# 10.28	#	~~10.27~~	Doran N. Schwartz offer letter dated as of September 8, 2017. Incorporated by reference to Exhibit 10.1 to our Current Report on Form ~~8-K~~8‑K filed September 22, 2017.
# 10.29	#	~~10.28~~	Voluntary Retirement and Release dated March 8, 2018 by and between Randy V. Schott and Ferrellgas, Inc., Ferrell Companies, Inc., Ferrellgas Partners, L.P. and Ferrellgas, L.P. Incorporated by reference to Exhibit 10.45 to our Quarterly Report on Form 10‑Q filed March 8, 2018.
# 10.30		Separation Agreement and release dated December 1, 2018 by and between Doran Schwartz and Ferrellgas, Inc., Ferrell Companies, Inc., Ferrellgas Partners, L.P. and Ferrellgas, L.P. Incorporated by reference to Exhibit 10.29 to our Quarterly Report on Form 10-Q filed March 8, ~~2018.~~2019.
* # 10.31		~~31.1~~ Separation Agreement and release dated December 1, 2018 by and between Trenton D. Hampton and Ferrellgas, Inc., Ferrell Companies, Inc., Ferrellgas Partners, L.P. and Ferrellgas, L.P. Incorporated by reference to Exhibit 10.30 to our Quarterly Report on Form 10-Q filed March 8, 2019.
10.32		First Amendment to Financing Agreement, dated as of June 6, 2019, by and among Ferrellgas, L.P., Ferrellgas, Inc., as the general partner of Ferrellgas, L.P., certain subsidiaries of Ferrellgas, L.P., as guarantors, the lenders party thereto, and TPG Specialty Lending, Inc., as collateral agent. Incorporated by reference to Exhibit 10.31to our Quarterly Report on Form 10-Q filed June 10, 2019.
10.33		Second Amendment to Financing Agreement, dated as of November 7, 2019, by and among Ferrellgas, L.P., Ferrellgas, Inc., as the general partner of Ferrellgas, L.P., certain subsidiaries of Ferrellgas, L.P., as guarantors, the lenders party thereto, and TPG Specialty Lending, Inc., as collateral agent. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8‑K filed November 12, 2019.
* 10.34		Form of Indemnification Agreement, dated as of November 19, 2019,by and between Ferrellgas Partners, LP and each director and executive officer of Ferrellgas, Inc., its general partner.
* 31.1		Certification of Ferrellgas Partners, L.P. pursuant to Rule ~~13a-14(a)~~13a‑14(a) or Rule ~~15d-14(a)~~15d‑14(a) of the Exchange Act.
* 31.2		~~31.2~~	Certification of Ferrellgas Partners Finance Corp. pursuant to Rule ~~13a-14(a)~~13a‑14(a) or Rule ~~15d-14(a)~~15d‑14(a) of the Exchange Act.
* 31.3		~~31.3~~	Certification of Ferrellgas, L.P. pursuant to Rule ~~13a-14(a)~~13a‑14(a) or Rule ~~15d-14(a)~~15d‑14(a) of the Exchange Act.
* 31.4		~~31.4~~	Certification of Ferrellgas Finance Corp. pursuant to Rule ~~13a-14(a)~~13a‑14(a) or Rule ~~15d-14(a)~~15d‑14(a) of the Exchange Act.
* 32.1		~~32.1~~	Certification of Ferrellgas Partners, L.P. pursuant to 18 U.S.C. Section 1350.
* 32.2		~~32.2~~	Certification of Ferrellgas Partners Finance Corp. pursuant to 18 U.S.C. Section 1350.
* 32.3		~~32.3~~	Certification of Ferrellgas, L.P. pursuant to 18 U.S.C. Section 1350.
* 32.4		~~32.4~~	Certification of Ferrellgas Finance Corp. pursuant to 18 U.S.C. Section 1350.
* 101.INS		~~101.INS~~	XBRL Instance Document.
* 101.SCH		~~101.SCH~~	XBRL Taxonomy Extension Schema Document.
* 101.CAL		~~101.CAL~~	XBRL Taxonomy Extension Calculation Linkbase Document.
* 101.DEF		~~101.DEF~~	XBRL Taxonomy Extension Definition Linkbase Document.
* 101.LAB		~~101.LAB~~	XBRL Taxonomy Extension Label Linkbase Document.
* 101.PRE		~~101.PRE~~	XBRL Taxonomy Extension Presentation Linkbase Document.

		*	~~Filed herewith~~
		#	~~Management contracts or compensatory plans.~~
		+	~~Confidential treatment has been granted with respect to certain portions of this exhibit. Omitted portions have been filed separately with the SEC.~~

*Filed herewith

#Management contracts or compensatory plans.

+Confidential treatment has been granted with respect to certain portions of this exhibit. Omitted portions have been filed separately with the SEC.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

~~E-4~~

Table of Contents

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:	December 6, ~~2018~~2019	By	/s/ William E. Ruisinger
			William E. Ruisinger
			~~Interim~~
			Chief Financial Officer; Treasurer (Principal Financial and Accounting Officer)


		FERRELLGAS PARTNERS FINANCE CORP.

Date:	December 6, ~~2018~~2019	By	/s/ William E. Ruisinger
			William E. Ruisinger
			~~Interim~~ Chief Financial Officer and Sole Director


		FERRELLGAS, L.P.
		By Ferrellgas, Inc. (General Partner)

Date:	December 6, ~~2018~~2019	By	/s/ William E. Ruisinger
			William E. Ruisinger
			~~Interim~~ Chief Financial Officer; Treasurer (Principal Financial and Accounting Officer)


		FERRELLGAS FINANCE CORP.

Date:	December 6, ~~2018~~2019	By	/s/ William E. Ruisinger
			William E. Ruisinger
			~~Interim~~ Chief Financial Officer and Sole Director

~~E-5~~

Delaware		43‑1698480
Delaware		43‑1742520
Delaware ~~Delaware~~ ~~Delaware~~ ~~Delaware~~		~~43-1698480~~ ~~43-1742520~~ ~~43-1698481~~ ~~14-1866671~~ 43‑1698481
Delaware		14‑1866671
(States or other jurisdictions of incorporation or organization)		(I.R.S. Employer Identification Nos.)

7500 College Boulevard, Suite 1000, Overland Park, Kansas		66210
(Address of principal executive office)		(Zip Code)



Ferrellgas Partners, L.P.:
Large ~~accelerated filer~~ o Accelerated Filer ☐	Accelerated ~~filer~~Filer x☒	Non-accelerated Filer ☐	~~Non-accelerated filer~~ o	Smaller ~~reporting company~~ o Reporting Company ☐
				Emerging ~~growth company~~Growth Company ☐



Ferrellgas Partners Finance Corp, Ferrellgas, L.P. and Ferrellgas Finance Corp.:
Large ~~accelerated filer~~ o Accelerated Filer ☐	Accelerated Filer ☐	~~Accelerated filer~~ o	Non-accelerated ~~filer~~Filer x☒	Smaller ~~reporting company~~ o Reporting Company ☐
				Emerging ~~growth company~~Growth Company ☐


☒
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended October 31, ~~2018~~2019

or
o ☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

59

		Condensed Statements of Cash Flows – Three months ended October 31, ~~2018~~2019 and ~~2017~~2018		57 60
		Notes to Condensed Financial Statements		58 61

ITEM 2.		~~MANAGEMENT'S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		59 62
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		76 77
ITEM 4.		CONTROLS AND PROCEDURES		77 79

			PART II - OTHER INFORMATION
ITEM 1.		LEGAL PROCEEDINGS		78 79
ITEM 1A.		RISK FACTORS		78 80
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		79 80
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES		79 80
ITEM 4.		MINE SAFETY DISCLOSURES		79 80
ITEM 5.		OTHER INFORMATION		79 80
ITEM 6.	EXHIBITS	~~EXHIBITS~~		~~E-1~~ 82



	October 31, 2018		July 31, 2018
Propane gas and related products	$	93,195	$	71,180
Appliances, parts and supplies, and other	13,365		12,514
Inventories	$	106,560	$	83,694



	For the three months ended October 31,
	2018		2017
Operating expense	$	47,443	$	43,314
Depreciation and amortization expense	1,072		1,112
Equipment lease expense	7,519		6,069
Total shipping and handling expenses	$	56,034	$	50,495



	Asset (Liability)
	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)			Unobservable Inputs (Level 3)		Total
October 31, 2018:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	15,302		$	—	$	15,302
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(7,331	)	$	—	$	(7,331	)


July 31, 2018:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	22,470		$	—	$	22,470
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(1,910	)	$	—	$	(1,910	)



		Amount of Gain Recognized on Derivative				Amount of Interest Expense Recognized on Fixed-Rate Debt (Related Hedged Item)
Derivative Instrument	Location of Amounts Recognized on Derivative	For the three months ended October 31,				For the three months ended October 31,
		2018		2017		2018		2017
Interest rate swap agreements	Interest expense	$	—	$	138	$	—	$	(2,275	)



	For the three months ended October 31, 2018
Derivative Instrument	Amount of Gain (Loss) Recognized in AOCI			Location of Gain (Loss) Reclassified from AOCI into Income	Amount of Gain (Loss) Reclassified from AOCI into Income
Derivative Instrument	Amount of Gain (Loss) Recognized in AOCI			Location of Gain (Loss) Reclassified from AOCI into Income	Effective portion			Ineffective portion
Commodity derivatives	$	(8,154	)	Cost of sales-propane and other gas liquids sales	$	4,433		$	—
	$	(8,154	)		$	4,433		$	—

	For the three months ended October 31, 2017
Derivative Instrument	Amount of Gain (Loss) Recognized in AOCI			Location of Gain (Loss) Reclassified from AOCI into Income	Amount of Gain (Loss) Reclassified from AOCI into Income
Derivative Instrument	Amount of Gain (Loss) Recognized in AOCI			Location of Gain (Loss) Reclassified from AOCI into Income	Effective portion			Ineffective portion
Commodity derivatives	$	22,323		Cost of sales-propane and other gas liquids sales	$	4,132		$	—
Interest rate swap agreements	126			Interest expense	(183		)	—
	$	22,449			$	3,949		$	—



	Three months ended October 31, 2018
	Propane operations and related equipment sales		Corporate and other			Total
Segment revenues	$	352,309	$	—		$	352,309
Direct costs (1)	323,594		10,874			334,468
Adjusted EBITDA	$	28,715	$	(10,874	)	$	17,841

	Three months ended October 31, 2017
	Propane operations and related equipment sales		Corporate and other			Total
Segment revenues	$	333,895	$	120,760		$	454,655
Direct costs (1)	303,329		125,110			428,439
Adjusted EBITDA	$	30,566	$	(4,350	)	$	26,216



	Asset (Liability)
	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)			Unobservable Inputs (Level 3)		Total
October 31, 2018:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	15,302		$	—	$	15,302
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(7,331	)	$	—	$	(7,331	)

July 31, 2018:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	22,470		$	—	$	22,470
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(1,910	)	$	—	$	(1,910	)



	Distributable Cash Flow to equity investors			Cash reserves (deficiency) approved by our General Partner			Cash distributions paid to equity investors		DCF ratio
Three months ended October 31, 2018	$	(27,384	)	$	(37,299	)	$	9,915
For the year ended July 31, 2018	62,904			22,934			39,970
Less: Three months ended October 31, 2017	(19,343		)	(29,256		)	9,913
Twelve months ended October 31, 2018	$	54,863		$	14,891		$	39,972	1.37

Twelve months ended July 31, 2018	62,904			22,934			39,970		1.57
Change	$	(8,041	)	$	(8,043	)	$	2	(0.20	)



	Common unit ownership at	Distributions (in thousands) paid during the three months ended
	October 31, 2018	October 31, 2018
Ferrell Companies (1)	22,529,361	$	2,253
FCI Trading Corp. (2)	195,686	20
Ferrell Propane, Inc. (3)	51,204	5
James E. Ferrell (4)	4,763,475	476

For the three months ended October 31, 2017

Derivatives Not Designated as Hedging Instruments

Amount of Gain (Loss) Recognized in Income

Location of Gain (Loss) Recognized in Income

Commodity derivatives - crude oil

Cost of sales - midstream operations