UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended ~~October 31, 2020~~April 30, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

Commission file numbers: 001-11331, 333-06693-02, 000-50182 and 000-50183

Ferrellgas Partners, L.P.

Ferrellgas Partners Finance Corp.

Ferrellgas, L.P.

Ferrellgas Finance Corp.

(Exact name of registrants as specified in their charters)

Delaware		43-1698480
Delaware		43-1742520
Delaware		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)

Registrants’ telephone number, including area code: (913) 661-1500

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “Large Accelerated Filer,” “Accelerated Filer,” “Smaller Reporting Company,” and “Emerging Growth Company” in Rule 12b-2 of the Exchange Act.

Ferrellgas Partners, L.P.:
Large Accelerated Filer ☐	Accelerated Filer ☐	Non-accelerated Filer ☒	Smaller Reporting Company ☒
			Emerging Growth Company ☐

Ferrellgas Partners Finance Corp, Ferrellgas, L.P. and Ferrellgas Finance Corp.:
Large Accelerated Filer ☐	Accelerated Filer ☐	Non-accelerated Filer ☒	Smaller Reporting Company ☒
			Emerging Growth Company ☐

If an Emerging Growth Company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Ferrellgas Partners, L.P. and Ferrellgas, L.P. ☐

Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp. ☐

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).

Ferrellgas Partners, L.P. and Ferrellgas, L.P. Yes ☐ No ☒

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

Indicate by check mark whether the registrants have filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Ferrellgas Partners, L.P. and Ferrellgas Partners Finance Corp. Yes ☒ No ☐

Ferrellgas, L.P. and Ferrellgas Finance Corp. N/A

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


Title of each class:	Trading Symbol	Name of each exchange on which registered:
N/A	N/A	N/A

At ~~November 30, 2020,~~May 31, 2021, the registrants had ~~common units~~Class A Units, Class B Units or shares of common stock outstanding as follows:

Ferrellgas Partners, L.P.	~~97,152,665~~4,857,605	~~Common~~Class A Units
	1,300,000	Class B Units
Ferrellgas Partners Finance Corp.	1,000	Common Stock
Ferrellgas, L.P.	n/a	n/a
Ferrellgas Finance Corp.	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 AND ARE THEREFORE, WITH RESPECT TO EACH SUCH REGISTRANT, FILING THIS FORM 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
ITEM 1.	FINANCIAL STATEMENTS (unaudited)

	Ferrellgas Partners, L.P. and Subsidiaries
	Condensed Consolidated Balance Sheets – ~~October 31, 2020~~April 30, 2021 and July 31, 2020	3
	Condensed Consolidated Statements of Operations – Three and nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) – Three and nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~	5
	Condensed Consolidated Statement of ~~Partners’ Deficit~~Equity – Three and nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~	6
	Condensed Consolidated Statements of Cash Flows – ~~Three~~Nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~	7
	Notes to Condensed Consolidated Financial Statements	8

	Ferrellgas Partners Finance Corp.
	Condensed Balance Sheets – ~~October 31, 2020~~April 30, 2021 and July 31, 2020	2533
	Condensed Statements of Operations – Three and nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~	2634
	Condensed Statements of Cash Flows – ~~Three~~Nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~	2735
	Notes to Condensed Financial Statements	2836

	Ferrellgas, L.P. and Subsidiaries
	Condensed Consolidated Balance Sheets – ~~October 31, 2020~~April 30, 2021 and July 31, 2020	3037
	Condensed Consolidated Statements of Operations – Three and nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~	3138
	Condensed Consolidated Statements of Comprehensive Income (Loss) – Three and nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~	3239
	Condensed Consolidated Statement of ~~Partners’ Deficit~~Equity – Three and nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~	3340
	Condensed Consolidated Statements of Cash Flows – ~~Three~~Nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~	3441
	Notes to Condensed Consolidated Financial Statements	3542

	Ferrellgas Finance Corp.
	Condensed Balance Sheets – ~~October 31, 2020~~April 30, 2021 and July 31, 2020	5764
	Condensed Statements of Operations – Three and nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~	5865
	Condensed Statements of Cash Flows – ~~Three~~Nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~	5966
	Notes to Condensed Financial Statements	6067

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	6268
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	7990
ITEM 4.	CONTROLS AND PROCEDURES	8092

PART II - OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	8193
ITEM 1A.	RISK FACTORS	8193
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	8198
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	8198
ITEM 4.	MINE SAFETY DISCLOSURES	8198
ITEM 5.	OTHER INFORMATION	8198
ITEM 6.	EXHIBITS	8399

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS (unaudited)

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)

October 31, 2020

July 31, 2020
ASSETS

Current assets:

Cash and cash equivalents (including $96,909 and $95,759 of restricted cash at October 31, 2020 and July 31, 2020, respectively)

$
299,527

$
333,761
Accounts and notes receivable, net (including $120,261 and $103,703 of accounts receivable pledged as collateral at October 31, 2020 and July 31, 2020, respectively)

119,488

101,438
Inventories

78,980

72,664
Prepaid expenses and other current assets

40,088

35,944
Total current assets

538,083

543,807




Property, plant and equipment, net

592,132

591,042
Goodwill, net

246,946

247,195
Intangible assets (net of accumulated amortization of $425,426 and $423,290 at October 31, 2020 and July 31, 2020, respectively)

101,812

104,049
Operating lease right-of-use assets

100,349

107,349
Other assets, net

73,522

74,748
Total assets

$
1,652,844

$
1,668,190




LIABILITIES AND PARTNERS' DEFICIT




Current liabilities:




Accounts payable

$
44,641

$
33,944
Current portion of long-term debt

859,095

859,095
Current operating lease liabilities

28,280

29,345
Other current liabilities

186,938

167,466
Total current liabilities

1,118,954

1,089,850




Long-term debt

1,647,106

1,646,396
Operating lease liabilities

83,337

89,022
Other liabilities

49,543

51,190
Contingencies and commitments (Note L)




Partners' deficit:




Common unitholders (97,152,665 units outstanding at October 31, 2020 and July 31, 2020)

(1,171,359)

(1,126,452)
General partner unitholder (989,926 units outstanding at October 31, 2020 and July 31, 2020)

(71,741)

(71,287)
Accumulated other comprehensive income (loss)

5,534

(2,303)
Total Ferrellgas Partners, L.P. partners' deficit

(1,237,566)

(1,200,042)
Noncontrolling interest

(8,530)

(8,226)
Total partners' deficit

(1,246,096)

(1,208,268)
Total liabilities and partners' deficit

$
1,652,844

$
1,668,190


	April 30, 2021		July 31, 2020
ASSETS
Current assets:
Cash and cash equivalents (including $11,500 and $95,759 of restricted cash at April 30, 2021 and July 31, 2020, respectively)	$	222,849	$	333,761
Accounts and notes receivable, net (including $103,703 of accounts receivable pledged as collateral at July 31, 2020)		170,516		101,438
Inventories		69,742		72,664
Prepaid expenses and other current assets		73,984		35,944
Total current assets		537,091		543,807

Property, plant and equipment, net		582,838		591,042
Goodwill, net		246,946		247,195
Intangible assets (net of accumulated amortization of $429,135 and $423,290 at April 30, 2021 and July 31, 2020, respectively)		97,560		104,049
Operating lease right-of-use assets		93,341		107,349
Other assets, net		86,914		74,748
Total assets	$	1,644,690	$	1,668,190

LIABILITIES, MEZZANINE AND EQUITY
Current liabilities:
Accounts payable	$	54,320	$	33,944
Current portion of long-term debt		1,565		859,095
Current operating lease liabilities		26,669		29,345
Other current liabilities		178,514		167,466
Total current liabilities		261,068		1,089,850

Long-term debt		1,443,095		1,646,396
Operating lease liabilities		78,498		89,022
Other liabilities		51,427		51,190
Contingencies and commitments (Note M)

Mezzanine equity:
Senior preferred units, net of issue discount and offering costs (700,000 units outstanding at April 30, 2021)		651,854		—

Equity:
Common unitholders
Class A (4,857,605 units outstanding at April 30, 2021 and July 31, 2020)		(1,181,241)		(1,126,452)
Class B (1,300,000 units outstanding at April 30, 2021)		388,147		—
General partner unitholder (49,496 units outstanding at April 30, 2021 and July 31, 2020)		(71,840)		(71,287)
Accumulated other comprehensive income (loss)		31,845		(2,303)
Total Ferrellgas Partners, L.P. equity		(833,089)		(1,200,042)
Noncontrolling interest		(8,163)		(8,226)
Total equity		(841,252)		(1,208,268)
Total liabilities, mezzanine and equity	$	1,644,690	$	1,668,190

See notes to condensed consolidated financial statements.

Table of Contents

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except unit data)

(unaudited)

For the three months ended October 31,


2020

2019


Revenues:

Propane and other gas liquids sales

$
281,049

$
273,385

Other

19,845

19,829

Total revenues

300,894

293,214



Costs and expenses:



Cost of sales - propane and other gas liquids sales

137,627

134,028

Cost of sales - other

3,667

3,681

Operating expense - personnel, vehicle, plant and other

109,027

114,543

Operating expense - equipment lease expense

6,830

8,388

Depreciation and amortization expense

21,390

19,219

General and administrative expense

13,080

9,695

Non-cash employee stock ownership plan compensation charge

708

795

Loss on asset sales and disposals

813

2,235



Operating income

7,752

630

Interest expense

(54,226)

(45,697)

Other income (expense), net

108

(132)

Loss before income taxes

(46,366)

(45,199)

Income tax expense

87

518

Net loss

(46,453)

(45,717)

Net loss attributable to noncontrolling interest

(391)

(373)

Net loss attributable to Ferrellgas Partners, L.P.

(46,062)

(45,344)

Less: General partner's interest in net loss

(461)

(453)

Common unitholders' interest in net loss

$
(45,601)

$
(44,891)

Basic and diluted net loss per common unit

$
(0.47)

$
(0.46)


	For the three months ended April 30,				For the nine months ended April 30,
	2021		2020		2021		2020
Revenues:
Propane and other gas liquids sales	$	542,036	$	391,745	$	1,351,519	$	1,150,377
Other		22,694		20,385		67,665		65,800
Total revenues		564,730		412,130		1,419,184		1,216,177

Costs and expenses:
Cost of sales - propane and other gas liquids sales		298,386		176,265		706,790		548,136
Cost of sales - other		2,985		2,740		10,156		9,774
Operating expense - personnel, vehicle, plant and other		124,624		121,558		348,898		364,334
Operating expense - equipment lease expense		6,770		8,075		20,462		24,724
Depreciation and amortization expense		21,281		20,366		63,920		59,380
General and administrative expense		15,205		12,560		48,760		36,447
Non-cash employee stock ownership plan compensation charge		811		757		2,281		2,182
Loss on asset sales and disposals		1,345		1,859		2,238		6,242

Operating income		93,323		67,950		215,679		164,958

Interest expense		(42,189)		(45,703)		(149,010)		(138,948)
Loss on extinguishment of debt		(109,922)		(37,399)		(109,922)		(37,399)
Other income (expense), net		553		(158)		4,169		(214)
Reorganization expense - professional fees		(9,007)		—		(10,207)		—

Loss before income taxes		(67,242)		(15,310)		(49,291)		(11,603)

Income tax expense		193		161		606		794

Net loss		(67,435)		(15,471)		(49,897)		(12,397)

Net earnings (loss) attributable to noncontrolling interest		(641)		(78)		(308)		133

Net loss attributable to Ferrellgas Partners, L.P.		(66,794)		(15,393)		(49,589)		(12,530)

Distribution to preferred unitholders		8,011		—		8,011		—

Less: General partner's interest in net loss		(748)		(154)		(576)		(125)

Class A unitholders' interest in net loss	$	(74,057)	$	(15,239)	$	(57,024)	$	(12,405)

Basic and diluted net loss per Class A common unit	$	(15.25)	$	(3.14)	$	(11.74)	$	(2.55)

See notes to condensed consolidated financial statements.

Table of Contents

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

For the three months ended October 31,

2020

2019

Net loss

$
(46,453)

$
(45,717)

Other comprehensive income (loss):

Change in value of risk management derivatives

5,767

(13,627)

Reclassification of losses on derivatives to earnings, net

2,150

7,479

Other comprehensive income (loss)

7,917

(6,148)

Comprehensive loss

(38,536)

(51,865)

Less: Comprehensive loss attributable to noncontrolling interest

(311)

(435)

Comprehensive loss attributable to Ferrellgas Partners, L.P.

$
(38,225)

$
(51,430)


	For the three months ended April 30,				For the nine months ended April 30,
	2021		2020		2021		2020

Net loss	$	(67,435)	$	(15,471)	$	(49,897)	$	(12,397)
Other comprehensive income (loss):
Change in value of risk management derivatives		20,446		(11,501)		63,170		(36,340)
Reclassification of (gains) losses on derivatives to earnings, net		(22,383)		14,073		(28,674)		30,318
Pension liability adjustment		—		—		—		(109)
Other comprehensive income (loss)		(1,937)		2,572		34,496		(6,131)
Comprehensive loss		(69,372)		(12,899)		(15,401)		(18,528)
Less: Comprehensive income (loss) attributable to noncontrolling interest		(20)		26		348		148
Comprehensive loss attributable to Ferrellgas Partners, L.P.	$	(69,352)	$	(12,925)	$	(15,749)	$	(18,676)

See notes to condensed consolidated financial statements.

Table of Contents

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF ~~PARTNERS’ DEFICIT~~EQUITY

(in thousands)

(unaudited)



	Number of units									Accumulated		Total Ferrellgas
			General					General		other		Partner, L.P.
	Class A	Class B	partner	Class A		Class B		partner		comprehensive		partners'		Non-controlling		Total partners'
	unitholders	unitholders	unitholder	unitholders		unitholders		unitholder		income (loss)		equity		interest		equity
Balance at July 31, 2020	4,857.6	—	49.5	$	(1,126,452)	$	—	$	(71,287)	$	(2,303)	$	(1,200,042)	$	(8,226)	$	(1,208,268)

Contributions in connection with non-cash ESOP compensation charges	—	—	—		694		—		7		—		701		7		708
Net loss	—	—	—		(45,601)		—		(461)		—		(46,062)		(391)		(46,453)
Other comprehensive income	—	—	—		—		—		—		7,837		7,837		80		7,917
Balance at October 31, 2020	4,857.6	—	49.5		(1,171,359)		—		(71,741)		5,534		(1,237,566)		(8,530)		(1,246,096)
Contributions in connection with non-cash ESOP compensation charges	—	—	—		746		—		8		—		754		8		762
Net earnings	—	—	—		62,634		—		633		—		63,267		724		63,991
Other comprehensive income	—	—	—		—		—		—		28,228		28,228		288		28,516
Balance at January 31, 2021	4,857.6	—	49.5		(1,107,979)		—		(71,100)		33,762		(1,145,317)		(7,510)		(1,152,827)
Contributions in connection with non-cash ESOP compensation charges	—	—	—		795		—		8		—		803		8		811
Issuance of Class B units	—	1,300.0	—		—		388,147		—		—		388,147		—		388,147
Net earnings allocated to preferred units	—	—	—		(8,011)		—		—		—		(8,011)		—		(8,011)
Net loss	—	—	—		(66,046)		—		(748)		—		(66,794)		(641)		(67,435)
Other comprehensive loss	—	—	—		—		—		—		(1,917)		(1,917)		(20)		(1,937)
Balance at April 30, 2021	4,857.6	1,300.0	49.5	$	(1,181,241)	$	388,147	$	(71,840)	$	31,845	$	(833,089)	$	(8,163)	$	(841,252)

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, 2020

97,152.7

989.9

$
(1,126,452)

$
(71,287)

$
(2,303)

$
(1,200,042)

$
(8,226)

$
(1,208,268)
Contributions in connection with non-cash ESOP compensation charges

—

—

694

7

—

701

7

708
Net loss

—

—

(45,601)

(461)

—

(46,062)

(391)

(46,453)
Other comprehensive income

—

—

—

—

7,837

7,837

80

7,917
Balance at October 31, 2020

97,152.7

989.9

(1,171,359)

(71,741)

5,534

(1,237,566)

(8,530)

(1,246,096)


	Number of units						Accumulated		Total Ferrellgas
		General			General		other		Partner, L.P.
	Class A	partner	Class A		partner		comprehensive		partners’		Non-controlling		Total partners’
	unitholders	unitholder	unitholders		unitholder		loss		equity		interest		equity
Balance at July 31, 2019	4,857.6	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	4,857.6	989.9		(1,091,704)		(70,935)		(20,598)		(1,183,237)		(8,147)		(1,191,384)
Contributions in connection with non-cash ESOP compensation charges	—	—		618		6		—		624		6		630
Distributions	—	—		—		—		—		—		(157)		(157)
Net earnings	—	—		47,725		482		—		48,207		584		48,791
Other comprehensive loss	—	—		—		—		(2,528)		(2,528)		(27)		(2,555)
Balance at January 31, 2020	4,857.6	989.9		(1,043,361)		(70,447)		(23,126)		(1,136,934)		(7,741)		(1,144,675)
Contributions in connection with non-cash ESOP compensation charges	—	—		741		8		—		749		8		757
Net earnings	—	—		(15,239)		(154)		—		(15,393)		(78)		(15,471)
Other comprehensive income	—	—		—		—		2,546		2,546		26		2,572
Balance at April 30, 2020	4,857.6	989.9	$	(1,057,859)	$	(70,593)	$	(20,580)	$	(1,149,032)	$	(7,785)	$	(1,156,817)

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

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 and stock and unit-based 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)

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,


2020

2019
Cash flows from operating activities:




Net loss

$
(46,453)

$
(45,717)
Reconciliation of net loss to net cash provided by (used in) operating activities:




Depreciation and amortization expense

21,390

19,219
Non-cash employee stock ownership plan compensation charge

708

795
Loss on asset sales and disposals

813

2,235
Provision for doubtful accounts

678

665
Deferred income tax expense (benefit)

(1)

554
Other

2,346

3,450
Changes in operating assets and liabilities, net of effects from business acquisitions:


Accounts and notes receivable, net of securitization

(18,728)

(14,410)
Inventories

(6,316)

(4,541)
Prepaid expenses and other current assets

(334)

(8,008)
Accounts payable

10,479

11,360
Accrued interest expense

14,827

34,167
Other current liabilities

6,154

8,214
Other assets and liabilities

2,946

(872)
Net cash provided by (used in) operating activities

(11,491)

7,111




Cash flows from investing activities:




Business acquisitions, net of cash acquired

—

(6,400)
Capital expenditures

(19,454)

(18,126)
Proceeds from sale of assets

1,407

835
Cash payments to construct assets in connection with future lease transactions

—

(16,879)
Cash receipts in connection with leased vehicles

—

5,863
Net cash used in investing activities

(18,047)

(34,707)




Cash flows from financing activities:




Payments on long-term debt

(696)

(512)
Net additions to short-term borrowings

—

37,000
Net additions to collateralized short-term borrowings

—

11,000
Cash paid for financing costs

(2,297)

(1,102)
Noncontrolling interest activity

—

(1)
Cash payments for principal portion of finance lease liability

(1,703)

(38)
Net cash provided by (used in) financing activities

(4,696)

46,347




Net change in cash and cash equivalents

(34,234)

18,751
Cash and cash equivalents - beginning of period

333,761

11,054
Cash, cash equivalents and restricted cash - end of period

$
299,527

$
29,805


	For the nine months ended April 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(49,897)	$	(12,397)
Reconciliation of net loss to net cash provided by operating activities:
Depreciation and amortization expense		63,920		59,380
Non-cash employee stock ownership plan compensation charge		2,281		2,182
Loss on asset sales and disposals		2,238		6,242
Loss on extinguishment of debt		109,922		37,399
Provision for expected credit losses		3,479		1,586
Deferred income tax expense		—		554
Other		6,524		9,837
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts and notes receivable, net of securitization		(72,557)		(26,942)
Inventories		2,922		15,245
Prepaid expenses and other current assets		(11,273)		(6,634)
Accounts payable		20,520		4,236
Accrued interest expense		(12,986)		32,708
Other current liabilities		31,213		(7,949)
Other assets and liabilities		6,650		363
Net cash provided by operating activities		102,956		115,810

Cash flows from investing activities:
Business acquisitions, net of cash acquired		—		(6,400)
Capital expenditures		(50,470)		(57,251)
Proceeds from sale of assets		3,707		2,510
Cash payments to construct assets in connection with future lease transactions		(603)		(37,042)
Cash receipts in connection with leased vehicles		391		21,995
Net cash used in investing activities		(46,975)		(76,188)

Cash flows from financing activities:
Proceeds from sale of preferred units, net of issue discount and offering cost		670,429		—
Fees in connection with Class B unit exchange		(1,954)		—
Proceeds from issuance of long-term debt		1,475,000		703,750
Payments on long-term debt		(1,540)		(1,422)
Payment for settlement and early extinguishment of liabilities		(2,175,000)		(283,863)
Net reductions in short-term borrowings		—		(43,000)
Net reductions in collateralized short-term borrowings		—		(62,000)
Payment of redemption premium on debt extinguishment		(85,026)		(17,516)
Cash paid for financing costs		(43,520)		(26,676)
Noncontrolling interest activity		—		(158)
Cash payments for principal portion of lease liability		(5,282)		(944)
Net cash provided by (used in) financing activities		(166,893)		268,171

Net change in cash and cash equivalents		(110,912)		307,793
Cash and cash equivalents - beginning of period		333,761		11,054
Cash, cash equivalents and restricted cash - end of period	$	222,849	$	318,847

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 on 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, 2020,~~April 30, 2021, Ferrell Companies, Inc., a Kansas corporation (“Ferrell Companies”), beneficially owns ~~22.8~~1.1 million of Ferrellgas Partners’ outstanding ~~common~~Class A units.

Ferrellgas, Inc. (the “general partner”), a Delaware corporation and a wholly-owned subsidiary of Ferrell Companies, ~~is the sole general partner of Ferrellgas Partners and one of three general partners of the operating partnership. Ferrellgas, Inc.~~ has retained an approximate 1% general partner economic interest in Ferrellgas Partners and also holds an approximate 1% general partner economic interest in the operating partnership, representing an effective 2% general partner economic interest in Ferrellgas on a combined basis. As the sole general partner of Ferrellgas Partners, Ferrellgas, Inc. performs all management functions required by Ferrellgas Partners. Unless contractually provided for, creditors of the operating partnership have no recourse with regards to Ferrellgas Partners.

The term “general partner” (i) with respect to Ferrellgas Partners refers to Ferrellgas, Inc. and (ii) with respect to the operating partnership refers to (a) Ferrellgas, Inc., in the case of any economic general partner interest and (b) Ferrellgas, Inc., Ferrellgas GP II, LLC and Ferrellgas GP III, LLC, collectively, in the case of any voting general partner interest.

Ferrellgas Partners is a holding entity that conducts no operations and has ~~two~~2 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 any 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~~nine months ended ~~October 31, 2020~~April 30, 2021 are not necessarily indicative of the results to be expected for the full fiscal year ending July ~~30,~~31, 2021.

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. The information included in this Quarterly Report on Form 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’ Annual Report on Form 10-K for fiscal 2020.

~~Going Concern~~Recent Developments

~~The accompanying condensed consolidated financial statements have been prepared~~

Chapter 11 Bankruptcy Cases

On March 5, 2021, the ~~condensed consolidated financial statements. Additionally, Ferrellgas, L.P. has $500.0 million in unsecured notes due May 1, 2021, that are also classified as current in~~Bankruptcy Court entered an order (the “Confirmation Order”) confirming the ~~condensed consolidated financial statements. The ability~~Second Amended Prepackaged Joint Chapter 11 Plan of Reorganization of Ferrellgas Partners, ~~to restructure, refinance or otherwise satisfy these notes is uncertain considering the level of other outstanding indebtedness. Given these concerns,~~L.P. and Ferrellgas Partners ~~believes there is substantial doubt about~~Finance Corp. (the “Plan”).

On March 30, 2021 (the “Effective Date”), the ~~entity’s ability~~conditions to ~~continue as a going concern. Ferrellgas has engaged Moelis & Company LLC as its financial advisor~~effectiveness of the Plan were satisfied and the ~~law firm of Squire Patton Boggs LLP to assist in its ongoing process to reduce existing debt and address its debt maturities. On December 10, 2020,~~Confirmation Order was deemed binding upon Ferrellgas Partners, Ferrellgas Partners Finance Corp. and all other

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parties affected by the Plan. In satisfying the conditions of the Plan, on the Effective Date, certain restructuring transactions by Ferrellgas Partners and certain financing transactions by the operating partnership were completed, as further described under “–Transactions” below.

Ferrellgas has accounted for the effects of the reorganization and determined that fresh-start accounting does not need to be applied, as a change in control did not occur.

Transactions

Satisfaction of Ferrellgas Partners Notes; Issuance of Class B Units to Holders of Ferrellgas Partners Notes

On the Effective Date, by operation of the Plan, all outstanding indebtedness (including accrued interest) of Ferrellgas Partners and Ferrellgas Partners Finance Corp. under their $357.0 million aggregate principal amount of 8.625% senior unsecured notes due June 2020 (the “Ferrellgas Partners Notes”), as described further in Note F –Debt, were discharged and cancelled.

Pursuant to the Plan, Ferrellgas Partners issued an aggregate of 1.3 million Class B Units to holders of the Ferrellgas Partners Notes in satisfaction of their claims in respect of the Ferrellgas Partners Notes. See Note H – Equity for additional discussion.

Issuance of Preferred Units of the Operating Partnership

On the Effective Date, the operating partnership and the general partner (in its capacity as the general partner of operating partnership) entered into an Investment Agreement (the “Investment Agreement”) with certain purchasers named therein, pursuant to which, on the Effective Date, the operating partnership issued and sold to such purchasers an aggregate of 700,000 Senior Preferred Units (the “Preferred Units”), having an aggregate initial liquidation preference of $700.0 million. The purchase price per Preferred Unit was $1,000 less a 3.0% purchase price discount, for an aggregate purchase price of $679.0 million.

The operating partnership received net proceeds from the issuance and sale of the Preferred Units of approximately $651.8 million, after deducting the purchase price discount and certain expenses. The operating partnership used such net proceeds, together with the net proceeds of the issuance and sale of the 2026 Notes and the 2029 Notes (as defined and described below) and cash on hand, (i) to redeem (or satisfy and discharge and subsequently redeem) all of the operating partnership’s previously issued and outstanding senior notes, as described below, and (ii) to repay all outstanding obligations under the operating partnership’s then-existing accounts receivable securitization facility in connection with the termination of that facility, as described below. See Note G – Preferred units for additional discussion.

Issuance of Senior Unsecured Notes of the Operating Partnership

On the Effective Date, 2 wholly-owned subsidiaries of the operating partnership (the “Escrow Issuers”) issued $650.0 million aggregate principal amount of 5.375% senior notes due 2026 (the “2026 Notes”) and $825.0 million aggregate principal amount of 5.875% senior notes due 2029 (the “2029 Notes”), in each case, at an offering price equal to 100% of the principal amount thereof. On the Effective Date and immediately after the issuance of the 2026 Notes and the 2029 Notes by the Escrow Issuers, (i) the Escrow Issuers were merged into the operating partnership and Ferrellgas ~~entities~~Finance Corp., respectively, and the operating partnership and Ferrellgas Finance Corp. assumed the obligations of the Escrow Issuers as co-issuers of the 2026 Notes and the 2029 Notes, and (ii) the general partner and certain subsidiaries of the operating partnership guaranteed the 2026 Notes and the 2029 Notes.

The operating partnership received aggregate net proceeds from the issuance and sale of the 2026 Notes and the 2029 Notes of approximately $1,446.5 million, after deducting the initial purchaser’s discount and offering expenses. The operating partnership used such net proceeds, together with the net proceeds of the issuance and sale of the Preferred Units and cash on hand, (i) to redeem (or satisfy and discharge the indentures governing and subsequently redeem) all of the operating partnership’s previously issued and outstanding senior notes, as described below, and (ii) to repay all outstanding obligations under the operating partnership’s then-existing accounts receivable securitization facility in connection with the termination of that facility, as described below. See Note F – Debt for additional discussion.

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Redemption of Previously Issued Senior Notes of the Operating Partnership

Prior to the Effective Date, the operating partnership delivered notices of redemption of all its previously issued and outstanding 10.00% senior secured notes due 2025 (the “2025 Notes”), 6.50% senior unsecured notes due 2021 (the “2021 Notes”), 6.75% senior unsecured notes due 2022 (the “2022 Notes”) and 6.75% senior unsecured notes due 2023 (the “2023 Notes”), in the aggregate combined principal amount for all such notes of $2,175.0 million, pursuant the terms of the indentures governing those notes, with a redemption date of March 30, 2021 for the 2025 Notes and April 5, 2021 for the 2021 Notes, the 2022 Notes and the 2023 Notes.

On the Effective Date, the operating partnership redeemed all of the issued and outstanding 2025 Notes. Also on the Effective Date, the operating partnership (i) satisfied and discharged the indentures governing the 2021 Notes, the 2022 Notes and the 2023 Notes by irrevocably depositing with the applicable trustees under such indentures funds in an amount sufficient to pay the redemption price for all of such notes on April 5, 2021 and (ii) delivered irrevocable instructions directing the applicable trustees to apply such funds to the redemption of such notes on April 5, 2021. As a result, as of the Effective Date, the indentures governing the 2021 Notes, the 2022 Notes and the 2023 Notes ceased to be of further effect (except as to certain expressly surviving rights), and all of the issued and outstanding 2021 Notes, 2022 Notes and 2023 Notes were redeemed on April 5, 2021.

The aggregate redemption price for the 2021 Notes, the 2022 Notes, the 2023 Notes and the 2025 Notes was approximately $2,320.9 million, consisting of principal, redemption premium (in the case of the 2023 Notes and the 2025 Notes) and accrued and unpaid interest to the applicable redemption date. See Note F – Debt for additional discussion.

Credit Agreement

On the Effective Date, the operating partnership, the general partner and certain of the operating partnership’s subsidiaries entered into a ~~Transaction Support~~Credit Agreement, which provides for a four-year revolving credit facility in an aggregate principal amount of up to $350.0 million, including a sublimit not to exceed $225.0 million for the issuance of letters of credit for a period of 60 days after March 30, 2021, reducing to $200.0 million thereafter. See Note F – Debt for additional discussion.

Termination of Accounts Receivable Securitization Facility

On the Effective Date, the operating partnership and its receivables subsidiary repaid all of the outstanding obligations and fees under the then-existing accounts receivable securitization facility and terminated that facility. See Note E – Accounts and notes receivable, net for additional discussion.

Amended Partnership Agreements of Ferrellgas Partners and the Operating Partnership

On the Effective Date, the general partner executed the Sixth Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners, L.P. (the ~~“TSA”~~“Amended Ferrellgas Partners LPA”), which amended and restated in its entirety the Fifth Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners, L.P. Among other matters, the Amended Ferrellgas Partners LPA provided for the restructuring of Ferrellgas Partners in accordance with ~~certain~~the Plan, including (i) effecting a reverse unit split of Ferrellgas Partners’ then-outstanding common units pursuant to which the holders of ~~or investment advisors, sub-advisors, or managers~~the common units received one Class A Unit for every twenty common units held, and (ii) providing for the issuance of ~~discretionary accounts that hold, claims arising under, derived from or based upon~~Class B Units to the ~~indenture governing~~holders of the Ferrellgas Partners Notes ~~due June 15, 2020. There is no assurance that~~in exchange for such holders’ contribution of the ~~transactions contemplated by~~Ferrellgas Partners Notes as a capital contribution to Ferrellgas Partners and in satisfaction of such holders’ claims in respect of the ~~TSA will be consummated and the outcome of Ferrellgas’ debt reduction strategy continues to remain uncertain.~~Ferrellgas Partners Notes. See Note NH – ~~Subsequent Events,~~Equity for additional discussion.

Also on the Effective Date, the general partner executed (i) the Fifth Amended and Restated Agreement of Limited Partnership of Ferrellgas, L.P. (the “Amended OpCo LPA”), which amended and restated in its entirety the Fourth Amended and Restated Agreement of Limited Partnership of Ferrellgas L.P., and (ii) a ~~discussion~~First Amendment to the Amended OpCo LPA (the “OpCo LPA First Amendment”), which sets forth the preferences, rights, privileges and other terms of the ~~TSA and the transactions contemplated thereunder. Additionally, see Note F – Debt below for further discussion~~Preferred Units.

Table of ~~the outstanding debt.~~Contents

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, 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 expected credit losses, fair value of reporting units, fair value of Class B units, recoverability of long-lived assets, assumptions used to value business combinations, determination of incremental borrowing rate used to measure right-of-use asset and lease liability, fair values of derivative contracts and stock-based compensation calculations.

Update to accounting estimates:

On August 1, 2020 Ferrellgas adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326). As a result, we updated our significant accounting policies for the measurement of expected credit losses below.

Allowance for expected credit losses

Ferrellgas closely monitors accounts receivable balances and estimates the allowance for expected credit losses. The estimate is primarily based on historical collection experience and other factors, including those related to current market conditions and events. The expected credit losses associated with accounts receivable have not historically been material and the adoption impact on Ferrellgas’ allowance for expected credit losses was immaterial as of ~~October 31, 2020.~~

April 30, 2021.

(2) New accounting standards:

FASB Accounting Standard Update No. 2016-13

In June 2016, the FASB issued ASU 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 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 adopted the amended guidance effective August 1, 2020. The adoption of this standard did not have a material impact on the condensed consolidated financial statements.

911

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C. Leases

The following table provides the operating and financing ROU assets and lease liabilities as of ~~October 31, 2020~~April 30, 2021 and July 31, 2020:


Leases	Classification		October 31, 2020		July 31, 2020	Classification		April 30, 2021		July 31, 2020
Assets
Operating lease assets	Operating lease right-of-use assets	$	100,349	$	107,349	Operating lease right-of-use assets	$	93,341	$	107,349
Financing lease assets	Other assets, net		39,753		41,426	Other assets, net		36,747		41,426
Total leased assets		$	140,102	$	148,775		$	130,088	$	148,775

Liabilities
Current
Operating	Current operating lease liabilities	$	28,280	$	29,345	Current operating lease liabilities	$	26,669	$	29,345
Financing	Other current liabilities		7,186		6,955	Other current liabilities		7,460		6,955
Noncurrent
Operating	Operating lease liabilities		83,337		89,022	Operating lease liabilities		78,498		89,022
Financing	Other liabilities		32,033		33,473	Other liabilities		29,559		33,473
Total leased liabilities		$	150,836	$	158,795		$	142,186	$	158,795

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The following table provides the lease expenses for the three and nine months ended ~~October 31, 2020~~April 30, 2021 and ~~2019:~~2020:


		For the three months ended October 31,					For the three months ended April 30,				For the nine months ended April 30,
Leases expense	Classification	2020		2019		Classification	2021		2020		2021		2020

Operating lease expense	Operating expense - personnel, vehicle, plant and other	$	1,783	$	1,741	Operating expense - personnel, vehicle, plant and other	$	1,846	$	1,946	$	5,126	$	5,351
	Operating expense - equipment lease expense		6,442		7,607	Operating expense - equipment lease expense		6,373		7,602		19,328		23,365
	Cost of sales - propane and other gas liquids sales		526		389	Cost of sales - propane and other gas liquids sales		461		370		1,479		1,083
	General and administrative expense		282		266	General and administrative expense		(169)		528		307		1,491
Total operating lease expense			9,033		10,003			8,511		10,446		26,240		31,290

Short-term expense	Operating expense - personnel, vehicle, plant and other		2,033		1,954	Operating expense - personnel, vehicle, plant and other		2,003		1,512		5,908		5,478
	General and administrative expense		242		110	General and administrative expense		111		123		475		374
Total short-term expense			2,275		2,064			2,114		1,635		6,383		5,852

Variable lease expense	Operating expense - personnel, vehicle, plant and other		746		675	Operating expense - personnel, vehicle, plant and other		784		751		2,328		2,097
	Operating expense - equipment lease expense		388		733	Operating expense - equipment lease expense		397		473		1,134		1,359
Total variable lease expense			1,134		1,408			1,181		1,224		3,462		3,456

Finance lease expense:
Amortization of leased assets	Depreciation and amortization expense		2,165		40	Depreciation and amortization expense		2,229		754		6,583		1,229
Interest on lease liabilities	Interest expense		945		42	Interest expense		933		183		2,841		543
Total finance lease expense			3,110		82			3,162		937		9,424		1,772

Total lease expense (a)		$	15,552	$	13,557		$	14,968	$	14,242	$	45,509	$	42,370

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(a)

~~As of October 31, 2020~~For the three and ~~2019~~nine months ended April 30, 2021 Ferrellgas ~~has~~ also recognized $0.1 million and ~~$0.1~~$0.4 million, respectively, of expense related to the accretion of lease exit costs associated with a crude oil storage agreement that is no longer being utilized, primarily due to various Midstream dispositions, and for which Ferrellgas does not anticipate any future economic benefit.

Minimum annual payments under existing operating and finance lease liabilities as of ~~October 31, 2020~~April 30, 2021 are as follows:


Maturities of lease liabilities		Operating leases		Finance leases		Total
2021	$	10,376	$	3,391	$	13,767
2022		28,860		10,148		39,008
2023		36,674		8,149		44,823
2024		19,782		7,564		27,346
2025		13,943		7,577		21,520
Thereafter		21,931		11,559		33,490
Total lease payments	$	131,566	$	48,388	$	179,954
Less: Imputed interest		26,399		11,369		37,768
Present value of lease liabilities	$	105,167	$	37,019	$	142,186

Maturities of lease liabilities

Operating leases

Finance leases

Total
2021

$
25,539

$
7,751

$
33,290
2022

27,163

9,709

36,872
2023

35,832

7,742

43,574
2024

18,150

7,173

25,323
2025

12,889

7,183

20,072
Thereafter

21,532

10,655

32,187
Total lease payments

$
141,105

$
50,213

$
191,318
Less: Imputed interest

29,488

10,994

40,482
Present value of lease liabilities

$
111,617

$
39,219

$
150,836

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The following table represents the weighted-average remaining lease term and discount rate as of ~~October 31, 2020:~~April 30, 2021:


	As of October 31, 2020		As of April 30, 2021
Lease type	Weighted-average remaining lease term (years)	Weighted-average discount rate	Weighted-average remaining lease term (years)	Weighted-average discount rate
Operating leases	5.3	8.2%	4.9	8.3%
Finance leases	5.9	8.6%	5.4	8.8%

Cash flow information is presented below:

For the three months ended October 31,

2020

2019
Cash paid for amounts included in the measurement of lease liabilities for operating leases:

Operating cash flows
$
8,395

$
11,049

Cash paid for amounts included in the measurement of lease liabilities for financing leases:

Operating cash flows
$
877

$
42
Financing cash flows
$
1,703

$
38


	For the nine months ended April 30,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	26,454	$	32,104

Cash paid for amounts included in the measurement of lease liabilities for financing leases:
Operating cash flows	$	2,571	$	543
Financing cash flows	$	5,282	$	944

D. Supplemental financial statement information

Inventories consist of the following:

October 31, 2020

July 31, 2020
Propane gas and related products

$
65,513

$
58,733
Appliances, parts and supplies, and other

13,467

13,931
Inventories

$
78,980

$
72,664


	April 30, 2021		July 31, 2020
Propane gas and related products	$	56,369	$	58,733
Appliances, parts and supplies, and other		13,373		13,931
Inventories	$	69,742	$	72,664

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, 2020,~~April 30, 2021, Ferrellgas had committed, for supply procurement purposes, to take delivery of approximately ~~1.7~~11.6 million gallons of propane at fixed prices.

~~Table of Contents~~

Prepaid expenses and other current assets consist of the following:

October 31, 2020

July 31, 2020
Broker margin deposit assets

$
9,381

$
14,398
Other

30,707

21,546
Prepaid expenses and other current assets

$
40,088

$
35,944


	April 30, 2021		July 31, 2020
Broker margin deposit assets	$	14,972	$	14,398
Price risk management asset		29,612		2,846
Other		29,400		18,700
Prepaid expenses and other current assets	$	73,984	$	35,944

Other current liabilities consist of the following:


	April 30, 2021		July 31, 2020
Accrued interest	$	7,754	$	53,841
Customer deposits and advances		29,296		32,257
Accrued payroll		22,646		18,375
Accrued insurance		11,305		14,796
Broker margin deposit liability		34,581		510
Other		72,932		47,687
Other current liabilities	$	178,514	$	167,466

October 31, 2020

July 31, 2020
Accrued interest

$
68,668

$
53,841
Customer deposits and advances

40,898

32,257
Accrued payroll

13,431

18,375
Accrued insurance

10,994

14,796
Price risk management liabilities

1,506

5,029
Other

51,441

43,168
Other current liabilities

$
186,938

$
167,466

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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,


2020

2019

Operating expense - personnel, vehicle, plant and other

$
47,531

$
48,015

Depreciation and amortization expense

4,523

1,840

Operating expense - equipment lease expense

5,883

7,642

$
57,937

$
57,497


	For the three months ended April 30,				For the nine months ended April 30,
	2021		2020		2021		2020
Operating expense - personnel, vehicle, plant and other	$	56,989	$	54,664	$	161,242	$	167,666
Depreciation and amortization expense		3,347		2,007		9,828		5,883
Operating expense - equipment lease expense		5,551		8,308		17,227		23,934
	$	65,887	$	64,979	$	188,297	$	197,483

Cash and cash equivalents consist of the following:


	October 31, 2020		July 31, 2020		April 30, 2021		July 31, 2020
Cash and cash equivalents	$	202,618	$	238,002	$	211,349	$	238,002
Restricted cash (1)		96,909		95,759		11,500		95,759
Cash, cash equivalents and restricted cash	$	299,527	$	333,761	$	222,849	$	333,761

(1)

As of ~~October 31, 2020, the $96.9 million of~~April 30, 2021, restricted cash includes ~~$79.4 million of pledged cash collateral for letters of credit outstanding,~~ an $11.5 million cash deposit made with the administrative agent under the operating partnership’s senior secured credit facility that was terminated ~~Senior Secured Credit Facility,~~in April 2020, which may be used by the administrative agent to pay contingent obligations arising under the ~~Financing Agreement~~financing agreement that governed the ~~Senior Secured Credit Facility, and $6.0 million of additional pledged collateral.~~terminated senior secured credit facility. As of July 31, 2020, the $95.8 million of restricted cash includes $78.2 million of pledged cash collateral for letters of credit outstanding, anthe $11.5 million cash deposit made with the administrative agent under the terminated ~~Senior Secured Credit Facility, which may be used by the administrative agent to pay contingent obligations arising under the Financing Agreement that governed the Senior Secured Credit Facility,~~senior secured credit facility and $6.1 million of additional pledged collateral. For additional discussion see Note IF – Debt.

~~Table of Contents~~

For purposes of the condensed consolidated statements of cash flows, Ferrellgas considers cash equivalents to include all highly liquid debt instruments purchased with an original maturity of three months or less. Certain cash flow and significant non-cash activities are presented below:


	For the three months ended October 31,				For the nine months ended April 30,
	2020		2019		2021		2020
Cash paid for:
Interest	$	36,997	$	8,284	$	154,834	$	96,418
Income taxes	$	35	$	—	$	438	$	50
Non-cash investing and financing activities:
Liabilities incurred in connection with acquisitions	$	—	$	520
Liability incurred in connection with Financing Agreement amendment					$	—	$	8,863
Change in accruals for property, plant and equipment additions	$	(65)	$	(43)	$	(48)	$	486
Lease liabilities arising from operating right-of-use assets	$	366	$	11,563	$	7,315	$	20,886
Lease liabilities arising from finance right-of-use assets	$	554	$	5,614	$	1,904	$	21,156
Accrued fees relating to senior preferred units					$	18,575	$	—
Accrued senior preferred units distributions					$	8,011	$	—

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

Accounts and notes receivable, net consist of the following:


	April 30, 2021		July 31, 2020
Accounts receivable (a)	$	175,510	$	102,914
Note receivable		13,648		12,648
Less: Allowance for expected credit losses		(18,642)		(14,124)
Accounts and notes receivable, net	$	170,516	$	101,438

(a)

At July 31, 2020, $103.7 million was pledged as collateral under the terminated accounts receivable securitization facility, discussed below.

October 31, 2020

July 31, 2020
Accounts receivable pledged as collateral

$
120,261

$
103,703
Accounts receivable not pledged as collateral (including other reserves)

823

(825)
Note receivable

15,148

12,648
Other

37

36
Less: Allowance for expected credit losses

(16,781)

(14,124)
Accounts and notes receivable, net

$
119,488

$
101,438

~~At October 31, 2020, $120.3 million~~Table of ~~trade accounts receivable were pledged as collateral, but~~Contents

On March 30, 2021, Ferrellgas had no outstanding collateralized notes payable due to a commercial paper conduit. At July 31, 2020, $103.7 million of trade accounts receivable were pledged as collateral, but Ferrellgas had no outstanding collateralized notes payable due to a commercial paper conduit. These accounts receivable pledged as collateral are bankruptcy remote fromterminated 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, 2020, Ferrellgas had received no cash proceeds from trade accounts receivables securitized, with $26.0 million remaining capacity to receive additional proceeds or issue letters of credit. As of July 31, 2020, Ferrellgas had received no cash proceeds from trade accounts receivables securitized, with $11.0 million remaining capacity to receive additional proceeds or issue letters of credit.

~~The~~ agreement governing the accounts receivable securitization facility, (the “Purchase Agreement”) requires the operating partnership to maintain a fixed charge coverage ratio of not less than 1.00x and a senior secured leverage ratio of not greater than 3.00x. The operating partnership was in compliance with these financial ratio requirementsinitially dated as of ~~October 31, 2020. However, if at any~~January 19, 2012 and as subsequently amended from time to time (the “Accounts Receivables Facility”). In connection with the ~~operating partnership is not in compliance with these financial ratio requirements,~~termination of the Accounts Receivables Facility, Ferrellgas ~~will be unable to access~~repaid all of the ~~facility for working capital or other cash requirements~~outstanding obligations and the facility may be terminated. This facility matures in May 2021 and includes an option, at Ferrellgas’ request and consent, for the purchasers in their sole discretion to extend the facility for up to an additional three years.fees thereunder.

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F. Debt

Long-term debt

Long-term debt consists of the following:


	October 31, 2020		July 31, 2020		April 30, 2021		July 31, 2020
Unsecured senior notes
Fixed rate, 6.50%, due 2021 (1)	$	500,000	$	500,000	$	—	$	500,000
Fixed rate, 6.75%, due 2023 (2)		500,000		500,000		—		500,000
Fixed rate, 6.75%, due 2022, net of unamortized premium of $770 and $937 at October 31, 2020 and July 31, 2020, respectively (3)		475,770		475,937
Fixed rate, 6.75%, due 2022, net of unamortized premium of $937 at July 31, 2020 (3)						—		475,937
Fixed rate, 8.625%, due 2020 (4)		357,000		357,000		—		357,000
Fixed rate, 5.375%, due 2026 (5)						650,000		—
Fixed rate, 5.875%, due 2029 (5)						825,000		—

Secured senior notes
Fixed rate, 10.00%, due 2025, net of unamortized premium of $3,424 at October 31, 2020 and $3,573 at July 31, 2020, respectively (5)		703,424		703,573
Fixed rate, 10.00%, due 2025, net of unamortized premium of $3,573 at July 31, 2020 (6)						—		703,573

Notes payable
9.7% and 9.4% weighted average interest rate at October 31, 2020 and July 31, 2020, respectively, due 2020 to 2029, net of unamortized discount of $449 and $537 at October 31, 2020 and July 31, 2020, respectively		3,956		4,564
7.7% and 9.4% weighted average interest rate at April 30, 2021 and July 31, 2020, respectively, due 2021 to 2029, net of unamortized discount of $296 and $537 at April 30, 2021 and July 31, 2020, respectively						3,063		4,564
Total debt, excluding unamortized debt issuance and other costs		2,540,150		2,541,074		1,478,063		2,541,074
Unamortized debt issuance and other costs		(33,949)		(35,583)		(33,403)		(35,583)
Less: current portion of long-term debt		859,095		859,095		1,565		859,095
Long-term debt	$	1,647,106	$	1,646,396	$	1,443,095	$	1,646,396

(1)

During November 2010, the operating partnership issued $500.0 million aggregate principal amount of 6.50% senior notes due ~~2021. These notes are general unsecured senior obligations of~~2021 (referred to herein as the operating partnership and are (i) 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, and (ii) structurally subordinated to all existing and future indebtedness and obligations of the operating partnership’s subsidiaries. The senior notes bear interest from the date of issuance, payable semi-annually in arrears on May 1 and November 1 of each year.2021 Notes). The outstanding principal amount isof the 2021 Notes was due on May 1, 2021. Prior to the Effective Date, the operating partnership delivered a notice of redemption of all of the issued and outstanding 2021 Notes pursuant the terms of the indenture governing the 2021 Notes, with a redemption date of April 5, 2021. On the Effective Date, the operating partnership (i) satisfied and discharged the indenture governing the 2021 Notes by irrevocably depositing with the trustee under such indenture funds in an amount sufficient to pay the redemption price for all of the 2021 Notes on April 5, 2021 and (ii) delivered irrevocable instructions directing the trustee to apply such funds to the redemption of the 2021 Notes on April 5, 2021. As a result, as of the Effective Date, the indenture governing the 2021 Notes ceased to be of further effect (except as to certain expressly surviving rights), and all of the issued and outstanding 2021 Notes were redeemed on April 5, 2021. The aggregate redemption price for the 2021 Notes was $513.9 million, consisting of principal and accrued and unpaid interest to the redemption date.

(2)

During June 2015, the operating partnership issued $500.0 million aggregate principal amount of 6.75% senior notes due ~~2023. These notes are general unsecured senior obligations of~~2023 (referred to herein as the operating partnership and are (i) 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, and (ii) structurally subordinated to all existing and future indebtedness and obligations of any subsidiary of the operating partnership that is not a guarantor of these notes. The senior notes bear interest from the date of issuance, payable semi-annually in arrears on June 15 and December 15 of each year.2023 Notes). The outstanding principal amount isof the 2023 Notes was due June 15, 2023. ~~The~~Prior to the Effective Date, the operating partnership ~~would incur prepayment penalties if it~~delivered a notice of redemption of all of the issued and outstanding 2023 Notes pursuant the terms of the indenture governing the 2023 Notes, with a redemption date of April 5, 2021. On the Effective Date, the operating partnership (i) satisfied and discharged the indenture governing the 2023 Notes by irrevocably depositing with the trustee under such indenture funds in an amount sufficient to pay the redemption price for all of the 2023 Notes on April 5, 2021 and (ii) delivered irrevocable instructions directing the trustee to apply such funds to the redemption of the 2023 Notes on April 5, 2021. As a result, as of the Effective Date, the indenture governing the 2023 Notes ceased to be of further effect (except as to certain expressly surviving rights), and all of the issued and outstanding 2023 Notes were redeemed on April 5, 2021. The aggregate redemption price for the 2023 Notes was $518.8 million, consisting of principal, redemption premium and accrued and unpaid interest to ~~repay~~ the ~~notes prior to June 15, 2021.~~redemption date.

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(3)

During fiscal 2014, the operating partnership issued $475.0 million aggregate principal amount of 6.75% senior notes due 2022 (referred to herein as the 2022 Notes), $325.0 million of which was issued at par and $150.0 million of which was issued at 104% of par. These notes are general unsecured senior obligations of the operating partnership and are (i) 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, and (ii) structurally subordinated to all existing and future indebtedness and obligations of the operating partnership’s subsidiaries. The senior notes bear interest from the date of issuance, payable semi-annually in arrears on January 15 and July 15 of each year. The outstanding principal amount isof the 2022 Notes was due January 15, 2022. Prior to the Effective Date, the operating partnership delivered a notice of redemption of all of the issued and outstanding 2022 Notes pursuant the terms of the indenture governing the 2022 Notes with a redemption date of April 5, 2021. On the Effective Date, the operating partnership (i) satisfied and discharged the indenture governing the 2022 Notes by irrevocably depositing with the trustee under such indenture funds in an amount sufficient to pay the redemption price for all of the 2022 Notes on April 5, 2021 and (ii) delivered irrevocable instructions directing the trustee to apply such funds to the redemption of the 2022 Notes on April 5, 2021. As a result, as of the Effective Date, the indenture governing the 2022 Notes ceased to be of further effect (except as to certain expressly surviving rights), and all of the issued and outstanding 2022 Notes were redeemed on April 5, 2021. The aggregate redemption price for the 2022 Notes was $482.0 million, consisting of principal and accrued and unpaid interest to the redemption date.

(4)

During April 2010, Ferrellgas Partners issued $280.0 million aggregate principal amount of 8.625% unsecured senior notes due 2020 (referred to herein as the Ferrellgas Partners Notes). During March 2011, Ferrellgas Partners redeemed $98.0 million of the Ferrellgas Partners Notes. During January 2017, Ferrellgas Partners issued $175.0 million aggregate principal amount of additional ~~8.625% unsecured senior notes due 2020, issued~~Ferrellgas Partners Notes at 96% of par. The outstanding principal amount of the Ferrellgas Partners ~~contributed~~Notes was due on June 15, 2020, but had not been repaid and was classified as current on the ~~net proceeds from~~consolidated balance sheet as of July 31, 2020. On the ~~offering~~Effective Date, by operation of ~~approximately $166.1 million~~the Plan, all outstanding indebtedness under the Ferrellgas Partners Notes was discharged and cancelled. Pursuant to the ~~operating partnership, which used such amounts to~~

~~Table of Contents~~

~~repay borrowings under its previous senior secured credit facility. During April 2010,~~Plan, Ferrellgas Partners issued ~~$280.0~~an aggregate of 1.3 million Class B Units to holders of ~~these notes. During March 2011,~~the Ferrellgas Partners ~~redeemed $98.0 million~~Notes in satisfaction of ~~these notes. These notes are general unsecured senior obligations~~their claims in respect of the Ferrellgas Partners ~~and are (i) effectively junior to all existing and future senior secured indebtedness of Ferrellgas Partners, to~~Notes.

(5)

On the ~~extent of the value of the assets securing such debt, and (ii) structurally subordinated to all existing and future indebtedness and obligations~~Effective Date, 2 wholly-owned subsidiaries of the operating partnership ~~and its subsidiaries. The unsecured~~(referred to herein as the Escrow Issuers) issued $650.0 million aggregate principal amount of 5.375% senior notes due 2026 (referred to herein as the 2026 Notes) and $825.0 million aggregate principal amount of 5.875% senior notes due 2029 (referred to herein as the 2029 Notes). On the Effective Date and immediately after the issuance of the 2026 Notes and 2029 Notes by the Escrow Issuers, (i) the Escrow Issuers were merged into the operating partnership and Ferrellgas Finance Corp., respectively, and the operating partnership and Ferrellgas Finance Corp. assumed the obligations of the Escrow Issuers as co-issuers of the 2026 Notes and the 2029 Notes, and (ii) the general partner and certain subsidiaries of the operating partnership guaranteed the 2026 Notes and the 2029 Notes. The 2026 Notes and 2029 Notes bear interest from the date of issuance, payable semi-annually in arrears on ~~June 15~~October 1 and ~~December 15~~April 1 of each year. The ~~outstanding principal amount was due~~2026 Notes will mature on ~~June 15, 2020, but has not been repaid.~~April 1, 2026, and the 2029 Notes will mature on April 1, 2029. See “–Senior unsecured notes” below for additional discussion.

~~(5)~~(6)

During April 2020, the operating partnership issued $700.0 million aggregate principal amount of 10.00% senior secured ~~first lien~~ notes due 2025 (referred to herein as the 2025 Notes), $575.0 million of which was issued at par and $125.0 million of which was issued at 103% of par. These notes are senior secured obligations of the operating partnership and the guarantors of such notes, including Ferrellgas Partners, the general partners of the operating partnership and certain subsidiaries of the operating partnership, and are (i) effectively senior to all existing senior unsecured indebtedness of the operating partnership and the guarantors, to the extent of the value of the assets securing such debt, and (ii) structurally subordinated to all existing and future indebtedness and obligations of Ferrellgas Receivables, LLC, a special purpose subsidiary that does not guarantee the notes. The senior notes bear interest from the date of issuance, payable semiannually in arrears on April 15 and October 15 of each year. The operating partnership would incur prepayment penalties if it were to repay the notes prior to April 15, 2024. The outstanding principal amount isof the 2025 Notes was due on April 15, 2025. Prior to the Effective Date, the operating partnership delivered a notice of redemption of all of the issued and outstanding 2025 Notes pursuant the terms of the indenture governing the 2025 Notes, with a redemption date of March 30, 2021, and all of the issued and outstanding 2025 Notes were redeemed on the Effective Date. The aggregate redemption price for the 2025 Notes was $806.2 million, consisting of principal, redemption premium and accrued and unpaid interest to the redemption date.

Senior secured revolving credit facility

On the Effective Date, the operating partnership, the general partner and certain of the operating partnership’s subsidiaries entered into a Credit Agreement (the “Credit Agreement”), which provides for a four-year revolving credit facility (the “Credit Facility”) in an aggregate principal amount of up to $350.0 million, including a sublimit not to exceed $225.0 million for the issuance of letters of credit for a period of 60 days after March 30, 2021, reducing to $200.0 million thereafter.

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borrowings are secured, on a first priority basis, by substantially all of the assets of the operating partnership and its subsidiaries and all of the equity interests in the operating partnership held by the general partner and Ferrellgas Partners.

Availability under the Credit Facility is, at any time, an amount equal to (a) the lesser of the revolving commitment (initially $350.0 million) and the Borrowing Base (as defined below) minus (b) the sum of the aggregate outstanding amount of borrowings under Credit Facility plus the undrawn amount of outstanding letters of credit under the Credit Facility plus unreimbursed drawings in respect of letters of credit (unless otherwise converted into revolving loans). The "Borrowing Base" equals the sum of: (a) $200.0 million, plus (b) 80% of the eligible accounts receivable of the operating partnership and its subsidiaries, plus (c) 70% of the eligible propane inventory of the operating partnership and its subsidiaries, valued at weighted average cost, less (d) certain reserves, as determined and subject to certain modifications by the administrative agent in its permitted discretion.

Amounts borrowed under the Credit Facility bear interest, at the operating partnership's option, at either (a) for base rate loans, (i) a base rate determined by reference to the highest of (A) the rate of interest last quoted by The Wall Street Journal in the U.S. as the prime rate in effect, (B) the NYFRB Rate from time to time plus 0.50% per annum and (C) the Adjusted LIBO Rate for a one-month interest period plus 1.00% per annum plus (ii) a margin of 1.50% to 2.00% per annum depending on total net leverage or (b) for Eurodollar rate loans, (i) a rate determined by reference to the Adjusted LIBO Rate plus (ii) a margin of 2.50% to 3.00% per annum depending on total net leverage. The operating partnership will be required to pay an undrawn fee to the lenders on the average daily unused amount of the Credit Facility at a rate of 0.375% to 0.50% per annum depending on total net leverage.

The Credit Agreement contains customary representations, warranties, covenants and events of default.

The financial covenants in the Credit Agreement require the operating partnership to maintain: (1) a minimum interest coverage ratio (defined generally as the ratio of adjusted EBITDA to cash interest expense) of 2.50 to 1.00, (2) a maximum secured leverage ratio (defined generally as the ratio of total first priority secured indebtedness to adjusted EBITDA) of 2.50 to 1.00, and (3) a maximum total net leverage ratio (defined generally as the ratio of total indebtedness (net of unrestricted cash, subject to certain limits) to adjusted EBITDA) of 5.50 to 1.00 initially. The maximum total net leverage ratio adjusts to 5.25 to 1.00 starting with the quarter ending April 30, 2022, 5.00 to 1.00 starting with the quarter ending October 31, 2022, and 4.75 to 1.00 starting with the quarter ending April 30, 2023.

In addition to the financial covenants, the Credit Agreement includes covenants that may (or if not met will) restrict the ability of the operating partnership to, among other things: incur indebtedness or liens; effect certain fundamental changes, including mergers, consolidations, liquidations, dissolutions and changes in line of business; make certain restricted payments, including distributions to holders of Preferred Units, Ferrellgas Partners and the general partner and redemptions of Preferred Units; make investments, loans or advances; dispose of assets; effect sale and leaseback transactions; enter into swap agreements; make optional payments and modifications of subordinated and other debt instruments; enter into transactions with affiliates; agree to negative pledge clauses and burdensome agreements; and effect amendments to organizational documents.

On June 11, 2021, Ferrellgas entered into the First Amendment to the Credit Agreement. See Note O – Subsequent events for further discussion.

Senior unsecured notes

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Notes of approximately $1,446.5 million, after deducting the initial purchaser’s discount and estimated offering expenses. The operating partnership used such net proceeds, together with the net proceeds of the issuance and sale of the Preferred Units, as discussed in Note G – Preferred units, and cash on hand, (i) to redeem (or satisfy and discharge the indentures governing and subsequently redeem) all of the issued and outstanding 2021 Notes, 2022 Notes, 2023 Notes and 2025 Notes, as described above, and (ii) to repay all outstanding obligations under the Accounts Receivable Facility in connection with the termination of that facility, as described in Note E – Accounts and notes receivable, net.

The 2026 Notes and 2029 Notes are the senior unsecured obligations of the operating partnership and Ferrellgas Finance Corp. and are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the general partner and all domestic subsidiaries of the operating partnership other than Ferrellgas Finance Corp. and Ferrellgas Receivables, LLC.

The 2026 Notes may be redeemed prior to April 1, 2023 and the 2029 Notes may be redeemed prior to April 1, 2024 at the issuer’s option, in whole or in part, at a redemption price of par plus the applicable make-whole premium and accrued and unpaid interest. On and after April 1, 2023 and April 1, 2024, the 2026 Notes and the 2029 Notes, respectively, may be redeemed at the issuer’s option, in whole or in part, at the redemption prices set forth in the respective indenture governing such notes, plus accrued and unpaid interest. Beginning on April 1, 2025 and April 1, 2026, the 2026 Notes and 2029 Notes, respectively, may be redeemed at par plus accrued and unpaid interest.

The indentures governing the 2026 Notes and 2029 Notes contain customary affirmative and negative covenants restricting, among other things, the ability of the operating partnership and its restricted subsidiaries to: incur additional indebtedness and guarantee indebtedness; pay dividends or make other distributions (including distributions to holders of Preferred Units, Ferrellgas Partners and the general partner) or repurchase or redeem their equity interests (including redemptions of Preferred Units); repurchase or redeem certain debt; make certain other restricted payments or investments; sell assets, incur liens, enter into transactions with affiliates, enter into agreements restricting the operating partnership’s subsidiaries’ ability to pay dividends; and consolidate, merge or sell all or substantially of their assets. The indentures also restrict the ability of the general partner to engage in certain activities.

In particular, under these covenants, subject to certain exceptions and additional requirements, the operating partnership is permitted to make cash distributions to holders of Preferred Units, Ferrellgas Partners and the general partner, redemptions of Preferred Units and other restricted payments (i) only in limited amounts specified in the indentures and (ii) only if the operating partnership’s net leverage ratio (defined generally to mean the ratio of consolidated total net debt to trailing 4 quarters consolidated EBITDA, both as adjusted for certain, specified items) is not greater than 5.0 to 1.0, on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events. Further, if the operating partnership’s consolidated fixed charge coverage ratio (defined generally to mean the ratio of trailing 4 quarters consolidated EBITDA to consolidated fixed charges, both as adjusted for certain, specified items) is equal to or less than 1.75 to 1.00 (on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events), the amount of distributions and other restricted payments the operating partnership is permitted to make under the indentures is further limited.

The scheduled principal payments on long-term debt are as follows:


	Scheduled		Scheduled
Payment due by fiscal year	principal payments		principal payments
2021 ~~(a)~~	$	858,425	$	580
2022		476,435		1,335
2023		500,999		899
2024		329		329
2025		700,199		199
Thereafter		19		1,475,019
Total	$	2,536,406	$	1,478,361

~~(a)~~

~~Includes the Ferrellgas Partners Notes, which matured on June 15, 2020, but have not yet been repaid.~~

Letters of credit outstanding at ~~October 31, 2020~~April 30, 2021 and July 31, 2020 totaled ~~$127.1~~$138.2 million and $126.0 million, respectively, and were used to secure insurance arrangements, product purchases and commodity hedges. As of April 30, 2021, Ferrellgas had available borrowing capacity under its Credit Facility of $211.8 million, which included remaining available letter of credit capacity of $86.8 million. At ~~October 31, 2020 and~~ July 31, 2020, Ferrellgas did not have in place a credit facility providing for the issuance of letters of credit and had ~~$79.4 million and~~ $78.2 million ~~respectively,~~ of restricted cash pledged as cash collateral for letters

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of credit outstanding. Additionally, at ~~both October 31, 2020 and~~ July 31, 2020, Ferrellgas also issued letters of credit of $50.0 million by utilizing our liquidity available on the ~~accounts~~terminated Accounts Receivable Facility.

G. Preferred units

On the Effective Date, pursuant to the Investment Agreement, the operating partnership issued an aggregate of 700,000 Preferred Units, having an aggregate initial liquidation preference of $700.0 million. The purchase price per Preferred Unit was $1,000 less a 3.0% purchase price discount, for an aggregate purchase price of $679.0 million. The operating partnership received net proceeds from the issuance and sale of the Preferred Units of approximately $651.8 million, after deduction of the purchase price discount and certain expenses. The operating partnership used such net proceeds, together with the net proceeds of the issuance and sale of the 2026 Notes and the 2029 Notes and cash on hand, (i) to redeem (or satisfy and discharge the indentures governing and subsequently redeem) all of the issued and outstanding 2021 Notes, 2022 Notes, 2023 Notes and 2025 Notes, as described in Note F - Debt, and (ii) to repay all outstanding obligations under the Accounts Receivable Facility in connection with the termination of that facility, as described in Note E – Accounts and notes receivable, ~~securitization facility.~~net.

The following table summarizes the changes in the number of the Preferred Units:



		Preferred Units
Balance at January 31, 2021		—
Preferred units issued		700,000
Balance at April 30, 2021		700,000

The preferences, rights, privileges and other terms of the Preferred Units are set forth in the OpCo LPA Amendment entered into by the general partner on the Effective Date (along with the Amended OpCo LPA) and are described below.

~~Forbearance Agreement~~Issuer Redemption Right

The operating partnership has the right to redeem all or a portion of the Preferred Units for cash, pro rata and at any time and from time to time, including in connection with a Change of Control (as defined in the OpCo LPA Amendment), at an amount per Preferred Unit (the “Redemption Price”) equal to, without duplication, the sum of (a) the greater of (i) the amount necessary to result in a MOIC (as defined below) of 1.47x in respect of the purchase price, before discount, of such Preferred Unit, which is $1,000 per Preferred Unit (the “Purchase Price”), and (ii) the amount necessary to result in the applicable internal rate of return equal to 12.25%, which is increased by 150 basis points if the operating partnership has elected to pay more than four Quarterly Distributions (as defined below) in PIK Units (as defined below) and (b) the accumulated but unpaid Quarterly Distributions to the date of redemption, if any. A partial redemption of the Preferred Units is permitted only in the event the aggregate amount to be paid in respect of all Preferred Units included in such partial redemption is at least $25.0 million.

“MOIC” means, with respect to ~~Ferrellgas Partners’ 8.625% Unsecured Senior Notes due June 15, 2020~~

~~On June 7, 2020, Ferrellgas Partners and additional Ferrellgas entities entered into~~ a ~~Forbearance Agreement (the “Forbearance Agreement”) with~~Preferred Unit, a multiple on invested capital equal to the ~~beneficial owners (or nominees, investment managers, advisors or subadvisors for~~quotient determined by dividing (A) the ~~beneficial owners, collectively referred to as the “Forbearing Noteholders”)~~sum of ~~approximately 77% of~~(x) the aggregate ~~principal~~ amount of ~~Ferrellgas Partners’ 8.625% unsecured senior notes due June 15, 2020, pursuant to which the Forbearing Noteholders agreed to forbear from exercising any default-related rights and remedies~~all distributions made in cash with respect to such Preferred Unit prior to the applicable date of determination, with certain exclusions, plus (y) each Redemption Price paid in cash in respect of such Preferred Unit, on or prior to the applicable date of determination, by (B) the Purchase Price of such Preferred Unit.

Investor Redemption Right

In the event that (i) any Class B Units are outstanding, or (ii) (x) 0 Class B Units are outstanding and (y) no more than 233,300 Preferred Units are outstanding, at any time on and after the tenth anniversary of the Effective Date the Required Holders may elect, by delivery of written notice, to have the operating partnership fully redeem each remaining outstanding Preferred Unit for an amount in cash equal to the Redemption Price. “Required Holders” refers to both (i) holders owning at least 33.3% of the total Preferred Units outstanding at any time and (ii) certain initial affiliated purchasers, for so long as such initial affiliated purchasers collectively own at least 25% of the Preferred Units outstanding at such time.

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In the event that (i) 0 Class B Units are outstanding and (ii) more than 233,300 Preferred Units are outstanding, the Required Holders will have the right to trigger a sale of the operating partnership after the tenth anniversary of the Effective Date. If the operating partnership fails to consummate a sale that would pay the Redemption Price in full within 180 days of written notice requiring such sale, the Required Holders will have the right to appoint a majority of the members of the Board of Directors of the general partner and initiate a sale of the operating partnership.

Change of Control

Upon a Change of Control (as defined in the OpCo LPA Amendment), the Required Holders will have the option to require the redemption of all or a portion of the Preferred Units in cash in an amount equal to the Redemption Price; provided, that such Redemption Price shall not be payable unless the operating partnership shall have first made any required change of control offer pursuant to the indentures governing the 2026 Notes and the 2029 Notes and purchased all such 2026 Notes and 2029 Notes tendered pursuant to such offer (unless otherwise waived by such noteholders); provided, further that the Redemption Price shall be paid immediately following the purchase of such tendered Notes (if any).

Ferrellgas identified the issuer redemption right, the investor redemption right, and the change in control option as embedded derivatives that require bifurcation as they are not clearly and closely related to the debt host contract and has concluded that the fair values at issuance and at April 30, 2021, are immaterial to the financial statements.

Distributions

Pursuant to the OpCo LPA Amendment, the operating partnership will pay to the holders of each Preferred Unit a cumulative, quarterly distribution (the "Quarterly Distribution") at the Distribution Rate (as defined below) on the Purchase Price.

"Distribution Rate" means, for the first five years after March 30, 2021, a rate per annum equal to 8.956%, with certain increases in the Distribution Rate on each of the 5^th, 6^th and 7^th anniversaries of March 30, 2021, subject to a maximum rate of 11.125% and certain other adjustments and exceptions.

The Quarterly Distribution will be paid in cash; provided, that the operating partnership may, at its option in its sole discretion, pay any Quarterly Distribution "in kind" through the issuance of additional Preferred Units ("PIK Units") at the quarterly Distribution Rate plus an applicable premium that escalates each year from 75 bps to 300 bps so long as the Preferred Units remain outstanding. In the event the operating partnership fails to make any Quarterly Distribution in cash, such Quarterly Distribution will automatically be paid in PIK Units.

The Distribution Rate on the Preferred Units will increase upon violation of certain protective provisions for the benefit of Preferred Unit holders notwithstanding the cap mentioned above.

As of April 30, 2021, the Quarterly Distribution accrued was $8.0 million, reflecting a prorated distribution amount for the period from the Effective Date to April 30, and the Quarterly Distribution in that amount was paid in cash to holders of Preferred Units on May 17, 2021.

Tax Distributions

For any quarter in which the operating partnership makes a Quarterly Distribution in PIK Units in lieu of cash, it will be required to make a subsequent cash tax distribution for such quarter in an amount equal to the (i) the lesser of (x) 25% and (y) the highest combined federal, state and local tax rate applicable for corporations organized in New York, multiplied by (ii) the excess (if any) of (A) one-fourth (1/4th) of the estimated taxable income to be allocated to the holders of Preferred Units for the year in which the Quarterly Tax Payment Date (which refers to certain specified dates that next follow a Quarterly Distribution date on which PIK Units were issued) occurs, over (B) any cash paid on the Quarterly Distribution date immediately preceding the Quarterly Tax Payment Date on which a quarterly tax amount would otherwise be paid (such amount, the "Tax Distribution"). Tax Distributions are treated as advances against, and reduce, future cash distributions for any reason, including payments in redemption of Preferred Units or PIK Units, or payments to the holders in their capacity as such pursuant to any side letter or other agreement.

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Additional Amounts for Certain Purchasers

The operating partnership is required to pay certain additional amounts of cash (the “Additional Amounts”) as necessary to certain holders of Preferred Units that hold their interests through a “blocker,” which is a U.S. entity that is owned and organized by certain original purchasers of Preferred Units who are non-U.S. persons or tax exempt for U.S. tax purposes and is treated as a corporation for U.S. tax purposes. Only certain original purchasers of Preferred Units who hold their Preferred Units through such blockers are, and none of their transferees is, entitled to Additional Amounts. Additional Amounts are capped at the lesser of: (a) the product of 20% multiplied by taxable income allocated to a “blocker” (as defined) divided by 0.8, and (b) the actual taxes payable by the “blocker” as a result of holding Senior Preferred Units.

Board Rights

For so long as at least 140,000 Preferred Units remain outstanding, holders of the Preferred Units have the right to designate 1 director to the Board of the general partner, subject to approval by the general partner.

Protective Provisions

The OpCo LPA Amendment and the Amended Ferrellgas Partners ~~Notes~~LPA include, among other things, certain covenants for the benefit of holders of Preferred Units applicable to the operating partnership and, in certain instances, Ferrellgas Partners, for so long as at least $35,000,000 of Preferred Units and PIK Units remain outstanding. These covenants include, among other things, limitations on (i) effecting a Change of Control, (ii) amending organizational documents, (iii) issuing certain equity securities, (iv) issuing Preferred Units, (v) filing for bankruptcy, (vi) non-ordinary course investments, and (vii) incurring certain levels of indebtedness.

Ranking and Liquidation Preference

The Preferred Units rank senior to ~~direct the trustee thereunder not to take~~ any ~~remedial action. The forbearance period under the Forbearance Agreement expired on August 15, 2020. Following the expiration~~other class or series of equity interests of the ~~forbearance period, discussions with representatives of~~operating partnership (including the ~~Forbearing Noteholders have continued.~~

~~Financial covenants~~

~~The indenture governing the outstanding notes of~~partnership interests held by Ferrellgas Partners and the ~~agreements governing~~general partner). Upon a liquidation, dissolution or winding up of the operating ~~partnership’s indebtedness contain various covenants that limit Ferrellgas Partners’ ability~~partnership, each holder of Preferred Units will be entitled to receive, prior and in preference to any distribution of any assets of the ~~ability~~operating partnership to the holders of ~~specified subsidiaries to, among~~any other ~~things, make restricted payments and incur additional indebtedness. The general partner~~

~~Table~~class or series of ~~Contents~~

~~believes that the most restrictive of these covenants are the restricted payments covenants~~equity interests in the ~~indenture governing the outstanding notes of~~operating partnership (including Ferrellgas Partners and the ~~indentures governing~~general partner), an amount per Preferred Unit equal to the ~~outstanding notes~~Redemption Price.

Restrictions on Cash Distributions to Ferrellgas Partners and the General Partner

The operating partnership is permitted to make distributions of Available Cash (as defined in the Amended OpCo LPA) to Ferrellgas Partners and the general partner only if (i) the operating partnership ~~which are discussed below.~~

~~Ferrellgas Partners, L.P.~~has made all required Quarterly Distributions (in cash or PIK Units), Tax Distributions and payments of Additional Amounts, (ii) the ~~master limited~~operating partnership

~~The indenture governing~~ has redeemed all PIK Units issued, (iii) 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. Ferrellgas Partners continues to comply with the restrictive covenants with respect to the $357.0 million aggregate principal amount of its unsecured senior notes due June 15, 2020 as it continues to negotiate with the Forbearing Noteholders.

~~Under this covenant, subject to the limited exception described below, Ferrellgas Partners may not make a restricted payment unless its~~operating partnership’s consolidated ~~fixed charge coverage ratio~~net leverage (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, 2020, Ferrellgas Partners’ consolidated fixed charge coverage ratio was 1.38x.

If the consolidated fixed charge coverage ratio is below 1.75x, Ferrellgas Partners may make restricted payments of up to $50.0 million in total over a sixteen quarter 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 for the three months ended October 31, 2020, and the general partner expects that this covenant will continue to prohibit Ferrellgas Partners from making common unit distributions, unless and until the outstanding notes of Ferrellgas Partners due 2020 are restructured, refinanced or otherwise satisfied. While there can be no assurance of success, as part of our debt and interest expense reduction strategy, we are presently considering potential solutions to address the maturity of the outstanding notes of Ferrellgas Partners due June 15, 2020, as well as the upcoming maturity of the operating partnership’s $500.0 million in unsecured notes due May 1, 2021. The potential solutions include, among others, restructuring, refinancing or a transaction to exchange new notes for some or all of these notes.

~~Ferrellgas, L.P., the operating partnership~~

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 Partners. Under these covenants, in the indentures governing the operating partnership’s notes, subject to the limited exceptions 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, 2020, the operating partnership’s consolidated ~~fixed charge coverage ratio was 1.65x.~~

~~Under~~total net debt (including the covenants in the indentures governing the operating partnership’s unsecured notes, if the consolidated fixed charge coverage ratio is below 1.75x, the operating partnership may still make restricted payments in limited amounts determined under the indentures governing the operating partnership’s unsecured notes. The distributions made by the operating partnership on June 15, 2019total redemption price of all outstanding Preferred Units and ~~December 15, 2019 for payment~~PIK Units but excluding certain letters of interest on Ferrellgas Partners’ unsecured senior notes due June 2020 were made from capacity under this limited exception to the ratio requirement under the indentures governing the operating partnership’s unsecured notes.

The indenture governing the operating partnership’s senior secured first lien notes due 2025 contains a similar but, in some respects, a different restricted payments covenant. The covenant in the secured notes indenture provides for the same 1.75x consolidated fixed charge coverage ratio testcredit and capital lease obligations) as the unsecured notes indentures and a limited exception when that ratio is below 1.75x. In addition, the secured notes indenture also provides that, subject to a separate limited exception, described below, the operating partnership generally may not make a restricted payment unless the operating partnership’s consolidated leverage ratio (defined in the secured notes indenture generally to mean the ratio of

~~Table~~ of ~~Contents~~

~~consolidated total debt~~each Quarterly Distribution Date to trailing four quarters consolidated EBITDA, both as adjusted for certain, specified items) is ~~no greater than 5.5x, on a pro forma basis~~below 7.25x through May 15, 2022 and 7.00x thereafter, net of cash, immediately before and after giving effect to the restricted payment and, if applicable, certain other specified events. The consolidated leverage ratio test applies regardless of whether the operating partnership’s consolidated fixed coverage ratio is at least 1.75x or below 1.75x. As of October 31, 2020, the operating partnership’s consolidated leverage ratio was substantially in excess of 5.5x. Additionally, the secured notes indenture provides for restricted payments under its limited exception to the consolidated fixed charge coverage ratio test that is less than the capacity available under the similar exception in the unsecured notes indentures. However, the secured notes indenture contains a separate exception to both the consolidated fixed charge coverage ratio test and the consolidated leverage ratio test that can be utilized to make certain specified restricted payments in a limited amount whensuch distribution, (iv) the operating partnership ~~does not meet either the consolidated fixed charge coverage ratio test or the consolidated leverage ratio test. This separate exception under the secured notes indenture currently~~ has ~~capacity for such specified restricted payments that is substantially the same as the~~at least $100 million of liquidity, consisting of unrestricted cash on hand and available capacity under the ~~most restrictive of~~Credit Agreement or any replacement thereof, and (v) the operating ~~partnership’s unsecured notes indentures.~~partnership is in compliance with the other protective provisions in the OpCo LPA Amendment.

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H. Equity

Reverse Unit Split

As described ~~above,~~in the Note A – Partnership organization and formation under “—Recent Developments—Transactions— Amended Partnership Agreements of Ferrellgas ~~Partners’ unsecured~~Partners and the Operating Partnership,” on the Effective Date, Ferrellgas Partners effected a 1-for-20 reverse unit split in which holders of its then-outstanding common units received one Class A Unit for every twenty common units held. No fractional Class A Units were issued in connection with the reverse unit split. If, as a result of the reverse unit split, a unitholder would otherwise have been entitled to a fractional Class A Unit, the number of Class A Units such unitholder received was rounded up or down to the nearest whole Class A Unit, with a fraction of one-half or less being rounded down. The reverse unit split resulted in a reduction of our previously outstanding common units from 97,152,665 common units to 4,857,605 Class A Units. All references to common units and per unit data for all periods presented in the accompanying consolidated financial statements and notes ~~due 2020 matured~~thereto have been adjusted to reflect the reverse unit split on ~~June 15, 2020,~~a retroactive basis.

Class B Units

As discussed in the Note A – Partnership organization and formation under “—Recent Developments—Transactions— Satisfaction of Ferrellgas Partners Notes; Issuance of Class B Units to Holders of Ferrellgas Partners Notes”, on the Effective Date, Ferrellgas Partners issued 1.3 million Class B Units to the holders of the Ferrellgas Partners Notes in exchange for such holders’ contribution of the Ferrellgas Partners Notes to Ferrellgas Partners as a capital contribution and in satisfaction of such holders’ claims in respect of the Ferrellgas Partners Notes. The terms of the Class B Units are set forth in the Amended Ferrellgas Partners LPA entered into by the general partner on the Effective Date.

Ferrellgas Partners may, subject to certain conditions, issue additional Class A Units to such parties as determined at the discretion of Ferrellgas Partners, upon consent by the holders of the requisite percentage of Class B Units as specified in the Amended Ferrellgas Partners LPA (the “Requisite Class B Units”), which refers to: (i) if the initial majority holder of Class B Units holds at least 50% of Class B Units, holders of at least 50% of the outstanding Class B Units, or (ii) if the initial majority holder of Class B Units holds less than 50% of Class B Units, holders of at least one-third of the outstanding Class B Units.

Distributions by Ferrellgas Partners to its partners are required to be made such that the ratio of (i) the amount of distributions made to holders of Class B Units to (ii) the amount of distributions made to holders of Class A Units and the general partner is not less than 6:1 until holders of Class B Units receive distributions in the aggregate amount equaling $357.0 million (which was the outstanding principal amount of ~~those notes was due~~the Ferrellgas Partners Notes), upon receipt of which the Class B Units will be converted to ~~be paid on~~Class A Units at the applicable conversion rate, set forth in the table below, at the option of Ferrellgas Partners in the first five years after the Effective Date and, thereafter, automatically upon distribution of $357.0 million.


Year Post-Emergence	Conversion Factor
Y1	1.75x
Y2	2.00x
Y3	3.50x
Y4	4.00x
Y5	5.00x
Y6	6.00x
Y7	7.00x
Y8	10.00x
Y9	12.00x
Y10	25.00x

In the first five years after the Effective Date, Ferrellgas Partners may redeem the Class B Units, in full, at a price equal to an amount that ~~date, together~~will result in an internal rate of return with ~~accrued interest~~respect to the ~~maturity date. Although~~Class B Units equal to the sum of (i) 300 basis points and (ii) the internal rate of return for the Preferred Units as specified in the Amended Ferrellgas Partners LPA, subject to the minimum redemption price of $302.08 per unit, less any cash distributed prior to the redemption, if called in the first year after issuance.

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During the first five years following the Effective Date, after Ferrellgas Partners has distributed $356 million in distributions to holders of the Class B Units, Ferrellgas Partners will have the option to hold cash for six months at either Ferrellgas Partners or Ferrellgas Partners Finance Corp. for the sole purpose of redeeming the Class B Units; provided, however, if the funds held are not used to redeem the Class B Units, such funds will either be distributed to holders of the Class B Units, holders of the Class A Units and the general partner or returned to the operating partnership.

Ferrellgas Partners will only be able to call the Class B Units to the extent it receives sufficient distributions from the operating partnership, ~~has some capacity~~and the operating partnership is limited in its ability to make distributions ~~under~~by the ~~operating partnership’s unsecured~~indentures that govern the 2026 Notes and ~~secured notes indentures, this capacity~~the 2029 Notes, the Credit Agreement and the OpCo LPA Amendment governing the Preferred Units.

The holders of Class B Units will ~~not allow~~have the right to acquire the general partner interests in Ferrellgas Partners and the operating partnership, ~~to make distributions to~~without the approval of the general partner, Ferrellgas Partners, ~~sufficient to pay~~ the ~~principal~~holders of ~~and accrued interest on Ferrellgas Partners’ unsecured senior notes due 2020 that was due at~~ the ~~maturity of those notes. Additionally, the restrictions in these indentures currently limit the ability of~~Class A Units or the operating partnership, if the Class B Units are still outstanding and have not been converted to ~~make distributions to~~Class A Units by the earlier of (i) a material breach of the covenants in favor of the Class B Units under the Amended Ferrellgas Partners LPA or the Amended OpCo LPA that is not cured within the time period specified therein and (ii) the 10th anniversary of the Effective Date.

Board Rights

The holders of Class B units will be permitted to ~~enable it~~designate 1 independent director to ~~pay cash distributions to its unitholders.~~the Board of the general partner in accordance with a voting agreement among the general partner, Ferrell Companies, Inc. ("FCI"), the sole stockholder of the general partner, and the holders of the Class B units and the general partner's bylaws.

Fair Value

~~Debt~~The fair value of Class B Units approximates the carrying value of the principal and interest ~~expense reduction strategy~~of the Ferrellgas Partners Notes of $390.1 million and thus 0 gain (loss) on extinguishment was recognized.

Ferrellgas continues to pursue a strategy to reduce its debt and interest expense. Opportunities include the generation of additional cash flows through accretive acquisitions, continued restructuring or refinancing of 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. Ferrellgas engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist in its ongoing process to reduce existing debt and address its debt maturities.

G. ~~Partners’ deficit~~Class A Units

As of ~~October 31, 2020~~April 30, 2021 and July 31, 2020, limited partner ~~units~~Class A Units were beneficially owned by the following:


	April 30, 2021	July 31, 2020
Public Class A unitholders (1)	3,480,621	3,480,621
Ferrell Companies (2)	1,126,468	1,126,468
FCI Trading Corp. (3)	9,784	9,784
Ferrell Propane, Inc. (4)	2,560	2,560
James E. Ferrell (5)	238,172	238,172

October 31, 2020

July 31, 2020
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~~Class A Units are traded on the OTC Pink Market under the symbol “FGPR”.

(2)

Ferrell Companies is the owner of the general partner and an approximate 23% direct owner of Ferrellgas Partners’ ~~common units~~Class A Units and thus a related party. Ferrell Companies also beneficially owns ~~195,686~~9,784 and ~~51,204 common units~~2,560 Class A Units of Ferrellgas Partners held by FCI Trading Corp. ("FCI Trading") and Ferrell Propane, Inc. ("Ferrell Propane"), respectively, bringing Ferrell Companies’ total beneficial ownership to 23.4%.

(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~~237,942 of these ~~common units~~Class A 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~~230 Class A Units are held by Ferrell Resources

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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.

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Partnership distributions

NoFerrellgas Partners did not pay any distributions ~~will be paid~~ to ~~common unitholders~~Class B Unitholders, Class A Unitholders or the general partner for the three months ended ~~October 31, 2020.~~

April 30, 2021.

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

See Note J – Derivative instruments and hedging activities – for details regarding changes in the fair value of risk management financial derivatives recorded within AOCI for the three and nine months ended ~~October 31, 2020~~April 30, 2021 and ~~2019.~~2020.

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~~nine months ended ~~October 31, 2020,~~April 30, 2021, the general partner made non-cash contributions of ~~$14.0~~$46.0 thousand to Ferrellgas to maintain its effective 2% general partner interest.

During the ~~three~~nine months ended ~~October 31, 2019,~~April 30, 2020, the general partner made non-cash contributions of ~~$16.0~~$44.0 thousand to Ferrellgas to maintain its effective 2% general partner interest.

H.I. Revenue from contracts with customers

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,


2020

2019

Retail - Sales to End Users

$
174,645

$
180,417

Wholesale - Sales to Resellers

102,612

82,704

Other Gas Sales

3,792

10,264

Other

19,845

19,829

Propane and related equipment revenues

$
300,894

$
293,214


	For the three months ended April 30,				For the nine months ended April 30,
	2021		2020		2021		2020
Retail - Sales to End Users	$	392,838	$	286,163	$	945,833	$	840,649
Wholesale - Sales to Resellers		140,015		103,686		381,357		291,445
Other Gas Sales		9,183		1,896		24,329		18,283
Other		22,694		20,385		67,665		65,800
Propane and related equipment revenues	$	564,730	$	412,130	$	1,419,184	$	1,216,177

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; therefore, Ferrellgas does not capitalize these costs.

1825

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


	April 30, 2021		July 31, 2020
Accounts receivable	$	172,660	$	108,483
Contract assets	$	16,498	$	7,079
Contract liabilities
Deferred revenue (1)	$	39,378	$	42,911

October 31, 2020

July 31, 2020
Accounts receivable

$
132,570

$
108,483
Contract assets

$
3,699

$
7,079
Contract liabilities


Deferred revenue (1)

$
52,220

$
42,911

(1)	Of the beginning balance of deferred revenue, ~~$11.4~~$34.3 million was recognized as revenue during the ~~three~~nine months ended ~~October 31, 2020.~~April 30, 2021.

Remaining performance obligations

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.

I.J. 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, 2020~~April 30, 2021 and July 31, 2020:

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, 2020:








Assets:








Derivative financial instruments:








Commodity derivatives

$
—

$
7,161

$
—

$
7,161
Liabilities:






Derivative financial instruments:








Commodity derivatives

$
—

$
(1,557)

$
—

$
(1,557)

July 31, 2020:








Assets:








Derivative financial instruments:








Commodity derivatives

$
—

$
3,112

$
—

$
3,112
Liabilities:








Derivative financial instruments:








Commodity derivatives

$
—

$
(5,425)

$
—

$
(5,425)


	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
April 30, 2021:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	33,914	$	—	$	33,914
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(1,731)	$	—	$	(1,731)

July 31, 2020:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	3,112	$	—	$	3,112
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(5,425)	$	—	$	(5,425)

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

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. At ~~October 31, 2020~~April 30, 2021 and

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July 31, 2020, the estimated fair value of Ferrellgas’ long-term debt instruments was ~~$2,232.3~~$1,462.4 million and $2,177.1 million, respectively. Ferrellgas estimates the fair value of long-term debt based on quoted market prices. The fair value of Ferrellgas’ consolidated debt obligations is a Level 2 valuation based on the observable inputs used for similar liabilities.

Class B Units

The fair value of Class B units approximates the carrying value of the principal and interest of the Ferrellgas Partners Notes of $390.1 million and thus 0 gain (loss) on extinguishment was recognized.

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.

J.K. 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.

Derivative instruments and hedging activity

During the ~~three~~nine months ended ~~October 31,~~April 30, 2021 and 2020, ~~and 2019,~~ 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 within Ferrellgas’ condensed consolidated balance sheets as of ~~October 31, 2020~~April 30, 2021 and July 31, 2020:

Final
October 31, 2020

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

$
6,656

Other current liabilities

$
1,506
Commodity derivatives-propane

Other assets, net

505

Other liabilities

51

Total

$
7,161

Total

$
1,557


	Final	April 30, 2021
	Maturity	Asset Derivatives			Liability Derivatives
Derivative Instrument	Date	Location	Fair value		Location	Fair value
Derivatives designated as hedging instruments	December 2023
Commodity derivatives-propane		Prepaid expenses and other current assets	$	29,612	Other current liabilities	$	833
Commodity derivatives-propane		Other assets, net		4,302	Other liabilities		898
		Total	$	33,914	Total	$	1,731


	Final	July 31, 2020
	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	$	2,846	Other current liabilities	$	5,029
Commodity derivatives-propane		Other assets, net		266	Other liabilities		396
		Total	$	3,112	Total	$	5,425

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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, 2020~~April 30, 2021 and July 31, 2020, respectively:

October 31, 2020

Assets

Liabilities
Description

Location

Amount

Location

Amount
Margin Balances

Prepaid expense and other current assets

$
9,381

Other current liabilities

$
5,768

Other assets, net

544

Other liabilities

483

$
9,925



$
6,251


	April 30, 2021
	Assets			Liabilities
Description	Location	Amount		Location	Amount
Margin Balances	Prepaid expense and other current assets	$	14,972	Other current liabilities	$	34,581
	Other assets, net		3,447	Other liabilities		4,282
		$	18,419		$	38,863


	July 31, 2020
	Assets			Liabilities
Description	Location	Amount		Location	Amount
Margin Balances	Prepaid expense and other current assets	$	14,398	Other current liabilities	$	510
	Other assets, net		1,433	Other liabilities		—
		$	15,831		$	510

The following tables provide a summary of the effect on Ferrellgas’ condensed consolidated statements of comprehensive income (loss) for the three and nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~ due to derivatives designated as cash flow hedging instruments:


	For the three months ended October 31, 2020							For the three months ended April 30, 2021
				Amount of Gain (Loss)							Amount of Gain (Loss)
	Amount of Gain		Location of Gain (Loss)	Reclassified from				Amount of Gain		Location of Gain (Loss)	Reclassified from
	(Loss) Recognized in		Reclassified from	AOCI into Income				(Loss) Recognized in		Reclassified from	AOCI into Income
Derivative Instrument	AOCI		AOCI into Income	Effective portion		Ineffective portion		AOCI		AOCI into Income	Effective portion		Ineffective portion
Commodity derivatives	$	5,767	Cost of product sold- propane and other gas liquids sales	$	(2,150)	$	—	$	20,446	Cost of product sold- propane and other gas liquids sales	$	22,383	$	—
	$	5,767		$	(2,150)	$	—	$	20,446		$	22,383	$	—


	For the three months ended October 31, 2019							For the three months ended April 30, 2020
				Amount of Gain (Loss)							Amount of Gain (Loss)
	Amount of Gain (Loss)		Location of Gain (Loss)	Reclassified from				Amount of Gain (Loss)		Location of Gain (Loss)	Reclassified from
	Recognized in		Reclassified from	AOCI into Income				Recognized in		Reclassified from	AOCI into Income
Derivative Instrument	AOCI		AOCI into Income	Effective portion		Ineffective portion		AOCI		AOCI into Income	Effective portion		Ineffective portion
Commodity derivatives	$	(13,627)	Cost of product sold- propane and other gas liquids sales	$	(7,479)	$	—	$	(11,501)	Cost of product sold- propane and other gas liquids sales	$	(14,073)	$	—
	$	(13,627)		$	(7,479)	$	—	$	(11,501)		$	(14,073)	$	—


	For the nine months ended April 30, 2021
				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	$	63,170	Cost of sales-propane and other gas liquids sales	$	28,674	$	—
	$	63,170		$	28,674	$	—

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	For the nine months ended April 30, 2020
				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	$	(36,340)	Cost of sales-propane and other gas liquids sales	$	(30,318)	$	—
	$	(36,340)		$	(30,318)	$	—

The changes in derivatives included in AOCI for the ~~three~~nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~ were as follows:

For the three months ended October 31,
Gains and losses on derivatives included in AOCI

2020

2019
Beginning balance

$
(2,313)

$
(14,756)
Change in value of risk management commodity derivatives

5,767

(13,627)
Reclassification of losses on commodity hedges to cost of sales - propane and other gas liquids sales, net

2,150

7,479
Ending balance

$
5,604

$
(20,904)


	For the nine months ended April 30,
Gains and losses on derivatives included in AOCI	2021		2020
Beginning balance	$	(2,313)	$	(14,756)
Change in value of risk management commodity derivatives		63,170		(36,340)
Reclassification of (gains) losses on commodity hedges to cost of sales - propane and other gas liquids sales, net		(28,674)		30,318
Ending balance	$	32,183	$	(20,778)

Ferrellgas expects to reclassify net gains of approximately ~~$5.2~~$28.8 million to earnings during the next 12 months. These net gains are expected to be offset by ~~increased~~decreased margins on propane sales commitments Ferrellgas has with its customers that qualify for the normal purchase normal sale exception.

~~Table of Contents~~

During the ~~three~~nine months ended ~~October 31, 2020~~April 30, 2021 and ~~2019,~~2020, 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, 2020,~~April 30, 2021, Ferrellgas had financial derivative contracts covering ~~3.6~~5.3 million barrels 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 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, parental 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, 2020,~~April 30, 2021, the maximum amount of loss due to credit risk that Ferrellgas would incur based upon the gross fair values of the derivative financial instruments is ~~$3.5 million.~~0.

From time to time Ferrellgas enters into derivative contracts that have credit-risk-related contingent features which dictate credit limits based upon Ferrellgas’ debt rating. There were no0 open derivative contracts with credit-risk-related contingent features as of ~~October 31, 2020.~~April 30, 2021.

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K.L. Transactions with related parties

Ferrellgas has no0 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 its 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,

2020

2019

Operating expense

$
60,980

$
63,471

General and administrative expense

$
6,719

$
6,487


	For the three months ended April 30,				For the nine months ended April 30,
	2021		2020		2021		2020
Operating expense	$	64,242	$	67,241	$	195,817	$	203,796

General and administrative expense	$	6,194	$	7,705	$	23,348	$	21,668

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

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L.M. 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 induring the fiscal year ended July 31, 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 coordinated for pretrial purposes by the 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 and intends to vigorously defend itself against these remaining claims. Ferrellgas does not believe loss is probable or reasonably estimable at this time related to the putative class action lawsuit.

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Ferrellgas and Bridger Logistics, LLC (“Bridger”), have been named, along with ~~two~~2 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”), previously named Bridger Transfer Services, a former subsidiary of 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 as a result of the arbitration. Eddystone also alleges that JTS was an “alter ego” of Bridger and 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 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 damages, if ultimately owed to Eddystone, could be material to Ferrellgas. Ferrellgas intends to vigorously defend this claim. 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 time.

~~Table of Contents~~

M.N. Net earnings (loss) per unitholders’ interest

Below is a calculation of the basic and diluted net loss per ~~common~~Class A unitholders’ interest in the condensed consolidated statements of operations for the periods indicated:


	For the three months ended October 31,				For the three months ended April 30,				For the nine months ended April 30,
	2020		2019		2021		2020		2021		2020

					(in thousands, except per common unit amounts)
Common unitholders’ interest in net loss	$	(45,601)	$	(44,891)
Class A unitholders’ interest in net loss					$	(74,057)	$	(15,239)	$	(57,024)	$	(12,405)
Weighted average common units outstanding (in thousands)		97,152.7		97,152.7		4,857.6		4,857.6		4,857.6		4,857.6
Basic and diluted net loss per common unit	$	(0.47)	$	(0.46)
Basic and diluted net loss per Class A common unit					$	(15.25)	$	(3.14)	$	(11.74)	$	(2.55)

Class B units considerations

The Class B units meet the definition of a participating security and the two-class method is required. For any periods in which earnings are recognized, the earnings will be allocated between the Class B units and the Class A units on a 6-to-one basis. For any periods in which losses are recognized, no effect is given to the Class B units as they do not contractually participate in the losses of Ferrellgas.

N.In addition, Ferrellgas has the option to redeem all, but not less than all, of the Class B units outstanding at any time on or prior to the fifth anniversary of the Effective Date for cash. This call option does not impact the dilutive effect of net earnings (loss) per common unit due to the cash-only redemption provision, which is assumed, therefore there would be no dilutive effect.

O. Subsequent events

Ferrellgas has evaluated events and transactions occurring after the balance sheet date through the date 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, except as follows.

~~Transaction Support Agreement~~

On ~~December 10, 2020,~~June 11, 2021, Ferrellgas Partners, Ferrellgas, Inc. and certain subsidiaries of Ferrellgas Partners, ~~Finance Corp.~~as guarantors, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent for the ~~operating partnership and additional Ferrellgas entities (collectively, the “Company Parties”~~lenders (the “Agent”), entered into a ~~Transaction Support~~First Amendment to Credit Agreement (the ~~“TSA”~~“Credit Agreement Amendment”) ~~with certain holders~~which amends its existing Credit Agreement, dated as of March 30, 2021 (the “Existing Credit Agreement”). The Credit Agreement Amendment does not alter the size or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims (collectively, the “Consenting Noteholders”) arising under, derived from or based upon the indenture governing the Ferrellgas Partners Notes due June 15, 2020. As of December 10, 2020, the Consenting Noteholders hold or represent, in the aggregate, approximately 74%tenor of the ~~outstanding~~loans provided (a four-year revolving credit facility in an aggregate principal amount of ~~the Ferrellgas Partners Notes due June 15, 2020.~~up to $350.0 million).

Table of Contents

The ~~TSA sets forth (i) a restructuring process to satisfy~~Credit Agreement Amendment, which has an effective date of April 30, 2021, amends the ~~obligations of~~financial covenant requiring Ferrellgas Partners and Ferrellgas Partners Finance Corp. under the Ferrellgas Partners Notes due June 15, 2020 (the “Ferrellgas Partners Transactions”), which will be effectuated through pre-packaged voluntary cases (the “Chapter 11 Cases”its subsidiaries to maintain a specified consolidated Minimum Interest Coverage Ratio (“Minimum Coverage Ratio”) ~~under chapter 11~~ of ~~title 11~~at least 2.50 to 1.00 as of the ~~United States Code filed~~end of each fiscal quarter for the period consisting of the trailing 4 fiscal quarters by ~~only Ferrellgas Partners and Ferrellgas Partners Finance Corp. and~~(i) waiving the ~~confirmation of a pre-packaged plan of reorganization~~financial covenant for ~~Ferrellgas Partners and Ferrellgas Partners Finance Corp.,~~the trailing 4 fiscal quarters ending April 30, 2021 and (ii) ~~a refinancing process~~annualizing the consolidated cash interest charges component of the ~~operating partnership, including but not limited~~covenant for (a) the fiscal quarter ending on July 31, 2021, (b) the 2 fiscal quarters ending on October 31, 2021, and (c) the 3 fiscal quarters ending on January 31, 2022. In addition, the Credit Agreement Amendment waives compliance with the representations related to ~~replacement~~the accuracy of the ~~operating partnership’s existing unsecured notes due 2021, 2022~~information set forth in Schedules 4.12 and 2023 (the “operating partnership Transactions” and, together with the Ferrellgas Partners Transactions, the “Transactions”), which will be consummated on the effective date (the “Effective Date”) of Ferrellgas Partners’ plan of reorganization that implements the Ferrellgas Partners Transactions (the “Plan”) and will close simultaneously with the Ferrellgas Partners Transactions effectuated under the Plan.

~~Generally, the TSA and the Transactions contemplate, among other things, the transactions and certain changes~~4.29 to the ~~capital structure~~Existing Credit Agreement and ~~governance of the Company Parties as described in more detail in the TSA.~~

Pursuant to the TSA, and subject to the terms and conditions thereof, the parties thereto have agreed to support, act in good faith and take all steps reasonably necessary and desirable to implement and consummate the Transactions until the TSA is terminated. The Consenting Noteholders have agreed, among other things, (i) to forbear from taking actions with respect to any default ~~or event~~arising therefrom. The Credit Agreement Amendment further amends and replaces Schedules 4.12 and 4.29 in their entirety. In addition, the Credit Agreement Amendment modifies the timing for payment of default by the Company Parties under the indenture governing the Ferrellgas Partners Notes which arises solely as a result of the failure to make payments of the principal due on the Ferrellgas Partners Notes,certain fees and ~~(ii) to vote in favor of any matter requiring approval to the extent necessary to implement the Transactions and the Plan.~~

~~The TSA contains~~modifies certain ~~milestones~~provisions relating to the ~~commencement~~timing and delivery of collateral documents as well as certain other deliverables.

The foregoing description of the ~~solicitation of acceptances~~Credit Agreement Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the ~~Plan (the “Solicitation”),~~First Amendment to the ~~refinancing process and the Chapter 11 Cases,~~Credit Agreement, which ~~include the dates~~is filed or incorporated by which Ferrellgas Partners is required to commence the Solicitation and, thereafter, commence the Chapter 11 Cases or obtain certain approval orders of the United States Bankruptcy Court for the District of Delaware. In addition, the milestones include thereference as Exhibit 10.29.

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obligation of Ferrellgas Partners and Ferrellgas Partners Finance Corp. to emerge from chapter 11 protection no later than April 4, 2021, unless that deadline is extended pursuant to the terms of the TSA.

The TSA also provides that the TSA may be terminated by the Required Consenting Noteholders (as defined therein) with respect to the Consenting Noteholders or by any Company Party with respect to the Company Parties upon the occurrence of certain events set forth therein. In particular, the Company Parties may terminate the TSA in the event the governing body of any Company Party determines, after consulting with counsel, (i) that continuing to pursue any of the Transactions in the manner contemplated by the TSA would be inconsistent with the exercise of its contractual or fiduciary duties or applicable law or (ii) in the exercise of its contractual or fiduciary duties, to pursue an alternative transaction proposal.

~~There is no assurance that the restructuring and refinancing processes described in the TSA will be consummated.~~

FERRELLGAS PARTNERS FINANCE CORP.

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

CONDENSED BALANCE SHEETS

(unaudited)


	April 30, 2021		July 31, 2020
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		39,486		38,846
Accumulated deficit		(39,486)		(36,996)
Total stockholder’s equity	$	1,000	$	2,850

See notes to condensed financial statements.

October 31, 2020

July 31, 2020
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

38,920

38,846
Accumulated deficit

(38,920)

(36,996)
Total stockholder’s equity

$
1,000

$
2,850

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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 April 30,				For the nine months ended April 30,
	2021		2020		2021		2020
General and administrative expense	$	341	$	3,087	$	2,490	$	3,977

Net loss	$	(341)	$	(3,087)	$	(2,490)	$	(3,977)

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,

2020

2019

General and administrative expense

$
1,924

$
891

Net loss

$
(1,924)

$
(891)

~~See notes to condensed financial statements.~~

~~Table of Contents~~

~~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,


2020

2019
Cash flows from operating activities:




Net loss

$
(1,924)

$
(891)
Changes in operating assets and liabilities:




Prepaid expenses and other current assets

1,850

838
Cash used in operating activities

(74)

(53)

Cash flows from financing activities:




Capital contribution

74

53
Cash provided by financing activities

74

53

Net change in cash

—

—
Cash - beginning of period

1,000

1,000
Cash - end of period

$
1,000

$
1,000


	For the nine months ended April 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(2,490)	$	(3,977)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		1,850		1,858
Cash used in operating activities		(640)		(2,119)

Cash flows from financing activities:
Capital contribution		640		2,119
Cash provided by financing activities		640		2,119

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”~~(“Ferrellgas Partners��).

~~The Partnership~~Ferrellgas Partners contributed $1,000 to the Finance Corp. on April 8, 1996 in exchange for 1,000 shares of common stock.

The Finance Corp. has nominal assets, does not conduct any operations and has no0 employees.

~~Going Concern~~Chapter 11 Bankruptcy Cases

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, which the Partnership failed to repay, that are classified as current in its condensed consolidated financial statements. These obligations are onlypreviously 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,January 11, 2021, Ferrellgas Partners and 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~~filed voluntary petitions for relief under chapter 11 of title 11 of the ~~debt securities~~United States Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The chapter 11 cases were jointly administered under the caption and case numbers, In re: Ferrellgas Partners, L.P. and Ferrellgas Partners Finance Corp., Chapter 11 Case Nos. 21-10020 and 21-10021.

On March 5, 2021, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Second Amended Prepackaged Joint Chapter 11 Plan of Reorganization of Ferrellgas Partners, L.P. and Ferrellgas Partners Finance Corp. (the “Plan”).

On March 30, 2021 (the “Effective Date”), the conditions to effectiveness of the ~~Partnership. Given these concerns, we believe there is substantial doubt about~~Plan were satisfied and the Confirmation Order was deemed binding upon Ferrellgas Partners, the Finance ~~Corp’s ability to continue as a going concern. The Partnership has engaged Moelis & Company LLC as its financial advisor~~Corp. and all other parties affected by the ~~law firm~~Plan. In satisfying the conditions of ~~Squire Patton Boggs LLP to assist with~~ the ~~Partnership’s ongoing process to reduce existing debt and address its debt maturities. On December 10, 2020,~~Plan, on the ~~Partnership, Finance Corp., the operating partnership and additional Ferrellgas entities entered into a Transaction Support Agreement (the “TSA”) with~~Effective Date, certain ~~holders of, or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims arising under, derived from or based upon the indenture governing the~~restructuring transactions by Ferrellgas Partners ~~Notes due June 15, 2020. There is no assurance that the~~and certain financing transactions ~~contemplated~~ by the TSA will be consummated and the outcome of Ferrellgas’ debt reduction strategy continues to remain uncertain. See Note C – Subsequent Events, for a discussion of the TSA and the transactions contemplated thereunder.

Ferrellgas, L.P. were completed.

B. Contingencies and commitments

The Finance Corp. serves as co-issuer and co-obligor for debt securities of Ferrellgas Partners. At July 31, 2020, the ~~Partnership. The~~ Finance Corp. iswas liable as co-issuer and co-obligor for the $357.0 million aggregate principal amount of ~~the Partnership’s~~Ferrellgas Partners’ unsecured senior notes due June 15, 2020, which ~~the Partnership~~Ferrellgas Partners failed to repay, and which obligation iswas only reported on ~~the Partnership’s~~Ferrellgas Partners’ condensed consolidated balance sheet.

On the Effective Date, by operation of the Plan, all outstanding indebtedness under the Ferrellgas Partners Notes was discharged and cancelled. As of April 30, 2021, Ferrellgas Partners had no debt securities outstanding, and the Finance Corp. therefore was not liable as co-issuer for any such debt securities.

C. Subsequent events

The Finance Corp. has evaluated events and transactions occurring after the balance sheet date through the date the Finance Corp.’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, except as follows.~~statements.

2836

Table of Contents

~~Transaction Support Agreement~~

On December 10, 2020, the Partnership, Finance Corp., the operating partnership and additional Ferrellgas entities (collectively, the “Company Parties”) entered into a Transaction Support Agreement (the “TSA”) with certain holders of, or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims (collectively, the “Consenting Noteholders”) arising under, derived from or based upon the indenture governing the Ferrellgas Partners Notes due June 15, 2020. As of December 10, 2020, the Consenting Noteholders hold or represent, in the aggregate, approximately 74% of the outstanding amount of the Ferrellgas Partners Notes due June 15, 2020.

The TSA sets forth (i) a restructuring process to satisfy the obligations of the Partnership and the Finance Corp. under the Ferrellgas Partners Notes due June 15, 2020 (the “Ferrellgas Partners Transactions”), which will be effectuated through pre-packaged voluntary cases (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code filed by only the Partnership and the Finance Corp. and the confirmation of a pre-packaged plan of reorganization for the Partnership and the Finance Corp., and (ii) a refinancing process of the operating partnership and Ferrellgas Finance Corp., including but not limited to, replacement of the operating partnership’s and Ferrellgas Finance Corp.’s existing unsecured notes due 2021, 2022 and 2023 (the “operating partnership Transactions” and, together with the Ferrellgas Partners Transactions, the “Transactions”), which will be consummated on the effective date (the “Effective Date”) of the Partnership’s and the Finance Corp.’s plan of reorganization that implements the Ferrellgas Partners Transactions (the “Plan”) and will close simultaneously with the Ferrellgas Partners Transactions effectuated under the Plan.

Generally, the TSA and the Transactions contemplate, among other things, the transactions and certain changes to the capital structure and governance of the Company Parties as described in more detail in the TSA.

Pursuant to the TSA, and subject to the terms and conditions thereof, the parties thereto have agreed to support, act in good faith and take all steps reasonably necessary and desirable to implement and consummate the Transactions until the TSA is terminated. The Consenting Noteholders have agreed, among other things, (i) to forbear from taking actions with respect to any default or event of default by the Company Parties under the indenture governing the Ferrellgas Partners Notes which arises solely as a result of the failure to make payments of the principal due on the Ferrellgas Partners Notes, and (ii) to vote in favor of any matter requiring approval to the extent necessary to implement the Transactions and the Plan.

The TSA contains certain milestones relating to the commencement of the solicitation of acceptances of the Plan (the “Solicitation”), the refinancing process and the Chapter 11 Cases, which include the dates by which the Partnership and the Finance Corp. are required to commence the Solicitation and, thereafter, commence the Chapter 11 Cases or obtain certain approval orders of the United States Bankruptcy Court for the District of Delaware. In addition, the milestones include the obligation of the Partnership and the Finance Corp. to emerge from chapter 11 protection no later than April 4, 2021, unless that deadline is extended pursuant to the terms of the TSA.

~~There is no assurance that the restructuring and refinancing processes described in the TSA will be consummated.~~

~~Table of Contents~~

FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

October 31, 2020

July 31, 2020
ASSETS

Current assets:




Cash and cash equivalents (including $96,909 and $95,759 of restricted cash at October 31, 2020 and July 31, 2020, respectively)

$
299,522

$
333,755
Accounts and notes receivable, net (including $120,261 and $103,703 of accounts receivable pledged as collateral at October 31, 2020 and July 31, 2020, respectively)

119,488

101,438
Inventories

78,980

72,664
Prepaid expenses and other current assets

40,044

35,897
Total current assets

538,034

543,754

Property, plant and equipment, net

592,132

591,042
Goodwill, net

246,946

247,195
Intangible assets (net of accumulated amortization of $425,426 and $423,290 at October 31, 2020 and July 31, 2020, respectively)

101,812

104,049
Operating lease right-of-use assets

100,349

107,349
Other assets, net

73,522

74,748
Total assets

$
1,652,795

$
1,668,137

LIABILITIES AND PARTNERS' DEFICIT





Current liabilities:




Accounts payable

$
44,641

$
33,944
Current portion of long-term debt

502,095

502,095
Current operating lease liabilities

28,280

29,345
Other current liabilities

159,910

148,136
Total current liabilities

734,926

713,520

Long-term debt

1,647,106

1,646,396
Operating lease liabilities

83,337

89,022
Other liabilities

49,543

51,190
Contingencies and commitments (Note L)

Partners’ deficit:




Limited partner

(859,121)

(821,462)
General partner

(8,600)

(8,216)
Accumulated other comprehensive income (loss)

5,604

(2,313)
Total partners’ deficit

(862,117)

(831,991)
Total liabilities and partners’ deficit

$
1,652,795

$
1,668,137


	April 30, 2021		July 31, 2020
ASSETS
Current assets:
Cash and cash equivalents (including $11,500 and $95,759 of restricted cash at April 30, 2021 and July 31, 2020, respectively)	$	210,251	$	333,755
Accounts and notes receivable, net (including $103,703 of accounts receivable pledged as collateral at July 31, 2020)		170,516		101,438
Inventories		69,742		72,664
Prepaid expenses and other current assets		73,964		35,897
Total current assets		524,473		543,754

Property, plant and equipment, net		582,838		591,042
Goodwill, net		246,946		247,195
Intangible assets (net of accumulated amortization of $429,135 and $423,290 at April 30, 2021 and July 31, 2020, respectively)		97,560		104,049
Operating lease right-of-use assets		93,341		107,349
Loan receivable - Ferrellgas Partners, L.P.		25,057		—
Other assets, net		86,914		74,748
Total assets	$	1,657,129	$	1,668,137

LIABILITIES, MEZZANINE AND EQUITY

Current liabilities:
Accounts payable	$	54,320	$	33,944
Current portion of long-term debt		1,565		502,095
Current operating lease liabilities		26,669		29,345
Other current liabilities		175,400		148,136
Total current liabilities		257,954		713,520

Long-term debt		1,443,095		1,646,396
Operating lease liabilities		78,498		89,022
Other liabilities		51,427		51,190
Contingencies and commitments (Note L)

Mezzanine equity:
Senior preferred units, net of issue discount and offering costs (700,000 units outstanding at April 30, 2021)		651,854		—

Equity:
Limited partners		(849,381)		(821,462)
General partner		(8,501)		(8,216)
Accumulated other comprehensive income (loss)		32,183		(2,313)
Total equity		(825,699)		(831,991)
Total liabilities, mezzanine and equity	$	1,657,129	$	1,668,137

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,


2020

2019

Revenues:

Propane and other gas liquids sales

$
281,049

$
273,385

Other

19,845

19,829

Total revenues

300,894

293,214

Costs and expenses:





Cost of sales - propane and other gas liquids sales

137,627

134,028

Cost of sales - other

3,667

3,681

Operating expense - personnel, vehicle, plant and other

109,027

114,543

Operating expense - equipment lease expense

6,830

8,388

Depreciation and amortization expense

21,390

19,219

General and administrative expense

13,076

9,696

Non-cash employee stock ownership plan compensation charge

708

795

Loss on asset sales and disposals

813

2,235

Operating income

7,756

629

Interest expense

(46,528)

(36,877)

Other income (expense), net

108

(132)

Loss before income taxes

(38,664)

—
(36,380)

Income tax expense

87

518

Net loss

$
(38,751)

$
(36,898)


	For the three months ended April 30,				For the nine months ended April 30,
	2021		2020		2021		2020

Revenues:
Propane and other gas liquids sales	$	542,036	$	391,745	$	1,351,519	$	1,150,377
Other		22,694		20,385		67,665		65,800
Total revenues		564,730		412,130		1,419,184		1,216,177

Costs and expenses:
Cost of sales - propane and other gas liquids sales		298,386		176,265		706,790		548,136
Cost of sales - other		2,985		2,740		10,156		9,774
Operating expense - personnel, vehicle, plant and other		124,624		121,558		348,898		364,334
Operating expense - equipment lease expense		6,770		8,075		20,462		24,724
Depreciation and amortization expense		21,281		20,366		63,920		59,380
General and administrative expense		15,203		12,555		48,533		36,336
Non-cash employee stock ownership plan compensation charge		811		757		2,281		2,182
Loss on asset sales and disposals		1,345		1,859		2,238		6,242

Operating income		93,325		67,955		215,906		165,069

Interest expense		(42,189)		(38,006)		(135,239)		(113,573)
Loss on extinguishment of debt		(107,968)		(37,399)		(107,968)		(37,399)
Other income (expense), net		1,552		(158)		5,419		(214)

Earnings (loss) before income taxes		(55,280)		(7,608)		(21,882)		13,883

Income tax expense		193		112		592		745

Net earnings (loss)	$	(55,473)	$	(7,720)	$	(22,474)	$	13,138

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,


2020

2019

Net loss

$
(38,751)

$
(36,898)

Other comprehensive income (loss):





Change in value of risk management derivatives

5,767

(13,627)

Reclassification of losses on derivatives to earnings, net

2,150

7,479

Other comprehensive income (loss)

7,917

(6,148)

Comprehensive loss

$
(30,834)

$
(43,046)


	For the three months ended April 30,				For the nine months ended April 30,
	2021		2020		2021		2020

Net earnings (loss)	$	(55,473)	$	(7,720)	$	(22,474)	$	13,138
Other comprehensive income (loss):
Change in value of risk management derivatives		20,446		(11,501)		63,170		(36,340)
Reclassification of (gains) losses on derivatives to earnings, net		(22,383)		14,073		(28,674)		30,318
Pension liability adjustment		—		—		—		(109)
Other comprehensive income (loss)		(1,937)		2,572		34,496		(6,131)
Comprehensive income (loss)	$	(57,410)	$	(5,148)	$	12,022	$	7,007

See notes to condensed consolidated financial statements.

3239

Table of Contents

FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF ~~PARTNERS’ DEFICIT~~EQUITY

(in thousands)

(unaudited)


					Accumulated
					other		Total
	Limited		General		comprehensive		partners’
	partner		partner		income (loss)		equity
Balance at July 31, 2020	$	(821,462)	$	(8,216)	$	(2,313)	$	(831,991)
Contributions in connection with non-cash ESOP compensation charges		701		7		—		708
Net loss		(38,360)		(391)		—		(38,751)
Other comprehensive income		—		—		7,917		7,917
Balance at October 31, 2020		(859,121)		(8,600)		5,604		(862,117)
Contributions in connection with non-cash ESOP compensation charges		754		8		—		762
Net earnings		71,026		724		—		71,750
Other comprehensive income		—		—		28,516		28,516
Balance at January 31, 2021		(787,341)		(7,868)		34,120		(761,089)
Contributions in connection with non-cash ESOP compensation charges		803		8		—		811
Net earnings allocated to preferred units		(8,011)		—		—		(8,011)
Net loss		(54,832)		(641)		—		(55,473)
Other comprehensive loss		—		—		(1,937)		(1,937)
Balance at April 30, 2021	$	(849,381)	$	(8,501)	$	32,183	$	(825,699)

Accumulated

other

Total

Limited

General

comprehensive

partners’


partner

partner

income (loss)

deficit
Balance at July 31, 2020

$
(821,462)

$
(8,216)

$
(2,313)

$
(831,991)
Contributions in connection with non-cash ESOP compensation charges

701

7

—

708
Net loss

(38,360)

(391)

—

(38,751)
Other comprehensive income

—

—

7,917

7,917
Balance at October 31, 2020

$
(859,121)

$
(8,600)

$
5,604

$
(862,117)


					Accumulated
					other		Total
	Limited		General		comprehensive		partners’
	partner		partner		loss		equity
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)
Contributions in connection with non-cash ESOP compensation charges		624		6		—		630
Distributions		(15,396)		(157)		—		(15,553)
Net earnings		57,172		584		—		57,756
Other comprehensive loss		—		—		(2,555)		(2,555)
Balance at January 31, 2020		(752,985)	$	(7,517)		(23,350)		(783,852)
Contributions in connection with non-cash ESOP compensation charges		749		8		—		757
Net loss		(7,642)		(78)		—		(7,720)
Other comprehensive income		—		—		2,572		2,572
Balance at April 30, 2020	$	(759,878)	$	(7,587)	$	(20,778)	$	(788,243)

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)

See notes to condensed consolidated financial statements.

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Table of Contents

FERRELLGAS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

For the three months ended October 31,


2020

2019
Cash flows from operating activities:

Net loss

$
(38,751)

$
(36,898)
Reconciliation of net loss to net cash provided by (used in) operating activities:




Depreciation and amortization expense

21,390

19,219
Non-cash employee stock ownership plan compensation charge

708

795
Loss on asset sales and disposals

813

2,235
Provision for doubtful accounts

678

665
Deferred income tax expense (benefit)

(1)

554
Other

2,346

2,327
Changes in operating assets and liabilities, net of effects from business acquisitions:




Accounts and notes receivable, net of securitization

(18,728)

(14,410)
Inventories

(6,316)

(4,541)
Prepaid expenses and other current assets

(337)

(7,970)
Accounts payable

10,479

11,360
Accrued interest expense

7,129

26,469
Other current liabilities

6,154

8,214
Other assets and liabilities

2,946

(872)
Net cash provided by (used in) operating activities

(11,490)

7,147

Cash flows from investing activities:




Business acquisitions, net of cash acquired

—

(6,400)
Capital expenditures

(19,454)

(18,126)
Proceeds from sale of assets

1,407

835
Cash payments to construct assets in connection with future lease transactions

—

(16,879)
Cash receipts in connection with leased vehicles

—

5,863
Net cash used in investing activities

(18,047)

(34,707)

Cash flows from financing activities:




Distributions

—

(101)
Payments on long-term debt

(696)

(512)
Net additions to short-term borrowings

—

37,000
Net additions to collateralized short-term borrowings

—

11,000
Cash payments for principal portion of finance lease liability

(1,703)

(38)
Cash paid for financing costs and other

(2,297)

(1,102)
Net cash provided by (used in) financing activities

(4,696)

46,247

Net change in cash and cash equivalents

(34,233)

18,687
Cash and cash equivalents - beginning of period

333,755

11,046
Cash, cash equivalents and restricted cash - end of period

$
299,522

$
29,733


	For the nine months ended April 30,
	2021		2020
Cash flows from operating activities:
Net earnings (loss)	$	(22,474)	$	13,138
Reconciliation of net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization expense		63,920		59,380
Non-cash employee stock ownership plan compensation charge		2,281		2,182
Loss on asset sales and disposals		2,238		6,242
Loss on extinguishment of debt		107,968		37,399
Provision for expected credit losses		3,479		1,586
Deferred income tax expense		—		554
Other		6,524		7,555
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts and notes receivable, net of securitization		(72,557)		(26,942)
Inventories		2,922		15,245
Prepaid expenses and other current assets		(11,300)		(6,704)
Accounts payable		20,520		4,236
Accrued interest expense		(26,757)		25,010
Other current liabilities		28,099		(7,949)
Other assets and liabilities		5,401		363
Net cash provided by operating activities		110,264		131,295

Cash flows from investing activities:
Business acquisitions, net of cash acquired		—		(6,400)
Capital expenditures		(50,470)		(57,251)
Proceeds from sale of assets		3,707		2,510
Cash payments to construct assets in connection with future lease transactions		(603)		(37,042)
Cash receipts in connection with leased vehicles		391		21,995
Loan to Ferrellgas Partners, L.P.		(23,808)		—
Net cash used in investing activities		(70,783)		(76,188)

Cash flows from financing activities:
Distributions		—		(15,654)
Proceeds from sale of preferred units, net of issue discount and offering costs		670,429		—
Proceeds from issuance of long-term debt		1,475,000		703,750
Payments on long-term debt		(1,540)		(1,422)
Payment for settlement and early extinguishment of liabilities		(2,175,000)		(283,863)
Payment of redemption premium on debt extinguishment		(83,072)		(17,516)
Net reductions in short-term borrowings		—		(43,000)
Cash payments for principal portion of finance lease liability		(5,282)		(944)
Net additions to collateralized short-term borrowings		—		(62,000)
Cash paid for financing costs		(43,520)		(26,667)
Net cash provided by (used in) financing activities		(162,985)		252,684

Net change in cash and cash equivalents		(123,504)		307,791
Cash and cash equivalents - beginning of period		333,755		11,046
Cash, cash equivalents and restricted cash - end of period	$	210,251	$	318,837

See notes to condensed consolidated financial statements.

3441

Table of Contents

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. (the “operating partnership”) is a limited partnership that owns and operates propane distribution and related 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.~~the operating partnership. Ferrellgas, Inc., a Delaware corporation and a wholly-owned subsidiary of Ferrell Companies, Inc., a Kansas corporation (“Ferrell Companies”), is the sole general partner of Ferrellgas Partners and ~~one~~ of ~~three general partners of Ferrellgas, L.P.~~the operating partnership. Ferrellgas, Inc. has retained an approximate 1% general partner economic interest in Ferrellgas Partners and also holds an approximate 1% general partner economic interest in ~~Ferrellgas, L.P.,~~the operating partnership, representing an effective 2% general partner economic interest in ~~Ferrellgas, L.P.~~the operating partnership on a combined basis.

As the sole general partner of Ferrellgas Partners and the operating partnership, Ferrellgas, Inc. performs all management functions required by Ferrellgas ~~Partners.~~Partners and the operating partnership. Ferrellgas Partners and ~~Ferrellgas, L.P.,~~the operating partnership, 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.

The term “general partner” (i) with respect to Ferrellgas Partners refers to Ferrellgas, Inc. and (ii) with respect to Ferrellgas, L.P. refers to (a) Ferrellgas, Inc., in the case of any economic general partner interest and (b) Ferrellgas, Inc., Ferrellgas GP II, LLC and Ferrellgas GP III, LLC, collectively, in the case of any voting general partner interest. As the general partners of Ferrellgas, L.P., Ferrellgas, Inc., Ferrellgas GP II, LLC and Ferrellgas GP III, LLC each have an equal vote and all general partner matters of Ferrellgas, L.P. are determined by the vote or consent of a majority of such entities. The general partners perform all management functions required by Ferrellgas, L.P. The general partner interests held by Ferrellgas GP II, LLC and Ferrellgas GP III, LLC are strictly voting and non-economic. Unless contractually provided for, creditors of Ferrellgas, L.P. have no recourse with regards to Ferrellgas Partners.

~~Ferrellgas, L.P.~~operating partnership 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.~~the operating partnership.

~~Ferrellgas, L.P.~~The operating partnership 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, L.P.~~The operating partnership serves residential, industrial/commercial, portable tank exchange, agricultural, wholesale and other customers in all 50 states, the District of Columbia, and Puerto Rico.

The condensed consolidated financial statements of ~~Ferrellgas, L.P.~~the operating partnership 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. The information included in this Quarterly Report on Form 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 for fiscal 2020.

~~Going Concern~~Recent Developments

~~The accompanying condensed consolidated financial statements have been prepared~~Chapter 11 Bankruptcy Cases

As previously reported, on ~~a going concern basis, which contemplates~~January 11, 2021, Ferrellgas Partners and Ferrellgas Partners Finance Corp. filed voluntary petitions for relief under chapter 11 of title 11 of the ~~continuity of operations, the realization of assets and the satisfaction of liabilities~~United States Code (the “Bankruptcy Code”) in the ~~normal course~~United States Bankruptcy Court for the District of ~~business. Ferrellgas, L.P. has $500.0 million in unsecured notes due May 1, 2021, that are classified as current in its condensed consolidated financial statements. Additionally,~~Delaware (the “Bankruptcy Court”). The chapter 11 cases were jointly administered under the caption and case numbers, In re: Ferrellgas Partners, ~~has $357.0 million in unsecured notes due June 15, 2020, which~~L.P. and Ferrellgas Partners failed to repay, 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 byFinance Corp., Chapter 11 Case Nos. 21-10020 and 21-10021.

On March 5, 2021, the ~~cash flows~~Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Second Amended Prepackaged Joint Chapter 11 Plan of ~~Ferrellgas, L.P. The ability~~Reorganization of Ferrellgas Partners, ~~to restructure or refinance these notes is uncertain considering the level of other outstanding indebtedness. Given these concerns,~~L.P. and Ferrellgas Partners ~~believes~~Finance Corp. (the “Plan”).

~~Table~~On March 30, 2021 (the “Effective Date”), the conditions to effectiveness of ~~Contents~~

~~there is substantial doubt about Ferrellgas, L.P.’s ability to continue as a going concern. Ferrellgas has engaged Moelis & Company LLC as its financial advisor~~the Plan were satisfied and the ~~law firm of Squire Patton Boggs LLP to assist in its ongoing process to reduce existing debt and address its debt maturities. On December 10, 2020,~~Confirmation Order was deemed binding upon Ferrellgas Partners, Ferrellgas Partners Finance Corp., and all other parties affected by the Plan. In satisfying the conditions of the Plan, on the Effective Date, certain restructuring

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transactions by Ferrellgas ~~L.P.~~Partners and ~~additional~~certain financing transactions by the operating partnership were completed, as further described under “–Transactions” below.

Transactions

Satisfaction of Ferrellgas ~~entities entered into a Transaction Support Agreement~~Partners Notes; Issuance of Class B Units to Holders of Ferrellgas Partners Notes

On the Effective Date, by operation of the Plan, all outstanding indebtedness (including accrued interest) of Ferrellgas Partners and Ferrellgas Partners Finance Corp. under their $357.0 million aggregate principal amount of 8.625% senior unsecured notes due June 2020 (the ~~“TSA”~~“Ferrellgas Partners Notes”) ~~with certain~~were discharged and cancelled.

Pursuant to the Plan, Ferrellgas Partners issued an aggregate of 1.3 million of its Class B Units to holders of ~~or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims arising under, derived from or based upon the indenture governing~~ the Ferrellgas Partners Notes in satisfaction of their claims in respect of the Ferrellgas Partners Notes.

Issuance of Preferred Units

Issuance of Senior Unsecured Notes

On the Effective Date, 2 wholly-owned subsidiaries of the operating partnership (the “Escrow Issuers”) issued $650.0 million aggregate principal amount of 5.375% senior notes due ~~June 15, 2020. There is no assurance that~~2026 (the “2026 Notes”) and $825.0 million aggregate principal amount of 5.875% senior notes due 2029 (the “2029 Notes”), in each case, at an offering price equal to 100% of the ~~transactions contemplated~~principal amount thereof. On the Effective Date and immediately after the issuance of the 2026 Notes and the 2029 Notes by the ~~TSA will be consummated~~Escrow Issuers, (i) the Escrow Issuers were merged into the operating partnership and Ferrellgas Finance Corp., respectively, and the ~~outcome of Ferrellgas’ debt reduction strategy continues to remain uncertain. See Note N – Subsequent Events, for a discussion~~operating partnership and Ferrellgas Finance Corp. assumed the obligations of the ~~TSA~~Escrow Issuers as co-issuers of the 2026 Notes and the ~~transactions contemplated thereunder. Additionally, see~~2029 Notes, and (ii) the general partner and certain subsidiaries of the operating partnership guaranteed the 2026 Notes and the 2029 Notes.

Redemption of Previously Issued Senior Notes

Prior to the Effective Date, the operating partnership delivered notices of redemption of all its previously issued and outstanding 10.00% senior secured notes due 2025 (the “2025 Notes”), 6.50% senior unsecured notes due 2021 (the “2021 Notes”), 6.75% senior unsecured notes due 2022 (the “2022 Notes”) and 6.75% senior unsecured notes due 2023 (the “2023 Notes”), in the aggregate combined principal amount for all such notes of $2,175.0 million, pursuant the

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terms of the indentures governing those notes, with a redemption date of March 30, 2021 for the 2025 Notes and April 5, 2021 for the 2021 Notes, the 2022 Notes and the 2023 Notes.

On the Effective Date, the operating partnership redeemed all of the issued and outstanding 2025 Notes. Also on the Effective Date, the operating partnership (i) satisfied and discharged the indentures governing the 2021 Notes, the 2022 Notes and the 2023 Notes by irrevocably depositing with the applicable trustees under such indentures funds in an amount sufficient to pay the redemption price for all of such notes on April 5, 2021 and (ii) delivered irrevocable instructions directing the applicable trustees to apply such funds to the redemption of such notes on April 5, 2021. As a result, as of the Effective Date, the indentures governing the 2021 Notes, the 2022 Notes and the 2023 Notes ceased to be of further ~~discussion~~effect (except as to certain expressly surviving rights), and all of the issued and outstanding 2021 Notes, 2022 Notes and 2023 Notes were redeemed on April 5, 2021.

Credit Agreement

On the Effective Date, the operating partnership, the general partner and certain of the operating partnership’s subsidiaries entered into a Credit Agreement, which provides for a four-year revolving credit facility in an aggregate principal amount of up to $350.0 million, including a sublimit not to exceed $225.0 million for the issuance of letters of credit for a period of 60 days after March 30, 2021, reducing to $200.0 million thereafter. See Note F – Debt for additional discussion.

Termination of Accounts Receivable Securitization Facility

On the Effective Date, the operating partnership and its receivables subsidiary repaid all of the outstanding ~~debt.~~obligations and fees under the then-existing accounts receivable securitization facility and terminated that facility. See Note E – Accounts and notes receivable, net for additional discussion.

Amended Partnership Agreement

On the Effective Date, the general partner executed (i) the Fifth Amended and Restated Agreement of Limited Partnership of Ferrellgas, L.P. (the “Amended OpCo LPA”), which amended and restated in its entirety the Fourth Amended and Restated Agreement of Limited Partnership of Ferrellgas L.P., and (ii) a First Amendment to the Amended OpCo LPA (the “OpCo LPA First Amendment”), which sets forth the preferences, rights, privileges and other terms of the Preferred Units.

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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, 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 expected credit losses, fair value of reporting units, recoverability of long-lived assets, assumptions used to value business combinations, determination of incremental borrowing rate used to measure right-of-use asset and lease liability, fair values of derivative contracts and stock-based compensation calculations.

Update to accounting estimates:

On August 1, 2020 Ferrellgas, L.P. adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326). As a result, we updated our significant accounting policies for the measurement of expected credit losses below.

Allowance for expected credit losses

Ferrellgas, L.P. closely monitors accounts receivable balances and estimates the allowance for expected credit losses. The estimate is primarily based on historical collection experience and other factors, including those related to current market conditions and events. The expected credit losses associated with accounts receivable have not historically been material and the adoption impact on Ferrellgas, L.P.’s allowance for expected credit losses was immaterial as of ~~October 31, 2020.~~

April 30, 2021.

(2) New accounting standards:

FASB Accounting Standard Update No. 2016-13

In June 2016, the FASB issued ASU 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 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. adopted the amended guidance effective August 1, 2020. The adoption of this standard did not have a material impact on the condensed consolidated financial statements.

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C. Leases

The following table provides the operating and financing ROU assets and lease liabilities as of ~~October 31, 2020~~April 30, 2021 and July 31, 2020:


Leases	Classification		October 31, 2020		July 31, 2020	Classification		April 30, 2021		July 31, 2020
Assets
Operating lease assets	Operating lease right-of-use assets	$	100,349	$	107,349	Operating lease right-of-use assets	$	93,341	$	107,349
Financing lease assets	Other assets, net		39,753		41,426	Other assets, net		36,747		41,426
Total leased assets		$	140,102	$	148,775		$	130,088	$	148,775

Liabilities
Current
Operating	Current operating lease liabilities	$	28,280	$	29,345	Current operating lease liabilities	$	26,669	$	29,345
Financing	Other current liabilities		7,186		6,955	Other current liabilities		7,460		6,955
Noncurrent
Operating	Operating lease liabilities		83,337		89,022	Operating lease liabilities		78,498		89,022
Financing	Other liabilities		32,033		33,473	Other liabilities		29,559		33,473
Total leased liabilities		$	150,836	$	158,795		$	142,186	$	158,795

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The following table provides the lease expenses for the three and nine months ended ~~October 31, 2020~~April 30, 2021 and ~~2019:~~2020:


		For the three months ended October 31,					For the three months ended April 30,				For the nine months ended April 30,
Leases expense	Classification	2020		2019		Classification	2021		2020		2021		2020

Operating lease expense	Operating expense - personnel, vehicle, plant and other	$	1,783	$	1,741	Operating expense - personnel, vehicle, plant and other	$	1,846	$	1,946	$	5,126	$	5,351
	Operating expense - equipment lease expense		6,442		7,607	Operating expense - equipment lease expense		6,373		7,602		19,328		23,365
	Cost of sales - propane and other gas liquids sales		526		389	Cost of sales - propane and other gas liquids sales		461		370		1,479		1,083
	General and administrative expense		282		266	General and administrative expense		(169)		528		307		1,491
Total operating lease expense			9,033		10,003			8,511		10,446		26,240		31,290

Short-term expense	Operating expense - personnel, vehicle, plant and other		2,033		1,954	Operating expense - personnel, vehicle, plant and other		2,003		1,512		5,908		5,478
	General and administrative expense		242		110	General and administrative expense		111		123		475		374
Total short-term expense			2,275		2,064			2,114		1,635		6,383		5,852

Variable lease expense	Operating expense - personnel, vehicle, plant and other		746		675	Operating expense - personnel, vehicle, plant and other		784		751		2,328		2,097
	Operating expense - equipment lease expense		388		733	Operating expense - equipment lease expense		397		473		1,134		1,359
Total variable lease expense			1,134		1,408			1,181		1,224		3,462		3,456

Finance lease expense:
Amortization of leased assets	Depreciation and amortization expense		2,165		40	Depreciation and amortization expense		2,229		754		6,583		1,229
Interest on lease liabilities	Interest expense		945		42	Interest expense		933		183		2,841		543
Total finance lease expense			3,110		82			3,162		937		9,424		1,772

Total lease expense (a)		$	15,552	$	13,557		$	14,968	$	14,242	$	45,509	$	42,370

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(a)

~~As of October 31, 2020~~For the three and ~~2019~~nine months ended April 30, 2021 Ferrellgas, L.P. ~~has~~ also recognized $0.1 million and ~~$0.1~~$0.4 million, respectively, of expense related to the accretion of lease exit costs associated with a crude oil storage agreement that is no longer being utilized, primarily due to various Midstream dispositions, and for which Ferrellgas does not anticipate any future economic benefit.

Minimum annual payments under existing operating and finance lease liabilities as of ~~October 31, 2020~~April 30, 2021 are as follows:


Maturities of lease liabilities		Operating leases		Finance leases		Total		Operating leases		Finance leases		Total
2021	$	25,539	$	7,751	$	33,290	$	10,376	$	3,391	$	13,767
2022		27,163		9,709		36,872		28,860		10,148		39,008
2023		35,832		7,742		43,574		36,674		8,149		44,823
2024		18,150		7,173		25,323		19,782		7,564		27,346
2025		12,889		7,183		20,072		13,943		7,577		21,520
Thereafter		21,532		10,655		32,187		21,931		11,559		33,490
Total lease payments	$	141,105	$	50,213	$	191,318	$	131,566	$	48,388	$	179,954
Less: Imputed interest		29,488		10,994		40,482		26,399		11,369		37,768
Present value of lease liabilities	$	111,617	$	39,219	$	150,836	$	105,167	$	37,019	$	142,186

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The following table represents the weighted-average remaining lease term and discount rate as of ~~October 31, 2020:~~April 30, 2021:


	As of October 31, 2020		As of April 30, 2021
Lease type	Weighted-average remaining lease term (years)	Weighted-average discount rate	Weighted-average remaining lease term (years)	Weighted-average discount rate
Operating leases	5.3	8.2%	4.9	8.3%
Finance leases	5.9	8.6%	5.4	8.8%

Cash flow information is presented below:


	For the three months ended October 31,				For the nine months ended April 30,
	2020		2019		2021		2020
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	8,395	$	11,049	$	26,454	$	32,104

Cash paid for amounts included in the measurement of lease liabilities for financing leases:
Operating cash flows	$	877	$	42	$	2,571	$	543
Financing cash flows	$	1,703	$	38	$	5,282	$	944

D. Supplemental financial statement information

Inventories consist of the following:

October 31, 2020

July 31, 2020
Propane gas and related products

$
65,513

$
58,733
Appliances, parts and supplies, and other

13,467

13,931
Inventories

$
78,980

$
72,664


	April 30, 2021		July 31, 2020
Propane gas and related products	$	56,369	$	58,733
Appliances, parts and supplies, and other		13,373		13,931
Inventories	$	69,742	$	72,664

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, 2020,~~April 30, 2021, Ferrellgas, L.P. had committed, for supply procurement purposes, to take delivery of approximately ~~1.7~~11.6 million gallons of propane at fixed prices.

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Prepaid expenses and other current assets consist of the following:

October 31, 2020

July 31, 2020
Broker margin deposit assets

$
9,381

$
14,398
Other

30,663

21,499
Prepaid expenses and other current assets

$
40,044

$
35,897


	April 30, 2021		July 31, 2020
Broker margin deposit assets	$	14,972	$	14,398
Price risk management asset		29,612		2,846
Other		29,380		18,653
Prepaid expenses and other current assets	$	73,964	$	35,897

Other current liabilities consist of the following:


	April 30, 2021		July 31, 2020
Accrued interest	$	7,754	$	34,511
Customer deposits and advances		29,296		32,257
Accrued payroll		22,646		18,375
Accrued insurance		11,305		14,796
Broker margin deposit liability		34,581		510
Other		69,818		47,687
Other current liabilities	$	175,400	$	148,136

October 31, 2020

July 31, 2020
Accrued interest

$
41,640

$
34,511
Customer deposits and advances

40,898

32,257
Accrued payroll

13,431

18,375
Accrued insurance

10,994

14,796
Price risk management liabilities

1,506

5,029
Other

51,441

43,168
Other current liabilities

$
159,910

$
148,136

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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,

2020

2019

Operating expense - personnel, vehicle, plant and other

$
47,531

$
48,015

Depreciation and amortization expense

4,523

1,840

Operating expense - equipment lease expense

5,883

7,642

$
57,937

$
57,497


	For the three months ended April 30,				For the nine months ended April 30,
	2021		2020		2021		2020
Operating expense - personnel, vehicle, plant and other	$	56,989	$	54,664	$	161,242	$	167,666
Depreciation and amortization expense		3,347		2,007		9,828		5,883
Operating expense - equipment lease expense		5,551		8,308		17,227		23,934
	$	65,887	$	64,979	$	188,297	$	197,483

Cash and cash equivalents consist of the following:


	October 31, 2020		July 31, 2020		April 30, 2021		July 31, 2020
Cash and cash equivalents	$	202,613	$	237,996	$	198,751	$	237,996
Restricted cash (1)		96,909		95,759		11,500		95,759
Cash, cash equivalents and restricted cash	$	299,522	$	333,755	$	210,251	$	333,755

(1)

For purposes of the condensed consolidated statements of cash flows, Ferrellgas, L.P. considers cash equivalents to include all highly liquid debt instruments purchased with an original maturity of three months or less. Certain cash flow and significant non-cash activities are presented below:

For the three months ended October 31,


2020

2019
Cash paid for:

Interest

$
36,997

$
8,284
Income taxes

$
35

$
—
Non-cash investing and financing activities:

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Liabilities incurred in connection with acquisitions	$	—	$	520

					For the nine months ended April 30,
					2021		2020
Cash paid for:
Interest					$	154,834	$	81,023
Income taxes					$	424	$	1
Non-cash investing and financing activities:
Liability incurred in connection with Financing Agreement amendment					$	—	$	8,863
Change in accruals for property, plant and equipment additions	$	(65)	$	(43)	$	(48)	$	486
Lease liabilities arising from operating right-of-use assets	$	366	$	11,563	$	7,315	$	20,886
Lease liabilities arising from finance right-of-use assets	$	554	$	5,614	$	1,904	$	21,156
Accrued fees relating to senior preference units					$	18,575	$	—
Accrued senior preferred units distributions					$	8,011	$	—

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

Accounts and notes receivable, net consist of the following:


	April 30, 2021		July 31, 2020
Accounts receivable (a)	$	175,510	$	102,914
Note receivable		13,648		12,648
Less: Allowance for expected credit losses		(18,642)		(14,124)
Accounts and notes receivable, net	$	170,516	$	101,438

(a)

At July 31, 2020, $103.7 million was pledged as collateral under the terminated accounts receivable securitization facility, discussed below.

~~At October 31, 2020, $120.3 million~~Table of ~~trade accounts receivable were pledged as collateral, but~~Contents

On March 30, 2021, Ferrellgas L.P. had no outstanding collateralized notes payable due to a commercial paper conduit. At July 31, 2020, $103.7 million of trade accounts receivable were pledged as collateral, but Ferrellgas, L.P. had no outstanding collateralized notes payable due to a 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 toterminated the ~~collectability of these accounts receivable pledged as collateral.~~

As of October 31, 2020, Ferrellgas, L.P. had received no cash proceeds from trade accounts receivables securitized, with $26.0 million remaining capacity to receive additional proceeds or issue letters of credit. As of July 31, 2020, Ferrellgas, L.P. had received no cash proceeds from trade accounts receivables securitized, with $11.0 million remaining capacity to receive additional proceeds or issue letters of credit.

~~The~~ agreement governing the accounts receivable securitization facility, (the “Purchase Agreement”) requires the operating partnership to maintain a fixed charge coverage ratio of not less than 1.00x and a senior secured leverage ratio of not greater than 3.00x. The operating partnership was in compliance with these financial ratio requirementsinitially dated as of ~~October 31, 2020. However, if at any~~January 19, 2012 and as subsequently amended from time to time (the “Accounts Receivables Facility”). In connection with the ~~operating partnership is not in compliance with these financial ratio requirements,~~termination of the Accounts Receivables Facility, Ferrellgas ~~L.P. will be unable to access~~repaid all of the ~~facility for working capital or other cash requirements~~outstanding obligations and the facility may be terminated. This facility matures in May 2021 and includes an option, at Ferrellgas, L.P.’s request and consent, for the purchasers in their sole discretion to extend the facility for up to an additional three years.fees thereunder.

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F. Debt

Long-term debt

Long-term debt consists of the following:


	October 31, 2020		July 31, 2020		April 30, 2021		July 31, 2020
Unsecured senior notes
Fixed rate, 6.50%, due 2021 (1)	$	500,000	$	500,000	$	—	$	500,000
Fixed rate, 6.75%, due 2023 (2)		500,000		500,000		—		500,000
Fixed rate, 6.75%, due 2022, net of unamortized premium of $770 and $937 at October 31, 2020 and July 31, 2020, respectively (3)		475,770		475,937
Fixed rate, 6.75%, due 2022, net of unamortized premium of $937 at July 31, 2020 (3)						—		475,937
Fixed rate, 5.375%, due 2026 (4)						650,000		—
Fixed rate, 5.875%, due 2029 (4)						825,000		—

Secured senior notes
Fixed rate, 10.00%, due 2025, net of unamortized premium of $3,424 and $3,573 at October 31, 2020 and July 31, 2020, respectively (4)		703,424		703,573
Fixed rate, 10.00%, due 2025, net of unamortized premium of $3,573 at July 31, 2020 (5)						—		703,573

Notes payable
9.7% and 9.4% weighted average interest rate at October 31, 2020 and July 31, 2020, respectively, due 2020 to 2029, net of unamortized discount of $449 and $537 at October 31, 2020 and July 31, 2020, respectively		3,956		4,564
7.7% and 9.4% weighted average interest rate at April 30, 2021 and July 31, 2020, respectively, due 2021 to 2029, net of unamortized discount of $296 and $537 at April 30, 2021 and July 31, 2020, respectively						3,063		4,564
Total debt, excluding unamortized debt issuance and other costs		2,183,150		2,184,074		1,478,063		2,184,074
Unamortized debt issuance and other costs		(33,949)		(35,583)		(33,403)		(35,583)
Less: current portion of long-term debt		502,095		502,095		1,565		502,095
Long-term debt	$	1,647,106	$	1,646,396	$	1,443,095	$	1,646,396

(1)

During November 2010, ~~Ferrellgas, L.P.~~the operating partnership issued $500.0 million aggregate principal amount of 6.50% senior notes due ~~2021.These notes are general unsecured senior obligations of Ferrellgas, L.P. and are (i) effectively junior~~2021 (referred to ~~all existing and future senior secured indebtedness of Ferrellgas, L.P., to~~herein as the extent of the value of the assets securing such debt, and (ii) structurally subordinated to all existing and future indebtedness and obligations of the Ferrellgas, L.P.’s subsidiaries. The senior notes bear interest from the date of issuance, payable semi-annually in arrears on May 1 and November 1 of each year.2021 Notes). The outstanding principal amount isof the 2021 Notes was due on May 1, 2021. Prior to the Effective Date, the operating partnership delivered a notice of redemption of all of the issued and outstanding 2021 Notes pursuant the terms of the indenture governing the 2021 Notes, with a redemption date of April 5, 2021. On the Effective Date, the operating partnership (i) satisfied and discharged the indenture governing the 2021 Notes by irrevocably depositing with the trustee under such indenture funds in an amount sufficient to pay the redemption price for all of the 2021 Notes on April 5, 2021 and (ii) delivered irrevocable instructions directing the trustee to apply such funds to the redemption of the 2021 Notes on April 5, 2021. As a result, as of the Effective Date, the indenture governing the 2021 Notes ceased to be of further effect (except as to certain expressly surviving rights), and all of the issued and outstanding 2021 Notes were redeemed on April 5, 2021. The aggregate redemption price for the 2021 Notes was $513.9 million, consisting of principal and accrued and unpaid interest to the redemption date.

(2)

During June 2015, ~~Ferrellgas, L.P.~~the operating partnership issued $500.0 million aggregate principal amount of 6.75% senior notes due ~~2023. These notes are general unsecured senior obligations of Ferrellgas, L.P. and certain subsidiaries and are (i) effectively junior~~2023 (referred to ~~all existing and future senior secured indebtedness of Ferrellgas, L.P. and such subsidiaries, to~~herein as the extent of the value of the assets securing such debt, and (ii) structurally subordinated to all existing and future indebtedness and obligations of any subsidiary of Ferrellgas, L.P. that is not a guarantor of these notes. The senior notes bear interest from the date of issuance, payable semi-annually in arrears on June 15 and December 15 of each year.2023 Notes). The outstanding principal amount isof the 2023 Notes was due on June 15, 2023. ~~Ferrellgas, L.P. would incur prepayment penalties if it~~Prior to the Effective Date, the operating partnership delivered a notice of redemption of all of the issued and outstanding 2023 Notes pursuant the terms of the indenture governing the 2023 Notes, with a redemption date of April 5, 2021. On the Effective Date, the operating partnership (i) satisfied and discharged the indenture governing the 2023 Notes by irrevocably depositing with the trustee under such indenture funds in an amount sufficient to pay the redemption price for all of the 2023 Notes on April 5, 2021 and (ii) delivered irrevocable instructions directing the trustee to apply such funds to the redemption of the 2023 Notes on April 5, 2021. As a result, as of the Effective Date, the indenture governing the 2023 Notes ceased to be of further effect (except as to certain expressly surviving rights), and all of the issued and outstanding 2023 Notes were redeemed on April 5, 2021. The aggregate redemption price for the 2023 Notes was $518.8 million, consisting of principal, redemption premium and accrued and unpaid interest to ~~repay~~ the ~~notes prior to June 15, 2021.~~redemption date.

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(3)

During fiscal 2014, ~~Ferrellgas, L.P.~~the operating partnership issued $475.0 million aggregate principal amount of 6.75% senior notes due 2022 (referred to herein as the 2022 Notes), $325.0 million of which was issued at par and $150.0 million of which was issued at 104% of par. ~~These~~The outstanding principal amount of the 2022 Notes was due January 15, 2022. Prior to the Effective Date, the operating partnership delivered a notice of redemption of all of the issued and outstanding 2022 Notes pursuant the terms of the indenture governing the 2022 Notes, with a redemption date of April 5, 2021. On the Effective Date, the operating partnership (i) satisfied and discharged the indenture governing the 2022 Notes by irrevocably depositing with the trustee under such indenture funds in an amount sufficient to pay the redemption price for all of the 2022 Notes on April 5, 2021 and (ii) delivered irrevocable instructions directing the trustee to apply such funds to the redemption of the 2022 Notes on April 5, 2021. As a result, as of the Effective Date, the indenture governing the 2022 Notes ceased to be of further effect (except as to certain expressly surviving rights), and all of the issued and outstanding 2022 Notes were redeemed on April 5, 2021. The aggregate redemption price for the 2022 Notes was $482.0 million, consisting of principal and accrued and unpaid interest to the redemption date.

(4)

On the Effective Date, 2 wholly-owned subsidiaries of the operating partnership (referred to herein as the Escrow Issuers) issued $650.0 million aggregate principal amount of 5.375% senior notes ~~are general unsecured~~due 2026 (referred to herein as the 2026 Notes) and $825.0 million aggregate principal amount of 5.875% senior notes due 2029 (referred to herein as the 2029 Notes). On the Effective Date and immediately after the issuance of the 2026 Notes and 2029 Notes by the Escrow Issuers, (i) the Escrow Issuers were merged into the operating partnership and Ferrellgas Finance Corp., respectively, and the operating partnership and Ferrellgas Finance Corp. assumed the obligations of ~~Ferrellgas, L.P. and are (i) effectively junior to all existing and future senior secured indebtedness of Ferrellgas, L.P., to~~ the ~~extent~~Escrow Issuers as co-issuers of the ~~value~~2026 Notes and the 2029 Notes, and (ii) the general partner and certain subsidiaries of the ~~assets securing such debt,~~operating partnership guaranteed the 2026 Notes and ~~(ii) structurally subordinated to all existing~~the 2029 Notes. The 2026 Notes and ~~future indebtedness and obligations of Ferrellgas, L.P.’s subsidiaries. The senior notes~~2029 Notes bear interest from the date of issuance, payable semi-annually in arrears on ~~January 15~~October 1 and ~~July 15~~April 1 of each year. The ~~outstanding principal amount is due~~2026 Notes will mature on ~~January 15, 2022.~~April 1, 2026, and the 2029 Notes will mature on April 1, 2029. See “–Senior unsecured notes” below for additional discussion.

~~(4)~~(5)

During April 2020, ~~Ferrellgas, L.P.~~the operating partnership issued $700.0 million aggregate principal amount of 10.00% senior secured ~~first lien~~ notes due 2025 (referred to herein as the 2025 Notes), $575.0 million of which was issued at par and $125.0 million of which was issued at 103% of par. These notes are senior secured obligations of Ferrellgas, L.P. and the guarantors of such notes, including Ferrellgas Partners, the general partners of Ferrellgas, L.P. and certain subsidiaries, and are (i) effectively senior to all existing senior unsecured indebtedness of Ferrellgas, L.P. and the guarantors, to the

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extent of the value of the assets securing such debt, and (ii) structurally subordinated to all existing and future indebtedness and obligations of Ferrellgas Receivables, LLC, a special purpose subsidiary that does not guarantee the notes. The senior notes bear interest from the date of issuance, payable semiannually in arrears on April 15 and October 15 of each year. The operating partnership would incur prepayment penalties if it were to repay the notes prior to April 15, 2024. The outstanding principal amount isof the 2025 Notes was due on April 15, 2025. Prior to the Effective Date, the operating partnership delivered a notice of redemption of all of the issued and outstanding 2025 Notes pursuant the terms of the indenture governing the 2025 Notes, with a redemption date of March 30, 2021, and all of the issued and outstanding 2025 Notes were redeemed on the Effective Date. The aggregate redemption price for the 2025 Notes was $806.2 million, consisting of principal, redemption premium and accrued and unpaid interest to the redemption date.

Senior secured revolving credit facility

All borrowings under the Credit Facility are guaranteed by the general partner and the direct and indirect subsidiaries of the operating partnership (other than Ferrellgas Finance Corp. and Ferrellgas Receivables, LLC) and a limited-recourse guaranty from Ferrellgas Partners (limited to its equity interests in the operating partnership). Additionally, all borrowings are secured, on a first priority basis, by substantially all of the assets of the operating partnership and its subsidiaries and all of the equity interests in the operating partnership held by the general partner and Ferrellgas Partners.

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The Credit Agreement contains customary representations, warranties, covenants and events of default.

On June 11, 2021, Ferrellgas, L.P. entered into the First Amendment to the Credit Agreement. See Note N – Subsequent events for further discussion.

Senior unsecured notes

As discussed above, on the Effective Date, (i) the Escrow Issuers issued $650.0 million aggregate principal amount of 2026 Notes and $825.0 million aggregate principal amount of 2029 Notes, and (ii) the operating partnership and Ferrellgas Finance Corp. assumed the obligations of the Escrow Issuers as co-issuers of the 2026 Notes and the 2029 Notes upon the merger of the Escrow Issuers into the operating partnership and Ferrellgas Finance Corp., respectively. The operating partnership received aggregate net proceeds from the issuance and sale of the 2026 Notes and the 2029 Notes of approximately $1,446.5 million, after deducting the initial purchaser’s discount and estimated offering expenses. The operating partnership used such net proceeds, together with the net proceeds of the issuance and sale of the Preferred Units, as discussed in Note G – Preferred units, and cash on hand, (i) to redeem (or satisfy and discharge the indentures governing and subsequently redeem) all of the issued and outstanding 2021 Notes, 2022 Notes, 2023 Notes and 2025 Notes, as described above, and (ii) to repay all outstanding obligations under the Accounts Receivable Facility in connection with the termination of that facility, as described in Note E – Accounts and notes receivable, net.

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The scheduled principal payments on long-term debt are as follows:


Payment due by fiscal year	Scheduled principal payments		Scheduled principal payments
2021	$	501,425	$	580
2022		476,435		1,335
2023		500,999		899
2024		329		329
2025		700,199		199
Thereafter		19		1,475,019
Total	$	2,179,406	$	1,478,361

Letters of credit outstanding at ~~October 31, 2020~~April 30, 2021 and July 31, 2020 totaled ~~$127.1~~$138.2 million and $126.0 million, respectively, and were used to secure insurance arrangements, product purchases and commodity hedges. As of April 30, 2021, Ferrellgas, L.P. had available borrowing capacity under its Credit Facility of $211.8 million, which included remaining available letter of credit capacity of $86.8 million. At ~~October 31, 2020 and~~ July 31, 2020, Ferrellgas, L.P. did not have in place a credit facility providing for the issuance of letters of credit and had ~~$79.4 million and~~ $78.2 million ~~respectively,~~ of restricted cash pledged as cash collateral for letters of credit outstanding. Additionally, at ~~both October 31, 2020 and~~ July 31, 2020, Ferrellgas, L.P. also issued letters of credit of $50.0 million by utilizing our liquidity available on the terminated accounts receivable securitization facility.

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G. Preferred units

The following table summarizes the changes in the number of the Preferred Units:


		Preferred Units
Balance at January 31, 2021		—
Preferred units issued		700,000
Balance at April 30, 2021		700,000

~~Forbearance Agreement~~Issuer Redemption Right

“MOIC” means, with respect to ~~Ferrellgas Partners’ 8.625% Unsecured Senior Notes due June 15, 2020~~

Investor Redemption Right

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Change of Control

Distributions

The Distribution Rate on the Preferred Units will increase upon violation of certain protective provisions for the benefit of Preferred Unit holders notwithstanding the cap mentioned above.

Tax Distributions

Additional Amounts for Certain Purchasers

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Board Rights

Protective Provisions

Ranking and Liquidation Preference

~~Financial covenants~~

~~The indenture governing the outstanding notes of~~partnership interests held by Ferrellgas Partners and the agreements governing the outstanding notes of Ferrellgas, L.P. contain various covenants that limit Ferrellgas 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 are the restricted payments covenants discussed below.~~

~~Similar to the indenture governing the outstanding notes of Ferrellgas Partners, the indentures governing the outstanding notes~~partner). Upon a liquidation, dissolution or winding up of the operating partnership, ~~contain covenants that restrict the ability~~each holder of Preferred Units will be entitled to receive, prior and in preference to any distribution of any assets of the operating partnership to ~~make certain restricted payments, including distributions to Ferrellgas Partners. Under these covenants, subject to~~ the ~~limited exception described below,~~holders of any other class or series of equity interests in the operating partnership ~~may not~~(including Ferrellgas Partners and the general partner), an amount per Preferred Unit equal to the Redemption Price.

Restrictions on Cash Distributions to Ferrellgas Partners and the General Partner

The operating partnership is permitted to make ~~a restricted payment unless its consolidated fixed charge coverage ratio (defined~~distributions of Available Cash (as defined in the ~~indentures~~Amended OpCo LPA) to Ferrellgas Partners and the general partner only if (i) the operating partnership has made all required Quarterly Distributions (in cash or PIK Units), Tax Distributions and payments of Additional Amounts, (ii) the operating partnership has redeemed all PIK Units issued, (iii) the operating partnership’s consolidated net leverage (defined 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, 2020, the operating partnership’s consolidated ~~fixed charge coverage ratio was 1.65x.~~

~~Under~~total net debt (including the covenants in the indentures governing Ferrellgas, L.P.’s unsecured notes, if the consolidated fixed charge coverage ratio is below 1.75x, Ferrellgas, L.P. may still make restricted payments in limited amounts determined under the indentures governing Ferrellgas, L.P.’s unsecured notes. The distributions made by Ferrellgas, L.P. on June 15, 2019total redemption price of all outstanding Preferred Units and ~~December 15, 2019 for payment~~PIK Units but excluding certain letters of ~~interest on Ferrellgas Partners’ unsecured senior notes due June 2020 were made~~

~~Table~~credit and capital lease obligations) as of ~~Contents~~

~~from capacity under this limited exception to the ratio requirement under the indentures governing Ferrellgas, L.P.’s unsecured notes.~~

The indenture governing Ferrellgas, L.P.’s senior secured first lien notes due 2025 contains a similar but, in some respects, a different restricted payments covenant. The covenant in the secured notes indenture provides for the same 1.75x consolidated fixed charge coverage ratio test as the unsecured notes indentures and a limited exception when that ratio is below 1.75x. In addition, the secured notes indenture also provides that, subject to a separate limited exception, described below, Ferrellgas, L.P. generally may not make a restricted payment unless Ferrellgas, L.P.’s consolidated leverage ratio (defined in the secured notes indenture generally to mean the ratio of consolidated total debteach Quarterly Distribution Date to trailing four quarters consolidated EBITDA, both as adjusted for certain, specified items) is ~~no greater than 5.5x, on a pro forma basis~~below 7.25x through May 15, 2022 and 7.00x thereafter, net of cash, immediately before and after giving effect to such distribution, (iv) the ~~restricted payment and, if applicable, certain other specified events. The consolidated leverage ratio test applies regardless of whether Ferrellgas, L.P.’s consolidated fixed coverage ratio is~~operating partnership has at least ~~1.75x or below 1.75x. As~~$100 million of ~~October 31, 2020, Ferrellgas, L.P.’s consolidated leverage ratio was substantially in excess~~liquidity, consisting of ~~5.5x. Additionally, the secured notes indenture provides for restricted payments under its limited exception to the consolidated fixed charge coverage ratio test that is less than the capacity~~unrestricted cash on hand and available under the similar exception in the unsecured notes indentures. However, the secured notes indenture contains a separate exception to both the consolidated fixed charge coverage ratio test and the consolidated leverage ratio test that can be utilized to make certain specified restricted payments in a limited amount when Ferrellgas, L.P. does not meet either the consolidated fixed charge coverage ratio test or the consolidated leverage ratio test. This separate exception under the secured notes indenture currently has capacity for such specified restricted payments that is substantially the same as the capacity under the ~~most restrictive of Ferrellgas, L.P.’s unsecured notes indentures.~~

~~As described above, Ferrellgas Partners’ unsecured notes due 2020 matured on June 15, 2020,~~Credit Agreement or any replacement thereof, and (v) the outstanding principal amount of those notes was due to be paid on that date, together with accrued interest to the maturity date. Although Ferrellgas, L.P. has some capacity to make distributions under Ferrellgas, L.P.’s unsecured and secured notes indentures, this capacity will not allow Ferrellgas, L.P. to make distributions to Ferrellgas Partners sufficient to pay the principal of and accrued interest on Ferrellgas Partners’ unsecured senior notes due 2020 due at the maturity of those notes. Additionally, the restrictionsoperating partnership is in these indentures currently limit the ability of Ferrellgas, L.P. to make distributions to Ferrellgas Partners to enable it to pay cash distributions to its unitholders. Ferrellgas Partners continues to complycompliance with the ~~restrictive covenants with respect to~~other protective provisions in the ~~$357.0 million aggregate principal amount of Ferrellgas Partners Notes due June 15, 2020 as Ferrellgas Partners continues to negotiate with the Forbearing Noteholders.~~OpCo LPA Amendment.

~~Debt and interest expense reduction strategy~~

Ferrellgas, L.P. continues to pursue a strategy to reduce its debt and interest expense. Opportunities include the generation of additional cash flows through accretive acquisitions, continued restructuring or refinancing of 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 reduction strategy until the consolidated leverage ratio reaches a level that it deems appropriate for its business. Ferrellgas, L.P. engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist in its ongoing process to reduce existing debt and address its debt maturities.

G.H. ~~Partners’ deficit~~Equity

Partnership distributions

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

For the three months ended October 31,

2020

2019

Ferrellgas Partners

$
—

$
100

General partner

—

1


	For the three months ended April 30,				For the nine months ended April 30,
	2021		2020		2021		2020
Ferrellgas Partners	$	—	$	—	$	—	$	15,496
General partner		—		—		—		158

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

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

See Note J – Derivative instruments and hedging activities for details regarding changes in the fair value of risk management financial derivatives recorded within AOCI for the three and nine months ended ~~October 31, 2020~~April 30, 2021 and ~~2019.~~2020.

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.

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During the ~~three~~nine months ended ~~October 31, 2020,~~April 30, 2021, the general partner made non-cash contributions of ~~$7.0~~$23.0 thousand to Ferrellgas, L.P. to maintain its 1.0101% general partner interest.

During the ~~three~~nine months ended ~~October 31, 2019,~~April 30, 2020, the general partner made non-cash contributions of ~~$8.0~~$22.0 thousand to Ferrellgas, L.P. to maintain its 1.0101% general partner interest.

H.I. Revenue from contracts with customers

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 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 April 30,				For the nine months ended April 30,
	2021		2020		2021		2020
Retail - Sales to End Users	$	392,838	$	286,163	$	945,833	$	840,649
Wholesale - Sales to Resellers		140,015		103,686		381,357		291,445
Other Gas Sales		9,183		1,896		24,329		18,283
Other		22,694		20,385		67,665		65,800
Propane and related equipment revenues	$	564,730	$	412,130	$	1,419,184	$	1,216,177

Contract assets and liabilities

Ferrellgas, L.P.’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; therefore, Ferrellgas, L.P. does not capitalize these costs.

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The following table presents the opening and closing balances of Ferrellgas, L.P.’s receivables, contract assets, and contract liabilities:


	April 30, 2021		July 31, 2020
Accounts receivable	$	172,660	$	108,483
Contract assets	$	16,498	$	7,079
Contract liabilities
Deferred revenue (1)	$	39,378	$	42,911

October 31, 2020

July 31, 2020
Accounts receivable

$
132,570

$
108,483
Contract assets

$
3,699

$
7,079
Contract liabilities


Deferred revenue (1)

$
52,220

$
42,911

(1)	Of the beginning balance of deferred revenue, ~~$11.4~~$34.3 million was recognized as revenue during the ~~three~~nine months ended ~~October 31, 2020.~~April 30, 2021.

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Remaining performance obligations

Ferrellgas, L.P.’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.

I.J. 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, 2020~~April 30, 2021 and July 31, 2020:

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, 2020:

Assets:








Derivative financial instruments:








Commodity derivatives

$
—

$
7,161

$
—

$
7,161
Liabilities:








Derivative financial instruments:








Commodity derivatives

$
—

$
(1,557)

$
—

$
(1,557)

July 31, 2020:








Assets:








Derivative financial instruments:








Commodity derivatives

$
—

$
3,112

$
—

$
3,112
Liabilities:








Derivative financial instruments:








Commodity derivatives

$
—

$
(5,425)

$
—

$
(5,425)


	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
April 30, 2021:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	33,914	$	—	$	33,914
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(1,731)	$	—	$	(1,731)

July 31, 2020:
Assets:
Derivative financial instruments:
Commodity derivatives	$	—	$	3,112	$	—	$	3,112
Liabilities:
Derivative financial instruments:
Commodity derivatives	$	—	$	(5,425)	$	—	$	(5,425)

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

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July 31, 2020, the estimated fair value of Ferrellgas, L.P.’s long-term debt instruments was ~~$2,157.4~~$1,462.4 million and $2,054.4 million, respectively. Ferrellgas, L.P. estimates the fair value of long-term debt based on quoted market prices. The fair value of Ferrellgas, L.P.’s 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.

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J.K. 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.

Derivative instruments and hedging activity

During the ~~three~~nine months ended ~~October 31,~~April 30, 2021 and 2020, ~~and 2019,~~ 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 within Ferrellgas, L.P.’s condensed consolidated balance sheets as of ~~October 31, 2020~~April 30, 2021 and July 31, 2020:

Final
October 31, 2020

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

$
6,656

Other current liabilities

$
1,506
Commodity derivatives-propane

Other assets, net

505

Other liabilities

51

Total

$
7,161

Total

$
1,557


	Final	April 30, 2021
	Maturity	Asset Derivatives			Liability Derivatives
Derivative Instrument	Date	Location	Fair value		Location	Fair value
Derivatives designated as hedging instruments	December 2023
Commodity derivatives-propane		Prepaid expenses and other current assets	$	29,612	Other current liabilities	$	833
Commodity derivatives-propane		Other assets, net		4,302	Other liabilities		898
		Total	$	33,914	Total	$	1,731


	Final	July 31, 2020
	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	$	2,846	Other current liabilities	$	5,029
Commodity derivatives-propane		Other assets, net		266	Other liabilities		396
		Total	$	3,112	Total	$	5,425

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Ferrellgas, L.P.’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, 2020~~April 30, 2021 and July 31, 2020, respectively:


	April 30, 2021
	Assets			Liabilities
Description	Location	Amount		Location	Amount
Margin Balances	Prepaid expense and other current assets	$	14,972	Other current liabilities	$	34,581
	Other assets, net		3,447	Other liabilities		4,282
		$	18,419		$	38,863


	July 31, 2020
	Assets			Liabilities
Description	Location	Amount		Location	Amount
Margin Balances	Prepaid expense and other current assets	$	14,398	Other current liabilities	$	510
	Other assets, net		1,433	Other liabilities		—
		$	15,831		$	510

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July 31, 2020

Assets

Liabilities
Description

Location

Amount

Location

Amount
Margin Balances

Prepaid expense and other current assets

$
14,398

Other current liabilities

$
510

Other assets, net

1,433

Other liabilities

—

$
15,831



$
510

The following tables provide a summary of the effect on Ferrellgas, L.P.’s condensed consolidated statements of comprehensive income (loss) for the three and nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~ due to derivatives designated as cash flow hedging instruments:


	For the three months ended October 31, 2020							For the three months ended April 30, 2021
				Amount of Gain (Loss)							Amount of Gain (Loss)
			Location of Gain (Loss)	Reclassified from						Location of Gain (Loss)	Reclassified from
	Amount of Gain (Loss)		Reclassified from AOCI	AOCI into Income				Amount of Gain (Loss)		Reclassified from AOCI	AOCI into Income
Derivative Instrument	Recognized in AOCI		into Income	Effective portion		Ineffective portion		Recognized in AOCI		into Income	Effective portion		Ineffective portion
Commodity derivatives	$	5,767	Cost of product sold- propane and other gas liquids sales	$	(2,150)	$	—	$	20,446	Cost of product sold- propane and other gas liquids sales	$	22,383	$	—
	$	5,767		$	(2,150)	$	—	$	20,446		$	22,383	$	—


	For the three months ended October 31, 2019							For the three months ended April 30, 2020
				Amount of Gain (Loss)							Amount of Gain (Loss)
			Location of Gain (Loss)	Reclassified from						Location of Gain (Loss)	Reclassified from
	Amount of Gain (Loss)		Reclassified from AOCI	AOCI into Income				Amount of Gain (Loss)		Reclassified from AOCI	AOCI into Income
Derivative Instrument	Recognized in AOCI		into Income	Effective portion		Ineffective portion		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)	$	—	$	(11,501)	Cost of product sold- propane and other gas liquids sales	$	(14,073)	$	—
	$	(13,627)		$	(7,479)	$	—	$	(11,501)		$	(14,073)	$	—


	For the nine months ended April 30, 2021
				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	$	63,170	Cost of sales-propane and other gas liquids sales	$	28,674	$	—
	$	63,170		$	28,674	$	—


	For the nine months ended April 30, 2020
				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	$	(36,340)	Cost of sales-propane and other gas liquids sales	$	(30,318)	$	—
	$	(36,340)		$	(30,318)	$	—

The changes in derivatives included in AOCI for the ~~three~~nine months ended ~~October 31,~~April 30, 2021 and 2020 ~~and 2019~~ were as follows:


	For the nine months ended April 30,
Gains and losses on derivatives included in AOCI	2021		2020
Beginning balance	$	(2,313)	$	(14,756)
Change in value of risk management commodity derivatives		63,170		(36,340)
Reclassification of (gains) losses on commodity hedges to cost of sales - propane and other gas liquids sales, net		(28,674)		30,318
Ending balance	$	32,183	$	(20,778)

Ferrellgas, L.P. expects to reclassify net gains of approximately ~~$5.2~~$28.8 million to earnings during the next 12 months. These net gains are expected to be offset by ~~increased~~decreased margins on propane sales commitments Ferrellgas, L.P. has with its customers that qualify for the normal purchase normal sale exception.

During the ~~three~~nine months ended ~~October 31, 2020~~April 30, 2021 and ~~2019,~~2020, 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.

~~Table of Contents~~

As of ~~October 31, 2020,~~April 30, 2021, Ferrellgas, L.P. had financial derivative contracts covering ~~3.6~~5.3 million barrels of propane that were entered into as cash flow hedges of forward and forecasted purchases of propane.

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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 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, parental 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, 2020,~~April 30, 2021, the maximum amount of loss due to credit risk that Ferrellgas, L.P. would incur based upon the gross fair values of the derivative financial instruments is ~~$3.5 million.~~0.

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 no0 open derivative contracts with credit-risk-related contingent features as of ~~October 31, 2020.~~April 30, 2021.

K.L. Transactions with related parties

Ferrellgas, L.P. has no0 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 its 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,

2020

2019

Operating expense

$
60,980

$
63,471

General and administrative expense

$
6,719

$
6,487


	For the three months ended April 30,				For the nine months ended April 30,
	2021		2020		2021		2020
Operating expense	$	64,242	$	67,241	$	195,817	$	203,796

General and administrative expense	$	6,194	$	7,705	$	23,348	$	21,668

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

Term loan credit agreement with Ferrellgas Partners, L.P.

On January 8, 2021, Ferrellgas, L.P. entered into a term loan credit agreement with Ferrellgas Partners, L.P., pursuant to which Ferrellgas, L.P. extended to Ferrellgas Partners, L.P. an unsecured, non-amortizing term loan in the aggregate principal amount of $19.9 million. The term loan bears interest at a rate of 20% per annum, and all interest on the term loan will be added to the outstanding principal amount of the term loan. The term loan will mature on July 1, 2022. Interest income totaled $1.0 million and $1.3 million for the three and nine months ended April 30, 2021, respectively, and is classified in the “Other income (expense), net” line item on the condensed consolidated statements of operations.

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L.M. Contingencies and commitments

Litigation

Ferrellgas, L.P.’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 induring the fiscal year ended July 31, 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 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’

~~Table of Contents~~

fees, injunctive relief and costs on behalf of the putative class. These lawsuits have been coordinated for pretrial purposes by the 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 and intends to vigorously defend itself against 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. and Bridger Logistics, LLC (“Bridger”), have been named, along with ~~two~~2 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”), previously named Bridger Transfer Services, a former subsidiary of 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 as a result of the arbitration. Eddystone also alleges that JTS was an “alter ego” of Bridger and 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 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 damages, if ultimately owed to Eddystone, could be material to Ferrellgas. Ferrellgas intends to vigorously defend this claim. 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 time.

M. ~~Guarantor financial information~~

The $500.0 million aggregate principal amount of registered 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.

4962

Table of Contents

~~FERRELLGAS, L.P. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING BALANCE SHEETS~~

~~(in thousands)~~

As of October 31, 2020


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

$
296,890

$
1

$
—

$
2,631

$
—

$
299,522
Accounts and notes receivable, net

15,547

—

—

103,941

—

119,488
Intercompany receivables

87,191

—

—

—

(87,191)

—
Inventories

78,980

—

—

—

—

78,980
Prepaid expenses and other current assets

40,044

—

—

—

—

40,044
Total current assets

518,652

1

—

106,572

(87,191)

538,034

Property, plant and equipment, net

592,132

—

—

—

—

592,132
Goodwill, net

246,946

—

—

—

—

246,946
Intangible assets, net

101,812

—

—

—

—

101,812
Investments in consolidated subsidiaries

37,821

—

—

—

(37,821)

—
Operating lease right-of-use assets

100,349

—

—

—

—

100,349
Other assets, net

71,029

—

2,255

238

—

73,522
Total assets

$
1,668,741

$
1

$
2,255

$
106,810

$
(125,012)

$
1,652,795

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)












Current liabilities:












Accounts payable

$
44,641

$
—

$
—

$
—

$
—

$
44,641
Intercompany payables

—

—

—

87,191

(87,191)

—
Current portion of long-term debt

502,095

—

—

—

—

502,095
Current operating lease liabilities

28,280

—

—

—

—

28,280
Other current liabilities

175,856

—

—

(15,946)

—

159,910
Total current liabilities

750,872

—

—

71,245

(87,191)

734,926

Long-term debt

1,647,106

—

—

—

—

1,647,106
Operating lease liabilities

83,337

—

—

—

—

83,337
Other liabilities

49,543

—

—

—

—

49,543
Contingencies and commitments













Partners' capital (deficit):












Partners' equity

(867,721)

1

2,255

35,565

(37,821)

(867,721)
Accumulated other comprehensive income

5,604

—

—

—

—

5,604
Total partners' capital (deficit)

(862,117)

1

2,255

35,565

(37,821)

(862,117)
Total liabilities and partners' capital (deficit)

$
1,668,741

$
1

$
2,255

$
106,810

$
(125,012)

$
1,652,795

~~Table of Contents~~

~~FERRELLGAS, L.P. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING BALANCE SHEETS~~

~~(in thousands)~~

As of July 31, 2020


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

$
332,244

$
1

$
—

$
1,510

$
—

$
333,755
Accounts and notes receivable, net

11,879

—

24

89,535

—

101,438
Intercompany receivables

69,980

—

—

—

(69,980)

—
Inventories

72,664

—

—

—

.

72,664
Prepaid expenses and other current assets

35,897

—

—

—

—

35,897
Total current assets

522,664

1

24

91,045

(69,980)

543,754

Property, plant and equipment, net

591,042

—

—

—

—

591,042
Goodwill, net

247,195

—

—

—

—

247,195
Intangible assets, net

104,049

—

—

—

—

104,049
Investments in consolidated subsidiaries

37,662

—

—

—

(37,662)

—
Operating lease right-of-use assets

107,349

—

—

—

—

107,349
Other assets, net

72,137

—

2,255

356

—

74,748
Total assets

$
1,682,098

$
1

$
2,279

$
91,401

$
(107,642)

$
1,668,137

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)












Current liabilities:












Accounts payable

$
33,944

$
—

$
—

$
—

$
—

$
33,944
Intercompany payables

—

—

—

69,980

(69,980)

—
Current portion of long-term debt

502,095

—

—

—

—

502,095
Current operating lease liabilities

29,345

—

—

—

—

29,345
Other current liabilities

162,097

—

—

(13,961)

—

148,136
Total current liabilities

727,481

—

—

56,019

(69,980)

713,520

Long-term debt

1,646,396

—

—

—

—

1,646,396
Operating lease liabilities

89,022

—

—

—

—

89,022
Other liabilities

51,190

—

—

—

—

51,190
Contingencies and commitments













Partners' capital (deficit):












Partners' equity

(829,678)

1

2,279

35,382

(37,662)

(829,678)
Accumulated other comprehensive income

(2,313)

—

—

—

—

(2,313)
Total partners' capital (deficit)

(831,991)

1

2,279

35,382

(37,662)

(831,991)
Total liabilities and partners' capital (deficit)

$
1,682,098

$
1

$
2,279

$
91,401

$
(107,642)

$
1,668,137

~~Table of Contents~~

~~FERRELLGAS, L.P. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS~~

~~(in thousands)~~

For the three months ended October 31, 2020


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

$
281,049

$
—

$
—

$
—

$
—

$
281,049
Other

19,845

—

—

—

—

19,845
Total revenues

300,894

—

—

—

—

300,894

Costs and expenses:










Cost of sales - propane and other gas liquids sales

137,627

—

—

—

—

137,627
Cost of sales - other

3,667

—

—

—

—

3,667
Operating expense - personnel, vehicle, plant and other

109,027

—

—

737

(737)

109,027
Operating expense - equipment lease expense

6,830

—

—

—

—

6,830
Depreciation and amortization expense

21,390

—

—

—

—

21,390
General and administrative expense

13,074

2

—

—

—

13,076
Non-cash employee stock ownership plan compensation charge

708

—

—

—

—

708
Loss on asset sales and disposals

813

—

—

—

—

813

Operating income (loss)

7,758

(2)

—

(737)

737

7,756

Interest expense

(45,901)

—

—

(627)

—

(46,528)
Other income (expense), net

129

—

(21)

1,679

(1,679)

108

Earnings (loss) before income taxes

(38,014)

(2)

(21)

315

(942)

(38,664)

Income tax expense

87

—

—

—

—

87
Equity in earnings (loss) of subsidiaries

292

—

—

—

(292)

—

Net earnings (loss)

(37,809)

(2)

(21)

315

(1,234)

(38,751)

Other comprehensive income

7,917

—

—

—

—

7,917

Comprehensive income (loss)

$
(29,892)

$
(2)

$
(21)

$
315

$
(1,234)

$
(30,834)

~~Table of Contents~~

~~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
Operating expense - equipment lease expense

8,388

—

—

—

—

8,388
Depreciation and amortization expense

19,107

—

—

112

—

19,219
General and administrative expense

9,695

1

—

—

—

9,696
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 subsidiary

(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)

~~Table of Contents~~

~~FERRELLGAS, L.P. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS~~

~~(in thousands)~~

For the three months ended October 31, 2020


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

$
(9,925)

$
(2)

$
3

$
(2,687)

$
1,121

$
(11,490)

Cash flows from investing activities:












Business acquisitions, net of cash acquired

—

—

—

—

—

—
Capital expenditures

(19,454)

—

—

—

—

(19,454)
Proceeds from sale of assets

1,407

—

—

—

—

1,407
Cash collected for purchase of interest in accounts receivable

—

—

—

153,131

(153,131)

—
Cash remitted to Ferrellgas, L.P. for accounts receivable

—

—

—

(152,010)

152,010

—
Intercompany loan to affiliate

(2,686)

—

—

—

2,686

—
Net cash provided by (used in) investing activities

(20,733)

—

—

1,121

1,565

(18,047)

Cash flows from financing activities:












Payments on long-term debt

(696)

—

—

—

—

(696)
Net changes in advances with consolidated entities

—

2

(3)

2,687

(2,686)

—
Cash payments for principal portion of finance lease liability

(1,703)

—

—

—

—

(1,703)
Cash paid for financing costs and other

(2,297)

—

—

—

—

(2,297)
Net cash provided by (used in) financing activities

(4,696)

2

(3)

2,687

(2,686)

(4,696)

Net change in cash and cash equivalents

(35,354)

—

—

1,121

—

(34,233)
Cash and cash equivalents - beginning of year

332,244

1

—

1,510

—

333,755
Cash, cash equivalents and restricted cash - end of year

$
296,890

$
1

$
—

$
2,631

$
—

$
299,522

~~Table of Contents~~

~~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 payment to construct assets in connection with future lease transactions

(16,879)

—

—

—

—

(16,879)
Cash receipts in connection with leased vehicles

5,863

—

—

—

—

5,863
Net cash provided by (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
Net changes in advances with consolidated entries

—

1

(506)

3,708

(3,203)

—
Cash payments for principal portion of finance lease liability

(38)

—

—

—

—

(38)
Cash paid for financing costs and other

(1,102)

—

—

—

—

(1,102)
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

~~Table of Contents~~

N. Subsequent events

Ferrellgas, L.P. has evaluated events and transactions occurring after the balance sheet date through the date Ferrellgas, L.P.’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, except as follows.

~~Transaction Support Agreement~~

On ~~December 10, 2020,~~June 11, 2021, Ferrellgas Partners, Ferrellgas, Inc. and certain subsidiaries of Ferrellgas Partners, ~~Finance Corp.~~as guarantors, the lenders party thereto, and JPMorgan Chase Bank, N.A., ~~Ferrellgas, L.P.~~as administrative agent and ~~additional Ferrellgas entities (collectively,~~collateral agent for the ~~“Company Parties”~~lenders (the “Agent”), entered into a ~~Transaction Support~~First Amendment to Credit Agreement (the ~~“TSA”~~“Credit Agreement Amendment”) ~~with certain holders~~which amends its existing Credit Agreement, dated as of March 30, 2021 (the “Existing Credit Agreement”). The Credit Agreement Amendment does not alter the size or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims (collectively, the “Consenting Noteholders”) arising under, derived from or based upon the indenture governing the Ferrellgas Partners Notes due June 15, 2020. As of December 10, 2020, the Consenting Noteholders hold or represent, in the aggregate, approximately 74%tenor of the ~~outstanding~~loans provided (a four-year revolving credit facility in an aggregate principal amount of ~~the Ferrellgas Partners Notes due June 15, 2020.~~up to $350.0 million).

The ~~TSA sets forth (i) a restructuring process to satisfy~~Credit Agreement Amendment, which has an effective date of April 30, 2021, amends the ~~obligations of~~financial covenant requiring Ferrellgas Partners and Ferrellgas Partners Finance Corp. under the Ferrellgas Partners Notes due June 15, 2020 (the “Ferrellgas Partners Transactions”), which will be effectuated through pre-packaged voluntary cases (the “Chapter 11 Cases”its subsidiaries to maintain a specified consolidated Minimum Interest Coverage Ratio (“Minimum Coverage Ratio”) ~~under chapter 11~~ of ~~title 11~~at least 2.50 to 1.00 as of the ~~United States Code filed~~end of each fiscal quarter for the period consisting of the trailing 4 fiscal quarters by ~~only Ferrellgas Partners and Ferrellgas Partners Finance Corp. and~~(i) waiving the ~~confirmation of a pre-packaged plan of reorganization~~financial covenant for ~~Ferrellgas Partners and Ferrellgas Partners Finance Corp.,~~the trailing 4 fiscal quarters ending April 30, 2021 and (ii) ~~a refinancing process~~annualizing the consolidated cash interest charges component of ~~Ferrellgas, L.P., including but not limited to, replacement of Ferrellgas, L.P.’s existing unsecured notes due~~the covenant for (a) the fiscal quarter ending on July 31, 2021, ~~2022~~(b) the 2 fiscal quarters ending on October 31, 2021, and ~~2023 (the “operating partnership Transactions” and, together~~(c) the 3 fiscal quarters ending on January 31, 2022. In addition, the Credit Agreement Amendment waives compliance with the Ferrellgas Partners Transactions, the “Transactions”), which will be consummated on the effective date (the “Effective Date”) of Ferrellgas Partners’ plan of reorganization that implements the Ferrellgas Partners Transactions (the “Plan”) and will close simultaneously with the Ferrellgas Partners Transactions effectuated under the Plan.

~~Generally, the TSA and the Transactions contemplate, among other things, the transactions and certain changes~~representations related to the ~~capital structure and governance~~accuracy of the ~~Company Parties as described~~information set forth in ~~more detail in the TSA.~~

~~Pursuant~~Schedules 4.12 and 4.29 to the ~~TSA,~~Existing Credit Agreement and subject to the terms and conditions thereof, the parties thereto have agreed to support, act in good faith and take all steps reasonably necessary and desirable to implement and consummate the Transactions until the TSA is terminated. The Consenting Noteholders have agreed, among other things, (i) to forbear from taking actions with respect to any default ~~or event~~arising therefrom. The Credit Agreement Amendment further amends and replaces Schedules 4.12 and 4.29 in their entirety. In addition, the Credit Agreement Amendment modifies the timing for payment of default by the Company Parties under the indenture governing the Ferrellgas Partners Notes which arises solely as a result of the failure to make payments of the principal due on the Ferrellgas Partners Notes,certain fees and ~~(ii) to vote in favor of any matter requiring approval to the extent necessary to implement the Transactions and the Plan.~~

~~The TSA contains~~modifies certain ~~milestones~~provisions relating to the ~~commencement~~timing and delivery of collateral documents as well as certain other deliverables.

The foregoing description of the ~~solicitation of acceptances~~Credit Agreement Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Plan (the “Solicitation”), the refinancing process and the Chapter 11 Cases, which include the dates by which Ferrellgas Partners is required to commence the Solicitation and, thereafter, commence the Chapter 11 Cases or obtain certain approval orders of the United States Bankruptcy Court for the District of Delaware. In addition, the milestones include the obligation of Ferrellgas Partners and Ferrellgas Partners Finance Corp. to emerge from chapter 11 protection no later than April 4, 2021, unless that deadline is extended pursuantFirst Amendment to the ~~terms of the TSA.~~Credit Agreement, which is filed or incorporated by reference as Exhibit 10.29.

~~There is no assurance that the restructuring and refinancing processes described in the TSA will be consummated.~~

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FERRELLGAS FINANCE CORP.

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

CONDENSED BALANCE ~~SHEETS~~SHEETS

(unaudited)

October 31, 2020

July 31, 2020
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

84,240

84,187
Accumulated deficit

(84,140)

(82,587)
Total stockholder's equity

$
1,100

$
2,600


	April 30, 2021		July 31, 2020
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		101,962		84,187
Accumulated deficit		(101,862)		(82,587)
Total stockholder's equity	$	1,100	$	2,600

See notes to condensed financial statements.

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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,

2020

2019

General and administrative expense

$
1,553

$
1,019

Net loss

$
(1,553)

$
(1,019)


	For the three months ended April 30,				For the nine months ended April 30,
	2021		2020		2021		2020
General and administrative expense	$	17,419	$	2,104	$	19,275	$	6,010

Net loss	$	(17,419)	$	(2,104)	$	(19,275)	$	(6,010)

See notes to condensed financial statements.

5865

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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,

2020

2019
Cash flows from operating activities:

Net loss

$
(1,553)

$
(1,019)
Changes in operating assets and liabilities:

Prepaid expenses and other current assets

1,500

966
Cash used in operating activities

(53)

(53)

Cash flows from financing activities:

Capital contribution

53

53
Cash provided by financing activities

53

53

Net change in cash

—

—
Cash - beginning of period

1,100

1,100
Cash - end of period

$
1,100

$
1,100


	For the nine months ended April 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(19,275)	$	(6,010)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		1,500		1,841
Cash used in operating activities		(17,775)		(4,169)

Cash flows from financing activities:
Capital contribution		17,775		4,169
Cash provided by financing activities		17,775		4,169

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”~~“operating partnership”).

The ~~Partnership~~operating partnership contributed $1,000 to the Finance Corp. on January 24, 2003 in exchange for 1,000 shares of common stock.

The Finance Corp. has nominal assets, does not conduct any operations and has no0 employees.

~~Going Concern~~Chapter 11 Bankruptcy Cases

As previously reported, on January 11, 2021, Ferrellgas Partners, L.P. (“Ferrellgas Partners”) and Ferrellgas Partners Finance Corp. filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The ~~accompanying condensed financial statements have been prepared on a going concern basis, which contemplates~~chapter 11 cases were jointly administered under the ~~continuity~~caption and case numbers, In re: Ferrellgas Partners, L.P. and Ferrellgas Partners Finance Corp., Chapter 11 Case Nos. 21-10020 and 21-10021.

On March 5, 2021, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Second Amended Prepackaged Joint Chapter 11 Plan of ~~operations,~~ Reorganization of Ferrellgas Partners, L.P. and Ferrellgas Partners Finance Corp. (the ~~realization~~“Plan”).

On March 30, 2021 (the “Effective Date”), the conditions to effectiveness of ~~assets~~the Plan were satisfied 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 $500.0 million in unsecured notes due May 1, 2021 that are classified as current in its condensed consolidated financial statements. This obligation is only reported on the condensed consolidated balance sheet of the Partnership. The ability of the Partnership to restructure, refinance or otherwise satisfy these notes is uncertain considering the level of other outstanding indebtedness. 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, we believe there is substantial doubt about the Finance Corp’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 in the Partnership’s ongoing process to reduce existing debt and address its debt maturities. On December 10, 2020,Confirmation Order was deemed binding upon Ferrellgas Partners, Ferrellgas Partners Finance Corp., and all other parties affected by the ~~Partnership, Finance Corp. and additional Ferrellgas entities entered into a Transaction Support Agreement (the “TSA”) with~~Plan. In satisfying the conditions of the Plan, on the Effective Date, certain ~~holders of, or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims arising under, derived from or based upon the indenture governing the~~restructuring transactions by Ferrellgas Partners ~~Notes due June 15, 2020. There is no assurance that the~~and certain financing transactions ~~contemplated~~ by the TSA will be consummated and the outcome of Ferrellgas’ debt reduction strategy continues to remain uncertain. See Note C – Subsequent Events, for a discussion of the TSA and the transactions contemplated thereunder.

operating partnership were completed.

B. Contingencies and commitments

The Finance Corp. serves as co-issuer and co-obligor for debt securities of the ~~Partnership. The~~operating partnership. At July 31, 2020, the Finance Corp. iswas liable as co-issuer and co-obligor for the operating partnership’s (i) ~~the~~ $500 million aggregate principal amount of ~~the Partnership’s~~ unsecured senior notes due 2021, (ii) ~~the~~ $475 million aggregate principal amount of ~~the Partnership’s~~ unsecured senior notes due 2022, ~~and~~ (iii) ~~the~~ $500 million aggregate principal amount of ~~the Partnership’s~~ unsecured senior notes due 2023, and (iv) $700 million aggregate principal amount of senior secured notes due 2025, which obligations were only reported on the operating partnership’s condensed consolidated balance sheet. The senior notes due 2021, senior notes due 2022 and senior notes due 2023 were redeemed on April 5, 2021, and the senior secured notes due 2025 were redeemed on the Effective Date. As of April 30, 2021, the Finance Corp. was liable as co-issuer and co-obligor for the operating partnership’s (i) $650 million aggregate principal amount of unsecured senior notes due 2026 and (ii) $825 million aggregate principal amount of unsecured senior notes due 2029, each of which were issued on the Effective Date and which obligations are only reported on the ~~Partnership’s~~operating partnership’s condensed consolidated balance sheet.

C. Subsequent events

The ~~Partnership~~Finance Corp. has evaluated events and transactions occurring after the balance sheet date through the date the ~~Partnership’s~~Finance Corp.’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, except as follows.~~statements.

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~~Transaction Support Agreement~~

On December 10, 2020, Ferrellgas Partners, Ferrellgas Partners Finance Corp., the Partnership, Finance Corp. and additional Ferrellgas entities (collectively, the “Company Parties”) entered into a Transaction Support Agreement (the “TSA”) with certain holders of, or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims (collectively, the “Consenting Noteholders”) arising under, derived from or based upon the indenture governing the Ferrellgas Partners Notes due June 15, 2020. As of December 10, 2020, the Consenting Noteholders hold or represent, in the aggregate, approximately 74% of the outstanding amount of the Ferrellgas Partners Notes due June 15, 2020.

The TSA sets forth (i) a restructuring process to satisfy the obligations of Ferrellgas Partners and Ferrellgas Partners Finance Corp. under the Ferrellgas Partners Notes due June 15, 2020 (the “Ferrellgas Partners Transactions”), which will be effectuated through pre-packaged voluntary cases (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code filed by only Ferrellgas Partners and Ferrellgas Partners Finance Corp. and the confirmation of a pre-packaged plan of reorganization for Ferrellgas Partners and Ferrellgas Partners Finance Corp., and (ii) a refinancing process of the Partnership and the Finance Corp., including but not limited to, replacement of the Partnership’s and the Finance Corp.’s existing unsecured notes due 2021, 2022 and 2023 (the “operating partnership Transactions” and, together with the Ferrellgas Partners Transactions, the “Transactions”), which will be consummated on the effective date (the “Effective Date”) of Ferrellgas Partners’ plan of reorganization that implements the Ferrellgas Partners Transactions (the “Plan”) and will close simultaneously with the Ferrellgas Partners Transactions effectuated under the Plan.

Pursuant to the TSA, and subject to the terms and conditions thereof, the parties thereto have agreed to support, act in good faith and take all steps reasonably necessary and desirable to implement and consummate the Transactions until the TSA is terminated. The Consenting Noteholders have agreed, among other things, (i) to forbear from taking actions with respect to any default or event of default by the Company Parties under the indenture governing the Ferrellgas Partners Notes which arises solely as a result of the failure to make payments of the principal due on the Ferrellgas Partners Notes, and (ii) to vote in favor of any matter requiring approval to the extent necessary to implement the Transactions and the Plan.

The TSA contains certain milestones relating to the commencement of the solicitation of acceptances of the Plan (the “Solicitation”), the refinancing process and the Chapter 11 Cases, which include the dates by which Ferrellgas Partners is required to commence the Solicitation and, thereafter, commence the Chapter 11 Cases or obtain certain approval orders of the United States Bankruptcy Court for the District of Delaware. In addition, the milestones include the obligation of Ferrellgas Partners and Ferrellgas Partners Finance Corp. to emerge from chapter 11 protection no later than April 4, 2021, unless that deadline is extended pursuant to the terms of the TSA.

~~There is no assurance that the restructuring and refinancing processes described in the TSA will be consummated.~~

~~Table of Contents~~

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, 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 (except where the context indicates otherwise) with its consolidated subsidiaries, including Ferrellgas Finance Corp.;

●

our “general partner” ~~(i) with respect to Ferrellgas Partners~~ refers to Ferrellgas, Inc. and (ii) with respect to the operating partnership refers to (a) Ferrellgas, Inc., in the case of any economic general partner interest and (b) Ferrellgas, Inc., Ferrellgas GP II, LLC and Ferrellgas GP III, LLC, collectively, in the case of any voting general partner interest;;

●

“Ferrell Companies” refers to Ferrell Companies, Inc., the sole shareholder or sole member, as applicable, of our general partners;

●

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

●

"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;

●

“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;

●

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

●

“Ferrellgas Partners Notes” refers to the $357.0 million aggregate principal amount of 8.625% unsecured senior notes due June 15, 2020 co-issued by Ferrellgas Partners and Ferrellgas Partners Finance Corp.;

●

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

~~Table of Contents~~

●

“references to any fiscal ~~2021” means~~year are to the fiscal year ended or ending on July 31 ~~2021, “fiscal 2020” means~~of 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.~~applicable year.

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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 assets are its approximate 99% limited partnership interest in the operating partnership and its 100% equity interest in Ferrellgas Partners Finance Corp. The ~~common~~Class A units of Ferrellgas Partners are traded on the OTC Pink Market 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 an 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 23.4% of our outstanding ~~common~~Class A units. Ferrell Companies is owned 100% by an employee stock ownership trust.

We file annual, quarterly, and 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. 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 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 audited historical consolidated financial statements and accompanying Notes thereto included in our Annual Report on Form 10-K for fiscal 2020 and in our unaudited historical condensed consolidated financial statements and accompanying Notes thereto included elsewhere in this Quarterly Report on Form 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 exists one material ~~difference~~differences between Ferrellgas Partners and the operating partnership: Ferrellgas Partners has outstanding $357.0 million aggregate principal amount of 8.625% senior notes due June 15, 2020, and, accordingly, has interest expense that the operating partnership does not have. Ferrellgas Partners’ access to liquidity is dependent on distributions from the operating partnership. See the statements of operations in their respective condensed consolidated financial statements.

●

Ferrellgas Partners, L.P. entered into a term loan credit agreement with Ferrellgas, L.P., pursuant to which Ferrellgas, L.P. extended to Ferrellgas Partners, L.P. an unsecured, non-amortizing term loan in the aggregate principal amount of $19.9 million. The term loan bears interest at a rate of 20% per annum, and all interest on the term loan will be added to the outstanding principal amount of the term loan. The term loan will mature on July 1, 2022. The balance of the outstanding loan and accrued interest at April 30, 2021 equals $25.1 million.

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.

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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;

~~Table of Contents~~

●

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

●

disruptions to the supply of propane;

●

competition from other industry participants and other energy sources;

●

energy efficiency and technology advances;

●

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

●

significant delays in the collection of accounts or notes receivable;

●

customer, counterparty, supplier or vendor defaults;

●

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

●

disruptions to railroad operations on the railroads we use;

●

increased trucking and rail regulations;

●

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

●

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

●

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

●

the impact of pending and future legal proceedings;

●

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

●

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

●

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

●

disruptions in the capital and credit markets;

●

access to available capital to meet our operating ~~requirements up to~~ and ~~including the refinancing and/or restructuring of maturing debt instruments; and~~

●

~~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.~~debt-service requirements;

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 for fiscal ~~2020.~~2020 and in “Item 1A Risk Factors” of this Quarterly Report on Form 10-Q. 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.

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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.

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Recent developments

COVID-19

The coronavirus disease 2019 (COVID-19), which has been declared by the World Health Organization as a “Public Health Emergency of International Concern,” continues to ~~spread and severely~~ impact the economy of the United States and other countries around the world. COVID-19 poses the risk that we or our employees, contractors, suppliers, customers and other business partners may be prevented from or limited in conducting business activities for an indefinite period of time. The outbreak of COVID-19 has already resulted in significant governmental measures being implemented to control the spread of the virus, including quarantines, travel restrictions, manufacturing restrictions, declarations of national emergency and states of emergency, business shutdowns and restrictions on the movement of people throughout the United States and the world. While some of our business operations and support systems are deemed essential in many jurisdictions, we are continuing to assess the impact that COVID-19 may have on our results of operations and financial condition and cannot at this time accurately predict what effects these conditions will have on our operations and sales due to uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak and the length of the travel restrictions and business closures imposed by governments in different jurisdictions. Additionally, initiatives we have implemented or may implement to slow and/or reduce the impact of COVID-19, such as using staggered start times for drivers, may increase our operating expenses and reduce the efficiency of our operations. Any of the foregoing events or other unforeseen consequences of public health epidemics may have further adverse impacts on U.S. and global economic conditions, including a general slowdown in the U.S. economy, which could decrease demand for our products and have a material adverse effect on our results of operations and financial condition.

~~Transaction Support Agreement~~Chapter 11 Bankruptcy Cases

On December 10, 2020, Ferrellgas Partners, Ferrellgas Partners Finance Corp., the operating partnership and additional Ferrellgas entities (collectively, the “Company Parties”) entered into a Transaction Support Agreement (the “TSA”) with certain holders of, or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims (collectively, the “Consenting Noteholders”) arising under, derived from or based upon the indenture governing the Ferrellgas Partners Notes due June 15, 2020. As ~~of December 10, 2020, the Consenting Noteholders hold or represent, in the aggregate, approximately 74% of the outstanding amount of the Ferrellgas Partners Notes due June 15, 2020.~~

~~The TSA sets forth (i) a restructuring process to satisfy the obligations of~~previously reported on January 11, 2021, Ferrellgas Partners and Ferrellgas Partners Finance Corp. ~~under the Ferrellgas Partners Notes due June 15, 2020 (the “Ferrellgas Partners Transactions”), which will be effectuated through pre-packaged~~filed voluntary ~~cases (the “Chapter 11 Cases”)~~petitions for relief under chapter 11 of title 11 of the United States Code filed by only Ferrellgas Partners and Ferrellgas Partners Finance Corp. and the confirmation of a pre-packaged plan of reorganization for Ferrellgas Partners and Ferrellgas Partners Finance Corp., and (ii) a refinancing process of the operating partnership, including but not limited to, replacement of the operating partnership’s existing unsecured notes due 2021, 2022 and 2023 (the “operating partnership Transactions” and, together with the Ferrellgas Partners Transactions, the “Transactions”), which will be consummated on the effective date (the “Effective Date”) of Ferrellgas Partners’ plan of reorganization that implements the Ferrellgas Partners Transactions (the “Plan”) and will close simultaneously with the Ferrellgas Partners Transactions effectuated under the Plan.

~~Generally, the TSA and the Transactions contemplate, among other things, the transactions and certain changes to the capital structure and governance of the Company Parties as described~~ in ~~more detail in the TSA.~~

Pursuant to the TSA, and subject to the terms and conditions thereof, the parties thereto have agreed to support, act in good faith and take all steps reasonably necessary and desirable to implement and consummate the Transactions until the TSA is terminated. The Consenting Noteholders have agreed, among other things, (i) to forbear from taking actions with respect to any default or event of default by the Company Parties under the indenture governing the Ferrellgas Partners Notes which arises solely as a result of the failure to make payments of the principal due on the Ferrellgas Partners Notes, and (ii) to vote in favor of any matter requiring approval to the extent necessary to implement the Transactions and the Plan.

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~~orders of~~ the United States Bankruptcy Court for the District of ~~Delaware.~~ Delaware (the “Bankruptcy Court”). The chapter 11 cases were jointly administered under the caption and case numbers, In ~~addition,~~re: Ferrellgas Partners, L.P. and Ferrellgas Partners Finance Corp., Chapter 11 Case Nos. 21-10020 and 21-10021.

On March 5, 2021, the ~~milestones include~~Bankruptcy Court entered an order (the “Confirmation Order”) confirming the ~~obligation~~Second Amended Prepackaged Joint Chapter 11 Plan of Reorganization of Ferrellgas Partners, L.P. and Ferrellgas Partners Finance Corp. (the “Plan”).

On March 30, 2021 (the “Effective Date”), the conditions to effectiveness of the Plan were satisfied and the Confirmation Order was deemed binding upon Ferrellgas Partners, Ferrellgas Partners Finance Corp. and all other parties affected by the Plan. In satisfying the conditions of the Plan, on the Effective Date, certain restructuring transactions by Ferrellgas Partners and certain financing transactions by the operating partnership were completed, as further described under “–Transactions” below.

Ferrellgas has accounted for the effects of the reorganization and determined that fresh-start accounting does not need to be applied, as a change in control did not occur.

Transactions

Satisfaction of Ferrellgas Partners Notes; Issuance of Class B Units to Holders of Ferrellgas Partners Notes

On the Effective Date, by operation of the Plan, all outstanding indebtedness (including accrued interest) of Ferrellgas Partners and Ferrellgas Partners Finance Corp. ~~to emerge from chapter 11 protection no later than April 4, 2021, unless that deadline is extended pursuant to the terms of the TSA.~~

~~There is no assurance that the restructuring and refinancing processes described in the TSA will be consummated.~~

~~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 to, among other things, make restricted payments and incur additional indebtedness. Our general partner believes that the most restrictive of these covenants are the restricted payments covenants discussed below.

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

~~The indenture governing the~~under their $357.0 million aggregate principal amount of 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. Ferrellgas Partners continues to comply with the restrictive covenants with

~~respect to~~ the Ferrellgas Partners Notes ~~due June 15, 2020 as~~were discharged and cancelled.

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Pursuant to the Plan, Ferrellgas Partners ~~continues~~issued an aggregate of 1.3 million Class B Units to ~~negotiate with~~holders of the ~~Forbearing Noteholders~~. ~~Under this covenant, subject to the limited exception described below,~~ Ferrellgas Partners ~~may not make a restricted payment unless its consolidated fixed charge coverage ratio (defined~~Notes in ~~the indenture generally to mean the ratio~~satisfaction 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~~their claims in respect of the ~~restricted payment and, if applicable, certain other specified events. As of October 31, 2020, Ferrellgas Partners’ consolidated fixed charge coverage ratio was 1.38x.~~

~~If the consolidated fixed charge coverage ratio is below 1.75x,~~ Ferrellgas Partners ~~may make restricted payments~~Notes. See Note H – Equity for additional discussion.

Issuance of ~~up to $50.0 million in total over a sixteen quarter period. As a result~~Preferred Units 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 forOperating Partnership

On the ~~three months ended October 31, 2020,~~Effective Date, the operating partnership and the general partner ~~expects that this covenant will continue~~(in its capacity as the general partner of operating partnership) entered into an Investment Agreement (the “Investment Agreement”) with certain purchasers named therein, pursuant to ~~prohibit Ferrellgas Partners~~which, on the Effective Date, the operating partnership issued and sold to such purchasers an aggregate of 700,000 Senior Preferred Units (the “Preferred Units”), having an aggregate initial liquidation preference of $700.0 million. The purchase price per Preferred Unit was $1,000 less a 3.0% purchase price discount, for an aggregate purchase price of $679.0 million.

The operating partnership received net proceeds from ~~making common unit distributions unless~~the issuance and until the outstanding notes of Ferrellgas Partners due 2020 are restructured, refinanced or otherwise satisfied. While there can be no assurance of success, as part of our debt and interest expense reduction strategy, we are presently considering potential solutions to address the maturitysale of the ~~outstanding notes~~Preferred Units of ~~Ferrellgas Partners due June 15, 2020, as well as~~approximately $651.8 million, after deducting the ~~upcoming maturity~~purchase price discount and certain expenses. The operating partnership used such net proceeds, together with the net proceeds of the issuance and sale of the 2026 Notes and the 2029 Notes (as defined and described below) and cash on hand, (i) to redeem (or satisfy and discharge and subsequently redeem) all of the operating partnership’s previously issued and outstanding senior notes, as described below, and (ii) to repay all outstanding obligations under the operating partnership’s then-existing accounts receivable securitization facility in connection with the termination of that facility, as described below. See Note G – Preferred units for additional discussion.

Issuance of Senior Unsecured Notes of the Operating Partnership

On the Effective Date, two wholly-owned subsidiaries of the operating partnership (the “Escrow Issuers”) issued $650.0 million aggregate principal amount of 5.375% senior notes due 2026 (the “2026 Notes”) and $825.0 million aggregate principal amount of 5.875% senior notes due 2029 (the “2029 Notes”), in each case, at an offering price equal to 100% of the principal amount thereof. On the Effective Date and immediately after the issuance of the 2026 Notes and the 2029 Notes by the Escrow Issuers, (i) the Escrow Issuers were merged into the operating partnership and Ferrellgas ~~L.P.’s $500.0~~Finance Corp., respectively, and the operating partnership and Ferrellgas Finance Corp. assumed the obligations of the Escrow Issuers as co-issuers of the 2026 Notes and the 2029 Notes, and (ii) the general partner and certain subsidiaries of the operating partnership guaranteed the 2026 Notes and the 2029 Notes.

Redemption of Previously Issued Senior Notes of the Operating Partnership

Prior to the Effective Date, the operating partnership delivered notices of redemption of all its previously issued and outstanding 10.00% senior secured notes due 2025 (the “2025 Notes”), 6.50% senior unsecured notes due ~~May 1, 2021. The potential solutions include, among others, restructuring, refinancing or~~2021 (the “2021 Notes”), 6.75% senior unsecured notes due 2022 (the “2022 Notes”) and 6.75% senior unsecured notes due 2023 (the “2023 Notes”), in the aggregate combined principal amount for all such notes of $2,175.0 million, pursuant the terms of the indentures governing those notes, with a ~~transaction to exchange new notes~~redemption date of March 30, 2021 for ~~some or~~the 2025 Notes and April 5, 2021 for the 2021 Notes, the 2022 Notes and the 2023 Notes.

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On the Effective Date, the operating partnership redeemed all of ~~these notes.~~

~~Ferrellgas, L.P.,~~the issued and outstanding 2025 Notes. Also on the Effective Date, the operating partnership

~~Similar to the indenture governing the outstanding notes of Ferrellgas Partners,~~ (i) satisfied and discharged the indentures governing the ~~outstanding~~2021 Notes, the 2022 Notes and the 2023 Notes by irrevocably depositing with the applicable trustees under such indentures funds in an amount sufficient to pay the redemption price for all of such notes on April 5, 2021 and (ii) delivered irrevocable instructions directing the applicable trustees to apply such funds to the redemption of such notes on April 5, 2021. As a result, as of the operating partnership contain covenants that restrict the ability of the operating partnership to make certain restricted payments, including distributions to Ferrellgas Partners. Under these covenants inEffective Date, the indentures governing the ~~operating partnership’s unsecured notes, subject~~2021 Notes, the 2022 Notes and the 2023 Notes ceased to be of further effect (except as to certain expressly surviving rights), and all of the issued and outstanding 2021 Notes, 2022 Notes and 2023 Notes were redeemed on April 5, 2021.

The aggregate redemption price for the 2021 Notes, the 2022 Notes, the 2023 Notes and the 2025 Notes was approximately $2,320.9 million, consisting of principal, redemption premium (in the case of the 2023 Notes and the 2025 Notes) and accrued and unpaid interest to the ~~limited exceptions described below,~~applicable redemption date. See Note F – Debt for additional discussion.

Credit Agreement

On the Effective Date, 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~~general partner and certain ~~specified items) is at least 1.75x, on a pro forma basis giving effect to the restricted payment and, if~~

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~~applicable, certain other specified events. As of October 31, 2020, the operating partnership’s consolidated fixed charge coverage ratio was 1.65x.~~

Under the covenants in the indentures governing the operating partnership’s unsecured notes, if the consolidated fixed charge coverage ratio is below 1.75x, the operating partnership may still make restricted payments in limited amounts determined under the indentures governing the operating partnership’s unsecured notes. The distributions made by the operating partnership on June 15, 2019 and December 15, 2019 for payment of interest on Ferrellgas Partners’ unsecured senior notes due June 2020 were made from capacity under this limited exception to the ratio requirement under the indentures governing the operating partnership’s unsecured notes.

The indenture governing the operating partnership’s senior secured first lien notes due 2025 contains a similar but, in some respects, different restricted payments covenant. The covenant in the secured notes indenture provides for the same 1.75x consolidated fixed charge coverage ratio test as the unsecured notes indentures and a limited exception when that ratio is below 1.75x. In addition, the secured notes indenture also provides that, subject to a separate limited exception, described below, the operating partnership generally may not make a restricted payment unless the operating partnership’s consolidated leverage ratio (defined in the secured notes indenture generally to mean the ratio of consolidated total debt to trailing four quarters consolidated EBITDA, both as adjusted for certain, specified items) is no greater than 5.5x, on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events. The consolidated leverage ratio test applies regardless of whether the operating partnership’s consolidated fixed coverage ratio is at least 1.75x or below 1.75x. As of October 31, 2020, the operating partnership’s consolidated leverage ratio was substantially in excess of 5.5x. Additionally, the secured notes indenture provides for restricted payments under its limited exception to the consolidated fixed charge coverage ratio test that is less than the capacity available under the similar exception in the unsecured notes indentures. However, the secured notes indenture contains a separate exception to both the consolidated fixed charge coverage ratio test and the consolidated leverage ratio test that can be utilized to make certain specified restricted payments in a limited amount when the operating partnership does not meet either the consolidated fixed charge coverage ratio test or the consolidated leverage ratio test. This separate exception under the secured notes indenture currently has capacity for such specified restricted payments that is substantially the same as the capacity under the most restrictive of the operating partnership’s ~~unsecured notes indentures.~~

~~As described above, Ferrellgas Partners’ unsecured notes due 2020 matured on June 15, 2020, and the outstanding~~subsidiaries entered into a Credit Agreement, which provides for a four-year revolving credit facility in an aggregate principal amount of ~~those notes was due~~up to ~~be paid on that date, together with accrued interest~~$350.0 million, including a sublimit not to exceed $225.0 million for the ~~maturity date. Although~~issuance of letters of credit for a period of 60 days after March 30, 2021, reducing to $200.0 million thereafter. See Note F – Debt for additional discussion.

Termination of Accounts Receivable Securitization Facility

On the Effective Date, the operating partnership ~~has some capacity to make distributions~~and its receivables subsidiary repaid all of the outstanding obligations and fees under the ~~operating partnership’s unsecured~~then-existing accounts receivable securitization facility and ~~secured~~terminated that facility. See Note E – Accounts and notes ~~indentures, this capacity will not allow~~receivable, net for additional discussion.

Amended Partnership Agreements of Ferrellgas Partners and the ~~operating partnership~~Operating Partnership

On the Effective Date, the general partner executed the Sixth Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners, L.P. (the “Amended Ferrellgas Partners LPA”), which amended and restated in its entirety the Fifth Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners, L.P. Among other matters, the Amended Ferrellgas Partners LPA provided for the restructuring of Ferrellgas Partners in accordance with the Plan, including (i) effecting a reverse unit split of Ferrellgas Partners’ then-outstanding common units pursuant to ~~make distributions~~which the holders of the common units received one Class A Unit for every twenty common units held, and (ii) providing for the issuance of Class B Units to the holders of the Ferrellgas Partners Notes in exchange for such holders’ contribution of the Ferrellgas Partners Notes as a capital contribution to Ferrellgas Partners ~~sufficient to pay the principal~~and in satisfaction of ~~and accrued interest on Ferrellgas Partners’ unsecured senior notes due 2020 that was due at the maturity of those notes. Additionally, the restrictions~~such holders’ claims in ~~these indentures currently limit the ability~~respect of the ~~operating partnership to make distributions to~~ Ferrellgas Partners ~~to enable it to pay cash distributions to its unitholders.~~Notes. See Note H – Equity for additional discussion.

~~Debt~~Also on the Effective Date, the general partner executed (i) the Fifth Amended and ~~interest expense reduction strategy~~

~~We continue to pursue a strategy to reduce our debt and interest expense. Opportunities include the generation~~Restated Agreement of additional cash flows through accretive acquisitions, continued restructuring or refinancing of 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.

Ferrellgas Partners has $357.0 million in unsecured notes due June 15, 2020, which Ferrellgas Partners failed to repay, 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 flowsLimited Partnership of Ferrellgas, L.P. ~~The ability~~(the “Amended OpCo LPA”), which amended and restated in its entirety the Fourth Amended and Restated Agreement of Limited Partnership of Ferrellgas ~~Partners~~L.P., and (ii) a First Amendment to ~~restructure or refinance these notes is uncertain considering~~ the ~~level~~Amended OpCo LPA (the “OpCo LPA First Amendment”), which sets forth the preferences, rights, privileges and other terms of ~~other outstanding indebtedness.~~the Preferred Units.

~~Distributions~~

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~~distributions unless and until the outstanding notes of Ferrellgas Partners due 2020 are restructured, refinanced or otherwise satisfied.~~

How We Evaluate Our Operations

We evaluate our overall business performance based primarily on 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. For the definition of Adjusted EBITDA and 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 2020, 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,

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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 retail 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 2021 and 2022 sales commitments and, as of ~~October 31, 2020,~~April 30, 2021, we have experienced net mark-to-market gains of approximately ~~$5.6~~$32.2 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 current liabilities,” "Other liabilities" and “Accumulated other comprehensive ~~loss,~~income,” 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 are expected to be offset by decreased margins on propane sales commitments that qualify for the normal purchase normal sale exception. At ~~October 31, 2020,~~April 30, 2021, we estimate ~~92%~~62% 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:

Executive Overview

For the three months ended ~~October 31,~~April 30, 2021 and 2020

Weather in the more highly concentrated geographic areas we serve for the three months ended April 30, 2021 was approximately 3% colder than normal, and ~~2019~~8% colder than the prior year period. A sustained and widespread cooler weather pattern during the month of February where average temperatures were 15% colder than normal and 18% colder than February 2020 contributed to an increase in heat-related demand and volumes sold. We estimate that this colder weather increased retail gallons compared to the prior year.

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During the three months ended ~~October 31, 2020,~~April 30, 2021, we recognized a net loss attributable to Ferrellgas Partners, L.P. of ~~$46.1~~$66.8 million, compared to a net loss attributable to Ferrellgas Partners, L.P. of ~~$45.3~~$15.4 million during the three months ended ~~October 31, 2019.~~April 30, 2020. This ~~slight increase~~increased loss reflects ~~an $8.5~~a $72.5 million increase in ~~interest expense,~~“Loss on extinguishment of debt” and $9.0 million of “Reorganization items, net” incurred only in fiscal 2021, partially offset by ~~an $7.1~~a $28.2 million increase in ~~operating income. Operating income increased~~“Gross margin – Propane and other gas liquid sales”.

Interest expense decreased $3.5 million primarily due to a ~~$4.1 million increase in gross margin and a $2.1~~$7.7 million decrease in ~~operating, general and administrative expenses. Interest expense increased primarily due to~~interest recognized on the Ferrellgas Partner Notes, partially offset by the following April 2020 transactions: net additional borrowings ~~incurred in April 2020~~ related to the refinancing of our terminated ~~Senior Secured Credit Facility~~senior secured credit facility with the issuance of ~~the~~ $700.0 million principal amount of ~~notes due~~the 2025 Notes and, to a lesser extent, increased interest rates on the ~~new notes.~~2025 Notes.

Distributable cash flow ~~shortage decreased slightly~~excess increased to ~~$21.8~~$68.9 million in the current period from ~~$22.7~~$42.0 million in the prior year period, primarily due to a ~~$8.8~~$26.9 million increase to our Adjusted EBITDA, and by a ~~$1.3~~$5.7 million decrease in our ~~maintenance capital expenditures,~~net cash interest expense.

For the nine months ended April 30, 2021 and 2020

Weather in the more highly concentrated geographic areas we serve for the nine months ended April 30, 2021 was approximately 2% warmer than normal, and 2% colder than the prior year period. We believe that this colder weather slightly increased retail gallons compared to the prior year.

During the nine months ended April 30, 2021, we recognized net loss attributable to Ferrellgas Partners, L.P. of $49.6 million, compared to net loss attributable to Ferrellgas Partners, L.P. of $12.5 million during the nine months ended April 30, 2020. This increased loss reflects a $72.5 million increase in “Loss on extinguishment of debt”, a $12.3 million increase in “General and administrative expense” and $10.2 million of “Reorganization items, net” incurred only in fiscal 2021, partially offset by a ~~$9.1~~$42.5 million increase in “Gross margin – Propane and other gas liquid sales” and a $15.4 million decrease in “Operating expenses – personnel, vehicle, plant and other”. “General and administrative expense” reflect the effects of legal fees and settlement related to non-core businesses of $8.6 million and $5.9 million during fiscal 2021 and fiscal 2020, respectively.

Interest expense increased $10.1 million primarily due to the following April 2020 transactions: net additional borrowings related to the refinancing of our terminated senior secured credit facility with the issuance of $700.0 million principal amount of the 2025 Notes and, to a lesser extent, increased interest rates on the 2025 Notes, partially offset by an $11.6 million decrease in interest recognized on the Ferrellgas Partners Notes.

Distributable cash flow excess increased to $134.1 million in the current period from $91.3 million in the prior year period, primarily due to a $55.2 million increase to our Adjusted EBITDA, partially offset by an $8.4 million increase in our net cash interest expense.

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Consolidated Results of Operations

Three months ended October 31,

(amounts in thousands)

2020

2019

Total revenues

$
300,894

$
293,214

Total cost of sales

141,294

137,709

Operating expense

109,027

114,543

Depreciation and amortization expense

21,390

19,219

General and administrative expense

13,080

9,695

Equipment lease expense

6,830

8,388

Non-cash employee stock ownership plan compensation charge

708

795

Loss on asset sales and disposals

813

2,235

Operating income

7,752

630

Interest expense

(54,226)

(45,697)

Other income (expense), net

108

(132)

Loss before income taxes

(46,366)

(45,199)

Income tax expense

87

518

Net loss

(46,453)

(45,717)

Net loss attributable to noncontrolling interest

(391)

(373)

Net loss attributable to Ferrellgas Partners, L.P.

(46,062)

(45,344)

Less: General partner's interest in net loss

(461)

(453)

Common unitholders' interest in net loss

$
(45,601)

$
(44,891)


	Three months ended April 30,				Nine months ended April 30,
(amounts in thousands)	2021		2020		2021		2020
Total revenues	$	564,730	$	412,130	$	1,419,184	$	1,216,177

Total cost of sales		301,371		179,005		716,946		557,910

Operating expense		124,624		121,558		348,898		364,334
Depreciation and amortization expense		21,281		20,366		63,920		59,380
General and administrative expense		15,205		12,560		48,760		36,447
Equipment lease expense		6,770		8,075		20,462		24,724
Non-cash employee stock ownership plan compensation charge		811		757		2,281		2,182
Loss on asset sales and disposals		1,345		1,859		2,238		6,242
Operating income		93,323		67,950		215,679		164,958
Interest expense		(42,189)		(45,703)		(149,010)		(138,948)
Loss on extinguishment of debt		(109,922)		(37,399)		(109,922)		(37,399)
Other income (expense), net		553		(158)		4,169		(214)
Reorganization expense - professional fees		(9,007)		—		(10,207)		—
Loss before income taxes		(67,242)		(15,310)		(49,291)		(11,603)
Income tax expense		193		161		606		794
Net loss		(67,435)		(15,471)		(49,897)		(12,397)
Net loss attributable to noncontrolling interest		(641)		(78)		(308)		133
Net loss attributable to Ferrellgas Partners, L.P.		(66,794)		(15,393)		(49,589)		(12,530)
Distribution to preferred unitholders		8,011		—		8,011		—
Less: General partner's interest in net loss		(748)		(154)		(576)		(125)
Class A unitholders' interest in net loss	$	(74,057)	$	(15,239)	$	(57,024)	$	(12,405)

Non-GAAP Financial Measures

In this Quarterly Report we present the following Non-GAAP financial measures: Adjusted EBITDA, Distributable cash flow attributable to equity investors, Distributable cash flow attributable to preferred and common unitholders, and Distributable cash flow excess.

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management uses, adjusted for items management believes 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 comparable to Adjusted EBITDA or similarly titled measurements used by other companies. Items added into our calculation of Adjusted EBITDA that will not occur on a continuing basis may have associated cash payments. This method of calculating Adjusted EBITDA should be viewed in conjunction with measurements that are computed in accordance with GAAP.

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~~Distributable Cash Flow Attributable to Equity Investors~~Adjusted EBITDA. ~~Distributable cash flow attributable to equity investors~~Adjusted EBITDA for Ferrellgas Partners is calculated as ~~Adjusted EBITDA minus~~ net ~~cash~~loss attributable to Ferrellgas Partners, L.P., plus the sum of the following: income tax expense, interest expense, ~~maintenance capital expenditures~~depreciation and ~~cash paid~~amortization expense, distribution to preferred unitholders, non-cash employee stock ownership plan compensation charge, loss on extinguishment of debt, loss on asset sales and disposals, other income (expense), net, reorganization expense – professional fees, severance costs, legal fees and settlements related to non-core businesses, provision for ~~taxes, plus proceeds from certain asset sales. Management considers distributable cash flow~~doubtful accounts related to non-core businesses, lease accounting standard adjustment and other and net loss attributable to ~~equity~~noncontrolling interest. Management believes the presentation of this measure is relevant and useful because it allows investors ~~a meaningful measure of~~to view the partnership’s ~~ability~~performance in a manner similar to ~~declare~~the method management uses, adjusted for items management believes make it easier to compare its results with other companies that have different financing and ~~pay quarterly distributions to equity investors. Distributable cash flow attributable to equity investors, as management defines it,~~capital structures. This method of calculating Adjusted EBITDA may not be comparable to ~~distributable cash flow attributable to equity investors~~Adjusted EBITDA or similarly titled measurements used by other companies. Items added into our calculation of ~~distributable cash flow attributable to equity investors~~Adjusted EBITDA that will not occur on a continuing basis may have associated cash payments. ~~Distributable cash flow attributable to equity investors~~This method of calculating Adjusted EBITDA 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 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 companies. 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 should be viewed in conjunction with measurements that are computed in accordance with GAAP.

~~Distributable Cash Flow Excess (Shortage)~~. 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 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 accounts receivable securitization facility or, previously, under our terminated Senior Secured Credit 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 companies. 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.

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The following table reconciles Adjusted EBITDA, Distributable cash flow attributable to equity investors, Distributable cash flow attributable to common unitholders and Distributable cash flow excess (shortage) to Net loss attributable to Ferrellgas Partners, L.P., the most directly comparable GAAP measure, for the three and months ended October 31, 2020 and 2019:

Three months ended October 31,
(amounts in thousands)

2020

2019
Net loss attributable to Ferrellgas Partners, L.P.

$
(46,062)

$
(45,344)
Income tax expense

87

518
Interest expense

54,226

45,697
Depreciation and amortization expense

21,390

19,219
EBITDA

29,641

20,090
Non-cash employee stock ownership plan compensation charge

708

795
Loss on asset sales and disposals

813

2,235
Other income (expense), net

��
(108)

132
Legal fees and settlements related to non-core businesses

2,508

2,043
Severance costs

684

—
Lease accounting standard adjustment and other

—

170
Net loss attributable to noncontrolling interest

(391)

(373)
Adjusted EBITDA

33,855

25,092
Net cash interest expense (a)

(51,716)

(42,583)
Maintenance capital expenditures (b)

(5,177)

(6,467)
Cash paid for income taxes

(35)

—
Proceeds from certain asset sales

700

835
Distributable cash flow attributable to equity investors

(22,373)

(23,123)
Distributable cash flow attributable to general partner and non-controlling interest

575

462
Distributable cash flow attributable to common unitholders

(21,798)

(22,661)
Less: Distributions paid to common unitholders

—

—
Distributable cash flow shortage

$
(21,798)

$
(22,661)

~~(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, and may include the purchase of assets that are typically leased.~~

~~Table of Contents~~

~~Operating Results for the three months ended October 31, 2020 and 2019~~

~~The following table summarizes propane sales volumes and Adjusted EBITDA results for the periods indicated:~~

2020

2019

Increase (Decrease)

As of October 31,

Retail customers

706,718

696,592

10,126

1
%
Tank exchange selling locations

62,226

55,952

6,274

11
%

(amounts in thousands)

Three months ended October 31,

Propane sales volumes (gallons):









Retail - Sales to End Users

118,018

129,901

(11,883)

(9)
%
Wholesale - Sales to Resellers

49,590

50,039

(449)

(1)
%

167,608

179,940

(12,332)

(7)
%
Revenues -









Propane and other gas liquids sales:









Retail - Sales to End Users

$
174,645

$
180,417

$
(5,772)

(3)
%
Wholesale - Sales to Resellers

102,612

82,704

19,908

24
%
Other Gas Sales (a)

3,792

10,264

(6,472)

(63)
%
Other (b)

19,845

19,829

16

0
%
Propane and related equipment revenues

$
300,894

$
293,214

$
7,680

3
%









Gross Margin -









Propane and other gas liquids sales gross margin: (c)









Retail - Sales to End Users (a)

$
90,734

$
97,936

$
(7,202)

(7)
%
Wholesale - Sales to Resellers (a)

52,688

41,421

11,267

27
%
Other (b)

16,178

16,148

30

0
%
Propane and related equipment gross profit

$
159,600

$
155,505

$
4,095

3
%









Operating, general and administrative expense (d)

$
122,107

$
124,238

$
(2,131)

(2)
%
Operating expense - equipment lease expense

6,830

8,388

(1,558)

(19)
%









Operating income

$
7,752

$
630

$
7,122

NM

Depreciation and amortization expense

21,390

19,219

2,171

11
%
Non-cash employee stock ownership plan compensation charge

708

795

(87)

(11)
%
Loss on asset sales and disposals

813

2,235

(1,422)

(64)
%
Legal fees and settlements related to non-core businesses

2,508

2,043

465

23
%
Severance costs

684

—

684

NM

Lease accounting standard adjustment and other (e)

—

170

(170)

NM

Adjusted EBITDA

$
33,855

$
25,092

$
8,763

35
%

~~NM – Not meaningful~~

~~(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.~~

~~(b)~~

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

~~(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 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.

~~(e)~~

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

~~Table of Contents~~

Propane sales volumes during the three months ended October 31, 2020 decreased 7%, or 12.3 million gallons, from the prior year period due to decreased sales volumes to retail customers. The decrease in propane sales volumes to retail customers was primarily due to the implementation of strategic initiatives that resulted in significant operating expense savings, but also resulted in fewer gallons delivered in the current period. These initiatives focus on more efficient deliveries that increase average gallons per stop but are not intended to impact gallons over time. Tank exchange gallons (which are classified as a “wholesale – sales to reseller” transaction) increased 27% due to increased residential demand for tank exchanges in connection with the change in customer usage, as well as increased sales of spare cylinder tanks, both influenced by the COVID-19 environment. This increase was offset by a 29% decline in volumes of bulk propane sold to our wholesale customers primarily due to the widespread slowdown of the economy due to COVID-19.

Our wholesale sales price per gallon partially correlates to the change in the wholesale market price of propane. The wholesale market price at major supply points in Mt. Belvieu, Texas during the three months ended October 31, 2020 averaged 16% more than the prior year period, while at the Conway, Kansas major supply point prices averaged 26% more than the prior year period. The wholesale market price at Mt. Belvieu, Texas averaged $0.51 and $0.44 per gallon during the three months ended October 31, 2020 and 2019, respectively, while the wholesale market price at Conway, Kansas averaged $0.48 and $0.38 per gallon during the three months ended October 31, 2020 and 2019, respectively. This increase in the wholesale cost of propane contributed to our increase in sales price per gallon and therefore revenues.

~~Revenues~~

Retail sales decreased $5.8 million compared to the prior year period. This decrease resulted from a $16.5 million decrease in sales volumes, partially offset by a $10.7 million increase in sales price per gallon, both as discussed above.

~~Wholesale sales increased $19.9 million compared to the prior year period. The increase in sales was primarily due to the increases in tank exchange sales volumes as discussed above.~~

~~Other gas sales decreased $6.5 million compared to the prior year period primarily due to decreased gallon sales for inventory management purposes.~~

~~Gross margin - Propane and other gas liquids sales~~

Gross margin increased $4.1 million primarily due to the increase in increased tank exchange sales volumes and to a lesser extent increased gross margin per gallon, partially offset by the decreased volumes sales, each as discussed above. The $11.3 million increase in wholesale gross margin primarily relates to increased tank exchange sales volumes, as discussed above and to a lesser extent increased gross margin per gallon due to the change in sales mix due to increased spare cylinder sales. The decrease in retail gross margin of $7.2 million resulted primarily from a $9.0 million decrease in sales volumes, as discussed above, partially offset by a $1.8 million increase in gross margin per gallon.

~~Operating income~~

Operating income increased $7.1 million primarily due to a $4.1 million increase in "Gross margin - Propane and other gas liquid sales", as discussed above, and a $2.1 million decrease in “Operating, general and administrative expense”. “Operating, general and administrative expense” decreased due to a $5.5 million decrease in “Operating expense – personnel, vehicle, plant and other”, partially offset by a $3.4 million increase in “General and administrative expense”. “Operating expense – personnel, vehicle, plant and other” decreased primarily due to a $3.6 million decrease in vehicle fuel and other vehicle costs, $3.1 million decrease in field personnel costs and $1.8 million in decreased plant and office costs, partially offset by a $2.9 million increase in general liability and workers compensation costs. “General and administrative expense” increased primarily due to a $3.2 million increase in legal costs.

Adjusted EBITDA. Adjusted EBITDA for Ferrellgas Partners is calculated as net loss attributable to Ferrellgas Partners, L.P., plus the sum of the following: income tax expense, interest expense, depreciation and amortization expense, distribution to preferred unitholders, non-cash employee stock ownership plan compensation charge, loss on extinguishment of debt, loss on asset sales and disposals, other income (expense), net, reorganization expense – professional fees, severance costs, legal fees and settlements related to non-core businesses, provision for doubtful accounts related to non-core businesses, lease accounting standard adjustment and other 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 performance in a manner similar to the method management uses, adjusted for items management believes 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 comparable to Adjusted EBITDA or similarly titled measurements used by other companies. Items added into our calculation of Adjusted EBITDA that will not occur on a continuing basis may have associated cash payments. This method of calculating Adjusted EBITDA should be viewed in conjunction with measurements that are computed in accordance with GAAP.

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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 income 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, including holders of the operating partnership’s Preferred Units. 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 companies. 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 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 distributions accrued or paid on the Preferred Units and distributable cash flow attributable to general partner and noncontrolling interest. Management considers 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 companies. 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 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 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 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 companies. 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.

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The following table reconciles Adjusted EBITDA, Distributable cash flow attributable to equity investors, 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 and nine months ended April 30, 2021 and 2020:


	Three months ended April 30,				Nine months ended April 30,
(amounts in thousands)	2021		2020		2021		2020
Net loss attributable to Ferrellgas Partners, L.P.	$	(66,794)	$	(15,393)	$	(49,589)	$	(12,530)
Income tax expense		193		161		606		794
Interest expense		42,189		45,703		149,010		138,948
Depreciation and amortization expense		21,281		20,366		63,920		59,380
EBITDA		(3,131)		50,837		163,947		186,592
Non-cash employee stock ownership plan compensation charge		811		757		2,281		2,182
Loss on extinguishment of debt		109,922		37,399		109,922		37,399
Loss on asset sales and disposals		1,345		1,859		2,238		6,242
Other income (expense), net		(553)		158		(4,169)		214
Reorganization expense - professional fees		9,007		—		10,207		—
Severance costs		—		—		1,761		—
Legal fees and settlements related to non-core businesses		2,436		1,325		8,572		5,887
Recovery of doubtful accounts related to non-core businesses		—		—		(500)		—
Lease accounting standard adjustment and other		—		80		—		134
Net loss attributable to noncontrolling interest		(641)		(78)		(308)		133
Adjusted EBITDA		119,196		92,337		293,951		238,783
Net cash interest expense (a)		(37,757)		(43,442)		(137,716)		(129,341)
Maintenance capital expenditures (b)		(4,058)		(6,803)		(14,517)		(18,700)
Cash paid for income taxes		(133)		(49)		(438)		(50)
Proceeds from certain asset sales		1,270		851		3,707		2,510
Distributable cash flow attributable to equity investors		78,518		42,894		144,987		93,202
Less: Distributions accrued or paid to preferred unitholders		8,011		—		8,011		—
Distributable cash flow attributable to general partner and non-controlling interest		1,571		(858)		2,900		(1,864)
Distributable cash flow attributable to Class A and B unitholders		68,936		42,036		134,076		91,338
Less: Distributions accrued or paid to Class A and B unitholders		—		—		—		—
Distributable cash flow excess	$	68,936	$	42,036	$	134,076	$	91,338

(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 terminated accounts receivable securitization facility.

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

Table of Contents

Operating Results for the three months ended April 30, 2021 and 2020

The following table summarizes propane sales volumes and Adjusted EBITDA results for the periods indicated:


	2021		2020		Increase (Decrease)
As of April 30,
Retail customers		721,562		727,863		(6,301)	(1)	%
Tank exchange selling locations		62,372		58,245		4,127	7	%

(amounts in thousands)
Three months ended April 30,
Propane sales volumes (gallons):
Retail - Sales to End Users		200,028		186,175		13,853	7	%
Wholesale - Sales to Resellers		60,128		60,660		(532)	(1)	%
		260,156		246,835		13,321	5	%
Revenues -
Propane and other gas liquids sales:
Retail - Sales to End Users	$	392,838	$	286,163	$	106,675	37	%
Wholesale - Sales to Resellers		140,015		103,686		36,329	35	%
Other Gas Sales (a)		9,183		1,896		7,287	384	%
Other (b)		22,694		20,385		2,309	11	%
Propane and related equipment revenues	$	564,730	$	412,130	$	152,600	37	%

Gross Margin -
Propane and other gas liquids sales gross margin: (c)
Retail - Sales to End Users (a)	$	181,000	$	163,038	$	17,962	11	%
Wholesale - Sales to Resellers (a)		62,650		52,442		10,208	19	%
Other (b)		19,709		17,645		2,064	12	%
Propane and related equipment gross profit	$	263,359	$	233,125	$	30,234	13	%

Operating, general and administrative expense (d)	$	139,829	$	134,118	$	5,711	4	%
Operating expense - equipment lease expense		6,770		8,075		(1,305)	(16)	%

Operating income	$	93,323	$	67,950	$	25,373	37	%

Depreciation and amortization expense		21,281		20,366		915	4	%
Non-cash employee stock ownership plan compensation charge		811		757		54	7	%
Loss on asset sales and disposals		1,345		1,859		(514)	(28)	%
Legal fees and settlements related to non-core businesses		2,436		1,325		1,111	84	%
Lease accounting standard adjustment and other (e)		—		80		(80)	NM
Adjusted EBITDA	$	119,196	$	92,337	$	26,859	29	%

NM – Not meaningful

(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.

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

(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 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.

(e)	Lease accounting standard adjustment and other reflects the additional expense recognized in excess of cash paid.

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Propane sales volumes during the three months ended April 30, 2021 increased 5%, or 13.3 million gallons, from the prior year period due to increased sales volumes to retail customers and to a lesser extent increased sales volumes to tank exchange customers, tempered by the impacts of industrial commercial downtime due to closures related to the extreme cold felt in February 2021. Weather in the more highly concentrated geographic areas we serve for the three months ended April 30, 2021 was approximately 3% colder than normal, and 8% colder than the prior year period. A sustained and widespread cooler weather pattern during the month of February where average temperatures were 15% colder than normal and 18% colder than February 2020 contributed to an increase in heat-related demand and volumes sold. We believe that this colder weather increased retail gallons compared to the prior year.

Our wholesale sales price per gallon partially correlates to the change in the wholesale market price of propane. The wholesale market price at major supply points in Mt. Belvieu, Texas during the three months ended April 30, 2021 averaged 162% more than the prior year period, while at the Conway, Kansas major supply point prices averaged 175% more than the prior year period. The wholesale market price at Mt. Belvieu, Texas averaged $0.89 and $0.34 per gallon during the three months ended April 30, 2021 and 2020, respectively, while the wholesale market price at Conway, Kansas averaged $0.88 and $0.32 per gallon during the three months ended April 30, 2021 and 2020, respectively. This increase in the wholesale cost of propane contributed to our increase in sales price per gallon and therefore revenues.

Revenues

Retail sales increased $106.7 million compared to the prior year period. This increase resulted from an $85.4 million increase in sales price per gallon and a $21.3 million increase in sales volume, both as discussed above.

Wholesale sales increased $36.3 million compared to the prior year period. The increase in sales was primarily due to an increase in sales price per gallon and the increases in tank exchange sales volumes, both as discussed above.

Other gas sales increased $7.3 million compared to the prior year period primarily due to an increase in sales price per gallon.

Other revenues increased $2.3 million compared to the prior year period primarily due to increased miscellaneous fees billed to customers and increased tank rental income.

Gross margin - Propane and other gas liquids sales

Gross margin increased $28.2 million primarily due to increased retail volumes, increased tank exchange sales volumes, both as discussed above, and increased retail gross margin per gallon. The $18.0 million increase in retail gross margin resulted primarily from a $12.2 million increase attributed to sales volumes, as discussed above, and a $5.8 million increase in gross margin per gallon. The $10.2 million increase in wholesale gross margin primarily relates to increased tank exchange sales volumes, as discussed above.

Gross margin - other

Gross margin increased $2.1 million compared to the prior year period primarily due to increased miscellaneous fees billed to customers and increased tank rental income.

Table of Contents

Operating income

Operating income increased $25.4 million primarily due to a $28.2 million increase in "Gross margin - Propane and other gas liquid sales", a $2.1 million increase in gross margin – other, both as discussed above, and a $1.3 million decrease in “Operating expense – equipment lease expense”, partially offset by a $5.7 million increase in “Operating, general and administrative expense”. “Operating expense – equipment lease expense” decreased due to our entering into more finance leases instead of operating leases, resulting in less lease expense and greater interest expense and amortization expense. “Operating, general and administrative expense” increased due to a $3.1 million increase in “Operating expense – personnel, vehicle, plant and other”, and a $2.6 million increase in “General and administrative expense”. “Operating expense – personnel, vehicle, plant and other” increased primarily due to a $2.2 million increase in field personnel costs, and a $1.1 million increase in vehicle fuel and other vehicle costs. “General and administrative expense” increased primarily due to a $1.5 million increase in legal costs and a $1.0 million increase in personnel incentives.

Adjusted EBITDA

Adjusted EBITDA increased ~~$8.8~~$26.9 million primarily due to a ~~$4.1~~$28.2 million increase in "Gross margin - Propane and other gas liquid sales", a $2.1 million increase in gross margin – other, both as discussed above, and a $1.3 million decrease in “Operating expense – equipment lease expense”, partially offset by a $4.7 million increase in “Operating, general and administrative expense”. “Operating, general and administrative expense” increased due to a $3.2 million increase in “Operating expense – personnel, vehicle, plant and other”, and a $1.5 million increase in “General and administrative expense”. “Operating expense – personnel, vehicle, plant and other” increased primarily due to a $2.2 million increase in field personnel costs and a $1.1 million increase in vehicle fuel and other vehicle costs. “General and administrative expense” increased primarily due to a $1.0 million increase in personnel incentives.

Table of Contents

Operating Results for the nine months ended April 30, 2021 and 2020


	2021		2020		Increase (Decrease)
As of April 30,
Retail customers		721,562		727,863		(6,301)	(1)	%
Tank exchange selling locations		62,372		58,245		4,127	7	%

(amounts in thousands)
Nine months ended April 30,
Propane sales volumes (gallons):
Retail - Sales to End Users		536,124		552,340		(16,216)	(3)	%
Wholesale - Sales to Resellers		176,970		179,695		(2,725)	(2)	%
		713,094		732,035		(18,941)	(3)	%
Revenues -
Propane and other gas liquids sales:
Retail - Sales to End Users	$	945,833	$	840,649	$	105,184	13	%
Wholesale - Sales to Resellers		381,357		291,445		89,912	31	%
Other Gas Sales (a)		24,329		18,283		6,046	33	%
Other (b)		67,665		65,800		1,865	3	%
Propane and related equipment revenues	$	1,419,184	$	1,216,177	$	203,007	17	%

Gross Margin -
Propane and other gas liquids sales gross margin: (c)
Retail - Sales to End Users (a)	$	464,343	$	459,198	$	5,145	1	%
Wholesale - Sales to Resellers (a)		180,386		143,043		37,343	26	%
Other (b)		57,509		56,026		1,483	3	%
Propane and related equipment gross profit	$	702,238	$	658,267	$	43,971	7	%

Operating, general and administrative expense (d)	$	397,658	$	400,781	$	(3,123)	(1)	%
Operating expense - equipment lease expense		20,462		24,724		(4,262)	(17)	%

Operating income	$	215,679	$	164,958	$	50,721	31	%

Depreciation and amortization expense		63,920		59,380		4,540	8	%
Non-cash employee stock ownership plan compensation charge		2,281		2,182		99	5	%
Loss on asset sales and disposals		2,238		6,242		(4,004)	(64)	%
Legal fees and settlements related to non-core businesses		8,572		5,887		2,685	46	%
Provision for doubtful accounts		(500)		—		(500)	NM
Severance costs		1,761		—		1,761	NM
Lease accounting standard adjustment and other (e)		—		134		(134)	NM
Adjusted EBITDA	$	293,951	$	238,783	$	55,168	23	%

NM – Not meaningful

(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.

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

(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 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.

(e)	Lease accounting standard adjustment and other reflects the additional expense recognized in excess of cash paid.

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Propane sales volumes during the nine months ended April 30, 2021 decreased 3%, or 18.9 million gallons, from the prior year period primarily due to decreased sales volumes to retail and wholesale customers, substantially offset by increased sales to tank exchange customers. Sales volumes to retail customers were impacted by a now recovering industrial commercial customer base and weak agriculture demand. Weather in the more highly concentrated geographic areas we serve for the nine months ended April 30, 2021 was approximately 2% warmer than normal, and 2% colder than the prior year period.

Our wholesale sales price per gallon partially correlates to the change in the wholesale market price of propane. The wholesale market price at major supply points in Mt. Belvieu, Texas during the nine months ended April 30, 2021 averaged 64% more than the prior year period, while at the Conway, Kansas major supply point prices averaged 76% more than the prior year period. The wholesale market price at Mt. Belvieu, Texas averaged $0.69 and $0.42 per gallon during the nine months ended April 30, 2021 and 2020, respectively, while the wholesale market price at Conway, Kansas averaged $0.67 and $0.38 per gallon during the nine months ended April 30, 2021 and 2020, respectively. This increase in the wholesale cost of propane contributed to our increase in sales price per gallon and therefore revenues.

Revenues

Retail sales increased $105.2 million compared to the prior year period. This increase resulted from a $129.9 million increase in sales price per gallon, partially offset by a $24.7 million decrease in sales volume, both as discussed above.

Wholesale sales increased $89.9 million compared to the prior year period. The increase in sales was primarily due to the increases in tank exchange sales volumes and an increase in sales price per gallon, both as discussed above.

Other gas sales increased $6.0 million compared to the prior year period primarily due to an increase in sales price per gallon.

Other revenues increased $1.9 million compared to the prior year period primarily due to increased miscellaneous fees billed to customers and increased tank rental income, partially offset by a $2.4 million one-time refund of federal fuel excise tax received in fiscal 2020 that was not repeated in fiscal 2021.

Gross margin - Propane and other gas liquids sales

Gross margin increased $42.4 million primarily due to increased tank exchange sales volumes and to a lesser extent increased retail gross margin per gallon, partially offset by the decreased other volumes sales, each as discussed above. The $37.3 million increase in wholesale gross margin primarily relates to increased tank exchange sales volumes. The $5.1 million increase in retail gross margin resulted primarily from a $18.6 million increase in gross margin per gallon, partially offset by a $13.5 million overall decrease in sales volume, as discussed above.

Gross margin - other

Gross margin decreased $1.5 million compared to the prior year period primarily due to increased miscellaneous fees billed to customers and increased tank rental income, partially offset by a $2.4 million one-time refund of federal fuel excise tax received in fiscal 2020 that was not repeated in fiscal 2021.

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Operating income

Operating income increased $50.7 million primarily due to a $42.4 million increase in "Gross margin - Propane and other gas liquid sales", as discussed above, a $4.3 million decrease in “Operating expense – equipment lease expense”, and a ~~$3.3~~$3.1 million decrease in “Operating, general and administrative expense”. “Operating expense – equipment lease expense” decreased due to our entering into more finance leases instead of operating leases, resulting in less lease expense and greater interest expense and amortization expense. “Operating, general and administrative expense” decreased due to a ~~$6.1~~$15.4 million decrease in “Operating expense – personnel, vehicle, plant and other”, partially offset by a ~~$2.8~~$12.3 million increase in “General and administrative expense”. “Operating expense – personnel, vehicle, plant and other” decreased primarily due to a ~~$3.6 million decrease in field~~

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~~personnel costs, a $3.6~~$5.3 million decrease in vehicle fuel and other vehicle costs, ~~and $1.8~~$3.0 million in decreased plant and office costs, a $2.8 million decrease in general insurance and workers compensation costs and a $2.7 million decrease in field personnel costs. “General and administrative expense” increased primarily due to a $6.6 million increase in legal costs and a $5.4 million increase in personnel incentives.

Adjusted EBITDA

Adjusted EBITDA increased $55.2 million primarily due to a $42.5 million increase in "Gross margin - Propane and other gas liquid sales", as discussed above, a $7.0 million decrease in “Operating, general and administrative expense”, and a $4.3 million decrease in “Operating expense – equipment lease expense”, as discussed above. “Operating, general and administrative expense” decreased due to a $16.3 million decrease in “Operating expense – personnel, vehicle, plant and other”, partially offset by a ~~$2.9~~$9.3 million increase in “General and administrative expense”. “Operating expense – personnel, vehicle, plant and other” decreased primarily due to a $5.3 million decrease in vehicle fuel and other vehicle costs, a $3.6 million decrease in field personnel costs, $3.0 million in decreased plant and office costs and a $2.8 million decrease in general ~~liability~~insurance and workers compensation costs. “General and administrative expense” increased primarily due to a ~~$2.7~~$5.4 million increase in personnel incentives and a $3.9 million increase in legal costs.

Liquidity and Capital Resources

General

Our primary sources of liquidity and capital resources are cash flows from operating activities, our ~~accounts receivable securitization facility~~Credit Facility and funds received from sales of debt and equity securities. As of ~~October 31, 2020,~~April 30, 2021, our total liquidity was ~~$228.6~~$423.1 million, which is comprised of ~~$202.6~~$211.3 million in unrestricted cash and ~~$26.0~~$211.8 million of availability under our ~~accounts receivable securitization facility.~~Credit Facility. These sources of liquidity and short term capital resources are intended to fund our working capital requirements, acquisitions and capital expenditures, and may be used to repay or redeem outstanding indebtedness to the extent permitted by the covenants under the indentures governing our outstanding senior notes, including the covenants described under the “Financial Covenants” subheading above.expenditures. As of ~~October 31, 2020,~~April 30, 2021, letters of credit outstanding totaled ~~$127.1~~$138.2 million. Our access to 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.

As of ~~October 31, 2020,~~April 30, 2021, we had ~~$96.9~~$11.5 million of restricted cash ~~which includes $79.4 million of pledged cash collateral~~ for ~~letters of credit outstanding, an $11.5 million~~a cash deposit made with the administrative agent under the senior secured credit facility that was terminated ~~Senior Secured Credit Facility, and $6.0 million of additional pledged collateral.~~in April 2020.

We believe that the liquidity available from cash flows from operating activities, unrestricted cash and the ~~accounts receivable securitization facility and proceeds from sales of debt and equity securities, combined with our debt and interest expense reduction initiatives,~~Credit Facility will be sufficient to meet our capital expenditure, working capital and letter of credit requirements. However, as discussed above, Ferrellgas Partners has $357.0 million in unsecured notes due June 15, 2020, which Ferrellgas Partners failed to repay, that are classified as current in its condensed consolidated financial statements. Additionally,requirements for the operating partnership has $500.0 million in unsecured notes due May 1, 2021, that are also classified as current in the condensed consolidated financial statements. Ferrellgas Partners’ ability to restructure, refinance or otherwise satisfy these notes is uncertain considering the level of other outstanding indebtedness. We have engaged Moelis & Company LLC as our financial advisor and the law firm of Squire Patton Boggs LLP to assist in our ongoing process to reduce existing debt and address our debt maturities.foreseeable future.

~~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 pursue a strategy to reduce our debt and interest expense. If we are unsuccessful with our strategy to reduce debt and interest expense, we 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;~~

●

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

●

~~an unexpected downturn in business operations;~~

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●

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

●

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

●

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

●

~~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 for the three months ended October 31, 2020, and the general partner expects that Ferrellgas Partners will continue to be prohibited from making common unit distributions unless and until the outstanding notes of Ferrellgas Partners due 2020 are restructured, refinanced or otherwise satisfied. Unless the indenture governing the outstanding notes due 2020 is amended or replaced, or Ferrellgas Partners’ consolidated fixed charge coverage ratio improves to at least 1.75x, this covenant will continue to restrict us from making common unit distributions.

Distributable Cash Flow

Distributable cash flow attributable to equity investors is reconciled to net earnings (loss) attributable to Ferrellgas Partners, L.P., the most directly comparable GAAP measure, in this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations under the subheading "Non-GAAP Financial 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, 2020~~April 30, 2021 to the twelve months ended ~~July~~January 31, ~~2020~~2021 is as follows (in thousands):


	Distributable		Cash reserves		Cash distributions			Distributable		Cash reserves		Cash distributions
	cash flow attributable		(deficiency) approved		paid to		DCF ratio	cash flow attributable		(deficiency) approved		accrued or paid to		DCF ratio
	to equity investors		by our General Partner		equity investors		(a) (b)	to equity investors		by our General Partner		equity investors		(a) (b)
Three months ended October 31, 2020	$	(22,373)	$	(22,373)	$	—
Nine months ended April 30, 2021								$	144,987	$	136,976	$	8,011	18.1
Fiscal 2020		63,702		63,544		158			63,702		63,544		158
Less: Three months ended October 31, 2019		(23,123)		(23,124)		1
Twelve months ended October 31, 2020	$	64,452	$	64,295	$	157	NM
Less: Nine months ended April 30, 2020									93,202		93,044		158
Twelve months ended April 30, 2021								$	115,487	$	107,476	$	8,011	14.4

Twelve months ended July 31, 2020		63,702		63,544		158	NM
Twelve months ended January 31, 2021									79,863		79,863		—	NM
Change	$	750	$	751	$	(1)	NM	$	35,624	$	27,613	$	8,011	4.5

(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.

For the twelve months ended ~~October 31, 2020,~~April 30, 2021, distributable cash flow attributable to equity investors increased ~~$0.8~~$35.6 million compared to the twelve months ended ~~July~~January 31, ~~2020.~~2021. We declared an $8.0 million quarterly distribution to Preferred Unitholders on April 30, 2021 and paid this distribution in May 2021. No cash distributions have been paid to our ~~common~~Class A unitholders since the three months ended October 31, 2018. Thus, cash reserves, which we utilize to meet future anticipated expenditures, increased by ~~$64.3~~$107.5 million during the twelve months ended ~~October 31, 2020,~~April 30, 2021, compared to an increase of ~~$63.5~~$79.9 million in the twelve months ended ~~July~~January 31, ~~2020.~~2021.

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.

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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.

Operating Activities

Ferrellgas Partners

Net cash ~~used in~~provided by operating activities was ~~$11.5~~$103.0 million for the ~~three~~nine months ended ~~October 31, 2020,~~April 30, 2021, compared to net cash provided by operating activities of ~~$7.1~~$115.8 million for the ~~three~~nine months ended ~~October 31, 2019.~~April 30, 2020. This decrease in cash provided by operating activities was primarily due to a ~~$20.7~~$52.8 million increase in working capital requirements, ~~and~~partially offset by a ~~$1.7~~$33.7 million ~~decrease~~increase in cash flow from operations and a $6.3 million inflow associated with other assets and other liabilities.

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The increase in working capital requirements for the nine months ended April 30, 2021 compared to the nine months ended April 30, 2020 was primarily due to an $45.7 million decrease in accrued interest expense related to the timing and nature of the restructuring transaction in March 2021 and the debt refinancing in April 2020, a $45.6 million increase in requirements for accounts and notes receivable due to rising propane prices in the quarter that was partially offset by slight decreases in volume of propane sold and a $12.3 million increase in requirements for inventory partially due to rising propane prices in the current period, partially offset by a ~~$3.8~~$39.2 million decrease in requirements for other current liabilities and a $16.3 million decrease in accounts payable.

The increase in cash flow from operations was primarily due to a $44.0 million increase in gross profit and a net decrease in “Operating expense – personnel, vehicle, plant and other” and “Operating expense – equipment lease expense” of $19.7 million, partially offset by a $12.3 million increase in “General and administrative expense”, a $10.2 million increase in “Reorganization items, net” and a $10.1 million increase in "Interest expense".

The operating partnership

Net cash provided by operating activities was $110.3 million for the nine months ended April 30, 2021, compared to net cash provided by operating activities of $131.3 million for the nine months ended April 30, 2020. This decrease in cash provided by operating activities was primarily due to a $62.0 million decrease in working capital requirements, partially offset by a $35.9 million increase in cash flow from operations and a $5.0 million inflow associated with other assets and other liabilities.

The increase in working capital requirements for the ~~three~~nine months ended ~~October 31, 2020~~April 30, 2021 compared to the ~~three~~nine months ended ~~October 31, 2019~~April 30, 2020 was primarily due to ~~a $19.3~~an $51.8 million decrease in accrued interest expense related to the timing and nature of the restructuring transaction in March 2021 and the debt refinancing in April 2020, a ~~$4.3~~$45.6 million increase in requirements for accounts and notes receivable due to rising propane prices in the ~~current~~ quarter that was partially offset by slight decreases in ~~the~~ volume of propane sold and a ~~$1.8~~$12.3 million increase in requirements for inventory partially due to rising propane prices in the current period, ~~and~~partially offset by a ~~$2.1~~$36.0 million ~~increase~~decrease in requirements for other current liabilities ~~partially offset by~~and a ~~$7.7~~$16.3 million decrease in ~~prepaid expenses and other current assets.~~

The decrease in cash flow from operations was primarily due to an $8.5 million increase in "Interest expense," as well as a $3.4 million increase in "General and administrative expense", partially offset by a net decrease in "Operating expense – personnel, vehicle, plant and other" and "Operating expense – equipment lease expense" of $7.1 million and a $4.1 million increase in gross profit.

~~The operating partnership~~

Net cash used in operating activities was $11.5 million for the three months ended October 31, 2020, compared to net cash provided by operating activities of $7.1 million for the three months ended October 31, 2019. This decrease in cash provided by operating activities was primarily due to a $20.7 million increase in working capital requirements and a $1.2 million decrease in cash flow from operations, partially offset by a $3.8 million inflow associated with other assets and other liabilities.accounts payable.

The increase in working capital requirements for the three months ended October 31, 2020 compared to the three months ended October 31, 2019 was primarily due to a $19.3 million decrease in accrued interest expense, a $4.3 million increase in requirements for accounts and notes receivable due to rising propane prices in the current quarter partially offset by decreases in the volume of propane sold, a $1.8 million increase in requirements for inventory partially due to rising propane prices in the current period, and a $2.1 million increase in requirements for other current liabilities, partially offset by a $7.6 million decrease in prepaid expenses and other current assets.

~~The decrease~~ in cash flow from operations was primarily due to a ~~$9.7~~$44.0 million increase in ~~"Interest expense," as well as a $3.4 million increase in "General~~gross profit and ~~administrative expense", partially offset by~~ a net decrease in ~~"Operating~~“Operating expense – personnel, vehicle, plant and ~~other"~~other” and ~~"Operating~~“Operating expense – equipment lease ~~expense"~~expense” of ~~$7.1~~$19.7 million, ~~and~~partially offset by a ~~$4.1~~$21.7 million increase in ~~gross profit.~~"Interest expense" and a $12.2 million increase in “General and administrative expense”.

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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.

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Net cash used in investing activities was ~~$18.0~~$47.0 million for the ~~three~~nine months ended ~~October 31, 2020,~~April 30, 2021, compared to net cash used in investing activities of ~~$34.7~~$76.2 million for the ~~three~~ nine months ended ~~October 31, 2019.~~April 30, 2020. This decrease in net cash used in investing activities was primarily due to a ~~$16.9~~$36.4 million decrease in “Cash payments to construct assets in connection with future lease transactions”, a $6.8 million decrease in “Capital expenditures” and a $6.4 million decrease in “Business acquisitions, net of cash acquired”, partially offset by a ~~$5.9~~$21.6 million decrease in “Cash receipts in connection with leased vehicles” ~~and a $1.3 million increase in “Capital expenditures”~~.

The ~~increase~~decrease in "Capital expenditures" was primarily due to a ~~slight increase~~decrease financing the construction of assets with cash, a decrease in maintenance capital expenditures, asand to a lesser extent a decrease in growth capital expenditures ~~remained flat~~ during the ~~three~~nine months ended ~~October 31,~~April 30, 2021 compared to the nine months ended April 30, 2020. The ~~slight increase~~decrease in both growth and maintenance capital expenditures was primarily ~~related~~due to ~~the purchase~~more effective use of equipment on hand. This was especially noticeable in tank ~~exchange plant equipment during the three months ended October 31, 2020.~~

and cylinders, but also had an impact in vehicles and storage facilities.

Due to the mature nature of our operations we do not anticipate significant fluctuations in maintenance capital 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.~~partnership, other than the $19.9 million term loan credit agreement with Ferrellgas Partners, L.P. See “Disclosures about Effects of Transactions with Related Parties” below for further discussion.

Financing Activities

Ferrellgas Partners

Net cash used in financing activities was ~~$4.7~~$166.9 million for the ~~three~~nine months ended ~~October 31, 2020,~~April 30, 2021, compared to net cash provided by financing activities of ~~$46.3~~$268.2 million for the ~~three~~nine months ended ~~October 31, 2019.~~April 30, 2020. This decrease in cash flow provided by financing activities was primarily due to a ~~$48.0~~$1,893.7 million ~~net decrease~~increase in ~~short-term borrowings,~~payments for settlement and early extinguishment of liabilities due to the redemption of the 2021 Notes, the 2022 Notes, the 2023 Notes and the 2025 Notes (as discussed further in Note F – Debt), a ~~$1.7~~$67.5 million increase in payments of redemption premiums related to those extinguishments of liabilities, a $16.8 million increase in cash paid for financing costs and a $4.3 million increase in cash payments for the principal portion of finance lease liabilities, ~~and~~partially offset by a ~~$1.2~~$771.3 million increase in ~~cash paid for financing costs.~~proceeds from the debt offering due to the issuance of the 2026 Notes and the 2029 Notes, a $670.4 million increase in proceeds from the sale of the Preferred Units, net of offering costs and issue discount and a $105.0 million net decrease in short-term borrowings in fiscal 2020 that was not repeated in fiscal 2021.

Letters of credit outstanding at ~~October 31, 2020~~April 30, 2021 and July 31, 2020 totaled ~~$127.1~~$138.2 million and $126.0 million, respectively, and were used to secure insurance arrangements, product purchases and commodity hedges. As of April 30, 2021, we had available borrowing capacity under our Credit Facility of $211.8 million, which included remaining available letter of credit capacity of $86.8 million. At ~~October 31, 2020 and~~ July 31, 2020, we did not have in place a credit facility providing for the issuance of letters of credit and had ~~$79.4 million and~~ $78.2 million of restricted cash pledged as cash collateral for letters of credit ~~outstanding, respectively.~~outstanding. Additionally, at ~~both October 31, 2020 and~~ July 31, 2020, we also issued letters of credit of $50.0 million by utilizing our liquidity available on the terminated accounts receivable securitization facility.

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Accounts receivable securitization facility

~~We utilize an accounts receivable securitization facility for~~On March 30, 2021, Ferrellgas terminated the purpose of providing additional short-term working capital funding, especially during the winter heating months. As part of this facility, we transfer an interest in a pool of our trade accounts receivable to Ferrellgas Receivables, LLC, a consolidated and wholly-owned, qualifying special purpose subsidiary, which in turn sells this interest to certain financial institutions. We remit daily to Ferrellgas Receivables, LLC funds collected on its pool of trade accounts receivables. Expenses associated with these 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 decreased $11.0 million, as we reduced our net funding to zero from this facility during the three months ended October 31, 2020 as compared to receiving net funding of $11.0 million from this facility during the three months ended October 31, 2019. As noted above, during the fourth quarter of fiscal 2020, we issued letters of credit of $50.0 million by utilizing our liquidity available on the accounts receivable securitization facility. These letters of credit remain outstanding.

~~Our utilization of~~agreement governing the accounts receivable securitization facility, ~~is limited~~initially dated as of January 19, 2012 and as subsequently amended from time to time (the “Accounts Receivables Facility”). In connection with the termination of the Accounts Receivables Facility, Ferrellgas repaid all of the outstanding obligations and fees thereunder.

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Distributions

Partnership distributions

Pursuant to the Amended Ferrellgas Partners LPA, distributions by Ferrellgas Partners to its partners are required to be made such that the ratio of (i) the amount of ~~accounts receivable that we are permitted~~distributions made to ~~securitize according~~holders of Class B Units to (ii) the ~~agreement governing our accounts receivable securitization facility (the “Purchase Agreement”). As our trade accounts receivable increase during~~amount of distributions made to holders of Class A Units and the ~~winter heating season, the facility permits us to~~general partner is not less than 6:1 until holders of Class B Units receive ~~greater proceeds as eligible trade accounts receivable increase, thereby providing additional cash for working capital needs. Specifically,~~distributions in the aggregate amount equaling $357.0 million (which was the outstanding principal amount of ~~proceeds we are able~~the Ferrellgas Partners Notes), upon receipt of which the operating partnership may elect to ~~receive~~convert the Class B Units (or under ~~the facility is equal to the lesser of (1) the balance of our eligible trade accounts receivable (reduced in~~ certain circumstances ~~based on~~ the ~~concentration of customers owing such accounts receivable) less specified reserve amounts and (2)~~Class B Units will automatically convert) to Class A Units at the ~~seasonally adjusted total commitments of~~applicable conversion rate described in the ~~purchasers under~~Amended Ferrellgas Partners LPA. See Note H – Equity for additional discussion.

Ferrellgas Partners does not intend to pay any distributions to Class B Unitholders, Class A Unitholders or the facility. The total commitments of the purchasers are $250.0 million during the months of December through March, $200.0 million during the months of November, April and May, and $150.0 million during the months of June through October. This facility matures in May 2021 and includes an option, at our request and consent, for the purchasers in their sole discretion to extend the facility for up to an additional three years.

~~As of October 31, 2020, we had no cash proceeds from our trade accounts receivables securitized, with $26.0 million remaining capacity to receive additional proceeds or issue letters of credit.~~

~~Distributions~~

~~No distribution will be made~~general partner for the three months ended ~~October 31, 2020.~~April 30, 2021.

The ability of Ferrellgas Partners to make cash distributions to its Class A Unitholders and Class B Unitholders is dependent on the receipt by Ferrellgas Partners of cash distributions from the operating partnership. For so long as any Preferred Units remain outstanding, the amount of cash that otherwise would be available for distribution by the operating partnership to Ferrellgas Partners and the general partner will be reduced by the amount of cash distributions and other payments made by the operating partnership in respect of the Preferred Units, including payments to redeem Preferred Units. Further, the indentures governing the 2026 Notes and 2029 Notes, the Credit Agreement and the OpCo LPA Amendment governing the Preferred Units contain covenants that limit the ability of the operating partnership to make distributions to Ferrellgas Partners and therefore effectively limit the ability of Ferrellgas Partners to make distributions to its Class A Unitholders and Class B Unitholders. See Note F – Debt and Note G – Preferred units for a discussion of these limitations. See also “Risk Factors— Our ability to make cash distributions to holders of Class A Units and Class B Units is dependent on the receipt by Ferrellgas Partners of cash distributions from the operating partnership, which are limited by our obligations in respect of the Preferred Units and the terms of the indentures governing the 2026 Notes and 2029 Notes, the Credit Agreement and the OpCo LPA Amendment governing the Preferred Units and may be limited by a variety of other factors. Accordingly, we may be unable to make cash distributions to holders of Class A Units and Class B Units, and we do not anticipate making any such cash distributions in the near future.”

Preferred unit distributions

The ~~general partner expects~~Quarterly Distribution will be paid in cash; provided, that ~~Ferrellgas Partners~~the operating partnership may, at its option in its sole discretion, pay any Quarterly Distribution "in kind" through the issuance of additional Preferred Units ("PIK Units") at the quarterly Distribution Rate plus an applicable premium that escalates each year from 75 bps to 300 bps so long as the Preferred Units remain outstanding. In the event the operating partnership fails to make any Quarterly Distribution in cash, such Quarterly Distribution will ~~continue~~automatically be paid in PIK Units.

The Distribution Rate on the Preferred Units will increase upon violation of certain protective provisions for the benefit of Preferred Unit holders notwithstanding the cap mentioned above.

As of April 30, 2021 the Quarterly Distribution accrued was $8.0 million, reflecting a prorated distribution amount for the period from the Effective Date to April 30, and the Quarterly Distribution in that amount was paid in cash to holders of Preferred Units on May 17, 2021.

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Preferred unit tax distributions

For any quarter in which the operating partnership makes a Quarterly Distribution in PIK Units in lieu of cash, it shall make a subsequent cash tax distribution for such quarter in an amount equal to the (i) the lesser of (x) 25% and (y) the highest combined federal, state and local tax rate applicable for corporations organized in New York, multiplied by (ii) the excess (if any) of (A) one-fourth (1/4th) of the estimated taxable income to be ~~prohibited from making common unit~~allocated to the holders of Preferred Units for the year in which the Quarterly Tax Payment Date (which refers to certain specified dates that next follow a Quarterly Distribution date on which PIK Units were issued) occurs, over (B) any cash paid on the Quarterly Distribution date immediately preceding the Quarterly Tax Payment Date on which a quarterly tax amount would otherwise be paid (such amount, the "Tax Distribution"). Tax Distributions are treated as advances against, and reduce, future cash distributions for any ~~future quarterly period unless and until~~reason, including payments in redemption of Preferred Units or PIK Units, or payments to the ~~outstanding notes of Ferrellgas Partners due 2020 are restructured, refinanced~~holders in their capacity as such pursuant to any side letter or ~~otherwise satisfied.~~other agreement.

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.~~below, as well as fees paid for the Class B units exchange and amounts related to the termination of the Ferrellgas Partners Notes.

Cash distributions paid

The operating partnership did not pay cash distributions during the ~~three~~nine months ended ~~October 31, 2020.~~April 30, 2021. The operating partnership paid cash distributions of ~~$0.1~~$15.7 million during the ~~three~~nine months ended ~~October 31, 2019.~~

As described above, although the operating partnership has some capacity to make distributions under the operating partnership’s unsecured and secured notes indentures, this capacity will not allow the operating partnership to make distributions to Ferrellgas Partners sufficient to pay the principal of and accrued interest on Ferrellgas Partners’ unsecured senior notes due June 15, 2020 that was due at the maturity of those notes. Additionally, the restrictions in

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~~these indentures currently limit the ability of the operating partnership to make distributions to Ferrellgas Partners to enable it to pay cash distributions to its unitholders.~~April 30, 2020.

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 ~~$67.7~~$219.2 million for the ~~three~~nine months ended ~~October 31, 2020,~~April 30, 2021, 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.

During the three months ended ~~October 31, 2020,~~April 30, 2021, Ferrellgas Partners and the operating partnership did not pay distributions.

Term loan credit agreement between Ferrellgas Partners, L.P. and Ferrellgas, L.P.

As discussed ~~previously,~~in Note L – Transactions with related parties in the notes to the condensed consolidated financial statements of the operating partnership, on January 8, 2021 Ferrellgas Partners, ~~continues~~L.P. entered into a term loan credit agreement with Ferrellgas, L.P., pursuant to which Ferrellgas, L.P. extended to Ferrellgas Partners, L.P. an unsecured, non-amortizing term loan in the aggregate principal amount of $19.9 million. The term loan bears interest at a rate of 20% per annum, and all interest on the term loan will be ~~not in compliance with~~added to the ~~consolidated~~outstanding principal amount of the term loan. The term loan will mature on July 1, 2022.

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Contractual Obligations

In the performance of our operations, we are bound by certain contractual obligations.

The following table summarizes our long-term debt, including current portion, and fixed ~~charge coverage ratio under note indenture,~~rate interest obligations at April 30, 2021. These obligations reflect the issuance of the $650.0 million aggregate principal amount of 5.375% senior notes due 2026 and ~~thus remains unable~~the $825.0 million aggregate principal amount of 5.875% senior notes due 2029.


	Payment or settlement due by fiscal year
(in thousands)	2021		2022		2023		2024		2025		Thereafter		Total
Long-term debt, including current portion (1)	$	580	$	1,335	$	899	$	329	$	199	$	1,475,019	$	1,478,361
Fixed rate interest obligations (2)		—		84,333		83,406		83,406		83,406		228,813		563,364

(1)

We have long and short-term payment obligations under agreements such as the indentures governing our senior notes. Amounts shown in the table represent our scheduled future maturities of long-term debt (including current maturities thereof) for the periods indicated. For additional information regarding our debt obligations, see “Liquidity and Capital Resources – Financing Activities.”

(2)

Fixed rate interest obligations represent the amount of interest due on fixed rate long-term debt.

The operating partnership

The contractual obligations discussed above also apply to ~~make restricted payments, including distributions to unitholders.~~the operating partnership.

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, 2020.~~April 30, 2021. 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.

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 and basis swaps to seek protection from adverse price movements and to minimize potential losses. We enter into these financial derivative instruments with brokers who are clearing members with the Intercontinental Exchange or the Chicago Mercantile 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 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.

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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.

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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, 2020~~April 30, 2021 and July 31, 2020, 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 ~~$7.8~~$16.8 million and $8.0 million as of ~~October 31, 2020~~April 30, 2021 and July 31, 2020, 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 reduce overall credit risk. These policies include 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 that are suppliers, marketers, wholesalers, retailers and end 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.

Interest rate risk

At ~~October 31, 2020,~~April 30, 2021, we had no ~~variable~~outstanding cash borrowings under our Credit Facility. Thus, no interest rate ~~or collateralized note payable borrowings, as we do not have~~risk that would result in a ~~credit facility in place and had no outstanding collateralized notes payable on our accounts receivable securitization facility.~~reduction to future earnings.

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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) or 15d-15(e) under the Exchange Act, were effective as of ~~October 31, 2020.~~April 30, 2021.

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, 2020,~~April 30, 2021, that our disclosure controls and procedures are effective in achieving that level of reasonable assurance.

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During the most recent fiscal quarter ended ~~October 31, 2020,~~April 30, 2021, progress continued on a plan that calls for modifications and enhancements to our internal controls over financial reporting in relation to our implementation of Salesforce.com applications and the impacts on our revenue cycle. Specifically, we implemented/modified internal controls surrounding revenue recognition.

Except as disclosed above, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or Rule 15d-15(f) of the Exchange Act) during the fiscal quarter ended ~~October 31, 2020~~April 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For information regarding legal proceedings, see Note LM “Contingencies and commitments” in our condensed consolidated financial statements included in Item 1. “Financial Statements.”

ITEM 1A. RISK FACTORS

~~There have been no material changes from~~The following risk factors are provided to update and supplement the risk factors set forth under Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for fiscal 2020.

Our ability to make cash distributions to holders of Class A Units and Class B Units is dependent on the receipt by Ferrellgas Partners of cash distributions from the operating partnership, which are limited by our obligations in respect of the Preferred Units and the terms of the indentures governing the 2026 Notes and 2029 Notes, the Credit Agreement and the OpCo LPA Amendment governing the Preferred Units and may be limited by a variety of other factors. Accordingly, we may be unable to make cash distributions to holders of Class A Units and Class B Units, and we do not anticipate making any such cash distributions in the near future.

Accordingly, we may be unable to make cash distributions to holders of Class A Units and Class B Units.

If we are unable to access the financing markets, including through our Credit Facility, it may adversely impact our business and liquidity.

Market conditions may impact our ability to access the financing markets on terms acceptable to us or at all. In addition, there are limitations on our ability to utilize fully all commitments under the Credit Facility. Availability under the Credit Facility is determined by reference to a borrowing base comprised of a combination of accounts receivable and propane inventory that fluctuates over time and the borrowing base may be further reduced by discretionary actions of the administrative agent under the Credit Facility. See “Risk Factors—The amount of borrowings permitted under our Credit Facility may fluctuate significantly.” If we are unable to access the financing markets, including through our Credit Facility, we would be required to use cash on hand to fund operations and repay outstanding debt, including the notes offered hereby. There is no assurance that we will be able to generate sufficient cash to fund our operations and repay or refinance such debt. A failure to generate such cash would have a material adverse effect on our business if we were unable to access financing markets. Additionally, even if we are able to generate sufficient cash to refinance such debt, cash available to us for working capital and other corporate uses could be reduced. Market conditions may also impact our ability to utilize letters of credit or other financial instruments we use to conduct our business.

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Holders of the Class B Units have the right to appoint an independent director, and certain consent from the holders of Class B Units is required for certain transactions, which may reduce our operating flexibility. The holders of the Class B Units and their affiliates may have conflicts with us.

The holders of Class B Units are permitted to designate one independent director to the Board of Directors of the general partner (the “Class B Independent Director”). The Class B Independent Director may not be affiliated with any prior holders of the Ferrellgas Partners Notes that entered into the Transaction Support Agreement and must be acceptable to Ferrellgas Partners and the operating partnership. The interests of holders of the Class B Units may conflict with our interests or the interests of other securityholders.

The partnership agreements of Ferrellgas Partners and the operating partnership provide certain covenants for the benefit of holders of the Class B Units, including, among others, that none of Ferrellgas Partners, the operating partnership or their respective subsidiaries may (i) incur indebtedness in excess of $75.0 million, other than certain refinancing transactions, (ii) issue or redeem outstanding equity interests (other than the Preferred Units) or (iii) engage in certain related party transactions, asset sales, investments, contributions or other transfers of assets, in each case above a specified threshold. Accordingly, the Class B Independent Director has significant influence with respect to our management, business plans and policies. These restrictions, which can be waived only upon consent by holders of the Requisite New Class B Units (defined as (a) if the holder that initially holds a majority of the Class B Units (the “Initial Class B Majority Holder”) holds at least 50% of Class B Units, holders of at least 50% of the outstanding Class B Units or (b) if the Initial Class B Majority Holder holds less than 50% of New Class B Units, holders of at least one-third of the outstanding Class B Units), may limit our flexibility to pursue strategic opportunities.

Holders of the Class B Units will have the right to acquire the general partner interests in Ferrellgas Partners and the operating partnership upon a material breach of certain covenants in the governance documents of Ferrellgas Partners and the operating partnership and will convert into Class A Units under certain circumstances.

On the Effective Date, Ferrellgas Partners issued approximately 1.3 million Class B Units to holders of the Ferrellgas Partners Notes. Holders of the Class B Units will have the right to acquire the general partner interests in Ferrellgas Partners and the operating partnership, without the approval of the general partner, Ferrellgas Partners, the holders of the Class A Units or the operating partnership, upon a material breach of certain covenants in the governance documents of Ferrellgas Partners and the operating partnership or if the Class B Units fail to convert within ten years after the Effective Date. Additionally, if the Class B Units are not called by Ferrellgas Partners (which is only permitted within five years of the issuance thereof), then upon receipt of distributions equal to $357 million the Class B Units will convert into Class A Units in accordance with the conversion factors described in the Amended Ferrellgas Partners LPA. Ferrellgas Partners will only be able to call the Class B Units to the extent it receives sufficient distributions from the operating partnership, and the operating partnership will be limited in its ability to make distributions by its debt agreements and the terms of the Preferred Units. See “—We issued $700.0 million aggregate initial liquidation preference of Preferred Units, the terms of which restrict us from undertaking certain actions while such Preferred Units are outstanding.” Any such acquisition and/or conversion could have a material adverse effect on us and could substantially change our management and the resolution of conflicts of interest, as described above. Such acquisition also could result in a “change of control” under our debt instruments, including the indentures governing the 2026 Notes and 2029 Notes, or our other securities, including the First Amendment to the Amended OpCo LPA governing the Preferred Units, which could result in an event of default under such instruments or require that we offer to repurchase our debt and/or other securities.

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We issued $700.0 million aggregate initial liquidation preference of Preferred Units, the terms of which restrict us from undertaking certain actions while such Preferred Units are outstanding.

We issued $700.0 million initial aggregate liquidation preference of Preferred Units.The Preferred Units are entitled to quarterly distributions in cash or payment in kind and are redeemable at the option of the operating partnership at any time, or at the option of the holders no earlier than ten years after the Effective Date, subject to the terms as described in more detail under as discussed in Note G – Preferred units.

For so long as at least 20% of the Preferred Units initially issued (without any adjustment for PIK payments) remain outstanding, holders of the Preferred Units have the right, voting as a separate class, to designate one director onto the board of the general partner, which may not exceed nine directors.

For so long as at least $35.0 million aggregate liquidation preference of Preferred Units remain outstanding, the partnership agreements of Ferrellgas Partners and the operating partnership limit the following, unless agreed by holders of at least 1/3 of the outstanding Preferred Units:

●

change of control transactions, unless Ferrellgas Partners has sufficient liquidity to redeem the Preferred Units;

●

amendments to organizational documents that adversely affect the rights of the holders of the Preferred Units;

●

authorization, creation or issuance of any equity interest having rights, preferences or privileges senior or pari passu to the Preferred Units, and none of the operating partnership’s subsidiaries may issue additional equity or redeem any equity;

●

authorization, creation or issuance of additional Preferred Units;

●

filings for bankruptcy;

●

engage in any investment, contribution or other transfer of any value, or asset sales outside the ordinary course of business, to any person above specified thresholds;

●

entering into or modifying any transaction or agreement with an affiliate or related party;

●

redemptions or repurchases by Ferrellgas Partners, the operating partnership or their respective subsidiaries of equity interests of the operating partnership ranking junior to the Preferred Units, other than explicitly permitted as described herein, or by Ferrellgas Partners, to its common limited partnership units;

●

limitations on distributions on the operating partnership’s common limited partnership other than as set forth herein;

●

limitations on the incurrence of indebtedness other than $75.0 million, or refinancings of the Credit Facility or the 2026 Notes or 2029 Notes (with premiums, interest and expense counting toward the $75.0 million basket); and

●

limitations on tax elections that cause Ferrellgas Partners or the operating partnership to be classified as a corporation, or any fundamental changes in the nature of the business or the entering into any material line of business substantially different from those conducted on the Effective Date.

Accordingly, the holders of the PreferredUnits will have significant influence with respect to our management, business plans and policies. The interests of holders of the PreferredUnits may conflict with our interests or the interests of our debtholders or securityholders.

Additionally, upon the occurrence of certain “change of control” transactions, the holders of the Preferred Units will have the option to require the redemption of all or a portion of the Preferred Units in cash in an amount equal to the redemption price; such a “change of control” will also trigger a “change of control” under the indentures governing the 2026 Notes and 2029 Notes.

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In the event that no Class B Units are outstanding and the outstanding amount of Preferred Units is greater than $233.3 million after the tenth anniversary of the Effective Date, to the extent the operating partnership fails to redeem all the outstanding Preferred Units, holders of at least 1/3 of the outstanding Preferred Units will have the right to appoint a majority of the members of the directors onto the board of directors of the general partner and initiate a sale of the operating partnership.

These restrictions may limit our flexibility to pursue strategic opportunities.

The amount of borrowings permitted under our Credit Facility may fluctuate significantly.

Availability under the Credit Facility is determined by reference to a borrowing base, determined based on specified percentages of our eligible accounts receivable and eligible propane inventory, that may fluctuate significantly over time, and the borrowing base may be further reduced by discretionary actions of the administrative agent under the Credit Facility, including the imposition of reserves and availability blocks and the re-characterization of assets that might otherwise increase loan availability. The borrowing base is calculated on a monthly basis, or more frequently under certain circumstances. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing Activities—Senior secured revolving credit facility.” As a result of the foregoing, our access to credit under the Credit Facility is potentially subject to significant fluctuation and, if such fluctuations result in a reduction in loan availability, such fluctuations could materially and adversely impair our liquidity, financial position and results of operations, including in respect of our ability to make interest payments on our debt obligations.

Restrictive covenants in the indentures governing the Notes and the agreements governing our other indebtedness and other financial obligations, including our Credit Facility, may reduce our operating flexibility.

The indentures governing the Notes, the Credit Agreement governing the Credit Facility will contain and the agreements governing our other financial obligations contain, and any indenture or other agreement that will govern debt incurred by us in the future may contain, various covenants that limit our ability to, among other things:

●

incur additional indebtedness and guarantee indebtedness;

●

pay dividends or make other distributions, repurchase or redeem our capital stock, or make other restricted payments;

●

prepay, redeem or repurchase certain debt;

●

issue certain preferred stock or similar equity securities;

●

make loans and investments;

●

sell assets;

●

incur liens;

●

enter into transactions with affiliates;

●

enter into agreements restricting our subsidiaries’ ability to pay dividends; and

●

consolidate, merge or sell all or substantially all of our assets.

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These restrictions could limit our ability to:

●

obtain future financings;

●

make necessary capital expenditures;

●

withstand a future downturn in our business or the economy in general; or

●

conduct operations, compete effectively or otherwise take advantage of business opportunities that may arise.

The Credit Agreement governing the Credit Facility requires and some of the agreements governing our future indebtedness and other financial obligations may also require, the maintenance of specified financial ratios and the satisfaction of other financial conditions, including a minimum interest coverage ratio, a maximum senior secured leverage ratio, and a maximum total net leverage ratio. Further, there are limitations on our ability to utilize fully all commitments under the Credit Facility. Availability under the Credit Facility is determined by reference to a borrowing base comprised of a combination of accounts receivable and propane inventory that fluctuates over time and the borrowing base may be further reduced by discretionary actions of the administrative agent under the Credit Facility. See “Risk Factors—The amount of borrowings permitted under our Credit Facility may fluctuate significantly.”

In addition, the limited partnership agreement governing the terms of the Preferred Units also restricts our ability to pay dividends and make distributions relating to our other capital stock, and future issuances of equity by Ferrellgas Partners or the operating partnership may contain additional restrictions. See “—We issued $700.0 million aggregate initial liquidation preference of Preferred Units, the terms of which restrict us from undertaking certain actions while such Preferred Units are outstanding.”

Our ability to meet those financial ratios and conditions can be affected by unexpected downturns in business operations beyond our control, such as significantly warmer-than-normal weather, a volatile energy commodity cost environment, deterioration in credit quality of key business partners, or an economic downturn. Accordingly, we may be unable to meet these ratios and conditions. This failure could impair our operating capacity and cash flows and could restrict our ability to incur debt or to make cash distributions, even if sufficient funds were available. See “—If we are unable to access the financing markets, including through our Credit Facility, it may adversely impact our business and liquidity.”

In addition, the terms of any future indebtedness may be more restrictive.

Our breach of any of these covenants or failure to meet any of these ratios or conditions could result in a default under the terms of the relevant indebtedness, which could cause such indebtedness or other financial obligations and, by reason of any cross-default provisions that may exist, any of our other existing or future debt, including the Notes, to become immediately due and payable. If we were unable to repay those amounts, the holders of such debt could initiate a bankruptcy proceeding or liquidation proceeding or, in the case of secured debt, proceed against their collateral in accordance with state law and the rights granted under the relevant debt agreements. If our lenders or noteholders accelerate the repayment of borrowings or other amounts owed, we may not have sufficient assets to repay our indebtedness or other financial obligations, including indebtedness under the Notes, the Credit Agreement and any future debt obligations. As of April 30, 2021, we had approximately $1,475.0 million principal amount of total indebtedness and we had no secured indebtedness under our Credit Facility (in each case, excluding $138.2 million represented by outstanding letters of credit under our Credit Facility); and we had commitments available to be borrowed under our Credit Facility of approximately $211.8 million (after giving effect to $138.2 million of outstanding letters of credit under the Credit Facility and subject to adjustment based on calculation of our borrowing base). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—General.”

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The indentures governing the 2026 Notes and the 2029 Notes and the Credit Agreement governing the Credit Facility contain important exceptions to the covenants.

The indentures governing the Notes contain important exceptions to the covenants, including the covenants that restrict our ability to sell assets and make restricted payments. For example, the indentures governing the Notes initially permit us to make $60 million plus the amount of our Available Cash from Operating Surplus (as defined in the indentures governing the Notes) for the preceding fiscal quarter (so long as our fixed coverage ratio is at least 1.75x) or $25 million (if our fixed coverage ratio is below 1.75x) plus an additional $25 million, in each case, of restricted payments for any purpose, subject to compliance with applicable conditions, as well as to make additional restricted payments for specified purposes. Furthermore, we may utilize exceptions to sell assets and such asset sales may be on unfavorable terms. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing Activities.”

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under our Credit Facility will be at variable rates of interest and expose us to interest rate risk. If interest rates were to increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. Assuming all loans are fully drawn and all commitments are available under the Credit Facility, each quarter point change in interest rates would result in a change of approximately $0.9 million in annual interest expense on our indebtedness under our Credit Facility.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

On ~~December~~June 11, ~~2020,~~2021, Ferrellgas ~~Inc. (the “General Partner”)~~ entered into a Change in Control Retention Bonus Letter Agreement (the “CIC Bonus Agreement”) with each of Brian W. Herrmann, Interim Chief Financial Officer and Treasurer, and Tamria A. Zertuche, Senior Vice President and Chief Operating Officer (collectively, the ~~“Named Executive Officers”).~~

~~Pursuant~~First Amendment to the terms of each CIC Bonus Agreement, commencing on December 11, 2020 and continuing through the date of consummation of a “change in control” (as defined in the CIC Bonus Agreement) that occurs on or prior to October 31, 2021 (the “Retention Period”), the General Partner will pay a change in control retention bonus in an amount equal to 1.5 times each Named Executive Officer’s current base compensation rate, less applicable withholdings and deductions required by law (the “Change in Control Retention Bonus”). Eligibility to receive the Change in Control Retention Bonus requires that the Change in Control occurs during the Retention Period and that the Named Executive Officer is employed on a continuous basis through the date of consummation of a Change in Control that occurs during the Retention Period.Credit Agreement. See Note O – Subsequent events for further discussion.

~~For purposes of the CIC Bonus Agreement, “change in control” means, in summary, the occurrence of~~ (i) the acquisition by any person or group of persons (excluding the General Partner or its subsidiaries or any related employee benefit plan) of 33% or more of the combined voting power of the General Partner’s outstanding securities, (ii) the consummation of a merger or consolidation of the General Partner or any direct or indirect subsidiary of the General Partner with any other corporation or other entity (subject to certain exceptions, including a merger or consolidation involving a related party), (iii) approval of a plan of liquidation or winding up of the General Partner or agreement for sale or disposition of all of the General Partner’s assets (excluding sales to related parties), (iv) a change in the majority of the board of directors of the General Partner, (v) Ferrell Companies, Inc. ceases to beneficially own 51% of the

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economic interests in the capital stock of the General Partner, (vi) the General Partner ceases to manage and control Ferrellgas Partners, L.P. and Ferrellgas, L.P., (vii) Ferrellgas Partners, L.P. ceases to control 100% of Ferrellgas, L.P., and (viii) a change in control or similar event pursuant to the terms of any indebtedness of the General Partner, Ferrellgas Partners, L.P. or Ferrellgas, L.P.

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ITEM 6. EXHIBITS

The exhibits listed below are furnished as part of this Quarterly Report on Form 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
2.1		Second Amended Prepackaged Joint Chapter 11 Plan of Reorganization of Ferrellgas Partners, L.P. and Ferrellgas Partners Finance Corp. Incorporated by reference to Exhibit 99.1 to our Quarterly Report on Form 10-Q filed March 8, 2021.
2.2		Transaction Support Agreement, dated December 10, 2020, by and among the Company Parties (as defined therein) and the Consenting Lenders (as defined therein). Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed December 11, 2020.
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 filed September 29, 2015.
3.2		Fifth Amended and Restated Agreement of Limited Partnership 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		First Amendment to Fifth Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners, L.P., dated as of December 11, 2020. Incorporated by reference to Exhibit 3.3 to our Quarterly Report on Form 10-Q filed December 15, 2020.
3.4		Sixth Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners, L.P. dated as of March 30, 2021. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed April 5, 2021.
3.5		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 filed March 6, 2009.
~~3.5~~3.6		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 filed March 6, 2009.
~~3.6~~3.7		Certificate of Limited Partnership of Ferrellgas, L.P. Incorporated by reference to Exhibit 3.9 to our Annual Report on Form 10-K filed September 29, 2015.
~~3.7~~		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 filed March 6, 2009.
3.8		Fourth Amended and Restated Agreement of Limited Partnership of Ferrellgas, L.P., dated as of April 24, 2020. Incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K filed on April 27, 2020.
3.9		Fifth Amended and Restated Agreement of Limited Partnership of Ferrellgas, L.P., dated as of March 30, 2021. Incorporated by reference to Exhibit 3.2 of our Current Report on Form 8-K filed April 5, 2021.
3.10		First Amendment to the Fifth Amended and Restated Agreement of Limited Partnership of Ferrellgas, L.P., dated as of March 30, 2021. Incorporated by reference to Exhibit 3.3 of our Current Report on Form 8-K filed April 5, 2021.
3.11		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 filed March 6, 2009.
~~3.10~~3.12		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 filed March 6, 2009.
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 filed March 6, 2009.
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 filed November 5, 2013; File No. 001-11331; 000-50182; 000-50183 and 333-06693.
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 filed April 13, 2010; File No. 001-11331; 000-50182; 000-50183 and 333-06693.

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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 filed April 13, 2010; File No. 001-11331; 000-50182; 000-50183 and 333-06693.
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 filed January 30, 2017.
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 filed November 30, 2010; File No. 001-11331; 000-50182; 000-50183 and 333-06693.
4.7		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 filed June 8, 2015.

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4.8		Indenture, dated as of April 16, 2020, by and among Ferrellgas, L.P., Ferrellgas Finance Corp., Ferrellgas Partners, L.P., Ferrellgas, Inc., the subsidiary guarantors party thereto and Delaware Trust Company, as trustee and collateral agent, relating to $700 million aggregate principal amount of 10% Senior Secured First Lien Notes due 2025. Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed April 17, 2020.
~~+10.1~~4.9		~~Financing~~Indenture relating to 5.375% Senior Notes due 2026, dated as of March 30, 2020 (with form of Note attached), among Ferrellgas Escrow, LLC and FG Operating Finance Escrow Corp., as co-issuers, and U.S. Bank National Association, as trustee. Incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K filed April 5, 2021.
4.10		Assumption Supplemental Indenture relating to 5.375% Senior Notes due 2026, dated as of March 30, 2021, among Ferrellgas, L.P. and Ferrellgas Finance Corp., as co-issuers, the guarantors party thereto and U.S. Bank National Association, as trustee. Incorporated by reference to Exhibit 4.2 of our Current Report on Form 8-K filed April 5, 2021.
4.11		Indenture relating to 5.875% Senior Notes due 2026, dated as of March 30, 2020 (with form of Note attached), among Ferrellgas Escrow, LLC and FG Operating Finance Escrow Corp., as co-issuers, and U.S. Bank National Association, as trustee. Incorporated by reference to Exhibit 4.4 of our Current Report on Form 8-K filed April 5, 2021.
4.12		Assumption Supplemental Indenture relating to 5.875% Senior Notes due 2026, dated as of March 30, 2021, among Ferrellgas, L.P. and Ferrellgas Finance Corp., as co-issuers, the guarantors party thereto and U.S. Bank National Association, as trustee. Incorporated by reference to Exhibit 4.5 of our Current Report on Form 8-K filed April 5, 2021.
4.13		Investment Agreement, dated as of ~~May 4, 2018,~~March 30, 2021, among Ferrellgas, L.P., Ferrellgas, Inc. and the several purchasers named therein. Incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed April 5, 2021.
4.14		Voting Agreement, dated as of March 30, 2021, among Ferrellgas, Inc., asFerrell Companies, Inc., and the ~~general partner~~holders of Class B Units of Ferrellgas Partners, L.P. Incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K filed April 14, 2021.
4.15		Voting Agreement, dated as of March 30, 2021, among Ferrellgas, Inc., Ferrell Companies, Inc., and the purchasers of the Senior Preferred Units of Ferrellgas, L.P. Incorporated by reference to Exhibit 4.2 of our Current Report on Form 8-K filed April 14, 2021.
10.1		Credit Agreement, dated as of March 30, 2021, among Ferrellgas, L.P., Ferrellgas, Inc., certain subsidiaries of Ferrellgas, L.P., as guarantors, the lenders party thereto, ~~TPG Specialty Lending, Inc.~~and JPMorgan Chase Bank, N.A., as administrative agent ~~collateral agent~~ and ~~lead arranger, and PNC Bank, National Association, as syndication~~collateral agent. Incorporated by reference to Exhibit 10.1 toof our Current Report on Form 8-K filed ~~September 7, 2018.~~April 5, 2021.
10.2		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 filed January 20, 2012; File No. 001-11331; 000-50182; 000-50183 and 333-06693.

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10.3		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 filed January 20, 2012; File No. 001-11331; 000-50182; 000-50183 and 333-06693.
10.4		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 filed June 8, 2012; File No. 001-11331; 000-50182; 000-50183 and 333-06693.
10.5		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 filed April 4, 2014.
10.6		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 filed July 27, 2016.
10.7		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 filed September 28, 2016.
10.8		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 filed May 2, 2017.
+ 10.9		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 filed September 7, 2018.
10.10		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. Incorporated by reference to Exhibit 10.17 to our Quarterly Report on Form 10-Q filed December 6, 2019.
10.11		Amendment No. 9 to Receivables Purchase Agreement, dated as of April 10, 2020, 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. Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 8-K filed April 13, 2020.
# 10.12		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 filed March 10, 2010; File No. 001-11331; 000-50182; 000-50183 and 333-06693.
# 10.13		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 filed September 29,

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		2014.
# 10.14		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 filed June 9, 2010; File No. 001-11331; 000-50182; 000-50183 and 333-06693.
# 10.15		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 filed September 29, 2014.

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# 10.16		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 filed March 9, 2012; File No. 001-11331; 000-50182; 000-50183 and 333-06693.
# 10.17		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 filed September 29, 2015.
~~10.18~~		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 10.31 to our Quarterly Report on Form 10-Q filed June 10, 2019.
~~10.19~~		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.
# ~~10.20~~10.18		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. Incorporated by reference to Exhibit 10.34 to our Quarterly Report on Form 10-Q filed December 6, 2019.
# ~~10.21~~10.19		Change in Control Retention Bonus Letter Agreement with William E. Ruisinger, Chief Financial Officer and Treasurer. Incorporated by reference to Exhibit 10.21 in our Current Report on Form 8-K filed April 27, 2020.
# ~~10.22~~10.20		Change in Control Retention Bonus Letter Agreement with Bryan J. Wright, Senior Vice President and Chief Operating Officer. Incorporated by reference to Exhibit 10.22 in our Current Report on Form 8-K filed April 27, 2020.
# ~~10.23~~10.21		Change in Control Retention Bonus Letter Agreement Tamria A. Zertuche, Senior Vice President and Chief Information Officer. Incorporated by reference to Exhibit 10.23 in our Current Report on Form 8-K filed April 27, 2020.
~~10.24~~10.22		Forbearance Agreement among Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp. and the beneficial owners dated June 7, 2020. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed June 11, 2020.
~~10.25~~# 10.23		Transaction Support Agreement, dated December 10, 2020, by and among the Company Parties (as defined therein) and the Consenting Lenders (as defined therein). Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed December 11, 2020.
*# 10.26		Change in Control Retention Bonus Letter Agreement with Brian W. Herrmann, Interim Chief Financial Officer and Treasurer. Incorporated by reference to Exhibit 10.26 to our Quarterly Report on Form 10-Q filed December 15, 2020.
*# ~~10.27~~10.24		Change in Control Retention Bonus Letter Agreement with Tamria A. Zertuche, Senior Vice President and Chief Operating Officer. Incorporated by reference to Exhibit 10.27 to our Quarterly Report on Form 10-Q filed December 15, 2020.
# 10.25		Offer Letter, effective as of December 30, 2020, by and among Ferrellgas, Inc. and James E. Ferrell. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed January 5, 2021.
# 10.26		Employment Agreement, dated as of December 31, 2020, by and among Ferrellgas, Inc. and James E. Ferrell. Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed January 5, 2021.
# 10.27		Executive Confidentiality and Restrictive Covenants Agreement, dated as of December 31, 2020, by and among Ferrellgas, Inc. and James E. Ferrell. Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed January 5, 2021.
10.28		Term Loan Credit Agreement, dated as of January 8, 2021, between Ferrellgas Partners, L.P., as the borrower, and Ferrellgas, L.P., as the lender. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed January 11, 2021.
* 10.29		First Amendment to the Credit Agreement, dated as of June 11, 2021, among Ferrellgas, L.P., Ferrellgas, Inc., the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.
* 31.1		Certification of Ferrellgas Partners, L.P. pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
* 31.2		Certification of Ferrellgas Partners Finance Corp. pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
* 31.3		Certification of Ferrellgas, L.P. pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
* 31.4		Certification of Ferrellgas Finance Corp. pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
* 32.1		Certification of Ferrellgas Partners, L.P. pursuant to 18 U.S.C. Section 1350.
* 32.2		Certification of Ferrellgas Partners Finance Corp. pursuant to 18 U.S.C. Section 1350.
* 32.3		Certification of Ferrellgas, L.P. pursuant to 18 U.S.C. Section 1350.
* 32.4		Certification of Ferrellgas Finance Corp. pursuant to 18 U.S.C. Section 1350.
* 101.INS		XBRL Instance ~~Document.~~Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
* 101.SCH		XBRL Taxonomy Extension Schema Document.
* 101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

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* 101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

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* 101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
* 101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.
* 104		The cover page from Ferrellgas Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended April 30, 2021, formatted in Inline XBRL and contained in Exhibit 101.

*	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.

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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., its general partner

Date:	~~December 15, 2020~~June 14, 2021	By	/s/ Brian W. Herrmann
			Brian W. Herrmann

			Interim Chief Financial Officer; Treasurer (Principal Financial and Accounting Officer)


		FERRELLGAS PARTNERS FINANCE CORP.

Date:	~~December 15, 2020~~June 14, 2021	By	/s/ Brian W. Herrmann
			Brian W. Herrmann
			Interim Chief Financial Officer and Sole Director


		FERRELLGAS, L.P.
		By Ferrellgas, Inc., ~~Ferrellgas GP II, LLC and Ferrellgas GP III, LLC,~~ its general ~~partners~~partner

Date:	~~December 15, 2020~~June 14, 2021	By	/s/ Brian W. Herrmann
			Brian W. Herrmann
			Interim Chief Financial Officer; Treasurer (Principal Financial and Accounting Officer)


		FERRELLGAS FINANCE CORP.

Date:	~~December 15, 2020~~June 14, 2021	By	/s/ Brian W. Herrmann
			Brian W. Herrmann
			Interim Chief Financial Officer and Sole Director

87104


	October 31, 2020		July 31, 2020
Accounts receivable pledged as collateral	$	120,261	$	103,703
Accounts receivable not pledged as collateral (including other reserves)		823		(825)
Note receivable		15,148		12,648
Other		37		36
Less: Allowance for expected credit losses		(16,781)		(14,124)
Accounts and notes receivable, net	$	119,488	$	101,438


	October 31, 2020	July 31, 2020
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


	As of October 31, 2020
	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	$	296,890	$	1	$	—	$	2,631	$	—	$	299,522
Accounts and notes receivable, net		15,547		—		—		103,941		—		119,488
Intercompany receivables		87,191		—		—		—		(87,191)		—
Inventories		78,980		—		—		—		—		78,980
Prepaid expenses and other current assets		40,044		—		—		—		—		40,044
Total current assets		518,652		1		—		106,572		(87,191)		538,034

Property, plant and equipment, net		592,132		—		—		—		—		592,132
Goodwill, net		246,946		—		—		—		—		246,946
Intangible assets, net		101,812		—		—		—		—		101,812
Investments in consolidated subsidiaries		37,821		—		—		—		(37,821)		—
Operating lease right-of-use assets		100,349		—		—		—		—		100,349
Other assets, net		71,029		—		2,255		238		—		73,522
Total assets	$	1,668,741	$	1	$	2,255	$	106,810	$	(125,012)	$	1,652,795

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
Accounts payable	$	44,641	$	—	$	—	$	—	$	—	$	44,641
Intercompany payables		—		—		—		87,191		(87,191)		—
Current portion of long-term debt		502,095		—		—		—		—		502,095
Current operating lease liabilities		28,280		—		—		—		—		28,280
Other current liabilities		175,856		—		—		(15,946)		—		159,910
Total current liabilities		750,872		—		—		71,245		(87,191)		734,926

Long-term debt		1,647,106		—		—		—		—		1,647,106
Operating lease liabilities		83,337		—		—		—		—		83,337
Other liabilities		49,543		—		—		—		—		49,543
Contingencies and commitments

Partners' capital (deficit):
Partners' equity		(867,721)		1		2,255		35,565		(37,821)		(867,721)
Accumulated other comprehensive income		5,604		—		—		—		—		5,604
Total partners' capital (deficit)		(862,117)		1		2,255		35,565		(37,821)		(862,117)
Total liabilities and partners' capital (deficit)	$	1,668,741	$	1	$	2,255	$	106,810	$	(125,012)	$	1,652,795


	As of July 31, 2020
	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	$	332,244	$	1	$	—	$	1,510	$	—	$	333,755
Accounts and notes receivable, net		11,879		—		24		89,535		—		101,438
Intercompany receivables		69,980		—		—		—		(69,980)		—
Inventories		72,664		—		—		—		.		72,664
Prepaid expenses and other current assets		35,897		—		—		—		—		35,897
Total current assets		522,664		1		24		91,045		(69,980)		543,754

Property, plant and equipment, net		591,042		—		—		—		—		591,042
Goodwill, net		247,195		—		—		—		—		247,195
Intangible assets, net		104,049		—		—		—		—		104,049
Investments in consolidated subsidiaries		37,662		—		—		—		(37,662)		—
Operating lease right-of-use assets		107,349		—		—		—		—		107,349
Other assets, net		72,137		—		2,255		356		—		74,748
Total assets	$	1,682,098	$	1	$	2,279	$	91,401	$	(107,642)	$	1,668,137

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
Accounts payable	$	33,944	$	—	$	—	$	—	$	—	$	33,944
Intercompany payables		—		—		—		69,980		(69,980)		—
Current portion of long-term debt		502,095		—		—		—		—		502,095
Current operating lease liabilities		29,345		—		—		—		—		29,345
Other current liabilities		162,097		—		—		(13,961)		—		148,136
Total current liabilities		727,481		—		—		56,019		(69,980)		713,520

Long-term debt		1,646,396		—		—		—		—		1,646,396
Operating lease liabilities		89,022		—		—		—		—		89,022
Other liabilities		51,190		—		—		—		—		51,190
Contingencies and commitments

Partners' capital (deficit):
Partners' equity		(829,678)		1		2,279		35,382		(37,662)		(829,678)
Accumulated other comprehensive income		(2,313)		—		—		—		—		(2,313)
Total partners' capital (deficit)		(831,991)		1		2,279		35,382		(37,662)		(831,991)
Total liabilities and partners' capital (deficit)	$	1,682,098	$	1	$	2,279	$	91,401	$	(107,642)	$	1,668,137


	Three months ended October 31,
(amounts in thousands)	2020		2019
Total revenues	$	300,894	$	293,214

Total cost of sales		141,294		137,709

Operating expense		109,027		114,543
Depreciation and amortization expense		21,390		19,219
General and administrative expense		13,080		9,695
Equipment lease expense		6,830		8,388
Non-cash employee stock ownership plan compensation charge		708		795
Loss on asset sales and disposals		813		2,235
Operating income		7,752		630
Interest expense		(54,226)		(45,697)
Other income (expense), net		108		(132)
Loss before income taxes		(46,366)		(45,199)
Income tax expense		87		518
Net loss		(46,453)		(45,717)
Net loss attributable to noncontrolling interest		(391)		(373)
Net loss attributable to Ferrellgas Partners, L.P.		(46,062)		(45,344)
Less: General partner's interest in net loss		(461)		(453)
Common unitholders' interest in net loss	$	(45,601)	$	(44,891)