Supplemental Financial Statement Information

12 Months Ended

Jul. 31, 2017

Supplemental Financial Statement Information

Supplemental financial statement information

Inventories consist of the following:

	2017		2016
Propane gas and related products	$	67,049	$	59,726
Crude oil	724		4,642
Appliances, parts and supplies	24,779		26,226
Inventories	$	92,552	$	90,594

In addition to inventories on hand, Ferrellgas enters into contracts primarily to buy propane for supply procurement purposes with terms generally up to 36 months. Most of these contracts call for payment based on market prices at the date of delivery. As of July 31, 2017, Ferrellgas had committed, for supply procurement purposes, to take delivery of approximately 109.6 million gallons of propane at fixed prices.

Property, plant and equipment, net consist of the following:

	Estimated useful lives	2017		2016
Land	Indefinite	$	35,824	$	35,309
Land improvements	2-20	14,342		14,097
Buildings and improvements	20	73,333		73,021
Vehicles, including transport trailers	8-20	121,233		122,691
Bulk equipment and district facilities	5-30	104,291		104,428
Tanks, cylinders and customer equipment	2-30	755,867		767,234
Salt water disposal wells and related equipment	2-30	52,495		57,695
Rail cars	30	91,787		92,980
Injection stations	20	13,130		13,130
Pipeline	15	1,663		1,663
Computer and office equipment	2-5	118,518		122,304
Construction in progress	n/a	10,974		10,481
		1,393,457		1,415,033
Less: accumulated depreciation		661,534		640,353
Property, plant and equipment, net		$	731,923	$	774,680

As of July 31, 2016, property, plant and equipment amounts are net of impairment losses of $181.8 million. See Note C – Asset impairments for additional disclosures regarding these impairments.

Depreciation expense totaled $68.1 million, $85.8 million and $61.3 million for fiscal 2017, 2016 and 2015, respectively.

Other assets, net consist of the following:

	2017		2016
Jamex receivable, less current portion	$	32,500	$	39,760
Other	41,557		47,463
Other assets, net	$	74,057	$	87,223

At July 31, 2016, management determined a that a significant portion of the trade accounts receivable balance with Jamex should be considered noncurrent and accordingly, $39.8 million of this trade accounts receivable was reclassified from "Accounts and notes receivable, net" to "Other assets, net". The Jamex trade receivable was converted into a secured promissory note on September 1, 2016. See Note D – Significant transactions for further discussion of this promissory note.

Other current liabilities consist of the following:

	2017		2016
Accrued interest	$	18,671	$	16,623
Customer deposits and advances	25,541		27,391
Price risk management liabilities	1,838		18,401
Other	80,174		66,543
Other current liabilities	$	126,224	$	128,958

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

	For the year ended July 31,
	2017		2016		2015
Operating expense	$	175,164	$	167,980	$	174,105
Depreciation and amortization expense	3,909		4,282		5,127
Equipment lease expense	26,299		25,967		22,667
	$	205,372	$	198,229	$	201,899

During fiscal 2016, Ferrellgas committed to a plan to dispose of certain assets in its Midstream operations segment. The held for sale assets were recorded at the lower of carrying value or estimated fair value, less an estimate of costs to sell. The estimate of fair value included significant unobservable inputs (Level 3 fair value). As of July 31, 2016, this plan resulted in 134 trucks sold and 12 trucks remaining classified as held for sale assets. During fiscal 2017, the 12 remaining trucks classified as held for sale assets were repurposed and reclassified to property, plant, and equipment as held for use within other Ferrellgas businesses.

Loss on asset sales and disposal during the year ended July 31, 2017 consists of:

	For the year ended July 31,
	2017		2016		2015
Loss on assets held for sale	$	—	$	12,112	$	—
Loss on sale of assets held for sale	—		1,698		—
Loss on sale of assets and other	14,457		17,025		7,099
Loss on asset sales and disposal	$	14,457	$	30,835	$	7,099

For purposes of the 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 year ended July 31,
	2017		2016			2015
CASH PAID FOR:
Interest	$	143,441	$	133,629		$	91,783
Income taxes	$	310	$	777		$	712
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common units in connection with acquisitions	$	—	$	—		$	262,952
Liabilities incurred in connection with acquisitions	$	139	$	2,126		$	481
Change in accruals for property, plant and equipment additions	$	164	$	(1,122	)	$	498

Ferrellgas, L.P. [Member]

Supplemental Financial Statement Information

Supplemental financial statement information

Inventories consist of the following:

	2017		2016
Propane gas and related products	$	67,049	$	59,726
Crude oil	724		4,642
Appliances, parts and supplies	24,779		26,226
Inventories	$	92,552	$	90,594

In addition to inventories on hand, Ferrellgas enters into contracts primarily to buy propane for supply procurement purposes with terms generally up to 36 months. Most of these contracts call for payment based on market prices at the date of delivery. As of July 31, 2017, Ferrellgas, L.P. had committed, for supply procurement purposes, to take delivery of approximately 109.6 million gallons of propane at fixed prices.

Property, plant and equipment, net consist of the following:

	Estimated useful lives	2017		2016
Land	Indefinite	$	35,824	$	35,309
Land improvements	2-20	14,342		14,097
Buildings and improvements	20	73,333		73,021
Vehicles, including transport trailers	8-20	121,233		122,691
Bulk equipment and district facilities	5-30	104,291		104,428
Tanks, cylinders and customer equipment	2-30	755,867		767,234
Salt water disposal wells and related equipment	2-30	52,495		57,695
Rail cars	30	91,787		92,980
Injection stations	20	13,130		13,130
Pipeline	15	1,663		1,663
Computer and office equipment	2-5	118,518		122,304
Construction in progress	n/a	10,974		10,481
		1,393,457		1,415,033
Less: accumulated depreciation		661,534		640,353
Property, plant and equipment, net		$	731,923	$	774,680

As of July 31, 2016, property, plant and equipment amounts are net of impairment losses of $181.8 million. See Note C – Asset impairments for additional disclosures regarding these impairments.

Depreciation expense totaled $68.1 million, $85.8 million and $61.3 million for fiscal 2017, 2016 and 2015, respectively.

Other assets, net consist of the following:

	2017		2016
Jamex receivable, less current portion	$	32,500	$	39,760
Other	41,557		47,463
Other assets, net	$	74,057	$	87,223

At July 31, 2016, management determined a that a significant portion of the trade accounts receivable balance with Jamex should be considered noncurrent and accordingly, $39.8 million of this trade accounts receivable was reclassified from "Accounts and notes receivable, net" to "Other assets, net". The Jamex trade receivable was converted into a secured promissory note on September 1, 2016. See Note D – Significant transactions for further discussion of this promissory note.

Other current liabilities consist of the following:

	2017		2016
Accrued interest	$	14,737	$	14,617
Customer deposits and advances	25,541		27,391
Price risk management liabilities	1,838		18,401
Other	79,900		66,543
Other current liabilities	$	122,016	$	126,952

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

	For the year ended July 31,
	2017		2016		2015
Operating expense	$	175,164	$	167,980	$	174,105
Depreciation and amortization expense	3,909		4,282		5,127
Equipment lease expense	26,299		25,967		22,667
	$	205,372	$	198,229	$	201,899

During fiscal 2016, Ferrellgas, L.P. committed to a plan to dispose of certain assets in its Midstream operations segment. The held for sale assets were recorded at the lower of carrying value or estimated fair value, less an estimate of costs to sell. The estimate of fair value included significant unobservable inputs (Level 3 fair value). As of July 31, 2016, this plan resulted in 134 trucks sold and 12 trucks remaining classified as held for sale assets. During fiscal 2017, the 12 remaining trucks classified as held for sale assets were repurposed and reclassified to property, plant, and equipment as held for use within other Ferrellgas businesses.

Loss on asset sales and disposal during the year ended July 31, 2017 consists of:

	For the year ended July 31,
	2017		2016		2015
Loss on assets held for sale	$	—	$	12,112	$	—
Loss on sale of assets held for sale	—		1,698		—
Loss on sale of assets and other	14,457		17,025		7,099
Loss on asset sales and disposal	$	14,457	$	30,835	$	7,099

For purposes of the 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 year ended July 31,
	2017		2016			2015
CASH PAID FOR:
Interest	$	122,084	$	117,931		$	76,085
Income taxes	$	305	$	773		$	643
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Assets contributed from Ferrellgas Partners in connection with acquisitions	$	—	$	—		$	825,452
Liabilities incurred in connection with acquisitions	$	139	$	2,126		$	481
Change in accruals for property, plant and equipment additions	$	164	$	(1,122	)	$	498