Acquisitions, dispositions and other significant transactions

12 Months Ended

Jul. 31, 2020

D. Acquisitions, dispositions and other significant transactions

Acquisitions

Business combinations are accounted for under the acquisition method of accounting and the assets acquired and liabilities assumed are recorded at their estimated fair market values as of the acquisition dates. The results of operations are included in the consolidated statements of operations from the date of acquisition. The pro forma effect of these transactions was not material to Ferrellgas’ balance sheets or results of operations.

Propane operations and related equipment sales

During fiscal 2020, Ferrellgas acquired propane distribution assets, primarily of independent distributors, with an aggregate value of $11.2 million in the following transactions:

Golden State Propane, Inc., based in California, acquired in August 2019;

C.F. Van Duzer Gas Services, Inc., based in New York, acquired in October 2019;

Lee Propane of Pennington Gap, Inc., based in Virginia, acquired in June 2020;

During fiscal 2019, Ferrellgas acquired propane distribution assets, primarily of independent distributors, with an aggregate value of $15.2 million in the following transactions:

Salathe Gas Co., based in Louisiana, acquired September 2018;

North Star Exchange, Inc., based in Indiana, acquired October 2018;

Wylie LP Gas Inc., based in Texas, acquired October 2018;

Co-op Butane Inc., based in Louisiana, acquired in December 2018;

American Propane, based in Oklahoma, acquired January 2019;

Reliable Propane Inc., based in Missouri, acquired in February 2019;

AAA Propane, Inc., based in Colorado, acquired in June 2019.

During fiscal 2018, Ferrellgas acquired propane distribution assets with an aggregate value of $20.6 million in the following transactions:

Lindsey Propane LLC, based in Tennessee, acquired August 2017;

Sevier County Propane, based in Tennessee, acquired August 2017;

Service Plus Propane, Inc., based in Virginia, acquired September 2017;

Tapper Propane, Inc., based in Michigan, acquired November 2017; and

Diamond Propane LLC, based in New York, acquired June 2018.

These acquisitions were funded as follows on their dates of acquisition:


	For the year ended July 31,
	2020		2019		2018
Cash payments, net of cash acquired	$	10,195	$	13,551	$	18,141
Issuance of liabilities and other costs and considerations		975		1,650		2,426
Aggregate fair value of transactions	$	11,170	$	15,201	$	20,567

The aggregate fair values, for the acquisitions in propane operations and related equipment sales reporting segment, were allocated as follows, including any adjustments identified during the measurement period:


	For the year ended July 31,
	2020		2019		2018
Working capital	$	—	$	31	$	758
Customer tanks, buildings, land and other		6,598		11,560		10,022
Goodwill		—		1,410		—
Customer lists		738		1,272		7,758
Non-compete agreements		3,834		928		2,029
Aggregate fair value of net assets acquired	$	11,170	$	15,201	$	20,567

The estimated fair values and useful lives of assets acquired during fiscal 2020 are based on a preliminary valuation and are subject to final valuation adjustments. Ferrellgas intends to continue its analysis of the net assets of these transactions to determine the final allocation of the total purchase price to the various assets and liabilities acquired. The estimated fair values and useful lives of assets acquired during fiscal 2019 and 2018 are based on internal valuations and included only minor adjustments during the 12 month period after the date of acquisition. Due to the immateriality of these adjustments, Ferrellgas did not retrospectively adjust the consolidated statements of operations for those measurement period adjustments.

Dispositions

Propane operations and related equipment sales

During July 2018, Ferrellgas completed the sale of a group of assets encompassing an immaterial reporting unit within our Propane operations segment for approximately $26.6 million in cash. For the year ended July 31, 2018, “Loss on asset sales and disposals” includes a loss of $15.2 million related to this sale. The assets sold consist primarily of working capital and equipment.

Midstream operations

During July 2018, Ferrellgas completed the sale of a subsidiary and a group of assets within the Midstream operations segment for approximately $57.0 million in cash. The subsidiary sold was Bridger Environmental LLC, which encompasses all saltwater disposal activities previously operated by Ferrellgas. The group of assets sold includes all assets, excluding working capital, associated with the crude oil trucking operations previously operated by Ferrellgas. Additionally, the sale included two crude oil injection terminals. In separate transactions, the remaining assets of the Bridger Terminal business were sold to various parties. The largest of these assets, the Swan Ranch Terminal, was sold for $8.0 million in cash. For the year ended July 31, 2018, “Loss on asset sales and disposals” includes a loss of $120.2 million related to these sales.

Additionally, during fiscal 2018, Ferrellgas sold all 1,292 rail cars utilized in the Midstream operations segment for approximately $51.3 million in cash. For the year ended July 31, 2018, “Loss on asset sales and disposals” includes a loss of $36.8 million related to the sale of these rail cars. Proceeds from the transaction were used to reduce outstanding debt on Ferrellgas’ previous senior secured credit facility. During fiscal 2018, Ferrellgas completed the sale of Bridger Energy, LLC, included in the Midstream operations segment, in exchange for an $8.5 million secured promissory note due in May 2020 which was fully paid on February 20, 2019. For the year ended July 31, 2018, “Loss on asset sales and disposals” includes a loss of $4.0 million related to this sale.

The combined results from operations of these various Midstream dispositions in our Consolidated Statements of Operations includes losses before income taxes for the year ended July 31, 2018 of $55.4 million. The combined losses before income taxes attributable to Ferrellgas Partners, L.P. for the year ended July 31, 2018 was $54.8 million.

“Loss on asset sales and disposals” consists of:


	For the year ended July 31,
	2020		2019		2018
Loss on sale of:
Propane-related accessories reporting unit	$	—	$	—	$	15,194
Midstream trucking, water disposal & terminal assets		—		2,679		120,240
Midstream railcars		—		—		36,762
Bridger Energy		—		—		4,002
Other		7,924		8,289		11,201
Loss on asset sales and disposals	$	7,924	$	10,968	$	187,399

Ferrellgas, L.P. [Member]

Business Acquisition [Line Items]

Business Combinations

D. Acquisitions, dispositions and other significant transactions

Acquisitions

Propane operations and related equipment sales

During fiscal 2020, Ferrellgas acquired propane distribution assets, primarily of independent distributors, with an aggregate value of $11.2 million in the following transactions:

Golden State Propane, Inc., based in California, acquired in August 2019;

C.F. Van Duzer Gas Services, Inc., based in New York, acquired in October 2019;

Lee Propane of Pennington Gap, Inc., based in Virginia, acquired in June 2020;

During fiscal 2019, Ferrellgas acquired propane distribution assets, primarily of independent distributors, with an aggregate value of $15.2 million in the following transactions:

Salathe Gas Co., based in Louisiana, acquired September 2018;

North Star Exchange, Inc., based in Indiana, acquired October 2018;

Wylie LP Gas Inc., based in Texas, acquired October 2018;

Co-op Butane Inc., based in Louisiana, acquired in December 2018;

American Propane, based in Oklahoma, acquired January 2019;

Reliable Propane Inc., based in Missouri, acquired in February 2019;

AAA Propane, Inc., based in Colorado, acquired in June 2019.

During fiscal 2018, Ferrellgas, L.P. acquired propane distribution assets with an aggregate value of $20.6 million in the following transactions:

Lindsey Propane LLC, based in Tennessee, acquired August 2017;

Sevier County Propane, based in Tennessee, acquired August 2017;

Service Plus Propane, Inc., based in Virginia, acquired September 2017;

Tapper Propane, Inc., based in Michigan, acquired November 2017; and

Diamond Propane LLC, based in New York, acquired June 2018.

These acquisitions were funded as follows on their dates of acquisition:


	For the year ended July 31,
	2020		2019		2018
Cash payments, net of cash acquired	$	10,195	$	13,551	$	18,141
Issuance of liabilities and other costs and considerations		975		1,650		2,426
Aggregate fair value of transactions	$	11,170	$	15,201	$	20,567


	For the year ended July 31,
	2020		2019		2018
Working capital	$	—	$	31	$	758
Customer tanks, buildings, land and other		6,598		11,560		10,022
Goodwill		—		1,410		—
Customer lists		738		1,272		7,758
Non-compete agreements		3,834		928		2,029
Aggregate fair value of net assets acquired	$	11,170	$	15,201	$	20,567

The estimated fair values and useful lives of assets acquired during fiscal 2020 are based on a preliminary valuation and are subject to final valuation adjustments. Ferrellgas, L.P. intends to continue its analysis of the net assets of these transactions to determine the final allocation of the total purchase price to the various assets and liabilities acquired. The estimated fair values and useful lives of assets acquired during fiscal 2019 and 2018 are based on internal valuations and included only minor adjustments during the 12 month period after the date of acquisition. Due to the immateriality of these adjustments, Ferrellgas, L.P. did not retrospectively adjust the consolidated statements of operations for those measurement period adjustments.

Dispositions

Propane operations and related equipment sales

During July 2018, Ferrellgas, L.P. completed the sale of a group of assets encompassing an immaterial reporting unit within our Propane operations segment for approximately $26.6 million in cash. For the year ended July 31, 2018, “Loss on asset sales and disposals” includes a loss of $15.2 million related to this sale. The assets sold consist primarily of working capital and equipment.

Midstream operations

During July 2018, Ferrellgas, L.P. completed the sale of a subsidiary and a group of assets within the Midstream operations segment for approximately $57.0 million in cash. The subsidiary sold was Bridger Environmental LLC, which encompasses all saltwater disposal activities previously operated by Ferrellgas Partners. The group of assets sold includes all assets, excluding working capital, associated with the crude oil trucking operations previously operated by Ferrellgas Partners. Additionally, the sale included two crude oil injection terminals. In separate transactions, the remaining assets of the Bridger Terminal business were sold to various parties. The largest of these assets, the Swan Ranch Terminal, was sold for $8.0 million in cash. For the year ended July 31, 2018, “Loss on asset sales and disposals” includes a loss of $120.2 million related to these sales.

Additionally, during fiscal 2018, Ferrellgas, L.P. sold all 1,292 rail cars utilized in the Midstream operations segment for approximately $51.3 million in cash. For the year ended July 31, 2018, “Loss on asset sales and disposals” includes a loss of $36.8 million related to the sale of these rail cars. Proceeds from the transaction were used to reduce outstanding debt on Ferrellgas, L.P.’s previous senior secured credit facility. During fiscal 2018, Ferrellgas, L.P. completed the sale of Bridger Energy, LLC, included in the Midstream operations segment, in exchange for an $8.5 million secured promissory note due in May 2020 which was fully paid on February 20, 2019. For the year ended July 31, 2018, “Loss on asset sales and disposals” includes a loss of $4.0 million related to this sale.

The combined results from operations of these various Midstream dispositions in our Consolidated Statements of Operations includes losses before income taxes for the year ended July 31, 2018 of $55.4 million. The combined losses before income taxes attributable to Ferrellgas for the year ended July 31, 2018 was $54.8 million.

“Loss on asset sales and disposals” consists of:


	For the year ended July 31,
	2020		2019		2018
Loss on sale of:
Propane-related accessories reporting unit	$	—	$	—	$	15,194
Midstream trucking, water disposal & terminal assets		—		2,679		120,240
Midstream railcars		—		—		36,762
Bridger Energy		—		—		4,002
Other		7,924		8,289		11,201
Loss on asset sales and disposals	$	7,924	$	10,968	$	187,399