Ferrellgas Partners, L.P. Announces Near-Record Fiscal 2005 Results

OVERLAND PARK, Kan., Oct. 14 /PRNewswire-FirstCall/ -- Ferrellgas Partners, L.P. , one of the nation's largest propane distributors, today reported earnings for its fiscal fourth quarter and year ended July 31, 2005.

"Fiscal 2005 will be remembered as a turning point in the history of Ferrellgas as we have successfully completed the nationwide rollout of our new technology platform," said James E. Ferrell, Chairman, President and Chief Executive Officer. "Today, all of our more than 850 retail propane distribution locations are servicing over 1 million customers on our new operating platform and we have begun to realize the anticipated operating expense savings and improved customer profitability associated with this new operating platform. We continue to believe that our new business model will contribute more than $30 million annually to our Adjusted EBITDA performance beginning in fiscal 2006."

Propane sales for the fiscal year were a near-record 898 million gallons, compared to propane sales volumes of 874 million gallons sold in fiscal 2004, primarily reflecting the full-year contribution from the Blue Rhino propane by portable tank exchange operations partially offset by warmer than normal heating season temperatures and the effects of continued customer conservation resulting from significantly higher wholesale commodity prices. In fiscal 2005, national temperatures were 6 percent warmer than normal and 2 percent warmer than the prior fiscal year, according to the National Oceanic & Atmospheric Administration.

Gross profit for the fiscal year was a record $613.8 million, compared to a gross profit of $542.0 million reported in fiscal 2004. This fiscal year's record gross profit results reflect the full-year contribution from our Blue Rhino operations, which experienced a more than 20-percent increase in year-over-year sales volumes, contributions from recent retail propane acquisitions and improved margins from retail locations. These increases in gross profit were partially offset by reduced sales volumes resulting from continued customer conservation related to the high commodity prices and warmer temperatures and a lesser contribution from risk management activities.

Operating and general and administrative expenses for the fiscal year were $366.2 million and $42.3 million, respectively, compared to $323.3 million and $34.5 million in the prior fiscal year. Increases in these expenses primarily reflect the full-year contribution from the Blue Rhino operations and recent retail propane acquisitions and, to a lesser extent, anticipated costs associated with the ongoing rollout of the partnership's new technology initiative to its retail distribution locations.

Interest expense and depreciation and amortization expense were $91.5 million and $83.1 million, respectively, compared to $74.5 million and $56.1 million in the prior fiscal year. Increases in these expenses primarily reflect the impact of recent acquisitions, including the Blue Rhino contribution in April 2004. Equipment lease expense for the fiscal year was $25.5 million, compared to $19.7 million in the prior fiscal year primarily reflecting the addition of leased equipment related to the partnership's technology initiative.

Adjusted EBITDA, including results from discontinued operations, and net earnings for fiscal 2005 were $189.2 million and $88.8 million, respectively, compared to $173.7 million and $28.6 million achieved in fiscal 2004. Fiscal 2005 net earnings were favorably impacted by the partnership's July 2005 divestiture of certain non-strategic storage and terminal assets, which generated a $97.0 million gain on the sale of these discontinued operations.

"With the rollout of our technology platform behind us and our recent significant debt reduction, we are now operationally and financially positioned in fiscal 2006 to be more flexible to changes in customer demand, commodity prices and other factors impacting our industry," said Mr. Ferrell. "We are excited to share with investors what our enhanced capabilities can produce and expect to show a significant improvement in our financial results beginning with our upcoming fiscal first quarter."

For the fourth quarter, propane sales volumes and gross profit were 130 million gallons and $106.3 million, respectively. Operating and general and administrative expenses were $86.9 million and $10.7 million, respectively. Interest expense and depreciation and amortization expense were $22.8 million and $21.5 million, respectively, while equipment lease expense was $6.8 million. These seasonal results produced an expected Adjusted EBITDA, including results from discontinued operations, of $3.2 million and net earnings of $46.6 million for the fourth fiscal quarter.

Ferrellgas Partners, L.P., through its operating partnership, Ferrellgas, L.P., currently serves more than one million customers in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Canada. Ferrellgas employees indirectly own more than 18 million common units of Ferrellgas Partners through an employee stock ownership plan.

Statements in this release concerning expectations for the future are forward-looking statements. A variety of known and unknown risks, uncertainties and other factors could cause results, performance and expectations to differ materially from anticipated results, performance and expectations. These risks, uncertainties and other factors are discussed in the Annual Report on Form 10-K of Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P. and Ferrellgas Finance Corp. for the fiscal year ended July 31, 2005 and other documents filed from time to time by these entities with the Securities and Exchange Commission.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except unit data) (unaudited) ASSETS July 31, 2005 July 31, 2004 Current Assets: Cash and cash equivalents $20,505 $15,428 Accounts and notes receivable, net 107,778 110,389 Inventories 97,743 96,359 Prepaid expenses and other current assets 12,861 9,715 Current assets of discontinued operations - 11,348 Total Current Assets 238,887 243,239 Property, plant and equipment, net 766,765 776,507 Goodwill 234,142 230,604 Intangible assets, net 255,277 264,427 Other assets, net 13,902 15,330 Non-current assets of discontinued operations - 48,068 Total Assets $1,508,973 $1,578,175 LIABILITIES AND PARTNERS' CAPITAL Current Liabilities: Accounts payable $108,667 $101,737 Short term borrowings 19,800 - Other current liabilities (a) 71,535 88,313 Current liabilities of discontinued operations - 7,052 Total Current Liabilities 200,002 197,102 Long-term debt (a) 948,977 1,153,652 Other liabilities 20,165 17,052 Non-current liabilities of discontinued operations - 3,479 Contingencies and commitments - - Minority interest 6,151 4,791 Partners' Capital: Senior unitholder (0 and 1,994,146 units outstanding and liquidation preference $0 and $79,766 at 2005 and 2004 respectively) - 79,766 Common unitholders (60,134,054 and 48,772,875 units outstanding at 2005 and 2004, respectively) 390,422 178,994 General partner unitholder (607,415 and 512,798 units outstanding at 2005 and 2004, respectively) (56,132) (57,391) Accumulated other comprehensive income (loss) (612) 730 Total Partners' Capital 333,678 202,099 Total Liabilities and Partners' Capital $1,508,973 $1,578,175 (a) The principal difference between the Ferrellgas Partners, L.P. balance sheet and that of Ferrellgas, L.P., is $268 million of 8 3/4% notes which are liabilities of Ferrellgas Partners, L.P. and not of Ferrellgas, L.P. FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS FOR THE THREE AND TWELVE MONTHS ENDED JULY 31, 2005 AND 2004 (in thousands, except per unit data) (unaudited) Three months ended July 31 Twelve months ended July 31 2005 2004 2005 2004 Revenues: Propane and other gas liquids sales $261,908 $209,139 $1,592,325 $1,210,564 Other 34,442 34,413 161,789 97,822 Total revenues 296,350 243,552 1,754,114 1,308,386 Cost of product sold 190,091 139,296 1,140,298 766,404 Gross profit 106,259 104,256 613,816 541,982 Operating expense 86,864 91,849 366,192 323,260 Depreciation and amortization expense 21,509 19,673 83,060 56,111 General and administrative expense 10,664 10,771 42,342 34,532 Equipment lease expense 6,821 5,396 25,495 19,652 Employee stock ownership plan compensation charge 3,814 1,902 12,266 7,892 Loss on sale of assets and other 4,070 2,652 8,673 7,133 Operating income (loss) (27,483) (27,987) 75,788 93,402 Interest expense (22,848) (22,384) (91,518) (74,467) Interest income 368 322 1,894 1,582 Earnings (loss) before income taxes, minority interest, and discontinued operations (49,963) (50,049) (13,836) 20,517 Income tax expense (benefit) 879 (419) 1,447 (402) Minority interest (b) (452) (444) 92 418 Earnings (loss) before discontinued operations (50,390) (49,186) (15,375) 20,501 Earnings from discontinued operations (including gain on sale in 2005 of $97,001), net of minority interest 97,027 1,415 104,189 8,049 Net earnings (loss) 46,637 (47,771) 88,814 28,550 Distributions to senior unitholder 1,323 1,995 7,305 7,977 Net earnings (loss) available to general partner 3,146 (497) 815 206 Net earnings (loss) available to common unitholders $42,168 $(49,269) $80,694 $20,367 Basic earnings (loss) per common unit: Net earnings available to common unitholders before discontinued operations(c) $(0.91) $(1.04) $(0.41) $0.30 Earnings from discontinued operations $1.66 $0.03 $1.91 $0.19 Net earnings available to common unitholders (e) $0.75 $(1.01) $1.50 $0.49 Weighted average common units outstanding 56,460.5 48,772.0 53,945.4 41,419.2 Supplemental Data and Reconciliation of Non-GAAP Item: Three months ended July 31 Twelve months ended July 31 2005 2004 2005 2004 Propane gallons 897,606 129,948 897,606 873,711 Net earnings (loss) $46,637 $(47,771) $88,814 $28,550 Income taxes 879 (419) 1,447 (402) Interest expense 22,848 22,384 91,518 74,467 Depreciation and amortization expense 21,509 19,673 83,060 56,111 Interest income (368) (322) (1,894) (1,582) EBITDA $91,505 $(6,455) $262,945 $157,144 Employee stock ownership plan compensation charge 3,814 1,902 12,266 7,892 Earnings from discontinued operations(a) (95,751) 364 (94,785) 1,121 Loss on disposal of assets and other 4,070 2,652 8,673 7,133 Minority interest (b) (452) (444) 92 418 Adjusted EBITDA (d) $3,186 $(1,981) $189,191 $173,708 (a) Gain on sale of storage and distribution business sold during July 2005 and other non-cash items related to the discontinued operations. (b) Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P. (c) Amount calculated as 99% of the earnings (loss) before discontinued operations less distribution to senior unit holder; the result then divided by the weighted average common units outstanding. (d) Management considers Adjusted EBITDA to be a chief measurement of the partnership's overall economic performance and return on invested capital. Adjusted EBITDA is calculated as earnings before interest, income taxes, depreciation and amortization, employee stock ownership plan compensation charge, loss on disposal of assets and other, minority interest, and other non-cash and non-operating charges. 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 are unusual or non-recurring, and makes it easier to compare its results with other companies that have different financing and capital structures. In addition, management believes this measure is consistent with the manner in which the partnership's lenders and investors measure its overall performance and liquidity, including its ability to pay quarterly equity distributions, service its long-term debt and other fixed obligations and to fund its capital expenditures and working capital requirements. This method of calculating Adjusted EBITDA may not be consistent with that of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP. (e) Emerging Issues Task Force ("EITF") 03-6 "Participating Securities and the Two-Class Method under FASB Statement No. 128, Earnings per Share," requires the calculation of net earnings per limited partner unit for each period presented according to distributions declared and participation rights in undistributed earnings, as if all of the earnings for the period had to be distributed. In periods with undistributed earnings above certain levels, the calculation according to the two-class method results in an increased allocation of undistributed earnings to the general partner and a dilution of earnings to the limited partners. The dilutive effect of EITF 03-6 on basic net earnings per common unit was $0.04 for the three months ended July 31, 2005. Contact: Ryan VanWinkle, Investor Relations, 913-661-1528 Scott Brockelmeyer, Media Relations, 913-661-1830