Segment Reporting Segment Reporting

3 Months Ended

Oct. 31, 2014

Segment Reporting Disclosure [Text Block]

Segment reporting

During May 2014, Ferrellgas entered into a membership interest purchase agreement to acquire all of the issued and outstanding membership interests of Sable, a fluid logistics provider in the Eagle Ford shale region of south Texas. With this acquisition Ferrellgas established a new operating and reportable segment referred to as “Midstream Operations” in addition to the existing reportable segment of propane and related equipment sales. The chief operating decision maker evaluates the operating segments using an Adjusted EBITDA performance measure which is based on net loss before income tax benefit, interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, non-cash stock-based compensation charge, loss on disposal of assets, other income (expense), net, change in fair value of contingent consideration and litigation accrual and related legal fees associated with a class action lawsuit. This performance measure is not a GAAP measure but the components are computed using amounts that are determined in accordance with GAAP. A reconciliation of this performance measure to net loss attributable to Ferrellgas Partners L.P., which is its nearest comparable GAAP measure, is included in the tables below. In management's evaluation of performance, certain costs, such as compensation for administrative staff and executive management, are not allocated by segment and, accordingly, the following reportable segment results do not include such unallocated costs. The accounting policies of the operating segments are otherwise the same as those described in the summary of significant accounting policies in Note B.

Assets reported within a segment are those assets that can be identified to a segment and primarily consist of trade receivables, property, plant and equipment, inventories, identifiable intangible assets and goodwill. Cash, certain prepaid assets and other assets are not allocated to segments. Although Ferrellgas can and does identify long-lived assets such as property, plant and equipment and identifiable intangible assets to reportable segments, Ferrellgas does not allocate the related depreciation and amortization to the segment as management evaluates segment performance exclusive of these non-cash charges.

The propane and related equipment sales segment primarily includes the distribution and sale of propane and related equipment and supplies with concentrations in the Midwest, Southeast, Southwest and Northwest regions of the United States. Sales from propane distribution are generated principally from transporting propane purchased from third parties to propane distribution locations and then to tanks on customers’ premises or to portable propane tanks delivered to nationwide and local retailers. Sales from portable tank exchanges, nationally branded under the name Blue Rhino, are generated through a network of independent and partnership-owned distribution outlets.

Salt water disposal wells are a critical component of the oil and natural gas well drilling industry. Oil and gas wells generate significant volumes of salt water known as “flowback” and “production” water. Flowback is a water based solution that flows back to the surface during and after the completion of the hydraulic fracturing (“fracking”) process whereby large volumes of water, sand and chemicals are injected under high pressures into rock formations to stimulate production. Flowback contains clays, chemicals, dissolved metal ions, total dissolved solids and oil/condensate. Production water is salt water from underground formations that are brought to the surface during the normal course of oil or gas production. Because this water has been in contact with hydrocarbon-bearing formations, it contains some of the chemical characteristics of the formations and the hydrocarbons. In the oil and gas fields we service, these volumes of water are transported by truck away from the fields to salt water disposal wells where it is injected into underground geologic formations using high-pressure pumps. Revenue is derived from fees charged to customers to dispose of salt water at the disposal facilities and crude oil sales from the skimming oil process.

Prior to the Sable acquisition in May 2014, Ferrellgas managed and evaluated its operations as a single reportable segment. As the current two reportable segment structure is the result of the Sable acquisition completed during May 2014, comparative historical segment information for fiscal 2014 is not provided.

Following is a summary of segment information for the three months ended October 31, 2014.

	Three months ended October 31, 2014
	Propane and related equipment sales		Midstream operations		Corporate and other			Total
Segment revenues	$	435,439	$	7,916	$	—		$	443,355
Direct costs (1)		393,805		4,733		10,456			408,994
Adjusted EBITDA	$	41,634	$	3,183	$	(10,456	)	$	34,361

(1) Direct costs are comprised of "cost of products sold-propane and other gas liquids sales", "cost of products sold-other", "operating expense", "general and administrative expense", and "equipment lease expense" less "non-cash stock-based compensation charge", "change in fair value of contingent consideration" and "litigation accrual and related legal fees associated with a class action lawsuit".

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

	Three months ended October 31,
	2014
Net loss attributable to Ferrellgas Partners, L.P.	$	(32,875	)
Income tax benefit		(510	)
Interest expense		23,912
Depreciation and amortization expense		23,309
EBITDA		13,836
Non-cash employee stock ownership plan compensation charge		4,374
Non-cash stock-based compensation charge		16,112
Loss on disposal of assets		961
Other expense (income), net		449
Change in fair value of contingent consideration		(1,800	)
Litigation accrual and related legal fees associated with a class action lawsuit		723
Net loss attributable to noncontrolling interest		(294	)
Adjusted EBITDA	$	34,361

Following are total assets by segment:

	October 31,		July 31,
	2014		2014
Assets
Propane and related equipment sales	$	1,442,779	$	1,400,603
Midstream operations		201,344		136,116
Corporate and unallocated		36,312		35,551
Total consolidated assets	$	1,680,435	$	1,572,270

Following are capital expenditures by segment:

	Three months ended October 31,
	Propane and related equipment sales		Midstream operations		Corporate and other		Total
Maintenance	$	4,576	$	176	$	304	$	5,056
Growth		11,069		857		—		11,926
Total	$	15,645	$	1,033	$	304	$	16,982

Ferrellgas, L.P. [Member]

Segment Reporting Disclosure [Text Block]

Segment reporting

During May 2014, Ferrellgas L.P. entered into a membership interest purchase agreement to acquire all of the issued and outstanding membership interests of Sable, a fluid logistics provider in the Eagle Ford shale region of south Texas. With this acquisition Ferrellgas L.P. established a new operating and reportable segment referred to as “Midstream Operations” in addition to the existing reportable segment of propane and related equipment sales. The chief operating decision maker evaluates the operating segments using an Adjusted EBITDA performance measure which is based on net loss before income tax benefit, interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, non-cash stock-based compensation charge, loss on disposal of assets, other income (expense), net, change in fair value of contingent consideration and litigation accrual and related legal fees associated with a class action lawsuit. This performance measure is not a GAAP measure, however, the components are computed using amounts that are determined in accordance with GAAP. A reconciliation of this performance measure to net loss, which is its nearest comparable GAAP measure, is included in the tables below. In management's evaluation of performance, certain costs, such as compensation for administrative staff and executive management, are not allocated by segment and, accordingly, the following reportable segment results do not include such unallocated costs. The accounting policies of the operating segments are otherwise the same as those described in the summary of significant accounting policies in Note B.

Assets reported within a segment are those assets that can be identified to a segment and primarily consist of trade receivables, property, plant and equipment, inventories, identifiable intangible assets and goodwill. Cash, certain prepaid assets and other assets are not allocated to segments. Although Ferrellgas L.P. can and does identify long-lived assets such as property, plant and equipment and identifiable intangible assets to reportable segments, Ferrellgas L.P. does not allocate the related depreciation and amortization to the segment as management evaluates segment performance exclusive of these non-cash charges.

The propane and related equipment sales segment primarily includes the distribution and sale of propane and related equipment and supplies with concentrations in the Midwest, Southeast, Southwest and Northwest regions of the United States. Sales from propane distribution are generated principally from transporting propane purchased from third parties to propane distribution locations and then to tanks on customers’ premises or to portable propane tanks delivered to nationwide and local retailers. Sales from portable tank exchanges, nationally branded under the name Blue Rhino, are generated through a network of independent and partnership-owned distribution outlets.

Salt water disposal wells are a critical component of the oil and natural gas well drilling industry. Oil and gas wells generate significant volumes of salt water known as “flowback” and “production” water. Flowback is a water based solution that flows back to the surface during and after the completion of the hydraulic fracturing (“fracking”) process whereby large volumes of water, sand and chemicals are injected under high pressures into rock formations to stimulate production. Flowback contains clays, chemicals, dissolved metal ions, total dissolved solids and oil/condensate. Production water is salt water from underground formations that are brought to the surface during the normal course of oil or gas production. Because this water has been in contact with hydrocarbon-bearing formations, it contains some of the chemical characteristics of the formations and the hydrocarbons. In the oil and gas fields we service, these volumes of water are transported by truck away from the fields to salt water disposal wells where it is injected into underground geologic formations using high-pressure pumps. Revenue is derived from fees charged to customers to dispose of salt water at the disposal facilities and crude oil sales from the skimming oil process.

Prior to the Sable acquisition in May 2014, Ferrellgas managed and evaluated its operations as a single reportable segment. As the current two reportable segment structure is the result of the Sable acquisition completed during May 2014, comparative historical segment information for fiscal 2013 are not provided.

Following is a summary of segment information for the three months ended October 31, 2014.

	Three months ended October 31, 2014
	Propane and related equipment sales		Midstream operations		Corporate and other			Total
Segment revenues	$	435,439	$	7,916	$	—		$	443,355
Direct costs (1)		393,808		4,733		10,456			408,997
Adjusted EBITDA	$	41,631	$	3,183	$	(10,456	)	$	34,358

(1) Direct costs are comprised of "cost of products sold-propane and other gas liquids sales", "cost of products sold-other", "operating expense", "general and administrative expense", and "equipment lease expense" less "non-cash stock-based compensation charge", "change in fair value of contingent consideration" and "litigation accrual and related legal fees associated with a class action lawsuit".

Following is a reconciliation of our total segment performance measure to consolidated net earnings:

	Three months ended October 31,
	2014
Net loss	$	(29,137	)
Income tax benefit		(511	)
Interest expense		19,878
Depreciation and amortization expense		23,309
EBITDA		13,539
Non-cash employee stock ownership plan compensation charge		4,374
Non-cash stock-based compensation charge		16,112
Loss on disposal of assets		961
Other expense (income), net		449
Change in fair value of contingent consideration		(1,800	)
Litigation accrual and related legal fees associated with a class action lawsuit		723
Adjusted EBITDA	$	34,358

Following are total assets by segment:

	October 31,		July 31,
	2014		2014
Assets
Propane and related equipment sales	$	1,442,779	$	1,400,603
Midstream operations		201,344		136,116
Corporate and unallocated		33,834		33,114
Total consolidated assets	$	1,677,957	$	1,569,833

Following are capital expenditures by segment:

	Three months ended October 31,
	Propane and related equipment sales		Midstream operations		Corporate and other		Total
Maintenance	$	4,576	$	176	$	304	$	5,056
Growth		11,069		857		—		11,926
Total	$	15,645	$	1,033	$	304	$	16,982