Fair Value Measurements

9 Months Ended

Apr. 30, 2018

Fair Value Measurements

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 April 30, 2018 and July 31, 2017:

	Asset (Liability)
	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)			Unobservable Inputs (Level 3)		Total
April 30, 2018:
Assets:
Derivative financial instruments:
Interest rate swap agreements	$	—	$	41		$	—	$	41
Commodity derivatives	$	—	$	19,750		$	—	$	19,750
Liabilities:
Derivative financial instruments:
Interest rate swap agreements	$	—	$	(3,222	)	$	—	$	(3,222	)
Commodity derivatives	$	—	$	(2,239	)	$	—	$	(2,239	)
July 31, 2017:
Assets:
Derivative financial instruments:
Interest rate swap agreements	$	—	$	583		$	—	$	583
Commodity derivatives	$	—	$	16,212		$	—	$	16,212
Liabilities:
Derivative financial instruments:
Interest rate swap agreements	$	—	$	(707	)	$	—	$	(707	)
Commodity derivatives	$	—	$	(1,258	)	$	—	$	(1,258	)

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. The fair values of interest rate swap contracts are based upon third-party quotes or indicative values based on recent market transactions.

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. The estimated fair value of various note receivable financial instruments classified in "Other assets, net" on the condensed consolidated balance sheets, are approximately $29.3 million, or $4.7 million less than their carrying amount as of April 30, 2018. The estimated fair values of these notes receivable were calculated using a discounted cash flow method which relied on significant unobservable inputs. At April 30, 2018 and July 31, 2017, the estimated fair value of Ferrellgas’ long-term debt instruments was $1,890.1 million and $1,966.6 million, respectively. Ferrellgas estimates the fair value of long-term debt based on quoted market prices. The fair value of our consolidated debt obligations is a Level 2 valuation based on the observable inputs used for similar liabilities.

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.

Ferrellgas, L.P. [Member]

Fair Value Measurements

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 April 30, 2018 and July 31, 2017:

	Asset (Liability)
	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)			Unobservable Inputs (Level 3)		Total
April 30, 2018:
Assets:
Derivative financial instruments:
Interest rate swap agreements	$	—	$	41		$	—	$	41
Commodity derivatives	$	—	$	19,750		$	—	$	19,750
Liabilities:
Derivative financial instruments:
Interest rate swap agreements	$	—	$	(3,222	)	$	—	$	(3,222	)
Commodity derivatives	$	—	$	(2,239	)	$	—	$	(2,239	)
July 31, 2017:
Assets:
Derivative financial instruments:
Interest rate swap agreements	$	—	$	583		$	—	$	583
Commodity derivatives	$	—	$	16,212		$	—	$	16,212
Liabilities:
Derivative financial instruments:
Interest rate swap agreements	$	—	$	(707	)	$	—	$	(707	)
Commodity derivatives	$	—	$	(1,258	)	$	—	$	(1,258	)

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. The fair values of interest rate swap contracts are based upon third-party quotes or indicative values based on recent market transactions.

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. The estimated fair value of various note receivable financial instruments classified in "Other assets, net" on the condensed consolidated balance sheets, are approximately $29.3 million, or $4.7 million less than their carrying amount as of April 30, 2018. The estimated fair values of these notes receivable were calculated using a discounted cash flow method which relied on significant unobservable inputs. At April 30, 2018 and July 31, 2017, the estimated fair value of Ferrellgas, L.P.’s long-term debt instruments was $1,560.8 million and $1,645.3 million, respectively. Ferrellgas, L.P. estimates the fair value of long-term debt based on quoted market prices. The fair value of our 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.