-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EXfc3ibhuR/ZmZ/J0L53LeM5EuYazdhW8PHzJTI8ELJGXjts8MeZ1cXqeOLkKRE2 BsyQo+PbeYDRg9nN9SR4pA== 0000950123-98-008813.txt : 19981008 0000950123-98-008813.hdr.sgml : 19981008 ACCESSION NUMBER: 0000950123-98-008813 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980130 ITEM INFORMATION: FILED AS OF DATE: 19981007 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: K N ENERGY INC CENTRAL INDEX KEY: 0000054502 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 480290000 STATE OF INCORPORATION: KS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-06446 FILM NUMBER: 98722243 BUSINESS ADDRESS: STREET 1: 370 VAN GORDON ST STREET 2: PO BOX 281304 CITY: LAKEWOOD STATE: CO ZIP: 80228-8304 BUSINESS PHONE: 3039891740 MAIL ADDRESS: STREET 1: 370 VAN GORDON STREET STREET 2: P O BOX 281304 CITY: LAKEWOOD STATE: CO ZIP: 80228-8304 FORMER COMPANY: FORMER CONFORMED NAME: KN ENERGY INC DATE OF NAME CHANGE: 19920430 FORMER COMPANY: FORMER CONFORMED NAME: KANSAS NEBRASKA NATURAL GAS CO INC DATE OF NAME CHANGE: 19830403 8-K/A 1 AMENDMENT TO FORM 8-K: KN ENERGY, INC. 1 =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-1004 ------------------ FORM 8-K/A ------------------ CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) January 30, 1998 ------------------ K N ENERGY, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ------------------ KANSAS 1-6446 48-0290000 (State or other (Commission File Number) (I.R.S. Employer jurisdiction of Identification No.) incorporation or organization) 370 VAN GORDON STREET P.O. BOX 281304 LAKEWOOD, COLORADO (Address of Principal 80228-8304 Executive Offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (303) 989-1740 =============================================================================== 2 ITEM 7. FINANCIAL STATEMENTS. (a) UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT Unaudited pro forma condensed statement of income for the six months ended June 30, 1998 and related notes are included herein. 3 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. K N Energy, Inc. Dated: October 7, 1998 By: /s/ Martha B. Wyrsch -------------------------- Martha B. Wyrsch Vice President, General Counsel and Secretary 4 UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT The following unaudited pro forma income statement gives effect to (i) KN Energy, Inc.'s ("K N") January 30, 1998 acquisition of MidCon Corp. ("MidCon") from Occidental Petroleum Corporation ("Occidental") (the "Acquisition"), (ii) the March 1998 sale by K N of 12.5 million shares of common stock in an underwritten public offering (the "Equity Offering"), (iii) the March 1998 underwritten public offering of an aggregate principal amount of $2.35 billion of senior notes of varying maturities (the "Debt Offerings") and (iv) the April 1998 underwritten public offering of $175 million aggregate liquidation amount of 7.63% Capital Securities (the "Capital Securities Offering" and, together with the Equity Offering and the Debt Offerings, the "Prior Offerings"). The unaudited pro forma condensed statement of income assumes that the Acquisition and the Prior Offerings occurred at January 1, 1998. A pro forma balance sheet has not been included because K N's June 30, 1998 balance sheet included in its second-quarter 1998 Report on Form 10-Q reflects the impact of the Acquisition. A pro forma income statement for the twelve months ended December 31, 1997 has not been included because such income statement was included in K N's Report on Form 8-K filed on June 5, 1998. The Acquisition was recorded as a purchase for accounting purposes and, accordingly, the assets acquired and liabilities assumed have been reflected at their estimated respective fair market values. The unaudited pro forma income statement should be read in conjunction with the historical financial statements of K N and "Management's Discussion and Analysis of Financial Condition and Results of Operations" of K N included in K N's 1997 Annual Report on Form 10-K and first- and second-quarter 1998 Reports on Form 10-Q and the historical financial statements of MidCon included in K N's Report on Form 8-K/A dated February 12, 1998. The unaudited pro forma condensed statement of income is not necessarily indicative of the financial results that would have occurred had the Acquisition been consummated on the date indicated, nor is it necessarily indicative of future financial results. The pro forma adjustments are based on preliminary assumptions and estimates made by K N's management and do not reflect adjustments for anticipated operating efficiencies and cost savings which K N expects to achieve as a result of the Acquisition. The actual allocation of the consideration paid by K N for MidCon may differ from that reflected in the unaudited pro forma combined condensed financial statements after a more extensive review of the fair market values of the assets acquired and liabilities assumed has been completed. 5 UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME Six Months Ended June 30, 1998 (in thousands, except per share amounts)
HISTORICAL PRO FORMA ------------------------- -------------------------- K N ENERGY MIDCON(1) ADJUSTMENTS COMBINED ---------- --------- ----------- -------- Operating Revenues ......................... $2,206,240 $268,055 $2,474,295 ---------- -------- ---------- Operating Costs and Expenses: Gas Purchases and Other Costs of Sales .... 1,726,876 194,382 1,921,258 Operations and Maintenance ................ 189,239 28,200 $ (400)(a) 217,039 Depreciation and Amortization ............. 89,199 13,174 (254)(b) 102,119 Taxes, Other Than Income Taxes ............ 25,287 3,754 29,041 Merger-related Costs ...................... 5,763 -- -- 5,763 ---------- -------- -------- --------- Total Operating Costs and Expenses .............................. 2,036,364 239,510 (654) 2,275,220 ---------- -------- -------- ---------- Operating Income ........................... 169,876 28,545 654 199,075 ---------- -------- -------- ---------- Other Income and (Deductions): Interest Expense, Net ..................... (113,833) (22,443) (15,680)(c) (143,491) 1,128 (d) 4,479 (e) 2,858 (f) Minority Interests ........................ (6,996) (162) (4,280)(f) (11,438) Other, Net ................................ 13,171 1,250 (1,126)(d) 13,138 (137)(g) (20)(f) ---------- -------- -------- ---------- Total Other Income and (Deductions) ........ (107,658) (21,355) (12,778) (141,791) ---------- -------- -------- ---------- Income Before Income Taxes ................. 62,218 7,190 (12,124) 57,284 Income Taxes ............................... 23,021 2,660 (4,580)(h) 21,101 ---------- -------- -------- ---------- Net Income ................................. 39,197 4,530 (7,544) 36,183 Less -- Preferred Stock Dividends .......... 175 -- -- 175 ---------- -------- -------- ---------- Earnings Available For Common Stock ........ $ 39,022 $ 4,530 $ (7,544) $ 36,008 ---------- -------- -------- ---------- Diluted Earnings Per Common Share .......... $ 0.96 $ 0.79 Number of Shares Used in Computing Diluted Earnings Per Common Share ......... 40,545 4,765 (e) 45,310 Dividends Per Common Share(2) .............. $ 0.56 $ 0.56
- --------- (1) MidCon's results of operations for January 1998. (2) Represents K N's historical dividends per common share. See Notes to Unaudited Pro Forma Combined Condensed Financial Statements 6 NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (a) Gives pro forma effect to the termination of MidCon's Employee Stock Ownership Plan instituted in November 1996, and the removal of the associated administrative expenses. (b) The pro forma adjustment to depreciation and amortization consists of the following:
(Thousands) ----------- Elimination of MidCon's historical depreciation and amortization................................................. $(13,174) K N's recomputed depreciation and amortization................................................................... 12,920 ----------- Total....................................................................................................... $(254) ===========
(c) The pro forma adjustment to interest expense consists of the following:
(Thousands) ----------- Elimination of MidCon's historical interest expense on its ESOP Note............................................. $(9,183) Elimination of MidCon's historical interest expense on its $1.6 billion payable to Occidental.................... (10,533) Interest expense on the Debt Offerings at 6.78%.................................................................. 30,120 Interest expense at 5.80% on the Substitute Note................................................................. 6,739 Interest savings associated with the repayment of $329.2 million outstanding under K N's previous short-term credit facility...................................................................... (1,860) Fee for letter of credit at 0.625% used to collateralize the Substitute Note..................................... 397 ----------- Total....................................................................................................... $15,680 ===========
(d) To eliminate facility fees and interest income associated with MidCon's participation in a sale of receivables facility, which participation terminated concurrently with the closing of the Acquisition. (e) To record the Equity Offering and application of the net proceeds of $623.9 million to reduce short term borrowings and purchase $460.1 million of U.S. government securities as a portion of the collateral for the Substitute Note. The U.S. government securities are assumed to earn interest at 5.15%. (f) To record the Capital Securities Offering and application of the net proceeds of $173.1 million to purchase U.S. government securities to replace a portion of the letters of credit that collateralized the Substitute Note. Distributions on the Capital Securities are payable at an annual rate of 7.63%. The U.S. government securities are assumed to earn interest at 5.15%. (g) To record amortization of debt issuance cost associated with the Debt Offerings. (h) Represents the tax effect at the effective rate (equal to (i) the statutory federal income tax rate plus (ii) the statutory state income tax rate, net of federal income benefit) for all pre-tax pro forma adjustments not representing permanent book/tax differences. -----END PRIVACY-ENHANCED MESSAGE-----