-----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, Q0jPWRv3tQ7JOgbiwR+Gn7HGCDxKr2Fh0SshpUEBRuY3ayUJ4ZICA2+4jx0vgGFX EkMpqPHtQO+ieCfLJs3OQg== 0000950134-99-003045.txt : 19990419 0000950134-99-003045.hdr.sgml : 19990419 ACCESSION NUMBER: 0000950134-99-003045 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980130 ITEM INFORMATION: FILED AS OF DATE: 19990416 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 SEC ACT: SEC FILE NUMBER: 001-06446 FILM NUMBER: 99596032 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 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 January 30, 1998 (Date of earliest event reported) K N Energy, Inc. (Exact Name of Registrant as specified in charter) Kansas 1-6446 48-0290000 (State of Incorporation) (Commission (IRS Employer File Number) Identification No.) 370 Van Gordon Street P.O. Box 281304 Lakewood, Colorado 80228-8304 (Address of principal executive offices, including Zip code) (303) 989-1740 (Registrant's telephone number, including area code) 2 Item 7. Financial Statements. (b) Unaudited Pro Forma Consolidated Financial Statement An unaudited pro forma condensed statement of income for the year ended December 31, 1998 and related notes are included herein. 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 hereunto duly authorized. K N Energy, Inc. By: /s/ Martha B. Wyrsch ----------------------------- Name: Martha B. Wyrsch Title: Vice President, General Counsel and Secretary Date: April 16, 1999 3 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma financial statement gives effect to (i) KN Energy, Inc's ("K N") 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"), (iv) the April 1998 underwritten public offering of $175 million principal amount of 7.63% capital securities (the "Capital Securities Offering"), (v) the November 1998 underwritten public offering of $400 million senior notes (the "Senior Notes Offering") and (vi) the November 1998 underwritten public offering of 9,310,000 units of Premium Equity Participating Units (the "PEPS Units Offering"). The unaudited pro forma condensed statement of income for the year ended December 31, 1998 assumes that the Acquisition, the Equity Offering, the Debt Offerings, the Capital Securities Offering, the Senior Notes Offering and the PEPS Units Offering occurred at January 1, 1998. A pro forma balance sheet has not been included because K N's December 31, 1998 consolidated balance sheet included in its 1998 Annual Report on Form 10-K reflects the impact of the events indicated above. 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 financial 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" included in K N's 1998 Annual Report on Form 10-K 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 statements of income is not necessarily indicative of the financial results that would have occurred had the Acquisition, the Equity Offering, the Debt Offerings, the Capital Securities Offering, the Senior Notes Offering and the PEPS Units Offering been consummated on the date indicated, nor are they 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 after December 31, 1998 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. 4 UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME YEAR ENDED DECEMBER 31, 1998 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL PRO FORMA ---------------------- --------------------------- K N ENERGY MIDCON* ADJUSTMENTS COMBINED ---------- -------- ----------- ---------- Operating Revenues........................ $4,387,843 $268,055 $4,655,898 ---------- -------- ---------- Operating Costs and Expenses: Gas Purchases and Other Costs of Sales................................ 3,400,044 194,382 3,594,426 Operations and Maintenance.............. 390,883 28,200 $ (400)(b) 418,683 Depreciation and Amortization........... 195,916 13,174 (254)(c) 208,836 Taxes, Other Than Income Taxes.......... 50,686 3,754 54,440 Merger-related Costs.................... 5,763 5,763 ---------- -------- -------- ---------- Total Operating Costs and Expenses...................... 4,043,292 239,510 (654) 4,282,148 ---------- -------- -------- ---------- Operating Income.......................... 344,551 28,545 654 373,750 ---------- -------- -------- ---------- Other Income and (Deductions): Interest Expense........................ (247,180) (22,443) (17,263)(d) (278,421) 1,128(e) 4,479(f) 2,858(g) Minority Interests...................... (16,167) (162) (4,280)(g) (20,609) Other, Net.............................. 17,057 1,250 (1,126)(e) 16,390 (137)(h) (20)(g) (634)(a) ---------- -------- -------- ---------- Total Other Income and (Deductions)....... (246,290) (21,355) (14,995) (282,640) ---------- -------- -------- ---------- Income Before Income Taxes................ 98,261 7,190 (14,341) 91,110 Income Taxes.............................. 38,272 2,660 (5,677)(i) 35,255 ---------- -------- -------- ---------- Net Income................................ 59,989 4,530 (8,664) 55,855 Less -- Preferred Stock Dividends......... 350 -- 350 ---------- -------- -------- ---------- Earnings Available For Common Stock....... $ 59,639 $ 4,530 $ (8,664) $ 55,505 ========== ======== ======== ========== Diluted Earnings Per Common Share......... $ 0.92 $ 0.81 Number of Shares Used in Computing Diluted Earnings Per Common Share............... 64,636 3,544(f) 68,180 Dividends Per Common Share................ $ 0.76 $ 0.76**
- --------------- * Represents MidCon's results of operations for January 1998. MidCon's results of operations for the eleven months ended December 31, 1998 are included in K N's historical results of operations. ** Represents K N's historical dividends per common share See Notes to Unaudited Pro Forma Combined Condensed Financial Statements 5 NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (a) To record the amortization of issuance costs of the Senior Notes Offering. (b) To record the pro forma effect of the removal of the administrative expenses associated with the termination of MidCon's Employee Stock Ownership Plan instituted in November 1996. (c) The pro forma adjustment to depreciation and amortization consists of the following (in thousands): Elimination of MidCon's historical depreciation and amortization............ $(13,174) K N's recomputed depreciation and amortization*............................ 12,920 -------- Total............................... $ (254) ========
- --------------- * The depreciation and amortization is calculated on a property, plant and equipment balance that includes a gas plant acquisition adjustment of approximately $3.9 billion which represents the excess of the estimated fair market value of MidCon's interstate pipeline assets over their recorded historical cost for regulatory purposes, amortized over 36 years (approximately the estimated remaining life of MidCon's interstate pipeline assets). (d) The pro forma adjustment to interest expense consists of the following (in 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 at 6.78% on the Debt Offerings......... 30,120 Interest Expense at 5.8% on the Substitute Note......... 6,739 Interest Expense at 6.45% on $400 million of long-term debt from the Senior Notes Offering.................. 22,831 Interest savings associated with the repayment of $329.2 million outstanding under the 1997 Credit Agreement............................................ (1,860) Interest savings associated with repayment of short-term borrowings using proceeds from the Senior Notes Offering............................................. (21,248) Fee for letter of credit at .625% used to collateralize the Substitute Note.................................. 397 -------- Total........................................... $ 17,263 ========
(e) To eliminate facility fees and interest income associated with MidCon's participation in a sale of receivables facility, which participation terminated concurrently with closing of the Acquisition. (f) To record the issuance of 18,750,000 shares of Common Stock and the interest income associated with the U.S. government securities purchased with the net proceeds from the Equity Offering. (g) To record distribution expense, amortization of issuance costs and the interest income associated with the U.S. government securities purchased with the net proceeds from the Capital Securities Offering. (h) To record the amortization of issuance costs of the Debt Offerings. (i) 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 tax benefit) for all pre-tax pro forma adjustments not representing permanent book/tax differences. -----END PRIVACY-ENHANCED MESSAGE-----