-----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, O8J1j4x/8geWCe6SJtnI/+hy5OCpBTV0g43X4GuD73AbXlMSjHW28nNGvQoAdIvq r5Ju6xNh8fgCfVbAdpX/Nw== 0000950123-97-010134.txt : 19971209 0000950123-97-010134.hdr.sgml : 19971209 ACCESSION NUMBER: 0000950123-97-010134 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970930 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971208 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KTI INC CENTRAL INDEX KEY: 0000931581 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 222665282 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-25490 FILM NUMBER: 97734173 BUSINESS ADDRESS: STREET 1: 7000 BLVD E CITY: GUTTENBERG STATE: NJ ZIP: 07093 BUSINESS PHONE: 2018547777 MAIL ADDRESS: STREET 1: 7000 BOULEVARD EAST CITY: GUTTENBERG STATE: NJ ZIP: 07093 8-K/A 1 KTI, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-KA CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 30, 1997 KTI, INC. (Exact name of Registrant as specified in Charter) New Jersey 33-85234 22-2665282 (State or other juris- (Commission (IRS Employer diction of incorporation) File Number) Identification Number) 7000 Boulevard East, Guttenberg, New Jersey 07093 (Address of principal executive office) (Zip Code) Registrant's telephone number including area code- (201) 854-7777 Not Applicable (Former name and former address, as changed since last report) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On September 30, 1997, KTI, Inc., a New Jersey corporation (the Company or the Registrant) purchased a 49.5% limited partnership interest in Penobscot Energy Recovery Company, Limited Partnership, a Maine limited partnership ("PERC") from The Prudential Insurance Company of America ("Prudential") for approximately $11.7 million in cash. In addition the Company assumed certain liabilities of Prudential by the payment of cash in the amount of $200,000 to Prudential and the issuance of Letters of Credit to Morgan Guaranty Trust Company of New York ("Morgan Guaranty") for approximately $3.9 million, replacing obligations of Prudential to Morgan Guaranty. At the same time, the Company purchased an option for $300,000 to buy the remaining 14.8% interest of Prudential in PERC for a price of $2.1 million. The option to purchase Prudential's remaining limited partnership interest terminates on October 31, 1998. With this purchase, the Company's interest in PERC has increased to 56.5%. Prudential owns a 14.8% limited partnership interest. A subsidiary of Pacificorp holds the remaining 28.7% interest in PERC, 3% as a general partner and 25.7% as a limited partner. PERC is located in Orrington, Maine and owns a 25 megawatt waste-to-energy power generating plant. Power is produced by processing approximately 250,000 tons of municipal solid waste received from 230 communities in Maine. The power is sold to Bangor Hydro-Electric Company under a long-term power supply contract. PERC had $30.3 million of revenue and $6.1 million of net income in 1996. For the nine months ended on September 30, 1997, PERC had revenue of $23.1 million and net income of $4.8 million. ITEM 5. OTHER EVENTS. In early October 1997, WEXFORD KTI LLC converted all of its $5 million principal amount Convertible Subordinated Promissory Note dated as of October 23, 1996 into 618,609 shares of the Company's common stock. ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTOR. Kenneth A. Rubin, an Officer of WEXFORD KTI LLC, resigned as a director of the Company. No disagreement exists, to the knowledge of the Company, between Mr. Rubin and the Company as to the Company's operations, policies or ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of the business acquired. The audited balance sheet of Penobscot Energy Recovery Company, Limited Partnership, as of December 31, 1996 and 1995 and the related statements of income, changes in partners' capital and cash flow for each of the three years in the period ended December 31, 1996 were included in the Registrant's Form 10-K for the fiscal year ended December 31, 1996. 3 (b) Pro Forma Financial information. The following pro forma condensed combined financial statements are based on the historical financial statements of the company and of PERC at December 31, 1996 and September 30, 1997. The pro forma condensed combined statement of operations assumes that the Company purchased PERC at the beginning of the stated period. The Company's financial statements on Form 10-Q for the quarterly period ended September 30, 1997 consolidate PERC for balance sheet purposes. Accordingly, no pro forma balance sheet is included herein. The pro forma condensed combined statements of operations are not necessarily indicative of operating results which would have been achieved had this transaction been completed at the beginning of the respective periods and should not be construed as representative of future operations. 4
KTI, INC. PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (UNAUDITED) YEAR ENDED DECEMBER 31, 1996 PRO FORMA PRO FORMA KTI, INC. PERC ADJUSTMENTS KTI, INC. ------------- ------------- ------------- ------------- REVENUES Electric Power Revenues $ 20,820,860 $ 18,478,405 $ 39,299,265 Gain on Sale of Capacity 33,203,252 33,203,252 Waste Processing Revenues 11,024,265 11,807,454 (530,786)(1) 22,300,933 Other Waste Handling Revenues 3,459,546 3,459,546 ------------- ------------- ------------- ------------- Total Revenues 68,507,923 30,285,859 (530,786) 98,262,996 COSTS AND EXPENSES Electric power and waste Processing operating costs 26,453,290 15,660,582 (319,685)(2) 41,263,401 (530,786)(1) Selling, general, and administrative expenses 2,389,008 5,353,385 7,742,393 Interest, net 4,463,873 3,170,785 7,634,658 ------------- ------------- ------------- ------------- Total Costs and Expenses 33,306,171 24,184,752 (850,471) 56,640,452 Equity in net income (loss) of partnerships PERC 332,655 (332,655)(3) Loss of Sale of Investment (296,459) (296,459) ------------- ------------- ------------- ------------- Income (loss) before minority interest 35,237,948 6,101,107 (12,970) 41,326,085 Minority Interest 18,609,797 2,653,982(4) 21,263,779 ------------- ------------- ------------- ------------- Net Income (loss) available for Shareholders 16,628,151 6,101,107 (2,666,952) 20,062,306 Preferred Dividends 1,015,000(5) 1,015,000 ------------- ------------- ------------- ------------- Net Income for Common Shareholders $ 16,628,151 $ 6,101,107 $ (3,681,952) $ 19,047,306 ============= ============= ============= ============= Pro forma earnings (loss) per common share and common share equivalent: Primary: ------------- ------------- Net income $ 2.61 $ 3.00 ============= ============= Pro forma weighted average number of common shares and common share equivalents outstanding 6,359,593 6,359,593 Fully Diluted: ------------- ------------- Net income $ 2.40 $ 2.54 ============= ============= Pro forma weighted average number of common shares and common share equivalents outstanding 6,925,976 987,234(6) 7,913,210
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KTI, INC. PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 PRO FORMA PRO FORMA KTI, INC. ADJUSTMENTS KTI, INC. ------------ ------------ ------------ REVENUES Electric Power Revenues $ 30,389,250 $ 30,389,250 Waste Processing Revenues 19,513,711 19,513,711 Other Waste Handling Revenues 16,096,812 16,096,812 ------------ ------------ Total Revenues 65,999,773 65,999,773 COSTS AND EXPENSES Electric Power and Waste Processing Operating Costs 50,180,577 $ (239,764)(a) 49,940,813 Selling, General, and Administrative 2,375,680 2,375,680 Interest, Net 3,699,876 3,699,876 ------------ ------------ ------------ Total Costs and Expenses 56,256,133 (239,764) 56,016,369 ------------ ------------ ------------ Income from Continuing Operations before Minority Interest and Extraordinary Items 9,743,640 239,764 9,983,404 Pre-acquisition Earnings Minority Interest (3,983,766) 3,983,766 (b) Minority Interest in Subsidiaries (1,229,287) (2,527,335)(c) (3,756,622) ------------ ------------ ------------ Net Income 4,530,587 1,696,195 6,226,782 Preferred Dividends 759,164(d) 759,164 ------------ ------------ ------------ Net Income available to Common Shareholders $ 4,530,587 $ 937,030 $ 5,467,617 ============ ============ ============ Earnings (loss) per common share and common share equivalent Primary: ------------ ------------ Net Income $ 0.59 $ 0.71 ============ ============ Weighted Average number of common shares and common share equivalents outstanding 7,726,900 7,726,900 Fully diluted: ------------ ------------ Net Income $ 0.59 $ 0.71 ============ ============ Weighted Average number of common shares and common share equivalents outstanding 7,726,900 987,234(e) 8,714,134
6 KTI, INC. SEPTEMBER 30, 1997 AND DECEMBER 30, 1996 NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) 1. DESCRIPTION OF TRANSACTION On September 30, 1997, KTI, Inc. (the Company or the Registrant) purchased a 49.5% limited partnership interest in Penobscot Energy Recovery Company, Limited Partnership, a Maine limited partnership ("PERC") from The Prudential Insurance Company of America ("Prudential") for approximately $11.7 million in cash. In addition, the Company assumed certain liabilities of Prudential by the payment of cash in the amount of $200,000 to Prudential and the issuance of Letters of Credit to Morgan Guaranty Trust Company of New York ("Morgan Guaranty") for approximately $3.9 million, replacing obligations of Prudential to Morgan Guaranty. 2. PRO FORMA ADJUSTMENTS NINE MONTHS ENDING SEPTEMBER 30, 1997. (a) Reduction in depreciation of property, plant, and equipment as a result of the write down of assets in purchase accounting. (b) Elimination of pre-acquisition earnings in PERC (93% of PERC's net income, representing that share of PERC prior to the acquisition which was not owned by the Company) (c) Additional minority interest reflecting the 43.5% of PERC currently not owned by the Company (d) Dividends on $11,600,000 portion of 8.75% Preferred Stock issue, computed from January 1, 1997 (e) Additional shares from Preferred Stock issue at $11.75 per share YEAR ENDED DECEMBER 31, 1996 (1) Management fees charged by the Company to PERC and included as revenue by the Company, but also included as a cost by PERC (2) Reduction in depreciation of property, plant, and equipment as a result of the write down of assets in purchase accounting. (3) Elimination of the Company's equity earnings in PERC, which was 7% of net income. (4) Additional minority interest, reflecting the consolidation of PERC into the Company and the recording of a 43.5% minority interest. (5) Dividends on $11,600,000 portion of 8.75% Preferred Stock issue, computed from January 1, 1997. (6) Additional shares from Preferred Stock issue at $11.75 per share. 7 (c) Exhibits. Exhibit Number Description - -------------- ----------- 4.1 PURCHASE AND OPTION AGREEMENT by and between PERC Management Company Limited Partnership and The Prudential Insurance Company of America dated September 30, 1997. The exhibits to the PURCHASE AND OPTION AGREEMENT do not contain information which is material to an investment decision. 4.2 SECOND AMENDMENT TO THE SECOND AMENDED AND RESTATED AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP OF PENOBSCOT ENERGY RECOVERY COMPANY, LIMITED PARTNERSHIP dated as of September 29, 1997. 4.3 ASSIGNMENT AND ASSUMPTION AGREEMENT between The Prudential Insurance Company of America and PERC Management Company Limited Partnership dated as of September 29, 1997 re Penobscot Energy Recovery Company, Limited Partnership. 4.4 AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT AND RELEASE OF ASSIGNMENT DATED as of September 29, 1997 to the Reimbursement Agreement dated as of May 28, 1991 of Penobscot Energy Recovery Company, Limited Partnership in favor of Morgan Guaranty Trust Company of New York re Penobscot Energy Recovery Company, Limited Partnership. 4.5 ASSIGNMENT AND ASSUMPTION AGREEMENT between The Prudential Insurance Company of America and PERC Management Company Limited Partnership dated as of September 29, 1997 re Orrington Waste Ltd., Limited Partnership. 4.6 AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT AND RELEASE OF ASSIGNMENT DATED as of September 29, 1997 to the Reimbursement Agreement dated as of May 28, 1991 of Penobscot Energy Recovery Company, Limited Partnership in favor of Morgan Guaranty Trust Company of New York re Orrington Waste Ltd., Limited Partnership. 4.7 News release dated October 1, 1997. 4.8 Letter of Kenneth A. Rubin dated September 22, 1997. 8 SIGNATURES 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. KTI, Inc. (the Registrant) Dated: October 7, 1997 By: /s/ Martin J. Sergi ----------------------------- Name: Martin J. Sergi Title: President -----END PRIVACY-ENHANCED MESSAGE-----