<PAGE>
EXHIBIT 99.a
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma financial statements give effect to the
acquisition of certain natural gas gathering and processing businesses from
Kinder Morgan, Inc. (KMI). The acquisition will be recorded as a purchase
business combination. The acquisition was completed April 5, 2000.
The fiscal year-end of ONEOK, Inc. (ONEOK) was changed to December 31 effective
January 1, 2000. The Transition Report filed on a Form 10-Q for the period
September 1, 1999 through December 31, 1999 included, in addition to financial
information for the transition period, unaudited condensed consolidated
statement of income information for the twelve months ended December 31, 1999.
The fiscal year-end of KMI is December 31. Accordingly, the accompanying
unaudited pro forma combined condensed financial statements have been prepared
using previously filed financial statements of ONEOK combined with comparable
financial information of the businesses acquired from KMI. The unaudited pro
forma combined condensed balance sheet as of March 31, 2000, is presented as if
the acquisition had occurred on that date using the comparable balance sheets at
March 31, 2000. The unaudited pro forma combined condensed statements of income
for the twelve months ended December 31, 1999, and the three month period ended
March 31, 2000, assume that the acquisition occurred at the beginning of the
earliest period presented and include the comparable twelve months ended
December 31, 1999 and the three month period ended March 31, 2000.
The unaudited pro forma combined condensed financial statements should be read
in conjunction with the historical financial statements of ONEOK and KMI and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" of ONEOK and KMI. The unaudited pro forma combined condensed
financial statements do not purport to represent what ONEOK's financial position
or results of operations would actually have been if the acquisition had been
consummated on the indicated dates, nor are they necessarily indicative of
ONEOK's financial position or results of operations for any future period. The
results of operations for the three months ended March 31, 2000, are not
necessarily indicative of the results to be expected for the entire fiscal year
or any other interim period.
The pro forma adjustments are based on preliminary assumptions and estimates
made by ONEOK management. The information necessary to account for the
acquisition in accordance with generally accepted accounting principles is
incomplete at this time. Accordingly, as the additional information is
obtained, including third party appraisals, and analyzed by ONEOK, there could
be significant adjustments to the purchase price allocation from that included
herein.
This acquisition enhances ONEOK's interconnectivity and marketing arbitrage
capability. ONEOK will focus on combining the businesses acquired from KMI with
its existing businesses enabling ONEOK to take advantage of operating synergies.
However, the pro forma information included herein does not give any effect to
expected operating synergies. ONEOK expects to operate the acquired businesses
substantially different than they have been operated, and as a result, expects
the transaction to be accretive to earnings the first year even without expected
synergies.
<PAGE>
Unaudited Pro Forma Combined Condensed Statement of Income
Three Months Ended March 31, 2000
<TABLE>
<CAPTION>
Businesses
Acquired
from
Kinder Pro Forma Combined
ONEOK Morgan Adjustments Total
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars, except per share amounts)
<S> <C> <C> <C> <C>
Operating Revenues $ 823,949 $ 953,809 $ - $ 1,777,758
Cost of gas 558,296 920,686 (13,110) (d) 1,465,872
-------------------------------------------------------------------------------------------------------------------------------
Net Revenues 265,653 33,123 13,110 311,886
-------------------------------------------------------------------------------------------------------------------------------
Operating Expenses
Operations and maintenance 112,030 25,004 (2,856) (d) 134,178
Depreciation, depletion, and 34,327 7,734 (924) (a) 41,137
amortization
General taxes 12,239 2,007 - 14,246
-------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 158,596 34,745 (3,780) 189,561
-------------------------------------------------------------------------------------------------------------------------------
Operating Income 107,057 (1,622) 16,890 122,325
-------------------------------------------------------------------------------------------------------------------------------
Other income and expenses, net 14,281 (652) - 13,629
Interest expense 21,985 - 3,134 (c) 25,119
Income taxes 38,446 (903) 5,227 (e) 42,770
-------------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of a
change in accounting principle 60,907 (1,371) 8,529 68,065
Cumulative effect of a change in
accounting principle, net of tax 2,115 - - 2,115
-------------------------------------------------------------------------------------------------------------------------------
Net Income 63,022 (1,371) 8,529 70,180
Preferred Stock Dividends 9,275 - - 9,275
-------------------------------------------------------------------------------------------------------------------------------
Income Available for Common Stock $ 53,747 $ (1,371) $ 8,529 $ 60,905
===============================================================================================================================
Earnings Per Share of Common Stock -
Basic (Thousands) $ 1.84 $ 2.08
===============================================================================================================================
Earnings Per Share of Common Stock -
Diluted (Thousands) $ 1.28 $ 1.43
===============================================================================================================================
Average Shares of Common Stock -
Basic (Thousands) 29,242 29,242
Average Shares of Common Stock -
Diluted (Thousands) 49,189 49,189
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<PAGE>
Unaudited Pro Forma Combined Condensed Statement of Income
Twelve Months Ended December 31, 1999
<TABLE>
<CAPTION>
Businesses
Acquired
from
Kinder Pro Forma Combined
ONEOK Morgan Adjustments Total
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars, except per share amounts)
<S> <C> <C> <C> <C>
Operating Revenues $ 2,070,983 $ 3,784,153 $ - $ 5,855,136
Cost of gas 1,310,774 3,675,867 (52,440) (d) 4,934,201
---------------------------------------------------------------------------------------------------------------------------------
Net Revenues 760,209 108,286 52,440 920,935
---------------------------------------------------------------------------------------------------------------------------------
Operating Expenses
Operations and maintenance 349,006 120,661 (11,425) (d) 458,242
Depreciation, depletion, and amorization 131,195 31,920 (3,694) (a) 159,421
General taxes 41,985 9,109 - 51,094
---------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 522,186 161,690 (15,119) 668,757
---------------------------------------------------------------------------------------------------------------------------------
Operating Income 238,023 (53,404) 67,559 252,178
---------------------------------------------------------------------------------------------------------------------------------
Other income and expenses, net 1,646 (2,361) - (715)
Interest expense 65,739 - 12,535 (c) 78,274
Income taxes 67,057 (21,273) 20,909 (e) 66,693
---------------------------------------------------------------------------------------------------------------------------------
Net Income 106,873 (34,492) 34,115 106,496
Preferred Stock Dividends 37,182 - - 37,182
---------------------------------------------------------------------------------------------------------------------------------
Income Available for Common Stock $ 69,691 $ (34,492) $ 34,115 $ 69,314
=================================================================================================================================
Earnings Per Share of Common Stock -
Basic $ 2.24 $ 2.23
=================================================================================================================================
Earnings Per Share of Common Stock -
Diluted $ 2.09 $ 2.08
=================================================================================================================================
Average Shares of Common Stock - Basic
(Thousands) 31,127 31,127
Average Shares of Common Stock
Diluted (Thousands) 51,153 51,153
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<PAGE>
Unaudited Pro Forma Combined Condensed Balance Sheet
March 31, 2000
<TABLE>
<CAPTION> Businesses
Acquired
from Kinder Pro Forma Combined
ONEOK Morgan Adjustments Total
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 50,001 $ 264 $ (50,000) (c) $ 159
(106) (b)
Trade accounts and
notes receivable 394,444 420,450 (420,450) (b) 394,444
Inventories 61,345 50,104 7,094 (b) 118,543
Other current assets 106,633 14,878 1,778 (b) 123,289
------------------------------------------------------------------------------------------------------------------------------
Total Current Assets 612,423 485,696 (461,684) 636,435
------------------------------------------------------------------------------------------------------------------------------
Property, Plant and Equipment 3,465,399 851,881 (241,859) (a) 3,964,594
(110,827) (a)
Accumulated depreciation,
depletion, and amortization 1,041,582 241,859 (241,859) (a) 1,041,582
------------------------------------------------------------------------------------------------------------------------------
Net Property 2,423,817 610,022 (110,827) 2,923,012
------------------------------------------------------------------------------------------------------------------------------
Deferred Charges and Other Assets
Regulatory assets, net 256,517 - - 256,517
Goodwill 77,698 - - 77,698
Investments and other 204,093 11,049 (1,000) (c) 214,142
------------------------------------------------------------------------------------------------------------------------------
Total Deferred Charges and Other
Assets 538,308 11,049 (1,000) 548,357
------------------------------------------------------------------------------------------------------------------------------
Total Assets $ 3,574,548 $1,106,767 $ (573,511) $ 4,107,804
==============================================================================================================================
Liabilities and Shareholders' Equity
Current Liabilities
Current maturities of
long-term debt $ 21,767 $ - $ - $ 21,767
Notes payable 255,101 - - 255,101
Accounts payable 286,618 337,469 (318,972) (b) 305,115
Accrued taxes 35,217 7,190 (4,893) (b) 37,514
Accrued interest 11,742 - - 11,742
Other 111,233 21,084 (20,882) (b) 111,435
------------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 721,678 365,743 (344,747) 742,674
------------------------------------------------------------------------------------------------------------------------------
Long-term Debt, excluding
current maturities 1,122,184 - 110,743 (c) 1,232,927
Deferred Credits and Other
Liabilities
Deferred income taxes 364,332 22,949 (22,949) (b) 364,332
Other deferred credits 179,846 21,517 380,000 (a) 581,363
------------------------------------------------------------------------------------------------------------------------------
Total Deferred Credits
and Other Liabilities 544,178 44,466 357,051 945,695
------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 2,388,040 410,209 123,047 2,921,296
------------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity 1,186,508 696,558 (652,570) (a) 1,186,508
(43,988) (b)
------------------------------------------------------------------------------------------------------------------------------
Total Liabilities
and Shareholders' Equity $ 3,574,548 $1,106,767 $ (573,511) $ 4,107,804
==============================================================================================================================
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(In Thousands of Dollars)
The pro forma adjustments have been made to the Unaudited Pro Forma Combined
Condensed Financial Statements to reflect the following:
(a) ONEOK paid $110 million cash consideration to Kinder Morgan, Inc. for the
purchase of the acquired businesses, assumed certain uneconomic contracts
and acquired certain working capital for an additional payment of $53
million. Because the purchase was effective March 1, 2000, the purchase
price was adjusted for March income. This is the calculation of the
preliminary negative goodwill to be allocated resulting from the
acquisition and the amortization of that preliminary negative goodwill to
be allocated for the periods presented.
<TABLE>
<S> <C>
Cash payment $ 109,832
Transaction costs 1,000
Working capital acquired 53,016
Estimated fair value of uneconomic contracts assumed 380,000
Purchase price adjustment for March income (2,105)
---------
Total consideration $ 541,743
Estimated net tangible book value at March 31, 2000 652,570
---------
Preliminary negative goodwill to be allocated $(110,827)
=========
</TABLE>
Amortization of preliminary negative goodwill to be allocated (assumes
a 30 year life):
<TABLE>
<S> <C>
Adjustment to historic depreciation as a result of
preliminary negative goodwill to be allocated for the
twelve months $ (3,691) ended December 31, 1999 $ (3,694)
=========
Adjustment to historic depreciation as a result of
preliminary negative goodwill to be allocated for
the three months ended March 31, 2000 $ (924)
=========
</TABLE>
The computation of the preliminary purchase price allocation above is based
on preliminary assumptions and estimates made by ONEOK management. The
information necessary to account for the acquisition in accordance with
generally accepted accounting principles is incomplete at this time. For
the purposes of this unaudited pro forma information, ONEOK management has
allocated all of the preliminary negative goodwill to property, plant and
equipment, and the amortization effect is based on a weighted average life
of 30 years. As additional information is obtained, including third party
appraisals, and analyzed by ONEOK, there could be significant adjustments
to the purchase price allocation, and the lives over which the purchase
price adjustments are amortized, from that included herein.
(b) The following is a reconciliation of the assets and liabilities on the
historical balance sheet of the businesses acquired from KMI and the net
assets acquired by ONEOK.
<TABLE>
<CAPTION>
Excluded
Assets and Net
Historical Working Assets
Balance Capital Acquired
Sheet Adjustments by ONEOK
---------------------------------------------------------------
<S> <C> <C> <C>
Current assets $ 485,696 $ (411,684) $ 74,012
Net Property 610,022 610,022
Other 11,049 11,049
---------------------------------------------------------------
1,106,767 (411,684) 695,083
---------------------------------------------------------------
Current liabilities 365,743 (344,747) 20,996
Other liabilities 44,466 (22,949) 21,517
---------------------------------------------------------------
410,209 (367,696) 42,513
---------------------------------------------------------------
Net historical assets acquired $ 696,558 $ (43,988) $ 652,570
===============================================================
</TABLE>
<PAGE>
(c) Proceeds from ONEOK's debt offerings in March and April, 2000, were used
for general corporate purposes, and acquisitions. The weighted average
effective interest rate is 7.75 percent. Additional interest expense as a
result of the debt financings is as follows. For purposes of the balance
sheet pro forma entries, the pro forma entry to long-term debt of $111
million represents the financing consummated subsequent to March 31, 2000.
Cash payment $ 109,832
Transaction costs 1,000
Working capital acquired 53,016
Purchase price adjustment for March income (2,105)
---------
Total debt required 161,743
Interest rate on debt 7.75%
---------
Interest expense adjustment for the twelve months
ended December 31, 1999 $ 12,535
=========
Interest expense adjustment for the three months
ended March 31, 2000 $ 3,134
=========
(d) Adjustment to record the amortization of uneconomic contracts assumed.
Adjustment to operations and maintenance expense for the
twelve months ended December 31, 1999 $ (11,425)
=========
Adjustment to operations and maintenance expense for the
three months ended March 31, 2000 $ (2,856)
=========
Adjustment to the cost of gas for the twelve months
ended December 31, 1999 $ (52,440)
=========
Adjustment to the cost of gas for the three months
ended March 31, 2000 $ (13,110)
=========
(e) To record the tax effect at the statutory rate of all pre-tax pro forma
adjustments.
