<PAGE> 1
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
-------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------------- -----------------
Commission File Number 1-6446
------------
K N ENERGY, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Kansas 48-0290000
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
370 Van Gordon Street
P.O. Box 281304, Lakewood, Colorado 80228-8304
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(303) 989-1740
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, $5 par value; authorized 50,000,000 shares; outstanding
27,762,704 shares as of April 30, 1995.
<PAGE> 2
Form 10-Q
K N ENERGY, INC. AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1995
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements
Page Number
-----------
<S> <C>
Consolidated Balance Sheets (Unaudited).............................................. 3 & 4
Consolidated Statements of Income
(Unaudited)........................................................................ 5
Consolidated Statements of Cash Flows
(Unaudited)........................................................................ 6 & 7
Notes to Consolidated Financial Statements........................................... 8 & 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................................ 10 - 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.............................................................................. 13
Item 4. Submission of Matters to a Vote of
Security Holders........................................................................... 13
Item 6. Exhibit 27 - Financial Data Schedule*..........................................................
SIGNATURE................................................................................................. 14
</TABLE>
* Included in SEC EDGAR Filing Only.
2
<PAGE> 3
Form 10-Q
CONSOLIDATED BALANCE SHEETS
K N ENERGY, INC. AND SUBSIDIARIES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1995 1994
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents....................................................... $ 26,094 $ 20,613
Accounts Receivable............................................................. 109,856 151,834
Material and Supplies, at Average Cost.......................................... 9,974 12,687
Gas in Underground Storage...................................................... 16,872 31,695
Prepaid Gas..................................................................... 15,269 12,456
Exchange Gas and Other.......................................................... 42,341 50,029
---------- ----------
220,406 279,314
---------- ----------
INVESTMENTS..................................................................... 10,181 9,186
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Retail Natural Gas Services..................................................... 356,727 358,337
Interstate Transportation and Storage Services.................................. 372,825 371,253
Gathering, Processing and Marketing Services.................................... 554,270 533,226
Gas and Oil Production.......................................................... 51,622 49,578
---------- ----------
1,335,444 1,312,394
Less - Accumulated Depreciation, Depletion and Amortization..................... 472,818 461,745
---------- ----------
862,626 850,649
---------- ----------
DEFERRED CHARGES AND OTHER ASSETS............................................... 17,758 33,235
---------- ----------
$1,110,971 $1,172,384
========== ==========
</TABLE>
3
<PAGE> 4
Form 10-Q
CONSOLIDATED BALANCE SHEETS
K N ENERGY, INC. AND SUBSIDIARIES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1995 1994
---- ----
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current Maturities of Preferred Stock and Long-Term Debt........................ $ 32,006 $ 30,384
Notes Payable................................................................... 46,000 60,000
Accounts Payable................................................................ 67,544 108,755
Accrued Taxes................................................................... 11,115 6,197
Exchange Gas and Other.......................................................... 37,482 50,434
---------- ----------
194,147 255,770
---------- ----------
DEFERRED LIABILITIES, CREDITS AND RESERVES:
Deferred Income Taxes........................................................... 95,703 96,054
Deferred Revenues............................................................... 48,030 42,090
Other........................................................................... 24,864 28,194
---------- ----------
168,597 166,338
---------- ----------
LONG-TERM DEBT.................................................................. 321,372 334,644
---------- ----------
MINORITY INTERESTS IN EQUITY OF SUBSIDIARIES.................................... 14,510 13,231
---------- ----------
PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION................................. 1,143 1,715
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred Stock -
Authorized - Class A, 200,000 Shares; Class B, 2,000,000 Shares,
All Without Par Value
Redeemable Solely at Option of Company at $105 Per Share - Class A,
$5.00 Cumulative Series; 70,000 Shares.................................. 7,000 7,000
---------- ----------
Common Stockholders' Equity
Common Stock -
Authorized - 50,000,000 Shares, Par Value $5 Per Share
Outstanding - 27,739,146 and 27,617,531 Shares, Respectively............ 138,696 138,088
Additional Paid-in Capital.................................................. 172,537 170,932
Retained Earnings........................................................... 93,499 86,032
Deferred Compensation....................................................... (327) (378)
Treasury Stock, at Cost, (9,126 and 44,417 Shares, Respectively)............ (203) (988)
---------- ----------
Total Common Stockholders' Equity............................................... 404,202 393,686
---------- ----------
Total Stockholders' Equity...................................................... 411,202 400,686
---------- ----------
$1,110,971 $1,172,384
========== ==========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
4
<PAGE> 5
Form 10-Q
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
K N ENERGY, INC. AND SUBSIDIARIES
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
----------------------
1995 1994
---- ----
<S> <C> <C>
OPERATING REVENUES:
Retail Natural Gas Services..................................................... $ 75,698 $ 79,565
Interstate Transportation and Storage Services.................................. 7,217 5,335
Gathering, Processing and Marketing Services.................................... 206,701 261,166
Gas and Oil Production.......................................................... 2,091 2,904
-------- --------
Total Operating Revenues........................................................ 291,707 348,970
-------- --------
OPERATING COSTS AND EXPENSES:
Gas Purchases................................................................... 197,743 262,734
Operations and Maintenance...................................................... 44,933 43,067
Depreciation, Depletion and Amortization........................................ 12,338 12,818
Taxes, Other Than Income Taxes.................................................. 5,201 4,411
-------- --------
Total Operating Costs and Expenses.............................................. 260,215 323,030
-------- --------
OPERATING INCOME................................................................ 31,492 25,940
-------- --------
OTHER INCOME AND (DEDUCTIONS):
Interest Expense................................................................ (8,954) (7,302)
Minority Interests.............................................................. (577) (185)
Other, Net...................................................................... 569 155
-------- --------
Total Other Income and (Deductions)............................................. (8,962) (7,332)
-------- --------
INCOME BEFORE INCOME TAXES...................................................... 22,530 18,608
Income Taxes.................................................................... 8,012 6,649
-------- --------
NET INCOME...................................................................... 14,518 11,959
Less - Preferred Stock Dividends................................................ 123 157
-------- --------
EARNINGS AVAILABLE FOR COMMON STOCK............................................. $ 14,395 $ 11,802
======== ========
Number of Shares Used in Computing
Earnings Per Common Share................................................... 28,144 27,718
======== ========
EARNINGS PER COMMON SHARE....................................................... $ 0.51 $ 0.42
======== ========
DIVIDENDS PER COMMON SHARE...................................................... $ 0.25 $ 0.13
======== ========
</TABLE>
The accompanying notes are an integral part of these statements of income.
5
<PAGE> 6
Form 10-Q
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
K N ENERGY, INC. AND SUBSIDIARIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
----------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income...................................................................... $ 14,518 $ 11,959
Adjustments to Reconcile Net Income to Net Cash from Operating Activities:
Depreciation, Depletion and Amortization..................................... 12,338 12,818
Minority Interests........................................................... 577 185
Provisions for Losses on Accounts Receivable................................. 250 274
Executive Stock Compensation................................................. 51 323
Deferred Purchased Gas Costs................................................. 5,483 6,579
Changes in Other Working Capital Items....................................... 14,840 60,252
Changes in Deferred Revenues................................................. 5,940 4,578
Other, Net................................................................... 5,976 4,780
-------- --------
NET CASH FLOWS FROM OPERATING ACTIVITIES........................................ 59,973 101,748
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures............................................................ (14,645) (22,779)
Acquisitions, Net of Cash Acquired ............................................. (10,369) (28,730)
Other Funds Used During Construction............................................ -- 73
Investments..................................................................... (995) 3
Proceeds from Sale of Facilities................................................ 425 78
(Payments) Collections Under Basket Agreement................................... 715 (322)
-------- --------
NET CASH FLOWS USED IN INVESTING ACTIVITIES..................................... (24,869) (51,677)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-Term Debt (Net)........................................................... (14,000) (38,000)
Long-Term Debt - Issued................................................... -- 1,100
- Retired.................................................. (12,237) (8,091)
Common Stock Issued............................................................. 2,213 5,790
Treasury Stock - Issued................................................... 785 254
- Acquired................................................. -- (417)
Cash Dividends - Common................................................... (6,928) (3,666)
- Preferred................................................ (123) (157)
Minority Interests - Contributions............................................ 1,031 933
- Distributions............................................ (329) (218)
Premium on Debt Reacquisition and Issue Costs................................... (35) (2)
-------- --------
NET CASH FLOWS USED IN FINANCING ACTIVITIES..................................... (29,623) (42,474)
-------- --------
Net Increase in Cash and Cash Equivalents....................................... 5,481 7,597
Cash and Cash Equivalents at Beginning of Year.................................. 20,613 14,353
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD...................................... $ 26,094 $ 21,950
======== ========
</TABLE>
The accompanying notes are an intergral part of these statements of cash flows.
6
<PAGE> 7
Form 10-Q
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
K N ENERGY, INC. AND SUBSIDIARIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
----------------------
1995 1994
---- ----
<S> <C> <C>
CHANGES IN OTHER WORKING CAPITAL ITEMS SUMMARY
(NET OF ACQUISITION EFFECTS):
Accounts Receivable............................................................. $41,728 $ 1,962
Contract Demand Receivables ................................................... -- 38,732
Material and Supplies........................................................... 2,713 278
Gas in Underground Storage...................................................... 14,840 12,249
Accounts Payable, Accrued Taxes and Other Current Liabilities................... (49,316) 5,170
Other Current Assets............................................................ 4,875 1,861
------- -------
$14,840 $60,252
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash Paid During the Year for:
Interest (Net of Amount Capitalized)............................................ $ 9,990 $10,650
======= =======
Income Taxes.................................................................... $ 9 $ 778
======= =======
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
On February 16, 1995, K N's gas transmission affiliate, AOG Gas Transmission
Company, L.P., acquired natural gas transmission pipeline and storage assets in
Texas. In conjunction with the acquisition, liabilities were assumed as follows:
<TABLE>
<CAPTION>
1995
----
<S> <C>
Fair Value of Assets Acquired................................................... $13,440
Cash Paid for Assets............................................................ (10,369)
-------
Liabilities Assumed............................................................. $ 3,071
=======
</TABLE>
7
<PAGE> 8
Form 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
In the opinion of management, all adjustments necessary for a fair statement of
the results for the unaudited interim periods have been made. These adjustments
consist only of normal recurring accruals.
Certain prior year amounts have been reclassified to conform with the 1995
presentation.
2. Merger
On July 13, 1994, pursuant to the Agreement of Merger dated March 24, 1994,
American Oil and Gas Corporation ("AOG") was merged into the Company. As a
result of the merger, each outstanding share of common stock of AOG was
converted into 0.47 of a share of common stock of K N. In connection with the
merger, all the outstanding shares of AOG common stock were converted into
approximately 12.2 million shares of K N stock, and the authorized number of
shares of K N common stock was increased to 50 million shares.
The merger was accounted for as a pooling of interests and, accordingly, the
historical consolidated financial statements for periods prior to consummation
of the merger have been restated as though the companies had been combined for
all periods reported herein.
3. Merger and Restructuring Costs
The Company recorded merger and restructuring costs totaling $25.9 million in
the third quarter of 1994. Total expected cash expenditures relating to these
charges are $23.4 million, of which $3.0 million had not yet been paid as of
March 31, 1995.
Merger expenses include $12.4 million in investment bankers' and other
professional fees, $7.7 million for severance and employee benefit costs for
approximately 230 employees who have been or will be terminated through
consolidation of administrative and operational staff, and $4.6 million in costs
to eliminate duplicative space requirements and equipment, and to write-off the
cost of information systems not required subsequent to the merger.
Restructuring costs related to the formal restructuring plan of the Company's
retail distribution operations total $1.2 million, representing severance and
employee benefit costs for terminating approximately 90 retail distribution
employees as a result of the restructuring and centralization of customer
service functions.
4. Acquisitions
On February 16, 1995, the Company acquired natural gas transmission pipeline and
storage assets in Texas. The assets include two West Texas pipeline systems,
comprised of 347 miles of pipeline and related facilities, which are currently
connected to AOG's core pipeline system. In addition, surface facilities, lease
rights and approximately 10.8 Bcf of natural gas in storage in a leased, Gulf
Coast storage field were acquired. AOG also acquired the remaining 50 percent
interest it did not previously own in a 90-mile joint venture pipeline near
Midland, Texas.
8
<PAGE> 9
Form 10-Q
The total price was $80.1 million, subject to closing adjustments. The Company
utilized an operating lease and short-term debt financing arrangements to fund
the acquisition.
5. Regulatory Matters
In January 1995, as a result of an agreement reached with its customers, the
Company filed an application with FERC to transfer three storage fields,
including approximately 45 Bcf of cushion gas held by K N Interstate Gas
Transmission Co. ("KNI"), to a newly created nonjurisdictional affiliate, K N
Natural Gas, Inc. ("KNNG"). On May 2, 1995, FERC issued an order approving the
storage reorganization filing. With the approval of this transfer, KNI will own
only the Huntsman, Nebraska storage facilities, which will remain as
jurisdictional facilities and continue to provide storage services.
Jurisdictional rates will be restated to reflect this transfer. KNNG will be
able to market its cushion gas at market rates from the three storage facilities
which were transferred.
6. Treasury Stock
In April 1995, K N's Board of Directors authorized the purchase on the open
market of up to 500,000 shares of the Company's common stock through December
31, 1996. Any such purchases will be used to fund Company benefit plans and the
Company's dividend reinvestment plan. Such a program is in the ordinary course
of K N's business and is a continuation of a similar share purchasing program
that K N has used in the past.
9
<PAGE> 10
Form 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
CONSOLIDATED FINANCIAL RESULTS
For the first quarter of 1995, K N reported consolidated net income of $14.5
million, or $0.51 per common share, after payment of preferred dividends. This
reflects a 21 percent increase in earnings compared with the 1994 first
quarter's net income of $12.0 million, or $0.42 per common share.
Stringent cost controls (including realized expense savings from the K N-AOG
merger), contributions from the February 1995 acquisition of transmission and
storage assets in Texas, and the impact of 1994 rate increases (subsequent to
the first quarter of 1994) were the key factors to the 1995 earnings
improvement. These factors more than offset the adverse effects of mild winter
weather and lower natural gas prices.
RESULTS OF OPERATIONS
First quarter operating results by business segment and consolidated other
income and (deductions) and income taxes are discussed below. Segment operating
revenues, gas purchases, operations and maintenance expenses and volumetric data
cited below are before intersegment eliminations (dollars in millions).
<TABLE>
<CAPTION>
Retail Natural Gas Services 1995 1994
---- ----
<S> <C> <C>
Operating Revenues -
Gas Sales $73.3 $77.6
Transportation and Other 2.5 2.0
----- -----
75.8 79.6
----- -----
Operating Costs and Expenses -
Gas Purchases 45.4 50.3
Operations and Maintenance 13.6 14.6
Depreciation, Depletion and Amortization 3.2 2.9
Taxes, Other Than Income Taxes 1.9 1.4
----- -----
64.1 69.2
----- -----
Operating Income $11.7 $10.4
===== =====
Systems Throughput (Trillion Btus) -
Gas Sales 13.3 14.9
Transportation 6.2 4.1
----- -----
19.5 19.0
===== =====
System Wide Degree Days 2,823 3,137
</TABLE>
As indicated by degree days, the first quarter of 1995 was 10 percent milder
than the previous year. The decline in 1995 gas sales revenues and volumes and
gas purchases primarily reflects the milder weather. Sales volumes also declined
as several commercial customers converted to transportation service. Rate
increases on the Rocky Mountain distribution system, subsequent to the first
quarter of 1994, and expense reductions due to the centralization of customer
service operations more than offset the weather impact.
10
<PAGE> 11
Form 10-Q
<TABLE>
<CAPTION>
INTERSTATE TRANSPORTATION AND STORAGE SERVICES 1995 1994
---- ----
<S> <C> <C>
Operating Revenues -
Transportation and Storage $15.3 $15.3
Natural Gas Liquids and Other 1.3 0.9
----- -----
16.6 16.2
----- -----
Operating Costs and Expenses -
Gas Purchases 1.4 0.8
Operations and Maintenance 7.0 5.7
Depreciation, Depletion and Amortization 2.1 2.1
Taxes, Other Than Income Taxes 0.8 1.1
----- -----
11.3 9.7
----- -----
Operating Income $ 5.3 $ 6.5
===== =====
Systems Throughput (Trillion Btus) - 38.9 41.3
===== =====
Natural Gas Liquids (Millions of Gallons) 3.5 3.2
===== =====
</TABLE>
As a part of the 1994 FERC rate case, customers renominated lower levels of firm
storage service. Accordingly, the impact of higher rates resulting from the late
1994 rate case settlement was partially offset by lower storage revenues in the
1995 first quarter. Also contributing to the decline in 1995 operating income,
compared to the 1994 first quarter, was the favorable resolution in 1994 of
certain environmental or legal contingencies. First quarter 1994 operations and
maintenance expense was reduced by $1.3 million as reserves for these issues
were no longer required.
<TABLE>
<CAPTION>
GATHERING, PROCESSING AND MARKETING SERVICES 1995 1994
---- ----
<S> <C> <C>
Operating Revenues -
Gas Sales $178.4 $236.7
Transportation and Gathering 11.4 11.5
Natural Gas Liquids and Other 30.0 27.0
------ ------
219.8 275.2
------ ------
Operating Costs and Expenses -
Gas Purchases 174.0 236.4
Operations and Maintenance 23.4 22.5
Depreciation, Depletion and Amortization 5.9 6.3
Taxes, Other Than Income Taxes 2.3 1.6
------ ------
205.6 266.8
------ ------
Operating Income $ 14.2 $ 8.4
====== ======
System Throughput (Trillion Btus) -
Gas Sales 89.1 100.3
Transportation and Gathering 81.6 78.9
------ ------
170.7 179.2
====== ======
Natural Gas Liquids (Millions of Gallons) 92.8 89.5
====== ======
</TABLE>
Although first quarter 1995 gas sales volumes were 11.2 trillion Btus lower than
the 1994 first quarter, sales margins were higher due to favorable gas costs
and a greater percentage of 1995 sales being made to firm requirements
customers. First quarter 1995 results also benefited from the February
acquisition of natural gas transmission and storage assets in Texas, lower
operations and maintenance expense (excluding expenses of the February
acquisition), and an improvement in margins on natural gas liquids due to
improved recoveries.
11
<PAGE> 12
Form 10-Q
<TABLE>
<CAPTION>
GAS AND OIL PRODUCTION 1995 1994
---- ----
<S> <C> <C>
Operating Revenues -
Gas and Oil Sales $2.3 $3.4
Other 0.5 0.4
---- ----
2.8 3.8
---- ----
Operating Costs and Expenses -
Operations and Maintenance 1.2 1.3
Depreciation, Depletion and Amortization 1.1 1.6
Taxes, Other Than Income Taxes 0.2 0.3
---- ----
2.5 3.2
---- ----
Operating Income $0.3 $0.6
==== ====
Gas and Oil Production (Equivalent Bcf) 1.3 1.8
==== ====
</TABLE>
The decline in 1995 operating income reflects low natural gas prices which also
resulted in shut-in production. Additionally, the first quarter 1994 results
included production from gas and oil reserves acquired in February 1994. In
October 1994, the Company sold a 50 percent interest in these properties.
<TABLE>
<CAPTION>
OTHER INCOME AND (DEDUCTIONS) 1995 1994
---- ----
<S> <C> <C>
Interest Expense $(9.0) $(7.3)
===== =====
</TABLE>
The increase in first quarter 1995 interest expense is due to the October 1994
sale of $75 million of 8.75% debentures.
<TABLE>
<CAPTION>
INCOME TAXES 1995 1994
---- ----
<S> <C> <C>
Provisions $ 8.0 $ 6.6
===== =====
Effective Tax Rate 35.6% 35.7%
</TABLE>
The effective tax rates for both 1995 and 1994 reflect tax credits on production
from gas wells qualifying for non-conventional fuel credit under Section 29 of
the Internal Revenue Code.
LIQUIDITY AND CAPITAL RESOURCES
First quarter 1995 net cash flows from operations were $60.0 million, or $3.0
million below net operating cash flows for the 1994 first quarter, excluding the
$41 million of proceeds from the February 1994 sale of contract demand
receivables.
Short-term debt was $46.0 million at March 31, 1995, compared with short-term
borrowings of $60.0 million and $9.0 million at December 31, 1994 and March 31,
1994, respectively. In February 1995, the Company completed the $80.1 million
acquisition of natural gas transmission and storage assets in Texas.
Approximately $66 million of the acquisition was financed by an operating lease.
12
<PAGE> 13
Form 10-Q
OTHER INFORMATION
Item 1. Legal Proceedings
Mystery Bridge Road Environmental Matters.
As reported in the Company's Annual Report on Form 10-K, the Company
was named as one of four potentially responsible parties ("PRPs") at a
U.S. Environmental Protection Agency ("EPA") Superfund site known as
the Mystery Bridge Road/U.S. Highway 20 site located near Casper,
Wyoming. "Operating Unit Two", which addressed remediation of the soil
and free-phase petroleum product, was certified by the EPA as complete
in March 1995, and a monitoring phase is now underway. The Company
expects the monitoring phase to continue until summer 1996.
Westerman, et al. vs. K N Energy, Inc., et al.
As reported in the Company's Annual Report on Form 10-K, on December 8,
1994, K N and its wholly-owned subsidiary K N Gas Supply Services, Inc.
were sued by gas producers under claims arising from two gas purchase
contracts covering gas purchases from wells in the Niobrara Field,
Colorado. The parties are awaiting a decision on proper court venue.
For information relating to other legal proceedings, see Notes 5 and 6
of Notes to Consolidated Financial Statements on Pages 42-46 of the
1994 Annual Report on Form 10-K and Item 3: Legal Proceedings on Pages
16-20 on the 1994 Annual Report on Form 10-K.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Registrant held its Annual Meeting of Shareholders on April 6,
1995.
(b) Proxies for the meeting were solicited pursuant to Regulation 14 of
the Securities Exchange Act of 1934. There was no solicitation in
opposition to management's nominees for directors as listed in the
Proxy Statement and all such nominees were elected.
13
<PAGE> 14
Form 10-Q
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.
(Registrant)
May 15, 1995 /s/ E. Wayne Lundhagen
-------------------------------------------
E. Wayne Lundhagen
Vice President and Treasurer
(On Behalf of the Registrant and as
Principal Financial and Accounting Officer)
14
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION PAGE
- ----------- ------------------- ----
<S> <C> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 26,094
<SECURITIES> 0
<RECEIVABLES> 109,856
<ALLOWANCES> 0
<INVENTORY> 26,846
<CURRENT-ASSETS> 220,406
<PP&E> 1,335,444
<DEPRECIATION> 472,818
<TOTAL-ASSETS> 1,110,971
<CURRENT-LIABILITIES> 194,147
<BONDS> 321,372
<COMMON> 138,696
1,143
7,000
<OTHER-SE> 265,506
<TOTAL-LIABILITY-AND-EQUITY> 1,110,971
<SALES> 291,707
<TOTAL-REVENUES> 291,707
<CGS> 197,743
<TOTAL-COSTS> 260,215
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,954
<INCOME-PRETAX> 22,530
<INCOME-TAX> 8,012
<INCOME-CONTINUING> 14,518
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,518
<EPS-PRIMARY> 0.51
<EPS-DILUTED> 0
</TABLE>
