<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 11-K
-----------------------
ANNUAL REPORT
Pursuant to Section 15 (d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1996
Commission File Number 1-6446
------------------------
K N Energy, Inc.
Profit Sharing and Savings Plan
K N Energy, Inc.
P.O. Box 281304
Lakewood, Colorado 80228-8304
<PAGE> 2
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees have duly caused this annual report to be signed by the
undersigned hereunto duly authorized.
K N ENERGY, INC.
PROFIT SHARING AND SAVINGS PLAN
By: /s/ Martha B. Wyrsch
----------------------------------
Name: Martha B. Wyrsch
----------------------------------
Title: Vice President
----------------------------------
Date: June 30, 1997
<PAGE> 3
K N ENERGY, INC.
PROFIT SHARING AND SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants 5-6
Consent of Independent Public Accountants 7
Statements of Financial Condition-
December 31, 1996 and 1995 8
Statements of Income and Changes in Plan Equity
for the Years Ended December 31, 1996, 1995
and 1994. 9
Notes to Financial Statements 10-17
Schedule I - Allocation of Plan Assets and Liabilities to Investment 18-19
Programs - December 31, 1996 and 1995
Schedule II - Allocation of Plan Income and Changes in Plan Equity to 20-22
Investment Programs for the Years Ended December 31, 1996, 1995
and 1994
Schedule III - Item 27a - Schedule of Plan Assets Held for Investment 23
Purposes as of December 31, 1996
Schedule IV - Item 27d - Schedule of Reportable Transactions for the 24
Year Ended December 31, 1996
</TABLE>
<PAGE> 4
K N ENERGY, INC.
PROFIT SHARING AND SAVINGS PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996 AND 1995
TOGETHER WITH AUDITORS' REPORT
<PAGE> 5
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator,
K N Energy, Inc. Profit Sharing
and Savings Plan:
We have audited the accompanying statements of financial condition of the K N
ENERGY, INC. PROFIT SHARING AND SAVINGS PLAN (the "Plan"), as of December 31,
1996 and 1995, and the related statements of income and changes in plan equity
for each of the three years in the period ended December 31, 1996. These
financial statements and supplemental schedules referred to below are the
responsibility of K N Energy, Inc. (the "Plan Administrator"). Our
responsibility is to express an opinion on these financial statements and
supplemental schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial condition of the Plan as of December 31,
1996 and 1995, and the Plan income and changes in Plan equity for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
As further discussed in Note 5 to the financial statements, the Board of
Directors of K N Energy, Inc., the Plan's sponsor, voted to merge the American
Oil and Gas Corporation 401(k) Retirement and Savings Plan into the Plan as of
March 27, 1996.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Allocation of Plan Assets and Liabilities to Investment Programs, Allocation of
Plan Income and Changes in Plan Equity to Investment Programs, Schedule of Plan
Assets Held for Investment Purposes and Schedule of Reportable
<PAGE> 6
Transactions are presented for purposes of complying with Securities and
Exchange Commission requirements and the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, and are not a required part of the basic financial
statements. Such schedules have been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in our opinion,
are fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/S/ AUTHUR ANDERSEN LLP
Denver, Colorado,
June 20, 1997.
<PAGE> 7
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report, included in this Form 11-K, into the Company's
previously filed Registration Statement File No. 33-24934.
/S/ ARTHUR ANDERSEN LLP
Denver, Colorado,
June 27, 1997.
<PAGE> 8
K N ENERGY, INC.
PROFIT SHARING AND SAVINGS PLAN
STATEMENTS OF FINANCIAL CONDITION - DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
ASSETS 1996 1995
------ ------------ ------------
(Schedule I)
<S> <C> <C>
INVESTMENTS, at market value (Notes 1 and 2):
K N Energy, Inc. common stock $ 67,052,748 $ 53,171,364
Voyager Fund 24,673,000 21,101,795
Global Growth Fund -- 8,551,622
Fund for Growth and Income 17,550,702 14,194,547
Income Fund 6,196,452 6,978,673
International Growth Fund 10,106,065 --
U.S. Government Income Trust -- 10,222,326
Money Market Fund 11,192,525 697,360
Participant loans 1,434,084 1,100,816
------------ ------------
138,205,576 116,018,503
CASH 49,115 --
RECEIVABLES:
K N Energy, Inc. (Notes 1 and 2) 6,654,828 5,062,761
Interest and dividends 23,790 64,910
------------ ------------
Total assets $144,933,309 $121,146,174
============ ============
LIABILITIES AND PLAN EQUITY
LIABILITIES $ -- $ --
PLAN EQUITY 144,933,309 121,146,174
------------ ------------
Total liabilities and Plan equity $144,933,309 $121,146,174
============ ============
</TABLE>
The accompanying notes and schedules are an integral
part of these financial statements.
<PAGE> 9
K N ENERGY, INC.
PROFIT SHARING AND SAVINGS PLAN
STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------- ------------- -------------
(Schedule II)
<S> <C> <C> <C>
CONTRIBUTIONS (Notes 1 and 2):
Employer $ 6,659,842 $ 5,062,761 $ 2,324,070
Employee 3,857,429 3,717,443 2,246,065
------------- ------------- -------------
10,517,271 8,780,204 4,570,135
------------- ------------- -------------
EARNINGS (LOSSES) FROM INVESTMENTS
(Note 2):
Net appreciation (depreciation) in
market value of investments 20,959,665 20,670,351 (6,625,234)
Interest 126,648 63,455 385,559
Dividends 6,817,268 5,748,740 3,885,135
------------- ------------- -------------
Total earnings (losses) from
investments 27,903,581 26,482,546 (2,354,540)
DISTRIBUTIONS:
Directly to participants (18,455,415) (15,436,519) (4,331,688)
To insurance company for provision of
benefits, net of policy dividends (37,068) (17,043) (8,811)
Administration fees (9,196) (9,450) --
------------- ------------- -------------
Total distributions (18,501,679) (15,463,012) (4,340,499)
------------- ------------- -------------
TRANSFERS FROM RELATED PLANS
(Notes 1 and 5) 3,867,962 210,690 21,725,256
------------- ------------- -------------
NET INCREASE IN PLAN EQUITY
DURING THE YEAR 23,787,135 20,010,428 19,600,352
PLAN EQUITY, beginning of year 121,146,174 101,135,746 81,535,394
------------- ------------- -------------
PLAN EQUITY, end of year $ 144,933,309 $ 121,146,174 $ 101,135,746
============= ============= =============
</TABLE>
The accompanying notes and schedules are an integral
part of these financial statements.
<PAGE> 10
K N ENERGY, INC.
PROFIT SHARING AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(1) DESCRIPTION OF THE PLAN
General
The Employees Retirement Fund Trust Profit Sharing Plan (the "Profit Sharing
Plan") of K N Energy, Inc. (the "Company"), was established in 1945 for the
benefit of eligible employees (as defined in the Profit Sharing Plan
indenture). The Profit Sharing Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA").
The Profit Sharing Plan is the surviving plan of a merger effective July 1,
1994 of the 401(k) Retirement Savings Plan and Trust (the "401(k) Plan") into
the Profit Sharing Plan. The surviving Profit Sharing Plan was amended and
restated, including the name change to the Profit Sharing and Savings Plan (the
"Plan"). The amounts from the 401(k) Plan resulting from the merger are
reflected as Transfers from Related Plan in the accompanying 1994 Statement of
Income and Changes in Plan Equity.
Benefits under the Plan are not guaranteed by the Pension Benefit Guarantee
Corporation. Reference should be made to the Plan agreement for a more complete
description of the Plan's provisions.
<PAGE> 11
Contributions
Participants may elect to make pretax contributions totaling from 1% to 15% of
their annual compensation, limited by requirements of the Internal Revenue
Code. Participants may discontinue their election to contribute at any time.
For each Plan year, the Company contributes to the Plan 10% of the total
compensation (excluding bonuses) paid to eligible employees during that year,
or 10% of the eligible net profit, as defined, of the Company for that year,
whichever is less. The 1996, 1995 and 1994 contributions were based on eligible
net income. The total Company contribution was $6,659,842, $5,062,761 and
$2,324,070 in 1996, 1995 and 1994, respectively.
Beginning with the Company contribution in 1990, 50% of each participant's
portion of the annual Company contribution must be designated to the fund
consisting of the Company's common stock, K N Energy, Inc. Common Stock Fund.
Participants are not allowed to transfer their investments until age 55. The
participant can invest the remaining 50% in their investment elections.
Under IRS regulations,annual additions under the Plan and all other plans
sponsored by the Company are limited to the lesser of 25% of eligible
compensation or $30,000. Annual additions are defined as employer contributions
and employee contributions.
Investment Programs
Participants may designate, their allocated portion of the contribution in
percentage increments divisible by five, to one or more of the eligible
investment programs. New Plan participants may elect to transfer investments
from other qualified plans into the Plan.
<PAGE> 12
The investment programs of the Plan and the number of participants in each
program at December 31, 1996 and 1995 and 1994 are briefly described as
follows:
K N ENERGY, INC. COMMON STOCK FUND--This program consists of shares
of the Company's common stock. At December 31, 1996, 1,868
participants held 1,708,350 shares with a cost of $16,488,176 and a
market value of $67,052,748. At December 31, 1995, 1,807 participants
held 1,825,626 shares with a cost of $15,677,538 and a market value
of $53,171,364.
PUTNAM VOYAGER FUND--This program consists of investments in common
stocks of small companies that is managed by Putnam Investment
Management, Inc. At December 31, 1996, 1,441 participants held
1,530,583 shares with a cost of $20,300,553 and a market value of
$24,673,000. At December 31, 1995, 1,334 participants held 1,383,725
shares with a cost of $17,015,802 and a market value of $21,101,795.
PUTNAM GLOBAL GROWTH FUND--This program seeks capital appreciation by
investing primarily in common stocks traded in security markets
located in a number of foreign countries and in the United States. At
December 31, 1996, 0 participants held 0 shares with a cost of $0 and
a market value of $0. As of December 30, 1996, this no longer an
investment election. At December 31, 1995, 1,009 participants held
856,018 shares with a cost of $8,431,112 and a market value of
$8,551,622.
PUTNAM FUND FOR GROWTH AND INCOME--This program seeks capital growth
and current income by investing primarily in a portfolio of common
stocks that offer the potential for capital growth, current income or
both. At December 31, 1996, 1,150 participants held 973,957 shares
with a cost of $14,554,501 and a market value of $17,550,702. At
December 31, 1995, 1,112 participants held 876,748 shares with a cost
of $12,333,755 and a market value of $14,194,547.
PUTNAM INCOME FUND--This program invests primarily in corporate bonds
from credit worthy companies. At December 31, 1996, 632 participants
held 883,945 shares with a cost of $5,955,009 and a market value of
$6,196,452. At December 31, 1995, 674 participants held 965,239
shares with a cost of $6,462,876 and a market value of $6,978,673.
<PAGE> 13
PUTNAM NEW OPPORTUNITIES FUND--Invests in a portfolio of stocks in
certain emerging industry groups that Putnam believes offer
above-average long-term growth. This fund became an investment option
as of December 30, 1996. This fund had no activity as of yearend.
PUTNAM U.S. GOVERNMENT INCOME TRUST--This program invests in a
portfolio of government obligations. At December 31, 1996, 0
participants held 0 shares with a cost of $0 and a market value of
$0. As of December 30, 1996, this is no longer an investment
election. At December 31, 1995, 913 participants held 775,006 shares
with a cost of $9,734,774 and a market value of $10,222,326.
PUTNAM MONEY MARKET--This program invests primarily in money market
investments. At December 31, 1996, 885 participants held 11,192,525
shares with a cost of $11,192,525 and a market value of $11,192,525.
At December 31, 1995, 16 participants held 697,360 shares with a cost
and a market value of $697,360.
PUTNAM INTERNATIONAL GROWTH FUND--This program seeks capital
appreciation by investing in a diversified portfolio of stocks of
companies located outside the United States. At December 31, 1996,
1,006 participants held 672,393 shares with a cost of $10,106,065 and
a market value of $10,106,065.
The investment programs offered prior to the above are described below. All
assets were transferred out of these funds by the year ended December 31, 1994.
FUND KN--This investment program consisted of shares of the Company's
common stock.
FUND K5--This investment program consisted of shares of the Company's
common stock.
FUND EQ--This program consisted of investment units in the Harris
Trust and Savings Bank ("Harris") Index Fund, which is designed to
track the Standard & Poor's 500 Stock Average ("S&P 500") and in the
Harris Reserve Fund. The Index Fund consisted of investments in
corporate common stocks selected by Harris from the S&P 500. The
Index Fund did not include common stock of the Company.
<PAGE> 14
FUND BI--This program consisted of investments in an intermediate
bond pool administered by Alliance Capital Management Corporation
("Alliance").
FUND GI--This program consisted of investments in short-term U.S.
Government Securities and was managed by the Ark Asset Management
Company, Inc.
Prior to January 1, 1987, participants had the option of purchasing life
insurance through the Plan. Thereafter, the segment of the Plan allowing for
the purchase of a life insurance policy on the life of the participant was
frozen so that no new policies could be written. Participants with policies at
December 31, 1986, had the following options: 1) allow the policy to remain in
force with a frozen face value and fixed premium payments, 2) elect to use the
cash surrender value ("CSV") of the policy to purchase paid-up life insurance
or 3) reinvest the CSV of the policy in another fund.
The value of life insurance in force is not recorded in these financial
statements.
Benefits/Vesting
Obligations for distributions to participants who terminated from the Plan
prior to December 31, 1996, but were not paid until subsequent to yearend were
$319,000. Amounts related to 1995 were immaterial.
Participants have fully vested and nonforfeitable interests in their accounts
at all times. Employees hired after January 1, 1995 are subject to a four-year
vesting provision (25% per year of service) for Company contributions.
Contributions may be withdrawn, with the approval of the Advisory Committee, in
the event of unusual expenses connected with illness or disability, in the
event that the money is necessary for children's college expenses, or for the
purchase of a primary residence, as defined in the Plan document. If not
withdrawn earlier, a participant's account will be distributed in the event of
termination of employment, death, or termination of the Plan. If a
<PAGE> 15
participant's account is less than $3,500, a lump-sum distribution will
generally be made. If a participant's account is greater than $3,500, the
participant's distribution options are: lump-sum distribution, monthly or
yearly installments, or purchase of an annuity. Retirees may continue to leave
their account in the Plan.
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of Plan termination ,
participants will become 100 percent vested in their accounts.
Effective September 1, 1994, participants may borrow from their deferral
portion of their fund accounts, a minimum of $500 up to a maximum equal to the
lesser of $50,000 or 50 percent of their vested deferral account balance. The
loans are subject to certain restrictions, as defined in the Plan document and
applicable restrictions under the IRC.
(2) SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting and Valuation
The financial statements of the Plan are prepared on the accrual basis of
accounting. The preparation of the financial statements in conformity with
generally accepted accounting principles requires the Plan's management to use
estimates and assumptions that affect the accompanying financial statements and
disclosures. Actual results could differ from these estimates. Investments are
accounted for at yearend fair market values. Participant loans are valued at
cost, which approximates fair market value. Unrealized appreciation
(depreciation) is the difference between the fair value at the end of the
current year and the cost of the investment, if acquired during the Plan year,
or the fair value at the beginning of the Plan year. Therefore, the cost basis
reflected in Note 1 represents revalued ERISA cost. The accompanying
supplemental Schedule I reflects cost basis determined utilizing an original
cost approach as required by ERISA.
<PAGE> 16
Other
The Company's annual contribution is determined when annual net income and
payroll amounts are known. The contribution is allocated to participants
subsequent to yearend.
The Company provides certain administrative and accounting services to the Plan
at no cost and also pays the cost of certain outside services provided to the
Plan. Such outside services paid by the Company were approximately $76,000 and
$60,000 for 1996 and 1995, respectively.
Benefits are recorded when paid.
Reclassifications
Certain 1994 amounts have been reclassified to conform with the 1995 and 1996
presentation.
(3) FEDERAL INCOME TAXES
The Plan is qualified under the Internal Revenue Code as exempt from Federal
income taxes and the Plan received a favorable determination letter from the
Internal Revenue Service (the "IRS") on August 23, 1996. The Plan administrator
believes that the Plan is currently designed and being operated in compliance
with the applicable requirements of the Internal Revenue Code. Therefore, the
administrator believes that the Plan was tax exempt as of the financial
statement date.
Employer contributions to the Plan and all earnings from Plan investments are
not taxable to participants until a partial or complete distribution of such
contributions or earnings is made.
(4) PARTY-IN-INTEREST TRANSACTIONS
Certain Plan investments are shares of K N Energy, Inc. common stock. The Plan
had no reportable or prohibited party-in-interest transactions for the years
ended December 31, 1996, 1995 and 1994. Certain Plan investments are shares of
mutual funds managed by Putnam Investments,
<PAGE> 17
Inc. Putnam Fiduciary Trust Company (the Trustee of the Plan) is a subsidiary
of Putnam Investments, Inc. and therefore, these transactions qualify as
party-in-interest.
(5) PLAN MERGER
Effective March 27, 1996, the American Oil and Gas Corporation 401(k)
Retirement and Savings Plan merged into the Plan. Some of the assets
transferred into the Plan prior to December 31, 1995. All the remaining assets
were transferred in as of March 27, 1996 and are shown in the 1996 and 1995
Statements of Income and Changes in Plan Equity as transfers from Related Plan.
(6) SUBSEQUENT EVENT
Effective January 1, 1997 the Company contribution will be determined by the
Board of Directors based on earning goals achieved by the Company.
<PAGE> 18
SCHEDULE I
Page 1 of 2
K N ENERGY, INC.
PROFIT SHARING AND SAVINGS PLAN
ALLOCATION OF PLAN ASSETS AND LIABILITIES TO INVESTMENT PROGRAMS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
K N Putnam
Energy, Inc. Putnam Putnam Fund for Putnam
Common Stock Voyager Global Growth and Income
ASSETS Fund Fund Growth Fund Income Fund
------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENTS, at market value (Notes 1 and 2):
K N Energy, Inc. common stock $67,052,748 $ -- $ -- $ -- $ --
Voyager Fund -- 24,673,000 -- -- --
Global Growth Fund -- -- -- -- --
Fund for Growth and Income -- -- -- 17,550,702 --
Income Fund -- -- -- -- 6,196,452
International Growth Fund -- -- -- -- --
U. S. Government Income Trust -- -- -- -- --
Putnam Money Market -- -- -- -- --
Participant loans -- -- -- -- --
----------- ----------- ----------- ----------- -----------
$67,052,748 $24,673,000 $- $17,550,702 $ 6,196,452
----------- ----------- ----------- ----------- -----------
CASH -- -- -- -- --
RECEIVABLES:
K N Energy, Inc. (Notes 1 and 2) -- -- -- -- --
Interest and dividends -- -- -- -- 19,822
----------- ----------- ----------- ----------- -----------
Total assets $67,052,748 $24,673,000 $- $17,550,702 $ 6,216,274
=========== =========== =========== =========== ===========
LIABILITIES AND PLAN EQUITY
LIABILITIES $ -- $ -- $ -- $ -- $ --
PLAN EQUITY 67,052,748 24,673,000 -- 17,550,702 6,216,274
----------- ----------- ----------- ----------- -----------
Total liabilities and Plan equity $67,052,748 $24,673,000 $ -- $17,550,702 $ 6,216,274
=========== =========== =========== =========== ===========
<CAPTION>
Putnam Putnam Putnam
International U. S. Government Money Loan
ASSETS Growth Fund Income Trust Market Fund
------ ------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
INVESTMENTS, at market value (Notes 1 and 2):
K N Energy, Inc. common stock $ -- $ -- $ -- $ --
Voyager Fund -- -- -- --
Global Growth Fund -- -- -- --
Fund for Growth and Income -- -- -- --
Income Fund -- -- -- --
International Growth Fund 10,106,065 -- -- --
U. S. Government Income Trust -- -- -- --
Putnam Money Market -- -- 11,192,525 --
Participant loans -- -- -- 1,434,084
------------ ------------ ----------- ----------
$ 10,106,065 $ -- $11,192,525 $1,434,084
============ ============ =========== ==========
CASH -- -- -- --
RECEIVABLES:
K N Energy, Inc. (Notes 1 and 2) -- -- -- --
Interest and dividends -- -- 3,968 --
------------ ------------ ----------- ----------
Total assets $ 10,106,065 $ -- $11,196,493 $1,434,084
============ ============ =========== ==========
LIABILITIES AND PLAN EQUITY
LIABILITIES $ -- $ -- $ -- $ --
PLAN EQUITY 10,106,065 -- 11,196,493 1,434,084
------------ ------------ ----------- ----------
Total liabilities and Plan equity $ 10,106,065 $ -- $11,196,493 $1,434,084
============ ============ =========== ==========
<CAPTION>
ASSETS Other Total
------ ------------ -----------
<S> <C> <C>
INVESTMENTS, at market value (Notes 1 and 2):
K N Energy, Inc. common stock $ -- $ 67,052,748
Voyager Fund -- 24,673,000
Global Growth Fund -- --
Fund for Growth and Income -- 17,550,702
Income Fund -- 6,196,452
International Growth Fund -- 10,106,065
U. S. Government Income Trust -- --
Putnam Money Market -- 11,192,525
Participant loans -- 1,434,084
------------ ------------
$ -- $138,205,576
------------ ------------
CASH 49,115 49,115
RECEIVABLES:
K N Energy, Inc. (Notes 1 and 2) 6,654,828 6,654,828
Interest and dividends -- 23,790
------------ ------------
Total assets $ 6,703,943 $144,933,309
============ ============
LIABILITIES AND PLAN EQUITY
LIABILITIES $ -- $ --
PLAN EQUITY 6,703,943 144,933,309
------------ ------------
Total liabilities and Plan equity $ 6,703,943 $144,933,309
============ ============
</TABLE>
The accompanying notes to financial statements are an integral
part of this schedule.
<PAGE> 19
SCHEDULE I
Page 2 of 2
K N ENERGY, INC.
PROFIT SHARING AND SAVINGS PLAN
ALLOCATION OF PLAN ASSETS AND LIABILITIES
TO INVESTMENT PROGRAMS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
K N Putnam
Energy, Inc. Putnam Putnam Fund for Putnam
Common Stock Voyager Global Growth and Income
ASSETS Fund Fund Growth Fund Income Fund
------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENTS, at market value (Notes 1 and 2):
K N Energy, Inc. common stock $53,171,364 $ -- $ -- $ -- $ --
Voyager Fund -- 21,101,795 -- -- --
Global Growth Fund -- -- 8,551,622 -- --
Fund for Growth and Income -- -- -- 14,194,547 --
Income Fund -- -- -- -- 6,978,673
U. S. Government Income Trust -- -- -- -- --
Putnam Money Market -- -- -- -- --
Participant loans -- -- -- -- --
----------- ----------- ----------- ----------- -----------
53,171,364 21,101,795 8,551,622 14,194,547 6,978,673
----------- ----------- ----------- ----------- -----------
RECEIVABLES:
K N Energy, Inc. (Notes 1 and 2) -- -- -- -- --
Interest and dividends -- -- -- -- 20,955
----------- ----------- ----------- ----------- -----------
Total assets $53,171,364 $21,101,795 $ 8,551,622 $14,194,547 $ 6,999,628
=========== =========== =========== =========== ===========
LIABILITIES AND PLAN EQUITY
LIABILITIES $ -- $ -- $ -- $ -- $ --
PLAN EQUITY 53,171,364 21,101,795 8,551,622 14,194,547 6,999,628
----------- ----------- ----------- ----------- -----------
Total liabilities and plan equity $53,171,364 $21,101,795 $ 8,551,622 $14,194,547 $ 6,999,628
=========== =========== =========== =========== ===========
<CAPTION>
Putnam Putnam
U. S. Government Money Loan
ASSETS Income Trust Market Fund Other Total
------ ------------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENTS, at market value (Notes 1 and 2):
K N Energy, Inc. common stock $ -- $ -- $ -- $ -- $ 53,171,364
Voyager Fund -- -- -- -- 21,101,795
Global Growth Fund -- -- -- -- 8,551,622
Fund for Growth and Income -- -- -- -- 14,194,547
Income Fund -- -- -- -- 6,978,673
U. S. Government Income Trust 10,222,326 -- -- -- 10,222,326
Putnam Money Market -- 697,360 -- -- 697,360
Participant loans -- -- 1,100,816 -- 1,100,816
----------- ---------- ---------- ------------ ------------
10,222,326 697,360 1,100,816 -- 116,018,503
----------- ---------- ---------- ------------ ------------
RECEIVABLES:
K N Energy, Inc. (Notes 1 and 2) -- -- -- 5,062,761 5,062,761
Interest and dividends 42,745 1,210 -- -- 64,910
----------- ---------- ---------- ------------ ------------
Total assets $10,265,071 $ 698,570 $1,100,816 $ 5,062,761 $121,146,174
=========== ========== ========== ============ ============
LIABILITIES AND PLAN EQUITY
LIABILITIES $ -- $ -- $ -- $ -- $ --
PLAN EQUITY 10,265,071 698,570 1,100,816 5,062,761 121,146,174
----------- ---------- ---------- ------------ ------------
Total liabilities and plan equity $10,265,071 $ 698,570 $1,100,816 $ 5,062,761 $121,146,174
=========== ========== ========== ============ ============
</TABLE>
The accompanying notes to financial statements are an integral
part of this schedule.
<PAGE> 20
SCHEDULE II
Page 1 of 3
K N ENERGY, INC.
PROFIT SHARING AND SAVINGS PLAN
ALLOCATION OF PLAN INCOME AND CHANGES IN PLAN
EQUITY TO INVESTMENT PROGRAMS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
K N Putnam
Energy, Inc. Putnam Putnam Fund for Putnam
Common Stock Voyager Global Growth and Income
Fund Fund Growth Fund Income Fund
------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
CONTRIBUTIONS (Notes 1 and 2):
Employer $ -- $ -- $ -- $ -- $ --
Employee 1,102,446 1,148,826 485,041 644,504 182,939
------------ ------------ ----------- ------------ -----------
LOAN ACTIVITY, net (115,630) (8,373) (2,528) (47,307) (7,012)
------------ ------------ ----------- ------------ -----------
EARNINGS FROM INVESTMENTS:
Net appreciation (depreciation) in
market value of
investments (Note 2) 17,935,301 1,139,002 732,690 1,640,585 (206,665)
Interest -- -- -- -- --
Dividends 1,907,463 1,560,590 720,642 1,497,053 456,301
------------ ------------ ----------- ------------ -----------
Total earnings from
investments 19,842,764 2,699,592 1,453,332 3,137,638 249,636
------------ ------------ ----------- ------------ -----------
DISTRIBUTIONS:
Directly to participants (7,850,675) (2,696,733) (918,176) (2,277,986) (1,217,577)
To insurance company for
provision of benefits,
net of policy dividends -- -- -- -- --
Administration fees (1,442) (2,209) (816) (2,285) (611)
Payments to insurance carriers (15,791) (6,129) (3,279) (4,333) (2,193)
------------ ------------ ----------- ------------ -----------
Total distributions (7,867,908) (2,705,071) (922,271) (2,284,604) (1,220,381)
------------ ------------ ----------- ------------ -----------
TRANSFERS TO (FROM) INVESTMENT
PROGRAMS (Note 1) 919,712 2,436,231 (9,565,196) 1,905,924 11,464
TRANSFERS FROM RELATED PLAN
-- -- -- -- --
------------ ------------ ----------- ------------ -----------
NET INCREASE (DECREASE) IN PLAN
EQUITY 13,881,384 3,571,205 (8,551,622) 3,356,155 (783,354)
DURING THE YEAR
PLAN EQUITY, beginning of year 53,171,364 21,101,795 8,551,622 14,194,547 6,999,628
------------ ------------ ----------- ------------ -----------
PLAN EQUITY, end of year $ 67,052,748 $ 24,673,000 $ -- $ 17,550,702 $ 6,216,274
============ ============ =========== ============ ===========
<CAPTION>
Putnam
International Putnam Putnam
Growth U. S. Government Money Loan
Fund Income Trust Market Fund
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
CONTRIBUTIONS (Notes 1 and 2):
Employer $ -- $ -- $ -- $ --
Employee -- 258,316 35,357 --
----------- ------------ ------------ -----------
LOAN ACTIVITY, net -- 1,544 (8,517) 299,223
----------- ------------ ------------ -----------
EARNINGS FROM INVESTMENTS:
Net appreciation (depreciation) in
market value of
investments (Note 2) -- (281,248) -- --
Interest -- -- -- 102,011
Dividends -- 623,370 51,849 --
----------- ------------ ------------ -----------
Total earnings from
investments -- 342,122 51,849 102,011
----------- ------------ ------------ -----------
DISTRIBUTIONS:
Directly to participants -- (1,925,643) (1,500,660) (67,965)
To insurance company for
provision of benefits,
net of policy dividends -- -- -- --
Administration fees -- (1,741) (90) (1)
Payments to insurance carriers -- (5,343) -- --
----------- ------------ ------------ -----------
Total distributions -- (1,932,727) (1,500,750) (67,966)
----------- ------------ ------------ -----------
TRANSFERS TO (FROM) INVESTMENT
PROGRAMS (Note 1) 10,106,065 (8,934,326) 11,919,984 --
TRANSFERS FROM RELATED PLAN
-- -- -- --
----------- ------------ ------------ -----------
NET INCREASE (DECREASE) IN PLAN
EQUITY 10,106,065 (10,265,071) 10,497,923 333,268
DURING THE YEAR
PLAN EQUITY, beginning of year -- 10,265,071 698,570 1,100,816
----------- ------------ ------------ -----------
PLAN EQUITY, end of year $10,106,065 $ -- $ 11,196,493 $ 1,434,084
=========== ============ ============ ===========
<CAPTION>
Other Total
----------- -------------
<S> <C> <C>
CONTRIBUTIONS (Notes 1 and 2):
Employer $ 6,659,842 $ 6,659,842
Employee -- 3,857,429
----------- -------------
LOAN ACTIVITY, net (111,400) --
----------- -------------
EARNINGS FROM INVESTMENTS:
Net appreciation (depreciation) in
market value of
investments (Note 2) -- 20,959,665
Interest 24,637 126,648
Dividends -- 6,817,268
----------- -------------
Total earnings from
investments 24,637 27,903,581
----------- -------------
DISTRIBUTIONS:
Directly to participants -- (18,455,415)
To insurance company for
provision of benefits,
net of policy dividends -- --
Administration fees (1) (9,196)
Payments to insurance carriers -- (37,068)
----------- -------------
Total distributions (1) (18,501,679)
----------- -------------
TRANSFERS TO (FROM) INVESTMENT
PROGRAMS (Note 1) (8,799,858) --
TRANSFERS FROM RELATED PLAN
3,867,962 3,867,962
----------- -------------
NET INCREASE (DECREASE) IN PLAN
EQUITY DURING THE YEAR 1,641,182 23,787,135
PLAN EQUITY, beginning of year 5,062,761 121,146,174
----------- -------------
PLAN EQUITY, end of year $ 6,703,943 $ 144,933,309
=========== =============
</TABLE>
The accompanying notes to financial statements are an integral
part of this schedule.
<PAGE> 21
SCHEDULE II
Page 2 of 3
K N ENERGY, INC.
PROFIT SHARING AND SAVINGS PLAN
ALLOCATION OF PLAN INCOME AND CHANGES IN PLAN EQUITY TO INVESTMENT PROGRAMS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
K N Putnam
Energy, Inc. Putnam Putnam Fund for Putnam
Common Stock Voyager Global Growth and Income
Fund Fund Growth Fund Income Fund
------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
CONTRIBUTIONS (Notes 1 and 2):
Employer $ -- $ -- $ -- $ -- $ --
Employee 1,237,494 857,036 512,214 528,051 227,680
------------ ------------ ----------- ------------ -----------
LOAN ACTIVITY, net (251,111) (105,720) (56,334) (54,284) (8,173)
------------ ------------ ----------- ------------ -----------
EARNINGS FROM INVESTMENTS:
Net appreciation (depreciation)
in market value of investments
(Note 2) 10,310,590 4,994,664 690,341 3,059,321 780,531
Interest -- -- -- -- --
Dividends 1,926,733 1,125,040 475,523 956,596 494,376
------------ ------------ ----------- ------------ -----------
Total earnings from
investments 12,237,323 6,119,704 1,165,864 4,015,917 1,274,907
------------ ------------ ----------- ------------ -----------
DISTRIBUTIONS:
Directly to participants (5,725,961) (2,170,982) (999,084) (2,361,029) (1,333,160)
To insurance company for
provision of benefits,
net of policy dividends (8,101) (2,276) (1,599) (1,964) (1,111)
Administration fees (1,430) (2,284) (998) (1,330) (711)
------------ ------------ ----------- ------------ -----------
Total distributions (5,735,492) (2,175,542) (1,001,681) (2,364,323) (1,334,982)
------------ ------------ ----------- ------------ -----------
TRANSFERS TO (FROM)INVESTMENT PROGRAMS
(Note 1) (240,808) 1,151,536 (570,593) 833,532 (43,148)
TRANSFERS FROM RELATED PLAN 21,702 9,807 24,010 9,017 2,683
------------ ------------ ----------- ------------ -----------
NET INCREASE (DECREASE) IN PLAN
EQUITY DURING THE YEAR 7,269,108 5,856,821 73,480 2,967,910 118,967
PLAN EQUITY, beginning of year 45,902,256 15,244,974 8,478,142 11,226,637 6,880,661
------------ ------------ ----------- ------------ -----------
PLAN EQUITY, end of year $ 53,171,364 $ 21,101,795 $ 8,551,622 $ 14,194,547 $ 6,999,628
============ ============ =========== ============ ===========
<CAPTION>
Putnam Putnam
U. S. Government Money Loan
Income Trust Market Fund Other Total
------------ ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
CONTRIBUTIONS (Notes 1 and 2):
Employer $ -- $ -- $ -- $ 5,062,761 $ 5,062,761
Employee 348,408 6,560 -- -- 3,717,443
------------ ----------- ----------- ----------- -------------
LOAN ACTIVITY, net 7,425 381 584,611 (116,795) --
------------ ----------- ----------- ----------- -------------
EARNINGS FROM INVESTMENTS:
Net appreciation (depreciation)
in market value of investments
(Note 2) 834,904 -- -- -- 20,670,351
Interest -- -- 63,455 -- 63,455
Dividends 754,126 16,346 -- -- 5,748,740
------------ ----------- ----------- ----------- -------------
Total earnings from
investments 1,589,030 16,346 63,455 -- 26,482,546
------------ ----------- ----------- ----------- -------------
DISTRIBUTIONS:
Directly to participants (2,429,205) (343,565) (73,533) -- (15,436,519)
To insurance company for
provision of benefits,
net of policy dividends (1,887) (105) -- -- (17,043)
Administration fees (2,637) (60) -- -- (9,450)
------------ ----------- ----------- ----------- -------------
Total distributions (2,433,729) (343,730) (73,533) -- (15,463,012)
------------ ----------- ----------- ----------- -------------
TRANSFERS TO (FROM)INVESTMENT PROGRAMS
(Note 1) 195,492 1,019,013 -- (2,345,024) --
TRANSFERS FROM RELATED PLAN 26,676 -- -- 116,795 210,690
------------ ----------- ----------- ----------- -------------
NET INCREASE (DECREASE) IN PLAN
EQUITY DURING THE YEAR (266,698) 698,570 574,533 2,717,737 20,010,428
PLAN EQUITY, beginning of year 10,531,769 -- 526,283 2,345,024 101,135,746
------------ ----------- ----------- ----------- -------------
PLAN EQUITY, end of year $ 10,265,071 $ 698,570 $ 1,100,816 $ 5,062,761 $ 121,146,174
============ =========== =========== =========== =============
</TABLE>
The accompanying notes to financial statements are an integral
part of this schedule.
<PAGE> 22
SCHEDULE II
Page 3 of 3
K N ENERGY, INC.
PROFIT SHARING AND SAVINGS PLAN
ALLOCATION OF PLAN INCOME AND CHANGES PLAN EQUITY TO INVESTMENT PROGRAMS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
K N Putnam
Energy, Inc. Putnam Putnam Fund for Putnam
Common Stock Voyager Global Growth and Income
Fund Fund Growth Fund Income Fund
------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
CONTRIBUTIONS (Notes 1 and 2):
Employer $ -- $ -- $ -- $ -- $ --
Employee 565,483 387,136 253,273 255,573 119,720
------------ ------------ ----------- ------------ -----------
EARNINGS FROM INVESTMENTS:
Net appreciation (depreciation) in
market value of investments
(Note 2) 2,542,167 (631,016) (642,110) (1,026,625) (211,896)
Interest -- -- -- -- --
Dividends 961,880 649,170 283,267 549,945 194,606
------------ ------------ ----------- ------------ -----------
Total earnings from
investments 3,504,047 18,154 (358,843) (476,680) (17,290)
------------ ------------ ----------- ------------ -----------
DISTRIBUTIONS:
Directly to participants (753,357) (202,677) (242,624) (159,392) (139,658)
To insurance company for provision
of benefits, net of policy
dividends (4,004) (1,151) (886) (1,038) (565)
------------ ------------ ----------- ------------ -----------
Total distributions (757,361) (203,828) (243,510) (160,430) (140,223)
------------ ------------ ----------- ------------ -----------
TRANSFERS TO (FROM) INVESTMENT
PROGRAMS AND 401(k) PLAN
(Note 1) 42,590,087 15,043,512 8,827,222 11,608,174 6,918,454
------------ ------------ ----------- ------------ -----------
NET INCREASE (DECREASE) IN PLAN
EQUITY DURING THE YEAR 45,902,256 15,244,974 8,478,142 11,226,637 6,880,661
PLAN EQUITY, beginning of year -- -- -- -- --
------------ ------------ ----------- ------------ -----------
PLAN EQUITY, end of year $ 45,902,256 $ 15,244,974 $ 8,478,142 $ 11,226,637 $ 6,880,661
============ ============ =========== ============ ===========
<CAPTION>
Putnam
U. S. Government
Income Trust Fund KN Fund K5 Fund EQ Fund BI
----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
CONTRIBUTIONS (Notes 1 and 2):
Employer $ -- $ -- $ -- $ -- $ --
Employee 138,597 -- -- -- --
----------- ------------ ----------- ------------ -----------
EARNINGS FROM INVESTMENTS:
Net appreciation (depreciation) in
market value of investments
(Note 2) (331,700) (4,301,879) (908,359) (658,737) (205,376)
Interest -- -- -- (1,570) --
Dividends 328,899 567,107 145,878 204,383 --
----------- ------------ ----------- ------------ -----------
Total earnings from
investments (2,801) (3,734,772) (762,481) (455,924) (205,376)
----------- ------------ ----------- ------------ -----------
DISTRIBUTIONS:
Directly to participants (480,194) (559,531) (70,311) (161,703) (286,915)
To insurance company for provision
of benefits, net of policy
dividends (1,167) -- -- -- --
----------- ------------ ----------- ------------ -----------
Total distributions (481,361) (559,531) (70,311) (161,703) (286,915)
----------- ------------ ----------- ------------ -----------
TRANSFERS TO (FROM) INVESTMENT
PROGRAMS AND 401(k) PLAN
(Note 1) 10,877,334 (25,396,213) (6,426,580) (14,356,911) (6,252,317)
----------- ------------ ----------- ------------ -----------
NET INCREASE (DECREASE) IN PLAN
EQUITY DURING THE YEAR 10,531,769 (29,690,516) (7,259,372) (14,974,538) (6,744,608)
PLAN EQUITY, beginning of year -- 29,690,516 7,259,372 14,974,538 6,744,608
----------- ------------ ----------- ------------ -----------
PLAN EQUITY, end of year $10,531,769 $ -- $ -- $ -- $ --
=========== ============ =========== ============ ===========
<CAPTION>
Loan
Fund GI Fund Other Total
------------ -------- ---------- -------------
<S> <C> <C> <C> <C>
CONTRIBUTIONS (Notes 1 and 2):
Employer $ -- $ -- $2,324,070 $ 2,324,070
Employee -- 526,283 -- 2,246,065
------------ -------- ---------- -------------
EARNINGS FROM
INVESTMENTS:
Net appreciation (depreciation) in
market value of investments
(Note 2) (249,703) -- -- (6,625,234)
Interest 387,129 -- -- 385,559
Dividends -- -- -- 3,885,135
------------ -------- ---------- -------------
Total earnings from
investments 137,426 -- -- (2,354,540)
------------ -------- ---------- -------------
DISTRIBUTIONS:
Directly to participants (1,275,326) -- -- (4,331,688)
To insurance company for provision
of benefits, net of policy
dividends -- -- -- (8,811)
------------ -------- ---------- -------------
Total distributions (1,275,326) -- -- (4,340,499)
------------ -------- ---------- -------------
TRANSFERS TO (FROM) INVESTMENT
PROGRAMS AND 401(k) PLAN
(Note 1) (21,728,460) -- 20,954 21,725,256
------------ -------- ---------- -------------
NET INCREASE
(DECREASE) IN PLAN
EQUITY DURING THE YEAR (22,866,360) 526,283 2,345,024 19,600,352
PLAN EQUITY, beginning of year 22,866,360 -- -- 81,535,394
------------ -------- ---------- -------------
PLAN EQUITY, end of year $ -- $526,283 $2,345,024 $ 101,135,746
============ ======== ========== =============
</TABLE>
The accompanying notes to financial statements are integral
part this schedule.
<PAGE> 23
SCHEDULE III
K N ENERGY, INC.
PROFIT SHARING AND SAVINGS PLAN
ITEM 27a--SCHEDULE OF PLAN ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Number of
Shares or Market
Identity of Party Involved Description of Asset Units Cost* Value
-------------------------- -------------------- ----- ----- -----
<S> <C> <C> <C> <C>
Putnam Investments * * K N Energy, Inc. Common Stock 1,708,350.279 $16,488,176 $ 67,052,748
Putnam Investments * * Putnam Voyager Fund 1,530,583.136 20,300,553 24,673,000
Putnam Investments * * Putnam Global Growth Fund - - -
Putnam Investments * * Putnam Fund for Growth and Income 973,956.834 14,554,501 17,550,702
Putnam Investments * * Putnam Income Fund 883,944.665 5,955,009 6,196,452
Putnam Investments * * Putnam International Growth Fund 672,392.857 10,106,065 10,106,065
Putnam Investments * * Putnam U.S. Government Income Trust - - -
Putnam Investments * * Putnam Money Market 11,192,524.490 11,192,525 11,192,525
Participant Loans * * Interest rates ranging from 7.75% to
10.81% - 1,434,084 1,434,084
----------- ------------
$80,030,913 $138,205,576
=========== ============
</TABLE>
* Determined using original historical cost
* * Party-in-interest
The accompanying notes to financial statements are an integral
part of this schedule.
<PAGE> 24
SCHEDULE IV
K N ENERGY, INC.
PROFIT SHARING
AND SAVINGS PLAN
ITEM 27d--SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Number of
Transactions
Identity of Description of ---------------- **Purchase **Sales Cost
Party Involved Transaction Purchases Sales Price Price Basis Gain
-------------- ----------- --------- ----- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Putnam Investments: Putnam Fund For
Growth and Income 274 544 $ 3,410,592 $ 7,927,107 $ 7,421,931 $ 505,176
Putnam Voyager Fund 315 592 4,829,671 10,087,610 9,235,062 852,548
* K N Energy, Inc.
Common Stock 130 310 3,606,050 19,646,791 14,782,234 4,864,557
Putnam Global Growth
Fund 203 450 1,677,759 14,063,891 13,219,008 844,883
Putnam International
Growth Fund 1 - 10,106,065 - - -
Putnam Money Market 212 92 12,502,992 14,472,682 14,472,682 -
Putnam U S Government
Income Trust 178 548 2,492,611 16,087,032 15,884,121 202,911
</TABLE>
* Party-in-interest
** The current value of the assets on the transaction date is equal to the
purchase/sales price on that date.
The accompanying notes to financial statements are an integral
part of this statement.
