Delaware 47-0210602 (State of incorporation) (I.R.S. Employer Identification No.) 0-15658 (Commission File Number) 1000 Kiewit Plaza Omaha, Nebraska 68131 (Address of principal (Zip code) executive offices)
On January 2, 1998, Kiewit Diversified Group Inc. ("KDG"), a Peter Kiewit Sons', Inc. ("the Company") subsidiary, completed the previously announced sale (the "CalEnergy Transaction") to CalEnergy Company, Inc. ("CalEnergy") of (i) its stock and option interests in CalEnergy, (ii) its interests in certain joint ventures with CalEnergy (the "Joint Venture Energy Projects") which own power plants in the Philippines and Indonesia, and (iii) its 30% equity interest in Northern Electric plc, one of twelve regional electricity companies created by the privatization of the electric utility industry in the United Kingdom in 1990. The CalEnergy Transaction was accomplished through the sale by KDG to CalEnergy of all of the stock of Kiewit Energy Company ("Kiewit Energy") and the sale by Kiewit Energy to CalEnergy of the stock of certain Kiewit Energy subsidiaries.
The net proceeds of the CalEnergy Transaction to KDG were approximately $1.16
billion. The CalEnergy Transaction resulted in a one-time after tax gain in
1998 to the Company and KDG of approximately $300 million, and elimination
of KDG net income attributable to CalEnergy, the Joint Venture Energy
Projects and Northern Electric plc, which was $8 million in 1996 and is
expected to be approximately $37 million, prior to
the effect of one-time events, in 1997. The CalEnergy Transaction has
substantially increased (by approximately $960 million) the cash, cash
equivalents and other short-term investments held by KDG. KDG expects to
use substantially all of these funds in
connection with its previously announced plans to expand its information services business.
(b) Pro forma financial information.
The following pro forma financial information of the Company has been prepared to give effect to the CalEnergy Transaction.
The pro forma financial information includes pro forma consolidated condensed statements of earnings for the year ended December 28, 1996 and the nine month period ended September 30, 1997, and a pro forma consolidated condensed balance sheet as of September 30, 1997. The pro forma financial information should be read in conjunction with the historical consolidated financial statements and the notes thereto of the Company, appearing in the Company's Annual Report on Form 10-K for the year ended December 28, 1996 and on Form 10-Q for the nine month period ended September 30, 1997, and the notes to the pro forma consolidated condensed financial statements of the Company that follow.
The pro forma financial information is not intended to reflect results of operations or financial position of the Company which would have actually resulted had the sale been completed on the dates indicated. Moreover, the pro forma financial information is not intended to be indicative of the future results of operations or financial position of the Company.
(1) Basis of Reporting
The accompanying pro forma consolidated condensed financial statements of the Company are presented based upon the historical consolidated financial statements and the notes thereto of the Company, as adjusted to remove the earnings statement and the balance sheet accounts of Kiewit Energy and to give effect to certain other elements of the CalEnergy Transaction. Such pro forma financial statements should be read in conjunction with the separate historical consolidated financial statements and the notes thereto of the Company appearing in the Company's Annual Report on Form 10-K for the year ended December 28, 1996 and on Form 10-Q for the nine month period ended September 30, 1997. Such pro forma financial statements are not necessarily indicative of the future results of operations or financial position.
Completion of the sale has been assumed to be as of September 30, 1997 in the pro forma consolidated condensed balance sheet and as of January 1, 1996, in the pro forma consolidated condensed statements of earnings for the year ended December 28, 1996 and December 29, 1996, for the nine months ended September 30, 1997.
KDG expects to invest substantially all of the proceeds from the CalEnergy Transaction in its information services business. Therefore, the pro forma consolidated condensed statements of earnings contain no adjustments that recognize investment income for the fiscal year ended December 28, 1996 and for the nine month period ended September 30, 1997 relative to the proceeds received from the sale.
The significant accounting policies followed by the Company, described in the notes to its historical consolidated financial statements included in the Company's Annual Report on Form 10-K, have been used in preparing the accompanying pro forma consolidated condensed financial statements.
(2) Statements of Earnings Pro Forma Adjustments
As described in Note 1, the 1996 historical consolidated condensed statements of earnings for the Company have been adjusted to remove the income and expenses of Kiewit Energy. The 1997 historical consolidated statement of earnings reflects the income and expenses of Kiewit Energy as discontinued operations.
Material nonrecurring charges or credits and related tax effects which result directly from the sale, such as the estimated gain from the sale, were not considered in the pro forma consolidated condensed statements of earnings.
(3) Balance Sheet Pro Forma Adjustments
As described in Note 1, the historical consolidated condensed balance sheet of the Company has been adjusted to remove the balance sheet accounts of Kiewit Energy and to give effect to certain other elements of the sale. The other adjustment made in preparation of the Company's Pro Forma Consolidated Condensed Balance Sheet is as follows: an adjustment to record the cash proceeds on the sale of Kiewit Energy along with the estimated tax liability resulting from the estimated taxable gain on the sale and the resulting after tax proceeds to be received by the Company.
In order to fund the CalEnergy Transaction, CalEnergy sold, in October 1997, approximately 19.1 million shares of its common stock. It is the Company's policy to recognize gains on the sale of stock by its investees. The Company expects to recognize an after-tax gain of approximately $50 million in the fourth quarter of 1997 from the sale by CalEnergy of its common stock. The income from this sale and the additional equity earnings attributable to these assets recognized by the Company in the fourth quarter of 1997 will reduce the net gain reflected in the Pro Forma Consolidated Condensed Balance Sheet.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES Pro Forma Consolidated Condensed Balance Sheet September 30, 1997 (Unaudited) Kiewit Other (dollars in millions) Historical Energy Adjustments Pro Forma Assets Current Assets: Cash and cash equivalents $ 522 $ - $ 1,159 (a) $ 1,681 Marketable securities 373 - - 373 Restricted securities 22 - - 22 Receivables, less allowance of $15 463 - - 463 Costs and earnings in excess of billings on uncompleted contracts 118 - - 118 Investment in construction joint ventures 148 - - 148 Deferred income taxes 46 - - 46 Other 51 - - 51 Total Current assets 1,743 - 1,159 2,902 Property, Plant and Equipment, less accumulated depreciation and amortization of $665 391 - - 391 Investments 531 - - 531 Investments in Discontinued Operations 597 - (597) (a) - Intangible Assets 55 - - 55 Other Assets 43 - - 43 $ 3,360 $ - $ 562 $ 3,922 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 268 $ - $ - $ 268 Current portion of long-term debt 11 - - 11 Accrued costs and billings in excess of revenue on completed contracts 302 - - 302 Accrued insurance costs 86 - - 86 Other 83 - 197 (a) 280 Total Current Liabilities 750 - 197 947 Long-Term Debt, less current portion 151 - - 151 Deferred Income taxes 158 - - 158 Retirement Benefits 40 - - 40 Accrued Reclamation Costs 100 - - 100 Other Liabilities 182 - - 182 Minority Interest 11 - - 11 Stockholders' Equity: Preferred stock, no par value, authorized 250,000 shares: no shares outstanding in 1997 - - - - Common stock, $.0625 par value, aggregate redemption value $1.8 billion historical; $2.1 billion pro forma: Class B, authorized 8,000,000 shares: -0- outstanding - - - - Class C, authorized 125,000,000 shares: 10,082,829 outstanding 1 - - 1 Class D, authorized 50,000,000 shares: 25,386,725 outstanding 1 - - 1 Additional paid-in capital 317 - - 317 Foreign currency adjustment (8) - - (8) Net unrealized holding gain 18 - - 18 Retained earnings 1,639 - 365 (a) 2,004 Total Stockholders' Equity 1,968 - 365 2,333 $ 3,360 $ - $ 562 $ 3,922
PETER KIEWIT SONS', INC. AND SUBSIDIARIES Pro Forma Consolidated Condensed Statements of Earnings Year Ended December 28, 1996 and Nine Months Ended September 30, 1997 (Unaudited) Year Ended Nine Months Ended December 28, 1996 September 30, 1997 (dollars in millions, except per share data) Kiewit Other Kiewit Other Historical Energy Adjustments Pro Forma Historical Energy Adjustments Pro Forma (Audited) Revenue $ 2,904 $ - $ - $ 2,904 $ 2,180 $ - $ - $ 2,180 Cost of Revenue (2,412) - - (2,412) (1,877) - - (1,877) 492 - - 492 303 - - 303 General and Administrative Expenses (260) 1 - (259) (147) - - ( 147) Operating Earnings 232 1 - 233 156 - - 156 Other Income (Expense): Equity Earnings, net 12 (14) - (2) (17) - - ( 17) Investment Income, net 72 (2) - 70 34 - - 34 Interest Expense, net (37) - - (37) (13) - - ( 13) Other, net 26 (2) - 24 29 - - 29 73 (18) - 55 33 - - 33 Income from Continuing Operations Before Income Taxes and Minority Interest 305 (17) - 288 189 - - 189 Provision for Income Taxes (84) 9 - (75) (73) - - ( 73) Minority Interest in Net Losses of Subsidiaries - - - - 2 - - 2 Income from Continuing Operations $ 221 $ (8) $ - $ 213 $ 118 $ - $ - $ 118 Earnings Attributable to: Class C Stock $ 108 $ 108 $ 84 $ 84 Class D Stock $ 113 $ 105 $ 34 $ 34 Earnings Per Share: Class C Stock Primary $ 10.13 $ 10.13 $ 8.76 $ 8.76 Fully Diluted $ 9.82 $ 9.82 $ 1.40 $ 1.40 Class D Stock Primary $ 4.85 $ 4.49 $ 8.42 $ 8.42 Fully Diluted $ 4.85 $ 4.48 $ 1.40 $ 1.40 Weighted Average Shares Outstanding: Class C Stock Primary 10,655,886 10,655,886 9,570,079 9,570,079 Fully Diluted 11,026,045 11,026,045 24,513,018 24,513,018 Class D Stock Primary 23,263,688 23,263,688 10,006,912 10,006,912 Fully Diluted 23,273,775 23,273,775 24,513,018 24,513,018
(c) Exhibits. Exhibit Number Description 2 Stock Purchase Agreement by and between CalEnergy Company, Inc. and Kiewit Diversified Group Inc. dated September 10, 1997. (Exhibit 2 to the Form 8-K Current Report of CalEnergy dated September 10, 1997)
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.
Dated: January 15, 1998.
BY: /s/ Matthew J. Johnson Matthew J. Johnson Vice President