SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): August 16, 2001
CABOT OIL & GAS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-10447 04-3072771
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
1200 Enclave Parkway
Houston, Texas 77077
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281) 589-4600
This Form 8-K/A amends and supplements the Form 8-K filed on August 30,
2001, as amended by the 8-K/A filed on October 30, 2001, by amending Item 7 and
Exhibit 99.2 as set forth herein.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired.
The following consolidated financial statements of Cody Company are
filed herewith as Exhibit 99.2:
Independent Auditor's Report
Consolidated Balance Sheets - June 30, 2001 (unaudited) and
December 31, 2000
Consolidated Statements of Operations - For the Six Months Ended
June 30, 2001 (unaudited) and for the Year Ended December 31,
2000
Consolidated Statements of Comprehensive Income - For Six Months
Ended June 30, 2001 (unaudited) and for the Year Ended December
31, 2000
Consolidated Statement of Changes in Stockholders' Equity - For
the Period from January 1, 2001 through June 30, 2001 (unaudited)
and for the Period from January 1, 2000 through December 31, 2000
Consolidated Statements of Cash Flows - For the Six Months Ended
June 30, 2001 (unaudited) and for the Year Ended December 31,
2000
Notes to Consolidated Financial Statements
2
(b) Pro Forma Financial Information.
The accompanying unaudited pro forma combined financial statements and
related notes thereto are presented to reflect the merger of Cody Company with a
subsidiary of Cabot Oil & Gas Corporation ("Cabot").
Effective August 16, 2001, Cabot, COG Colorado Corporation, a wholly
owned subsidiary of Cabot ("Merger Sub"), and Cody Company consummated their
Agreement and Plan of Merger (the "Merger Agreement"), whereby (i) Cody Company
distributed to its shareholders certain assets and liabilities (the "Assignment
and Assumption"), and thereafter (ii) Merger Sub merged with and into Cody
Company (the "Merger"), with Cody Company surviving as a wholly owned subsidiary
of Cabot.
The Merger has been accounted for in the unaudited pro forma combined
financial statements using the purchase method of accounting. Consequently, the
unaudited pro forma combined balance sheet as of June 30, 2001 reflects the
recording of assets acquired and liabilities assumed of Cody Company at
estimated fair value as if the Merger had occurred on that date. The unaudited
pro forma combined statements of operations are prepared for the six months
ended June 30, 2001 and for the year ended December 31, 2000 and illustrate the
effects of the Merger as if it had occurred on January 1, 2000. The management
of Cabot believes that the assumptions utilized provide a reasonable basis for
presenting the significant effects of the Merger and that the pro forma
adjustments give appropriate effect to those assumptions and are properly
applied in the unaudited pro forma combined financial statements. The unaudited
pro forma combined financial statements do not purport to be indicative of the
financial position or results of operations of Cabot had the Merger occurred on
the dates mentioned above, nor are the unaudited pro forma combined financial
statements necessarily indicative of the future financial position or results of
operations of Cabot.
The unaudited pro forma combined financial statements should be read in
conjunction with the notes thereto and the historical financial statements of
Cody Company, referred to in Item 7(a) of this Form 8-K/A. In addition,
reference should be made to the historical financial statements of Cabot
included in its Form 10-K for the year ended December 31, 2000 and its Form 10-Q
for the six months ended June 30, 2001 filed with the Securities and Exchange
Commission.
3
Cabot Oil & Gas Corporation
Unaudited Pro Forma Combined Statement of Operations
For the Year Ended December 31, 2000
(in thousands, except per share amounts)
Pro Forma Combining Adjustments
-------------------------------
Historical Assignment and Purchase Pro Forma
----------
Revenues Cabot Cody Assumption and Other Combined
-------- ----- ---- ---------- --------- --------
Oil and Gas Sales $ 219,729 $ 64,813 $ 284,542
Brokered Natural Gas 141,085 141,085
Ranching 4,874 $ (4,874) a --
Investment Income 4,388 (4,388) a --
Sales of Land Held for Development 1,407 (1,407) a --
Other Income 7,837 660 (492) a 8,005
-----------------------------------------------------------------------------------------
Total Revenues 368,651 76,142 (11,161) 433,632
Costs and Expenses
------------------
Oil and Gas Operations:
Brokered Natural Gas Cost 135,700 135,700
Direct Operations-Field &
Pipeline 35,727 9,992 45,719
Taxes Other Than Income 23,041 5,319 28,360
Exploration 19,858 2,552 22,410
Impairment of Properties 13,511 13,511
Ranching 1,600 (1,600) a --
Land Operations 1,073 (1,073) a --
General and Administrative 22,517 7,207 (3,531) a 26,193
Accrued Severence Expense 3,600 $ (3,600) i --
Depletion, Depreciation and
amortization 53,441 19,628 9,779 j 82,848
-----------------------------------------------------------------------------------------
Total Cost and Expenses 303,795 50,971 (6,204) 6,179 354,741
Gain/(Loss) on Sale of Assets
and Other (39) (793) 999 a 167
-----------------------------------------------------------------------------------------
Income from Operations 64,817 24,378 (3,958) (6,179) 79,058
Interest Expense 22,878 2,931 (486) a 12,943 k 38,266
-----------------------------------------------------------------------------------------
Income from Continuing
Operations Before Income
Taxes 41,939 21,447 (3,472) (19,122) 40,792
Income Tax Expense 16,467 3,912 (633) a (3,839) l 15,907
-----------------------------------------------------------------------------------------
Income from Continuing
Operations 25,472 17,535 (2,839) (15,283) 24,885
Preferred Stock Dividend (3,749) -- -- -- (3,749)
-----------------------------------------------------------------------------------------
Net Income Available to
Common Stockholders $ 29,221 $ 17,535 $ (2,839) $ (15,283) $ 28,634
=========================================================================================
Earning per common share:
Basic $ 1.07 $ 0.97
Diluted $ 1.06 $ 0.97
See the notes to the unaudited pro forma combined financial statements.
4
Cabot Oil & Gas Corporation
Unaudited Pro Forma Combined Statement of Operations
For the Six Months Ended June 30, 2001
(in thousands, except per share amounts)
Pro Forma Combining Adjustments
-------------------------------
Historical Assignment and Purchase Pro Forma
----------
Revenues Cabot Cody Assumption and Other Combined
-------- ----- ---- ---------- --------- --------
Oil and Gas Sales $ 196,656 $ 53,368 $ 250,024
Brokered Natural Gas 62,695 62,695
Change in Derivative Fair
Value 1,211 1,211
Ranching 661 $ (661) a --
Investment Income 1,250 (1,250) a --
Other Income 1,936 3,387 (826) a 4,497
-----------------------------------------------------------------------------------------
Total Revenues 262,498 58,666 (2,737) 318,427
Costs and Expenses
------------------
Oil and Gas Operations:
Brokered Natural Gas Cost 60,479 60,479
Direct Operations-Field &
Pipeline 17,870 5,464 23,334
Taxes Other Than Income 16,617 905 17,522
Exploration 25,313 477 25,790
Impairment of Properties 2,964 2,964
Ranching 657 (657) a --
Land Operations --
General and Administrative 11,638 5,394 (2,226) a 14,806
Accrued Severence Expense 12,552 $ (12,552) i --
Depletion, depreciation and
amortization 32,089 9,338 7,857 j 49,284
-----------------------------------------------------------------------------------------
Total Cost and Expenses 166,970 34,787 (2,883) (4,695) 194,179
Gain/(Loss) on Sale of Assets
and Other (27) 66 63 a 102
-----------------------------------------------------------------------------------------
Income from Operations 95,501 23,945 209 4,695 124,350
Interest Expense 9,409 475 (176) a 6,471 k 16,179
-----------------------------------------------------------------------------------------
Income from Continuing
Operations Before Income
Taxes 86,092 23,470 385 (1,776) 108,171
Income Tax Expense 33,438 12,153 177 a (3,706) l 42,062
-----------------------------------------------------------------------------------------
Income from Continuing
Operations $ 52,654 $ 11,317 $ 208 $ 1,930 $ 66,109
=========================================================================================
Earning per common share:
Basic $ 1.79 $ 2.10
Diluted $ 1.76 $ 2.08
See the notes to the unaudited pro forma combined financial statements.
5
Cabot Oil & Gas Corporation
Unaudited Pro Forma Balance Sheet
As of June 30, 2001
(in thousands)
Pro Forma Combining Adjustments
-------------------------------
Historical Assignment and Purchase Pro Forma
---------- -------------- -------- ---------
Cabot Cody Assumption and Other Combined
----- ---- ---------- --------- --------
Current Assets
Cash and Cash Equivalents $ 9,361 $ 1,028 $ 12,428 a $ (18,261) b $ 38,977
14,924 c 5,000 e
10,047 c 4,450 g
Marketable Securities, at fair
value 33,440 (33,440) a 0
Receivables, sale of
securities 55,604 32,177 (32,177) a 55,604
Accounts Receivable, net 14,194 11,538 (608) a 842 d 25,966
Other Current Assets 30,065 13,708 (1,185) a 33,127
(10,047) c 586 d
----------------------------------------------------------------------------------------
Total Current Assets 109,224 91,891 (40,058) (7,383) 153,674
Property and Equipment, net 661,732 128,009 (16,181) a (111,828) d 967,316
301,133 d
4,451 m
Other Assets 1,974 28,243 (28,243) a 1,974
----------------------------------------------------------------------------------------
Total Assets $ 772,930 $ 248,143 $ (84,482) $ 186,373 $ 1,122,964
========================================================================================
Current Liabilities
Accounts Payable $ 95,050 $ 5,419 $ (115) a $ 5,000 e $ 106,480
1,126 d
Accrued Liabilities 27,334 23,386 (50) a 100 f 38,699
4,450 g
(4,820) d
(16,152) b
4,451 m
Other Current Liabilities 21,118 (19,218) a 16,824
14,924 c
----------------------------------------------------------------------------------------
Total Current Liabilities 122,384 49,923 (4,459) (5,845) 162,003
Long-Term Debt 187,000 50 181,353 h 368,403
Deferred Income Taxes 135,626 8,939 (8,939) a 79,152 d 214,778
Other Liabilities 13,837 13,837
Stockholders' Equity 314,083 189,231 (71,084) a (118,147) h 363,943
49,860 h
----------------------------------------------------------------------------------------
$ 772,930 $ 248,143 $ (84,482) $ 186,373 $ 1,122,964
========================================================================================
See the notes to the unaudited pro forma combined financial statements.
6
Cabot Oil & Gas Corporation
Notes to Unaudited Pro Forma Combined Financial Statements
a) To reflect the distribution of certain assets and liabilities to the former
shareholders of Cody Company pursuant to the Assignment and Assumption,
including cash, marketable securities and land, property and equipment not
related to energy activities, as well as the distribution of the cash
surrender value of the insurance policies, and the related revenue and
expenses associated with these assets and liabilities.
Pursuant to the Merger Agreement, Cody Company was required to hold cash
at the date of the Merger sufficient to fund the payment of Federal and
state income and franchise taxes as of the Merger date as well as
severance and bonus expenses noted in (i) below. These funds were made
available from the monetization of marketable securities and receivables
from the sale of securities that otherwise would have been distributed to
the shareholders of Cody Company.
b) To reflect the payment of the investment banking transaction fee and the
payment of executive and employee severance and bonus plans prior to
closing. These costs were the responsibility of the former shareholders of
Cody Company.
c) To record the tax liability related to the Assignment and Assumption of
certain assets and liabilities to Cody Company shareholders and the tax
liability related to the closing the short sale of certain marketable
securities as set forth below (in thousands):
Estimated Total Tax Liability $ 26,871
Estimated Tax Payments (10,047)
Previously Recorded Tax Liability (1,900)
---------
Adjustment to Fair Value of
Tax Liability $ 14,924
=========
d) To reflect the elimination of the Cody Company historical property and
equipment of $111.8 million and record such amounts at fair value based on
the purchase price allocation, inclusive of acquisition related fees and
costs associated with the closing of the transaction, as noted in M below,
and deferred income taxes to reflect the difference between the purchase
price allocated to the properties acquired and their associated remaining
tax basis acquired.
The table below sets forth the allocation of the purchase price (in
thousands):
Unproved oil & gas properties $ 29,931
Proved oil & gas properties 275,653
Net working capital items 9,232
---------
Total net assets 314,816
Acquisition related fees and costs (4,451)
Deferred tax component (79,152)
---------
Total cash and equity consideration $ 231,213
=========
7
The purchase price allocation has been based on preliminary estimates of
fair value and is subject to adjustment as additional information becomes
available and is evaluated.
Pursuant to the Merger Agreement, Cody Company was required to hold cash
at the date of the Merger sufficient to fund the payment of Federal and
state income and franchise taxes as of the Merger date as well as
severance and bonus expenses noted in (i) below. These funds were made
available from the monetization of marketable securities and receivables
from the sale of securities that otherwise would have been distributed to
the shareholders of Cody Company.
e) To reflect the reclassification of certain balances to conform to the
classification of such items in Cabot's historical financial statements.
f) To reflect the accrual of legal and accounting fees associated with the
closing of the acquisition of Cody Company.
g) To reflect escrowed purchase price consideration and the associated
liability payable to the former shareholders of Cody Company.
h) To reflect the financing of the acquisition with long-term debt and class A
common stock and the elimination of the remaining equity of Cody Company
totaling $118.1 million. Cash consideration paid to former Cody Company
shareholders was financed by the issuance of $170 million of 7.3% weighted
average fixed rate debt instruments and $11.4 million from Cabot's existing
revolving line of credit. The class A common stock consisted of 1,999,993
shares valued at $24.93 per share which represents the average closing
price for the three-day period surrounding the date of announcement.
i) To reflect the reduction of expenses related to Cody Company severance and
bonus plans which were paid by the former shareholders of Cody Company
pursuant to the Merger Agreement. These costs were the responsibility of
the former shareholders of Cody Company.
j) To reflect the incremental depletion, depreciation and amortization
resulting from the increase in property and equipment.
k) To reflect the interest expense associated with the debt component of the
acquisition at a weighted average fixed interest rate of 7.14%.
l) To reflect the reduction in income tax expense at the statutory tax rate of
39%.
m) To reflect the accrual of acquisition related fees and costs (See D above).
8
(c) Exhibits.
2.1 -- Agreement and Plan of Merger, dated as of June 20, 2001, among
Cabot Oil & Gas Corporation, COG Colorado Corporation, Cody
Company and the shareholders of Cody Company. (Incorporated by
reference to Exhibit 2.1 to the Current Report on Form 8-K for the
event dated June 20, 2001.)
2.2* -- Amendment to Agreement and Plan of Merger dated as of July 10,
2001 to the Agreement and Plan of Merger, dated June 20, 2001,
among Cabot Oil & Gas Corporation, COG Colorado Corporation, Cody
Company and the shareholders of Cody Company.
2.3* -- Closing Agreement dated August 16, 2001.
4.1* -- Note Purchase Agreement dated as of July 26, 2001 among Cabot Oil
& Gas Corporation and the Purchasers listed therein.
23.1 -- Consent of Netherland Sewell & Associates, Inc.
23.2 -- Consent of Hein + Associates LLP.
99.1* -- Press Release dated August 16, 2001.
99.2 -- Consolidated Financial Statements of Cody Company as of June 30,
2001 (unaudited) and December 31, 2000, and for the six month
period ended June 30, 2001 (unaudited) and for the twelve months
ended December 31, 2000.
__________________
* Filed with the Form 8-K as originally filed on August 30, 2001.
9
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 hereunto duly authorized.
CABOT OIL & GAS CORPORATION
By: /s/ Scott C. Schroeder
----------------------------------
Scott C. Schroeder
Vice President, Chief Financial Officer
and Treasurer
Date: January 4, 2002
10