UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 29, 2001
KANEB SERVICES, INC.
(Exact name of registrant as specified in charter)
Delaware 001-05083 74-1191271
(State of Organization) (Commission File No.) (I.R.S. Employer
Identification No.)
2435 North Central Expressway
Richardson, Texas 75080
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (972) 699-4000
Item 2. Acquisition or Disposition of Assets.
On June 29, 2001 (the "Distribution Date"), Kaneb Services, Inc. (the
"Company") completed the distribution of its pipeline, terminaling and product
marketing businesses to its shareholders in the form of a new limited liability
company, Kaneb Services LLC. On the Distribution Date, the shareholders of Kaneb
Services, Inc. received one common share Kaneb Services LLC for each three
shares of the Company's common stock held on June 20, 2001, the record date for
the distribution.
The common shares of Kaneb Services LLC (ticker symbol "KSL") began trading
on the New York Stock Exchange on July 2, 2001. The Company's common stock
continues trading as Kaneb Services, Inc. d/b/a Xanser Corporation on the New
York Stock Exchange under the ticker symbol "XNR". Upon shareholder
ratification, at the annual meeting, the Company's name will change to Xanser
Corporation (pronounced zan' ser).
Item 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
SIGNATURES
KANEB SERVICES, INC.
Date: July 13, 2001 By: MICHAEL R. BAKKE
----------------------------- ----------------------------
Michael R. Bakke, Controller
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
The following unaudited pro forma condensed consolidated balance sheet (the
"Pro Forma Balance Sheet") for Kaneb Services, Inc. (the "Company") has been
derived from the unaudited historical financial statements of the Company as of
March 31, 2001 and assumes that the distribution of Kaneb Services LLC shares
(the "Distribution") was consummated on March 31, 2001.
The Pro Forma Balance Sheet is based on the available information and
contains certain assumptions that the Company deems appropriate. The Pro Forma
Balance Sheet does not purport to be indicative of the financial position of the
Company had the Distribution occurred on March 31, 2001, nor is the Pro Forma
Balance Sheet necessarily indicative of the future financial position of Kaneb
Services, Inc. The Pro Forma Balance Sheet should be read in conjunction with
the consolidated financial statements of Kaneb Services, Inc., included in our
report on Form 10-Q/A, dated June 15, 2001.
KANEB SERVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 2001
(In Thousands)
(Unaudited)
Pro Forma
Historical Adjustments Pro Forma
-------------- -------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 15,886 $ - $ 15,886
Accounts receivable 32,408 7,500 (a) 54,908
15,000 (b)
Inventories 7,560 - 7,560
Prepaid expenses and other current assets 6,675 - 6,675
Current deferred taxes 36,070 (36,070)(b) -
-------------- ------------- --------------
Total current assets 98,599 (13,570) 85,029
-------------- ------------- --------------
Property and equipment 30,061 - 30,061
Less accumulated depreciation and amortization 19,673 - 19,673
-------------- ------------- --------------
Net property and equipment 10,388 - 10,388
-------------- ------------- --------------
Excess of cost over fair value of net assets
of acquired businesses 61,943 - 61,943
Deferred income taxes and other assets 11,044 (3,511)(b) 7,533
Net assets of discontinued operations - businesses to
be distributed to common shareholders 44,947 (44,947)(c) -
-------------- ------------- --------------
$ 226,921 $ (62,028) $ 164,893
============== ============= ==============
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 567 $ - $ 567
Accounts payable 7,426 - 7,426
Accrued expenses 11,210 15,000 (b) 26,210
-------------- -------------- --------------
Total current liabilities 19,203 15,000 34,203
-------------- ------------- --------------
Long-term debt, less current portion:
Technical services 18,529 - 18,529
Parent company 21,396 - 21,396
-------------- ------------- --------------
Total long-term debt, less current portion 39,925 - 39,925
-------------- ------------- --------------
Other liabilities 1,711 - 1,711
Stockholders' equity:
Preferred stock, without par value - - -
Common stock, without par value 4,250 - 4,250
Additional paid-in-capital 210,147 (77,564)(d) 132,583
Treasury stock, at cost (31,428) - (31,428)
Accumulated deficit (12,775) - (12,775)
Accumulated other comprehensive income (loss) -
foreign currency translation adjustment (4,112) 536 (e) (3,576)
-------------- ------------- --------------
Total stockholders' equity 166,082 (77,028) 89,054
-------------- ------------- --------------
$ 226,921 $ (62,028) $ 164,893
============== ============= ==============
KANEB SERVICES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 2001
(Unaudited)
The following pro forma entries have been applied to the preparation of the
Pro Forma Balance Sheet:
(a) Represents adjustments to accounts receivable to reflect estimated amounts
due from Kaneb Services LLC to Kaneb Services, Inc. for expenses incurred
by Kaneb Services, Inc. in connection with the Distribution. Pursuant to
the Distribution, Kaneb Services LLC entered into an agreement with Kaneb
Services, Inc. to pay Kaneb Services, Inc. an amount equal to the expenses
incurred by Kaneb Services, Inc. in connection with the Distribution. These
expenses include approximately $6.1 million in expenses that Kaneb
Services, Inc. incurred in connection with its redemption of its Adjustable
Rate Cumulative Class A Preferred Stock and an estimated $1.4 million in
legal, professional and other expenses incurred by Kaneb Services, Inc. in
connection with the Distribution.
(b) Represents adjustments to deferred income taxes to reflect utilization of
Kaneb Services, Inc.'s net operating loss carryforwards ($39.6 million) in
connection with the Distribution and estimated federal income taxes due
($15 million) in excess of such net operating loss carryforwards. The
distribution of Kaneb Services LLC common shares resulted in a taxable gain
to the extent of the excess of the fair market value of the Kaneb Services
LLC common shares distributed over the tax basis of the distributed assets
in the hands of Kaneb Services, Inc. To the extent that the taxable gain
exceeds available net operating loss carryforwards, the distribution
agreement obligates Kaneb Services LLC to pay Kaneb Services, Inc. amounts
calculated based on the taxes due on the net amount of gain in excess of
such net operating loss carryforwards. Although the amount of income tax
liability incurred could vary dramatically based on the fair market value
of the Kaneb Services LLC shares or if the Internal Revenue Service was to
successfully disallow any of the offsetting losses, a $15 million estimated
federal income tax liability and corresponding receivable from Kaneb
Services LLC has been reflected in the Pro Forma Balance Sheet.
(c) Represents adjustments to eliminate the net assets of the distributed
businesses which were classified as "Discontinued operations - businesses
to be distributed to common shareholders" at March 31, 2001.
(d) Represents adjustments to additional paid-in capital to reflect the payment
by Kaneb Services LLC to Kaneb Services, Inc. for expenses incurred by
Kaneb Services, Inc. in connection with the Distribution (see note a), the
reduction of deferred tax assets from utilization of net operating loss
carryforwards in connection with the Distribution (see note b) and the
elimination of the net assets of the distributed businesses (see note c).
(e) Represents adjustments to eliminate the accumulated foreign currency
translation adjustment relating to the distributed businesses.