Chesapeake Energy 1993 Annual Report Download - page 34

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
$57,300 and $120,000. respectively, as general and administrative expense in the accompanying statements
of operations related-to these leases. These monthly chargesceased effective December 31. 1991. at which
time CI and TLW transferred the buildings and certain furniture and fixtures to the Company, as part of the
Combination for a total consideratiqn of approximately $1,290,000 which included assumption of certain
indebtedness as well as the assumption of two notes payable to a bank, which were collateralized by the
buildings. The balance of these notes payable of $158,000 was recorded in notes payable and current
maturities of long term debt in the accompanying balance sheet at June 30 1992 As of June 30 1993 the
notes had been fully paid
7 EMPLOYEE BENEFIT PLANS
Effective October 1, 1989, the company established a 401(K) profit sharing plan. (the "401(K) Plan").
Eligible employees may make voluntary contributions to the 401 (K) Plan which are matched by the Company
up to 2.5% of the employees' salary. The amount of employee contributions is limited as specified in the
401(IC) Plan. The Company may, at its discretion, make additional contributions to the 401(K) Plan. The
Company contributed $44,000, $17,000 and $6,000 to the 401(K) Plan during the fiscal years endedJune 30,
1993, 1992 and 1991, respectively.
8. MAJOR CUSTOMERS
Sales to individual customers constituting 10% or more of total revenue were as follows:
Management. believes that the loss .of any of the -above customers would not have a material impact on
the Company's results of operations or its financial position.
9. STOCKHOLDERS' EQUITY. .
In February 1993, the company completed an initial public offering of 2,300,000 shares of its Common
Stock at $12 per share. The total offering proceeds were $27.6 million with total net proceeds of the offering
approximating $25.2 million, of which $12.8 million was .used to reduce indebtedness, and the balance was
used to fund operations and as working capital.
On December 4; 1992 the Company issued to TCW 576,923 shares .of its Convertible Preferred Stock,
in exchange foi-. a $7,500,000 reduction in the Company's debt to TCW. Each share of the Convertible
Preferred Stock has a liquidation preference of $13.00, accumulates dividends at an annual rate of $1.17 per
share cumulative from December 4, 1992 (to be paid quarterly commencing December 31, 1993) and is
convertible at any time into a number of sharesof Common StOck equal to the liquidation preference plus.
accumulated dividends of such share of Convertible Preferred Stock surrendered for conversion divided by
a conversion price of $9.60. Commencing December 31, 1993, accumulated dividends in arrears, if any, will
accumulate additional dividends at a rate of 9% per annum. Should the Company fail to pay accumulated
dividends on the Convertible Preferred Stock for a period of six consecutive calendar quarters, the holders
24
Year Amount Percent
Revenue
(I thousands)
19.93. Plains Marketing and Transportation, Inc. 2,579 22%
GPM Gas Corporation 2,039 18%
Mobil Oil Corporation 1,775 15%
Total Petroleum, Inc. 1,380. 12%
Texaco Exploration & Production, mc: 1,368 12%
1992 Plains Marketing and Transportation, Inc. 4,937 47%
1991 Plains Marketing and Transportation, Inc. 1,264 16%