Chesapeake Energy 2000 Annual Report Download - page 87

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Total revenue less total operating costs.
In the fourth quarter of 2000, we eliminated our valuation allowance resulting in the recognition of a $265 million income tax benefit. Based
upon recent results of operations and anticipated improvement in Chesapeake's outlook for sustained profitability, we believe that it is more
likely than not that we will generate sufficient future taxable income to realize the tax benefits associated with our NOL carryforwards prior
to their expiration.
13. Subsequent Events
We completed the acquisition of Gothic Energy Corporation on January 16, 2001 by merging a wholly-owned
subsidiary into Gothic. We issued a total of 4.0 million shares in the merger. Gothic shareholders (other than
Chesapeake) received 0.1908 of a share of Chesapeake common stock for each share of Gothic common stock. In
addition, outstanding warrants and options to purchase Gothic common stock were converted to the right to
purchase Chesapeake common stock (1.1 million shares as of March 15, 2001 at an average price of $12.28 per
share) based on the merger exchange ratio. Prior to the merger, Chesapeake purchased substantiallyall of Gothic's
14.125% senior secured discount notes for total consideration valued at $80.8 million in cash and Chesapeake
common stock. Prior to the merger, we also purchased $31.6 million principal amount of 11.125% senior secured
notes due 2005 issued by Gothic's operating subsidiary and guaranteed by Gothic. The consideration for these
purchases consisted of cash and Chesapeake common stock valued at a total of $34.8 million. In February 2001, we
purchased $1.0 million principal amount of Gothic senior secured notes tendered at 10 1%. There remain outstanding
$202.3 million principal amount of the 11.125% senior secured notes, all of which are secured by Gothic's oil and gas
properties. Chesapeake has not assumed any payment obligations with respect to the notes. The parties executed a
definitive merger agreement on September 8, 2000, as amended on October 1, 2000, and Gothic's shareholders
approved the merger at a special meeting on December 12, 2000.
-76-
Quarters Ended
March 31,
2000 June 30,
2000 September 30,
2000 December 31,
2000
Net sales
Gross $114,661 $134,463 $168,182 $210,646
profit
Net income 40,975
21,202 53,142
31,634 76,918
54,689 107,734
348,045(b)
Net income per share:
Basic .27 .26 .33 2.28
Diluted .15 .22 .31 2.12