-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UmFJspwQ3AFQLCnF7vGKz3tKmnSgZ0LXeWTPbUyRAmn5w01eRB0p9bkrKfjuarLo 9z3LChbWLFBasS7fwSrAfA== 0000950129-01-500162.txt : 20010430 0000950129-01-500162.hdr.sgml : 20010430 ACCESSION NUMBER: 0000950129-01-500162 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010216 ITEM INFORMATION: FILED AS OF DATE: 20010427 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KINDER MORGAN ENERGY PARTNERS L P CENTRAL INDEX KEY: 0000888228 STANDARD INDUSTRIAL CLASSIFICATION: PIPE LINES (NO NATURAL GAS) [4610] IRS NUMBER: 760380342 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-11234 FILM NUMBER: 1612369 BUSINESS ADDRESS: STREET 1: 500 DALLAS ST SUITE 1000 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7138449500 MAIL ADDRESS: STREET 1: 370 VAN GORDON STREET STREET 2: 2600 GRAND AVENUE CITY: LAKEWOOD STATE: CO ZIP: 80228-8304 FORMER COMPANY: FORMER CONFORMED NAME: ENRON LIQUIDS PIPELINE L P DATE OF NAME CHANGE: 19970304 8-K/A 1 h86413e8-ka.txt KINDER MORGAN ENERGY PARTNERS LP - AMENDMENT NO.2 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM 8-K/A AMENDMENT NO. 2 TO CURRENT REPORT DATED FEBRUARY 16, 2001 PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: April 27, 2001 KINDER MORGAN ENERGY PARTNERS, L.P. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation) 1-11234 (Commission File Number) 76-0380342 (I.R.S. Employer Identification Number) 500 Dallas Street, Ste. 1000, Houston, Texas 77002 (Address of principal executive offices)(zip code) Registrant's telephone number, including area code: 713-369-9000 ---------------------- 2 The undersigned registrant hereby amends the following items of its Current Report on Form 8-K dated February 16, 2001, as set forth herein. Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits (c) Exhibits 23.1 Consent of Independent Accountants* 23.2 Consent of Independent Auditors* 99.1 Financial Statements of Kinder Morgan Energy Partners, L.P. and Subsidiaries (incorporated by reference to the Financial Statements of Kinder Morgan Energy Partners, L.P. and Subsidiaries set forth on pages F-1 through F-39 of the Form 10-K/A, Amendment No. 2 of Kinder Morgan Energy Partners, L.P. dated April 27, 2001). 99.2 Selected Financial Data of Kinder Morgan Energy Partners, L.P. and Subsidiaries (incorporated by reference to the Selected Financial Data set forth in Item 6 on page 49 of the Form 10-K/A, Amendment No. 2 of Kinder Morgan Energy Partners, L.P. dated April 27, 2001). 99.3 Management's Discussion and Analysis of Financial Condition and Results of Operations for Kinder Morgan Energy Partners, L.P. and Subsidiaries (incorporated by reference to Management's Discussion and Analysis of Financial Condition and Results of Operations set forth in Item 7 on pages 50 through 62 of the Form 10-K/A, Amendment No. 2 of Kinder Morgan Energy Partners, L.P. dated April 27, 2001). 99.4 Balance Sheet of Kinder Morgan G.P., Inc.*** 99.5 Financial Statements of GATX Terminals Companies* 99.6 Unaudited Pro Forma Combined Financial Statements of Kinder Morgan Energy Partners, L.P. and Subsidiaries** * Filed with this Form 8-K/A, Amendment No. 2. ** Filed with the Form 8-K/A, Amendment No. 1. *** Filed with the Form 8-K. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. KINDER MORGAN ENERGY PARTNERS, L.P. (A Delaware Limited Partnership) By: KINDER MORGAN G.P., INC. as General Partner By: /s/ C. Park Shaper ------------------------------ C. Park Shaper, Vice President, Treasurer and Chief Financial Officer Date: April 27, 2001 4 EXHIBIT INDEX ------------- Exhibit No. Description ------ ----------- 23.1 Consent of Independent Accountants* 23.2 Consent of Independent Auditors* 99.1 Financial Statements of Kinder Morgan Energy Partners, L.P. and Subsidiaries (incorporated by reference to the Financial Statements of Kinder Morgan Energy Partners, L.P. and Subsidiaries set forth on pages F-1 through F-39 of the Form 10-K/A, Amendment No. 2 of Kinder Morgan Energy Partners, L.P. dated April 27, 2001). 99.2 Selected Financial Data of Kinder Morgan Energy Partners L.P. and Subsidiaries (incorporated by reference to the Selected Financial Data set forth in Item 6 on page 49 of the Form 10-K/A, Amendment No. 2 of Kinder Morgan Energy Partners, L.P. dated April 27, 2001). 99.3 Management's Discussion and Analysis of Financial Condition and Results of Operations for Kinder Morgan Energy Partners, L.P. and Subsidiaries (incorporated by reference to Management's Discussion and Analysis of Financial Condition and Results of Operations set forth in Item 7 on pages 50 through 62 of the Form 10-K/A, Amendment No. 2 of Kinder Morgan Energy Partners, L.P. dated April 27, 2001). 99.4 Balance Sheet of Kinder Morgan G.P., Inc.*** 99.5 Financial Statements of GATX Terminals Companies* 99.6 Unaudited Pro Forma Combined Financial Statements of Kinder Morgan Energy Partners, L.P. and Subsidiaries** * Filed with this Form 8-K/A, Amendment No. 2. ** Filed with the Form 8-K/A, Amendment No. 1. *** Filed with the Form 8-K. EX-23.1 2 h86413ex23-1.txt CONSENT OF INDEPENDENT ACCOUNTANTS 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Current Report on Form 8-K/A (Amendment No. 2) dated April 27, 2001 of our report dated February 14, 2001 relating to the financial statements and financial statement schedule of Kinder Morgan Energy Partners, L.P., which appears in Kinder Morgan Energy Partners, L.P.'s Amendment No. 2 on Form 10-K/A for the year ended December 31, 2000, which is incorporated herein. /s/ PricewaterhouseCoopers LLP Houston, Texas April 27, 2001 EX-23.2 3 h86413ex23-2.txt CONSENT OF INDEPENDENT AUDITORS 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS We consent to the use of our report dated January 23, 2001, with respect to the combined financial statements of GATX Terminals Companies as of and for the year ended December 31, 2000, included in the Kinder Morgan Energy Partners, L.P. Current Report on Form 8-K/A Amendment No. 2 dated April 27, 2001. /s/ ERNST & YOUNG LLP Chicago, Illinois April 27, 2001 EX-99.5 4 h86413ex99-5.txt FINANCIAL STATEMENTS OF KINDER MORGAN G P INC 1 EXHIBIT 99.5 GATX TERMINALS COMPANIES Combined Financial Statements Year ended December 31, 2000 with Report of Independent Auditors 2 GATX TERMINALS COMPANIES Combined Financial Statements December 31, 2000 CONTENTS Report of Independent Auditors.............................................1 Combined Financial Statements: Combined Balance Sheet..............................................2 Combined Statement of Operations....................................4 Combined Statement of Changes in Parent Investment and Advances.................................5 Combined Statement of Cash Flows....................................6 Notes to Combined Financial Statements.....................................7
3 Report of Independent Auditors Board of Directors GATX Terminals Corporation We have audited the accompanying combined balance sheet of the GATX Terminals Companies (the Terminals Companies), as defined in Note 2, an indirect, wholly owned subsidiary of GATX Corporation, as of December 31, 2000, and the related combined statement of operations, changes in parent investment and advances, and cash flows for the year then ended. These financial statements are the responsibility of the Terminals Companies' management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of the Terminals Companies at December 31, 2000, and the combined results of its operations and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States. /s/ ERNST & YOUNG LLP Chicago, Illinois January 23, 2001 4 GATX TERMINALS COMPANIES Combined Balance Sheet As of December 31, 2000 (In Thousands) ASSETS Current assets: Cash $ 379 Trade receivables - net of allowance for doubtful accounts of $1,054 31,323 Other current assets 1,256 ---------- Total current assets 32,958 Property, plant and equipment: Land 34,015 Terminal facilities, pipelines, and equipment 1,064,521 Construction in progress 28,980 ---------- 1,127,516 Less: Accumulated depreciation 468,212 ---------- Property, plant and equipment, net 659,304 Receivables from Excluded Companies 125,261 Other assets 36,819 ---------- Total assets $ 854,342 ==========
See notes to combined financial statements. 2 5 GATX TERMINALS COMPANIES Combined Balance Sheet (Continued) As of December 31, 2000 (In Thousands) LIABILITIES, DEFERRED ITEMS, AND PARENT INVESTMENT AND ADVANCES Current liabilities: Accounts payable $ 5,792 Accrued expenses and interest payable 30,699 Current portion of long-term debt 7,273 ---------- Total current liabilities 43,764 Long-term debt 129,746 Deferred income taxes 98,353 Other long-term liabilities 66,690 ---------- Total liabilities 338,553 ---------- Common stock 1 Paid-in-capital 44,051 Retained deficit (40,210) Advances from parent 511,947 ---------- Total parent investment and advances 515,789 ---------- Total liabilities and parent investment and advances $ 854,342 ==========
See notes to combined financial statements. 3 6 GATX TERMINALS COMPANIES Combined Statement of Operations Year ended December 31, 2000 (In Thousands) Gross income: Revenues $ 261,764 Share of affiliate's loss (2,361) Management fees 850 ------------ 260,253 Costs and expenses: Operating expenses 99,867 Provision for depreciation and amortization 39,631 Selling, general and administrative expenses 27,785 Allocated expenses from parent 5,144 Gain on sale of assets (1,819) Other income (436) Interest expense, net 51,921 Interest income from receivables from Excluded Companies (1,993) ------------ 220,100 ------------ Income before income taxes 40,153 Income tax (benefit) expense: Current (3,808) Deferred 17,835 ------------ 14,027 ------------ Net income $ 26,126 ============
See notes to combined financial statements. 4 7 GATX TERMINALS COMPANIES Combined Statement of Changes in Parent Investment and Advances Year ended December 31, 2000 (In Thousands)
Common Stock $1 par value Total Advances Total Parent ---------------- Paid-in Retained Parent from Investment and Shares Amount Capital Deficit Investment Parent Advances ------ ------ ------- -------- ---------- -------- ---------------- Balance at January 1, 2000 1 $1 $44,051 $(48,686) $(4,634) $487,859 $483,225 Net income 26,126 26,126 26,126 Dividends paid (17,650) (17,650) (17,650) Advances from parent, net 24,088 24,088 ------ ------ ------- -------- ------- -------- -------- Balance at December 31, 2000 1 $1 $44,051 $(40,210) $ 3,842 $511,947 $515,789 ====== ====== ======= ======== ======= ======== ========
See notes to combined financial statements. 5 8 GATX TERMINALS COMPANIES Combined Statement of Cash Flows Year ended December 31, 2000 (In Thousands) OPERATING ACTIVITIES: Net income $ 26,126 Adjustments to reconcile net income to net cash provided by operating activities: Provision for depreciation and amortization 39,631 Deferred income tax provision 17,835 Share of affiliate's loss 2,361 Gain on sale of property, plant and equipment (1,819) Net change in working capital (18,562) Other (18,613) ------------ Net cash provided by operating activities 46,959 INVESTING ACTIVITIES: Additions to property, plant, equipment and rights of way (27,910) Proceeds from sale of businesses 18,981 Proceeds from sale of property, plant and equipment 2,355 ------------ Net cash used in investing activities (6,574) FINANCING ACTIVITIES: Repayment of long-term debt (7,273) Change in advances from parent, net 24,088 Change in receivables from Excluded Companies (41,303) Dividends paid (17,650) ------------ Net cash used in financing activities (42,138) ------------ Net decrease in cash (1,753) Cash at beginning of year 2,132 ------------ Cash at end of year $ 379 ============
See notes to combined financial statements. 6 9 GATX Terminals Companies Notes to Combined Financial Statements December 31, 2000 1. DESCRIPTION OF BUSINESS GATX Terminals Corporation ("GTC") is an indirect wholly owned subsidiary of GATX Rail Corporation ("GRC"), which in turn is a wholly owned subsidiary of GATX Corporation ("GATX"), collectively referred to as "Parent". GTC, formed in 1925, is a worldwide bulk liquid storage and pipeline distributor. GTC owns and operates tank storage terminals, pipelines and related facilities which were acquired at various times during its operating history between 1926 and 1997. 2. BASIS OF PRESENTATION The accompanying combined financial statements include the accounts and results of operations of the domestic terminals and pipeline businesses of GTC, collectively the Terminals Companies. Historically, combined financial statements had not been prepared for the Terminals Companies. The combined statements do not include the accounts or operations relating to GTC's subsidiaries and equity method investees located outside the United States, GTC's partnership interest in GATX Product Services and GTC's Staten Island facility, collectively the Excluded Companies. The Terminal Companies own and operate tank storage terminals and pipelines and provide bulk liquid storage and pipeline distribution services within the United States. 3. SALE OF TERMINALS COMPANIES On November 30, 2000, GRC and Kinder Morgan Energy Partners, L.P. ("KMEP") entered into a Stock Purchase Agreement (the "Agreement"), whereby GTC would sell to KMEP the stock of GTC. Under the terms of the Agreement, certain assets and liabilities of GTC are excluded from the transaction. These excluded assets and liabilities (collectively the "Adjustments") are as follows: 1.) Assets and liabilities of the Excluded Companies (as defined in the Agreement the Excluded Companies consist of GTC's subsidiaries and equity method investees located outside the U.S., GTC's partnership interest in GATX Product Services and GTC's Staten Island facility). 2.) Intercompany advances from GATX and any of its affiliates, including assets and liabilities relating to income taxes. 3.) All cash balances. 4.) Accruals for pension liabilities, other post-employment benefits (other than for active hourly employees), workers compensation and long-term disability liabilities. 7 10 GATX Terminals Companies Notes to Combined Financial Statements December 31, 2000 3. SALE OF TERMINALS COMPANIES (CONTINUED) The above Adjustments have not been excluded from the accompanying combined financial statements with the exception of the Excluded Companies, whose assets and liabilities, results of operations and cash flows have been excluded. 4. SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF COMBINATION The combined financial statements of the Terminals Companies includes the accounts of GTC and its wholly owned subsidiaries except for the Excluded Companies, as discussed in Note 2. All intercompany accounts and transactions have been eliminated in combination. PROPERTY, PLANT, EQUIPMENT AND RIGHT-OF-WAYS Property, plant, equipment and right-of-ways are stated on the basis of cost. Provisions for depreciation or amortization are computed by the straight-line method, which results in equal annual depreciation or amortization charges over the estimated useful lives of the assets. The estimated useful lives of depreciable/amortized assets are 5 to 40 years. Maintenance and repairs are expensed as incurred. IMPAIRMENT OF LONG-LIVED ASSETS The Terminals Companies evaluates the recoverability of long-lived assets held for use in accordance with Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" by measuring the carrying amount of the assets against the estimated undiscounted future cash flows associated with them. At the time such evaluations indicate that the future undiscounted cash flows of certain long-lived assets are not sufficient to recover the carrying value of such assets, the assets are adjusted to their fair value which is based on an estimate of future discounted cash flows. GOODWILL Goodwill, which represents the cost in excess of the fair value of the net assets acquired in business combinations, is being amortized on a straight-line basis over 40 years. Goodwill, net of accumulated amortization of $3,640,000, was $9,800,000 as of December 31, 2000. Amortization expense was $336,000 for 2000. 8 11 GATX Terminals Companies Notes to Combined Financial Statements December 31, 2000 4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) OTHER LONG-TERM LIABILITIES Other long-term liabilities include the accruals for postretirement benefits other than pensions; environmental, general liability and workers' compensation reserves; and other deferred credits. ENVIRONMENTAL LIABILITIES Environmental expenditures that relate to current or future operations are expensed or capitalized as appropriate. Environmental expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are charged to environmental reserves. Reserves are recorded in accordance with accounting guidelines to cover work at identified sites when the Terminals Companies' liability for environmental clean-up is both probable and a minimum estimate of associated costs can be made; adjustments to initial estimates are recorded as necessary. At December 31, 2000, the Terminals Companies' environmental reserve, included in other long-term liabilities, was $36,515,000. These reserves reflect the Terminals Companies' best estimate of the cost to remediate its environmental conditions. Additions to the reserve were $3,017,000 in 2000. Expenditures charged to the reserve amounted to $4,221,000 in 2000. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires the Terminals Companies' management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as revenues and expenses during the reporting period. Actual amounts when ultimately realized could differ from those estimates. REVENUE RECOGNITION The majority of the Terminals Companies' gross income is derived from the transportation, distribution and storage of petroleum products, as well as from the storage of chemical products. Revenue is recognized at the time of service or over the lease term. Management fees received from the Excluded Companies are recognized in the period the services were performed. 9 12 GATX Terminals Companies Notes to Combined Financial Statements December 31, 2000 5. DIVESTITURES In September 2000, the Terminals Companies sold its Paulsboro terminal for $11,981,000 in cash. Also in September 2000, the Terminals Companies sold its joint venture interest in Olympic Pipeline Company for $7,000,000 in cash. 6. TRANSACTIONS WITH PARENT COMPANY AND EXCLUDED COMPANIES Advances from parent represent advances with varying maturities and with fixed and floating interest rates subject to periodic adjustment, as described in Note 9. The amount in receivables from Excluded Companies represent notes receivable from and advances to various Excluded Companies consisting primarily of non-interest bearing notes with no stated maturity dates. For the year ended December 31, 2000, the combined statement of operations include expense allocations from GATX. These allocations represent expenses the Terminals Companies would otherwise have had to incur for itself and do not include any allocation of corporate expenses of GATX which are attributable to its operations as a holding company. 7. PENSION BENEFITS The Company contributes to pension plans sponsored by GATX which cover substantially all employees. Benefits under the plans are based on years of service and/or final average salary. The funding policy for all plans is based on an actuarially determined cost method allowable under Internal Revenue Service regulations. There were no contributions or refunds made with respect to trusteed plans established by GATX in which employees of the Company and its consolidated subsidiaries participated in 2000. Costs pertaining to the GATX plans are allocated to the Terminals Companies on the basis of payroll costs with respect to normal cost and on the basis of actuarial determination for prior service cost. Charges to income with respect to said plans were $1,118,000 in 2000. Components of pension costs, accumulated plan benefit information, and net plan assets for subsidiaries of GATX have not been determined on an individual company basis. At December 31, 2000, the pension liability recorded for the Terminals Companies was $9,206,000. 10 13 GATX Terminals Companies Notes to Combined Financial Statements December 31, 2000 8. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS The Terminals Companies provides health care, life insurance and other benefits for certain retired employees who meet established criteria. Most domestic employees are eligible for health care and life insurance benefits if they retire from the Terminals Companies with immediate pension benefits under the GATX pension plan. The plans are either contributory or non-contributory, depending on various factors. Net periodic postretirement cost includes the following components:
YEAR ENDED DECEMBER 31 2000 ---------------------- Current service cost $ 335,000 Interest cost on accumulated postretirement benefit obligation 1,109,000 Unrecognized net gain (176,000) ------------------ Net periodic postretirement benefit cost $ 1,268,000 ================== Discount rate 7.50% ==================
The following table reconciles the benefit obligation to the amount recognized in the Terminal Companies combined balance sheet:
AS OF DECEMBER 31 2000 ----------------- Accumulated postretirement benefit obligation: Retirees $ 11,091,000 Fully eligible active plan participants 1,158,000 Other active plan participants 3,621,000 -------------- Total accumulated postretirement benefit obligation 15,870,000 Unrecognized loss (3,681,000) -------------- Accrued postretirement benefit liability $ 12,189,000 ==============
The accrued postretirement benefit liability was determined using an assumed discount rate of 7.50% for 2000. For measurement purposes, blended rates ranging from 5% increasing to 6% over the next year and remaining at that level thereafter, were used for the increase in the per capita cost of covered health care benefits. The health care cost trend rate assumption has a significant effect on the amount of the obligation and periodic cost reported. An increase in the assumed health care cost trend rates by 1% would increase the accumulated postretirement benefit obligation by $740,000 and would increase aggregate service and interest cost components of net periodic postretirement benefit cost by $60,000 per year. 11 14 GATX Terminals Companies Notes to Combined Financial Statements December 31, 2000 9. LONG-TERM DEBT AND ADVANCES FROM PARENT Long-term debt, including current maturities, consisted of the following:
AS OF INTEREST DECEMBER 31, RATE MATURITY 2000 -------- -------- ------------ Industrial revenue bonds 6.625%- 7.30% 2019-2024 $ 87,930,000 Term notes 7.84%- 10.07% 2001-2008 49,089,000 ------------ $137,019,000 ============
The industrial revenue bonds (IRBs) were issued by municipal authorities for the construction of terminal facilities. The Company has pledged collateral to cover the IRB's principal and interest payments. This collateral consists of several tanks at various Company locations. The Company is required to make payments sufficient to pay the interest and principal requirements under the indentures of trust covering the bond issues. Advances from parent consisted of the following:
AS OF DECEMBER 31, 2000 ---------------- Advances from GRC, 6.51% to 10.35% fixed rates maturing through May 1, 2009 $381,500,000 Advance from GRC, LIBOR plus 0.5% maturing at October 30, 2003 (7.26% at 2000) 50,000,000 Advance from GATX, interest rate adjusted monthly in accordance with actual short-term borrowing rates (6.53% in 2000) 30,447,000 Advance from GRC, LIBOR plus 0.45% maturing on October 1, 2001 (7.21% at 2000) 25,000,000 Advance from GRC, LIBOR plus 0.75% maturing on October 1, 2001 (7.40% at 2000) 25,000,000 ------------ $511,947,000 ============
Interest expense related to advances from parent was $41,769,000 in 2000. 12 15 GATX Terminals Companies Notes to Combined Financial Statements December 31, 2000 9. LONG-TERM DEBT AND ADVANCES FROM PARENT (CONTINUED) Aggregate maturities of long-term debt and advances from Parent for the years 2001 through 2005 are as follows:
ADVANCES YEAR LONG-TERM DEBT FROM PARENT ---- -------------- ----------- 2001 7,273,000 $108,500,000 2002 7,273,000 115,000,000 2003 7,273,000 80,500,000 2004 7,270,000 80,000,000 2005 5,000,000 7,500,000 Thereafter 102,930,000 120,447,000 ----------- ------------ 137,019,000 $511,947,000 =========== ============
Advances from Parent have been included with parent investment and advances on the combined balance sheet due to GATX's intent and ability to refinance such amounts. Interest costs capitalized as part of the cost of construction in progress was $173,000 in 2000. Total interest payments were $51,804,000 in 2000. 10. FAIR VALUE OF FINANCIAL INSTRUMENTS The following table presents the carrying amount and estimated fair value of the Terminals Companies' financial instruments that are recorded on the balance sheet. Generally accepted accounting principles define the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. Fair value was estimated by performing a discounted cash flow analysis using the term of the notes and market rates based on the Terminals Companies' current incremental borrowing rates for similar types of borrowing arrangements. Trade receivables, trade payables and short-term debt are carried at cost, which approximates fair value because of the short maturity of those instruments. Carrying value of notes receivable from Excluded Companies approximates fair value as notes are primarily non-interest bearing and have no stated maturity. 13 16 GATX Terminals Companies Notes to Combined Financial Statements December 31, 2000 10. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
AS OF DECEMBER 31, 2000 ------------------------------- Carrying Fair Amount Value -------------- -------------- Fixed rate parent advances $ 381,500,000 $ 382,674,000 Variable rate parent advances 130,447,000 130,447,000 Fixed rate long-term debt 137,019,000 141,181,000
11. INCOME TAXES The Terminals Companies have been included in the consolidated U.S. federal income tax return of GATX. The provision for income taxes of the Terminals Companies have been prepared as if a separate U.S. federal income tax return had been prepared for such operations on a stand-alone basis. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Terminals Companies deferred tax liabilities and assets were:
AT DECEMBER 31, 2000 -------------------- Deferred tax liabilities: Book/tax basis differences due to depreciation $ 120,416,000 State income tax 13,573,000 Investment tax credit 3,246,000 Other 20,349,000 -------------- Total deferred tax liabilities 157,584,000 Deferred tax assets: Alternative minimum tax credit 42,139,000 Environmental 12,780,000 Postretirement benefits other than pensions 4,312,000 -------------- Total deferred tax assets 59,231,000 -------------- Net deferred tax liabilities $ 98,353,000 ==============
14 17 GATX Terminals Companies Notes to Combined Financial Statements December 31, 2000 11. INCOME TAXES (CONTINUED) The provision for income taxes consists of the following:
YEAR ENDED DECEMBER 31, 2000 ----------------- Current: Federal $ (4,871,000) State and local 1,063,000 -------------- (3,808,000) Deferred: Federal 17,247,000 State and local 588,000 -------------- 17,835,000 Income tax expense $ 14,027,000 ============== Income taxes paid $ 6,383,000 ==============
The reasons for the difference between the Terminals Companies effective tax rate and the federal statutory income tax rate were:
YEAR ENDED DECEMBER 31, 2000 ----------------- Federal statutory income tax rate 35.0% Add (deduct) effect of: State income taxes, net of federal benefit 2.7 Investment tax credits (2.6) Other (0.2) ---------- Effective income tax rate 34.9% ==========
15 18 GATX Terminals Companies Notes to Combined Financial Statements December 31, 2000 12. LEASES Future minimum lease receipts, by year and in the aggregate, for services provided from noncancelable operating leases by year consisted of the following at December 31, 2000: 2001 $ 129,824,000 2002 77,791,000 2003 63,406,000 2004 58,714,000 2005 44,753,000 Years thereafter 212,433,000 -------------- Total minimum lease receipts $ 586,921,000 ==============
Future minimum payments, by year and in the aggregate, under noncancelable operating leases for land and terminal facilities expiring through the year 2022, consisted of the following at December 31, 2000: 2001 $ 1,954,000 2002 1,958,000 2003 1,782,000 2004 1,787,000 2005 1,679,000 Years thereafter 8,602,000 -------------- Total minimum lease payments $17,762,000 ==============
Total rent expense amounted to $4,060,000 in 2000. 13. OTHER ASSETS At December 31, 2000, other assets consisted of the following: Right of ways, net $ 20,831,000 Goodwill 9,800,000 Investment in real estate 3,192,000 Other 2,996,000 ------------ Total other assets $ 36,819,000 ============
16 19 GATX Terminals Companies Notes to Combined Financial Statements December 31, 2000 14. COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS OF CREDIT RISK The Terminals Companies' revenues are generated from the handling or transportation of products for the chemical and petroleum industries. Customer credit is extended based on an evaluation of the customer's financial condition, and generally, collateral is not required. Credit losses are provided for in the financial statements and consistently have been within management's expectations. At December 31, 2000, the Terminals Companies had commitments of $14,631,000 to upgrade and repair terminal and pipeline facilities. The Terminals Companies is engaged in various matters of litigation and has a number of unresolved claims pending including proceedings under governmental laws and regulations related to environmental matters. Although, the ultimate liability with respect to such litigation and claims can not be determined at this time, it is the opinion of management that damages, if any, required to be paid by the company in the discharge of such liability are not likely to be material to the Terminals Companies financial position or results of operations. 17 -----END PRIVACY-ENHANCED MESSAGE-----