-----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, L7uHzMvTHQy+FhjUnsbc/KzYM78eZzOVXd9eAaBbHxmoqtFnZCyC38nEGWOEvZU4 eus+h+JmbHcTyEN0x13JaA== 0001014108-98-000079.txt : 19980813 0001014108-98-000079.hdr.sgml : 19980813 ACCESSION NUMBER: 0001014108-98-000079 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980812 SROS: NYSE 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: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-11234 FILM NUMBER: 98682779 BUSINESS ADDRESS: STREET 1: 1301 MCKINNEY ST STREET 2: STE 3450 CITY: HOUSTON STATE: TX ZIP: 77010 BUSINESS PHONE: 7138449500 MAIL ADDRESS: STREET 1: C/O MORRISON & HECKER LLP STREET 2: 2600 GRAND AVENUE CITY: KANSAS CITY STATE: MO ZIP: 64108 FORMER COMPANY: FORMER CONFORMED NAME: ENRON LIQUIDS PIPELINE L P DATE OF NAME CHANGE: 19970304 10-Q/A 1 KINDER MORGAN ENERGY PARTNERS, L.P. FORM 10Q UNITED STATES SECURITIES AND EXCHANGE PRIVATE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A AMENDMENT NO. 1 TO QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 Commission File Number 1-11234 KINDER MORGAN ENERGY PARTNERS, L.P. (Exact name of registrant as specified in its charter) Delaware 76-0380342 ---------------------------------- ------------------------------ (State or other jurisdiction of (I.R.S.Employer Identification incorporation or organization) Number) 1301 McKinney St. Suite 3450 Houston, Texas 77010 ---------------------------------- ----------------------------- (Address of principal executive (Zip Code) Offices) (713) 844-9500 ------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The Registrant had 46,730,657 Common Units outstanding at August 10, 1998. Page 1 of 23 KINDER MORGAN ENERGY PARTNERS, L.P. AND SUBSIDIARIES TABLE OF CONTENTS Page No. -------- PART I. FINANCIAL INFORMATION ITEM 1. - Financial Statements (Unaudited) Consolidated Statement of Income - Three Months and Six Months Ended June 30, 1998 and 1997 3 Consolidated Balance Sheet - June 30, 1998 and December 31, 1997 4 Consolidated Statement of Cash Flows - Six Months Ended June 30, 1998 and 1997 5 Notes to Consolidated Financial Statements 6 ITEM 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations 12 ITEM 3. - Quantitative and Qualitative Disclosures about Market Risk 20 PART II. OTHER INFORMATION ITEM 1. - Legal Proceedings 21 ITEM 5. - Other Information 21 ITEM 6. - Exhibits and Reports on Form 8-K 21 Page 2 of 23 PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS KINDER MORGAN ENERGY PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (In Thousands Except Per Unit Amounts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 1988 1997 1998 1997 -------------------- -------------------- Revenue $ 82,044 $ 16,036 $ 118,785 $ 35,168 Costs and Expenses Cost of products sold 1,873 1,557 2,726 3,718 Operations and maintenance 12,462 3,260 18,822 7,077 Fuel and power 6,096 1,021 9,241 2,726 Depreciation and amortization 9,671 2,585 14,390 5,140 General and administrative 9,064 2,209 14,158 4,254 Taxes, other than income taxes 3,507 604 4,986 1,526 ------ ------ ------ ------ 42,673 11,236 64,323 24,441 ------ ------ ------ ------ Operating Income 39,371 4,800 54,462 10,727 Other Income (Expense) Equity in earnings of partnerships 5,325 1,616 10,607 2,455 Interest expense (12,719) (3,231) (18,622) (6,514) Interest income and Other, net (1,249) 101 (1,693) 256 Minority Interest (415) (29) (477) (64) --------- ------- -------- ------- Income Bef. Income Taxes and Extraordinary charge 30,313 3,257 44,277 6,860 Income Tax Expense - 391 - 566 -------- ------- -------- ------ Income Before Extraordinary charge 30,313 2,866 44,277 6,294 Extraord. charge on early extinguishment of debt - - (13,611) - -------- -------- --------- ------ Net Income $ 30,313 $ 2,866 $ 30,666 $6,294 ======== ======== ========= ====== Calculation of Limited Partners' Interest in Net Income: Income Before Extraordinary charge $ 30,313 $ 2,866 $ 44,277 $6,294 Less: General Partner's Interest in Net Income (9,562) (984) (12,427) (1,043) --------- -------- --------- ------- Limited Partners' Net Income bef. Extraord. charge 20,751 1,882 31,850 5,251 Less: Extraord. charge on early extinguishment of debt - - (13,611) - --------- -------- --------- ------- Limited Partners' Net Income $ 20,751 $ 1,882 $ 18,239 $5,251 ========= ======== ========= ======= Net Income per Unit before Extraordinary charge $ 0.50 $ 0.14 $ 1.00 $ 0.40 ======== ======== ========= ======= Net Income per Unit $ 0.50 $ 0.14 $ 0.57 $ 0.40 ======== ======== ========= ======= Number of Units used in Computation 41,908 13,020 31,763 13,020 ======== ======== ========= ======= The accompanying notes are an integral part of these consolidated financial statements. Page 3 of 23 KINDER MORGAN ENERGY PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (In Thousands) (Unaudited) June 30, December 31, 1998 1997 ------------- ------------- ASSETS Current Assets Cash and cash equivalents $ 40,080 $ 9,612 Accounts receivable (net of allowance for doubtful accounts) 39,919 8,569 Inventories Products 3,515 1,901 Materials and supplies 2,403 1,710 ----------- ------------ 85,917 21,792 ----------- ------------ Property, Plant and Equipment, at cost 1,744,062 290,620 Less accumulated depreciation 52,418 45,653 ----------- ------------ 1,691,644 244,967 ----------- ------------ Investments in Partnerships 127,347 31,711 ----------- ------------ Deferred Charges and Other Assets 16,473 14,436 ----------- ------------ TOTAL ASSETS $1,921,381 $ 312,906 =========== ============ LIABILITIES AND PARTNERS' CAPITAL Current Liabilities Accounts payable $ 16,826 $ 4,930 Accrued liabilities 14,431 3,585 Accrued benefits 17,668 - Accrued taxes 4,942 2,861 ----------- ------------ 53,867 11,376 ----------- ------------ Long-Term Liabilities and Deferred Credits Long-term Debt 429,592 146,824 Other 110,139 2,997 ---------- ---------- 539,731 149,821 ---------- ---------- Minority Interest 18,582 1,485 ---------- ---------- Partners' Capital Common Units 1,298,405 146,840 General Partner 10,796 3,384 ---------- ---------- 1,309,201 150,224 ---------- ---------- TOTAL LIABILITIES AND PARTNERS' CAPITAL $1,921,381 $ 312,906 ========== ========== The accompanying notes are an integral part of these consolidated financial statements. Page 4 of 23 KINDER MORGAN ENERGY PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (In Thousands) (Unaudited) Six Months Ended June 30, 1998 1997 ----------- ---------- Cash Flows from Operating Activities Reconciliation of net income to net cash provided by operating activities Net income $ 30,666 $ 6,294 Extraordinary charge on early extinguishment of debt 13,611 - Depreciation and amortization 14,390 5,140 Equity in earnings of partnerships (10,607) (2,455) Distributions from investments in partnerships 7,082 4,722 Changes in components of working capital, and Other, net (785) (1,766) El Paso Settlement (8,000) - ---------- ---------- Net Cash Provided by Operating Activities 46,357 11,935 ---------- ---------- Cash Flows From Investing Activities Acquisitions of assets (74,706) - Additions to property, plant and equipment for expansion and maintenance projects (9,424) (1,610) Sale of property, plant and equipment 33 - Contributions to partnership investments (26,155) (2,033) ---------- -------- Net Cash Used in Investing Activities (110,252) (3,643) ---------- -------- Cash Flows From Financing Activities Issuance of debt 265,054 24,600 Payment of debt (337,895) (24,491) Unit registration costs (8) (74) Cost of refinancing long-term debt (16,428) - Proceeds from issuance of common units 212,303 - Contributions from General Partner's Minority Interest 11,737 - Distributions to partners Common Units (32,184) (8,202) General Partner (7,698) (133) Minority interest (518) (85) --------- -------- Net Cash Provided by (Used In) Financing Activities 94,363 (8,385) --------- -------- Increase (Decrease) in Cash and Cash Equivalents 30,468 (93) Cash and Cash Equivalents, Beginning of Period 9,612 14,299 --------- -------- Cash and Cash Equivalents, End of Period $ 40,080 $14,206 ========= ======== Noncash Investing and Financing Activities Contribution of net assets to partnership investments $ 59,311 $ - Pacific Operations assets acquired by the issuance of Common Units $943,202 $ - Pacific Operations assets acquired by the assumption of liabilities $531,906 $ - The accompanying notes are an integral part of these consolidated financial statements. Page 5 of 23 KINDER MORGAN ENERGY PARTNERS, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. General The unaudited consolidated financial statements included herein have been prepared by Kinder Morgan Energy Partners, L.P. (the "Partnership") pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial results for the interim periods. Certain information and notes normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Partnership believes, however, that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1997 ("Form 10-K"). The Limited Partners' Net Income per Unit was computed by dividing the Limited Partners' interest in Net Income before and after the extraordinary charge on early extinguishment of debt by the weighted average number of Common Units outstanding during the period. Certain reclassifications have been made to the consolidated financial statements for the prior year to conform with the current presentation. 2. Acquisitions Santa Fe Kinder Morgan Operating L.P. "D" ("OLP-D"), a Delaware limited partnership, acquired on March 6, 1998, 99.5% of SFPP, L.P. ("SFPP"), the operating partnership of Santa Fe Pacific Pipeline Partners, L.P. ("Santa Fe"). The transaction was accounted for under the purchase method of accounting and was valued at more than $1.4 billion inclusive of liabilities assumed. The Partnership acquired the interest of Santa Fe's common unit holders in SFPP in exchange for approximately 26.6 million Common Units (1.39 Common Units of the Partnership for each Santa Fe common unit). The Partnership paid $84.4 million to Santa Fe Pacific Pipelines, Inc. (the "former SF General Partner") in exchange for the general partner interest in Santa Fe. The $84.4 million was borrowed under the Loan Facility (see Note 5). Also on March 6, 1998, SFPP redeemed from the SF General Partner a .5% interest in SFPP for $5.8 million. The redemption was paid from SFPP's cash reserves. After the redemption, the SF General Partner continues to own a .5% special limited partner interest in SFPP. Assets acquired in this transaction comprise the Partnership's Pacific Operations, which include over 3,300 miles of pipeline and thirteen owned and operated terminals. Page 6 of 23 Shell CO2 Company On March 5, 1998, the Partnership and affiliates of Shell Oil Company ("Shell") agreed to combine their CO2 activities and assets into a partnership, Shell CO2 Company, Ltd. ("Shell CO2 Company"), to be operated by a Shell affiliate. The Partnership acquired, through a newly created limited liability company, a 20% interest in Shell CO2 Company in exchange for contributing the Central Basin Pipeline and approximately $25 million in cash. The $25 million was borrowed under the Loan Facility (see Note 5). The Partnership accounts for its partnership interest in Shell CO2 Company under the equity method as part of the Mid-Continent Operations. Pro Forma Information The following summarized unaudited Pro Forma Consolidated Income Statement information for the six months ended June 30, 1998 and 1997, assumes the acquisition had occurred as of January 1, 1997. The unaudited Pro Forma financial results have been prepared for comparative purposes only and may not be indicative of the results that would have occurred if the Partnership had acquired the assets of SFPP and its interest in Shell CO2 Company on the dates indicted or which will be attained in the future. Amounts presented below are in thousands, except for per Common Unit amounts: Pro Forma Six Months Ended June 30, Income Statement 1998 1997 ------------------------------ Revenues $158,032 $154,617 Operating Income $69,603 $59,331 Net Income before extraordinary charge $53,357 $35,678 Net Income $39,746 $35,678 Net Income Per Common Unit before extraord. charge $0.90 $.76 Net Income per Common Unit $0.57 $.76 3. Litigation FERC Proceedings Prior to the Partnership's acquisition of SFPP, several complaints had been filed with the Federal Energy Regulatory Commission (FERC) challenging SFPP's rates for the East Line, West Line, Sepulveda Line, and the Watson station. An initial decision by the FERC Administrative Law Judge was issued on September 25, 1997 (the "Initial Decision"). The Initial Decision upheld SFPP's position that "changed circumstances" were not shown to exist on the West Line, thereby retaining the just and reasonable status of all West Line rates that were "grandfathered" under the Energy Policy Act of 1992. In addition, the Initial Decision determined that SFPP's East Line rates were not grandfathered under the Energy Policy Act and also included rulings that were generally adverse to SFPP regarding certain cost of service issues. If the Initial Decision is affirmed in current form by the FERC, the Partnership estimates that the total reparations and interest that would be payable approximate the reserves that have been recorded as of June 30, 1998. The Partnership also estimates that the Initial Decision, in its current form, Page 7 of 23 and if also applied to the Sepulveda Line and the Watson station rates, would reduce prospective revenues by approximately $8 million annually, the same rate at which the Partnership is currently accruing its reserve. California Public Utilities Commission Proceeding A complaint was filed on April 7, 1997 with the California Public Utilities Commission ("CPUC") challenging rates charged by SFPP for intrastate transportation of refined petroleum products. SFPP filed responsive testimony defending the justness and reasonableness of its rates. On June 18, 1998, a CPUC Administrative Law Judge issued a proposed decision, finding that the evidence of record did not support complainants' claim that rates charged for service within the State of California by SFPP are unjust or unreasonable under the California Public Utilities Code. In light of his findings, the Judge dismissed the complaints filed against SFPP by certain of its shippers. On August 6, 1998, the Partnership announced that the CPUC affirmed the proposed decision of its Administrative Law Judge and dismissed the complaints filed by certain shippers against the California rates of SFPP. Environmental SFPP, along with several other respondents, has been involved in one cleanup ordered by the United States Environmental Protection Agency ("EPA") related to ground water contamination in the vicinity of SFPP's storage facilities and truck loading terminals at Sparks, Nevada. The EPA approved the respondent's remediation plan, which began in 1995. In addition, SFPP is presently involved in 18 ground water hydrocarbon remediation efforts under administrative orders issued by the California Regional Water Quality Control Board and two other state agencies. SFPP is involved in environmental cleanup efforts at sights not governed by administrative orders. SFPP is also involved in environmental proceedings related to ground water and soil contamination in Elmira, California. The General Partner is a defendant in two proceedings (one by the State of Illinois and one by the Department of Transportation) relating to alleged environmental and safety violations for events relating to a fire that occurred at the Morris storage field in September 1994. The Partnership has recorded reserves for environmental costs which reflect the estimated cost of completing all remediation projects presently known to be required either by government mandate or in the ordinary course of business. Although no assurance can be given, based upon the information presently available, it is the opinion of management that the Partnership's environmental costs, to the extent they exceed recorded liabilities, will not have a material adverse effect on the Partnership's financial condition, liquidity or ability to maintain its quarterly cash distributions at the current level. Other The Partnership and SFPP, in the ordinary course of business, are defendants in various lawsuits relating to the Partnership's assets. Although no assurance can be given, the Partnership believes, based on its experience to date, that the ultimate resolution of such items will not have a material impact on its financial position or results of operations. Page 8 of 23 For more detailed information regarding litigation, refer to the Partnership's Form 10-K, Item 3, Legal Proceedings. 4. Distributions On May 15, 1998, the Partnership paid a cash distribution for the quarterly period ended March 31, 1998, of $0.5625 per Common Unit. The distribution was declared on April 21, 1998, payable to unitholders of record as of April 30, 1998. On July 15, 1998, the Partnership declared a cash distribution for the quarterly period ended June 30, 1998, of $0.63 per Common Unit. The distribution will be paid on August 14, 1998, to unitholders of record as of July 31, 1998. 5. Long-Term Debt In February 1998, the Partnership entered into a $325 million revolving credit facility (Loan Facility) expiring in February 2005. The Loan Facility has an outstanding balance of $50 million at June 30, 1998. On June 12, 1998, the Partnership received $212.30 million from an equity offering of approximately 6.1 million Common Units, which was primarily used to pay down long-term debt related to the Loan Facility. The Loan Facility provides for principal payments equal to the amount by which the outstanding balance is in excess of the amount available, which reduces quarterly commencing in May 2000. The Loan Facility also provides, at the Partnership's option, a floating interest rate equal to either the administrative agent's base rate (but not less than the Federal Funds Rate plus .5% per year) or LIBOR plus a margin ranging from .75% to 1.5% per year based on the Partnership's ratio of funded indebtedness to cash flow, as defined in the Loan Facility. The Loan Facility contains certain restrictive covenants including, but not limited to, the incurrence of additional indebtedness, making investments, and making cash distributions other than quarterly distributions from available cash as provided by the Partnership Agreement. The Partnership used the proceeds from the Loan Facility to refinance the existing first mortgage notes, including a prepayment premium, to fund the cash investment in Shell CO2 Company, and to fund the acquisition of the general partner interest in Santa Fe (Note 2). The prepayment premium and the write-off of the associated unamortized debt issue costs are reflected as an extraordinary charge in the accompanying condensed consolidated statement of income. SFPP's long-term debt primarily consists of its Series E and Series F first mortgage notes and a bank credit facility. At June 30, 1998, the outstanding balances under the Series E notes, Series F notes, and bank credit facility were $32.5 million, $244.0 million, and $78.5 million, respectively. The annual interest rate on the Series E and Series F notes is 10.25% and 10.70%, respectively, the maturity is December 1998 and December 2004, respectively, and interest is payable semiannually in June and December. The Partnership intends to refinance the Series E notes on a long-term basis upon their maturity and therefore, has included them in long-term debt. The Series F notes are payable in annual installments of $31.5 million in 1999, $32.5 million in 2000, $39.5 million in 2001, and $42.5 million in 2002. The first mortgage notes may also be prepaid beginning in 1999 in full or in part at a price equal to par plus, in certain circumstances, a premium. The first Page 9 of 23 mortgage notes are secured by mortgages on substantially all of the properties of SFPP (the Mortgaged Property). The notes contain certain covenants limiting the amount of additional debt or equity that may be issued and limiting the amount of cash distributions, investments, and property dispositions. The bank credit facility provides for borrowings of up to $175 million due in August 2000 and interest, at a short-term Eurodollar rate, payable quarterly. Borrowings ($78.5 million at June 30, 1998) under this facility are also secured by the Mortgaged Property and are generally subject to the same terms and conditions as the first mortgage notes. 6. Partners' Capital At December 31, 1997 and June 30, 1998, Partners' capital consisted of 13,249,200 and 45,868,657 Common Units, respectively, held by third parties and 862,000 Common Units held by the General Partner. Together, these 14,111,200 Common Units at December 31, 1997 and 46,730,657 Common Units at June 30, 1998 represent the limited partners' interest and an effective 98% economic interest in the Partnership, exclusive of the incentive distribution. On June 12, 1998, the Partnership issued 6,070,578 Common Units in a public offering. For the purposes of maintaining partner capital accounts, the Partnership Agreement specifies that items of income and loss shall be allocated among the partners in accordance with their respective interests. Normal allocations according to percentage interests are done only, however, after giving effect to any priority income allocations in an amount equal to incentive distributions allocated 100% to the General Partner. Incentive distributions paid to the General Partner are determined by the amount quarterly distributions to unitholders exceed certain specified target levels. The Partnership's cash distribution of $.5625 per Common Unit paid on May 15, 1998 for the first quarter of 1998 required an incentive distribution to the General Partner of $5,485,621. The Partnership's cash distribution of $.315 per Common Unit for the same period of the prior year required an incentive distribution to the General Partner of $25,143. The increased incentive distribution reflects the increased distribution of $.2475 per Common Unit and the issuance of additional Common Units since March 31, 1997. The Partnership's declared distribution for the second quarter of 1998 of $.63 per Common Unit will result in an incentive distribution to the General Partner of $9,352,984. This compares to the Partnership's cash distribution of $.50 per Common Unit and incentive distribution to the General Partner of $964,600 for the second quarter of 1997. The increase in the 1998 second quarter incentive distribution over the distribution paid for the second quarter of 1997 is a result of the $.13 increase in the distribution per Common Unit as well as the higher number of Common Units outstanding on June 30, 1998. 7. Subsequent Events Plantation Pipe Line Company On June 17, 1998, the Partnership announced that it had entered into a Stock Purchase Agreement, with an affiliate of Shell Pipe Line Corporation, for the purchase of Shell's 24% interest in Plantation Pipe Line Company for $110 Page 10 of 23 million. The consummation of the acquisition is subject to the satisfaction of certain customary closing conditions and Federal Trade Commission approval. Plantation Pipe Line Company owns and operates a 3,100 mile pipeline system throughout the southeastern United States which serves as a common carrier of refined petroleum products to various metropolitan areas, including Atlanta, Georgia; Charlotte, North Carolina; and the Washington, D.C. area. Hall-Buck Marine, Inc. On June 29, 1998, the Partnership announced that it had signed a letter of intent to acquire Hall-Buck Marine, Inc. ("Hall-Buck") for approximately $100 million. Hall-Buck, headquartered in Sorrento, Louisiana, is a leading independent operator of dry bulk terminals, operating twenty terminals on the Mississippi River, the Ohio River, and the Pacific Coast. Hall-Buck primarily stores and loads petroleum coke, coal, and other materials for major oil companies and other industrial customers. In addition, Hall-Buck owns all of the common stock of River Consulting Incorporated, a nationally recognized leader in the design and construction of bulk material facilities and port related structures. The Partnership will exchange approximately $77 million in Common Units for all of the outstanding stock of Hall-Buck and will assume approximately $23 million of existing debt. The transaction is subject to the execution of a definitive purchase agreement and certain regulatory approvals. Closing of the transaction is anticipated to occur in the third quarter with a July 1, 1998 effective date. Coal Marketing Alliance On July 8, 1998, the Partnership announced that it had entered into a long-term coal marketing alliance with Southern Company's wholesale energy marketing affiliate, Southern Company Energy Marketing L.P. Under terms of the five year agreement, the new alliance will jointly market coal transloading, blending, and storage services at the Partnership's Cora terminal, south of St. Louis, and its Grand Rivers terminal, in southwestern Kentucky. The agreement contemplates a range of 3.3 to 8.3 million tons of incremental volume to be marketed through the terminals over the life of the alliance. In addition, the alliance plans to expand the services currently available at these coal terminals to include a full array of products to provide customers with customized products to meet their individual coal and energy requirements. Both the Cora and the Grand Rivers terminals are strategically located to develop liquid markets for buyers and sellers of coal originating in Western and Illinois Basin production areas. The coal is transported to domestic markets throughout the Midwest, East Coast, and Southeastern United States via barge, truck, or rail as well as to overseas markets. Page 11 of 23 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Second Quarter 1998 Compared With Second Quarter 1997 The Partnership's net income before extraordinary charge increased to $30.31 million in the second quarter of 1998 compared to $2.87 million in the second quarter of 1997. The increase resulted primarily from the inclusion of earnings attributable to the Pacific Operations (formerly Santa Fe Pacific Pipeline Partners), which were acquired March 6, 1998. The period-to-period increase also reflects higher earnings from each of the other reportable business segments: Mid-Continent Operations, Coal Operations, and Fractionation and Processing. Higher overall quarterly earnings were partially offset by higher debt expense and higher general and administrative expenses. Increases in both categories of expense were likewise related to the acquisition of the Pacific Operations. The Pacific Operations reported quarterly net income of $40.02 million from total revenues of $65.49 million. The amount reflects strong demand for gasoline, jet fuel, and diesel fuel in the Partnership's West Coast markets. The Mid-Continent Operations' earnings increased 68% to $6.65 million in 1998 compared to $3.95 million in 1997. Mid-Continent Operations consist of the North System, the Cypress Pipeline, and the Partnership's equity investment in Shell CO2 Company. The Partnership realized a significant earnings increase in CO2 activities due to its joint venture with Shell. Revenues for the segment totaled $7.96 million in 1998 compared to $10.24 million last year. This was chiefly due to Central Basin Pipeline being accounted for under the equity method in 1998. Earnings from the Coal Operations segment increased to $3.91 million in 1998 compared to $3.58 million in 1997. This 9% increase was principally due to higher income from the marketing of coal to utilities and industrial customers and to the inclusion of the earnings from the Grand Rivers coal terminal, which was acquired in September 1997. Revenues from Coal Operations increased 51% in 1998 over the prior year. Total revenues of $8.33 million for the quarter ended June 30, 1998, compared to $5.51 million in the same period of 1997 was the result of a 41% increase in coal tons transferred, partially offset by just slightly lower coal transfer rates. The Fractionation and Processing business segment reported earnings of $1.23 million in the first quarter of 1998. This amount was 137% higher than the $.52 million in earnings reported in the comparable period of 1997. The increase was primarily due to higher earnings from the Partnership's equity interest in the Mont Belvieu Fractionator. Fractionation earnings increased due to higher volumes and the elimination of corporate taxes and certain start up costs incurred in 1997 for the 1996 plant expansion. Page 12 of 23 Operating statistics for the second quarter are as follows: Second Quarter 1998 1997 --------------------------- Pacific Operations ** Delivery Volumes (MMBbls) 99.4 - Average Tariff ($/Bbl) $.62 - Mid-Continent Operations *** Delivery Volumes (MMBbls) 10.5 9.6 Average Tariff ($/Bbl) $.62 $.69 Coal Operations Transport Volumes (MM Tons) 3.1 2.2 Average Revenues ($/Ton) $1.33 $1.34 Earnings contribution by business segment for the second quarter is as follows: Earnings Contribution by Business Segment* (Unaudited) (In Thousands) Second Quarter 1998 1997 --------------------------- Pacific Operations** $40,023 - Mid-Continent Operations $6,652 $3,954 Coal Operations $3,909 $3,580 Fractionation and Processing $1,229 $522 ------------------------------------------------------------------------ * Excludes general and administrative expenses, debt costs, and minority interest. ** Pacific Operations were acquired on March 6, 1998. *** Excludes CO2 volumes for 1998. Cost of products sold increased 20% to $1.87 million in the quarter ended June 30, 1998 compared to $1.56 million in the same period of 1997. The increase was due to higher purchase/sale contracts from coal marketing activities. Overall higher cost of products sold was partially offset by excluding costs related to the Central Basin Pipeline, which was transferred to Shell Co2 Company in March 1998 and accounted for under the equity method in 1998. Page 13 of 23 Fuel and power expenses increased to $6.10 million in 1998 compared to $1.02 million in 1997. Excluding the $4.88 million in expense reported by the Pacific Operations, fuel and power expense increased 20% in 1998, primarily due to higher volumes of products transported by the Mid-Continent segment and significantly higher volumes transferred by the Coal Operations segment. Operating and maintenance expenses, combined with general and administrative expenses, were $21.53 million in the second quarter of 1988. This amount compares to $5.47 million in the second quarter of 1997. Excluding the expenses of acquired asses (Pacific Operations and the Grand Rivers coal terminal), operations and maintenance expenses remained flat. The increase in general and administrative costs reflects spending associated with new acquisitions and investments made by the Partnership. Depreciation and amortization expense increased to $9.67 million in 1998 compared to $2.59 million in 1997. The increase was attributable to the inclusion of the Pacific Operations, which reported depreciation expense of $7.35 million in the quarter. Taxes, other than income taxes, increased $2.90 million in the second quarter of 1998 compared to the second quarter of last year. The increase was attributable to the inclusion of the Pacific Operations, which reported taxes, other than income of $2.96 million in the quarter. Equity in earnings of partnerships increased $3.71 million in the second quarter of 1998 compared to 1997. This resulted primarily from the recognition of $3.63 million of earnings from the Partneship's equity investment in Shell CO2 Company. Interest expense increased $9.49 million in the second quarter of 1998 compared to last year primarily duet o debt assumed by the Partnership as part the acquisition of the Pacific Operations. Interest income and Other, net, which includes interest income and other non-operating income and expense, decreased $1.35 million in 1998 compared to 1997. The decrease was primarily due to expense accruals made for the FERC Rate Case reserve established for the Pacific Operations. Page 14 of 23 Six Months Ended June 30, 1998 Compared With Six Months Ended June 30, 1997 For the six months ended June 30, 1998, the Partnership reported $44.28 million as net income before extraordinary charge. This amount compares to $6.29 million reported as net income from the first half of 1997. The 1998 amount includes $52.89 million in income earned by the Pacific Operations, which has been consolidated since March 1998. Excluding the Pacific Operations' income (from revenue of $86.26 million), the Partnership reported a 43% increase in earnings from its remaining three reportable business segments. Higher overall earnings in the first six months of 1998 were partially offset by higher debt expense and higher general and administrative expenses. The Mid-Continent Operations reported earnings of $14.78 million for the first six months of 1998 compared to $10.46 million for the same period last year. The increase was mainly due to higher earnings from CO2 activities. Due to the Partnership's investment in Shell CO2 Company, earnings from CO2 operations were $8.07 million in 1998 compared to $3.20 million in 1997. The overall increase in segment earnings was partially offset by pipeline income, which was down versus last year. Warmer weather resulted in lower volumes moved by the North System, and average tariff rates for the segment were down slightly compared to last year. Excluding the results of the Central Basin Pipeline, which was reported under the equity method in 1998, pipeline revenue and income was $17.02 million and $6.71 million, respectively, in the first six months of 1998. This compared to revenues and income of $20.07 million and $7.26 million, respectively, for the same period last year. Earnings from Coal Operations increased 21% to $6.36 million in the first half of 1998 compared to $5.24 million in the same period of 1997. Segment revenues for the first six months of 1998 increased 78% compared with the same 1997 period. Although coal revenues have been negatively impacted by railroad transportation congestion, significantly higher marketing revenues as well as the addition of the Grand Rivers terminal bolstered year-to-date revenues. Income attributable to the Fractionation and Processing segment increased to $2.51 million for 1998 compared to $.81 million in 1997. Earnings from the Partnership's investment in the Mont Belview Fractionator increased 91% due to higher fractionation volumes. Due to the assignment of the Mobil agreement and the leasing of the Painter facility, revenues for the first half of 1998 were down compared to last year. Page 15 of 23 Operating statistics for the first six months of 1998 and 1997 are as follows: Six Months Ended June 30, 1998 1997 ----------------- Pacific Operation ** Delivery Volumes (MMBbls) 129.3 - Average Tariff ($/Bbl) $.63 - Mid-Continent Operations *** Delivery Volumes (MMBbls) 22.3 21.6 Average Tariff ($/Bbl) $.70 $.78 Coal Operations Transport Volumes (MM Tons) 6.1 3.9 Average Revenues ($/Tons) $1.30 $1.37 Earnings contribution by business segment for the first six months of 1998 and 1997 is as follows: Earnings Contribution by Business Segment* (Unaudited) (In Thousands) Six Months Ended June 30, 1998 1997 ----------------- Pacific Operations** $52,888 - Mid-Continent Operations $14,780 $10,462 Coal Operations $6,359 $5,237 Fractionation and Processing $2,510 $812 ------------------------------------------------------------------------ * Excludes general and administrative expenses, debt costs, and minority interest. ** Pacific Operations were acquired on March 6, 1998. *** Excludes CO2 volumes for 1998. Cost of products sold decreased 27% to $2.73 million in 1998 compared to $3.72 million in 1997. Lower purchase/sale contracts reported by the Mid- Continent segment more than offset higher cost of goods sold incurred by the Coal Operations segment. Page 16 of 23 Excluding the $6.31 million in expense incurred by the Pacific Operations, year-to-date fuel and power expense increased 8% in 1998 as compared to 1997. The increase was due to a higher level of coal tons transferred. Operating and maintenance expenses, combined with general and administrative expenses, totaled $32.98 million for 1998. This compares to $11.33 million for the first six months of 1997. Excluding the $11.25 million reported by the Pacific Operations, operations and maintenance expenses increased 7% in 1998 versus last year. The 1998 increase reflects the addition of the Grand Rivers coal terminal and higher expense from the Coal Operations segment because of higher coal transfer volumes. The net increase was partially offset by lower operations and maintenance expenses from the Mid Continent segment due to lower transportation volumes on the North System. Depreciation and amortization expense increased to $14.39 million in 1998 compared to $5.14 million in 1997. The increase was attributable to the inclusion of the Pacific operations, which reported depreciation expense of $9.76 million for the first six months of 1998. Excluding the $3.74 million in expense incurred by the Pacific operations, taxes, other than income taxes, decreased 18% in the first half of 1998 compared to the same period a year ago. Lower expenses were reported by the Mid-Continent Operations as a result of the Co, joint venture with Shell. Equity in earnings of partnerships increased $8.15 million in the first half of 1998 compared to the first half of 1997. This resulted from the recognition of $7.25 million of earnings from the Partnership's equity investment in Shell Co, Company and a 22% increase in earnings from the equity investment in Mont Belvieu Associates due to higher fractionation volumes. Interest expense increased $12.11 million in the first half of 1998 compared to the same period last year. This was principally due to debt assumed by the Partnership as part of the acquisition of the Pacific operations as well as higher average outstanding balances on revolving credit agreements. Interest income and Other, net, which includes interest income and other non-operating income and expense, decreased $1.95 million in the first six months of 1998 compared to last year. The decrease was primarily owing to expense relating to the FERC Rate Case reserve for the Pacific operations. Financial Condition General The Partnership's primary cash requirements, in addition to normal operating expenses, are debt service, sustaining capital expenditures, discretionary capital expenditures, and quarterly distributions to partners. In addition to utilizing cash generated from operations, the Partnership could meet its cash requirements through the utilization of credit facilities or by issuing additional limited partner interests in the Partnership. The Partnership expects to fund future cash distributions and sustaining capital expenditures with existing cash and cash flows from operating activities. Expansion capital expenditures are expected to be funded through additional Partnership borrowings. Interest payments are expected to be paid from cash Page 17 of 23 flows from operating activities and debt principal payments will be met by additional borrowings as they become due. Cash Provided by Operating Activities Net cash provided by operating activities was $46.36 million for the first six months of 1998 versus $11.94 million for the comparable period of 1997. The period-to-period net cash flow increase was $34.42 million. Higher earnings, chiefly due to the acquisition of the Pacific Operations, accounted for $24.37 million of the increase. Higher depreciation, directly attributable to the Pacific operations, accounted for $9.25 million of the increase. Cash Used in Investing Activities Cash used in investing activities totaled $110.25 million for the six month period ended June 30, 1998 compared with $3.64 million for the same 1997 period. The $106.61 million increase was the result of $74.71 million used for the March 6, 1998 acquisition of the Pacific operations and $25 million used for the Partnership's cash investment in Shell C02 Company Excluding the effect of assets purchased in the acquisition of the Pacific operations, additions to property, plant, and equipment, were $9.42 million in the first half of 1998 compared to $1.61 million for the first half of 1997. These additions of property, plant and equipment include both expansion and maintenance projects. The 1998 increase was mainly due to property additions for the Pacific Operations since the date of acquisition and property additions related to the expansion of the Coal Operations. Cash Provided by Financing Activities Cash provided by financing activities was $94.36 million for the six month period ended June 30, 1998, compared to $8.39 million cash used in the six month period ended June 30, 1997. This increase of $102.75 million was the result of $212.30 million in proceeds received from the June 1998 issuance of approximately 6.1 million Common Units. Additionally, $11.74 million was received as a result of General Partner contributions made to maintain its minority interest in the operating partnerships. The net increase in cash provided by financing activities was partially offset by a $72.95 million increase in cash used for overall debt financing activities, $16.43 million for the cost of refinancing long-term debt, and an increase of $31.98 million in distributions to partners. The Partnership's debt instruments generally require the Partnership to maintain a reserve for current debt service obligations. The purpose of the reserve is to lessen differences in the amount of Available Cash from quarter to quarter due to timing of required principal and interest payments (which may only be required on a semi-annual or annual basis) and to provide a source of funds to make such payments. Distributions to partners increased to $40.40 million for the six month period ended June 30, 1998, compared to $8.42 million in the comparable 1997 period. This increase was attributable to increased distributions paid to Common Unitholders of $1.125 per Common Unit in 1998 compared to $.63 per Common Unit in 1997, the issuance of additional Common Units since June 30, 1997, and increased incentive distributions paid to the General Partner. Page 18 of 23 The Partnership believes that the increase in paid distributions per Unit resulted from favorable operating results in 1998. On July 15, 1998, the Partnership announced an increase in its quarterly distribution from $.5625 to $.63 per Common Unit (a 12% increase over the prior quarter's distribution and a 100% increase over the distribution paid in May 1997), effective with the distribution for the second quarter. The Partnership believes that future operating results will continue to support similar levels of quarterly cash distributions, however, no assurance can be given that future distributions will continue at such levels. The Partnership Agreement requires the Partnership to distribute 100% of "Available Cash" (as defined in the Partnership Agreement) to the Partners within 45 days following the end of each calendar quarter in accordance with their respective percentage interests. Available Cash consists generally of all cash receipts of the Partnership and its operating partnerships, less cash disbursements and net additions to reserves, and amounts payable to the former Santa Fe general partner in respect of its .5% interest in SFPP. Available Cash of the Partnership generally is distributed 98% to the Limited Partners (including the approximately 2% limited partner interest of the General Partner) and 2% to the General Partner. This general requirement is modified to provide for incentive distributions to be paid to the General Partner in the event that quarterly distributions to unitholders exceed certain specified targets. In general, Available Cash for each quarter is distributed, first, 98% to the Limited Partners and 2% to the General Partner until the Limited Partners have received a total of $0.3025 per Unit for such quarter, second, 85% to the limited Partners and 15% to the General Partner until the Limited Partners have received a total of $.3575 per Unit for such quarter, third, 75% to the Limited Partners and 25t to the General Partner until the Limited Partners have received a total of $.4675 per Unit for such quarter, and fourth, thereafter 50% to the Limited Partners and 50% to the General Partner. Incentive distributions are generally defined as all cash distributions that are in excess of 2% of the aggregate amount of cash being distributed. The General Partner's incentive distribution declared by the Partnership for the second quarter of 1998 was $9,352,984. Capital Requirements for Recent Transactions Plantation Pipe Line Company The Partnership has announced that it had entered into a Stock Purchase Agreement, with an affiliate of Shell Pipe Line Corporation, for the purchase of a 24t interest in Plantation Pipe Line Company for a sum in excess of $100 million. The Partnership plans to fund the stock purchase by borrowing necessary funds from its Loan Facility. Hall-Buck Marine, Inc. The Partnership has announced that it had signed a letter of intent to exchange approximately $75 million in Common Units for all of the outstanding stock of Hall-Buck. The transaction will not require cash financing. Information Regarding Forward Looking Statements This filing includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward looking statements are identified as any Page 19 of 23 statement that does not relate strictly to historical or current facts. They use words such as plans, expects, anticipates, estimates, will and other words and phrases of similar meaning. Although the Partnership believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Such forward looking statements involve known and unknown risks and uncertainties. The Partnership's actual actions or results may differ materially from those discussed in the forward looking statements. Specific factors which could cause actual results to differ from those in the forward looking statements, include, among others: _ price trends and overall demand for NGLS, refined petroleum products, CO2, and coal in the United States (which may be affected by general levels of economic activity, weather, alternative energy sources, conservation and technological advances); _ changes in the Partnership's tariff rates set by FERC and the California Public Utilities Commission: _ the Partnership's ability to integrate the Pacific operations (and other future acquisitions) into its existing operations; _ with respect to the Coal Terminals, the ability of railroads to deliver coal to the terminals on a timely basis; _ the Partnership's ability to successfully identify and close strategic acquisitions and realize cost savings; _ the discontinuation of operations at major end-users of the products transported by its liquids pipelines (such as refineries, petrochemical plants, or military bases); and _ the condition of the capital markets in the United States. See Items 1 and 2 "Business and Properties - Risk Factors" of the Annual Report filed on Form 10-K with the Securities and Exchange Commission on March 31, 1998 for a more detailed description of these and other factors that may affect the forward looking statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK None. Page 20 of 23 PART II. OTHER INFORMATION KINDER MORGAN ENERGY PARTNERS, L.P. AND SUBSIDIARIES ITEM 1. Legal Proceedings See Part I, Item 1, Note 3 to Consolidated Financial Statements entitled "Litigation" which is incorporated herein by reference. ITEM 5. Other Information None. ITEM 6. Exhibits and Reports on Form S-K (a) Exhibits. *3.1 Second Amended and Restated Agreement of Limited Partnership entered into as of January 14, 1998, but to be effective as of February 14, 1997 (Exhibit 3.1 to Amendment No. 1 to the Partnership's Registration Statement on Form S-4 (File No. 33344519)) Filed February 4, 1998 (" 1998 S-4" ) *4.1 Credit Agreement dated February 17, 1998 among Kinder Morgan Energy Partners, L.P., Kinder Morgan Operating L.P. 11 B", the Subsidiary Guarantors, the Lenders, Goldman Sachs Credit Partners, L.P. and First Union National Bank (Exhibit 4.9 to the Partnership's 1997 Form 10-K) *4.2 Pledge Agreement dated February 17, 1998 among Kinder Morgan Energy Partners, L.P., the Lenders, Goldman Sachs Credit Partners, L.P. and First Union National Bank (Exhibit 4.10 to 1997 Form 10K) *4.3 Pledge Agreement dated February 17, 1998 among Kinder Morgan Operating L.P. I All, the Lenders, Goldman Sachs Credit Partners, L.P. and First Union National Bank (Exhibit 4.11 to 1997 Form 10K) *4.4 Pledge Agreement dated February 17, 1998 among Kinder Morgan Operating L.P. "D" the Lenders, Goldman Sachs Credit Partners, L.P. and First Union National Bank (Exhibit 4.12 to 1997 Form 10K) *4.5 Pledge Agreement dated February 17,1998 among Kinder Morgan Natural Gas Liquids Corporation, the Lenders, Goldman Sachs Credit Partners, L.P. and First Union National Bank (Exhibit 4.13 to 1997 Form 10-K) Page 21 of 23 *4.6 First Mortgage Note Agreement dated December 8, 1988 among Southern Pacific Pipe Lines Partnership, L.P. (now known as SFPP, L.P.) and the Purchasers listed on Schedule A (a conformed composite of 54 separate agreements, identical except for signatures) (Exhibit 4.2 to Form 10-K for Santa Fe Pacific Pipelines, L.P. for 1988 (" Santa Fe 1988 Form 10-K" ) *4.6.1 Consent and Amendment dated as of December 19, 1997 between the noteholders and SFPP, L.P. (a conformed composite of the separate agreements with each noteholders identical except for signatures) (Exhibit 4.14.1 to 1997 Form 10-K) *4.7 Deed of Trust, Security Agreement and Fixture Filing, dated December 8, 1988, between SFPP, L.P., its general partner, Chicago Title Insurance Company and Security Pacific National Bank (Exhibit 4.3 to Santa Fe 1988 Form 10-K) *4.8 Trust Agreement dated December 19, 1988, between SFPP., its general partner and Security Pacific National Bank (Exhibit 4.4 to Santa Fe 1988 Form 10-K) *4.9 Amended and Restated Credit Agreement dated as of August 11, 1997 among SFPP, L.P., Bank of America National Trust and Savings Association, as agent, Texas Commerce Bank National Association, as syndication agent, Bank of Montreal, as documentation agent, BancAmerica Securities, Inc., as arranger, and the lenders that are signatories thereto. As the maximum allowable borrowings under this facility do not exceed 10%- of the Registrant's total assets, this instrument is not filed as an exhibit to this Report, however, the Registrant hereby agrees to furnish a copy of such instrument to the Securities and Exchange Commission upon request. 27 Financial Data Schedule as of and for the six months ended June 30, 1998 *Incorporated by reference. (b) Reports on Form 8-K. Current Report dated March 5, 1998, on Form 8-K, as amended April 1, 1998, April 3, 1998 and April 13, 1998. The acquisition of SFPP, L.P., the operating partnership of Santa Fe Pacific Pipeline Partners, L.P., and the formation of Shell CO, Company were disclosed in Item 2 of this report. The purchase agreement for the Santa Fe acquisition and the principal documents related to the formation of Shell CO, Company were filed as Exhibits pursuant to Item 7. The financial statements of Santa Fe Pacific Pipeline Partners, L.P., as of December 31, 1996 and 1997 and for each of the three years in the period ended December 31, 1997, were included under Item 7. Also disclosed in Item 7 were the pro forma financial statements of the Registrant giving effect to the acquisition of Santa Fe Pacific Pipeline Partners, L.P. and the formation of Shell CO, Company as of December 31, 1997 and for the year ended December 31, 1997. Page 22 of 23 SIGNATURES 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 thereunto duly authorized. KINDER MORGAN ENERGY PARTNERS, L.P. (A Delaware Limited Partnership) By: Kinder Morgan G.P., Inc. as General Partner Date: August 10, 1998 By: /s/ David G. Dehaemers, Jr. ----------------------------------- David G. Dehaemers, Jr. Vice President, Treasurer and Chief Financial Officer Page 23 of 23 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMA- TION EXTRACTED FROM CONSOLIDATED STATEMENT OF INCOME - THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997; CONSOLIDATED BALANCE SHEET - JUNE 30, 1998 AND DECEMBER 31, 1997; AND CONSOL- IDATED STATEMENT OF CASH FLOWS - SIX MONTHS ENDED JUNE 30, 1998 AND 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 40,080 0 44,749 4,830 5,918 85,917 1,744,062 52,418 1,921,381 53,867 429,592 0 0 0 1,309,201 1,921,381 118,785 118,785 2,726 64,323 (8,437) 0 18,622 44,277 0 44,277 0 (13,611) 0 30,666 0.57 0.57 A 2-for-1 stock split occurred effective as of October 1, 1997. Prior Financial Data Schedules have not been restated to reflect this stock split.
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