UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission file number
December 29, 2001 000-23943
PETER KIEWIT SONS', INC.
(Exact name of registrant as specified in its charter)
Delaware 91-1842817
(State of Incorporation) (I.R.S. Employer Identification No.)
Kiewit Plaza, Omaha, Nebraska 68131
(Address of principal executive offices) (Zip Code)
(402) 342-2052
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.01
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The registrant's stock is not publicly traded, and therefore, there is no
ascertainable market value of voting stock held by non-affiliates.
29,834,455 shares of the registrant's $0.01 par value Common Stock were
issued and outstanding on March 22, 2002.
Portions of the registrant's definitive proxy statement for its 2002 Annual
Meeting of Stockholders are incorporated by reference into Part III of this
Form 10-K.
TABLE OF CONTENTS
Page
Part I
Item 1. Business 1
Item 2. Properties 3
Item 3. Legal Proceedings 3
Item 4. Submissions of Matters to a Vote of Security Holders 4
Item 4A. Executive Officers of the Registrant 4
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters 6
Item 6. Selected Financial Data 7
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 14
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 44
Part III
Item 10. Directors and Executive Officers of the Registrant 44
Item 11. Executive Compensation 44
Item 12. Security Ownership of Certain Beneficial Owners and
Management 44
Item 13. Certain Relationships and Related Transactions 44
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K 44
PART I
Item 1. Business.
Forward Looking Statements.
This document contains forward looking statements and information that
are based on the beliefs of management as well as assumptions made by and
information currently available to Peter Kiewit Sons', Inc., together with
its subsidiaries ("PKS" or the "Company"). When used in this document,
the words "anticipate," "believe," "estimate," "expect" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current
views of the Company with respect to future events and are subject to certain
risks, uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in this document.
General.
The Company is one of the largest construction contractors in North
America. The Company was incorporated in Delaware in 1997 to continue a
construction business founded in Omaha, Nebraska in 1884.
As described in Note 2 of the "Notes to Consolidated Financial
Statements", the Company spun-off its materials operations on September 30,
2000.
Business.
The Company, its subsidiaries and its joint ventures and partnerships
perform construction services for a broad range of public and private
customers primarily in the United States and Canada. New contract awards
during 2001 were distributed among the following construction markets
(approximately, by number): transportation (including highways, bridges,
airports, railroads, and mass transit) - 74.3%; water supply/dams - 12.6%;
mining - 5.4%; power, heat, cooling - 3.4%; and other markets -- 4.3%.
The Company primarily performs its services as a general contractor. As
a general contractor, the Company is responsible for the overall direction
and management of construction projects and for completion of each contract
in accordance with its terms, plans, and specifications. The Company plans
and schedules the projects, procures materials, hires workers as needed, and
awards subcontracts. The Company generally requires performance and payment
bonds or other assurances of operational capability and financial capacity
from its subcontractors.
Contract Types.
The Company performs its construction work under various types of
contracts, including fixed unit or lump-sum price, guaranteed maximum price,
and cost-reimbursable contracts. Contracts are either competitively bid and
awarded or negotiated. The Company's public contracts generally provide for
the payment of a fixed price for the work performed. Profit on a fixed-price
contract is realized on the difference between the contract price and the
actual cost of construction, and the contractor bears the risk that it may
not be able to perform all the work for the specified amount. Construction
contracts generally provide for progress payments as work is completed, with
a retainage, ranging from 0% to 10%, to be paid when performance is
substantially complete. In some instances, the Company is able to substitute
bank letters of credit or escrowed securities in lieu of retainage.
Construction contracts frequently contain penalties or liquidated damages for
late completion and infrequently provide bonuses for early completion.
Government Contracts.
Public contracts accounted for approximately 89% of the combined prices
of contracts awarded to the Company during 2001. Most of these contracts
were awarded by government and quasi-government units under fixed price
contracts after competitive bidding. Credit risk is minimal with public
(government) owners since the Company ascertains that funds have been
appropriated by the governmental project owner prior to commencing work on
public projects. Most public contracts are subject to termination at the
election of the government. In the event of termination, however, the
contractor is entitled to receive the contract price on completed work and
payment of termination-related costs.
Competition.
A contractor's competitive position is based primarily on its prices for
construction services and its reputation for quality, timeliness, experience,
and financial strength. The construction industry is highly competitive and
lacks firms with dominant market power. In 2001, Engineering News Record, a
construction trade publication, ranked the Company as the seventh largest
United States contractor in terms of 2000 revenue. It ranked the Company
first in the transportation market in terms of 2000 revenue.
Demand.
The volume and profitability of the Company's construction work depends
to a significant extent upon the general state of the economies of the United
States and Canada, and the volume of work available to contractors.
Fluctuating demand cycles are typical of the industry, and such cycles
determine to a large extent the degree of competition for available projects.
The Company's construction operations could be adversely affected by labor
stoppages or shortages, adverse weather conditions, shortages of supplies, or
governmental action. The volume of available government work is affected by
budgetary and political considerations. A significant decrease in the amount
of new government contracts, for whatever reason, would have a material
adverse effect on the Company.
Backlog.
At the end of 2001, the Company had backlog (anticipated revenue from
uncompleted contracts) of approximately $4.2 billion, an increase from
approximately $3.3 billion at the end of 2000. Of current backlog,
approximately $1.9 billion is not expected to be completed during 2002. In
2001, the Company was low bidder on 197 jobs with total contract prices of
approximately $3.2 billion, an average price of approximately $16.2 million
per job. There were 20 new projects with contract prices over $25 million,
accounting for approximately 82% of the successful bid volume.
Joint Ventures.
The Company frequently enters into joint ventures to efficiently
allocate expertise and resources among the venturers and to spread risks
associated with particular projects. In most joint ventures, if one venturer
is financially unable to bear its share of expenses, the other venturers may
be required to pay those costs. The Company prefers to act as the sponsor of
its joint ventures. The sponsor generally provides the project manager, the
majority of venturer-provided personnel, and accounting and other
administrative support services. The joint venture generally reimburses the
sponsor for such personnel and services on a negotiated basis. The sponsor is
generally allocated a majority of the venture's profits and losses and
usually has a controlling vote in joint venture decision-making. In 2001, the
Company derived approximately 78% of its joint venture revenue from sponsored
joint ventures and approximately 22% from non-sponsored joint ventures. The
Company's share of joint venture revenue accounted for approximately 17% of
its 2001 total revenue.
Significant Customer.
During 2001, revenue recognized from contracts with Level 3
Communications, Inc. ("Level 3") represented 20.1% of the Company's total
revenue.
Locations.
The Company has 22 principal operating offices located throughout North
America, including its headquarters located in Omaha, Nebraska. Through its
decentralized system of management, the Company has been able to quickly
respond to changes in the local markets. During 2001, the Company had
projects in 46 states, Puerto Rico, Washington, D.C. and 8 Canadian
provinces.
Financial information about geographic areas for the fiscal years ended
December 29, 2001, December 30, 2000 and December 25, 1999 is included in
Note 11 of the "Notes to Consolidated Financial Statements".
Environmental Protection.
Compliance with federal, state, and local provisions regulating the
discharge of materials into the environment, or otherwise relating to the
protection of the environment, has not and is not expected to have a material
effect upon the capital expenditures, earnings, or competitive position of
the Company.
Employees.
At the end of 2001, the Company employed approximately 16,000 people.
The Company considers relations with its employees to be good.
Item 2. Properties.
The Company's headquarters facilities are located in Omaha, Nebraska and
are owned by the Company. The Company also has 21 principal district offices
located in Arizona, California, Colorado, Georgia, Kansas, Massachusetts,
Nebraska, New Jersey, Texas, Washington, Alberta and Quebec, 13 of which are
located in owned facilities and 8 of which operate from leased facilities.
The Company also has 21 area offices located in Alaska, California, Florida,
Hawaii, Illinois, Maryland, Massachusetts, Nebraska, Nevada, New Mexico, New
York, Pennsylvania, Rhode Island, Utah, British Columbia and Ontario, 2 of
which are owned facilities and 19 of which are leased facilities. The
Company owns or leases numerous shops, equipment yards, storage facilities,
warehouses, and construction material quarries. Since construction projects
are inherently temporary and location-specific, the Company owns
approximately 1,500 portable offices, shops and transport trailers. The
Company has a large equipment fleet, including approximately 3,500 trucks,
pickups and automobiles and 1,400 heavy construction vehicles, such as
graders, scrapers, backhoes and cranes. Joint ventures in which the Company
is a participant also own approximately an additional 150 portable offices,
shops and transport trailers, 600 trucks, pickups and automobiles and 350
heavy construction vehicles.
Item 3. Legal Proceedings.
On April 25, 2001, Bibb and Associates, Inc. ("Bibb"), a subsidiary of
the Company, was served with a complaint (the "Complaint") filed in the
Circuit Court of Jackson County, Missouri (the "Court"), in an action
brought by Kansas City Power & Light ("KCPL") with respect to a January 13,
1999 explosion at KCPL's Hawthorn No. 5 power plant. The Complaint lists a
total of 13 defendants, and generally alleges as to Bibb, strict liability,
negligence, professional gross negligence, fraud, negligent misrepresentation
and wrongful inducement to contract. The Complaint also names the Company,
and alleges that the Company is either the alter ego of Bibb or the successor
to Bibb's liability. The Complaint alleges damages in excess of $450 million
including property damage, costs of replacement of power and lost profits.
On October 18, 2001, the Company filed a motion to dismiss the action for
lack of personal jurisdiction. During February 2002, the Company's motion
was overruled, and the Court ordered the parties to proceed with discovery.
The Company believes that the factual allegations and legal claims asserted
against Bibb and the Company by KCPL are without merit and intends to
vigorously defend them.
The Company is party to many other pending legal proceedings incidental
to the business of such entities. It is not believed that any resulting
liabilities for legal proceedings, beyond amounts reserved, will materially
affect the financial condition, future results of operation, or future cash
flows of the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
None during the three months ended December 29, 2001.
Item 4A. Executive Officers of the Registrant.
The table below shows information as of March 15, 2002, about each
executive officer of the Company, including his business experience during
the past five years. The Company's executive officers are elected annually to
serve until their successors are elected and qualified or until their death,
resignation or removal.
Name Business Experience Age
Gregory D. Brokke Mr. Brokke has been the Controller of the Company 39
since June 2000. Mr. Brokke was Assistant Treasurer
of the Company from August 1997 to June 2000.
Mr. Brokke was Audit Supervisor of Kiewit
Construction Group Inc., a subsidiary of the
Company, from December 1994 to June 1997.
John B. Chapman Mr. Chapman has been Vice President of Human 56
Resources and Administration of the Company since
August 1997. Mr. Chapman was Vice President of
Human Resources for Kiewit Construction Group
Inc. for more than five years prior to August 1997.
Roy L. Cline Mr. Cline has been a director and an Executive 64
Vice President of the Company since June 1999. Mr.
Cline was the President of Kiewit Industrial Co., a
subsidiary of the Company, from March 1992 until June
1999. Mr. Cline is also a member of the Executive
Committee of the Company.
Richard W. Colf Mr. Colf has been a director of the Company since 58
August 1997. Mr. Colf has been an Executive Vice
President of the Company since July 1998. Mr. Colf
has been an Executive Vice President of Kiewit
Pacific Co., a subsidiary of the Company, since
September 1998 and was a Senior Vice President of
Kiewit Pacific Co. from October 1995 to September
1998. Mr. Colf is currently also a director of
Kiewit Materials Company. Mr. Colf is also a member
of the Executive Committee of the Company.
Bruce E. Grewcock Mr. Grewcock has been a director of the Company 48
since August 1997. Mr. Grewcock has been President
and Chief Operating Officer of the Company since
December 2000. Mr. Grewcock was an Executive Vice
President of the Company from August 1997 until
December 2000. Mr. Grewcock was the President of
Kiewit Western Co., a subsidiary of the Company,
from July 1997 to July 1999. Mr. Grewcock was an
Executive Vice President of Kiewit Construction
Group Inc. from July 1996 to June 1998. Mr. Grewcock
is currently also a director of Kiewit Materials
Company. Mr. Grewcock is also a member of the
Executive Committee of the Company.
Allan K. Kirkwood Mr. Kirkwood has been a director of the Company 58
since August 1997. Mr. Kirkwood has been an
Executive Vice President of the Company since
July 1998. Mr. Kirkwood has been an Executive Vice
President of Kiewit Pacific Co. since September
1998 and was a Senior Vice President of Kiewit
Pacific Co. from October 1995 to September 1998.
Mr. Kirkwood is also a member of the Executive
Committee and is the Chairman of the Audit Committee
of the Company.
Ben E. Muraskin Mr. Muraskin has been a Vice President of the 38
Company since January 2000. Mr. Muraskin was a
partner at Alston & Bird LLP from January 1999 to
December 1999, and an associate at that firm from
May 1992 to January 1999.
Douglas E. Patterson Mr. Patterson has been a director of the Company 50
since June 2001. Mr. Patterson has been Executive
Vice President of the Company since November 2001.
Mr. Patterson was President of Gilbert Central Corp.,
Gilbert Industrial Corporation and Kiewit
Engineering Co., all subsidiaries of the Company,
from June 1999 to June 2001. Mr. Patterson was
Senior Vice President of Kiewit Construction Company,
a subsidiary of the Company, from July 1996 to June
1999. Mr. Patterson is a member of the Executive
Committee of the Company.
Gerald S. Pfeffer Mr. Pfeffer has been a Vice President of the 56
Company since April 1998. Mr. Pfeffer was a Vice
President of Kiewit Construction Group Inc. from
December 1997 to June 1998. Mr. Pfeffer was Vice
President of Kiewit SR91 Corp. from January 1993 to
December 1997.
Michael J. Piechoski Mr. Piechoski has been a Vice President and the 48
Treasurer of the Company since June 2000. Mr.
Piechoski was Director of Audit of the Company
from April 1999 to June 2000. Mr. Piechoski was
Chief Accounting Officer of United Metro Materials,
Inc., a former subsidiary of the Company, for more
than five years prior to March 1999.
Jerry C. Porter Mr. Porter has been a Vice President of the 58
Company since May 2000. Mr. Porter has been the
design/build manager of the Company since September
1999. Mr. Porter was a construction design manager
for Kiewit Pacific Co. from September 1996 until
September 1999.
James E. Rowings Mr. Rowings has been a Vice President of the Company 49
since June 2001. Mr. Rowings was professor and
director of the Construction Engineering Department
at Iowa State University for more than five years
prior to June 2001.
Tobin A. Schropp Mr. Schropp has been a Vice President, General 39
Counsel and Secretary of the Company since September
1998. Mr. Schropp was Director of Taxes of the Company
from March 1998 to September 1998. Mr. Schropp was
Director of Taxes of Level 3 Communications, Inc.
from August 1996 to March 1998.
Stephen A. Sharpe Mr. Sharpe has been a Vice President of the Company 50
since August 1997. Mr. Sharpe was a Vice President
of Kiewit Construction Group Inc. from October 1996
to June 1998. Mr. Sharpe was a Vice President of U.S.
Generating Company for more than five years prior
to October 1996.
Kenneth E. Stinson Mr. Stinson has been a director and Chairman of 59
the Company since August 1997. Mr. Stinson has been
Chief Executive Officer of the Company since March
1998. Mr. Stinson was President of the Company from
August 1997 until December 2000. Mr. Stinson has been
the Chairman and Chief Executive Officer of Kiewit
Construction Group Inc. for more than the last five
years. Mr. Stinson was Executive Vice President of
Level 3 Communications, Inc. from June 1991 to August
1997. Mr. Stinson is also currently a director of
ConAgra, Inc., Valmont Industries, Inc., Kiewit
Materials Company and Level 3 Communications, Inc.
Mr. Stinson is also the Chairman of the Executive
Committee of the Company.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
Market Information.
As of December 29, 2001, the Company's $0.01 par value common stock
("Common Stock") was not listed on any national securities exchange or the
NASDAQ National Market and there is no established public trading market for
the Common Stock.
Company Repurchase Obligation.
Pursuant to the terms of the Company's Restated Certificate of
Incorporation ("Certificate"), the Company is generally required to
repurchase shares of Common Stock at a formula price upon demand. Common
Stock can be issued only to employees and directors of the Company and can be
resold only to the Company at a formula price based on the year-end book
value of the Company.
Formula Price.
The formula price of the Common Stock is based on the book value of the
Company. A significant element of the Common Stock formula price is the
subtraction of the book value of property, plant, and equipment used in the
Company's construction activities (approximately $136 million at December
29, 2001).
Restrictions.
Ownership of Common Stock is restricted to active Company employees and
directors and conditioned upon the execution of repurchase agreements which
restrict employees from transferring the Common Stock. Upon retirement,
termination of employment, or death, Common Stock must be resold to the
Company at the applicable formula price.
Stockholders.
On March 22, 2002, the Company had the following numbers of stockholders
and outstanding shares:
Class of Stock Stockholders Outstanding Shares
Common Stock 1,485 29,834,455
Dividends and Prices.
The chart below sets forth the cash dividends declared or paid on the
Common Stock during 2000 and 2001, and the formula price after each dividend
payment.
Dividend
Dividend Declared Dividend Paid Per Share Price Adjusted Formula Price
October 29, 1999 January 5, 2000 $0.27 December 26, 1999 $20.63
April 28, 2000 May 1, 2000 $0.28 May 1, 2000 $20.35
October 27, 2000 January 5, 2001 $0.30 December 30, 2000 $17.70 1
April 27, 2001 May 1, 2001 $0.35 May 1, 2001 $17.35
October 26, 2001 January 4, 2002 $0.30 December 29, 2001 $21.50
The Company's current dividend policy is to pay a regular dividend on
Common Stock based on a percentage of the prior year's ordinary earnings,
with any special dividends to be based on extraordinary earnings.
- --------------------
1 On September 30, 2000, the Company distributed the shares of common stock
of its subsidiary, Kiewit Materials Company, to holders of Common Stock in a
distribution intended to be tax-free for U.S. Federal income tax purposes
(see Note 15 of the "Notes to Consolidated Financial Statements").
Item 6. Selected Financial Data.
The following table presents selected historical financial data of the
Company as of and for the fiscal years ended 1997 through 2001, and is
derived from the Company's historical consolidated financial statements and
the notes to those financial statements.
Fiscal Year Ended
2001 2000 1999 1998 1997
- -----------------------------------------------------------------------------
(dollars in millions, except per share amounts)
Results of Operations:
Revenue $3,871 $4,463 $3,586 $3,053 $2,474
====== ====== ====== ====== ======
Earnings from continuing $ 175 $ 161 $ 137 $ 118 $ 136
operations
Earnings from discontinued
operations - 18 28 18 19
------ ------ ------ ------ ------
Net earnings $ 175 $ 179 $ 165 $ 136 $ 155
====== ====== ====== ====== ======
Per Common Share:
Basic:
Earnings from continuing $ 5.72 $ 4.97 $ 4.00 $ 3.53 $ 3.52
operations
Earnings from discontinued - .57 .81 .54 .48
operations ------ ------ ------ ------ ------
Net earnings $ 5.72 $ 5.54 $ 4.81 $ 4.07 $ 4.00
====== ====== ====== ====== ======
Diluted:
Earnings from continuing $ 5.49 $ 4.83 $ 3.91 $ 3.48 $ 3.38
operations
Earnings from discontinued - .55 .80 .54 .46
Operations ------ ------ ------ ------ ------
Net earnings $ 5.49 $ 5.38 $ 4.71 $ 4.02 $ 3.84
====== ====== ====== ====== ======
Dividends (1) $ .65 $ .58 $ .52 $ .43 $ .38
====== ====== ====== ====== ======
Formula price (2) $21.50 $17.70 $20.63 $15.90 $12.80
====== ====== ====== ====== ======
Book value $26.44 $21.56 $24.01 $19.35 $16.10
====== ====== ====== ====== ======
Financial Position:
Total assets $1,594 $1,401 $1,599 $1,379 $1,342
====== ====== ====== ====== ======
Current portion of
long-term debt $ 1 $ 1 $ 4 $ 8 $ 5
====== ====== ====== ====== ======
Long-term debt, net of
current portion $ 26 $ 12 $ 18 $ 13 $ 22
====== ====== ====== ====== ======
Redeemable Common Stock (3) $ 835 $ 696 $ 837 $ 691 $ 652
====== ====== ====== ====== ======
- -----------------------------------------------------------------------------
(1) The 2001, 2000, 1999, 1998 and 1997 dividends include $.30, $.30,
$.27, $.225 and $.20 for dividends declared in 2001, 2000, 1999, 1998 and
1997 respectively, but paid in January of the subsequent year.
(2) Pursuant to the Certificate, the formula price calculation is
computed annually at the end of the fiscal year, except that adjustments to
reflect dividends are made when declared.
(3) Ownership of the Common Stock is restricted to certain employees
conditioned upon the execution of repurchase agreements which restrict the
employees from transferring the stock. The Company is generally required to
purchase all Common Stock at the formula price. The aggregate redemption
value of Common Stock at December 29, 2001 and December 30, 2000 was $679
million and $571 million, respectively.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
On September 30, 2000, the Company effected a spin-off of its materials
business ("Materials Business") to its stockholders. As described in Note 2
of the "Notes to Consolidated Financial Statements", the Company has
reclassified the results of operations of its Materials Business as
discontinued operations. The following discussion is on a continuing
operations basis.
Results of Operations 2001 vs. 2000
Revenue.
Revenue for the twelve months ended December 29, 2001 consisted of $3.2
billion from sole contracts and $600 million from joint ventures. Total
revenues decreased $592 million or 13% from 2000. The decrease was
attributed to a $992 million reduction in revenue earned on a significant
fiber optic project for the twelve months ended December 29, 2001 from the
same period in 2000. This project was substantially complete at the end of
2001. Partially offsetting the decrease were increases in other sole
contract projects of $327 million and joint venture projects of $43 million.
These increases are primarily attributed to projects awarded to the Company
during the year 2000.
Contract backlog at December 29, 2001 increased to $4.2 billion from
$3.3 billion at December 30, 2000. Foreign operations, located primarily in
Canada, attributed 3.2% of backlog. Domestic projects are spread
geographically throughout the U.S. The Company's share of a large highway
contract in Colorado makes up 21% of total backlog.
Margin.
Margins for the twelve months ended December 29, 2001 consisted of $388
million from sole contracts, $25 million from joint ventures and $14 million
from other sources. Total margin increased $102 million or 31% from 2000.
Margins, as a percentage of revenue, for the twelve months ended December 29,
2001 increased to 11.0% compared to 7.3% in 2000. The increased margin, is
primarily attributable to a $99 million final settlement recognized on a
significant fiber optic project during December 2001, and an increase in
joint venture margins of $48 million for the twelve months ended December 29,
2001. The joint venture increase is primarily attributed to projects awarded
to the Company during the year 2000 and lower than anticipated close out
costs on several completed or near completed projects. Margins on sole
contracts, as a percentage of revenue excluding the significant fiber optic
project, were 12% for the twelve months ended December 29, 2001 remaining
relatively constant when compared to an 11% margin in 2000.
General and Administrative Expenses.
General and administrative expenses for the twelve months ended December
29, 2001 increased $14 million to $184 million compared to 2000. As a
percentage of revenue, general and administrative expenses for the twelve
months ended December 29, 2001 increased to 4.8% compared to 3.8% for the
same period in 2000. This increase was primarily attributed to new operating
offices in Colorado and Texas; the acquisition of a marine construction
operation in Washington State on July 31, 2001; and the relocation of an
operating office from Nebraska to Kansas. Revenue at the new office
locations lagged the related administrative costs associated with their
start-up. Another contributing factor was the increased general and
administrative staffing for the purpose of bidding new work during 2001.
Gain on Sale of Operating Assets.
Net gains on the disposition of property, plant and equipment and other
assets increased to $20 million in the twelve months ended December 29, 2001
from $17 million the same period in 2000. Although this number can vary
relative to business conditions, it remained comparably static to 2000.
Investment Income and Equity Earnings.
During the third quarter 2000, the Company determined that the decline
in market value of an investment security was other-than-temporary,
therefore, this investment was written down to the current market value and a
loss of $9 million was recognized in the Statement of Earnings. Prior to the
write-down, this investment had been carried at market value and the write-
down had been recorded as an unrealized loss as a separate component of other
comprehensive income. This investment was subsequently sold during 2001 at a
gain of $1 million.
A $3 million investment carried at cost was written off during the
twelve months ended December 29, 2001.
Other, net.
Other income is comprised primarily of mine management fee income.
During 2001 and 2000, the Company managed two and three active coal mines,
respectively. Fees for these services for the twelve months ended December
29, 2001 were $5 million as compared to $29 million in 2000. The decrease is
primarily due to the combination of: the expiration of a significant long-
term contract in late 2000; and the Company's September 26, 2000 acquisition
of Walnut Creek Mining Company, a mine previously managed. The Company's fee
is a percentage of adjusted operating earnings of the coal mines, as defined
in the mine management agreement. The mines managed earn the majority of
their revenues under long-term contracts. The remainder of the mines' sales
are made on the spot market where prices are substantially lower than those
of the long-term contracts.
Provision for income taxes.
The effective income tax rates for the twelve months ended December 29,
2001 and December 30, 2000 were 38.3% and 37.5%, respectively. These rates
differ from the federal statutory rate of 35% primarily due to state income
taxes.
Results of Operations 2000 vs. 1999
Revenue.
Revenue for the twelve months ended December 30, 2000 increased $877
million or 24% from the same time period in 1999. The most significant
factor contributing to this increase was a large fiber optic project where
installation was being performed only in selected locations during 1999 as
compared to nationwide installation being performed during the same period in
2000.
Contract backlog at December 30, 2000 was nearly $3.3 billion, of which
8.3% is attributable to foreign operations located primarily in Canada.
Domestic projects are spread geographically throughout the U.S.
Margin.
Margins, as a percentage of revenue, for the twelve months ended
December 30, 2000, decreased to 7.3% compared to 8.8% for the same period in
1999. Cost overruns on certain significant projects contributed to the
decrease. Margins may vary between periods due to the inherent uncertainties
associated with fixed price contracts, as well as seasonality and the stage
of completion of individual projects.
General and Administrative Expenses.
General and administrative expenses for the twelve months ended December
30, 2000, increased $29 million to $170 million when compared to the same
period in 1999. The increase was attributed primarily to increased
compensation of $18 million and increased travel costs of $6 million. As a
percentage of revenue, general and administrative expenses for the twelve
months ended December 30, 2000 decreased to 3.8% compared to 3.9% for the
same period in 1999 as a proportionate increase in administrative costs was
not necessary to support the Company's revenue growth.
Gain on Sale of Operating Assets.
Net gains on the disposition of property, plant and equipment and other
assets decreased to $17 million in the twelve months ended December 30, 2000,
from $20 million in the same period in 1999. The decrease is due to fewer
sales of excess construction equipment.
Investment Income and Equity Earnings.
During the third quarter 2000 and 1999, the Company determined that the
decline in market value of an investment security was other-than-temporary.
This investment was written down to the current market value and losses of $9
million and $18 million, respectively, were recognized in the Statement of
Earnings. Prior to each write-down, this investment had been carried at
market value and the write-down had been recorded as an unrealized loss as a
separate component of other comprehensive income. Subsequent changes in the
market value of the security will be included as a separate component of
comprehensive income.
Gain on Sale of Partnership.
On September 27, 2000, the Company sold its interest in the Aker Gulf
Marine partnership for $86 million. A gain of $45 million was recognized in
the Consolidated Statement of Earnings.
Other, Net.
Other income is primarily comprised of mine management fee income.
During the first nine months ended September 26, 2000 and for the twelve
months ended December 25, 1999, the Company managed three active coal mines.
On September 26, 2000, the Company acquired Walnut Creek Mining Company, a
mine previously managed. Primarily, as a result of this acquisition, fees
for these services decreased to $29 million for the twelve months ended
December 30, 2000 as compared to $33 million for the same period in 1999.
The Company's fee is a percentage of adjusted operating earnings of the coal
mines, as defined in the mine management agreement. The mines managed earn
the majority of their revenues under long-term contracts. The remainder of
the mines' sales are made on the spot market where prices are substantially
lower than those of the long-term contracts.
Provision for Income Taxes.
The effective income tax rates for the twelve months ended December 30,
2000 and December 25, 1999 were 37.5% and 37.6%, respectively. These rates
differ from the federal statutory rate of 35% due primarily to state income
taxes.
Financial Condition - December 29, 2001 vs. December 30, 2000
Cash and cash equivalents decreased $86 million to $216 million at
December 29, 2001 from $302 million at December 30, 2000. The decrease
reflects net cash provided by operations of $193 million; offset by net cash
used in investing activities of $244 million, $33 million used in financing
activities, and $2 million effect of exchange rates.
Net cash provided by operating activities for the twelve months ended
December 29, 2001 decreased by $15 million to $193 million as compared to the
same period in 2000. This decrease was primarily due to increased working
capital requirements for construction contracts. Accounts receivable
increased $61 million, primarily due to a $99 million settlement reached in
December 2001. This was partially offset by higher earnings (after excluding
gains on sale of property, plant and equipment and partnership interests).
Cash provided or used by operating activities is affected to a large degree
by the mix, timing, stage of completion and terms of individual contracts
which are reflected in changes through current assets and liabilities.
Net cash used in investing activities for the twelve months ended
December 29, 2001 increased by $96 million to $244 million as compared to the
same period in 2000. This increase was due primarily to an increase of cash
used for purchases of securities for sale and for other investments of $100
million; less cash available due to the sale of a partnership in the prior
year of $86 million and higher capital expenditures of $48 million. This
increase was primarily offset by reduced acquisitions of $134 million.
Capital spending varies due to the nature and timing of jobs awarded.
Management does not expect any material changes to capital spending.
Acquisitions depend largely on market conditions.
Net cash used in financing activities for the twelve months ended
December 29, 2001 decreased by $63 million to $33 million as compared to the
same time period in 2000. This decrease was primarily due to cash
distributed in connection with the Materials Spin-off of $47 million during
2000. Other factors include a reduction in repurchases of common stock of
$14 million and an increase in issuance of common stock of $5 million.
Liquidity.
The Company continues to explore opportunities to acquire additional
businesses and anticipates investing between $50 and $100 million annually to
expand its operations. Other long-term liquidity uses include the payment of
income taxes and the payment of dividends. As of December 29, 2001, the
Company had no material firm binding purchase commitments related to its
investments other than meeting the normal course of business needs of its
construction joint ventures. The current portion of long-term debt is $1
million. The Company paid dividends during the twelve months ended December
29, 2001 and December 30, 2000 of $19 million and $18 million, respectively.
These amounts were determined by the Board of Directors and were paid in
January and May of each such year. The Company also has the commitment to
repurchase Common Stock at any time during the year from shareholders.
The Company does not believe that the spin-off of its Materials Business
had nor will have an adverse impact on its liquidity or material commitments,
since earnings generated from the Materials Business had historically been
reinvested in the Materials Business. The Company's current financial
condition, together with anticipated cash flows from operations, should be
sufficient for immediate cash requirements and future investing activities.
The Company does not presently have any committed bank credit facilities. In
the past, the Company has been able to borrow on terms satisfactory to it.
The Company believes that, to the extent necessary, it will likewise be able
to borrow funds on acceptable terms for the foreseeable future.
Critical Accounting Policies.
Construction Contracts:
The Company operates as a general contractor throughout North America and
engages in various types of construction projects for both public and private
owners. Credit risk is minimal with public (government) owners since the
Company ascertains that funds have been appropriated by the governmental
project owner prior to commencing work on public projects. Most public
contracts are subject to termination at the election of the government.
However, in the event of termination, the Company is entitled to receive the
contract price on completed work and reimbursement of termination-related
costs. Credit risk with private owners is minimized because of statutory
mechanics liens, which give the Company high priority in the event of lien
foreclosures following financial difficulties of private owners.
The construction industry is highly competitive and lacks firms with
dominant market power. A substantial portion of the Company's business
involves construction contracts obtained through competitive bidding. The
volume and profitability of the Company's construction work depends to a
significant extent upon the general state of the economies of North America
and the volume of work available to contractors. The Company's construction
operations could be adversely affected by labor stoppages or shortages,
adverse weather conditions, shortages of supplies or other governmental
action.
The Company uses the percentage of completion method of accounting on
long-term construction contracts. For fixed-price construction contracts, an
estimated percentage of completion for each contract, as determined by the
Company's engineering estimate based on the amount of work performed, is
applied to total estimated revenue. For cost-plus construction contracts, the
percentage of completion, based upon costs incurred divided by projected
costs, is applied to total estimated profit. Provision is made for the entire
amount of future estimated losses on construction contracts in progress;
claims for additional contract compensation, however, are not reflected in the
accounts until the period in which such claims are settled. Revisions in cost
and profit estimates during the course of the work are reflected in the
accounting period in which the facts which require the revision become known.
It is at least reasonably possible that cost and profit estimates will be
revised in the near-term.
In accordance with industry practice, amounts realizable and payable
under contracts which may extend beyond one year are included in current
assets and liabilities.
Investments:
The Company continually evaluates its investments for other than
temporary declines in value. Several factors analyzed in evaluating
investments including an analysis of the company, its industry, valuation
levels and subsequent developments. Unrealized losses that are determined to
be other than temporary are recognized in earnings.
Included in accounts receivable retainage are securities in the amount
of $23 million that relate to stock warrants which are carried at fair value.
Such fair value is estimated based on a valuation model. Unrealized gains
and losses are recognized as a component of investment income in the
Consolidated Statement of Earnings.
Construction Joint Ventures:
The Company has entered into a number of construction joint venture
arrangements which are accounted for under the equity method in the balance
sheet and on a pro rata basis in the statement of earnings. Under these
arrangements, if one venturer is financially unable to bear its share of the
costs, the other venturers will be required to pay those costs.
Property, Plant and Equipment:
Property, plant and equipment are recorded at cost. Depreciation for the
majority of the Company's property, plant and equipment is calculated using
accelerated methods. The estimated useful lives of the Company's property,
plant and equipment are as follows:
Buildings 5 - 39 years
Equipment 3 - 20 years
A change in depreciation methods or estimated useful lives could have a
significant impact to earnings.
Accrued Insurance Costs:
The Company is self-insured for certain general, auto and worker's
compensation claims, and accrues for the estimated ultimate liability for
incurred losses, both reported and unreported. The Company bases its estimate
of loss on historic trends modified for recent events. It is at least
reasonably possible that the estimate of ultimate liability will be revised in
the near-term.
New Accounting Pronouncements.
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
which establishes accounting and reporting standards for derivative
instruments and for hedging activities, effective January 1, 2001. Adoption
of this statement did not affect the Company's financial statements as the
Company had no derivative instruments or hedging activities as of
December 31, 2000.
In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards No. 141 (SFAS 141), "Business
Combinations", and No. 142 (SFAS 142), "Goodwill and Other Intangible
Assets".
SFAS 141 supersedes Accounting Principles Board Opinion No. 16 (APB 16),
"Business Combinations". The most significant changes made by SFAS 141 are:
(1) requiring that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001, (2) establishing specific
criteria for the recognition of intangible assets separately from goodwill,
and (3) requiring unallocated negative goodwill to be written off immediately
as an extraordinary gain (instead of being deferred and amortized).
SFAS 142 supersedes APB 17, "Intangible Assets". SFAS 142 primarily
addresses the accounting for goodwill and intangible assets subsequent to
their acquisition (i.e., the post-acquisition accounting). The provisions of
SFAS 142 will be effective for fiscal years beginning after December 15,
2001. The most significant changes made by SFAS 142 are: (1) goodwill and
indefinite-lived intangible assets will no longer be amortized, (2) goodwill
will be tested for impairment at least annually at the reporting unit level,
(3) intangible assets deemed to have an indefinite life will be tested for
impairment at least annually, and (4) the amortization period of intangible
assets with finite lives will no longer be limited to forty years.
The adoption of SFAS No. 141 and 142 will not have a material effect on
the Company's consolidated financial position or results of operations.
In June 2001, the FASB issued SFAS No. 143 (SFAS 143), "Accounting for
Asset Retirement Obligations". SFAS 143 applies to legal obligations
associated with the retirement of long-lived assets that result from the
acquisition, construction, development of normal operation of a long-lived
asset. The provisions of SFAS 143 will be effective for fiscal years
beginning after June 15, 2002. Under SFAS 143: (1) retirement obligations,
measured at fair value, will be recognized when they are incurred and
displayed as liabilities, and (2) the associated asset retirement costs will
be capitalized as part of the carrying amount of the long-lived asset and
subsequently allocated to expense over the asset's useful life.
The Company does not anticipate the adoption of SFAS No. 143 to have a
material effect on its consolidated financial position or results of
operations.
In August 2001, the FASB issued SFAS No. 144 (SFAS 144), "Accounting
for the Impairment or Disposal of Long-Lived Assets" which supersedes both
FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-lived Assets to be Disposed Of" and the accounting and
reporting provisions of APB Opinion No. 30 (Opinion 30), "Reporting the
Results of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions", for the disposal of a segment of a business (as previously
defined in that Opinion). SFAS 144 retains the fundamental provisions in
SFAS 121 for recognizing and measuring impairment losses on long-lived assets
held for use and long-lived assets to be disposed of by sale, while also
resolving significant implementation issues associated with SFAS 121. For
example, SFAS 144 provides guidance on how a long-lived asset that is used as
part of a group should be evaluated for impairment, establishes criteria for
when a long-lived asset is held for sale, and prescribes the accounting for a
long-lived asset that will be disposed of other than by sale. SFAS 144
retains the basic provisions of Opinion 30 on how to present discontinued
operations in the income statement but broadens that presentation to include
a component of an entity (rather than a segment of a business). Unlike SFAS
121, an impairment assessment under SFAS 144 will never result in a write-
down of goodwill. Rather, goodwill is evaluated for impairment under SFAS
No. 142, "Goodwill and Other Intangible Assets".
The Company is required to adopt SFAS 144 no later than the year
beginning after December 15, 2001. Management does not expect the adoption
of SFAS 144 to have a material impact on the Company's financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The Company holds a diversified portfolio of investments that includes
cash, high quality commercial paper of maturities less than 90 days, US
Government debt obligations and money market, stock and bond mutual funds.
Except for cash, each of these investments is subject, in varying degrees, to
market risks, interest rate risks, economic risks and credit risks. These
risks, among others, can result in loss of principal. The majority of the
Company's investments consist of holdings in a money market mutual fund.
In addition, the Company is a limited partner in an investment limited
partnership (the "Partnership"). The investment objective of the
Partnership is to generate current income and capital appreciation while
minimizing the potential for loss of principal. The Partnership may use a
variety of investment strategies with the principle one being merger
arbitrage. In general, a merger arbitrage strategy involves purchasing the
stock of a company being acquired or merging with another company and selling
short the stock of the acquiring company. A particular merger arbitrage
transaction will either derive a profit or a loss depending on the price
differential between the price of the securities when purchased and the price
ultimately realized when the transaction is completed. The primary risk is
that a loss could result if the transaction is not completed. The Partnership
invests in a diversified portfolio of these types of transactions to minimize
risk of loss.
Stock warrants are accounted for under SFAS 133, "Accounting for
Derivative Instruments and Hedging Activities". The value of the warrants
is primarily based on the volatility of the underlying stock, the price of
the underlying stock and the time period until the warrants expire. The risk
to the value of the stock warrants predominately relates to the potential
change in volatility and price of the underlying stock.
Item 8. Financial Statements and Supplementary Data.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Peter Kiewit Sons', Inc.:
We have audited the accompanying consolidated balance sheet of Peter Kiewit
Sons', Inc. and subsidiaries as of December 29, 2001, and the related
consolidated statements of earnings, changes in redeemable common stock and
comprehensive income, and cash flows for the year then ended. In connection
with our audit of the consolidated financial statements, we have also audited
the financial statement schedule. These consolidated financial statements
and financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on
our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Peter
Kiewit Sons', Inc. and subsidiaries as of December 29, 2001, and the results
of their operations and their cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States
of America. Also in our opinion, the related financial statement schedule,
when considered in relation to the basic consolidated financial statements
taken as a whole, present fairly, in all material respects, the information
set forth therein.
KPMG LLP
Omaha, Nebraska
March 15, 2002
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Peter Kiewit Sons', Inc.
In our opinion, the accompanying consolidated balance sheet as of December
30, 2000 and the related consolidated statements of earnings, of changes in
redeemable common stock and comprehensive income, and of cash flows
for each of the two years in the period ended December 30, 2000 present
fairly, in all material respects, the financial position, results of
operations and cash flows of Peter Kiewit Sons', Inc. and its subsidiaries at
December 30, 2000 and for each of the two fiscal years in the period ended
December 30, 2000, in conformity with accounting principles generally
accepted in the United States of America. In addition, in our opinion, the
financial statement schedules listed in the accompanying index under Item
14(a)(2) on page 44 present fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in
the United States of America, which 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, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
PricewaterhouseCoopers LLP
Omaha, Nebraska
March 5, 2001
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
For the three fiscal years ended December 29, 2001
(dollars in millions, except per share data) 2001 2000 1999
- ---------------------------------------------------------------------------
Revenue $3,871 $4,463 $3,586
Cost of revenue (3,444) (4,138) (3,272)
------ ------ ------
427 325 314
General and administrative expenses (184) (170) (141)
Gain on sale of operating assets 20 17 20
------ ------ ------
Operating earnings 263 172 193
Other income (expense):
Investment income and equity earnings 16 13 -
Interest expense (3) (4) (7)
Gain on sale of partnership interest - 45 -
Other, net 11 33 35
------ ------ ------
24 87 28
------ ------ ------
Earnings before income taxes, minority interest
and discontinued operations 287 259 221
Minority interest in net earnings of subsidiaries,
net of tax (2) (1) (1)
Provision for income taxes (110) (97) (83)
------ ------ ------
Earnings from continuing operations 175 161 137
Discontinued operations:
Income from materials operations, net of income tax
expense of $-, $12 and $17 - 18 28
------ ------ ------
Net earnings $ 175 $ 179 $ 165
====== ====== ======
Earnings per share:
Continuing operations:
Basic $ 5.72 $ 4.97 $ 4.00
====== ====== ======
Diluted $ 5.49 $ 4.83 $ 3.91
====== ====== ======
Discontinued operations:
Basic $ - $ .57 $ .81
====== ====== ======
Diluted $ - $ .55 $ .80
====== ====== ======
Net earnings:
Basic $ 5.72 $ 5.54 $ 4.81
====== ====== ======
Diluted $ 5.49 $ 5.38 $ 4.71
====== ====== ======
See accompanying notes to consolidated financial statements.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 29, 2001 and December 30, 2000
(dollars in millions) 2001 2000
- -----------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 216 $ 302
Investments 108 7
Receivables, less allowance of $7 and $4 544 463
Unbilled contract revenue 115 97
Contract costs in excess of related revenue 41 58
Investment in construction joint ventures 112 93
Deferred income taxes 59 89
Other 12 10
---------- ----------
Total current assets 1,207 1,119
Property, plant and equipment, at cost:
Land 25 24
Buildings 64 60
Equipment 642 528
---------- ----------
731 612
Less accumulated depreciation and amortization (446) (424)
---------- ----------
Net property, plant and equipment 285 188
Other assets 102 94
---------- ----------
$ 1,594 $ 1,401
========== ==========
- -----------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 29, 2001 and December 30, 2000
(dollars in millions) 2001 2000
- -----------------------------------------------------------------------------
Liabilities and Redeemable Common Stock
Current liabilities:
Accounts payable, including retainage
of $63 and $56 $ 242 $ 223
Current portion of long-term debt 1 1
Accrued costs on construction contracts 154 150
Billings in excess of related costs and earnings 145 145
Accrued insurance costs 65 64
Accrued payroll 32 34
Other 39 22
---------- ----------
Total current liabilities 678 639
Long-term debt, less current portion 25 12
Deferred income taxes 30 20
Other liabilities 10 20
Minority interest 16 14
Preferred stock, no par value, 250,000 shares authorized,
no shares outstanding - -
Redeemable common stock ($679 million and $571 million aggregate redemption
value):
Common stock, $.01 par value, 125 million shares authorized
31,588,125 and 32,259,640 outstanding -
Additional paid-in capital 206 185
Accumulated other comprehensive loss (11) (7)
Retained earnings 640 518
---------- ----------
Total redeemable common stock 835 696
---------- ----------
$ 1,594 $ 1,401
========== ==========
- -----------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the three fiscal years ended December 29, 2001
(dollars in millions) 2001 2000 1999
Cash flows from operations:
Net earnings $ 175 $ 179 $ 165
Adjustments to reconcile net earnings to
net cash provided by operations:
Depreciation and amortization 74 72 73
Gain on sale of property, plant and
equipment and other investments, net (20) (8) (2)
Gain on sale of partnership interest - (45) -
Equity in earnings, net of distributions 2 (7) (13)
Change in other noncurrent liabilities (9) 7 -
Deferred income taxes 33 (8) (2)
Change in working capital items:
Receivables (61) (15) (41)
Unbilled contract revenue and contract
costs in excess of related revenue 4 (51) 10
Investment in construction joint ventures (19) 63 (8)
Other current assets - (1) 10
Accounts payable 19 4 42
Accrued construction costs and billings in
excess of revenue on uncompleted contracts 3 36 (16)
Accrued payroll (2) (2) -
Change in outstanding checks in excess of funds
on deposit (3) (20) 43
Other liabilities 1 (5) (8)
Other (4) 9 (18)
------- ------- -------
Net cash provided by operations 193 208 235
Cash flows from investing activities:
Proceeds from sales of available-for-sale
securities 3 - -
Proceeds from maturities of available-for-sale
securities 3 9 3
Purchases of available-for-sale securities (85) (5) (7)
Purchases of other investments (20) - -
Proceeds from sale of property, plant and
equipment 27 24 32
Acquisitions, net of cash acquired (38) (172) (36)
Proceeds from sale of partnership interest - 86 -
Capital expenditures (138) (90) (75)
Additions to notes receivable (2) (4) (2)
Payments received on notes receivable 6 4 5
------- ------- -------
Net cash used in investing activities $ (244) $ (148) $ (80)
- -----------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the three fiscal years ended December 29, 2001
(dollars in millions) 2001 2000 1999
Cash flows from financing activities:
Long-term debt borrowings $ 5 $ 5 $ 5
Payments on long-term debt (6) (4) (22)
Issuances of common stock 37 32 25
Repurchases of common stock (50) (64) (39)
Dividends paid (19) (18) (16)
Cash distributed in connection with
Materials spin-off - (47) -
-------- -------- --------
Net cash used in financing activities (33) (96) (47)
Effect of exchange rates on cash (2) - 3
-------- -------- --------
Net (decrease) increase in cash and
cash equivalents (86) (36) 111
Cash and cash equivalents at beginning of year 302 338 227
-------- -------- --------
Cash and cash equivalents at end of year $ 216 $ 302 $ 338
======== ======== ========
Supplemental disclosures of cash flow information:
Taxes paid $ 67 $ 124 $ 95
Interest paid $ 3 $ 5 $ 4
Non-cash investing activities:
- -----------------------------
Stock warrants received as part of a
contract settlement $ 23 $ - $ -
Non-cash financing activities:
Exchange of convertible debentures for materials
stock (Note 15) $ - $ (7) $ -
- -----------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Redeemable Common Stock and
Comprehensive Income
For the three fiscal years ended December 29, 2001
Accumulated
Other
(dollars in Compre- Total
millions) Redeemable Additional hensive Redeemable
Common Paid-In Income Retained Common
Stock Capital (Loss) Earnings Stock
- -------------------------------------------------------------------------
Balance at December
26, 1998 $ - $ 161 $ (22) $ 552 $ 691
Dividends (a) - - - (17) (17)
Issuance of stock - 25 - - 25
Repurchase of stock - (11) - (28) (39)
Comprehensive income:
Net earnings - - - 165 165
Other comprehensive income:
Foreign currency adjustment - - 1 - 1
Change in unrealized holding
loss, net of tax - - 11 - 11
-------
Total other comprehensive
income 12
-------
Total comprehensive income 177
----- ------- ------ ------- -------
Balance at December 25, 1999 - 175 (10) 672 837
Dividends (a) - - - (18) (18)
Issuance of stock - 32 - - 32
Repurchase of stock - (16) - (48) (64)
Exchange of Common Stock
for Materials Stock - (6) - (16) (22)
Materials spin-off - - - (251) (251)
Comprehensive income:
Net earnings - - - 179 179
Other comprehensive income:
Foreign currency adjustment - - - - -
Change in unrealized holding
loss, net of tax - - 3 - 3
-------
Total other comprehensive
Income 3
-------
Total comprehensive income 182
------- ------ ------ ------- -------
Balance at December 30, 2000 - 185 (7) 518 696
- ---------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Redeemable Common Stock and
Comprehensive Income
For the three fiscal years ended December 29, 2001
Accumulated
Other
(dollars in Compre- Total
millions) Redeemable Additional hensive Redeemable
Common Paid-In Income Retained Common
Stock Capital (Loss) Earnings Stock
- -------------------------------------------------------------------------
Dividends (a) - - - (19) (19)
Issuance of stock - 37 - - 37
Repurchase of stock - (16) - (34) (50)
Comprehensive income:
Net earnings - - - 175 175
Other comprehensive loss:
Foreign currency adjustment - - (4) - (4)
------
Total other comprehensive
Loss (4)
------
Total comprehensive income 171
------ ------ ------ ------ ------
Balance at
December 29, 2001 $ - $ 206 $ (11) $ 640 $ 835
====== ====== ====== ====== ======
- --------------------------------------------------------------------------
(a) Dividends per share include $.30, $.30 and $.27 for dividends
declared in 2001, 2000 and 1999, respectively, but paid in January of the
following year.
See accompanying notes to consolidated financial statements.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies:
Basis of Presentation:
The consolidated financial statements include the accounts of Peter Kiewit
Sons', Inc. ("the Company") and subsidiaries in which it has or had control.
Investments in construction joint ventures and partnerships are accounted for
under the equity method in the consolidated balance sheet. The Company
accounts for its share of the operations of the construction joint ventures
and partnerships on a pro rata basis in the consolidated statements of
earnings under Emerging Issues Task Force ("EITF") Issue No. 00-1 "Investor
Balance Sheet and Income Statement Display under the Equity Method for
Investments in Certain Partnerships and Other Ventures".
Revenue Recognition:
Construction Contracts:
The Company operates as a general contractor throughout North America and
engages in various types of construction projects for both public and private
owners. Credit risk is minimal with public (government) owners since the
Company ascertains that funds have been appropriated by the governmental
project owner prior to commencing work on public projects. Most public
contracts are subject to termination at the election of the government.
However, in the event of termination, the Company is entitled to receive the
contract price on completed work and reimbursement of termination-related
costs. Credit risk with private owners is minimized because of statutory
mechanics liens, which give the Company high priority in the event of lien
foreclosures following financial difficulties of private owners.
The construction industry is highly competitive and lacks firms with dominant
market power. A substantial portion of the Company's business involves
construction contracts obtained through competitive bidding. The volume and
profitability of the Company's construction work depends to a significant
extent upon the general state of the economies of North America and the volume
of work available to contractors. The Company's construction operations could
be adversely affected by labor stoppages or shortages, adverse weather
conditions, shortages of supplies or governmental action.
The Company uses the percentage of completion method of accounting. For
fixed-price construction contracts, an estimated percentage of completion for
each contract, as determined by the Company's engineering estimate based on
the amount of work performed, is applied to total estimated revenue. For
cost-plus construction contracts, the percentage of completion, based upon
costs incurred divided by projected costs, is applied to total estimated
profit. Provision is made for the entire amount of future estimated losses on
construction contracts in progress; claims for additional contract
compensation, however, are not reflected in the accounts until the period in
which such claims are allowed. Revisions in cost and profit estimates during
the course of the work are reflected in the accounting period in which the
facts which require the revision become known. It is at least reasonably
possible that cost and profit estimates will be revised in the near-term.
In accordance with industry practice, amounts realizable and payable under
contracts which may extend beyond one year are included in current assets and
liabilities.
Coal Sales Contracts:
The Company recognizes coal sales revenue at the time the product is
delivered and all contractual obligations have been satisfied.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
1. Summary of Significant Accounting Policies, Continued
Cash and Cash Equivalents:
Cash equivalents generally consist of highly liquid instruments purchased
with original maturities of three months or less. The securities are stated
at cost, which approximates fair value.
Outstanding checks in excess of funds on deposit in the amount of $78 million
and $81 million at December 29, 2001 and December 30, 2000 have been
reclassified to accounts payable.
Investments:
Available-for-Sale Securities:
The Company has classified all marketable securities and marketable non-
current investments not accounted for under the equity method as available-
for-sale. The amortized cost of the securities used in computing unrealized
and realized gains and losses is determined by specific identification. Fair
values are estimated based on quoted market prices for the securities on hand
or for similar investments. Net unrealized holding gains and losses are
reported as a separate component of accumulated other comprehensive income
(loss), net of tax. The Company continually evaluates its investments for
other than temporary declines in value. Several factors are analyzed in
evaluating investments including an analysis of the company, its industry,
valuation levels and subsequent developments. Unrealized losses that are
determined to be other than temporary are recognized in earnings.
Other:
The Company accounts for investments in limited investment partnerships under
the equity method of accounting.
Deferred Income Taxes:
Deferred income taxes are provided for the temporary differences between the
financial reporting basis and the tax basis of the Company's assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. A valuation allowance would be
recognized if it were anticipated that some or all of a deferred tax asset
would not be realized.
Property, plant and equipment:
Property, plant and equipment are recorded at cost. Depreciation for the
majority of the Company's property, plant and equipment is calculated using
accelerated methods. The estimated useful lives of the Company's property,
plant and equipment are as follows:
Buildings 5 - 39 years
Equipment 3 - 20 years
Intangible Assets:
Intangible assets primarily consist of amounts allocated upon purchase of
operations. Those assets are amortized on a straight-line basis over the
expected period of benefit, which does not exceed 20 years.
Long-Lived Assets:
The Company reviews the carrying amount of long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. Measurement of any impairment would include a
comparison of the present value of the estimated future operating cash flows
anticipated to be generated during the remaining life of the assets to the net
carrying value of the assets.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
1. Summary of Significant Accounting Policies, Continued
Accrued Insurance Costs:
The Company is self-insured for certain general, auto and worker's
compensation claims, and accrues for the estimated ultimate liability for
incurred losses, both reported and unreported. The Company bases its estimate
of loss on historic trends modified for recent events. It is at least
reasonably possible that the estimate of ultimate liability will be revised in
the near-term.
Redeemable Common Stock:
The Company accounts for its redeemable common stock under EITF Issue No. 87-
23 "Book Value Stock Purchase Plans".
Foreign Currencies:
The local currencies of foreign subsidiaries are the functional currencies for
financial reporting purposes. Assets and liabilities are translated into U.S.
dollars at year-end exchange rates. Revenue and expenses are translated using
average exchange rates prevailing during the year. Gains or losses resulting
from currency translation are recorded as adjustments to accumulated other
comprehensive income (loss).
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
1. Summary of Significant Accounting Policies, Continued:
Earnings Per Share:
Basic earnings per share has been computed using the weighted average
number of shares outstanding during each period. Diluted earnings per share
gives effect to convertible debentures considered to be dilutive common stock
equivalents. The potentially dilutive convertible debentures are calculated
in accordance with the "if converted" method. This method assumes that the
after-tax interest expense associated with the debentures is an addition to
income and the debentures are converted into equity with the resulting common
shares being aggregated with the weighted average shares outstanding.
2001 2000 1999
---- ---- ----
Earnings from continuing operations (in millions)$ 175 $ 161 $ 137
Earnings from discontinued operations - 18 28
-------- -------- --------
Net earnings available to common stockholders 175 179 165
Add: Interest expense, net of tax effect,
associated with convertible debentures 1 * *
-------- -------- --------
Net earnings for diluted shares $ 176 $ 179 $ 165
======== ======== ========
Total number of weighted average shares
outstanding used to compute basic
earnings per share (in thousands) 30,588 32,284 34,299
Additional dilutive shares assuming
conversion of convertible debentures 1,408 1,041 753
-------- -------- --------
Total number of shares used to compute
diluted earnings per share 31,996 33,325 35,052
======== ======== ========
Continuing operations:
Basic earnings per share $ 5.72 $ 4.97 $ 4.00
======== ======== ========
Diluted earnings per share $ 5.49 $ 4.83 $ 3.91
======== ======== ========
Discontinued operations:
Basic earnings per share $ - $ .57 $ .81
======== ======== ========
Diluted earnings per share $ - $ .55 $ .80
======== ======== ========
Net earnings:
Basic earnings per share $ 5.72 $ 5.54 $ 4.81
======== ======== ========
Diluted earnings per share $ 5.49 $ 5.38 $ 4.71
======== ======== ========
* Interest expense attributable to convertible debentures was less than $.5
million.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
1. Summary of Significant Accounting Policies, Continued:
Use of Estimates:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
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 and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
Recent Pronouncements:
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
133, "Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative instruments and
for hedging activities, effective January 1, 2001. Adoption of this
statement did not affect the Company's financial statements as the Company
had no derivative instruments or hedging activities as of December 31, 2000.
In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141 (SFAS 141), "Business Combinations", and No. 142 (SFAS 142),
"Goodwill and Other Intangible Assets".
SFAS 141 supersedes Accounting Principles Board Opinion No. 16 (APB 16),
"Business Combinations". The most significant changes made by SFAS 141 are:
(1) requiring that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001, (2) establishing specific
criteria for the recognition of intangible assets separately from goodwill,
and (3) requiring unallocated negative goodwill to be written off immediately
as an extraordinary gain (instead of being deferred and amortized).
SFAS 142 supersedes APB 17, "Intangible Assets". SFAS 142 primarily
addresses the accounting for goodwill and intangible assets subsequent to
their acquisition (i.e., the post-acquisition accounting). The provisions of
SFAS 142 will be effective for fiscal years beginning after December 15,
2001. The most significant changes made by SFAS 142 are: (1) goodwill and
indefinite-lived intangible assets will no longer be amortized, (2) goodwill
will be tested for impairment at least annually at the reporting unit level,
(3) intangible assets deemed to have an indefinite life will be tested for
impairment at least annually, and (4) the amortization period of intangible
assets with finite lives will no longer be limited to forty years.
The adoption of SFAS No. 141 and 142 will not have a material effect on the
Company's consolidated financial position or results of operations.
In June 2001, the FASB issued SFAS No. 143 (SFAS 143), "Accounting for Asset
Retirement Obligations". SFAS 143 applies to legal obligations associated
with the retirement of long-lived assets that result from the acquisition,
construction, development of normal operation of a long-lived asset. The
provisions of SFAS 143 will be effective for fiscal years beginning after
June 15, 2002. Under SFAS 143: (1) retirement obligations, measured at fair
value, will be recognized when they are incurred and displayed as
liabilities, and (2) the associated asset retirement costs will be
capitalized as part of the carrying amount of the long-lived asset and
subsequently allocated to expense over the asset's useful life.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
1. Summary of Significant Accounting Policies, Continued:
The Company does not anticipate the adoption of SFAS No. 143 to have a
material effect on its consolidated financial position or results of
operations.
In August 2001, the FASB issued SFAS No. 144 (SFAS 144), "Accounting for the
Impairment or Disposal of Long-Lived Assets" which supersedes both FASB
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-lived Assets to be Disposed Of" and the accounting and reporting
provisions of APB Opinion No. 30 (Opinion 30), "Reporting the Results of
Operations - Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions", for the disposal of a segment of a business (as previously
defined in that Opinion). SFAS 144 retains the fundamental provisions in
SFAS 121 for recognizing and measuring impairment losses on long-lived assets
held for use and long-lived assets to be disposed of by sale, while also
resolving significant implementation issues associated with SFAS 121. For
example, SFAS 144 provides guidance on how a long-lived asset that is used as
part of a group should be evaluated for impairment, establishes criteria for
when a long-lived asset is held for sale, and prescribes the accounting for a
long-lived asset that will be disposed of other than by sale. SFAS 144
retains the basic provisions of Opinion 30 on how to present discontinued
operations in the income statement but broadens that presentation to include
a component of an entity (rather than a segment of a business). Unlike SFAS
121, an impairment assessment under SFAS 144 will never result in a write-
down of goodwill. Rather, goodwill is evaluated for impairment under SFAS
No. 142, "Goodwill and Other Intangible Assets".
The Company is required to adopt SFAS 144 no later than the year beginning
after December 15, 2001. Management does not expect the adoption of SFAS 144
will have a material impact on the Company's financial statements.
Fiscal Year:
The Company has a 52-53 week fiscal year which ends on the last Saturday in
December. The years 2001 and 1999 were 52-week years and 2000 was a 53 week
year.
Reclassifications:
When appropriate, immaterial items within the consolidated financial
statements have been reclassified in the previous periods to conform to
current year presentation.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
2. Discontinued Operations:
In accordance with Accounting Principles Board Opinion No. 30
"Reporting the Results of Operations - Reporting the Effects of Disposal of
a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions" ("APB 30"), the consolidated statements
of earnings of the Company have been reclassified to reflect the spin-off of
the Company's materials business (the "Materials Business") that occurred on
September 30, 2000 (Note 15). Accordingly, the revenues, costs and expenses
of the Materials Business have been segregated in the Consolidated Statements
of Earnings. The net operating results of the Materials Business have been
reported as "Discontinued Operations" in the accompanying consolidated
financial statements.
Summarized financial information for the discontinued operations follows:
(dollars in millions) 2000 1999
- -----------------------------------------------------------------------------
Revenues $ 360 $ 437
======== ========
Income from discontinued operations (after
applicable income taxes of $13 and $17 $ 20 $ 28
Loss on disposal of business* (after applicable
income tax benefit of $1) (2) -
-------- --------
Income from discontinued operations $ 18 $ 28
======== ========
In connection with the spin-off, the Company distributed $352 million of
total assets, including $47 million of cash and total liabilities of $72
million.
*The loss on disposal of the Materials Business for the twelve months
ended December 30, 2000 reflects the costs directly associated with the
disposition.
3. Acquisitions:
On January 3, 2000, the Company acquired 100% of the outstanding common
stock and related assets of Solano Concrete Co., Inc., a materials operation
operating in the Northern California area, for $31 million. On August 4,
2000, the company acquired substantially all of the assets of Fort Calhoun
Stone Company, a limestone quarry located in Washington County, Nebraska, for
$42 million. During the first nine months of 2000, the Company also
acquired the assets of various materials operations for $7 million. Notes
payable of $2 million were issued in connection with the purchases. These
operations were included with the spin-off of the Company's Materials
Business (Note 15).
On September 26, 2000, the Company acquired 100% of Walnut Creek Mining
Company ("Walnut Creek"), a lignite mining business located in Robertson
County, Texas, for $94 million. The fair value of the identifiable assets
acquired and liabilities assumed was $110 million and $16 million,
respectively. Identifiable intangibles assets related to this purchase will
be amortized over their useful life of 15 years. No goodwill related to this
transaction was recorded.
On July 31, 2001, a subsidiary of the Company merged with General
Construction Company ("GCC"), a marine construction business located in
Poulsbo, Washington, pursuant to which the Company acquired 100% of the
outstanding common stock of GCC for $48 million. The results of GCC's
operations have been included in the consolidated financial statements since
that date. The merger occurred as part of the Company's plan to acquire
additional businesses.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
3. Acquisitions (Continued):
The following table summarizes the estimated fair value of the GCC
assets acquired and liabilities assumed at the date of acquisition.
As of
(dollars in millions) July 31, 2001
- -----------------------------------------------------------------------------
Current assets $ 28
Property and equipment 36
Non-tax deductible goodwill 18
---------
Total assets acquired 82
---------
Current liabilities 20
Long-term debt 5
Deferred taxes 9
---------
Total liabilities assumed 34
---------
Net assets acquired $ 48
=========
The following unaudited, pro-forma financial information assumes the
Walnut Creek and GCC acquisitions occurred at the beginning of the year 2000.
These results have been prepared for comparative purposes only and do not
purport to be indicative of what would have occurred had the acquisition been
made at the beginning of the year 2000, or the results which may occur in the
future.
(dollars in millions) 2001 2000
- ----------------------------------------------------------------------------
Revenue $ 3,940 $ 4,648
Net earnings $ 175 $ 190
Net earnings per share:
Basic $ 5.71 $ 5.87
Diluted $ 5.47 $ 5.71
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
4. Disclosures about Fair Value of Financial Instruments:
The following methods and assumptions were used to determine classification
and fair values of financial instruments:
Investments:
Investments consist of the following at December 29, 2001 and December 30,
2000:
(dollars in millions) 2001 2000
- ----------------------------------------------------------------------
Available-for-sale securities $ 87 $ 7
Investment in limited investment partnership 21 -
--------- --------
$ 108 $ 7
========= ========
The following summarizes the amortized cost, unrealized holding gains and
losses, and estimated fair values of available-for-sale securities at
December 29, 2001 and December 30, 2000:
Unrealized Unrealized
Amortized Holding Holding Fair
(dollars in millions) Cost Gains Losses Value
- -------------------------------------------------------------------------
2001
- ----
U.S. debt securities $ 2 $ - $ - $ 2
Mutual funds 85 - - 85
------ ------ ------ ------
Total $ 87 $ - $ - $ 87
====== ====== ====== ======
2000
- ----
U.S. debt securities $ 5 $ - $ - $ 5
Equity securities 2 - - 2
------ ------ ------ ------
Total $ 7 $ - $ - $ 7
====== ====== ====== ======
For debt securities, amortized costs do not vary significantly from principal
amounts. During 2001, realized gains on sales of available-for-sale
securities were $1 million. Realized and unrealized gains and losses on
sales of available-for-sale securities were each less than $1 million in
fiscal 2000 and 1999.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
4. Disclosures about Fair Value of Financial Instruments, Continued:
The contractual maturities of the debt securities are from one to five years.
The limited investment partnership invests in publicly traded securities with
readily determinable market values. The Company accounts for these
investments utilizing the equity method of accounting.
The equity security was an investment in a publicly traded company. During
2000 and 1999, the Company determined that the decline in market value of the
equity security was other-than-temporary. This investment was written down
to the current market value and losses of $9 million and $18 million,
respectively, were recognized in the Consolidated Statements of Earnings.
Prior to each write-down, this investment had been carried at market value
and the write-down had been recorded as an unrealized loss as a separate
component of accumulated other comprehensive income. This security was sold
during 2001 at a $1 million gain.
Retainage on Construction Contracts:
Receivables at December 29, 2001 and December 30, 2000 include approximately
$155 million and $116 million, respectively, of retainage on uncompleted
projects, the majority of which is expected to be collected within one year.
Included in the retainage amounts are $59 million and $29 million,
respectively, of securities which are being held by the owners of various
construction projects in lieu of retainage, which are not yet due. Also
included in accounts receivable are $1 million and $10 million, respectively,
of securities held by the owners which are now due as the contracts are
completed. Securities in the amount of $132 million are carried at fair
value which is determined based on quoted market prices for the securities on
hand or for similar investments. Net unrealized holding gains and losses, if
any, are reported as a separate component of accumulated other comprehensive
income (loss), net of tax. Securities in the amount of $23 million relate to
stock warrants which are carried at fair value. Such fair value is based on
a valuation model. Unrealized gains and losses are recognized as a component
of investment income in the Consolidated Statement of Earnings.
Long-term Debt:
The fair value of debt was estimated using the incremental borrowing rates of
the Company for debt of the same remaining maturities and approximates the
carrying amount.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
5. Investment in Construction Joint Ventures:
The Company has entered into a number of construction joint venture
arrangements. Under these arrangements, if one venturer is financially unable
to bear its share of the costs, the other venturers will be required to pay
those costs. The Company regularly evaluates the financial stability of its
business partners. Two partners defaulted on their joint venture
obligations, causing the Company to incur losses of $6 million during 2001,
recognize a recovery of $2 million during 2000 and incur losses of $8 million
during 1999. On September 27, 2000, the Company sold its 49% interest in the
Aker Gulf Marine construction partnership. The partnership engaged in the
engineering, construction, fabrication and installation of steel and concrete
structures.
Summary joint venture and partnership financial information follows:
Financial Position (dollars in millions) 2001 2000
- -----------------------------------------------------------------------------
Total Joint Ventures
Current assets $ 722 $ 755
Other assets (principally construction equipment) 101 101
------ ------
823 856
Current liabilities (630) (670)
------ ------
Net assets $ 193 $ 186
====== ======
Company's Share
Equity in net assets $ 116 $ 88
Payable (to) from joint ventures (4) 5
------ ------
Investment in construction joint ventures $ 112 $ 93
====== ======
Operations (dollars in millions) 2001 2000 1999
- -----------------------------------------------------------------------------
Total Joint Ventures and Partnership
Revenue $ 1,168 $ 1,129 $ 1,841
Costs 1,135 1,162 1,692
-------- -------- --------
Operating income (loss) $ 33 $ (33) $ 149
======== ======== ========
Company's Share
Revenue $ 647 $ 604 $ 908
Costs 622 627 833
-------- -------- --------
Operating income (loss) $ 25 $ (23) $ 75
======== ======== ========
Depreciation is computed by the joint ventures and partnership using
straight-line and declining balance methods over the estimated useful lives
of the assets which range from 3 to 7 years.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
6. Other Assets:
Other assets consist of the following at December 29, 2001 and December
30, 2000:
(dollars in millions) 2001 2000
- ---------------------------------------------------------------------------
Notes receivable $ 13 $ 15
Equity method investment 7 6
Other investments at cost - 3
Goodwill, net of accumulated amortization of
$13 and $11 25 8
Other intangibles, net of accumulated
amortization of $5 and $1 57 62
-------- --------
$ 102 $ 94
======== ========
The notes receivable are primarily non-interest bearing employee notes.
The equity method investment is a 33% interest in a concrete products
business that is not publicly traded and does not have a readily determinable
market value.
Financial data relating to the equity method investment is summarized below:
(dollars in millions) 2001 2000 1999
- ----------------------------------------------------------------------------
Current assets $ 17 $ 19
Property, plant and equipment, net 7 7
Other noncurrent assets 1 1
-------- --------
25 27
Current liabilities (6) (11)
-------- --------
Net assets $ 19 $ 16
======== ========
Equity in net assets $ 7 $ 6
======== ========
Revenue $ 50 $ 55 $ 37
======== ======== ========
Gross margin $ 8 $ 8 $ 7
======== ======== ========
Net earnings $ 3 $ 3 $ 3
======== ======== ========
Equity in net earnings $ 1 $ 1 $ 1
======== ======== ========
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
7. Long-Term Debt:
At December 29, 2001 and December 30, 2000, long-term debt consisted of
the following:
(dollars in millions) 2001 2000
- -----------------------------------------------------------------------------
6.28% - 8.25% Convertible debentures, due 2007-2011 $ 16 $ 11
Stockholder notes and other 10 2
------- -------
26 13
Less current portion 1 1
------- -------
$ 25 $ 12
======= =======
- -----------------------------------------------------------------------------
The convertible debentures are convertible during October of the fifth year
preceding their maturity date. Each annual series may be redeemed in its
entirety prior to the due date except during the conversion period. At
December 29, 2001, 1,616,814 shares of stock were reserved for future
conversions.
Scheduled maturities of long-term debt are as follows (in millions): 2002 -
$1; 2003 - $0; 2004 - $9; 2005 - $0, 2006 - $0 and 2007 and thereafter - $16.
8. Income Taxes:
An analysis of the income tax provision (benefit) relating to earnings before
income taxes, minority interest and discontinued operations for the three
years ended December 29, 2001 follows:
(dollars in millions) 2001 2000 1999
- ----------------------------------------------------------------------------
Current:
U.S. federal $ 64 $ 85 $ 72
Foreign 4 10 4
State 9 10 9
------- ------- -------
77 105 85
Deferred:
U.S. federal 30 (4) (6)
Foreign - (4) 2
State 3 - 2
------- ------- -------
33 (8) (2)
------- ------- -------
$ 110 $ 97 $ 83
======= ======= =======
The United States and foreign components of earnings, for tax reporting
purposes, before income taxes, minority interest and discontinued operations
follows:
(dollars in millions) 2001 2000 1999
- ---------------------------------------------------------------------------
United States $ 279 $ 254 $ 222
Foreign 8 5 (1)
------- ------- -------
$ 287 $ 259 $ 221
======= ======= =======
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
8. Income Taxes, Continued:
Income tax expense (benefit) is recorded in various places in the
Company's financial statements as detailed below:
(dollars in millions) 2001 2000 1999
- -----------------------------------------------------------------------------
Provision for income taxes $ 110 $ 97 $ 83
Minority interest in net
earnings of subsidiaries (1) - -
Discontinued operations - 12 17
Redeemable common stock:
Related to change in:
Foreign currency adjustment (2) - -
Unrealized holding gains/losses - 1 6
------- ------- --------
Total income tax expense $ 107 $ 110 $ 106
======= ======= ========
A reconciliation of the actual provision (benefit) for income taxes and the
tax computed by applying the U.S. federal rate (35%) to the earnings before
income taxes, minority interest and discontinued operations for the three
years ended December 29, 2001 follows:
(dollars in millions) 2001 2000 1999
- -----------------------------------------------------------------------------
Computed tax at statutory rate $ 100 $ 91 $ 77
State income taxes 9 6 7
Other 1 - (1)
-------- -------- --------
$ 110 $ 97 $ 83
======== ======== ========
Possible taxes, beyond those provided, on remittances of undistributed
earnings of foreign subsidiaries, are not expected to be significant.
The components of the net deferred tax assets for the years ended December
29, 2001 and December 30, 2000 were as follows:
2001 2000
(dollars in millions) Current Noncurrent Current Noncurrent
- ----------------------------------------------------------------------------
Deferred tax assets:
Construction accounting $ 4 $ 4 $ 8 $ 4
Joint venture investments 35 - 49 -
Insurance claims 26 1 27 -
Other 4 - 6 1
------- --------- ------- ---------
Total deferred tax assets 69 5 90 5
Deferred tax liabilities:
Asset bases/accumulated
depreciation - (17) - (6)
Other (10) (18) (1) (19)
------- --------- ------- ----------
Total deferred tax liabilities (10) (35) (1) (25)
------- --------- ------- ----------
Net deferred tax assets $ 59 $ (30) $ 89 $ (20)
======= ========= ======= ==========
Because of its historical earnings, its current backlog and various other
factors, the Company believes that it is more likely than not that its
deferred tax assets will be realized, therefore, no valuation allowance has
been established.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
9. Employee Benefit Plans:
The Company makes contributions, based on collective bargaining agreements
related to its construction operations, to several multi-employer union
pension plans. These contributions are included in the cost of revenue.
Under federal law, the Company may be liable for a portion of future plan
deficiencies; however, there are no known deficiencies.
Approximately 16% of the employees of the Company are covered under the
Company's profit sharing plan. The expense related to the profit sharing
plan was $2 million in 2001, $8 million in 2000 and $4 million in 1999.
The Company sponsors a 401(k) plan covering all domestic employees.
Employees may contribute up to 15% percent of their pay and the Company
generally does not provide matching contributions.
10. Redeemable Common Stock:
Ownership of Common Stock is restricted to certain employees conditioned upon
the execution of repurchase agreements which restrict the employees from
transferring the Common Stock. The Company is generally committed to
purchase all stock at the amount computed pursuant to its Restated
Certificate of Incorporation. Issuances and repurchases of Common Stock,
including conversions, for the three fiscal years ended December 29, 2001,
were as follows:
Balance at December 26, 1998 35,692,820
Shares issued in 1999 1,622,550
Shares repurchased in 1999 (2,438,652)
-----------
Balance at December 25, 1999 34,876,718
Shares issued in 2000 1,559,150
Shares repurchased in 2000 (4,176,228)
-----------
Balance at December 30, 2000 32,259,640
Shares issued in 2001 2,130,210
Shares repurchased in 2001 (2,801,725)
-----------
Balance at December 29, 2001 31,588,125
===========
11. Segment and Geographic Data:
The Company primarily operates in the construction industry and currently has
one reportable operating segment. The Construction segment performs services
for a broad range of public and private customers primarily in North America.
Construction services are performed in the following construction markets:
transportation (including highways, bridges, airports, railroads and mass
transit), commercial buildings, water supply, sewage and waste disposal,
dams, mining, power, telecommunication infrastructure, heating and cooling,
and oil and gas. As described in Note 2, the Company has reclassified the
results of operations of its Materials Business as discontinued operations.
The Materials Business was previously disclosed as a separate operating
segment. The following segment data have been restated to exclude amounts
related to the Materials Business.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
11. Segment and Geographic Data (Continued):
Intersegment sales are recorded at cost. Operating earnings is comprised of
net sales less all identifiable operating expenses, allocated general and
administrative expenses, gain on sale of operating assets, depreciation and
amortization. Investment income, interest expense and income taxes have been
excluded from segment operations. The management fee earned by the Company
as described in Note 12 is excluded from the segment information that follows
as it is included in other income on the Consolidated Statements of Earnings
and not included in operating earnings. Segment asset information has not
been presented as it is not reported to or reviewed by the chief operating
decision maker.
Segment Data 2001 2000 1999
(dollars in
millions) Construction Other Construction Other Construction Other
- ----------- ------------ ----- ------------ ----- ------------ -----
Revenue-external
customers $ 3,829 $ 42 $ 4,451 $ 12 $ 3,586 $ -
======== ===== ======== ===== ======== ====
Depreciation and
amortization $ 62 $ 9 $ 53 $ 2 $ 54 $ -
======== ===== ======== ===== ======== ====
Operating earnings $ 252 $ 11 $ 174 $ (2) $ 193 $ -
======== ===== ======== ===== ======== ====
Geographic Data (dollars in millions) 2001 2000 1999
- ----------------------------------------------------------------------------
Revenue, by location of services provided:
United States $ 3,649 $ 4,269 $ 3,480
Canada 222 194 87
Other - - 19
-------- -------- --------
$ 3,871 $ 4,463 $ 3,586
======== ======== ========
Long-lived assets:
United States $ 279 $ 184 $ 239
Canada 6 4 4
-------- -------- --------
$ 285 $ 188 $ 243
======== ======== ========
During 2001 and 2000, revenue recognized from Level 3 Communications, Inc.
represented 20.1% and 39.8%, respectively, of the Company's total revenue.
12. Management Fees:
During 2001, 2000 and 1999, the Company managed two, three and three active
coal mines, respectively. Fees for these services were $5 million, $29
million and $33 million for 2001, 2000 and 1999, respectively. The Company's
fee is a percentage of adjusted operating earnings of the coal mines, as
defined in the mine management agreement. The mines managed by the Company
earn the majority of their revenues under long-term contracts. The remainder
of the mines' sales are made on the spot market where prices are
substantially lower than those of the long-term contracts.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
13. Other Comprehensive Income (Loss):
Other comprehensive income (loss) consisted of the following (dollars in
millions):
Tax
(Expense)
Before Tax of Benefit After Tax
---------- ---------- ---------
For the year ended December 29, 2001
Foreign currency translation adjustments $ (6) $ 2 $ (4)
--------- --------- --------
Other comprehensive loss December 29, 2001$ (6) $ 2 $ (4)
========= ========= ========
For the year ended December 30, 2000
Unrealized holding loss:
Unrealized holding losses arising during
the period $ (5) $ 2 $ (3)
Less reclassification adjustment for losses
realized in net earnings 9 (3) 6
--------- --------- --------
Other comprehensive income
December 30, 2000 $ 4 $ (1) $ 3
========= ========= ========
For the year ended December 25, 1999
Foreign currency translation adjustments $ 1 $ - $ 1
--------- --------- --------
Unrealized holding loss:
Unrealized holding losses arising during
period (1) - (1)
Less reclassification adjustment for losses
realized in net earnings 18 (6) 12
--------- --------- --------
17 (6) 11
--------- --------- --------
Other comprehensive income
December 25, 1999 $ 18 $ (6) $ 12
========= ========= ========
- ----------------------------------------------------------------------------
Accumulated other comprehensive income (loss) consisted of the following
(dollars in millions):
Foreign Unrealized Accumulated
Currency Holding Other
Translation Gain/(Loss) Comprehensive
Adjustments on Securities Income (Loss)
----------- ------------- -------------
Balance at December 26, 1998 $ (8) $ (14) $ (22)
Change during the year 1 11 12
------ ------ ------
Balance at December 25, 1999 (7) (3) (10)
Change during the year - 3 3
------ ------ ------
Balance at December 30, 2000 (7) - (7)
Change during the year (4) - (4)
------ ------ ------
Balance at December 29, 2001 $ (11) $ - $ (11)
====== ====== ======
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
14. Related Party Transactions:
Included in trade accounts receivable at December 29, 2001 is $10 million of
receivables with related parties.
15. Other Matters:
Materials Spin-Off:
On September 30, 2000, the Company distributed all of the 32,288,840
shares of common stock of its former subsidiary, Kiewit Materials Company
("Materials"), it then held to stockholders of the Company in a Spin-off (the
"Materials Spin-off"). In the Materials Spin-off, each stockholder of the
Company received one share of Materials common stock ("Materials Stock") for
each share of Common Stock they held on the record date for the Materials
Spin-off. Prior to the Materials Spin-off, the Company also completed a
share exchange offer and debenture exchange offer, pursuant to which holders
of Common Stock and the Company's convertible debentures collectively
exchanged 1,081,226 shares of Common Stock and $13,095,000 principal amount
of the Company's convertible debentures for: (1) 4,055,029 shares of
Materials Stock; (2) $670,000 principal amount of Materials convertible
debentures; and (3) $5,475,045 principal amount of the Company's new reduced
principal convertible debentures. As a result of the Materials Spin-off, the
Company and Materials now operate as two separate independent companies.
In connection with the Materials Spin-off, Materials and the Company
entered into various agreements including a Separation Agreement (the
"Materials Separation Agreement") and a Tax Sharing Agreement (the "Materials
Tax Sharing Agreement").
The Materials Separation Agreement provides for the allocation of
certain risks and responsibilities between Materials and the Company and for
cross-indemnifications that are intended to allocate financial responsibility
to the Company for liabilities arising out of the construction business and
to allocate to Materials liabilities arising out of the Materials Businesses.
Under the Materials Tax Sharing Agreement, with respect to periods, or
portions thereof, ending on or before the Materials Spin-off, Materials and
the Company generally will be responsible for paying the taxes relating to
such returns, including any subsequent adjustments resulting from the
redetermination of such tax liabilities by the applicable taxing authorities,
that are allocable to the Materials Business and construction business,
respectively. The Materials Tax Sharing Agreement also provides that
Materials and the Company will indemnify the other from certain taxes and
expenses that would be assessed if the Materials Spin-off were determined to
be taxable, but solely to the extent that such determination arose out of the
breach by Materials or the Company, respectively, of certain representations
made to the Internal Revenue Service in connection with the private letter
ruling issued with respect to the Materials Spin-off.
Disposition:
On September 27, 2000, the Company sold its interest in the Aker Gulf
Marine partnership for $86 million. A gain of $45 million was recognized in
the Statement of Earnings
Other:
On April 25, 2001, Bibb and Associates, Inc. ("Bibb"), a subsidiary of
the Company, was served with a complaint (the "Complaint") filed in the
Circuit Court of Jackson County, Missouri (the "Court"), in an action
brought by Kansas City Power & Light ("KCPL") with respect to a January 13,
1999 explosion at KCPL's Hawthorn No. 5 power plant. The Complaint lists a
total of 13 defendants, and generally alleges as to Bibb, strict liability,
negligence, professional gross negligence, fraud, negligent misrepresentation
and wrongful inducement to contract. The Complaint also names the Company,
and alleges that the Company is either the alter ego of Bibb or the successor
to Bibb's liability. The Complaint alleges damages in excess of $450 million
including property damage, costs of replacement of power and lost profits.
On October 18, 2001, the Company filed a motion to dismiss the action for
lack of personal jurisdiction. During February 2002, the Company's motion
was overruled, and the Court ordered the parties to proceed with discovery.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
15. Other Matters (Continued):
The Company believes that the factual allegations and legal claims asserted
against Bibb and the Company by KCPL are without merit and intends to
vigorously defend them.
The Company is involved in various other lawsuits and claims incidental to
its business. Management believes that any resulting liability, beyond that
provided, should not materially affect the Company's financial position,
future results of operations or future cash flows.
The Company leases mineral properties, buildings and equipment under
noncancelable operating lease agreements.
Future minimum lease commitments are as follows (dollars in millions):
2002 $ 7
2003 5
2004 4
2005 4
2006 3
Thereafter 9
--------
$ 32
========
It is customary in the Company's industry to use various financial
instruments in the normal course of business. These instruments include
items such as letters of credit. Letters of credit are conditional
commitments issued on behalf of the Company in accordance with specified
terms and conditions. The Company has informal arrangements with a number of
banks to provide such commitments. As of December 29, 2001, the Company had
outstanding letters of credit of approximately $172 million.
PETER KIEWIT SONS', INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
16. Quarterly Information (Unaudited):
(dollars in millions, March June September December
except per
share data) 2001 2000 2001 2000 2001 2000 2001 2000
- ----------------------------------------------------------------------------
Revenue $ 972 $ 986 $ 968 $1,189 $1,004 $1,314 $ 927 $ 974
====== ====== ====== ====== ====== ====== ====== =====
Gross profit $ 46 $ 44 $ 75 $ 95 $ 84 $ 51 $ 222 $ 135
====== ====== ====== ====== ====== ====== ====== =====
Income from
continuing operations $ 5 $ 11 $ 27 $ 42 $ 26 $ 40 $ 117 $ 68
Income from
discontinued operations - 3 - 8 - 7 - -
------ ------ ------ ------ ------ ------ ------ -----
Net earnings $ 5 $ 14 $ 27 $ 50 $ 26 $ 47 $ 117 $ 68
====== ====== ====== ====== ====== ====== ====== =====
Earnings per common share - basic:
Income from
continuing operations $ .17 $ .34 $ .91 $ 1.32 $ .84 $ 1.20 $ 3.69 $2.11
Income from
discontinued operations - .11 - .25 - .22 - -
------ ------ ------ ------ ------ ------ ------ -----
Net earnings $ .17 $ .45 $ .91 $ 1.57 $ .84 $ 1.42 $ 3.69 $2.11
====== ====== ====== ====== ====== ====== ====== =====
Earnings per common share - diluted:
Income from
continuing operations $ .16 $ .34 $ .88 $ 1.28 $ .81 $ 1.17 $ 3.52 $2.04
Income from
discontinued operations - .10 - .24 - .21 - -
------ ------ ------ ------ ------ ------ ------ -----
Net earnings $ .16 $ .44 $ .88 $ 1.52 $ .81 $ 1.38 $ 3.52 $2.04
====== ====== ====== ====== ====== ====== ====== =====
Dividends paid
per share $ .30 $ .27 $ .35 $ .28 $ - $ - $ - $ -
====== ====== ====== ====== ====== ====== ====== =====
During the normal course of business, the Company settles claims and
recognizes income in the period in which such claims are settled. During
December 2001, the Company settled a claim which significantly impacted
fourth quarter earnings.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosures.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Item 13. Certain Relationships and Related Transactions.
The information required by Part III is incorporated by reference to the
Company's definitive proxy statement for the 2002 Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission.
However, certain information is set forth in Item 4A "Executive Officers of
the Registrant" above.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-
K.
(a) The following documents are filed as part of this report:
1. Consolidated Financial Statements as of December 29, 2001 and December
30, 2000 and for the three years ended December 29, 2001:
Independent Auditors' Report dated March 15, 2002 of KPMG LLP
Report of Independent Accountants dated March 5, 2001 of
PricewaterhouseCoopers LLP
Consolidated Statements of Earnings
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Redeemable Common Stock and
Comprehensive Income
Notes to Consolidated Financial Statements
2. Financial Statement Schedules for the three years ended December 29,
2001:
II - Valuation and Qualifying Accounts and Reserves
Schedules not indicated above have been omitted because of the absence of the
conditions under which they are required or because the information called
for is shown in the consolidated financial statements or the notes thereto.
3. Exhibits required by Item 601 of Regulation S-K. Exhibits
incorporated by reference are indicated in parentheses:
Exhibit
Number Description
3.1 Restated Certificate of Incorporation, effective June 19, 1999
(Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999).
3.2 Amended and Restated By-laws, effective June 19, 1999 (Exhibit 3.2
to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999).
4.1 Form of Stock Repurchase Agreement for Employee Stockholders
(Exhibit 1 to the Company's Registration Statement on Form 8-A
filed March 24, 1998).
4.2 Indenture dated as of July 1, 1986, as amended pursuant to a First
Supplemental Indenture dated as of March 31, 1998 (Exhibit 4.3 to
the Company's Registration Statement on Form S-8 filed October 5,
1998).
4.3 Form of Debenture (Exhibit 4.4 to the Company's Registration
Statement on Form S-8 filed October 5, 1998).
4.4 Form of Repurchase Agreement for Convertible Debentures (Exhibit
4.5 to the Company's Registration Statement on Form S-8 filed
October 5, 1998).
21 List of Subsidiaries of the Company.
(b) Reports on Form 8-K.
Current Report on Form 8-K dated October 10, 2001 reporting the
dismissal of PricewaterhouseCoopers LLP as the Company's principal independent
accountant for the fiscal year ended December 29, 2001, and the engagement of
KPMG LLP, which Report was filed with the Securities and Exchange Commission
on October 12, 2001.
Schedule II
Valuation and Qualifying Accounts and Reserves
Additions
Balance Charged to Amounts Balance
Beginning Costs and Charged to End of
(dollars in millions) Of Period Expenses Reserves Other* Period
- -----------------------------------------------------------------------------
Year ended December 29, 2001
Allowance for doubtful
trade accounts $ 4 $ 4 $ (1) $ - $ 7
Reserves:
Insurance claims $ 64 $ 18 $ (20) $ 2 $ 64
Year ended December 30, 2000
Allowance for doubtful
trade accounts $ 7 $ 2 $ (4) $ (1) $ 4
Reserves:
Insurance claims $ 84 $ - $ (11) $ (9) $ 64
Year ended December 25, 1999
Allowance for doubtful
trade accounts $ 5 $ 3 $ (1) $ - $ 7
Reserves:
Insurance claims $ 81 $ 23 $ (20) $ - $ 84
- -----------------------------------------------------------------------------
* On September 30, 2000, as discussed in Note 2, the Company spun-off its
Materials Business. On July 31, 2001, as discussed in Note 3, the Company
acquired a marine construction business.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
PETER KIEWIT SONS', INC.
By: /s/ Tobin A. Schropp
Date: March 22, 2002 Tobin A. Schropp, Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Name Title Date
---- ----- ----
Chairman of the Board and
/s/ Kenneth E. Stinson Chief Executive Officer
Kenneth E. Stinson (Principal Executive Officer) March 22, 2002
Vice President
/s/ Michael J. Piechoski (Principal Financial Officer) March 22, 2002
Michael J. Piechoski
Controller
/s/ Gregory D. Brokke (Principal Accounting Officer) March 22, 2002
Gregory D. Brokke
/s/ Mogens C. Bay Director March 22, 2002
Mogens C. Bay
/s/ Roy L. Cline Director March 22, 2002
Roy L. Cline
/s/ Richard W. Colf Director March 22, 2002
Richard W. Colf
/s/ James Q. Crowe Director March 22, 2002
James Q. Crowe
/s/ Richard Geary Director March 22, 2002
Richard Geary
/s/ Bruce E. Grewcock Director March 22, 2002
Bruce E. Grewcock
/s/ William L. Grewcock Director March 22, 2002
William L. Grewcock
/s/ Allan K. Kirkwood Director March 22, 2002
Allan K. Kirkwood
/s/ Michael R. McCarthy Director March 22, 2002
Michael R. McCarthy
/s/ Douglas E. Patterson Director March 22, 2002
Douglas E. Patterson
/s/ Walter Scott, Jr. Director March 22, 2002
Walter Scott, Jr.
/s/ George B. Toll, Jr. Director March 22, 2002
George B. Toll, Jr.