SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
October 7, 1999
(Date of earliest event reported)
KINDER MORGAN, INC.
(Exact name of registrant as specified in its charter)
Kansas 1-6446 48-0290000
(State or other juri (Commission (I.R.S. Employer
sdiction File Number) Identification No.)
of incorporation)
1301 McKinney, Suite 3400
Houston, Texas 77010
(Address of principal executive offices, including zip code)
713-844-9500
(Registrant's telephone number, including area code)
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements.
The financial statements of Kinder Morgan, Inc., a
Delaware corporation ("Kinder Morgan - Delaware"), as of
September 30, 1999, and for the nine months ended
September 30, 1999, are included herein commencing on
page F-1.
(b) Pro Forma Financial Information.
The pro forma financial statements of Kinder Morgan,
Inc., a Kansas corporation ("Kinder Morgan"), giving
effect to the acquisition by merger of Kinder Morgan -
Delaware as of September 30, 1999, and for the nine
months ended September 30, 1999, are included herein
commencing on page PF-1.
(c) Exhibits.
The following materials are filed as exhibits to this
Current Report on Form 8-K.
Exhibit
Number Description
2.1 Agreement and Plan of Merger
dated July 8, 1999, by and Kinder
Morgan, Rockies Merger Corp. and Kinder
Morgan - Delaware (incorporated by
reference to Annex A-1 of Kinder Morgan's
Registration Statement on Form S-4 filed
on August 23, 1999 (File No. 333-
85747)).
2.2 First Amendment to the
Agreement and Plan of Merger dated
August 20, 1999, by and among Kinder
Morgan, Rockies Merger Corp. and Kinder
Morgan - Delaware (incorporated by
reference to Annex A-2 of the Kinder
Morgan's Registration Statement on Form S-
4 filed on August 23, 1999 (File No. 333-
85747)).
KINDER MORGAN, INC. (KINDER MORGAN - DELAWARE)
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts and number of shares)
<TABLE>
<CAPTION>
December 31 September 30
------------- -------------
1998 1999
---- ----
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 13,873 $ 435
Accounts Receivable - Related Party 13,645 8,680
Prepaid Expenses 1,126 3,399
---------- ----------
Total Current Assets 28,644 12,514
Investment in Partnership 41,959 45,421
Deferred Charges and Other Assets 3,679 5,890
---------- ----------
Total Assets $ 74,282 $ 63,825
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 1,387 $ 2,522
Notes Payable - 148,600
Accrued Liabilities 13,634 8,465
Accrued Taxes 1,556 -
---------- ----------
Total Current Liabilities 16,577 159,587
Long-term Debt 100,000 -
---------- ----------
Total Liabilities 116,577 159,587
---------- ----------
Commitments and Contingencies (Note 3)
Stockholders' Equity:
Series A Common Stock, Par Value $.01, 25,000
Shares
Authorized, 8,047 Issued and Outstanding * *
Series B Common Stock, Par Value $.01, 25,000
Shares
Authorized, 2,541 Issued and Outstanding * *
Retained Earnings (Deficit) (42,295) (95,762)
Total Stockholders' Equity (Deficit) (42,295) (95,762)
---------- ----------
Total Liabilities and Stockholders' Equity $ 74,282 $ 63,825
========== ==========
* Rounds to Zero
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-1
KINDER MORGAN, INC. (KINDER MORGAN - DELAWARE)
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts and number of shares)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
------------------------------
1998 1999
---- ----
(unaudited)
<S> <C> <C>
Partnership Income $ 25,935 $ 44,396
---------- ----------
Operating Expenses:
Depreciation and Amortization 341 769
General and Administrative 420 1,706
---------- ----------
Total Operating Expenses 761 2,475
---------- ----------
Operating Income 25,174 41,921
---------- ----------
Other Income (Expense):
Interest Expense (2,578) (7,717)
Interest Income 564 172
Other, Net (71) (62)
---------- ----------
Total Other Income (Expense) (2,085) (7,607)
---------- ----------
Income Before Income Taxes 23,089 34,314
Income Taxes 8,349 13,195
---------- ----------
Net Income $ 14,740 $ 21,119
========== ==========
Earnings Per Common Share
Basic and Diluted $ 1,392.14 $ 1,994.62
========== ==========
Number of Common Shares Used
in Calculation 10,588 10,588
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-2
KINDER MORGAN, INC. (KINDER MORGAN - DELAWARE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
------------------------------
1998 1999
---- ----
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 14,740 $ 21,119
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 341 769
Distributions from Investment in Partnership 19,667 41,084
Equity in Earnings of Partnership (25,935) (44,396)
Changes in Components of Working Capital:
Accounts Receivable (6,552) 4,965
Prepaid Expense (2,284) (1,761)
Accounts Payable 1,707 1,134
Accrued Liabilities 6,678 (5,622)
Accrued Taxes (1,228) 317
Other, Net 583 (3,516)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,717 14,093
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Contributions to Partnership Investments (12,488) (156)
Property Additions * *
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (12,488) (156)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Borrowings 103,850 70,825
Payment of Long-term Debt (14,550) (22,225)
Dividends Paid (74,294) (75,000)
Debt Issuance Costs (1,794) (975)
---------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING 13,212 (27,375)
ACTIVITIES
---------- ----------
Increase (Decrease) in Cash and Cash Equivalents 8,441 (13,438)
Cash and Cash Equivalents, Beginning of Period 165 13,873
---------- ----------
Cash and Cash Equivalents, End of Period $ 8,606 $ 435
========== ==========
*Rounds to Zero
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
KINDER MORGAN, INC. (KINDER MORGAN - DELAWARE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Basis of Presentation
Kinder Morgan, Inc. (Kinder Morgan - Delaware or the Company),
formerly KC Liquids Holding Corporation, was formed in October
1996. From October 1996 to February 1997, the Company had no
operations or activities. Effective February 14, 1997,
the Company acquired all of the issued and outstanding stock of
Enron Liquids Pipeline Company (ELPC or the Predecessor Company)
and renamed it Kinder Morgan G.P., Inc. (KMGP). KMGP owns approximately
3.8% and 8.1% of Kinder Morgan Energy Partners, L.P. (the Partnership)
as of September 30, 1999 and 1998, respectively. At September 30, 1999
and 1998, the ownership interest consists of 2% general partner
interests and 862,000 common units of the Partnership. The Company's
acquisition of KMGP was accounted for under the purchase method of
accounting. The purchase price of KMGP was approximately $21,745,000.
The unaudited consolidated financial statements as of September
30, 1999 and for the nine-month period then ended have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they reflect all
adjustments which are, in the opinion of management, necessary for a
fair presentation of the financial results for the interim periods. Certain
information and notes normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations. The Company believes, however, that the disclosures
are adequate to make the information presented not misleading.
2. Debt
On February 14, 1997, the Company entered into a borrowing agreement
with First Union National Bank (First Union) in connection with the
acquisition of the common stock of KMGP. Pursuant to this agreement,
the Company issued two notes in the aggregate amount
of $15,000,000, bearing interest, at the Company's option, at either
First Union's Base Rate plus one-half of 1% or LIBOR plus 2.5%. The
notes were payable August 31, 1999. Effective December 31, 1997,
the borrowing agreement was amended to provide a $15,000,000 facility
note in place of the two notes issued February 14, 1997. The borrowing
agreement was amended again in 1998 and 1999 to provide a term loan
commitment for an additional $85 million and $65 million, respectively, for
an aggregate commitment of $165 million. Along with the increased
borrowing, the interest rate was changed to First Union's Base
Rate plus one-half of one percent or LIBOR plus three percent and
the maturity date was changed to May 31, 2000. Kinder Morgan -
Delaware has pledged the stock of KMGP and KMGP's assets as
collateral for this term loan commitment. At December 31, 1998
and September 30, 1999, Kinder Morgan - Delaware had principal
amounts outstanding of $100 million and $148.6 million,
respectively. The carrying amounts of the long-term debt based
upon prevailing interest rates available to Kinder Morgan -
Delaware at September 30, 1999, approximated fair value.
Subsequent to September 30, 1999, all borrowings under this
credit agreement were repaid.
F-4
3. Litigation, Commitments and Contingencies
Through its investment in KMGP, in the ordinary course of
business, the Company is a defendant in various lawsuits relating
to the Partnership's assets. Although no assurance can be given,
the Company believes, based on its experience to date, that the
ultimate resolution of such items will not have a material,
adverse impact on the Company's financial position or its results
of operations.
Environmental
KMGP is a defendant in two proceedings (one by the State of
Illinois and one by the Department of Transportation) relating to
alleged environmental violations for events relating to a fire
that occurred at the Morris storage field in September 1994.
Although no assurance can be given, the Company believes the
ultimate resolution of these matters will not have a material,
adverse effect on the Partnership's financial position, results
of operations, or its ability to pay cash distributions to KMGP.
The Partnership is subject to environmental cleanup and
enforcement actions from time to time. In particular, the federal
Comprehensive Environmental Response, Compensation and Liability
Act (CERCLA or Superfund law) generally imposes joint and several
liability for cleanup and enforcement costs, without regard to
fault or the legality of the original conduct, on current or
predecessor owners and operators of a site. The operations of the
Partnership are also subject to federal, state and local laws and
regulations relating to protection of the environment. Although
the Partnership believes its operations are in general compliance
with applicable environmental regulations, risks of additional
costs and liabilities are inherent in pipeline and terminal
operations, and there can be no assurance significant costs and
liabilities will not be incurred by the Partnership. Moreover, it
is possible that other developments, such as increasingly
stringent environmental laws, regulations and enforcement
policies thereunder, and claims for damages to property or
persons resulting from the operations of the Partnership, could
result in substantial costs and liabilities to the Partnership
which could affect future cash distributions to KMGP.
The Partnership, along with several other respondents, is
involved in a cleanup in connection with an acquisition made in
1998. This cleanup, ordered by the United States Environmental
Protection Agency (EPA), related to ground water contamination in
the vicinity of the Partnership's storage facilities and truck
loading terminal at Sparks, Nevada. The EPA approved the
respondents' remediation plan in September 1992 and the
remediation system began operation in 1995. In addition, the
Partnership is presently involved in 18 ground water hydrocarbon
remediation efforts under administrative orders issued by the
California Regional Water Quality Control Board and two other
state agencies. Although no assurance can be given, KMGP believes
the ultimate resolutions of these matters will not have a
material, adverse effect on the Partnership's financial position,
result of operations, or its ability to pay cash distributions to
KMGP.
FERC
The Partnership and certain of its subsidiaries are defendants in
several actions in which the plaintiffs protest pipeline
transportation rates with the Federal Energy Regulatory
Commission (FERC). These actions are currently pending. The
Plaintiffs seek to recover transportation overpayments and
interests.
F-5
The Company is not able to predict with certainty whether
settlement agreements will be completed with some or all of the
complainants, the final terms of any such settlement agreements
that may be consummated, or the final outcome of the FERC
proceedings should they be carried through to their conclusion,
and it is possible that current or future proceedings could be
resolved in a manner adverse to the Partnership which could
affect future cash distributions to KMGP.
4. Subsequent Event
On October 7, 1999, Kinder Morgan completed its acquisition by
merger of Kinder Morgan - Delaware. The combined company has
been renamed Kinder Morgan, Inc. and trades under the New York
Stock Exchange symbol "KMI." Kinder Morgan - Delaware is the
sole stockholder of Kinder Morgan G.P., Inc., the Partnership's
general partner.
In the combination, Kinder Morgan issued an aggregate of
approximately 41.5 million shares of Kinder Morgan stock to the
stockholders of Kinder Morgan - Delaware in exchange for all of
the outstanding shares of Kinder Morgan - Delaware. The combined
entity (including the Partnership) has an enterprise value of
approximately $10.0 billion.
F-6
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements
have been prepared from the historical financial statements of
Kinder Morgan, Inc. ("Kinder Morgan", a Kansas Corporation,
formerly K N Energy, Inc.) and Kinder Morgan, Inc. ("Kinder
Morgan - Delaware", a Delaware Corporation) to give effect to the
combination of these entities by merger. The unaudited pro forma
combined balance sheet reflects adjustments as if the merger had
occurred on September 30, 1999. The unaudited pro forma combined
statement of income for the nine months ended September 30, 1999,
reflects adjustments as if the merger had occurred on January 1,
1998. The pro forma adjustments reflected in the accompanying
unaudited pro forma combined financial statements were prepared
using the purchase method of accounting. The pro forma
adjustments are based on preliminary estimates and certain
assumptions that Kinder Morgan believes are reasonable under the
circumstances. The preliminary allocation of the purchase price
to assets acquired and liabilities assumed reflects the
assumption that assets and liabilities, other than the investment
in Kinder Morgan Energy Partners, are carried at historical
amounts which approximate fair market value. The excess of the
purchase price over Kinder Morgan - Delaware's share of the
underlying equity in the net assets of Kinder Morgan Energy
Partners, calculated as of September 30, 1999, has been fully
allocated to the Kinder Morgan - Delaware investment in Kinder
Morgan Energy Partners. This allocation reflects the estimated
fair market value of this investment. The actual allocation of
the consideration paid by Kinder Morgan for Kinder Morgan -
Delaware may differ from that reflected in the unaudited pro
forma combined financial statements after a more extensive
review of the fair market values of the assets acquired and
liabilities assumed has been completed.
The unaudited pro forma combined financial statements do not
purport to present the financial position or results of
operations of Kinder Morgan had the transactions and events
assumed therein occurred on the dates specified, nor are they
necessarily indicative of the results of operations that may be
achieved in the future. The unaudited pro forma combined
statements of income do not give effect to any operating
efficiencies or cost savings that may be realized as a result of
the merger, primarily related to reduction of duplicative
operating, general and administrative expenses.
The unaudited pro forma combined financial statements should be
read in conjunction with the historical financial statements,
including the related notes, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of
Kinder Morgan, which are included in its Annual Report on Form 10-
K for the year ended December 31, 1998, from Kinder Morgan's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1999 and of Kinder Morgan - Delaware and Kinder Morgan Energy
Partners, which are included elsewhere in this Form 8-K or have
been previously filed.
The historical results of operations of Kinder Morgan reflect the
acquisition of MidCon Corp. by Kinder Morgan on January 30, 1998,
and include the results of operations of MidCon Corp. beginning
with January 30, 1998.
PF-1
KINDER MORGAN, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1999
(In thousands)
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------------- ------------------------------
Kinder Morgan-
Kinder Morgan Delaware Adjustments Combined
------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Current Assets:
Cash and Cash Equivalents $ 22,459 $ 435 $ $ 22,894
Restricted Deposits 7,461 7,461
Accounts Receivable 660,988 8,680 669,668
Inventories 134,209 134,209
Gas Imbalances 84,477 84,477
Other 51,265 3,399 54,664
---------- ---------- ---------- ==========
960,859 12,514 - 973,373
---------- ---------- ---------- ==========
Investments:
Investment in Kinder Morgan Energy Partners 45,421 1,241,248a 1,286,669
Other Investments 257,570 257,570
---------- ---------- ---------- ==========
257,570 45,421 1,241,248 1,544,239
---------- ---------- ---------- ==========
Property, Plant and Equipment, at Cost 7,767,790 7,767,790
Less Accumulated Depreciation and Amortization 880,768 880,768
---------- ---------- ---------- ==========
6,887,022 - - 6,887,022
---------- ---------- ---------- ==========
Deferred Charges and Other Assets 246,690 5,890 252,580
---------- ---------- ---------- ==========
Total Assets $8,352,141 $ 63,825 $1,241,248 $9,657,214
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Current Maturities of Long-term Debt $ 7,167 $ $ $ 7,167
Notes Payable 578,700 148,600 727,300
Accounts Payable 543,811 2,522 546,333
Accrued Taxes 28,474 28,474
Gas Imbalances 68,925 68,925
Payable for Purchase of Thermo Companies 43,762 43,762
Other 201,385 8,465 3,000a 212,850
---------- ---------- ---------- ==========
1,472,224 159,587 3,000 1,634,811
---------- ---------- ---------- ==========
Deferred Liabilities, Credits and Reserves:
Deferred Income Taxes 1,696,908 463,238b 2,160,146
Other 321,354 321,354
---------- ---------- ---------- ==========
2,018,262 - 463,238 2,481,500
---------- ---------- ---------- ==========
Long-term Debt 3,298,484 - - 3,298,484
---------- ---------- ---------- ==========
KMI-Obligated Mandatorily Redeemable Preferred
Capital Trust Securities of Subsidiary Trusts
Holding Solely Debentures of KMI 275,000 - - 275,000
---------- ---------- ---------- ==========
Minority Interests in Equity of Subsidiaries 64,213 - - 64,213
---------- ---------- ---------- ==========
Stockholders' Equity:
Common Stock 354,837 208,417a 563,254
Additional Paid-in Capital 731,199 470,831a 1,202,030
Retained Earnings 141,663 (95,762) 95,762a 141,663
Other (3,741) (3,741)
---------- ---------- ---------- ==========
Total Common Stockholders' Equity 1,223,958 (95,762) 775,010 1,903,206
---------- ---------- ---------- ==========
Total Liabilities and Stockholders' Equity $8,352,141 $ 63,825 $1,241,248 $9,657,214
========== ========== ========== ==========
</TABLE>
PF-2
KINDER MORGAN, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------------- -------------------------------
Kinder Morgan-
Kinder Morgan Delaware Adjustments Combined
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operating Revenues: $3,704,018 $ 44,396 $ - $3,748,414
---------- ---------- --------- ----------
Operating Costs and Expenses:
Gas Purchases and Other Costs of Sales 2,995,953 2,995,953
Operations and Maintenance 303,762 1,706 305,468
Depreciation and Amortization 147,993 769 22,275c 171,037
Taxes, Other Than Income Taxes 41,274 41,274
Merger-related and Severance Costs 10,962 10,962
---------- ---------- --------- ----------
Total Operating Costs and Expenses 3,499,944 2,475 22,275 3,524,694
---------- ---------- --------- ----------
Operating Income 204,074 41,921 (22,275) 223,720
---------- ---------- --------- ----------
Other Income and (Deductions):
Interest Expense (210,505) (7,717) (218,222)
Minority Interests (16,789) (16,789)
Other, Net 36,607 110 36,717
---------- ---------- --------- ----------
Total Other Income and (Deductions) (190,687) (7,607) - (198,294)
---------- ---------- --------- ----------
Income from Continuing Operations
Before Income Taxes 13,387 34,314 (22,275) 25,426
Income Taxes 5,221 13,195 (8,687)d 9,729
---------- ---------- --------- ----------
Income from Continuing Operations 8,166 21,119 (13,588) 15,697
---------- ---------- --------- ----------
Discontinued Operations, Net of Tax:
Loss from Discontinued Operations (6,491) (6,491)
Loss on Disposal of Discontinued Operations (11,479) (11,479)
---------- ---------- --------- ----------
Total Loss from Discontinued Operations (17,970) - - (17,970)
---------- ---------- --------- ----------
Net Income (Loss) (9,804) 21,119 (13,588) (2,273)
Less - Preferred Stock Dividends 129 129
Less - Premium Paid on Preferred Stock
Redemption 350 350
---------- ---------- --------- ----------
Earnings (Loss) Available For Common Stock $ (10,283) $ 21,119 $ (13,588)a $ (2,752)
========== ========== ========= ==========
Number of Shares Used in Computing
Basic Earnings Per Common Share 70,363 41,683a 112,046
========== ========== ========= ==========
Basic Earnings (Loss) Per Common Share:
Continuing Operations $ 0.11 $ 0.14
Discontinued Operations $ (0.09) $ (0.06)
Disposal of Discontinued Operations $ (0.17) $ (0.10)
---------- ---------- --------- ----------
Total Basic Earnings (Loss) Per Common Share $ (0.15) $ (0.02)
========== ========== ========= ==========
Number of Shares Used in Computing
Diluted Earnings Per Common Share 70,441 41,683a 112,124
========== ========== ========= ==========
Diluted Earnings (Loss) Per Common Share:
Continuing Operations $ 0.11 $ 0.14
Discontinued Operations $ (0.09) $ (0.06)
Disposal of Discontinued Operations $ (0.17) $ (0.10)
---------- ---------- --------- ----------
Total Diluted Earnings (Loss) Per Common Share $ (0.15) $ (0.02)
========== ========== ========= ==========
Dividends Per Common Share $ 0.60 $ 0.60
========== ========== ========= ==========
</TABLE>
PF-3
NOTES TO UNAUDITED PRO FORMA
COMBINED FINANCIAL STATEMENTS
a) The adjustment to the investment in Kinder Morgan Energy
Partners was derived as follows:
<TABLE>
<CAPTION>
(Thousands)
<S> <C>
41,483,328 shares of Kinder Morgan Common Stock issued in the merger at
$16.2625 per share
Common Stock - $5.00 Par Value $ 207,417
Additional Paid-in Capital 467,206
Estimated Fees and Expenses to Complete the Transaction:
Fees and Expenses Paid in Cash 3,000
Fees Paid by Issuance of 200,000 Shares of Kinder Morgan Common Stock at
$23.125 per Share
Common Stock - $5.00 Par Value 1,000
Additional Paid-in Capital 3,625
Elimination of Retained Earnings Deficit of Kinder Morgan - Delaware as of
September 30, 1999 95,762
Deferred Income Taxes (see Note b) 463,238
-----------
$ 1,241,248
===========
</TABLE>
The $16.2625 per share price used to value Kinder Morgan
common stock issued in the merger was determined by
calculating the average closing price for Kinder Morgan's
common stock on the NYSE for the five business days before and
after July 8, 1999, the date the terms of the merger were
announced. The $23.125 per share price used to value Kinder
Morgan common stock issued in payment of fees was determined
as the average of the high and low prices for Kinder Morgan's
stock on October 7, 1999, the date the merger was completed.
Kinder Morgan's preliminary allocation of purchase price to
assets acquired and liabilities assumed reflects the
assumption that current assets and current liabilities, other
than the investment in Kinder Morgan Energy Partners, are
carried at historical amounts which approximate their fair
market value. The excess of the purchase price over Kinder
Morgan - Delaware's share of the underlying equity in the net
assets of Kinder Morgan Energy Partners, calculated as of
September 30, 1999, has been fully allocated to the Kinder
Morgan - Delaware investment in Kinder Morgan Energy Partners.
This allocation reflects the estimated fair market value of
this investment.
b) Represents deferred income taxes, using a 39% effective tax
rate, calculated on the excess of Kinder Morgan's initial
investment over Kinder Morgan - Delaware's share of the
underlying equity in the net assets of Kinder Morgan Energy
Partners.
c) Represents amortization of the excess of Kinder Morgan's
initial investment over Kinder Morgan - Delaware's share of the
underlying equity in the net assets of Kinder Morgan Energy
Partners, calculated using the straight-line method over 40 years
(approximately the estimated remaining useful life of the assets
of Kinder Morgan Energy Partners).
d) Represents income tax expense calculated using a 39%
effective tax rate on the pre-tax pro forma adjustments.
PF-4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
KINDER MORGAN, INC.
Dated: November 18, 1999 By: /s/JOSEPH LISTENGART
---------------------------
Joseph Listengart
Vice President and General
Counsel
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
2.1 Agreement and Plan of Merger dated July 8, 1999,
by and among Kinder Morgan, Rockies Merger Corp.
and Kinder Morgan - Delaware (incorporated
by reference to Annex A-1 of the
Company's Registration Statement on Form
S-4 filed on August 23, 1999 (File No.
333-85747)).
2.2 First Amendment to the Agreement and Plan of
Merger dated August 20, 1999, by and among
Kinder Morgan, Rockies Merger Corp. and Kinder
Morgan - Delaware (incorporated by
reference to Annex A-2 of the Company's
Registration Statement on Form S-4 filed
on August 23, 1999 (File No. 333-
85747)).
