SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
DATED FEBRUARY 4, 2000
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
January 20, 2000
(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 (Commission (I.R.S. Employer
jurisdiction 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)
<PAGE> 2
Item 2. Disposition of Assets.
On December 30, 1999, Kinder Morgan, Inc., a Kansas
corporation (the "Company"), entered into a Contribution
Agreement among Kinder Morgan Energy Partners, L.P., a Delaware
limited partnership ("KMEP"), Kinder Morgan G.P., Inc., a
Delaware corporation ("KMGP"), the Company, Natural Gas Pipeline
Company of America, a Delaware corporation ("NGPL"), and KN Gas
Gathering, Inc., a Colorado corporation ("KNGG"). On January 20,
2000, but effective as of December 31, 1999, the contribution of
assets by KMI, NGPL and KNGG to KMEP was completed.
In exchange for the contribution to KMEP of:
(i) all of the Company's interest in Kinder Morgan
Interstate Gas Transmission, LLC, a Colorado single-member
limited liability company,
(ii) all of NGPL's interest in Kinder Morgan
Trailblazer LLC, a Delaware single-member limited liability
company, and
(iii) all of KNGG's interest in Red Cedar Gathering
Company, a Colorado general partnership,
KMEP took the following actions:
(1) issued an aggregate of 9,810,000 common units
representing limited partnership units of KMEP to the Company,
NGPL and KNGG,
(2) made a payment in the amount of $200,000,000 in cash to
the Company, and
(3) has the obligation to pay the Company $130,000,000
within 90 days of the completion of the contribution of assets.
The general partner of KMEP, KMGP, is responsible for the
operation and day-to-day management of KMEP and is an indirect,
wholly-owned subsidiary of the Company. Certain of the directors
and officers of the Company are also directors and officers of
KMGP.
<PAGE> 3
Item 5. Other Events.
On January 20, 2000, the Company issued a press release
announcing, among other things, the completion of the transaction
referenced in Item 2 above. A portion of this press release is
filed herewith as Exhibit 99.1 and is incorporated herein by
reference.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
a) Financial Statements. Not applicable.
b) Pro Forma Financial Information.
The pro forma financial statements of the Company,
giving effect to the transaction referenced in item 2
above 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 Contribution Agreement, dated as of
December 30, 1999, by and among the Company,
NGPL, KNGG, KMGP and KMEP
(incorporated by reference from
Exhibit 99.1 to the Company's
Current Report on Form 8-K filed
January 14, 2000).
99.1 Portions of the press release of the Company
issued January 20, 2000.
<PAGE> PF-1
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 KN Energy, Inc.) and Kinder Morgan (Delaware), Inc.
("Kinder Morgan Delaware", formerly Kinder Morgan, Inc., a
Delaware corporation) to give effect to (i) the combination of
these entities by merger, (ii) discontinuance of certain lines of
business by Kinder Morgan during the fourth quarter of 1999 and
(iii) the sale of certain assets by Kinder Morgan to Kinder
Morgan Energy Partners ("KMEP", a publicly-traded master limited
partnership, of which a subsidiary of Kinder Morgan Delaware is
the general partner and holds certain limited partner interests)
and application of the cash proceeds therefrom to the retirement
of debt. The unaudited pro forma combined balance sheet reflects
adjustments as if these transactions had occurred on September
30, 1999. The unaudited pro forma combined statements of income
from continuing operations for the 12 months ended December 31,
1998 and the nine months ended September 30, 1999 reflect
adjustments as if these transactions had occurred on January 1,
1998 and 1999, respectively. The pro forma adjustments reflected
in the accompanying unaudited pro forma combined financial
statements with respect to the combination of Kinder Morgan, Inc.
and Kinder Morgan Delaware were prepared using the purchase
method of accounting. These pro forma adjustments are based on
preliminary estimates and certain assumptions that Kinder Morgan
believes are reasonable under the circumstances. The preliminary
allocation of purchase price to assets acquired and liabilities
assumed reflects the assumption that these assets and
liabilities, other than the investment in KMEP, 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 KMEP has been fully
allocated to the Kinder Morgan Delaware investment in KMEP. This
allocation reflects the estimated fair market value of the
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 combination of Kinder Morgan and Kinder Morgan Delaware,
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 the (i) Annual Report on
Form 10-K for the year ended December 31, 1998 and (ii) Quarterly
Report on Form 10-Q for the quarter ended September 30, 1999.
The historical results of operations of Kinder Morgan reflect its
acquisition of MidCon Corp. on January 30, 1998, and include the
results of operations of MidCon Corp. beginning with January 30,
1998.
<PAGE> PF-2
KINDER MORGAN, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1999
(In thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Historical Pro Forma
------------------------ --------------------------------------------------------------------------
Kinder Purchase of Kinder Morgan Discontinued Sales of Assets
Morgan Delaware Operations to KMEP
----------------------------
K N Energy Delaware Adjustments Combined Adjustments(c) Adjustments(d) Combined
----------- ------------ --------------------------------------------------------------------------
ASSETS:
Current Assets:
Cash and Cash Equivalents $ 22,459 $ 435 $ $ 22,894 $ $ $ 22,894
Restricted Deposits 7,461 7,461 7,461
Accounts Receivable 660,988 8,680 669,668 (6,118) 663,550
Inventories 134,209 134,209 (963) 133,246
Gas Imbalances 84,477 84,477 (11,957) 72,520
Other 51,265 3,399 54,664 387 55,051
---------- ---------- ---------- ---------- ---------- --------- ----------
960,859 12,514 - 973,373 - (18,651) 954,722
---------- ---------- ---------- ---------- ---------- --------- ----------
Investments:
Investment in Kinder
Morgan Energy Partners 45,421 1,241,248(a) 1,286,669 406,500 1,693,169
Other Investments 257,570 257,570 (75,410) 182,160
---------- ---------- ---------- ---------- ---------- --------- ----------
257,570 45,421 1,241,248 1,544,239 - 331,090 1,875,329
---------- ---------- ---------- ---------- ---------- --------- ----------
Net Property, Plant
And Equipment 6,887,022 - - 6,887,022 - (523,704) 6,363,318
---------- ---------- ---------- ---------- ---------- --------- ----------
Deferred Charges and Other
Assets 246,690 5,890 252,580 (28,634) 223,946
---------- ---------- ---------- ---------- ---------- --------- ----------
Total Assets $8,352,141 $ 63,825 $1,241,248 $9,657,214 $ - $(239,899) $9,417,315
========== ========== ========== ========== ========== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Current Maturities of
Long-term Debt $ 7,167 $ $ $ 7,167 $ $ $ 7,167
Notes Payable 578,700 148,600 727,300 (330,000) 397,300
Accounts Payable 543,811 2,522 546,333 (1,574) 544,759
Accrued Taxes 28,474 28,474 54,703 83,177
Gas Imbalances 68,925 68,925 (7,888) 61,037
Payable for Purchase of
Thermo Companies 43,762 43,762 43,762
Other 201,385 8,465 3,000(a) 212,850 539,545 (9,112) 743,283
---------- ---------- ---------- ---------- ---------- --------- ----------
1,472,224 159,587 3,000 1,634,811 539,545 (293,871) 1,880,485
---------- ---------- ---------- ---------- ---------- --------- ----------
Deferred Liabilities, Credits
and Reserves:
Deferred Income Taxes 1,696,908 463,238(b) 2,160,146 (206,646) (39,691) 1,913,809
Other 321,354 321,354 (7,195) 314,159
---------- ---------- ---------- ---------- ---------- --------- ----------
2,018,262 - 463,238 2,481,500 (206,646) (46,886) 2,227,968
---------- ---------- ---------- ---------- ---------- --------- ----------
Long-term Debt 3,298,484 - - 3,298,484 - - 3,298,484
---------- ---------- ---------- ---------- ---------- --------- ----------
KMI-Obligated Mandatorily
Redeemable Preferred
Capital Trust Securities 275,000 - - 275,000 - - 275,000
---------- ---------- ---------- ---------- ---------- --------- ----------
Minority Interests in
Equity of Subsidiaries 64,213 - - 64,213 - - 64,213
---------- ---------- ---------- ---------- ---------- --------- ----------
Stockholders' Equity:
Common Stock 354,837 208,417(a) 563,254 563,254
Additional Paid-in
Capital 731,199 470,831(a) 1,202,030 1,202,030
Retained Earnings (deficit) 141,663 (95,762) 95,762(a) 141,663 (332,899) 100,858 (90,378)
Other (3,741) (3,741) (3,741)
---------- ---------- ---------- ---------- ---------- --------- ----------
Total Common Stockholders'
Equity 1,223,958 (95,762) 775,010 1,903,206 (332,899) 100,858 1,671,165
---------- ---------- ---------- ---------- ---------- --------- ----------
Total Liabilities and
Stockholders' Equity $8,352,141 $ 63,825 $1,241,248 $9,657,214 $ - $(239,899) $9,417,315
========== ========== ========== ========== ========== ========= ==========
See Notes to Unaudited Pro Forma Combined Financial Statements.
</TABLE>
<PAGE> PF-3
KINDER MORGAN, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME FROM CONTINUING
OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------ -------------------------------------------------------------------------
Kinder Purchase of Kinder Morgan Discontinued Sales of Assets
Morgan Delaware Operations to KMEP
---------------------------
K N Energy Delaware Adjustments Combined Adjustments(c) Adjustments(g) Combined
------------------------ -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues $3,704,018 $44,396 $ - $3,748,414 $(2,966,681) $ (45,243) $ 736,490
---------- ------- --------- ---------- ----------- --------- ---------
Operating Costs and
Expenses:
Gas purchases and other
costs of sales 2,995,953 2,995,953 (2,850,870) 6,349 151,432
Operations and maintenance 303,762 1,706 305,468 (114,373) (23,034) 168,061
Depreciation and amortization 147,993 769 22,275(e) 171,037 (31,075) (15,364) 124,598
Taxes other than income taxes 41,274 41,274 (8,130) (3,434) 29,710
Merger-related and
severance costs 10,962 10,962 - - 10,962
--------- ------- --------- ---------- ----------- --------- ---------
Total Operating Costs
and Expenses 3,499,944 2,475 22,275 3,524,694 (3,004,448) (35,483) 484,763
---------- ------- --------- ---------- ----------- --------- ---------
Operating Income 204,074 41,921 (22,275) 223,720 37,767 (9,760) 251,727
---------- ------- --------- ---------- ----------- --------- ---------
Other Income
and (Deductions):
Interest expense (210,505) (7,717) (218,222) 21,338 13,357 (183,527)
Minority interests (16,789) (16,789) (1,837) - (18,626)
Other, net 36,607 110 36,717 6,573 361 43,651
---------- ------- --------- ---------- ----------- --------- ---------
Total Other Income and
Deductions (190,687) (7,607) (198,294) 26,074 13,718 (158,502)
---------- ------- --------- ---------- ----------- --------- ---------
Income from continuing
operations before
income taxes 13,387 34,314 (22,275) 25,426 63,841 3,958 93,225
Income taxes 5,221 13,195 (8,687)(f) 9,729 29,833 1,505 41,067
---------- ------- --------- ---------- ----------- --------- ---------
Income from continuing
operations 8,166 21,119 (13,588) 15,697 34,008 2,453 52,158
Less-preferred stock dividends 129 129 129
Less-premium paid on
preferred stock redemptions 350 350 350
---------- ------- --------- ---------- ----------- --------- ---------
Income from continuing
operations available for
common stock $ 7,687 $21,119 $ (13,588) $ 15,218 $ 34,008 $ 2,453 $ 51,679
========== ======= ========= ========== =========== ========= =========
Number of shares used in
computing basic earnings
per common share 70,363 41,683(a) 112,046 112,046 112,046 112,046
========== ========= ========== =========== ========= =========
Basic earnings per common
share from continuing
operations $ 0.11 $ 0.14 $ 0.30 $ 0.02 $ 0.46
========== ========== =========== ========= =========
Number of shares used in
computing diluted earnings
per common share 70,441 41,683(a) 112,124 112,124 112,124 112,124
========== ========= ========== =========== ========= =========
Diluted earnings per
common share from
continuing operations $ 0.11 $ 0.14 $ 0.30 $ 0.02 $ 0.46
========== ========== =========== ========= =========
See Notes to Unaudited Pro Forma Combined Financial Statements.
</TABLE>
<PAGE> PF-4
KINDER MORGAN, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME FROM CONTINUING
OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical Pro Forma
---------------------------- ----------------------------------------------------------------------------
Kinder Purchase of Kinder Morgan Discontinued Sales of Assets
Morgan Delaware Operations to KMEP
----------------------------
K N Energy Delaware Adjustments Combined Adjustments(c) Adjustments(g) Combined
------------- ------------- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues $4,387,843 $37,575 $ - $4,425,418 $(3,030,982) $ (67,642) $1,326,794
---------- ------- --------- ---------- ----------- --------- ----------
Operating Costs and
Expenses:
Gas purchases and
other costs of
sales 3,400,044 3,400,044 (2,888,289) 13,574 525,329
Operations and
maintenance 390,883 877 391,760 (165,935) (27,634) 198,191
Depreciation and
amortization 195,916 603 29,700(e) 226,219 (40,554) (19,474) 166,191
Taxes other than
income taxes 50,686 50,686 (10,624) (4,308) 35,754
Merger-related and
severance costs 5,763 5,763 - (993) 4,770
---------- ------- --------- ---------- ----------- --------- ----------
Total Operating
Costs and Expenses 4,043,292 1,480 29,700 4,074,472 (3,105,402) (38,835) 930,235
---------- ------- --------- ---------- ----------- --------- ----------
Operating Income 344,551 36,095 (29,700) 350,946 74,420 (28,807) 396,559
---------- ------- --------- ---------- ----------- --------- ----------
Other Income
and (Deductions):
Interest expense (247,180) (4,507) (251,687) 38,913 19,503 (193,271)
Minority interests (16,167) (16,167) (3,229) (19,396)
Other, net 17,057 740 17,797 11,294 (3,097) 25,994
-------- ------- --------- ---------- ----------- --------- ----------
Total Other Income and
Deductions (246,290) (3,767) - (250,057) 46,978 16,406 (186,673)
---------- ------- --------- ---------- ----------- --------- ---------
Income from continuing
operations before
income taxes 98,261 32,328 (29,700) 100,889 121,398 (12,401) 209,886
Income taxes 38,272 11,661 (11,583)(f) 38,350 47,285 (4,824) 80,811
---------- ------- --------- ---------- ----------- --------- ----------
Income from continuing
operations 59,989 20,667 (18,117) 62,539 74,113 (7,577) 129,075
Less-preferred stock
dividends 350 350 350
---------- ------- --------- ---------- ----------- --------- ----------
Income from continuing
operations available
for common stock $ 59,639 $20,667 $ (18,117) $ 62,189 $ 74,113 $ (7,577) $ 128,725
========== ======= ========= ========== =========== ========= ==========
Number of shares used
in computing basic
earnings per common
share 64,021 41,683 (a) 105,704 105,704 105,704 105,704
========== ======== ========== =========== ========= ==========
Basic earnings per common
share from continuing
operations $ 0.93 $ 0.59 $ 0.70 $ (0.07) $ 1.22
========== ========== =========== ========= ==========
Number of shares used in
computing diluted earnings
per common share 64,636 41,683 (a) 106,319 106,319 106,319 106,319
========== ======== ========== =========== ========= ==========
Diluted earnings per
common share
from continuing
operations $ 0.92 $ 0.58 $ 0.70 $ (0.07) $ 1.21
========== ========== =========== ========= ==========
See Notes to Unaudited Pro Forma Combined Financial Statements.
</TABLE>
<PAGE> PF-5
NOTES TO UNAUDITED PRO FORMA
COMBINED FINANCIAL STATEMENTS
a) The adjustment to the investment in Kinder Morgan Energy
Partners ("KMEP") was derived as follows:
<TABLE>
<CAPTION>
<S> <C>
(Thousands)
-------------
41,483,328 shares of Kinder Morgan Common Stock Issued in the Acquisition 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 Acquisition:
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 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 of Kinder Morgan Common Stock on
October 7, 1999, the date the merger was effective.
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 KMEP, 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 KMEP, calculated as of
September 30, 1999, has been fully allocated to the Kinder
Morgan Delaware investment in KMEP, reflecting the estimated
fair market value of this investment.
b) Represents deferred income taxes, utilizing 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 KMEP.
c) Adjustments to reflect the discontinuation of certain lines
of business by Kinder Morgan in the fourth quarter of 1999.
d) Adjustments to reflect the December 31, 1999 sale by Kinder
Morgan to KMEP of (i) Kinder Morgan Interstate Gas Transmission
LLC (formerly K N Interstate Gas Transmission Co.), (ii) Kinder
Morgan's 1/3 interest in Trailblazer Pipeline Company and (iii)
Kinder Morgan's 49% interest in Red Cedar Gathering Co. Proceeds
from the sale were $330 million in cash (used to reduce short-
term borrowings, see Note g) and 9,810,000 KMEP Limited Partner
Units (valued at $41.44 per unit).
e) 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 KMEP, calculated using the
straight-line method over 44 years (approximately the estimated
remaining useful life of the assets of KMEP).
<PAGE> PF-6
f) Represents income tax expense calculated by applying a 39%
effective tax rate to the pre-tax pro forma adjustments.
g) Adjustments to reflect the sale by Kinder Morgan of certain
assets to KMEP (See Note d), including (i) reductions in interest
expense at historical average short-term interest rates of 5.91%
and 5.40% for the year ended December 31, 1998 and the nine
months ended September 30, 1999, respectively, resulting from
application of the $330 million of cash proceeds, (ii) the
removal from Kinder Morgan's income statement of the results of
operations of the assets sold to KMEP and (iii) as an addition to
operating revenues, the incremental earnings accruing to Kinder
Morgan (as a result of its general and limited partner interests)
due to (a) the increased level of earnings and cash flows at KMEP
attributable to the acquired assets and (b) Kinder Morgan's
increased limited partner interest resulting from the KMEP
Limited Partner Units received as a portion of the consideration
from the sale. As a result of this sale, Kinder Morgan recorded
a pre-tax gain of $158 million, which is not reflected in the
accompanying Unaudited Pro Forma Combined Statements of
Income from Continuing Operations.
<PAGE> 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: February 4, 2000 By: /s/ JOSEPH LISTENGART
-----------------------------
Joseph Listengart
Vice President and General
Counsel
<PAGE> 5
EXHIBIT INDEX
Exhibit
Number Description
2.1 Contribution Agreement, dated as
of December 30, 1999, by and among the
Company, NGPL, KNGG, KMGP and
KMEP (incorporated by reference
from Exhibit 99.1 to the
Company's Current Report on
Form 8-K filed January 14,
2000).
99.1 Portions of the Press Release of the
Company issued January 20, 2000.
[Kinder Morgan, Inc.]
Larry Pierce Irene Twardowski
Media Relations Investor Relations
(303) 914-4751 (713) 844-9543
KINDER MORGAN, INC. FOURTH QUARTER RECURRING EARNINGS EXCEED
EXPECTATIONS
HOUSTON, Jan. 207, 2000 - Kinder Morgan, Inc. (NYSE: KMI)
today reported fourth quarter 1999 earnings of $0.25 per diluted
common share from continuing operations before merger-related
costs and before a gain from the sale of assets to Kinder Morgan
Energy Partners, L.P. (NYSE:KMP).
"Fourth quarter earnings from continuing operations were
very solid," said Richard D. Kinder, chairman and CEO of KMI.
"We beat the analysts' consensus of $0.17 per share for
continuing operations by a wide margin, and as promised, met the
targeted range for net charges. Our gameplan is on track, and we
have positioned the company for a successful 2000."
As previously announced, KMI took a charge in the fourth
quarter for the divestiture of non-core assets and merger-related
costs, and recorded a gain from the sale of assets to KMP. The
majority of this $248 million net after-tax charge, which is
within the previously communicated range, is attributed to the
planned disposal of the Hugoton/Bushton gathering and processing
facilities and other Mid-Continent assets.
Overall, KMI reported a fourth quarter 1999 net loss of $232
million, or $2.10 per diluted common share, as compared to a
fourth quarter 1998 net loss of $4 million, or $0.05 per diluted
common share. For calendar year 1999, KMI reported a net loss of
$241 million, or $3.01 per diluted common share, as compared to
net income in 1998 of $60 million, or $0.92 per diluted share.
The KMI board of directors declared a common stock dividend
of $0.05 per share payable on Feb. 14, 2000 to shareholders of
record as of Jan. 31, 2000.
(more)
<PAGE> 2
KMI Earnings Page 2
Promises Made, Promises Kept
"Prior to the close of the Kinder Morgan-KN Energy
transaction - which occurred early in the fourth quarter - we
made a number of promises to our shareholders and we have kept
those commitments," Kinder said. The following summarizes KMI's
accomplishments in executing its "back to basics" strategy.
* In the past few months, Natural Gas Pipeline Company of
America (NGPL), a wholly owned subsidiary of KMI, has renewed
significant long-term contracts with its two largest customers,
Nicor Gas and Peoples Energy. Additionally, NGPL has entered
into new long-term agreements with Aquila Energy and Ameren
Corporation. NGPL is the anchor of KMI's interstate pipeline
transportation and storage business, serving the important
Chicago market and many other states in the Midwest.
* KMI sold more than $700 million of assets to KMP in a
transaction effective Dec. 31, 1999. Assets included are KN
Interstate Gas Transmission Co., a 49 percent interest in Red
Cedar Gathering Company and a 33 percent interest in Trailblazer
Pipeline Company. As consideration for the assets, KMI received
9.81 million KMP common units and approximately $330 million in
cash.
* KMI has reduced corporate overhead costs by $70 million
annually, beginning in 2000.
* To deleverage the balance sheet, KMI has received proceeds
in excess of $125 million from the sale of non-core assets and
expects to complete the divestiture process in the first quarter
of 2000.
* KMP acquired another one-third interest in Trailblazer
Pipeline Company, bringing its total interest to 66 2/3 percent.
KMI will benefit from KMP's increased ownership of Trailblazer
through its general partner interest.
* KMI settled the KN Interstate rate case.
Looking Ahead
"The year 2000 is off to a good start," Kinder said.
"Despite the warmer than normal weather, we are comfortable with
the consensus earnings estimate in the range of $1.10 per share
for the year. Beyond 2000, we have internally established annual
growth targets in earnings per share of 20 to 30 percent, driven
largely by the expected growth of KMP."
(more)
<PAGE> 3
KMI Earnings Page 3
Kinder Morgan, Inc. is one of the largest midstream energy
companies in America, operating more than 30,000 miles of natural
gas and products pipelines in 26 states. It also has
significant retail distribution, marketing, gathering, electric
generation and terminal assets. Kinder Morgan, Inc., through its
general partner interest, operates Kinder Morgan Energy Partners,
L. P., America's largest pipeline master limited partnership.
Combined, the two companies have an enterprise value of
approximately $10 billion.
For more information, contact: www.kindermorgan.com or
www.kne.com
This news release includes forward looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Although
Kinder Morgan believes that its expectations are based on
reasonable assumptions, it can give no assurance that such
assumptions will materialize.
# # #
