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
Date of Report March 30, 2000
KINDER MORGAN ENERGY PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 1-11234 76-0380342
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or File Identification
organization) Number) Number)
1301 McKinney Street, Ste. 3400, Houston, Texas 77010
(Address of principal executive offices)(zip code)
Telephone number of registrant, including area code: 713-844-9500
----------------------
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
(c) Exhibits
23.1 Consent of PriceWaterhouseCoopers LLP
99.1 Balance Sheet of Kinder Morgan G.P., Inc., as of December 31, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
KINDER MORGAN ENERGY PARTNERS, L.P.
(A Delaware Limited Partnership)
By: KINDER MORGAN G.P., INC.
as General Partner
By: /s/ C. Park Shaper
------------------------------
C. Park Shaper, Vice President
Treasurer and Chief Financial
Officer
Date: March 30, 2000
2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (Nos. 333-25995, 333-66931 and 333-62155) and the
incorporation by reference in the Registration Statement on Form S-8 (No.
333-56343) of Kinder Morgan Energy Partners, L.P. of our report dated March 30,
2000 relating to the balance sheet of Kinder Morgan G.P., Inc, which appears in
this Current Report on Form 8-K of Kinder Morgan Energy Partners, L.P. dated
March 30, 2000.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
March 30, 2000
Report of Independent Accountants
March 30, 2000
To the Board of Directors and Stockholder of
Kinder Morgan G.P., Inc.
In our opinion, the accompanying balance sheet presents fairly, in all material
respects, the financial position of Kinder Morgan G.P., Inc. (the General
Partner), a wholly-owned subsidiary of Kinder Morgan, Inc., at December 31, 1999
in conformity with accounting principles generally accepted in the United
States. This financial statement is the responsibility of the General Partner's
management; our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit of this statement in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statement, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
<PAGE>
Kinder Morgan G.P., Inc.
(a wholly-owned subsidiary of Kinder Morgan, Inc.)
Balance Sheet
December 31, 1999
- --------------------------------------------------------------------------------
(in thousands, except for per share amounts)
ASSETS
Current assets:
Cash and cash equivalents $ 54
Receivable from Partnership (Note 5) 1,896
Prepaid expenses 1,310
-----------
3,260
Investment in Partnership 1,345,387
Deferred taxes and other 3,602
-----------
Total assets $1,352,249
-----------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable - trade $ 1,946
Accrued liabilities 8,773
Payable to Kinder Morgan, Inc. (Note 5) 728
Accrued taxes 2,957
-----------
14,404
Deferred taxes and other 506,921
-----------
521,325
-----------
Commitments and contingencies (Note 4)
Stockholder's equity:
Common stock, $10 par value, authorized, issued and outstanding
1,000,000 shares 10,000
Additional paid-in capital 815,251
Accumulated earnings (deficit) 5,673
-----------
Total stockholder's equity 830,924
-----------
Total liabilities and stockholder's equity $1,352,249
-----------
The accompanying notes are an integral part of this financial
statement.
<PAGE>
Kinder Morgan G.P., Inc.
(a wholly-owned subsidiary of Kinder Morgan, Inc.)
Notes to Balance Sheet
December 31, 1999
- --------------------------------------------------------------------------------
1. ORGANIZATION
Effective February 14, 1997, Kinder Morgan, Inc. (KMI) acquired all of the
issued and outstanding stock of Enron Liquids Pipeline Company (ELPC), and
ELPC was renamed Kinder Morgan G.P., Inc. (the General Partner). The
General Partner owns approximately 3.5% of Kinder Morgan Energy Partners,
LP (the Partnership) as of December 31, 1999. The ownership interest
consists of a 1% general partner interest in the Partnership, a 1.0101%
general partner interest in the operating partnerships which are wholly
owned by the partnership and 862,000 common units of the Partnership.
On October 7, 1999, KMI completed a merger with K N Energy, Inc., a Kansas
corporation, providing integrated energy services including the gathering,
processing, transportation and storage of natural gas, marketing of
natural gas and natural gas liquids and electric power generation and
sales. The combined entity was renamed Kinder Morgan, Inc. and trades
under the New York Stock Exchange symbol "KMI." KMI remains the sole
stockholder of the general partner.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are followed by the General
Partner in the preparation of the financial statements.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles 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. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid investments that are readily
convertible into cash and have an original maturity of three months or
less at date of acquisition.
DEBT ISSUANCE COSTS
Debt issuance costs are amortized using the interest method over the term
of the financing for which they were incurred.
INVESTMENT IN PARTNERSHIP
The General Partner's investment in the Partnership is accounted for under
the equity method. At December 31, 1999, the General Partner's investment
in the Partnership exceeded its share of the underlying equity in the net
assets of the Partnership by $1,304,846,362. This excess is being
amortized on a straight-line basis over 44 years, which approximates the
useful lives of
-1-
<PAGE>
Kinder Morgan G.P., Inc.
(a wholly-owned subsidiary of Kinder Morgan, Inc.)
Notes to Balance Sheet
December 31, 1999
- --------------------------------------------------------------------------------
the Partnership's assets ranging from 2.0% to 12.5%. Amortization of this
excess cost was $7,584,947 for the period ended December 31, 1999.
INCOME TAXES
The General Partner files a separate federal income tax return and
accounts for income taxes under the liability method prescribed by
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes." Deferred income taxes are determined based on temporary
differences between the financial reporting and tax basis of the General
Partner's assets and liabilities using enacted tax rates in effect during
the years in which the differences are expected to reverse.
3. INVESTMENT IN PARTNERSHIP
Summarized financial information of the Partnership at December 31, 1999
is presented below (in thousands):
Current assets $ 131,932
Noncurrent assets 3,096,806
Current liabilities 319,161
Long-term debt and other liabilities 1,086,480
Minority interest 48,299
Partners' capital 1,774,798
4. LITIGATION, COMMITMENTS AND OTHER CONTINGENCIES
LITIGATION
The General Partner, in the ordinary course of business, is a defendant in
various lawsuits relating to the Partnership's assets. The Partnership
made certain acquisitions during 1999 and assumed potential and existing
claims associated with those acquisitions. Although no assurance can be
given, the General Partner believes, based on its experience to date, that
the ultimate resolution of such items will not have a material adverse
impact on the General Partner's financial position. It is expected that
the Partnership will reimburse the General Partner for any liability or
expenses incurred in connection with these legal proceeding.
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 and in some cases treble and punitive damages.
-2-
<PAGE>
Kinder Morgan G.P., Inc.
(a wholly-owned subsidiary of Kinder Morgan, Inc.)
Notes to Balance Sheet
December 31, 1999
- --------------------------------------------------------------------------------
The General Partner 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 the General
Partner.
ENVIRONMENTAL
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 the General Partner.
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. In
addition, the Partnership is presently involved in several 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, the General Partner 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 the General Partner.
OTHER
The Partnership, in the ordinary course of business, is a defendant in
various lawsuits relating to the Partnership's assets. Although no
assurance can be given, the General Partner
-3-
<PAGE>
Kinder Morgan G.P., Inc.
(a wholly-owned subsidiary of Kinder Morgan, Inc.)
Notes to Balance Sheet
December 31, 1999
- --------------------------------------------------------------------------------
believes, based on its experience to date, the ultimate resolution of such
items will not have a material adverse impact on the Partnership's
financial position, results of operations, or its ability to pay cash
distributions to the General Partner.
5. RELATED PARTY TRANSACTIONS
RECEIVABLE FROM PARTNERSHIP
General and administrative expenses incurred by the General Partner are
all reimbursed by the Partnership as provided in the Partnership
Agreement. The receivable from Partnership of $1,896,000 at December 31,
1999, represents general and administrative expenses incurred by the
General Partner to be reimbursed by the Partnership. The accrued
liabilities of $8,773,000 at December 31, 1999, represent general and
administrative expenses accrued by the General Partner to be reimbursed by
the Partnership upon payment of the expenses.
PAYABLE TO KMI
The payable to KMI relates to income taxes paid by KMI on behalf of the
General Partner as of December 31, 1999.
-4-
