-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lj6dCi6JFzHp8gTNqOATUKUFqYLPXkpIHG9Zi+S0xCxgVk9zg/HuyzuAqfRtgjG+ 4VP4LOjWr3qAOhH75dcJyw== 0000054502-00-000007.txt : 20000208 0000054502-00-000007.hdr.sgml : 20000208 ACCESSION NUMBER: 0000054502-00-000007 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000120 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KINDER MORGAN INC CENTRAL INDEX KEY: 0000054502 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 480290000 STATE OF INCORPORATION: KS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-06446 FILM NUMBER: 524711 BUSINESS ADDRESS: STREET 1: 370 VAN GORDON STREET CITY: LAKEWOOD STATE: CO ZIP: 80228-8304 BUSINESS PHONE: 7138449500 MAIL ADDRESS: STREET 1: 1301 MCKINNEY STREET 2: SUITE 3400 CITY: HOUSTON STATE: TX ZIP: 77010 FORMER COMPANY: FORMER CONFORMED NAME: K N ENERGY INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: KN ENERGY INC DATE OF NAME CHANGE: 19920430 FORMER COMPANY: FORMER CONFORMED NAME: KANSAS NEBRASKA NATURAL GAS CO INC DATE OF NAME CHANGE: 19830403 8-K/A 1 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) 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. 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. 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. PF-2 KINDER MORGAN, INC. UNAUDITED PRO FORMA COMBINED BALANCE SHEET SEPTEMBER 30, 1999 (In thousands)
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.
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)
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 ------------------------ ------------------------------------------------------------------------- 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.
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)
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 ------------- ------------- ---------------------------------------------------------------------------- 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.
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:
(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 ===========
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). 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. 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 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. EX-99.1 2 [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) 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) 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. # # # -----END PRIVACY-ENHANCED MESSAGE-----