-----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, FY3YAwnPhGRX5Xi6wZfvZ6R6e/ICphDAtlN25TZHKILcjUu9srMO858TVjWS7cNr Rl2B/yTpkczv0gO4Wv4DVg== 0000950129-03-000149.txt : 20030116 0000950129-03-000149.hdr.sgml : 20030116 20030116125621 ACCESSION NUMBER: 0000950129-03-000149 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030115 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 20030116 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 SEC ACT: 1934 Act SEC FILE NUMBER: 001-06446 FILM NUMBER: 03516021 BUSINESS ADDRESS: STREET 1: 500 DALLAS STREET 2: SUITE 1000 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 3039144752 MAIL ADDRESS: STREET 1: 500 DALLAS STREET 2: SUITE 1000 CITY: HUSTON STATE: TX ZIP: 77002 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 FORMER COMPANY: FORMER CONFORMED NAME: K N ENERGY INC DATE OF NAME CHANGE: 19920703 8-K 1 h02542e8vk.txt KINDER MORGAN, INC. - JANUARY 15, 2003 UNITED STATES 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 (date of earliest event reported) January 15, 2003 KINDER MORGAN, INC. (Exact name of registrant as specified in its charter) KANSAS 1-6446 48-0290000 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.)
500 Dallas Street, Suite 1000 Houston, Texas 77002 (Address of principal executive offices, including zip code) 713-369-9000 (Registrant's telephone number, including area code) ITEM 9. REGULATION FD DISCLOSURE. In accordance with General Instruction B.2. of Form 8-K, the following information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended. On January 15, 2003, Kinder Morgan, Inc. issued a press release, a copy of which is included herewith as Exhibit 99.1. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. The following material is furnished pursuant to Item 9 as an exhibit to this Current Report on Form 8-K. Exhibit Number Description 99.1 Press release of Kinder Morgan, Inc. issued January 15, 2003 -2- SIGNATURE 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, INC. Dated: January 15, 2003 By: /s/ Joseph Listengart ------------------------------------ Joseph Linstengart Vice president and General Counsel -3- EXHIBIT INDEX
Exhibit Number Description ------ ----------- 99.1 Press release of Kinder Morgan, Inc. issued January 15, 2003
-4- EX-99.1 3 h02542exv99w1.txt PRESS RELEASE ISSUED JANUARY 15, 2003 [KINDER MORGAN LOGO] Larry Pierce Irene Twardowski Broussard Media Relations Investor Relations (713) 369-9407 (713) 369-9490 www.kindermorgan.com KINDER MORGAN, INC. REPORTS RECORD EARNINGS; RAISES DIVIDEND AND 2003 ESTIMATES HOUSTON, Jan. 15, 2003 - Kinder Morgan, Inc. (NYSE: KMI) today reported record earnings for 2002, well in excess of consensus estimates. KMI also increased its quarterly dividend by 50 percent to $0.15 per share ($0.60 annualized) and revised its diluted earnings per share estimates for 2003 to $3.18 from $3.11. Diluted earnings per share from continuing operations in 2002 before special items were $2.85, up 45 percent from $1.96 in 2001, and well above consensus estimates of $2.69 per share. Comparable earnings per share for the fourth quarter were $0.82, up 37 percent from $0.60 in 2001, and substantially above consensus estimates of $0.74 per share. The special items were previously announced non-cash gains and losses that were recorded in the fourth quarter. These items included the reduction in carrying value of certain power assets, income tax adjustments which are primarily the effect of a reduction in the tax rate on the deferred tax account and the net impact of certain other smaller non-recurring gains and losses. After accounting for these special items, diluted earnings per share from continuing operations for 2002 were $2.50, compared to $1.97 in 2001. The attached table details the effects of these non-cash items.
4Q '02 4Q '01 2002 2001 ----------- --------- --------- --------- DILUTED EPS FROM CONT. OPS. BEFORE SPECIAL ITEMS $ 0.82 $ 0.60 $ 2.85 $ 1.96 Special Items Adjustment to Carrying Value of Power Investments (0.68) -- (0.68) -- Income Tax Adjustments 0.42 -- 0.34 -- Miscellaneous (0.01) -- (0.01) 0.01 DILUTED EPS FROM CONTINUING OPERATIONS $ 0.55 $ 0.60 $ 2.50 $ 1.97
(more) KMI-2002 EARNINGS PAGE 2 In the fourth quarter, KMI also recorded a charge to discontinued operations and an extraordinary loss from early extinguishment of debt that reduced income by $0.05 per share. In total, net income per diluted share for 2002 was $2.45 compared to $1.86 in 2001. Richard D. Kinder, chairman and CEO of KMI, said KMI's fee-based businesses and its ownership of the general partner of Kinder Morgan Energy Partners, L.P. (NYSE: KMP) combined to produce outstanding financial results in 2002. "We are delighted with KMI's results for the fourth quarter and the year. We significantly exceeded our published 2002 budget target of $2.58 recurring earnings per share and generated over $400 million in cash flow, defined as pretax income before DD&A, less cash taxes and sustaining capital expenditures. The net impact of the special items reported in the fourth quarter was within our previously announced range and had no impact on KMI's cash." Kinder noted that KMI will continue to evaluate additional increases in dividends annually as earnings and cash flow grow. "If the president's proposal to eliminate the double taxation of dividends is passed, we would evaluate paying a significantly larger dividend to our shareholders," Kinder said. "Our ability to increase our dividend comes from our significant cash flow, which we expect to be approximately $450 million in 2003. We expect to have a small amount of expansion capital expenditures in 2003, about $55 million, and plan to return most of the remainder of our cash flow to investors through debt reduction, dividends and share repurchases." The increased quarterly dividend of $0.15 per share ($0.60 annualized) will be payable on Feb. 14, 2003, to shareholders of record as of Jan. 31, 2003. 2003 OUTLOOK Today, KMI announced an increase in its 2003 earnings expectations to $3.18 per share from $3.11. The expectations include contributions only from assets currently owned by KMI and KMP and do not include the benefit of future acquisitions. It should be noted, however, that the company is optimistic about its chances for making accretive acquisitions in 2003. (more) KMI-2002 EARNINGS PAGE 3 "Like last year, we will detail KMI's 2003 financial plan at next week's annual analyst conference in Houston and post it on our web site so that investors may follow our progress throughout the year," Kinder said. "Our 2003 budget will be the standard by which we measure our success this year. We remain committed to transparency, and we will continue to review and explain any variances to the plan during our quarterly earnings calls." OVERVIEW OF BUSINESS SEGMENTS KMI'S INTEREST IN KMP contributed $338.5 million of pre-tax earnings to KMI in 2002, up 49 percent over $227.9 million in 2001, and $90.9 million of pre-tax earnings in the fourth quarter, compared to $62.9 million in the same period the previous year. KMI will receive $354.3 million in total distributions from its investment in KMP for the year, up from $272.8 million for 2001, and $95.1 million in the fourth quarter compared to $73.5 million in the same period the previous year. As KMP's cash flow grows, KMI's general partner share of that cash flow grows as well, up to 50 percent of incremental cash flow. "KMP's cash flow continued to increase in 2002 due to internal growth on its pipeline and terminal assets, along with strong performances from acquired assets," Kinder said. Natural Gas Pipeline Company of America (NGPL) reported 2002 segment earnings of $359.9 million, up 4 percent over 2001, and $91.6 million for the fourth quarter. "NGPL had a terrific year, successfully entering into a number of key transportation and storage contracts with our largest customers, attaching additional power plant load on the system and increasing throughput," Kinder said. Increased throughput does not directly correlate to NGPL's increase in earnings, as the vast majority of firm transportation and storage revenues come from demand charges secured by contracts that customers pay regardless of the amount of natural gas they ship through the pipeline. In December, the Federal Energy Regulatory Commission (FERC) gave final approval to NGPL's request to expand its North Lansing storage field in east Texas. (more) KMI-2002 EARNINGS PAGE 4 The company plans to invest $35.6 million to increase the field's working gas capacity by 10.7 billion cubic feet, all of which is already subscribed under long-term contracts. TRANSCOLORADO, in which KMI increased its ownership to 100 percent effective Oct. 1, 2002, reported segment earnings of $12.6 million for the year and $5.7 million in the fourth quarter, compared to losses in both comparable periods of 2001. "We have been pleased by TransColorado's performance in 2002 and in the fourth quarter, as basis differentials in the region made the pipeline's capacity more valuable to customers," Kinder explained. TransColorado is a 292-mile interstate pipeline that stretches from northwestern Colorado into northern New Mexico. Segment earnings for RETAIL for 2002 were $64.1 million, up 13 percent over 2001, and $25.5 million for the fourth quarter. "Retail's record annual earnings are primarily attributable to strong irrigation demand, an effective hedging program and growth in Colorado," Kinder said. Retail experienced an excellent year for irrigation, primarily in Nebraska, where agricultural customers used high volumes of natural gas to power crop irrigating equipment. KMI's hedging program, designed to normalize winter heating load, continued to reduce revenue volatility related to weather and produced more stable and reliable cash flows. Growth in Colorado was driven by connecting new meters in KMI's existing service territory and a full year of contributions from a small acquisition. POWER, which represented approximately 4 percent of KMI's total segment earnings in 2002, recorded earnings of $36.7 million for the year and nearly $14 million in the fourth quarter before special items, less than in 2001. This previously announced reduction reflects lower power plant development fees. (more) KMI-2002 EARNINGS PAGE 5 OTHER NEWS o As announced one year ago, Vice Chairman William V. Morgan has retired, effective with today's board meeting. "Bill has spent the past year working within the company to ensure a smooth transition," Kinder said. "He obviously has been a key component of Kinder Morgan's success, and we are delighted that he has agreed to continue to be available to the company as an unpaid advisor. President Michael C. Morgan has replaced Bill on KMI's board of directors, and Chief Financial Officer C. Park Shaper has replaced Bill on both KMP's and Kinder Morgan Management, LLC's (NYSE: KMR) boards of directors." Kinder noted that only two seats on each company's board of directors are held by officers of the company. o Kinder Morgan's three-person Office of the Chairman is now comprised of Chairman and CEO Richard D. Kinder, President Michael C. Morgan and Chief Financial Officer C. Park Shaper. o KMI announced that its board of directors has authorized the company to purchase shares of KMR if the shares trade at a significant discount to KMP. The company can begin purchasing shares later this month. Kinder Morgan, Inc. is one of the largest energy transportation and storage companies in America, operating more than 35,000 miles of natural gas and products pipelines. It also has significant retail distribution, electric generation and terminal assets. Kinder Morgan, Inc. owns the general partner interest of Kinder Morgan Energy Partners, L.P., the largest publicly traded pipeline limited partnership in the U.S. in terms of market capitalization. Combined, the two companies have an enterprise value of approximately $19 billion. PLEASE JOIN US AT 4:30 P.M. EASTERN TIME ON WEDNESDAY, JAN. 15, AT www.kindermorgan.com FOR A LIVE WEBCAST CONFERENCE CALL. 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. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein are enumerated in Kinder Morgan's Forms 10-K and 10-Q as filed with the Securities and Exchange Commission. # # # KINDER MORGAN, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months Ended December 31, Twelve Months Ended December 31, --------------------------------- ------------------------------- 2002 2001 2002 2001 -------------- -------------- -------------- ------------- Operating Revenues: Natural Gas Transportation and Storage $ 176,165 $ 166,930 $ 628,172 $ 645,369 Natural Gas Sales 86,579 96,140 312,764 301,994 Other 22,265 20,746 74,319 107,544 -------------- -------------- -------------- ------------- Total Operating Revenues 285,009 283,816 1,015,255 1,054,907 -------------- -------------- -------------- ------------- Operating Costs and Expenses: Gas Purchases and Other Costs of Sales 99,376 93,223 311,224 339,301 Operations and Maintenance 30,556 33,544 125,565 126,553 General and Administrative 20,145 24,221 73,496 73,319 Depreciation and Amortization 28,100 26,811 106,496 105,680 Taxes, Other Than Income Taxes 5,532 6,341 27,282 25,735 Revaluation of Power Investments 134,525 -- 134,525 -- -------------- -------------- -------------- ------------- Total Operating Costs and Expenses 318,234 184,140 778,588 670,588 -------------- -------------- -------------- ------------- Operating Income (Loss) (33,225) 99,676 236,667 384,319 -------------- -------------- -------------- ------------- Other Income and (Expenses): Kinder Morgan Energy Partners: Equity in Earnings 107,108 79,160 392,135 277,504 Amortization of Equity-method Goodwill -- (6,195) -- (25,644) Equity in Earnings (Losses) of Other Equity Investments (260) 3,757 12,791 245 Interest Expense, Net (41,652) (48,500) (161,935) (216,200) Minority Interests (16,171) (11,702) (55,720) (36,740) Other, Net 15,056 8,172 21,141 23,752 -------------- -------------- -------------- ------------- Total Other Income and (Expenses) 64,081 24,692 208,412 22,917 -------------- -------------- -------------- ------------- Income From Continuing Operations Before Income Taxes 30,856 124,368 445,079 407,236 Income Tax Expense (Benefit) (36,648) 52,106 135,912 168,601 -------------- -------------- -------------- ------------- Income From Continuing Operations 67,504 72,262 309,167 238,635 Loss on Disposal of Discontinued Operations (4,986) -- (4,986) -- Extraordinary Item - Loss on Early Extinguishment of Debt, Net of Income Tax Benefits of $618, $893 and $9,044 (1,036) -- (1,456) (13,565) -------------- -------------- -------------- ------------- Net Income $ 61,482 $ 72,262 $ 302,725 $ 225,070 ============== ============== ============== ============= Basic Earnings (Loss) Per Common Share: Income From Continuing Operations $ 0.56 $ 0.62 $ 2.53 $ 2.07 Loss on Disposal of Discontinued Operations (0.04) -- (0.04) -- Extraordinary Item - Loss on Early Extinguishment of Debt (0.01) -- (0.01) (0.12) -------------- -------------- -------------- ------------- Total Basic Earnings Per Common Share $ 0.51 $ 0.62 $ 2.48 $ 1.95 ============== ============== ============== ============= Number of Shares Used in Computing Basic Earnings Per Common Share (Thousands) 121,688 115,892 122,184 115,243 ============== ============== ============== ============= Diluted Earnings (Loss) Per Common Share: Income From Continuing Operations $ 0.55 $ 0.60 $ 2.50 $ 1.97 Loss on Disposal of Discontinued Operations (0.04) -- (0.04) -- Extraordinary Item - Loss on Early Extinguishment of Debt (0.01) -- (0.01) (0.11) -------------- -------------- -------------- ------------- Total Diluted Earnings Per Common Share $ 0.50 $ 0.60 $ 2.45 $ 1.86 ============== ============== ============== ============= Number of Shares Used in Computing Diluted Earnings Per Common Share (Thousands) 122,638 120,298 123,402 121,326 ============== ============== ============== ============= Dividends Per Common Share $ 0.10 $ 0.05 $ 0.30 $ 0.20 ============== ============== ============== =============
Note: As a result of the adoption of SFAS 142 at January 1, 2002, goodwill is no longer amortized. Had this rule been in effect during 2001, income before extraordinary item would have been $76,101 ($0.63 per diluted share) and $254,509 ($2.10 per diluted share) for the three months and twelve months ended December 31, 2001, respectively. Net income would have been $76,101 ($0.63 per diluted share) and $240,944 ($1.99 per diluted share) for the three months and twelve months ended December 31, 2001, respectively. KINDER MORGAN, INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION (UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months Ended Twelve Months Ended December 31 December 31 ------------------------------- ------------------------------ 2002 2001 2002 2001 ------------- ------------- ------------- ------------- Investment in Kinder Morgan Energy Partners: Equity in Earnings $ 107,108 $ 79,160 $ 392,135 $ 277,504 Amortization of Equity-method Goodwill -- (6,195) -- (25,644) Segment Earnings:(1) NGPL 91,612 88,781 359,911 346,569 TransColorado 5,706 (3) 12,648 (5,268) Retail 25,524 23,249 64,056 56,696 Power and Other 14,023 15,743 36,673 65,983 ------------- ------------- ------------- ------------- 243,973 200,735 865,423 715,840 General and Administrative Expenses (20,145) (19,421) (73,496) (68,519) Interest Expense, Net (41,652) (48,500) (161,935) (216,200) Other (14,998) (8,483) (48,591) (26,395) ------------- ------------- ------------- ------------- Income From Continuing Operations Before Income Taxes and Special Items 167,178 124,331 581,401 404,726 Income Taxes, Excluding Special Items 66,634 52,091 230,316 167,597 ------------- ------------- ------------- ------------- Income From Continuing Operations Before Special Items $ 100,544 $ 72,240 $ 351,085 $ 237,129 ============= ============= ============= ============= Diluted Earnings Per Share From Continuing Operations Before Special Items $ 0.82 $ 0.60 $ 2.85 $ 1.96 Special Items: Revaluation of Power Investments (0.68) -- (0.68) -- Income Tax Adjustments 0.42 -- 0.34 -- Other (0.01) -- (0.01) 0.01 ------------- ------------- ------------- ------------- Diluted Earnings Per Share From Continuing Operations $ 0.55 $ 0.60 $ 2.50 $ 1.97 ============= ============= ============= =============
EARNINGS ATTRIBUTABLE TO INVESTMENTS IN KMP
Three Months Ended Twelve Months Ended December 31 December 31 ---------------------------- ---------------------------- 2002 2001 2002 2001 ------------ ------------ ------------ ------------ General Partner Interest, Including Minority Interest in the OLPs $ 75,081 $ 56,321 $ 277,024 $ 206,705 Limited Partner Units (KMP) 9,203 10,497 42,920 42,397 Limited Partner i-units (KMR) 22,824 12,342 72,191 28,402 ------------ ------------ ------------ ------------ 107,108 79,160 392,135 277,504 Amortization of Equity-method Goodwill -- (6,195) -- (25,644) Pre-tax Minority Interest in KMR(2) (16,214) (10,032) (53,631) (23,980) ------------ ------------ ------------ ------------ Pre-tax KMI Earnings from Investments in KMP $ 90,894 $ 62,933 $ 338,504 $ 227,880 ============ ============ ============ ============
ADDITIONAL INFORMATION
Three Months Ended Twelve Months Ended December 31 December 31 ------------------------- ------------------------- 2002 2001 2002 2001 ---------- ---------- ---------- ----------- (Units and Shares in Millions) Average KMP Units Owned by KMI 18.4 26.2 21.9 27.2 KMP Earnings per Unit $ 0.50 $ 0.40 $ 1.96 $ 1.56 Average KMR Shares Owned by KMI 13.2 5.8 9.5 5.0 Average Total KMR Shares Outstanding 45.2 30.4 36.8 21.8
KINDER MORGAN, INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION (UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) VOLUME HIGHLIGHTS
Three Months Ended Twelve Months Ended December 31 December 31 ------------------------ ----------------------- 2002 2001 2002 2001 ----------- ---------- ---------- ---------- Systems Throughput (Trillion Btus): NGPL(3) 388.2 382.4 1,480.5 1,398.9 Retail(4) 12.0 13.4 42.4 42.0 TransColorado(5) 42.8 29.9 155.8 103.1 Btus = British thermal units
- --------------- (1) Operating income before corporate costs plus gains and losses on incidental sales of assets and, for Power, includes earnings from equity method investments and excludes 4th quarter 2002 revaluation of Power investments. Horizon Pipeline, a 50/50 joint venture in which NGPL participates, is included in the NGPL segment. (2) Minority interest, net of tax (as reported in the Consolidated Statements of Income) was $10,614 and $6,019 for the three months ended December 31, 2002 and 2001, respectively and $33,251 and $14,388 for the twelve months ended December 31, 2002 and 2001, respectively. (3) Excludes transport for Kinder Morgan Texas Pipeline. (4) Excludes transport volumes of intrastate pipelines. (5) Includes 100% of TransColorado transportation volumes for all periods. Effective October 1, 2002 Kinder Morgan acquired the 50% of TransColorado that it did not previously own. KINDER MORGAN, INC. AND SUBSIDIARIES PRELIMINARY SUMMARIZED BALANCE SHEET INFORMATION (UNAUDITED) (DOLLARS IN MILLIONS)
December 31 December 31, 2002 2001 ----------- ------------ Assets: Cash and Cash Equivalents $ 36 $ 16 Other Current Assets 369 389 Investments 3,319 3,255 Property, Plant and Equipment, Net 6,034 5,704 Other Assets 358 174 ---------- ---------- Total Assets $ 10,116 $ 9,538 ========== ========== Liabilities and Stockholders' Equity: Notes Payable and Current Maturities of Long-term Debt $ 501 $ 630 Other Current Liabilities 368 480 Other Liabilities and Deferred Credits 2,641 2,670 Long-term Debt: Outstanding 2,852 2,410 Market Value of Interest Rate Swaps 140 (5) ---------- ---------- 2,992 2,405 Capital Trust Securities 275 275 Minority Interests in Equity of Subsidiaries 966 818 Stockholders' Equity 2,373 2,260 ---------- ---------- Total Liabilities and Stockholders' Equity $ 10,116 $ 9,538 ========== ========== Total Debt, Net of Cash and Cash Equivalents, and Excluding the Market Value of Interest Rate Swaps $ 3,317 $ 3,024 ========== ========== Total Capital $ 6,931 $ 6,377 ========== ========== Ratio of Total Debt to Total Capital 47.9% 47.4% ========== ==========
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