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Kinder Morgan, Inc. Increases Quarterly Dividend to $0.32 Per Share

  Kinder Morgan, Inc. Increases Quarterly Dividend to $0.32 Per Share

Business Wire

HOUSTON -- April 18, 2012

Kinder Morgan, Inc. (NYSE: KMI) today reported first quarter cash available to
pay dividends of $303 million, up 14 percent from $267 million compared to the
same period a year ago and slightly ahead of its published annual budget.

The board of directors increased the quarterly dividend to $0.32 per share
($1.28 annualized), payable on May 16, 2012, to shareholders of record as of
April 30, 2012. This represents a 10 percent increase over the quarterly
dividend of $0.29 per share ($1.16 annualized) that was announced when KMI was
taken public Feb. 16, 2011.

Chairman and CEO Richard D. Kinder said, “KMI had a very good quarter,
benefiting from the performance of our publicly traded limited partnership,
Kinder Morgan Energy Partners (NYSE: KMP). KMI’s future growth will continue
to be driven by KMP, which expects an 8percent increase in declared cash
distributions per unit for 2012 versus 2011, and continues to generate stable
and incremental cash flow from its diversified assets. Approximately 99
percent of the distributions KMI currently receives are attributable to KMP.”

As previously announced, KMI expects to declare dividends of $1.35 per share
for 2012, a 13percent increase over its 2011 declared dividend of $1.20. (The
2011 per share amounts are presented as if KMI were publicly traded for all of
2011.) This 2012 outlook for KMI does not include the impact of its pending
acquisition of ElPaso Corporation (NYSE: EP).

El Paso Acquisition

Integration and Growth Expectations

KMI and El Paso integration teams continue to work together to plan for
combining the two companies, subject to limitations imposed by anti-trust
regulations. “I’m very pleased with the effort that is taking place among the
integration teams of both companies,” Kinder said. “As previously announced,
we expect to realize cost savings and other synergies totaling approximately
$350 million per year. This integration planning effort is being managed and
fully staffed by personnel from each of the two organizations, ensuring that
the people who understand best how to operate these assets are establishing
how they will be managed after we close the deal. This has required remarkable
effort by a large number of people who are each still responsible for their
normal jobs. The value of their contributions will be realized by the combined
organization for many years to come.”

The El Paso acquisition is expected to be nicely accretive to KMI. As a result
of this transaction and KMI’s normal expected annual growth, KMI expects its
dividend per share to grow at an average annual rate of around 12.5 percent
through 2015 from its budgeted 2011 dividend per share of $1.16. “We plan to
update our financial guidance to include the impact of the El Paso transaction
at some point around the close,” Kinder said.

Tentative Election Deadline

A tentative deadline for El Paso shareholders to elect the form of
consideration that they wish to receive has been set for 5:00 p.m., New York
City time, on May 23, 2012. The election deadline may be extended. Subject to
regulatory approval, the close of the merger is expected to occur by the end
of May.

Tentative Federal Trade Commission Agreement

KMI reached an agreement with Federal Trade Commission (FTC) staff to divest
certain KMP assets as a necessary step in order to receive regulatory approval
of the transaction. Subject to final FTC management and Commission approval,
KMI has agreed to sell Kinder Morgan Interstate Gas Transmission, Trailblazer
Pipeline Company, its Casper-Douglas natural gas processing and West Frenchie
Draw treating facilities in Wyoming, and the company’s 50percent interest in
the Rockies Express Pipeline.

Dropdowns

As previously announced, KMI plans to offer (drop down) El Paso assets to KMP
to replace the divested assets. The company expects to drop down all of
Tennessee Gas Pipeline and a portion of El Paso Natural Gas contemporaneously
with the close of KMP’s divestitures, which are expected to occur in the third
quarter this year. It is expected that the combination of the divestitures and
the dropdowns will be neutral to KMP’s distribution per unit in 2012 and
accretive thereafter. El Paso has offered to sell the remaining 14 percent of
Colorado Interstate Gas and all of Cheyenne Plains Pipeline to El Paso
Pipeline Partners, L.P. (NYSE: EPB). Subject to the approval of the boards of
directors of El Paso and EPB, this dropdown transaction is expected to close
contemporaneously with the close of the KMI-EP transaction and is expected to
be immediately accretive to EPB’s distributable cash flow.

Shareholder Votes

On March 9, El Paso shareholders overwhelmingly approved the KMI-El Paso
merger, with more than 95 percent of the shares that voted cast in favor of
the transaction. KMI shareholders approved the transaction on March 2 with all
shares that voted cast in favor of the transaction.

Sale of Exploration and Production Assets

In late February, El Paso entered into a definitive agreement to sell its
exploration and production business, EP Energy Corporation (EP Energy), for
approximately $7.15 billion to affiliates of Apollo Global Management, LLC and
Riverstone Holdings, LLC, who are joined by Access Industries, Inc. and other
parties. The sale of EP Energy, which is dependent upon completion of the
KMI-El Paso transaction and customary closing conditions, is also expected to
close about the same time as that transaction. As previously announced, El
Paso’s net operating loss carryforwards will largely offset taxes associated
with the sale of the exploration and production business, and thus almost the
entire proceeds from this sale will be used to reduce substantially the debt
borrowed by KMI to fund the cash portion of its purchase of El Paso.

Kinder Morgan, Inc. (NYSE: KMI) is a leading pipeline transportation and
energy storage company in North America. It owns an interest in or operates
more than 38,000 miles of pipelines and approximately 180 terminals. Its
pipelines transport natural gas, gasoline, crude oil, CO[2] and other
products, and its terminals store petroleum products and chemicals and handle
such products as ethanol, coal, petroleum coke and steel. KMI owns the general
partner interest of Kinder Morgan Energy Partners, L.P. (NYSE: KMP), one of
the largest publicly traded pipeline limited partnerships in America, along
with limited partner interest in KMP and Kinder Morgan Management, LLC (NYSE:
KMR). It also operates and owns a 20 percent interest in Natural Gas Pipeline
Company of America. Combined, KMI, KMP and KMR constitute the largest
midstream energy entity in the United States with an enterprise value of over
$65billion. For more information please visit www.kindermorgan.com.

Please join Kinder Morgan at 4:30 p.m. Eastern Time on Wednesday, April 18, at
www.kindermorgan.com for a LIVE webcast conference call on the company’s first
quarter earnings.

The non-generally accepted accounting principles, or non-GAAP, financial
measure ofcash available to pay dividends is presented in this news release.
This non-GAAP financial measure should not be considered as analternative to a
GAAP measure such as net income or any other GAAP measure of liquidity or
financial performance. Cash available to pay dividends is a significant metric
used by us and by external users of our financial statements, such as
investors, research analysts, commercial banks and others, to compare basic
cash flows generated by us to the cash dividends we expect to pay our
shareholders on an ongoing basis. Management uses this metric to evaluate our
overall performance. Cash available to pay dividends is also an important
non-GAAP financial measure for our shareholders because it serves as an
indicator of our success in providing a cash return on investment. This
financial measure indicates to investors whether or not we typically are
generating cash flow at a level that can sustain or support an increase in the
quarterly dividends we are paying. Our dividend policy provides that, subject
to applicable law, we will pay quarterly cash dividends generally representing
the cash we receive from our subsidiaries less any cash disbursements and
reserves established by our board of directors. Cash available to pay
dividends is also a quantitative measure used in the investment community
because the value of a share of an entity like KMI that pays out all or a
substantial proportion of its cash flow, is generally determined by the
dividend yield (which in turn is based on the amount of cash dividends the
corporation pays to its shareholders). The economic substance behind our use
of cash available to pay dividends is to measure and estimate the ability of
our assets to generate cash flows sufficient to pay dividends to our
investors.

We believe the GAAP measure most directly comparable to cash available to pay
dividends is income from continuing operations. A reconciliation of cash
available to pay dividends to income from continuing operations is provided in
this release. Our non-GAAP measure described above should not be considered as
an alternative to GAAP net income and has important limitations as an
analytical tool.Our computation of cash available to pay dividends may differ
from similarly titled measures used by others. You should not consider this
non-GAAP measure in isolation or as a substitute for an analysis of our
results as reported under GAAP. Management compensates for the limitations of
this non-GAAP measure by reviewing our comparable GAAP measures, understanding
the differences between the measures and taking this information into account
in its analysis and its decision making processes.

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
include those enumerated in Kinder Morgan’s Forms 10-K and 10-Q as filed with
the Securities and Exchange Commission.

                                                               
Kinder Morgan, Inc. and Subsidiaries
Preliminary Cash Available to Pay Dividends
(Non-GAAP, Unaudited)
(In millions)
                                                                    
                                                  Three Months Ended March 31,
                                                  2012              2011
KMP distributions to us
From ownership of general partner interest (1)    $   331           $  290
On KMP units owned by us (2)                          26               25
On KMR shares owned by us (3)                        17             15   
Total KMP distributions to us (4)                     374              330
NGPL's cash available for distribution to us         11             14   
(4)
                                                                    
Total cash generated                                  385              344
General and administrative expenses and               (3    )          (2   )
sustaining capital expenditures
Interest expense                                     (77   )         (75  )
                                                                    
Cash available to pay dividends before cash           305              267
taxes
Cash taxes                                           (2    )         -    
                                                                    
Cash available to pay dividends (4)               $   303          $  267  


Notes
      Based on (i) Kinder Morgan Energy Partners, L.P. (KMP) distributions of
      $1.20 and $1.14 per common unit declared for the first quarter of 2012
      and 2011, respectively, (ii) 339.7 million and 318.9 million aggregate
      common units, Class B units and i-units estimated to be outstanding as
      of April 30, 2012 and outstanding as of April 29, 2011, respectively,
(1)  and (iii) waived incentive distributions of $6.2 million and $7.1
      million for the first quarter 2012 and 2011, respectively. In
      conjunction with KMP's acquisition of its initial 50% interest in May
      2010, and subsequently, the remaining 50% interest in May 2011 of
      KinderHawk, we as general partner have agreed to waive a portion of our
      incentive distributions related to this investment from the first
      quarter of 2010 through the first quarter of 2013.
(2)   Based on 21.7 million KMP units owned by us multiplied by the KMP per
      unit distribution declared, as outlined in footnote (1) above.
      Assumes that we sold the Kinder Morgan Management, LLC (KMR) shares that
      we estimate to be received as distributions for the three months ended
(3)   March 31, 2012 and received as distributions for the three months ended
      March 31, 2011, respectively. We did not sell any KMR shares in the
      first three months of 2011 or 2012. We intend periodically to sell the
      KMR shares we receive as distributions to generate cash.
      2011 KMP distributions to us have been restated to a declared basis and
(4)   NGPL amounts have been restated to a cash available basis to be
      consistent with the 2012 presentation.

                                                              
Kinder Morgan, Inc. and Subsidiaries
Preliminary Consolidated Statement of Income
(Unaudited)
(In millions, except per share amounts)
                                                                  
                                                                  
                                                  Three Months Ended March 31,
                                                  2012            2011
                                                                  
Revenues                                          $  1,857       $  1,932  
                                                                  
Costs, expenses and other
Operating expenses                                   886             1,091
Depreciation, depletion and amortization             274             250
General and administrative                           129             180
Taxes, other than income taxes                       50              46
Other expense (income)                              2             -      
                                                    1,341         1,567  
                                                                  
Operating income                                     516             365
                                                                  
Other income (expense)
Earnings from equity investments                     65              50
Amortization of excess cost of equity                (2     )        (2     )
investments
Interest, net                                        (179   )        (169   )
Other, net                                          1             2      
                                                                  
Income before income taxes                           401             246
                                                                  
Income tax expense                                  (96    )       (96    )
                                                                  
Income from continuing operations                    305             150
                                                                  
Income from discontinued operations                  50              51
Loss on remeasurement to fair value of              (428   )       -      
discontinued operations
(Loss) income from discontinued operations          (378   )       51     
                                                                  
Net income                                           (73    )        201
                                                                  
Net loss (income) attributable to                   94            (46    )
noncontrolling interests
                                                                  
Net income attributable to KMI                    $  21          $  155    
                                                                  
Class P Shares
Basic Earnings Per Common Share From Continuing   $  0.23         $  0.11
Operations (1) (2)
Basic (Loss) Earnings Per Common Share From         (0.20  )       0.01   
Discontinued Operations (1)
Total Basic Earnings Per Common Share             $  0.03        $  0.12   
                                                                  
Class A Shares
Basic Earnings Per Common Share From Continuing   $  0.21         $  0.11
Operations (1) (2)
Basic (Loss) Earnings Per Common Share From         (0.20  )       0.01   
Discontinued Operations (1)
Total Basic Earnings Per Common Share             $  0.01        $  0.12   
                                                                  
Basic Weighted Average Number of Shares
Outstanding
Class P Shares                                      171           111    
Class A Shares                                      536           596    
                                                                  
Class P Shares
Diluted Earnings Per Common Share From            $  0.23         $  0.11
Continuing Operations (1) (2)
Diluted (Loss) Earnings Per Common Share From       (0.20  )       0.01   
Discontinued Operations (1)
Total Diluted Earnings per Common Share           $  0.03        $  0.12   
                                                                  
Class A Shares
Diluted Earnings Per Common Share From            $  0.21         $  0.11
Continuing Operations (1) (2)
Diluted (Loss) Earnings Per Common Share From       (0.20  )       0.01   
Discontinued Operations (1)
Total Diluted Earnings per Common Share           $  0.01        $  0.12   
                                                                  
Diluted Weighted Average Number of Shares
Outstanding
Class P Shares                                      708           707    
Class A Shares                                      536           596    
                                                                  
Declared dividend per share (3)                   $  0.32        $  0.14   

                                           
Notes
      March 31, 2011 earnings for the first quarter exclude $71 million of
      Members' interest in net income prior to Kinder Morgan, Inc.'s (KMI)
(1)  Initial Public Offering, $67 million of which has been allocated to
      continuing operations and $4 million of which has been allocated to
      discontinued operations.
      The Class A shares earnings per share as compared to the Class P shares
(2)   earnings per share has been reduced by the dividend paid to the Class B
      on February 15, 2012.
      March 31, 2011 dividend per share was prorated for the portion of the
(3)   first quarter KMI was a public company ($0.14 per share). If KMI had
      been a public company for the entire first quarter of 2011, the declared
      dividend would have been $0.29 per share.

                                                               
Kinder Morgan, Inc. and Subsidiaries
Preliminary Reconciliation of Cash Available to Pay Dividends to Income from
Continuing Operations
Including an Interim Capital Transaction
(Unaudited)
(In millions)
                                                                   
                                                  Three Months Ended March 31,
                                                  2012             2011
Income from continuing operations (1)             $   305          $  150
Income from discontinued operations (1)               50              51
Depreciation, depletion and amortization (2)          281             256
Amortization of excess cost of investments (1)        2               2
Earnings from equity investments (2)                  (87    )        (68   )
Distributions from equity investments                 80              64
Distributions from equity investments in excess       48              84
of cumulative earnings
KMP certain items (3)                                 4               88
KMI purchase accounting (4)                           4               (4    )
Difference between cash and book taxes                89              93
Difference between cash and book interest             (36    )        (33   )
expense for KMI
Sustaining capital expenditures (5)                   (44    )        (36   )
KMP declared distribution on its limited              (364   )        (324  )
partner units owned by the public (6)
Other (7)                                            (29    )       (56   )
                                                                   
Cash available to pay dividends (8)               $   303         $  267   

                                                           
Notes
      Consists of the corresponding
      line items in the preceding
(1)  Preliminary
      Unaudited Consolidated Statement
      of Income.
(2)   Consists of the following:                  Three Months Ended March 31,
                                                  2012              2011
      Depreciation, depletion and
      amortization from continuing                $   274          $  250  
      operations
      Depreciation, depletion and
      amortization from discontinued              $   7            $  6    
      operations
      Income from equity investments              $   (65   )       $  (50  )
      from continuing operations
      Income from equity investments              $   (22   )       $  (18  )
      from discontinued operations

      Consists of items such as hedge ineffectiveness, legal and environmental
      reserves, gain/loss on sale, insurance proceeds from casualty losses,
      and asset disposition expenses. First quarter of 2011 also includes
      KMP's portion ($87 million) of a $100 million special bonus expense for
      non-senior employees, which KMP is required to recognize in accordance
      with U.S. generally accepted accounting principles. However, KMP has no
      obligation, nor did it pay any amounts in respect to such bonuses. The
(3)  cost of the $100 million special bonus to non-senior employees was not
      borne by our Class P shareholders. In May of 2011 we paid for the $100
      million of special bonuses, which included the amounts allocated to KMP,
      using $64 million (after-tax) in available earnings and profits reserved
      for this purpose and not paid in dividends to our Class A shareholders.
      KMP adds back these certain items in its calculation of distributable
      cash flow used to determine its distribution. For more information, see
      KMP's 1st Quarter 2012 Earnings Release filed on Form 8-K with the SEC
      on April 18, 2012.
      Consists of non-cash purchase accounting adjustments related to the
(4)   Going Private Transaction primarily associated with non-cash income
      recognized from the revaluation of KMP’s interest rate swap agreements,
      and in the first quarter of 2011 KMP's crude hedges.
(5)   We define sustaining capital expenditures as capital expenditures that
      do not expand the capacity of an asset.
      Declared distribution multiplied by limited partner units outstanding on
      the applicable record date less units owned by us. Includes
(6)   distributions on KMR shares. KMP must generate the cash to cover the
      distributions on the KMR shares, but those distributions are paid in
      additional shares and KMP retains the cash. We do not have access to
      that cash.
      Consists of items such as timing and other differences between earnings
(7)   and cash, KMP's cash flow in excess of its distributions and KMI certain
      items, which includes for the first quarter of 2011, KMI's portion ($13
      million) of the special bonus as described in footnote (3) above.
      2011 KMP distributions to us have been restated to a declared basis and
(8)   NGPL amounts have been restated to a cash available basis to be
      consistent with the 2012 presentation.

                                                              
Kinder Morgan, Inc. and Subsidiaries
Preliminary Consolidated Balance Sheet
(Unaudited)
(In millions)
                                                                  
                                                     March 31,    December 31,
                                                     2012         2011
ASSETS
                                                                  
Cash and cash equivalents - KMI                      $ 3          $  2
Cash and cash equivalents - KMP                        491           409
Other current assets                                   3,408         1,252
Property, plant and equipment, net - KMI               2,388         2,330
Property, plant and equipment, net - KMP               14,916        15,596
Investments - KMI                                      398           398
Investments - KMP                                      1,782         3,346
Goodwill - KMI                                         3,473         3,637
Goodwill - KMP                                         1,356         1,437
Deferred charges and other assets                     2,155       2,310   
TOTAL ASSETS                                         $ 30,370    $  30,717  
                                                                  
LIABILITIES AND SHAREHOLDERS' EQUITY
                                                                  
Liabilities
Short-term debt:
KMI (1)                                              $ 1,235      $  1,261
KMP                                                    891           1,638
Other current liabilities                              1,582         1,630
Long-term debt:
KMI (2)                                                1,948         1,945
KMP                                                    12,156        11,160
Preferred interest in general partner of KMP           100           100
Value of interest rate swaps                           1,026         1,151
Deferred income taxes                                  2,239         2,199
Other long-term liabilities                           1,071       1,065   
Total liabilities                                     22,248      22,149  
                                                                  
Shareholders' Equity
Accumulated other comprehensive loss                   (128   )      (115    )
Other shareholders' equity                            3,244       3,436   
Total KMI equity                                       3,116         3,321
Noncontrolling interests                              5,006       5,247   
Total shareholders' equity                            8,122       8,568   
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY           $ 30,370    $  30,717  
                                                                  
KMI's debt, net of its cash and cash equivalents     $ 3,210      $  3,236
(3)
                                                                  
Cash available from KMP and NGPL (4)                 $ 1,441      $  1,400
                                                                  
Debt to Cash Available                                 2.2           2.3


Notes
      December 31, 2011 amount includes $1 million for an allocation of
(1)  purchase accounting adjustments associated with our 2007 Going Private
      Transaction.
      Amounts include ($35) million and ($37) million as of March 31, 2012 and
(2)   December 31, 2011, respectively, for allocations of purchase accounting
      adjustments.
      Amounts also include $5 million and $4 million as of March 31, 2012 and
      December 31, 2011, respectively, for allocations of purchase accounting
      adjustments related to KMP.
      Amounts include only KMI's short-term and long-term debt, net of its
(3)   cash and its cash equivalents and exclude allocation of purchase
      accounting adjustments described in footnote (1) above and the preferred
      interest in general partner of KMP.
      Cash available from KMP and NGPL is shown net of KMI's G&A and
      sustaining capital expenditures over last 12 months. 2011 KMP
(4)   distributions have been restated to a declared basis and NGPL amounts
      have been restated to a cash available basis to be consistent with the
      2012 presentation.

Contact:

Kinder Morgan, Inc.
Emily Mir, 713-369-8060
Media Relations
emily_mir@kindermorgan.com
or
Mindy Mills Thornock, 713-369-9490
Investor Relations
mindy_thornock@kindermorgan.com
www.kindermorgan.com
 
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