Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,361.94 99.38 0.61%
S&P 500 1,853.15 10.17 0.55%
NASDAQ 4,055.64 21.48 0.53%
Ticker Volume Price Price Delta
STOXX 50 3,137.06 45.54 1.47%
FTSE 100 6,588.54 46.93 0.72%
DAX 9,314.65 140.94 1.54%
Ticker Volume Price Price Delta
NIKKEI 14,417.68 420.87 3.01%
TOPIX 1,166.55 30.46 2.68%
HANG SENG 22,696.01 24.75 0.11%

Kinder Morgan, Inc. Increases Quarterly Dividend to $0.37 Per Share



  Kinder Morgan, Inc. Increases Quarterly Dividend to $0.37 Per Share

                 Dividend 19% Higher Than Fourth Quarter 2011

Business Wire

HOUSTON -- January 16, 2013

Kinder Morgan, Inc. (NYSE: KMI) today reported fourth quarter cash available
to pay dividends of $439 million, up 81 percent from $243 million for the
comparable 2011 period. For the full year, KMI reported cash available to pay
dividends of $1.411 billion, up 62 percent from $866 million in 2011 and
substantially exceeding its published annual budget of $985 million.

The board of directors increased the quarterly cash dividend to $0.37 per
share ($1.48 annualized), which is payable on Feb. 15, 2013, to shareholders
of record as of Jan. 31, 2013. This represents an increase of 19 percent from
the fourth quarter 2011 cash dividend per share of $0.31 ($1.24 annualized)
and is up from the third quarter 2012 dividend of $0.36 ($1.44 annualized) per
share.

Chairman and CEO Richard D. Kinder said, “KMI had an outstanding quarter and
an excellent year. Growth was driven by continued strong performance at Kinder
Morgan Energy Partners, L.P. (NYSE: KMP), three quarters of contributions from
El Paso Pipeline Partners, L.P. (NYSE: EPB) and the natural gas assets that
KMI acquired in the El Paso Corporation transaction, which closed in May 2012.
As a result, KMI was able to exceed its initial annual budget of $1.35, meet
our revised target to declare $1.40 per share for the full year and actually
generate $1.55 in cash available per average share outstanding. We are
delighted with the former El Paso employees and assets that have joined Kinder
Morgan, and we have made superb progress in fully integrating the two
companies. KMI has achieved more than $400 million in annual cost savings,
which is higher than our initial estimate of approximately $350 million.
Looking ahead, as the general partner of KMP and EPB, KMI is well positioned
for future growth in North America. We currently have identified approximately
$12 billion in expansion and joint venture investments across the Kinder
Morgan companies that we have, or are confident that we will soon have, under
contract and we are pursuing customer commitments for many more projects.”

Outlook

As previously announced, KMI expects to declare dividends of $1.57 per share
for 2013, a 16 percent increase over its 2012 budget target of $1.35 and a 12
percent increase over its 2012 declared dividend of $1.40 per share. Growth in
2013 is expected to be driven by continued strong performance at KMP, along
with contributions from EPB and the natural gas assets that KMI acquired in
the El Paso Corporation transaction.

The boards of directors of the Kinder Morgan companies approved the 2013
budgets at the January board meeting, and the budgets will be discussed in
detail during the company’s annual analyst conference on Jan. 30, 2013, in
Houston. The conference starts at 8 a.m. CT and will be webcast live.

Other News

  * In 2013, KMI expects to sell (drop down) its 50 percent membership
    interest in Gulf LNG to EPB, and its 50 percent stakes in El Paso Natural
    Gas pipeline and midstream assets to KMP.
  * The Federal Trade Commission approved the previously announced sale of
    former KMP assets to Tallgrass Energy Partners (closed in November 2012),
    which was a regulatory requirement for KMI to complete the El Paso
    Corporation acquisition. KMP sold Kinder Morgan Interstate Gas
    Transmission (KMIGT), Trailblazer Pipeline Company, the Casper-Douglas
    natural gas processing and West Frenchie Draw treating facilities in
    Wyoming, and the company’s 50 percent interest in the Rockies Express
    Pipeline (REX) to Tallgrass for approximately $1.8 billion in cash.
    Including the proportionate amount of REX debt, this amount is equivalent
    to a value of $3.3 billion.

Upcoming Organizational Changes

With the final distribution of KMI shares from the sponsor investors to
management in December 2012 (which wrapped up the KMI management-led buyout),
Richard D. Kinder will continue as chairman and CEO of Kinder Morgan, but
certain members of our corporate and business unit management have indicated
their intention to retire or take a different role in the organization. In
each case, the position will be filled by a long-time Kinder Morgan employee.
The transition will be largely complete by the end of the first quarter of
2013, and each person who is retiring has indicated his willingness to work
beyond the first quarter as necessary to ensure a smooth transition. The key
changes are as follows:

  * Park Shaper, president of Kinder Morgan, will be retiring as president of
    Kinder Morgan, but will remain a member of the KMI board. He will resign
    from the boards of directors of KMR and the general partners of EPB and
    KMP effective March 31, 2013. “Park has been with Kinder Morgan since the
    early days and has contributed an extraordinary amount to our success over
    the years,” Kinder said. “I am delighted that he will continue to be
    involved as a member of the KMI board.” Shaper stated, “My 13 years at
    Kinder Morgan have been an incredible opportunity for me, and I have truly
    enjoyed and benefited from working alongside Rich, Steve Kean and all of
    the remarkable Kinder Morgan employees. The time is right for me to spend
    more time with my family, and I look forward to continuing to serve on the
    KMI board.”
  * Steve Kean, currently executive vice president and COO and a member of the
    boards of directors of KMI and the general partner of EPB, will become
    president and COO of Kinder Morgan effective March 31, 2013. Kean has also
    been elected to the boards of directors of KMR and the general partner of
    KMP effective March 31, 2013. Kean has been with Kinder Morgan for 11
    years, the last six as COO. He has also served as president of the Texas
    Intrastate Pipeline Group and as president of Natural Gas Pipelines.
    Kinder and Kean will comprise the Office of the Chairman of Kinder Morgan.
  * Jeff Armstrong, president of Kinder Morgan Terminals, will become vice
    president of corporate strategy for Kinder Morgan. “We are seeing an
    unprecedented number of opportunities in North American energy that cut
    across business unit lines,” Kinder said. “Jeff is ideally suited to help
    us identify ways to coordinate our efforts across Kinder Morgan and look
    for opportunities to extend our business model to new, related lines of
    business.” Armstrong will be succeeded as president of the Terminals
    business segment by John Schlosser. Schlosser is currently vice president
    of business development for Terminals and has been with Kinder Morgan
    (including his time with a predecessor company) since 1999.
  * Tom Bannigan, president of Products Pipelines, is retiring and will be
    succeeded by Ron McClain, currently vice president of operations and
    engineering for the Products Pipelines group. McClain has been with Kinder
    Morgan (or predecessor companies) for more than 30 years and has headed
    operations and engineering for Products Pipelines since 2005. He
    previously was vice president of engineering for Natural Gas Pipelines.
  * Tim Bradley, president of Kinder Morgan CO[2], is retiring and will be
    succeeded by Jim Wuerth, who is currently vice president of finance and
    accounting for the CO[2] segment. Wuerth has been with Kinder Morgan
    (including his time with a predecessor company) for more than 30 years.
  * Joe Listengart, vice president and general counsel, will be stepping down
    from his current position and will be succeeded by Dave DeVeau, currently
    vice president and deputy general counsel. DeVeau has been with Kinder
    Morgan since 2001 and has been deputy general counsel since 2006.
    Listengart will continue working for the company, assisting as needed on
    significant transactions and other matters. Adam Forman, vice president
    and deputy general counsel, will assume the additional role of corporate
    secretary for the Kinder Morgan entities, reporting to DeVeau.

  * David Kinder, vice president of Corporate Development and treasurer, will
    be retiring and will be succeeded by Dax Sanders as vice president of
    Corporate Development. Sanders has been with the company in a variety of
    senior commercial and financial roles over the last 12 years (including
    Corporate Development), with the exception of a two-year period while he
    earned his MBA at Harvard Business School.
  * Kim Dang, vice president and CFO, will continue as CFO and will also
    assume responsibility for treasury and investor relations. Dang has been
    with the company for 11 years, the last six as CFO, and has served in
    senior roles in finance, accounting and investor relations. David Michels,
    currently vice president of finance, will become vice president of finance
    and investor relations for Kinder Morgan and CFO of EPB, reporting to
    Dang. Also reporting to Dang will be Anthony Ashley. Currently director of
    finance, Ashley will become vice president and treasurer for Kinder
    Morgan.
  * In addition to Rich Kinder, Kean, Dang and Armstrong, the other members of
    the senior management team that are staying with Kinder Morgan include Tom
    Martin, president of Natural Gas Pipelines, along with his entire senior
    commercial management team; Ian Anderson, president of Kinder Morgan
    Canada; and Jim Street, vice president of Human Resources and
    Administration.

Rich Kinder stated, “I am grateful for the tremendous contributions over the
years from Park, Tom, Tim, Joe and David, and I sincerely appreciate their
commitment to ensure a smooth transition. Though it is always difficult to see
talented people leave the organization, I am pleased that all of those who are
being promoted are very capable, have long tenures with Kinder Morgan and are
enthusiastic about their new roles. I am very optimistic about the future of
Kinder Morgan, especially considering the approximately $12 billion in growth
projects we have identified, and believe this team will continue to deliver
value to our unitholders and shareholders.”

Kinder Morgan is the largest midstream and the third largest energy company in
North America with a combined enterprise value of approximately $100 billion.
It owns an interest in or operates approximately 75,000 miles of pipelines and
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. Kinder
Morgan, Inc. (NYSE: KMI) owns the general partner interest of Kinder Morgan
Energy Partners, L.P. (NYSE: KMP) and El Paso Pipeline Partners, L.P. (NYSE:
EPB), along with limited partner interests in KMP and EPB and shares in Kinder
Morgan Management, LLC (NYSE: KMR). For more information please visit
www.kindermorgan.com.

Please join Kinder Morgan at 4:30 p.m. Eastern Time on Wednesday, Jan. 16 at
www.kindermorgan.com for a LIVE webcast conference call on the company’s
fourth quarter earnings.

The non-generally accepted accounting principles, or non-GAAP, financial
measure of cash available to pay dividends is presented in this news release.
This non-GAAP financial measure should not be considered as an alternative 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. These forward-looking
statements are subject to risks and uncertainties and are based on the beliefs
and assumptions of management, based on information currently available to
them. Although Kinder Morgan believes that these forward-looking statements
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 reports filed with the
Securities and Exchange Commission. Forward-looking statements speak only as
of the date they were made, and except to the extent required by law, Kinder
Morgan undertakes no obligation to update or review any forward-looking
statement because of new information, future events or other factors. Because
of these uncertainties, readers should not place undue reliance on these
forward-looking statements.

                                                                    
Kinder Morgan, Inc. and Subsidiaries
Preliminary Cash Available to Pay Dividends
(Non-GAAP, Unaudited)
(In millions)
                                                                      
                       Three Months Ended December     Year Ended December 31,
                       31,
                       2012            2011            2012          2011
KMP distributions
to us
From ownership of
general partner        $  397          $  313          $  1,454      $ 1,217
interest (1)
On KMP units owned        34              26              120          100
by us (2)
On KMR shares             20              16              73           63     
owned by us (3)
Total KMP
distributions to          451             355             1,647        1,380
us (4)
EPB distributions
to us
From ownership of
general partner           46              -               118          -
interest (5)
On EPB units owned        55              -               157          -      
by us (6)
Total EPB
distributions to          101             -               275          -
us
NGPL cash
available for             4               7               11           30     
distribution to us
(4)
                                                                      
Total cash                556             362             1,933        1,410
generated
General and
administrative
expenses and              (4     )        (2    )         (18    )     (9    )
sustaining capital
expenditures
Interest expense          (14    )        (6    )         (181   )     (167  )
                                                                      
Cash available to
pay dividends             538             354             1,734        1,234
before cash taxes
Cash taxes                (109   )        (111  )         (419   )     (368  )
                                                                      
Subtotal - Cash
available to pay          429             243             1,315        866
dividends (4)
                                                                      
El Paso
Corporation's cash
available for
distribution
EP operations -           140             -               518          -
EBITDA (7)
Interest expense          (96    )        -               (315   )     -
(8)
EP general and
administrative            (2     )        -               (37    )     -
expenses
Sustaining capital        (32    )        -               (70    )     -      
expenditures (9)
EP's net cash             10              -               96           -
available (10)
                                                                      
Total -
Consolidated cash      $  439          $  243          $  1,411      $ 866    
available to pay
dividends (11)
Average Shares            1,039           708             908          708
Outstanding
                                                                      
Cash Available Per
Average Share          $  0.42         $  0.34         $  1.55       $ 1.22
Outstanding
Declared Dividend      $  0.37         $  0.31         $  1.40       $ 1.05

 
Notes
       Based on (i) Kinder Morgan Energy Partners, L.P. (KMP) distributions of
       $1.29 and $4.98 per common unit declared for the three months and year
       ended December 31, 2012, respectively, and $1.16 and $4.61 per common
       unit declared for the three months and year ended December 31, 2011,
       respectively, (ii) 340 million and 319 million aggregate common units,
       Class B units and i-units (collectively, KMP units) outstanding as of
       April 30, 2012 and April 29, 2011, respectively, (iii) 347 million and
       330 million aggregate KMP units outstanding as of July 31, 2012 and
       July 29, 2011, respectively, (iv) 365 million and 333 million aggregate
       KMP units outstanding as of October 31, 2012 and October 31, 2011,
(1)    respectively, and (v) 373 million KMP units estimated to be outstanding
       as of January 31, 2013 and 336 million aggregate KMP units outstanding
       as of January 31, 2012, respectively, and (vi) waived incentive
       distributions of $7 million and $26 million for the three months and
       year ended December 31, 2012, respectively, and $7 million and $29
       million for the three months and year ended December 31, 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 of KMP have agreed to
       waive receipt of a portion of our incentive distributions related to
       this investment from the first quarter of 2010 through the first
       quarter of 2013.
       Based on 26 million KMP units owned by us for the six months ended
(2)    December 31, 2012 and 22 million KMP units owned by us in the prior
       periods 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
(3)    and year ended December 31, 2012 and received as distributions for the
       three months and year ended December 31, 2011, respectively. We did not
       sell any KMR shares in 2012 or 2011. We intend periodically to sell the
       KMR shares we receive as distributions to generate cash.
       2011 KMP distributions to us have been presented on a declared basis
(4)    and NGPL amounts have been presented on a cash available basis to be
       consistent with the current year presentation.
       Based on (i) El Paso Pipelines Partners, L.P. (EPB) distributions of
       $0.61 and $1.74 per common unit declared for the three months and nine
(5)    months ended December 31, 2012, respectively, and (ii) 208 million, 216
       million and 216 million common units outstanding as of July 31, 2012,
       October 31, 2012 and estimated to be outstanding as of January 31,
       2013, respectively.
(6)    Based on 90 million EPB units owned by us multiplied by the EPB per
       unit distribution declared, as outlined in footnote (5) above.
(7)    Includes an add back for our share of depreciation expense incurred by
       our equity investees.
       2012 amounts include interest associated with Kinder Morgan, Inc.'s
       (KMI) incremental debt issued to finance the cash portion of the El
       Paso Corporation (EP) acquisition purchase price as well as EP
(8)    consolidated interest expense, excluding EPB. EP interest expense is
       shown on an accrual basis (rather than a cash basis, as KMI is shown).
       Due to the timing of the EP cash interest payments, more than 7/12 of
       the payments occur after May 24.
(9)    Includes our share of sustaining capital expenditures incurred by our
       equity investees.
       Represents cash available from El Paso Corporation (EP), exclusive of
(10)   EPB operations for the period after May 25, 2012 and EP assets dropped
       down to KMP in the 3rd quarter of 2012.
       Excludes $310 million in after-tax expenses associated with the EP
       acquisition and El Paso Energy (EPE) sale for the year ended December
       31, 2012. The year ended December 31, 2012 includes (i) $101 million in
       employee severance, retention and bonus costs, (ii) $55 million of
(11)   accelerated EP stock based compensation allocated to the
       post-combination period under applicable GAAP rules, (iii) $37 million
       in advisory fees, (iv) $68 million write-off associated with the EP
       acquisition (primarily due to debt repayments) or amortization of
       capitalized financing fees, and (v) $67 million for legal fees and
       reserves.

                                                                    
Kinder Morgan, Inc. and Subsidiaries
Preliminary Consolidated Statements of Income (1)
(Unaudited)
(In millions, except per share amounts)
                                                                      
                      Three Months Ended December      Year Ended December 31,
                      31,
                      2012            2011             2012          2011
                                                                      
Revenues              $  3,079        $  1,937         $  9,973      $ 7,943  
                                                                      
Costs, expenses
and other
Operating                1,504           1,056            4,759        4,770
expenses
Depreciation,
depletion and            409             279              1,419        1,068
amortization
General and              113             116              929          515
administrative
Taxes, other than        79              40               286          174
income taxes
Other expense            9               5                (13    )     (7    )
(income)
                         2,114           1,496            7,380        6,520  
                                                                      
Operating income         965             441              2,593        1,423
                                                                      
Other income
(expense)
Earnings from
equity                   115             70               353          226
investments
Amortization of
excess cost of           (14    )        (2     )         (23    )     (7    )
equity
investments
Interest, net            (406   )        (175   )         (1,399 )     (682  )
Other, net               (10    )        6                19           (150  )
                                                                      
Income before            650             340              1,543        810
income taxes
                                                                      
Income tax               (45    )        (112   )         (210   )     (361  )
expense
                                                                      
Income from
continuing               605             228              1,333        449
operations
                                                                      
Income from
discontinued             14              65               159          211
operations
Loss on
remeasurement to
fair value and           (3     )        -                (937   )     -      
disposal of
discontinued
operations
Income (loss)
from discontinued        11              65               (778   )     211    
operations
                                                                      
Net income               616             293              555          660
                                                                      
Net income
attributable to          (267   )        (138   )         (111   )     (66   )
noncontrolling
interests
                                                                      
Net income
attributable to       $  349          $  155           $  444        $ 594    
KMI
                                                                      
Class P Shares
Basic Earnings
Per Common Share
From Continuing       $  0.34         $  0.21          $  0.70       $ 0.70
Operations (2)
(3)
Basic Earnings
(Loss) Per Common
Share From               -               0.01             (0.21  )     0.04   
Discontinued
Operations (1)
Total Basic
Earnings Per          $  0.34         $  0.22          $  0.49       $ 0.74   
Common Share
                                                                      
Class A Shares
Basic Earnings
Per Common Share
From Continuing       $  0.32         $  0.19          $  0.61       $ 0.64
Operations (2)
(3)
Basic Earnings
(Loss) Per Common
Share From               -               0.01             (0.21  )     0.04   
Discontinued
Operations (1)
Total Basic
Earnings Per          $  0.32         $  0.20          $  0.40       $ 0.68   
Common Share
                                                                      
Basic Weighted
Average Number of
Shares
Outstanding
Class P Shares           742             136              461          118    
Class A Shares           294             571              446          589    
                                                                      
Class P Shares
Diluted Earnings
Per Common Share
From Continuing       $  0.34         $  0.21          $  0.70       $ 0.70
Operations (2)
(3)
Diluted Earnings
(Loss) Per Common
Share From               -               0.01             (0.21  )     0.04   
Discontinued
Operations (1)
Total Diluted
Earnings per          $  0.34         $  0.22          $  0.49       $ 0.74   
Common Share
                                                                      
Class A Shares
Diluted Earnings
Per Common Share
From Continuing       $  0.32         $  0.19          $  0.61       $ 0.64
Operations (2)
(3)
Diluted Earnings
(Loss) Per Common
Share From               -               0.01             (0.21  )     0.04   
Discontinued
Operations (1)
Total Diluted
Earnings per          $  0.32         $  0.20          $  0.40       $ 0.68   
Common Share
                                                                      
Diluted Weighted
Average Number of
Shares
Outstanding (4)
Class P Shares           1,039           708              908          708    
Class A Shares           294             571              446          589    
                                                                      
Declared dividend
per common share      $  0.37         $  0.31          $  1.40       $ 1.05   
(5)

 
Notes
      Includes the operations of EP and its consolidated subsidiaries for the
(1)   periods after May 25, 2012 and earnings per share reflect the issuance
      of 330 million shares that were used to provide for the equity portion
      of the EP acquisition purchase price.
      Year ended December 31, 2011 earnings exclude $71 million of Members’
(2)   interest in net income prior to our 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
      earnings per share has been primarily reduced by the dividends paid to
(3)   the Class B shares on February 15, May 15, August 15, and November 15,
      2012. On December 26, 2012, all remaining Class A, B and C shares were
      converted into Class P shares and cancelled.
      Outstanding KMI warrants and convertible preferred securities (assumed
(4)   from the May 25, 2012 EP acquisition) were anti-dilutive during the
      three months and year ended December 31, 2012.
      Year ended 2011 dividend per share has been prorated for the portion of
      the first quarter we were a public company ($0.14 per share). If KMI had
(5)   been a public company for the entire year, the year to date declared
      dividend would have been $1.20 per share ($0.29, $0.30, $0.30 and $0.31
      per share for the first, second, third and fourth quarter of 2011,
      respectively).

                                                                   
Kinder Morgan, Inc. and Subsidiaries
Preliminary Reconciliation of Cash Available to Pay Dividends from Continuing
Operations
(Unaudited)
(In millions)
                                                                     
                            Three Months Ended         Year Ended December 31,
                            December 31,
                            2012           2011        2012         2011
       Income from
       continuing           $  605         $  228      $ 1,333      $ 449
       operations (1)
       Income from
       discontinued            14             65         159          211
       operations (1)
       Income
       attributable            -              -          (37    )     -
       to EPB (2)
       Distributions
       declared by             -              -          82           -
       EPB (2)
       Depreciation,
       depletion and           409            285        1,426        1,092
       amortization
       (3)
       Amortization
       of excess cost
       of equity               14             2          23           7
       investments
       (1)
       Earnings from
       equity                  (121  )        (98  )     (423   )     (313   )
       investments
       (4)
       Distributions
       from equity             91             86         381          287
       investments
       Distributions
       from equity
       investments in          41             51         200          236
       excess of
       cumulative
       earnings
       KMP certain             59             13         92           493
       items (5)
       EP acquisition
       related costs           (5    )        -          463          -
       (6)
       EP certain              3              -          19           -
       items (7)
       KMI deferred
       tax adjustment          (92   )        -          (57    )     -
       (8)
       Difference
       between cash            19             (3   )     (193   )     (32    )
       and book taxes
       Difference
       between cash
       and book                37             36         23           (1     )
       interest
       expense for
       KMI
       Sustaining
       capital                 (161  )        (72  )     (393   )     (213   )
       expenditures
       (9)
       KMP declared
       distribution
       on its limited          (428  )        (350 )     (1,583 )     (1,357 )
       partner units
       owned by the
       public (10)
       EPB declared
       distribution
       on its limited          (77   )        -          (214   )     -
       partner units
       owned by the
       public (11)
       Other (12)              31             -          110          7       
                                                                     
       Cash available
       to pay               $  439         $  243      $ 1,411      $ 866     
       dividends (13)
                                                                     
Notes
(1)    Consists of the corresponding line items in the preceding Preliminary
       Unaudited Consolidated Statements of Income.
       On May 25, 2012, we began recognizing income from our investment in
(2)    EPB, and we received in the third quarter the full distribution for the
       second quarter as we were the holder of record as of July 31, 2012.
                                                        
(3)    Consists of          Three Months Ended         Year Ended December 31,
       the following:       December 31,
                            2012           2011        2012         2011
       Depreciation,
       depletion and
       amortization         $  409         $  279      $ 1,419      $ 1,068   
       from
       continuing
       operations
       Depreciation,
       depletion and
       amortization         $  -           $  6        $ 7          $ 24      
       from
       discontinued
       operations
                                                                     
(4)    Consists of          Three Months Ended         Year Ended December 31,
       the following:       December 31,
                            2012           2011        2012         2011
       Earnings from
       equity
       investments          $  (115  )     $  (70  )   $ (353   )   $ (226   )
       from
       continuing
       operations
       Earnings from
       equity
       investments          $  (6    )     $  (28  )   $ (70    )   $ (87    )
       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. Year ended 2011
       includes (i) $167 million non-cash loss on remeasurement of KMP’s
       previously held equity interest in KinderHawk to fair value, (ii) $234
       million increase to KMP’s legal reserve attributable to rate case and
       other litigation involving KMP’s products pipelines on the West Coast
       and (iii) KMP’s portion ($87 million) of a $100 million special bonus
       expense for non-senior employees, which KMP is required to recognize in
(5)    accordance with U.S. generally accepted accounting principles. However,
       KMP had no obligation, nor did it pay any amounts in respect to such
       bonuses. The 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 4th Quarter 2012
       Earnings Release filed on Form 8-K with the SEC on January 16, 2013.
       Includes pre-tax expenses associated with the EP acquisition and EP
       Energy sale. The year ended December 31, 2012 include (i) $160 million
       in employee severance, retention and bonus costs, (ii) $87 million of
(6)    accelerated EP stock based compensation allocated to the
       post-combination period under applicable GAAP rules, (iii) $37 million
       in advisory fees, (iv) $108 million write-off (primarily due to
       repayments) or amortization of capitalized financing fees, and (v) $94
       million for legal fees and reserves.
(7)    Legacy marketing contracts and associated interest.
(8)    Primarily due to a reduction of FIN 48 income tax reserves.
(9)    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
(10)   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.
(11)   Declared distribution multiplied by EPB limited partner units
       outstanding on the applicable record date less units owned by us.
       Consists of items such as timing and other differences between earnings
       and cash, KMP’s and EPB's cash flow in excess of their distributions,
       non-cash purchase accounting adjustments related to the EP acquisition
(12)   and going private transaction primarily associated with non-cash
       amortization of debt fair value adjustments, and in the year ended 2011
       KMP’s crude hedges, 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 (5) above.
       2011 KMP distributions to us have been presented on a declared basis
(13)   and NGPL amounts have been presented on a cash available basis to be
       consistent with the current year presentation.

                                                                 
Kinder Morgan, Inc. and Subsidiaries
Preliminary Consolidated Balance Sheets
(Unaudited)
(In millions)
                                                                   
                                                 December 31,     December 31,
                                                 2012 (1)         2011
ASSETS                                                             
                                                                   
Cash and cash equivalents - KMI                  $  82            $  2
Cash and cash equivalents - KMP                     518              409
Cash and cash equivalents - EPB                     114              -
Other current assets                                2,838            1,252
Property, plant and equipment, net - KMI            5,601            2,330
Property, plant and equipment, net - KMP            19,638           15,596
Property, plant and equipment, net - EPB            5,931            -
Investments                                         6,091            3,744
Goodwill - KMI                                      18,940           3,638
Goodwill - KMP                                      4,606            1,436
Goodwill - EPB                                      22               -
Deferred charges and other assets                   4,139            2,310    
TOTAL ASSETS                                     $  68,520        $  30,717   
                                                                   
LIABILITIES AND SHAREHOLDERS' EQUITY
                                                                   
Liabilities
Short-term debt:
KMI                                              $  1,068         $  1,261
KMP                                                 1,155            1,638
EPB                                                 93               -
Other current liabilities                           2,982            1,630
Long-term debt:
KMI                                                 10,426           1,978
KMP                                                 14,714           11,183
EPB                                                 4,254            -
Preferred interest in general partner of KMP        100              100
Debt fair value adjustments (2)                     2,591            1,095
Deferred income taxes                               4,054            2,199
Other long-term liabilities                         2,844            1,065    
Total liabilities                                   44,281           22,149   
                                                                   
Shareholders' Equity
Accumulated other comprehensive loss                (119    )        (115    )
Other shareholders' equity                          14,124           3,436    
Total KMI equity                                    14,005           3,321
Noncontrolling interests                            10,234           5,247    
Total shareholders' equity                          24,239           8,568    
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $  68,520        $  30,717   
                                                                   
Debt, net of cash
KMI (3)                                          $  11,412        $  3,237
KMP                                                 15,351           12,412
EPB                                                 4,233            -        
Total Consolidated Debt                          $  30,996        $  15,649   

 
Notes
(1)   Includes the May 25, 2012 acquisition of EP, and its consolidated
      subsidiaries.
      Amounts include the fair value of interest rate swaps, debt discounts
(2)   and premiums, and as of December 31, 2012, purchase price allocation
      adjustments to record EP's debt, including EPB debt, at its May 25, 2012
      fair value.
(3)   Amounts exclude Preferred interest in general partner of KMP.

Contact:

Kinder Morgan, Inc.
Emily Mir, (713) 369-8060
Media Relations
emily_mir@kindermorgan.com
or
Peter Staples, (713) 369-9221
Investor Relations
peter_staples@kindermorgan.com
www.kindermorgan.com
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement