x
|
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
|
Kansas
|
|
48-0290000
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(I.R.S.
Employer
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)
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer þ
|
Smaller
reporting company o
|
|
Page
|
|
|
||
3-4
|
||
5-6
|
||
7-8
|
||
9-65
|
||
|
||
66-97
|
||
|
||
97
|
||
|
||
97
|
||
|
||
|
||
98
|
||
|
||
98-100
|
||
|
||
100
|
||
|
||
100
|
||
|
||
100
|
||
|
||
100
|
||
|
||
101
|
||
|
||
102
|
June
30,
2008
|
December
31,
2007
|
||||||
ASSETS:
|
|||||||
Current
Assets:
|
|||||||
Cash
and Cash Equivalents
|
$
|
180.9
|
$
|
148.6
|
|||
Restricted
Deposits
|
275.0
|
67.9
|
|||||
Accounts,
Notes and Interest Receivable, Net:
|
|||||||
Trade
|
1,423.3
|
970.0
|
|||||
Related
Parties
|
22.1
|
5.2
|
|||||
Inventories:
|
|||||||
Product
|
74.5
|
19.5
|
|||||
Materials
and Supplies
|
19.1
|
18.3
|
|||||
Gas
Imbalances
|
9.7
|
26.9
|
|||||
Assets
Held for Sale
|
-
|
3,353.3
|
|||||
Fair
Value of Derivative Instruments
|
78.0
|
37.1
|
|||||
Other
|
50.9
|
36.8
|
|||||
2,133.5
|
4,683.6
|
||||||
|
|||||||
Notes
Receivable – Related Parties
|
197.4
|
87.9
|
|||||
|
|||||||
Investments
|
1,864.9
|
1,996.2
|
|||||
|
|||||||
Goodwill
|
4,995.7
|
8,174.0
|
|||||
|
|||||||
Other
Intangibles, Net
|
261.0
|
321.1
|
|||||
|
|||||||
Property,
Plant and Equipment, Net:
|
|||||||
Property,
Plant and Equipment
|
15,952.6
|
15,080.9
|
|||||
Accumulated
Depreciation, Depletion and Amortization
|
(673.9
|
)
|
(277.0
|
)
|
|||
15,278.7
|
14,803.9
|
||||||
|
|||||||
Assets
Held for Sale, Non-current
|
-
|
5,634.6
|
|||||
|
|||||||
Deferred
Charges and Other Assets:
|
|||||||
Fair
Value of Derivative Instruments
|
196.2
|
142.4
|
|||||
Other
|
212.0
|
257.3
|
|||||
408.2
|
399.7
|
||||||
|
|||||||
Total
Assets
|
$
|
25,139.4
|
$
|
36,101.0
|
June
30,
2008
|
December
31,
2007
|
||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY:
|
|||||||
Current
Liabilities:
|
|||||||
Current
Maturities of Long-term Debt
|
$
|
275.9
|
$
|
79.8
|
|||
Notes
Payable
|
265.0
|
888.1
|
|||||
Cash
Book Overdrafts
|
49.1
|
30.7
|
|||||
Accounts
Payable:
|
|||||||
Trade
|
1,315.3
|
943.1
|
|||||
Related
Parties
|
2.1
|
0.6
|
|||||
Accrued
Interest
|
219.2
|
242.7
|
|||||
Accrued
Taxes
|
381.2
|
728.2
|
|||||
Gas
Imbalances
|
16.4
|
23.7
|
|||||
Liabilities
Held for Sale
|
-
|
168.2
|
|||||
Fair
Value of Derivative Instruments
|
1,191.4
|
594.7
|
|||||
Other
|
316.8
|
240.0
|
|||||
4,032.4
|
3,939.8
|
||||||
Other
Liabilities and Deferred Credits:
|
|||||||
Deferred
Income Taxes, Non-current
|
1,349.9
|
1,849.4
|
|||||
Liabilities
Held for Sale, Non-current
|
-
|
2,424.1
|
|||||
Fair
Value of Derivative Instruments
|
2,004.5
|
836.8
|
|||||
Other
|
600.0
|
618.0
|
|||||
3,954.4
|
5,728.3
|
||||||
|
|||||||
Long-term
Debt:
|
|||||||
Outstanding
Notes and Debentures
|
10,534.3
|
14,714.6
|
|||||
Deferrable
Interest Debentures Issued to Subsidiary Trusts
|
35.7
|
283.1
|
|||||
Preferred
Interest in General Partner of Kinder Morgan Energy
Partners
|
100.0
|
100.0
|
|||||
Value
of Interest Rate Swaps
|
164.8
|
199.7
|
|||||
|
10,834.8
|
15,297.4
|
|||||
|
|||||||
Minority
Interests in Equity of Subsidiaries
|
2,872.0
|
3,314.0
|
|||||
Commitments
and Contingencies (Note 19)
|
|||||||
|
|||||||
Stockholders’
Equity:
|
|||||||
Common
Stock – Authorized and Outstanding – 100 Shares, Par Value $0.01 Per
Share
|
-
|
-
|
|||||
Additional
Paid-in Capital
|
7,810.0
|
7,822.2
|
|||||
Retained
Earnings (Deficit)
|
(3,507.9
|
)
|
247.0
|
||||
Accumulated
Other Comprehensive Loss
|
(856.3
|
)
|
(247.7
|
)
|
|||
Total
Stockholders’ Equity
|
3,445.8
|
7,821.5
|
|||||
|
|||||||
Total
Liabilities and Stockholders’ Equity
|
$
|
25,139.4
|
$
|
36,101.0
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Three
Months
Ended
June
30, 2008
|
One
Month
Ended
June
30, 2007
|
Two
Months
Ended
May
31, 2007
|
||||||||||
Operating
Revenues:
|
||||||||||||
Natural
Gas Sales
|
$
|
2,464.7
|
$
|
561.9
|
$
|
1,012.7
|
||||||
Transportation
and Storage
|
678.7
|
275.5
|
549.4
|
|||||||||
Oil
and Product Sales
|
417.1
|
99.5
|
158.6
|
|||||||||
Total
Operating Revenues
|
3,560.5
|
936.9
|
1,720.7
|
|||||||||
|
||||||||||||
Operating
Costs and Expenses:
|
||||||||||||
Gas
Purchases and Other Costs of Sales
|
2,494.1
|
557.2
|
1,037.9
|
|||||||||
Operations
and Maintenance
|
314.8
|
106.8
|
189.9
|
|||||||||
General
and Administrative
|
91.8
|
30.0
|
173.2
|
|||||||||
Depreciation,
Depletion and Amortization
|
215.7
|
72.2
|
108.0
|
|||||||||
Taxes,
Other Than Income Taxes
|
51.1
|
15.5
|
30.9
|
|||||||||
Other
Income, Net
|
(2.2
|
)
|
(4.0
|
)
|
(0.1
|
)
|
||||||
Goodwill
Impairment
|
4,033.3
|
-
|
-
|
|||||||||
Total
Operating Costs and Expenses
|
7,198.6
|
777.7
|
1,539.8
|
|||||||||
|
||||||||||||
Operating
Income (Loss)
|
(3,638.1
|
)
|
159.2
|
180.9
|
||||||||
|
||||||||||||
Other
Income and (Expenses):
|
||||||||||||
Earnings
of Equity Investees
|
55.3
|
9.2
|
14.5
|
|||||||||
Interest
Expense, Net
|
(141.6
|
)
|
(83.5
|
)
|
(97.0
|
)
|
||||||
Interest
Expense – Deferrable Interest Debentures
|
(0.6
|
)
|
(1.9
|
)
|
(3.6
|
)
|
||||||
Minority
Interests
|
(126.4
|
)
|
(34.5
|
)
|
(32.5
|
)
|
||||||
Other,
Net
|
10.5
|
0.7
|
(1.6
|
)
|
||||||||
Total
Other Income and (Expenses)
|
(202.8
|
)
|
(110.0
|
)
|
(120.2
|
)
|
||||||
|
||||||||||||
Income
(Loss) from Continuing Operations Before Income Taxes
|
(3,840.9
|
)
|
49.2
|
60.7
|
||||||||
Income
Taxes
|
19.4
|
21.3
|
47.8
|
|||||||||
Income
(Loss) from Continuing Operations
|
(3,860.3
|
)
|
27.9
|
12.9
|
||||||||
Income
(Loss) from Discontinued Operations, Net of Tax
|
(0.3
|
)
|
2.3
|
65.4
|
||||||||
|
||||||||||||
Net
Income (Loss)
|
$
|
(3,860.6
|
)
|
$
|
30.2
|
$
|
78.3
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Six
Months
Ended
June
30, 2008
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
||||||||||
Operating
Revenues:
|
||||||||||||
Natural
Gas Sales
|
$
|
4,186.5
|
$
|
561.9
|
$
|
2,430.6
|
||||||
Transportation
and Storage
|
1,486.6
|
275.5
|
1,350.5
|
|||||||||
Oil
and Product Sales
|
782.4
|
99.5
|
384.0
|
|||||||||
Total
Operating Revenues
|
6,455.5
|
936.9
|
4,165.1
|
|||||||||
|
||||||||||||
Operating
Costs and Expenses:
|
||||||||||||
Gas
Purchases and Other Costs of Sales
|
4,254.7
|
557.2
|
2,490.4
|
|||||||||
Operations
and Maintenance
|
616.6
|
106.8
|
476.1
|
|||||||||
General
and Administrative
|
178.1
|
30.0
|
283.6
|
|||||||||
Depreciation,
Depletion and Amortization
|
433.8
|
72.2
|
261.0
|
|||||||||
Taxes,
Other Than Income Taxes
|
103.6
|
15.5
|
74.4
|
|||||||||
Other
Income, Net
|
(2.7
|
)
|
(4.0
|
)
|
(2.3
|
)
|
||||||
Goodwill
Impairment
|
4,033.3
|
-
|
377.1
|
|||||||||
Total
Operating Costs and Expenses
|
9,617.4
|
777.7
|
3,960.3
|
|||||||||
|
||||||||||||
Operating
Income (Loss)
|
(3,161.9
|
)
|
159.2
|
204.8
|
||||||||
|
||||||||||||
Other
Income and (Expenses):
|
||||||||||||
Earnings
of Equity Investees
|
99.0
|
9.2
|
38.3
|
|||||||||
Interest
Expense, Net
|
(352.3
|
)
|
(83.5
|
)
|
(241.1
|
)
|
||||||
Interest
Expense – Deferrable Interest Debentures
|
6.1
|
(1.9
|
)
|
(9.1
|
)
|
|||||||
Minority
Interests
|
(252.6
|
)
|
(34.5
|
)
|
(90.7
|
)
|
||||||
Other,
Net
|
13.7
|
0.7
|
0.6
|
|||||||||
Total
Other Income and (Expenses)
|
(486.1
|
)
|
(110.0
|
)
|
(302.0
|
)
|
||||||
|
||||||||||||
Income
(Loss) from Continuing Operations Before Income Taxes
|
(3,648.0
|
)
|
49.2
|
(97.2
|
)
|
|||||||
Income
Taxes
|
106.5
|
21.3
|
135.5
|
|||||||||
Income
(Loss) from Continuing Operations
|
(3,754.5
|
)
|
27.9
|
(232.7
|
)
|
|||||||
Income
(Loss) from Discontinued Operations, Net of Tax
|
(0.4
|
)
|
2.3
|
298.6
|
||||||||
|
||||||||||||
Net
Income (Loss)
|
$
|
(3,754.9
|
)
|
$
|
30.2
|
$
|
65.9
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Six
Months
Ended
June
30, 2008
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
||||||||||
Cash
Flows from Operating Activities:
|
||||||||||||
Net
Income (Loss)
|
$
|
(3,754.9
|
)
|
$
|
30.2
|
$
|
65.9
|
|||||
Adjustments
to Reconcile Net Income to Net Cash Flows from Operating
Activities:
|
||||||||||||
Loss
(Income) from Discontinued Operations, Net of Tax
|
0.4
|
(0.5
|
)
|
(287.9
|
)
|
|||||||
Loss
from Goodwill Impairment
|
4,033.3
|
-
|
377.1
|
|||||||||
Loss
on Early Extinguishment of Debt
|
23.6
|
-
|
-
|
|||||||||
Depreciation,
Depletion and Amortization
|
433.8
|
73.0
|
264.9
|
|||||||||
Deferred
Income Taxes
|
33.6
|
4.1
|
138.7
|
|||||||||
Equity
in Earnings of Equity Investees
|
(99.0
|
)
|
(9.5
|
)
|
(39.1
|
)
|
||||||
Distributions
from Equity Investees
|
83.7
|
22.5
|
48.2
|
|||||||||
Minority
Interests in Income of Consolidated Subsidiaries
|
252.6
|
34.5
|
90.7
|
|||||||||
Gains
from Property Casualty Indemnifications
|
-
|
-
|
(1.8
|
)
|
||||||||
Net
Gains on Sales of Assets
|
(2.8
|
)
|
(4.5
|
)
|
(2.6
|
)
|
||||||
Mark-to-Market
Interest Rate Swap Gain
|
(19.8
|
)
|
-
|
-
|
||||||||
Foreign
Currency (Gain) Loss
|
(0.2
|
)
|
-
|
15.5
|
||||||||
Changes
in Gas in Underground Storage
|
(28.0
|
)
|
(5.0
|
)
|
(84.2
|
)
|
||||||
Changes
in Working Capital Items
|
(542.0
|
)
|
107.9
|
(202.9
|
)
|
|||||||
(Payment
for) Proceeds from Termination of Interest Rate Swaps
|
(2.5
|
)
|
-
|
51.9
|
||||||||
Kinder
Morgan Energy Partners’ Rate Reparations, Refunds and Reserve
Adjustments
|
(23.3
|
)
|
-
|
-
|
||||||||
Other,
Net
|
(7.3
|
)
|
(31.9
|
)
|
58.8
|
|||||||
Cash
Flows Provided by Continuing Operations
|
381.2
|
220.8
|
493.2
|
|||||||||
Net
Cash Flows (Used in) Provided by Discontinued Operations
|
(0.5
|
)
|
(2.1
|
)
|
109.8
|
|||||||
Net
Cash Flows Provided by Operating Activities
|
380.7
|
218.7
|
603.0
|
|||||||||
|
||||||||||||
Cash
Flows from Investing Activities:
|
||||||||||||
Purchase
of Predecessor Stock
|
-
|
(11,534.3
|
)
|
-
|
||||||||
Capital
Expenditures
|
(1,269.2
|
)
|
(148.8
|
)
|
(652.8
|
)
|
||||||
Proceeds
from Sale of 80% Interest in NGPL PipeCo LLC, Net of $1.1
Million Cash Sold
|
2,899.3
|
-
|
-
|
|||||||||
Proceeds
from NGPL PipeCo LLC Restricted Cash
|
3,106.4
|
-
|
-
|
|||||||||
Acquisitions
|
(4.2
|
)
|
(5.7
|
)
|
(42.1
|
)
|
||||||
Net
(Investments in) Proceeds from Margin Deposits
|
(207.1
|
)
|
35.8
|
(54.8
|
)
|
|||||||
Distributions
from Equity Investees
|
89.1
|
-
|
-
|
|||||||||
Other
Investments
|
(339.4
|
)
|
(14.6
|
)
|
(29.7
|
)
|
||||||
Change
in Natural Gas Storage and NGL Line Fill Inventory
|
(2.7
|
)
|
1.5
|
8.4
|
||||||||
Property
Casualty Indemnifications
|
-
|
-
|
8.0
|
|||||||||
Net
Proceeds (Cost of Removal) from Sales of Other Assets
|
113.0
|
7.5
|
(1.5
|
)
|
||||||||
Net
Cash Flows Provided by (Used in) Continuing Investing
Activities
|
4,385.2
|
(11,658.6
|
)
|
(764.5
|
)
|
|||||||
Net
Cash Flows Provided by Discontinued Investing Activities
|
-
|
199.9
|
1,488.2
|
|||||||||
Net
Cash Flows Provided by (Used in) Investing Activities
|
$
|
4,385.2
|
$
|
(11,458.7
|
)
|
$
|
723.7
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Six
Months
Ended
June
30, 2008
|
One
Month
Ended
June
30, 2007
|
Five
Months Ended
May
31, 2007
|
||||||||||
Cash
Flows from Financing Activities:
|
||||||||||||
Short-term
Debt, Net
|
$
|
(623.1
|
)
|
$
|
(230.2
|
)
|
$
|
(247.5
|
)
|
|||
Long-term
Debt Issued
|
1,600.1
|
5,305.0
|
1,000.0
|
|||||||||
Long-term
Debt Retired
|
(5,861.5
|
)
|
(455.5
|
)
|
(302.4
|
)
|
||||||
Discount
on Early Extinguishment of Debt
|
69.2
|
-
|
-
|
|||||||||
Cash
Book Overdraft
|
18.5
|
0.5
|
(14.9
|
)
|
||||||||
Common
Stock Issued
|
-
|
-
|
9.9
|
|||||||||
Excess
Tax Benefits from Share-based Payment Arrangements
|
-
|
-
|
56.7
|
|||||||||
Cash
Paid to Share-based Award Holders Due to Going
Private Transaction
|
-
|
(181.1
|
)
|
-
|
||||||||
Issuance
of Kinder Morgan Management, LLC Shares
|
-
|
-
|
297.9
|
|||||||||
Contributions
from Successor Investors
|
-
|
5,112.0
|
-
|
|||||||||
Short-term
Advances (to) from Unconsolidated Affiliates
|
(11.5
|
)
|
(2.3
|
)
|
2.3
|
|||||||
Cash
Dividends, Common Stock
|
-
|
-
|
(234.9
|
)
|
||||||||
Minority
Interests, Contributions
|
384.8
|
-
|
-
|
|||||||||
Minority
Interests, Distributions
|
(300.9
|
)
|
-
|
(248.9
|
)
|
|||||||
Debt
Issuance Costs
|
(12.1
|
)
|
(62.7
|
)
|
(13.1
|
)
|
||||||
Other,
Net
|
3.9
|
-
|
(4.3
|
)
|
||||||||
Net
Cash Flows (Used in) Provided by Continuing Financing
Activities
|
(4,732.6
|
)
|
9,485.7
|
300.8
|
||||||||
Net
Cash Flows Provided by Discontinued Financing Activities
|
-
|
-
|
140.1
|
|||||||||
Net
Cash Flows (Used in) Provided by Financing Activities
|
(4,732.6
|
)
|
9,485.7
|
440.9
|
||||||||
Effect
of Exchange Rate Changes on Cash
|
(1.0
|
)
|
-
|
7.6
|
||||||||
Cash
Balance Included in Assets Held for Sale
|
-
|
-
|
(2.7
|
)
|
||||||||
|
||||||||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
32.3
|
(1,754.3
|
)
|
1,772.5
|
||||||||
Cash
and Cash Equivalents at Beginning of Period
|
148.6
|
1,902.3
|
129.8
|
|||||||||
Cash
and Cash Equivalents at End of Period
|
$
|
180.9
|
$
|
148.0
|
$
|
1,902.3
|
1.
|
General
|
2.
|
Summary
of Significant Accounting Policies
|
(In
millions)
|
|||
The
Total Purchase Price Consisted of the Following:
|
|||
Cash
Paid
|
$
|
5,112.0
|
|
Kinder
Morgan, Inc. Shares Contributed
|
2,719.2
|
||
Equity
Contributed
|
7,831.2
|
||
Cash
from Issuances of Long-term Debt
|
4,696.2
|
||
Total
Purchase Price
|
$
|
12,527.4
|
|
|
|||
The
Allocation of the Purchase Price is as Follows:
|
|||
Current
Assets
|
$
|
1,551.2
|
|
Investments
|
897.8
|
||
Goodwill
|
13,892.4
|
||
Property,
Plant and Equipment, Net
|
15,281.5
|
||
Deferred
Charges and Other Assets
|
1,639.8
|
||
Current
Liabilities
|
(3,279.5
|
)
|
|
Other
Liabilities and Deferred Credits:
|
|||
Deferred
Income Taxes, Non-current
|
(2,499.0
|
)
|
|
Other
Deferred Credits
|
(1,786.3
|
)
|
|
Long-term
Debt
|
(9,855.9
|
)
|
|
Minority
Interests in Equity of Subsidiaries
|
(3,314.6
|
)
|
|
$
|
12,527.4
|
3.
|
Goodwill
|
December
31,
2007
|
Acquisitions
and
Purchase
Price
Adjustments1
|
Impairment
of
Assets
|
Other2
|
June
30,
2008
|
|||||||||||||||||
(In
millions)
|
|||||||||||||||||||||
Products
Pipelines – KMP
|
$
|
2,179.4
|
$
|
(24.3
|
)
|
$
|
(1,113.9
|
)
|
$
|
(6.9
|
)
|
$
|
1,034.3
|
||||||||
Natural
Gas Pipelines – KMP
|
3,201.0
|
444.5
|
(2,242.8
|
)
|
(10.6
|
)
|
1,392.1
|
||||||||||||||
CO2
– KMP
|
1,077.6
|
467.4
|
-
|
(3.7
|
)
|
1,541.3
|
|||||||||||||||
Terminals
– KMP
|
1,465.9
|
-
|
(676.6
|
)
|
(4.5
|
)
|
784.8
|
||||||||||||||
Trans
Mountain – KMP
|
250.1
|
-
|
-
|
(6.9
|
)
|
243.2
|
|||||||||||||||
|
|||||||||||||||||||||
Consolidated
Total
|
$
|
8,174.0
|
$
|
887.6
|
$
|
(4,033.3
|
)
|
$
|
(32.6
|
)
|
$
|
4,995.7
|
1
|
Adjustments
relate primarily to a reallocation between goodwill and property, plant,
and equipment in our final purchase price
allocation.
|
2
|
Adjustments
include (i) the translation of goodwill denominated in foreign currencies
and (ii) reductions in the allocation of equity method goodwill due to
reductions in our ownership percentage of Kinder Morgan Energy
Partners.
|
4.
|
Other
Intangibles
|
June
30,
2008
|
December
31,
2007
|
||||||||||
(In
millions)
|
|||||||||||
Customer
Relationships, Contracts and Agreements:
|
|||||||||||
Gross
Carrying Amount1
|
$
|
270.9
|
$
|
321.3
|
|||||||
Accumulated
Amortization
|
(21.1
|
)
|
(11.6
|
)
|
|||||||
Net
Carrying Amount
|
249.8
|
309.7
|
|||||||||
Technology-based
Assets, Lease Value and Other:
|
|||||||||||
Gross
Carrying Amount
|
11.7
|
11.7
|
|||||||||
Accumulated
Amortization
|
(0.5
|
)
|
(0.3
|
)
|
|||||||
Net
Carrying Amount
|
11.2
|
11.4
|
|||||||||
Total
Other Intangibles, Net
|
$
|
261.0
|
$
|
321.1
|
|
1
|
The
change in the Gross Carrying Amount is due primarily to (i) a decrease of
approximately $18 million for Kinder Morgan Energy Partners’ allocated
purchase price to Marine Terminals, Inc.’s bulk terminal assets and (ii) a
decrease of approximately $32 million for Knight’s allocated purchase
price to the assets belonging to the Products Pipelines, Natural Gas
Pipelines, CO2, and
Terminals segments, related to the Going Private transaction. These
adjustments had the effect of increasing “Goodwill” and decreasing “Other
Intangibles, Net” by that amount.
|
Successor Company
|
Predecessor Company
|
|||||||||||||||||||
Three
Months Ended
June
30,
|
Six
Months
Ended
June,
|
One
Month
Ended
June
30,
|
Two
Months
Ended
May
31,
|
Five
Months
Ended
May
31,
|
||||||||||||||||
2008
|
2008
|
2007
|
2007
|
2007
|
||||||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||||||
Customer
Relationships, Contracts and Agreements
|
$
|
4.4
|
$
|
9.5
|
$
|
1.2
|
$
|
2.5
|
$
|
6.1
|
||||||||||
Technology-based
Assets, Lease Value and Other
|
0.1
|
0.2
|
-
|
0.1
|
0.2
|
|||||||||||||||
Total
Amortization
|
$
|
4.5
|
$
|
9.7
|
$
|
1.2
|
$
|
2.6
|
$
|
6.3
|
5.
|
Accounting
for Minority Interests
|
June
30,
2008
|
December
31,
2007
|
||||||
(In
millions)
|
|||||||
Kinder
Morgan Energy Partners
|
$
|
1,270.7
|
$
|
1,616.0
|
|||
Kinder
Morgan Management, LLC
|
1,558.3
|
1,657.7
|
|||||
Triton
Power Company LLC
|
33.1
|
29.2
|
|||||
Other
|
9.9
|
11.1
|
|||||
$
|
2,872.0
|
$
|
3,314.0
|
6.
|
Asset
Retirement Obligations
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Six
Months
Ended
|
One
Month
Ended
|
Five
Months
Ended
|
||||||||||
June
30, 2008
|
June
30, 2007
|
May
31, 2007
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Beginning
of Period
|
$
|
55.0
|
$
|
53.1
|
$
|
52.5
|
||||||
Additions
|
25.5
|
-
|
0.2
|
|||||||||
Liabilities
Settled
|
(1.8
|
)
|
-
|
(0.7
|
)
|
|||||||
Liabilities
Sold1
|
(2.8
|
)
|
-
|
-
|
||||||||
Accretion
Expense
|
1.4
|
0.2
|
1.1
|
|||||||||
End
of Period
|
$
|
77.3
|
$
|
53.3
|
$
|
53.1
|
|
1
|
ARO
liabilities associated with the NGPL business segment, 80% of which was
sold in February 2008 (see Note
12).
|
7.
|
Related
Party Transactions
|
June
30,
2008
|
December
31,
2007
|
||||||
(In
millions)
|
|||||||
Derivative
Assets (Liabilities):
|
|||||||
Deferred
Charges and Other Assets: Fair Value of Derivative
Instruments
|
$
|
7.8
|
$
|
-
|
|||
Current
Liabilities: Fair Value of Derivative Instruments
|
$
|
(566.7
|
)
|
$
|
(239.8
|
)
|
|
Other
Liabilities and Deferred Credits: Fair Value of Derivative
Instruments
|
$
|
(1,154.5
|
)
|
$
|
(386.5
|
)
|
8.
|
Cash
Flow Information
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Six
Months
Ended
June
30, 2008
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Accounts
Receivable
|
$
|
(463.7
|
)
|
$
|
(12.1
|
)
|
$
|
(31.9
|
)
|
|||
Materials
and Supplies Inventory
|
(5.3
|
)
|
(1.9
|
)
|
(1.7
|
)
|
||||||
Other
Current Assets
|
(34.2
|
)
|
0.5
|
0.5
|
||||||||
Accounts
Payable
|
364.1
|
49.4
|
26.3
|
|||||||||
Other
Current Liabilities
|
(402.9
|
)
|
72.0
|
(196.1
|
)
|
|||||||
$
|
(542.0
|
)
|
$
|
107.9
|
$
|
(202.9
|
)
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Six
Months
Ended
June
30, 2008
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Cash
Paid During the Period for:
|
||||||||||||
Interest,
Net of Amount Capitalized
|
$
|
358.0
|
$
|
41.2
|
$
|
381.8
|
||||||
Income
Taxes Paid, Including Prior Period Amounts
|
$
|
399.6
|
$
|
5.1
|
$
|
133.3
|
9.
|
Income
Taxes
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Three
Months
Ended
June
30, 2008
|
One
Month
Ended
June
30, 2007
|
Two
Months
Ended
May
31, 2007
|
||||||||||
(Dollars
in millions)
|
(Dollars
in
millions)
|
|||||||||||
Income
Taxes
|
$
|
19.4
|
$
|
21.3
|
$
|
47.8
|
||||||
Effective
Tax Rate1
|
10.1
|
%
|
43.3
|
%
|
78.7
|
%
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Six
Months
Ended
June
30, 2008
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
||||||||||
(Dollars
in millions)
|
(Dollars
in
millions)
|
|||||||||||
Income
Taxes
|
$
|
106.5
|
$
|
21.3
|
$
|
135.5
|
||||||
Effective
Tax Rate1
|
27.6
|
%
|
43.3
|
%
|
48.4
|
%
|
|
1
|
Excludes
goodwill impairment charges related to non-deductible goodwill; see Note
3.
|
10.
|
Comprehensive
Income (Loss)
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Three
Months
Ended
June
30, 2008
|
One
Month
Ended
June
30, 2007
|
Two
Months
Ended
May
31, 2007
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Net
Income (Loss)
|
$
|
(3,860.6
|
)
|
$
|
30.2
|
$
|
78.3
|
|||||
Other
Comprehensive Income (Loss), Net of Tax:
|
||||||||||||
Change
in Fair Value of Derivatives Utilized for
Hedging Purposes
|
(577.3
|
)
|
(19.0
|
)
|
0.5
|
|||||||
Reclassification
of Change in Fair Value of Derivatives
to Net Income
|
95.9
|
(0.9
|
)
|
(0.3
|
)
|
|||||||
Employee
Benefit Plans:
|
||||||||||||
Prior
Service Cost Arising During Period
|
(0.1
|
)
|
-
|
(1.7
|
)
|
|||||||
Net
Gain Arising During Period
|
(0.4
|
)
|
-
|
11.4
|
||||||||
Amortization
of Prior Service Cost Included in Net Periodic Benefit
Costs
|
(0.1
|
)
|
-
|
(0.2
|
)
|
|||||||
Amortization
of Net Loss Included in Net
Periodic Benefit Costs
|
0.1
|
-
|
0.5
|
|||||||||
Change
in Foreign Currency Translation Adjustment
|
15.6
|
(1.4
|
)
|
30.8
|
||||||||
Other
Comprehensive Income (Loss)
|
(466.3
|
)
|
(21.3
|
)
|
41.0
|
|||||||
|
||||||||||||
Comprehensive
Income (Loss)
|
$
|
(4,326.9
|
)
|
$
|
8.9
|
$
|
119.3
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Six
Months
Ended
June
30, 2008
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Net
Income (Loss)
|
$
|
(3,754.9
|
)
|
$
|
30.2
|
$
|
65.9
|
|||||
Other
Comprehensive Income (Loss), Net of Tax:
|
||||||||||||
Change
in Fair Value of Derivatives Utilized for Hedging Purposes
|
(797.0
|
)
|
(19.0
|
)
|
(21.3
|
)
|
||||||
Reclassification
of Change in Fair Value of Derivatives
to Net Income
|
211.4
|
(0.9
|
)
|
10.3
|
||||||||
Employee
Benefit Plans:
|
||||||||||||
Prior
Service Cost Arising During Period
|
0.3
|
-
|
(1.7
|
)
|
||||||||
Net
Gain Arising During Period
|
1.1
|
-
|
11.4
|
|||||||||
Amortization
of Prior Service Cost Included in Net
Periodic Benefit Costs
|
-
|
-
|
(0.4
|
)
|
||||||||
Amortization
of Net Loss Included in Net Periodic Benefit Costs
|
(0.1
|
)
|
-
|
1.4
|
||||||||
Change
in Foreign Currency Translation Adjustment
|
(8.7
|
)
|
(1.4
|
)
|
40.1
|
|||||||
Other
Comprehensive Income (Loss)
|
(593.0
|
)
|
(21.3
|
)
|
39.8
|
|||||||
|
||||||||||||
Comprehensive
Income (Loss)
|
$
|
(4,347.9
|
)
|
$
|
8.9
|
$
|
105.7
|
11.
|
Kinder
Morgan Management, LLC
|
12.
|
Business
Combinations, Investments, and
Sales
|
|
·
|
$500
million in principal amount of 6.25% senior notes due July 15,
2013;
|
|
·
|
$550
million in principal amount of 6.85% senior notes due July 15, 2018;
and
|
|
·
|
$250
million in principal amount of 7.50% senior notes due July 15,
2038.
|
13.
|
Discontinued
Operations
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Three
Months
Ended
June
30, 2008
|
One
Month
Ended
June
30, 2007
|
Two
Months
Ended
May
31, 2007
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Operating
Revenues
|
$
|
-
|
$
|
9.8
|
$
|
223.2
|
||||||
Earnings
(Loss) from Discontinued Operations
Before
Income Taxes
|
(0.3
|
)
|
2.3
|
52.4
|
||||||||
Income
Taxes
|
-
|
-
|
13.0
|
|||||||||
Earnings
(Loss) from Discontinued Operations
|
$
|
(0.3
|
)
|
$
|
2.3
|
$
|
65.4
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Six
Months
Ended
June
30, 2008
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Operating
Revenues
|
$
|
-
|
$
|
9.8
|
$
|
921.8
|
||||||
Earnings
(Loss) from Discontinued Operations
Before
Income Taxes
|
(0.4
|
)
|
2.3
|
393.2
|
||||||||
Income
Taxes
|
-
|
-
|
(94.6
|
)
|
||||||||
Earnings
(Loss) from Discontinued Operations
|
$
|
(0.4
|
)
|
$
|
2.3
|
$
|
298.6
|
14.
|
Financing
|
June
30, 2008
|
|||||||||||||
Short-term
Borrowings
Outstanding
Under
Revolving
Credit
Facility
|
Commercial
Paper
Outstanding
|
Weighted-
Average
Interest
Rate of
Short-term
Debt
Outstanding
|
|||||||||||
(In
millions)
|
|||||||||||||
Knight
Inc. – Secured Debt1
|
$
|
265.0
|
$
|
-
|
3.61
|
%
|
|||||||
Kinder
Morgan Energy Partners – Unsecured Debt2
|
$
|
-
|
$
|
-
|
-
|
%
|
|
____________
|
|
1
|
The
average short-term debt outstanding (and related weighted-average interest
rate) was $168.4 million (3.95%) and $180.0 million (4.81%) during the
three and six months ended June 30, 2008,
respectively.
|
|
2
|
The
average short-term debt outstanding (and weighted-average interest rate)
was $380.4 million (2.85%) and $413.6 million (3.50%) during the three and
six months ended June 30, 2008,
respectively.
|
Debt
Paid Down
and/or
Retired
|
|||||
(In
millions)
|
|||||
Knight
Inc.
|
|||||
Senior
Secured Credit Term Loan Facilities:
|
|||||
Tranche
A Term Loan, Due 2013
|
$
|
995.0
|
|||
Tranche
B Term Loan, Due 2014
|
3,183.5
|
||||
Credit
Facility:
|
|||||
$1.0
billion Secured Revolver, Due May 2013
|
375.0
|
||||
Total
Paid Down and/or Retired
|
$
|
4,553.5
|
Par
Value of
Debt
Repurchased
|
|||||
(In
millions)
|
|||||
Knight
Inc.
|
|||||
Debentures:
|
|||||
6.50%
Series, Due 2013
|
$
|
18.9
|
|||
6.67%
Series, Due 2027
|
143.0
|
||||
7.25%
Series, Due 2028
|
461.0
|
||||
7.45%
Series, Due 2098
|
124.1
|
||||
Senior
Notes:
|
|||||
6.50%
Series, Due 2012
|
160.7
|
||||
Kinder
Morgan Finance Company, LLC:
|
|||||
6.40%
Series, Due 2036
|
513.6
|
||||
Deferrable
Interest Debentures Issued to Subsidiary Trusts:
|
|||||
8.56%
Junior Subordinated Deferrable Interest Debentures
Due 2027
|
87.3
|
||||
7.63%
Junior Subordinated Deferrable Interest Debentures
Due 2028
|
160.6
|
||||
Repurchase
of Outstanding Debt
Securities
|
$
|
1,669.2
|
15.
|
Business
Segments
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Three
Months
Ended
June
30, 2008
|
One
Month
Ended
June
30, 2007
|
Two
Months
Ended
May
31, 2007
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Segment
Earnings (Loss) before Depreciation, Depletion, Amortization and
Amortization of Excess Cost of Equity Investments:
|
||||||||||||
NGPL1
|
$
|
8.7
|
$
|
59.4
|
$
|
107.1
|
||||||
Power
|
0.7
|
2.4
|
3.2
|
|||||||||
Express
|
5.2
|
2.7
|
1.8
|
|||||||||
Products
Pipelines – KMP2,
4
|
(977.2
|
)
|
47.4
|
90.7
|
||||||||
Natural
Gas Pipelines – KMP2,
4
|
(2,072.9
|
)
|
49.8
|
93.8
|
||||||||
CO2 –
KMP2
|
250.6
|
57.2
|
84.6
|
|||||||||
Terminals
– KMP2,
4
|
(536.3
|
)
|
38.3
|
71.8
|
||||||||
Trans
Mountain – KMP2
|
33.4
|
8.8
|
20.8
|
|||||||||
Total
Segment Earnings (Loss) Before DD&A
|
(3,287.8
|
)
|
266.0
|
473.8
|
||||||||
Depreciation,
Depletion and Amortization
|
(215.7
|
)
|
(72.2
|
)
|
(108.0
|
)
|
||||||
Amortization
of Excess Cost of Equity Investments
|
(1.4
|
)
|
(0.5
|
)
|
(1.0
|
)
|
||||||
Other
|
17.6
|
0.6
|
2.9
|
|||||||||
Interest
and Corporate Expenses, Net3
|
(355.9
|
)
|
(144.7
|
)
|
(313.6
|
)
|
||||||
Add
Back: Income Taxes Included in Segments Above2
|
2.3
|
-
|
6.6
|
|||||||||
Income
(Loss) from Continuing Operations Before Income Taxes
|
$
|
(3,840.9
|
)
|
$
|
49.2
|
$
|
60.7
|
Revenues
from External Customers:
|
||||||||||||
NGPL1
|
$
|
-
|
$
|
99.2
|
$
|
161.5
|
||||||
Power
|
13.2
|
8.9
|
8.3
|
|||||||||
Products
Pipelines – KMP
|
198.6
|
66.7
|
134.8
|
|||||||||
Natural
Gas Pipelines – KMP
|
2,644.7
|
587.9
|
1,105.2
|
|||||||||
CO2 –
KMP
|
342.5
|
79.8
|
132.6
|
|||||||||
Terminals
– KMP
|
300.4
|
79.5
|
149.3
|
|||||||||
Trans
Mountain – KMP
|
43.4
|
14.4
|
30.0
|
|||||||||
Other
|
17.7
|
0.5
|
(1.0
|
)
|
||||||||
Total
Revenues
|
$
|
3,560.5
|
$
|
936.9
|
$
|
1,720.7
|
||||||
Intersegment
Revenues:
|
||||||||||||
NGPL1
|
$
|
-
|
$
|
0.6
|
$
|
1.4
|
||||||
Terminals
– KMP
|
0.3
|
0.1
|
0.1
|
|||||||||
Other
|
(0.1
|
)
|
-
|
-
|
||||||||
Total
Intersegment Revenues
|
$
|
0.2
|
$
|
0.7
|
$
|
1.5
|
Depreciation,
Depletion and Amortization:
|
||||||||||||
NGPL1
|
$
|
-
|
$
|
5.9
|
$
|
18.3
|
||||||
Power
|
-
|
-
|
0.3
|
|||||||||
Products
Pipelines – KMP
|
28.8
|
8.5
|
13.3
|
|||||||||
Natural
Gas Pipelines – KMP
|
25.8
|
6.8
|
10.8
|
|||||||||
CO2 –
KMP
|
114.4
|
39.8
|
47.4
|
|||||||||
Terminals
– KMP
|
39.1
|
9.5
|
13.9
|
|||||||||
Trans
Mountain – KMP
|
7.5
|
1.5
|
3.5
|
|||||||||
Other
|
0.1
|
0.2
|
0.5
|
|||||||||
Total
Consolidated Depreciation, Depletion and Amortization
|
$
|
215.7
|
$
|
72.2
|
$
|
108.0
|
Capital
Expenditures – Continuing Operations:
|
||||||||||||
NGPL1
|
$
|
-
|
$
|
15.1
|
$
|
28.3
|
||||||
Products
Pipelines – KMP
|
63.5
|
23.3
|
43.2
|
|||||||||
Natural
Gas Pipelines – KMP
|
229.1
|
32.5
|
39.7
|
|||||||||
CO2 –
KMP
|
153.4
|
28.4
|
43.7
|
|||||||||
Terminals
– KMP
|
94.6
|
41.9
|
77.3
|
|||||||||
Trans
Mountain – KMP
|
93.9
|
6.0
|
58.7
|
|||||||||
Other
|
(3.6
|
)
|
1.6
|
4.5
|
||||||||
Total
Capital Expenditures – Continuing Operations
|
$
|
630.9
|
$
|
148.8
|
$
|
295.4
|
1
|
Effective
February 15, 2008, we sold an 80% ownership interest in NGPL to Myria. As
a result of the sale, beginning February 15, 2008, we account for our 20%
ownership interest in NGPL as an equity method
investment.
|
2
|
Income
taxes of Kinder Morgan Energy Partners of $2.3 million and $6.6 million
for the three months ended June 30, 2008 and the two months ended May 31,
2007, respectively, are included in segment earnings before depreciation,
depletion, amortization and amortization of excess cost of equity
investments.
|
3
|
Includes
(i) general and administrative expense, (ii) interest expense, (iii)
minority interests and (iv) miscellaneous other income and expenses not
allocated to business segments.
|
4
|
Three
months ended June 30, 2008 includes a goodwill impairment charge; see Note
3.
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Six
Months
Ended
June
30, 2008
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Segment
Earnings (Loss) before Depreciation, Depletion, Amortization and
Amortization of Excess Cost of Equity
Investments:
|
||||||||||||
NGPL1
|
$
|
104.7
|
$
|
59.4
|
$
|
267.4
|
||||||
Power
|
2.8
|
2.4
|
8.9
|
|||||||||
Express
|
9.2
|
2.7
|
5.4
|
|||||||||
Products
Pipelines – KMP2,
4
|
(836.9
|
)
|
47.4
|
224.4
|
||||||||
Natural
Gas Pipelines – KMP2,
4
|
(1,884.5
|
)
|
49.8
|
228.5
|
||||||||
CO2 –
KMP2
|
483.9
|
57.2
|
210.0
|
|||||||||
Terminals
– KMP2,
4
|
(410.5
|
)
|
38.3
|
172.3
|
||||||||
Trans
Mountain – KMP2,
4
|
63.6
|
8.8
|
(337.4
|
)
|
||||||||
Total
Segment Earnings (Loss) Before DD&A
|
(2,467.7
|
)
|
266.0
|
779.5
|
||||||||
Depreciation,
Depletion and Amortization
|
(433.8
|
)
|
(72.2
|
)
|
(261.0
|
)
|
||||||
Amortization
of Excess Cost of Equity Investments
|
(2.9
|
)
|
(0.5
|
)
|
(2.4
|
)
|
||||||
Other
|
18.4
|
0.6
|
2.9
|
|||||||||
Interest
and Corporate Expenses, Net3
|
(773.3
|
)
|
(144.7
|
)
|
(631.8
|
)
|
||||||
Add
Back: Income Taxes Included in Segments Above2
|
11.3
|
-
|
15.6
|
|||||||||
Income
(Loss) from Continuing Operations Before Income Taxes
|
$
|
(3,648.0
|
)
|
$
|
49.2
|
$
|
(97.2
|
)
|
Revenues
from External Customers:
|
||||||||||||
NGPL1
|
||||||||||||
Power
|
$
|
132.1
|
$
|
99.2
|
$
|
424.5
|
||||||
Products
Pipelines – KMP
|
20.7
|
8.9
|
19.9
|
|||||||||
Natural
Gas Pipelines – KMP
|
396.9
|
66.7
|
331.9
|
|||||||||
CO2 –
KMP
|
4,557.2
|
587.9
|
2,637.6
|
|||||||||
Terminals
– KMP
|
662.4
|
79.8
|
324.2
|
|||||||||
Trans
Mountain – KMP
|
580.4
|
79.5
|
364.2
|
|||||||||
Other
|
86.5
|
14.4
|
62.8
|
|||||||||
Total
Revenues
|
19.3
|
0.5
|
-
|
|||||||||
|
$
|
6,455.5
|
$
|
936.9
|
$
|
4,165.1
|
Intersegment
Revenues:
|
||||||||||||
NGPL1
|
$
|
0.9
|
$
|
0.6
|
$
|
2.0
|
||||||
Natural
Gas Pipelines – KMP
|
-
|
-
|
3.0
|
|||||||||
Terminals
– KMP
|
0.5
|
0.1
|
0.3
|
|||||||||
Other
|
(0.9
|
)
|
-
|
-
|
||||||||
Total
Intersegment
Revenues
|
$
|
0.5
|
$
|
0.7
|
$
|
5.3
|
Depreciation,
Depletion and Amortization:
|
||||||||||||
NGPL1
|
$
|
9.3
|
$
|
5.9
|
$
|
45.3
|
||||||
Power
|
-
|
-
|
(4.2
|
)
|
||||||||
Products
Pipelines – KMP
|
56.7
|
8.5
|
33.6
|
|||||||||
Natural
Gas Pipelines – KMP
|
51.3
|
6.8
|
26.8
|
|||||||||
CO2 –
KMP
|
222.8
|
39.8
|
116.3
|
|||||||||
Terminals
– KMP
|
78.4
|
9.5
|
34.4
|
|||||||||
Trans
Mountain – KMP
|
15.1
|
1.5
|
8.2
|
|||||||||
Other
|
0.2
|
0.2
|
0.6
|
|||||||||
Total
Consolidated Depreciation, Depletion and Amortization
|
$
|
433.8
|
$
|
72.2
|
$
|
261.0
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Six
Months
Ended
June
30, 2008
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Capital
Expenditures – Continuing Operations:
|
||||||||||||
NGPL1
|
$
|
10.2
|
$
|
15.1
|
$
|
77.3
|
||||||
Products
Pipelines – KMP
|
120.8
|
23.3
|
79.5
|
|||||||||
Natural
Gas Pipelines – KMP
|
416.8
|
32.5
|
66.6
|
|||||||||
CO2 –
KMP
|
248.4
|
28.4
|
133.3
|
|||||||||
Terminals
– KMP
|
240.6
|
41.9
|
169.9
|
|||||||||
Trans
Mountain – KMP
|
236.0
|
6.0
|
109.0
|
|||||||||
Other
|
(3.6
|
)
|
1.6
|
17.2
|
||||||||
Total
Capital Expenditures – Continuing Operations
|
$
|
1,269.2
|
$
|
148.8
|
$
|
652.8
|
1
|
Effective
February 15, 2008, we sold an 80% ownership interest in NGPL to Myria. As
a result of the sale, beginning February 15, 2008, we account for our 20%
ownership interest in NGPL as an equity method
investment.
|
2
|
Income
taxes of Kinder Morgan Energy Partners of $11.3 million and $15.6 million
for the six months ended June 30, 2008 and the five months ended May 31,
2007, respectively, are included in segment earnings before depreciation,
depletion, amortization and amortization of excess cost of equity
investments.
|
3
|
Includes
(i) general and administrative expense, (ii) interest expense, (iii)
minority interests and (iv) miscellaneous other income and expenses not
allocated to business segments.
|
4
|
Six
months ended June 30, 2008 and five months ended May 31, 2007 includes
goodwill impairment charges; see Note 3 of the accompanying Notes to
Consolidated Financial Statements.
|
June
30, 2008
|
|||
(In
millions)
|
|||
Assets:
|
|||
NGPL1
|
$
|
708.4
|
|
Power
|
54.3
|
||
Express
|
123.5
|
||
Products
Pipelines – KMP
|
5,566.5
|
||
Natural
Gas Pipelines – KMP
|
7,590.4
|
||
CO2 –
KMP
|
4,426.3
|
||
Terminals
– KMP
|
4,246.7
|
||
Trans
Mountain – KMP
|
1,587.5
|
||
Total
segment assets
|
24,303.6
|
||
Other2
|
835.8
|
||
Total
Consolidated Assets
|
$
|
25,139.4
|
1
|
Effective
February 15, 2008, we sold an 80% ownership interest in NGPL to Myria. As
a result of the sale, beginning February 15, 2008, we account for our 20%
ownership interest in NGPL as an equity method
investment.
|
2
|
Includes
assets of cash, restricted deposits, market value of derivative
instruments (including interest rate swaps) and miscellaneous corporate
assets (such as information technology and telecommunications equipment)
not allocated to individual
segments.
|
Successor
Company
|
|||||||||||||
Three
Months Ended June 30, 2008
|
|||||||||||||
United
States
|
Canada
|
Mexico
and Other2
|
Total
|
||||||||||
(In
millions)
|
|||||||||||||
Revenues:
|
|||||||||||||
NGPL1
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||
Power
|
13.2
|
-
|
-
|
13.2
|
|||||||||
Products
Pipelines – KMP
|
193.7
|
4.9
|
-
|
198.6
|
|||||||||
Natural
Gas Pipelines – KMP
|
2,641.1
|
-
|
3.6
|
2,644.7
|
|||||||||
CO2 –
KMP
|
342.5
|
-
|
-
|
342.5
|
|||||||||
Terminals
– KMP
|
282.8
|
15.5
|
2.1
|
300.4
|
|||||||||
Trans
Mountain
|
3.0
|
40.4
|
-
|
43.4
|
|||||||||
Other
|
16.9
|
0.8
|
-
|
17.7
|
|||||||||
$
|
3,493.2
|
$
|
61.6
|
$
|
5.7
|
$
|
3,560.5
|
Successor
Company
|
|||||||||||||
One
Month Ended June 30, 2007
|
|||||||||||||
United
States
|
Canada
|
Mexico
and
Other2
|
Total
|
||||||||||
(In
millions)
|
|||||||||||||
Revenues:
|
|||||||||||||
NGPL1
|
$
|
99.2
|
$
|
-
|
$
|
-
|
$
|
99.2
|
|||||
Power
|
8.9
|
-
|
-
|
8.9
|
|||||||||
Products
Pipelines –
KMP
|
64.1
|
2.6
|
-
|
66.7
|
|||||||||
Natural
Gas Pipelines –
KMP
|
586.8
|
-
|
1.1
|
587.9
|
|||||||||
CO2 –
KMP
|
79.8
|
-
|
-
|
79.8
|
|||||||||
Terminals
–
KMP
|
75.6
|
3.6
|
0.3
|
79.5
|
|||||||||
Trans
Mountain
|
1.0
|
13.4
|
-
|
14.4
|
|||||||||
Other
|
-
|
0.5
|
-
|
0.5
|
|||||||||
$
|
915.4
|
$
|
20.1
|
$
|
1.4
|
$
|
936.9
|
Predecessor
Company
|
||||||||||||||||||
Two
Months Ended May 31, 2007
|
||||||||||||||||||
United
States
|
Canada
|
Mexico and Other2
|
Total
|
|||||||||||||||
(In
millions)
|
||||||||||||||||||
Revenues:
|
||||||||||||||||||
NGPL1
|
$
|
161.5
|
$
|
-
|
$
|
-
|
$
|
161.5
|
||||||||||
Power
|
8.3
|
-
|
-
|
8.3
|
||||||||||||||
Products
Pipelines –
KMP
|
129.0
|
5.8
|
-
|
134.8
|
||||||||||||||
Natural
Gas Pipelines –
KMP
|
1,102.8
|
-
|
2.4
|
1,105.2
|
||||||||||||||
CO2 –
KMP
|
132.6
|
-
|
-
|
132.6
|
||||||||||||||
Terminals
–
KMP
|
148.5
|
-
|
0.8
|
149.3
|
||||||||||||||
Trans
Mountain
|
2.0
|
28.0
|
-
|
30.0
|
||||||||||||||
Other
|
-
|
(1.0
|
)
|
-
|
(1.0
|
)
|
||||||||||||
$
|
1,684.7
|
$
|
32.8
|
$
|
3.2
|
$
|
1,720.7
|
Successor
Company
|
|||||||||||||
Six
Months Ended June 30, 2008
|
|||||||||||||
United
States
|
Canada
|
Mexico and Other2
|
Total
|
||||||||||
(In
millions)
|
|||||||||||||
Revenues:
|
|||||||||||||
NGPL1
|
$
|
132.1
|
$
|
-
|
$
|
-
|
$
|
132.1
|
|||||
Power
|
20.7
|
-
|
-
|
20.7
|
|||||||||
Products
Pipelines – KMP
|
385.1
|
11.8
|
-
|
396.9
|
|||||||||
Natural
Gas Pipelines – KMP
|
4,550.1
|
-
|
7.1
|
4,557.2
|
|||||||||
CO2 –
KMP
|
662.4
|
-
|
-
|
662.4
|
|||||||||
Terminals
– KMP
|
550.9
|
25.6
|
3.9
|
580.4
|
|||||||||
Trans
Mountain
|
6.0
|
80.5
|
-
|
86.5
|
|||||||||
Other
|
17.7
|
1.6
|
-
|
19.3
|
|||||||||
$
|
6,325.0
|
$
|
119.5
|
$
|
11.0
|
$
|
6,455.5
|
Predecessor
Company
|
|||||||||||||
Five
Months Ended May 31, 2007
|
|||||||||||||
United
States
|
Canada
|
Mexico and Other2
|
Total
|
||||||||||
(In
millions)
|
|||||||||||||
Revenues:
|
|||||||||||||
NGPL1
|
$
|
424.5
|
$
|
-
|
$
|
-
|
$
|
424.5
|
|||||
Power
|
19.9
|
-
|
-
|
19.9
|
|||||||||
Products
Pipelines –
KMP
|
319.7
|
12.2
|
-
|
331.9
|
|||||||||
Natural
Gas Pipelines –
KMP
|
2,631.8
|
-
|
5.8
|
2,637.6
|
|||||||||
CO2 –
KMP
|
324.2
|
-
|
-
|
324.2
|
|||||||||
Terminals
–
KMP
|
362.0
|
2.2
|
364.2
|
||||||||||
Trans
Mountain
|
4.5
|
58.3
|
-
|
62.8
|
|||||||||
$
|
4,086.6
|
$
|
70.5
|
$
|
8.0
|
$
|
4,165.1
|
At
June 30, 2008
|
|||||||||||
United
States
|
Canada
|
Mexico and Other2
|
Total
|
||||||||
(In
millions)
|
|||||||||||
Long-lived Assets3:
|
|||||||||||
NGPL1
|
$
|
708.4
|
$
|
-
|
$
|
-
|
$
|
708.4
|
|||
Power
|
34.5
|
-
|
-
|
34.5
|
|||||||
Express
|
80.5
|
34.5
|
-
|
115.0
|
|||||||
Products
Pipelines – KMP
|
4,318.6
|
113.0
|
-
|
4,431.6
|
|||||||
Natural
Gas Pipelines – KMP
|
4,973.4
|
-
|
90.3
|
5,063.7
|
|||||||
CO2 –
KMP
|
2,618.8
|
-
|
-
|
2,618.8
|
|||||||
Terminals
– KMP
|
2,867.8
|
228.3
|
9.0
|
3,105.1
|
|||||||
Trans
Mountain – KMP
|
25.8
|
1,283.1
|
-
|
1,308.9
|
|||||||
Other
|
353.0
|
10.2
|
-
|
363.2
|
|||||||
$
|
15,980.8
|
$
|
1,669.1
|
$
|
99.3
|
$
|
17,749.2
|
1
|
Effective
February 15, 2008, we sold an 80% ownership interest in NGPL to Myria. As
a result of the sale, beginning February 15, 2008, we account for our 20%
ownership interest in NGPL as an equity method
investment.
|
2
|
Terminals
– KMP includes revenues of $2.1 million and $3.9 million for the
three-month and six-month periods ended June 30, 2008, respectively, $0.3
million for the one month period ended June 30, 2007, $0.8 million and
$2.2 million for the two-month and five-month periods ended May 31, 2007,
respectively, and long-lived assets of $9.0 million at June 30, 2008,
attributable to operations in the
Netherlands.
|
3
|
Long-lived
assets exclude goodwill and other intangibles,
net.
|
16.
|
Accounting
for Derivative Instruments and Hedging
Activities
|
June
30,
2008
|
December
31,
2007
|
|||||||
(In
millions)
|
(In
millions)
|
|||||||
Derivatives
Asset (Liability):
|
||||||||
Current
Assets: Fair Value of Derivative Instruments
|
$
|
77.7
|
$
|
37.1
|
||||
Current
Assets: Assets Held for Sale
|
$
|
-
|
$
|
8.4
|
||||
Deferred
Charges and Other Assets: Fair Value of Derivative
Instruments
|
$
|
37.3
|
$
|
4.4
|
||||
Current
Liabilities: Fair Value of Derivative Instruments
|
$
|
(1,191.4
|
)
|
$
|
(594.7
|
)
|
||
Current
Liabilities: Liabilities Held for Sale
|
$
|
-
|
$
|
(0.4
|
)
|
|||
Other
Liabilities and Deferred Credits: Fair Value of Derivative
Instruments
|
$
|
(1,974.5
|
)
|
$
|
(836.8
|
)
|
|
·
|
Level
1 Inputs—quoted prices (unadjusted) in active markets for identical assets
or liabilities that the reporting entity has the ability to access at the
measurement date;
|
|
·
|
Level
2 Inputs—inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly. If
the asset or liability has a specified (contractual) term, a Level 2 input
must be observable for substantially the full term of the asset or
liability; and
|
|
·
|
Level
3 Inputs—unobservable inputs for the asset or liability. These
unobservable inputs reflect the entity’s own assumptions about the
assumptions that market participants would use in pricing the asset or
liability, and are developed based on the best information available in
the circumstances (which might include the reporting entity’s own
data).
|
Asset
Fair Value Measurements as of June 30, 2008 Using
|
||||||||||||||||
Total
|
Quoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Energy
Commodity Derivative Contracts1
|
$
|
115.0
|
$
|
-
|
$
|
79.1
|
$
|
35.9
|
||||||||
Interest
Rate Swap Agreements
|
$
|
158.9
|
$
|
-
|
$
|
158.9
|
$
|
-
|
Liability
Fair Value Measurements as of June 30, 2008 Using
|
||||||||||||||||
Total
|
Quoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Energy
Commodity Derivative Contracts2
|
$
|
(3,165.9
|
)
|
$
|
(6.7
|
)
|
$
|
(2,890.3
|
)
|
$
|
(268.9
|
)
|
||||
Interest
Rate Swap Agreements
|
$
|
(30.0
|
)
|
$
|
-
|
$
|
(30.0
|
)
|
$
|
-
|
||||||
Cross
Currency Swaps
|
$
|
(49.5
|
)
|
$
|
-
|
$
|
(49.5
|
)
|
$
|
-
|
1
|
Level
2 consists primarily of OTC West Texas Intermediate hedges. Level 3
consists primarily of West Texas Sour hedges and West Texas Intermediate
options.
|
2
|
Level
1 consists primarily of NYMEX Natural Gas futures. Level 2
consists primarily of OTC West Texas Intermediate hedges. Level 3 consists
primarily of West Texas Sour hedges and West Texas Intermediate
options.
|
Significant Unobservable Inputs
(Level 3)
|
|||||||
Three
Months
Ended
June
30, 2008
|
Six
Months
Ended
June
30, 2008
|
||||||
(In
millions)
|
|||||||
Net
Asset (Liability)
|
|||||||
Beginning
Balance
|
$
|
(123.8
|
)
|
$
|
(100.3
|
)
|
|
Realized
and Unrealized Net Losses
|
(141.5
|
)
|
(186.3
|
)
|
|||
Purchases
and Settlements
|
32.3
|
53.6
|
|||||
Transfers
in (out) of Level 3
|
-
|
-
|
|||||
Balance
as of June 30, 2008
|
$
|
(233.0
|
)
|
$
|
(233.0
|
)
|
|
Change
in Unrealized Net Losses Relating to Contracts Still Held as of June 30,
2008
|
$
|
(123.1
|
)
|
$
|
(160.8
|
)
|
17.
|
Employee
Benefits
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||||||
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
One
Month Ended
June
30,
|
Two
Months Ended
May
31,
|
Five
Months Ended
May
31,
|
||||||||||||||||
2008
|
2008
|
2007
|
2007
|
2007
|
||||||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||||||
Service
Cost
|
$
|
2.8
|
$
|
5.6
|
$
|
0.9
|
$
|
1.8
|
$
|
4.5
|
||||||||||
Interest
Cost
|
3.6
|
7.2
|
1.1
|
2.2
|
5.6
|
|||||||||||||||
Expected
Return on Assets
|
(5.8
|
)
|
(11.6
|
)
|
(1.9
|
)
|
(3.8
|
)
|
(9.6
|
)
|
||||||||||
Amortization
of Prior Service Credit
|
-
|
-
|
-
|
-
|
0.1
|
|||||||||||||||
Amortization
of Net
Loss
|
-
|
-
|
-
|
-
|
0.2
|
|||||||||||||||
Net
Periodic Pension Cost
|
$
|
0.6
|
$
|
1.2
|
$
|
0.1
|
$
|
0.2
|
$
|
0.8
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||||||
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
One
Month Ended
June
30,
|
Two
Months Ended
May
31,
|
Five
Months Ended
May
31,
|
||||||||||||||||
2008
|
2008
|
2007
|
2007
|
2007
|
||||||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||||||
Service
Cost
|
$
|
0.1
|
$
|
0.2
|
$
|
-
|
$
|
0.1
|
$
|
0.2
|
||||||||||
Interest
Cost
|
1.1
|
2.2
|
0.4
|
0.8
|
1.9
|
|||||||||||||||
Expected
Return on Assets
|
(1.6
|
)
|
(3.2
|
)
|
(0.5
|
)
|
(1.1
|
)
|
(2.7
|
)
|
||||||||||
Amortization
of Prior Service Credit
|
-
|
-
|
-
|
(0.3
|
)
|
(0.7
|
)
|
|||||||||||||
Amortization
of Net
Loss
|
(0.2
|
)
|
(0.3
|
)
|
-
|
0.7
|
2.0
|
|||||||||||||
Net
Periodic Postretirement Benefit Cost
|
$
|
(0.6
|
)
|
$
|
(1.1
|
)
|
$
|
(0.1
|
)
|
$
|
0.2
|
$
|
0.7
|
|
Terasen
Inc. Retirement Plans – Components of Net Periodic Pension
Cost:
|
Predecessor
Company
|
|||||||
For
the Period
April
1 – May 17,
|
For
the Period
January
1 – May 17,
|
||||||
2007
|
2007
|
||||||
(In
millions)
|
|||||||
Service
Cost
|
$
|
0.9
|
$
|
2.7
|
|||
Interest
Cost
|
1.5
|
4.4
|
|||||
Expected
Return on Assets
|
(1.9
|
)
|
(5.5
|
)
|
|||
Plan
Amendments
|
-
|
-
|
|||||
Other
|
-
|
0.1
|
|||||
Net
Periodic Pension Cost
|
0.5
|
1.7
|
|||||
Defined
Contribution Cost
|
-
|
-
|
|||||
Total
Pension Costs
|
$
|
0.5
|
$
|
1.7
|
|
Other
Postretirement Employee Benefits – Components of Net Periodic Pension
Cost:
|
Predecessor
Company
|
|||||||
For
the Period
April
1 – May 17,
|
For
the Period
January
1 – May 17,
|
||||||
2007
|
2007
|
||||||
(In
millions)
|
|||||||
Service
Cost
|
$
|
0.2
|
$
|
0.6
|
|||
Interest
Cost
|
0.5
|
1.4
|
|||||
Net
Periodic Postretirement Benefit Cost
|
$
|
0.7
|
$
|
2.0
|
18.
|
Regulatory
Matters
|
|
·
|
the
Standards of Conduct apply only to the relationship between interstate
natural gas transmission pipelines and their marketing affiliates, not
their energy affiliates;
|
|
·
|
all
risk management personnel can be
shared;
|
|
·
|
the
requirement to post discretionary tariff actions was eliminated (but
interstate natural gas pipelines must still maintain a log of
discretionary tariff waivers);
|
|
·
|
lawyers
providing legal advice may be shared employees;
and
|
|
·
|
new
interstate natural gas transmission pipelines are not subject to the
Standards of Conduct until they commence
service.
|
19.
|
Litigation,
Environmental and Other
Contingencies
|
|
·
|
FERC
Docket No. OR92-8, et
al.—Complainants/Protestants: Chevron; Navajo; ARCO; BP WCP;
Western Refining; ExxonMobil ; Tosco; and Texaco (Ultramar is an
intervenor)—Defendant: SFPP
|
|
·
|
FERC
Docket No. OR92-8-025—Complainants/Protestants: BP WCP; ExxonMobil ;
Chevron; ConocoPhillips; and Ultramar—Defendant:
SFPP
|
|
·
|
FERC
Docket No. OR96-2, et
al.—Complainants/Protestants: All Shippers except Chevron (which is
an intervenor)—Defendant: SFPP
|
|
·
|
FERC
Docket Nos. OR02-4 and OR03-5—Complainant/Protestant: Chevron—Defendant:
SFPP
|
|
·
|
FERC
Docket No. OR04-3—Complainants/Protestants: America West Airlines;
Southwest Airlines; Northwest Airlines; and Continental
Airlines—Defendant: SFPP
|
|
·
|
FERC
Docket Nos. OR03-5, OR05-4 and OR05-5—Complainants/Protestants: BP WCP;
ExxonMobil ; and ConocoPhillips (other shippers intervened)—Defendant:
SFPP
|
|
·
|
FERC
Docket No. OR03-5-001—Complainants/Protestants: BP WCP; ExxonMobil ; and
ConocoPhillips (other shippers intervened)—Defendant:
SFPP
|
|
·
|
FERC
Docket No. OR07-1—Complainant/Protestant: Tesoro—Defendant:
SFPP
|
|
·
|
FERC
Docket No. OR07-2—Complainant/Protestant: Tesoro—Defendant:
SFPP
|
|
·
|
FERC
Docket No. OR07-3—Complainants/Protestants: BP WCP; Chevron; ExxonMobil;
Tesoro; and Valero Marketing—Defendant:
SFPP
|
|
·
|
FERC
Docket No. OR07-4—Complainants/Protestants: BP WCP; Chevron; and
ExxonMobil—Defendants: SFPP; Kinder Morgan G.P., Inc.; and Knight
Inc.
|
|
·
|
FERC
Docket Nos. OR07-5 and OR07-7 (consolidated)—Complainants/Protestants:
ExxonMobil and Tesoro—Defendants: Calnev; Kinder Morgan G.P., Inc.; and
Knight Inc.
|
|
·
|
FERC
Docket No. OR07-6—Complainant/Protestant: ConocoPhillips—Defendant:
SFPP
|
|
·
|
FERC
Docket No. OR07-8 (consolidated with Docket No.
OR07-11)—Complainant/Protestant: BP WCP—Defendant:
SFPP
|
|
·
|
FERC
Docket No. OR07-9—Complainant/Protestant: BP WCP—Defendant:
SFPP
|
|
·
|
FERC
Docket No. OR07-11 (consolidated with Docket No.
OR07-8)—Complainant/Protestant: ExxonMobil —Defendant:
SFPP
|
|
·
|
FERC
Docket No. OR07-14—Complainants/Protestants: BP WCP and
Chevron—Defendants: SFPP; Calnev, and several
affiliates
|
|
·
|
FERC
Docket No. OR07-16—Complainant/Protestant: Tesoro—Defendant:
Calnev
|
|
·
|
FERC
Docket No. OR07-18—Complainants/Protestants: Airline Complainants;
Chevron; and Valero Marketing—Defendant:
Calnev
|
|
·
|
FERC
Docket No. OR07-19—Complainant/Protestant: ConocoPhillips—Defendant:
Calnev
|
|
·
|
FERC
Docket No. OR07-20—Complainant/Protestant: BP WCP—Defendant:
SFPP
|
|
·
|
FERC
Docket No. OR07-22—Complainant/Protestant: BP WCP—Defendant:
Calnev
|
|
·
|
FERC
Docket No. IS05-230 (North Line rate case)—Complainants/Protestants:
Shippers—Defendant: SFPP
|
|
·
|
FERC
Docket No. IS05-327—Complainants/Protestants: Shippers—Defendant:
SFPP
|
|
·
|
FERC
Docket No. IS06-283 (East Line rate case)—Complainants/Protestants:
Shippers—Defendant: SFPP
|
|
·
|
FERC
Docket No. IS06-296—Complainant/Protestant: ExxonMobil —Defendant:
Calnev
|
|
·
|
FERC
Docket No. IS06-356—Complainants/Protestants: Shippers—Defendant:
SFPP
|
|
·
|
FERC
Docket No. IS07-137 (Ultra Low Sulfur Diesel (ULSD)
surcharge)—Complainants/Protestants: Shippers—Defendant:
SFPP
|
|
·
|
FERC
Docket No. IS07-229—Complainants/Protestants: BP WCP and ExxonMobil
—Defendant: SFPP
|
|
·
|
FERC
Docket No. IS07-234—Complainants/Protestants: BP WCP and ExxonMobil
—Defendant: Calnev
|
|
·
|
FERC
Docket No. IS08-28—Complainants/Protestants: ConocoPhillips; Chevron; BP
WCP; ExxonMobil ; Southwest Airlines; Western; and Valero—Defendant:
SFPP
|
|
·
|
FERC
Docket No. IS08-302—Complainants/Protestants: Chevron; BP WCP; ExxonMobil;
and Tesoro—Defendant: SFPP
|
|
·
|
FERC
Docket No. IS08-389—Complainants/Protestants: ConocoPhillips, Valero,
Southwest Airlines Co., Navajo, Western—Defendant:
SFPP
|
|
·
|
FERC
Docket No. IS08-390—Complainants/Protestants: BP WCP, ExxonMobil,
ConocoPhillips, Valero, Chevron, the Airlines—Defendant:
SFPP
|
|
·
|
Motions
to compel payment of interim damages (various
dockets)—Complainants/Protestants: Shippers—Defendants: SFPP; Kinder
Morgan G.P., Inc.; and Knight Inc.
|
20.
|
Recent
Accounting Pronouncements
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||
Three
Months
Ended
June
30, 2008
|
Three
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Two
Months
Ended
May
31, 2007
|
||||||||||||||
(In
millions)
|
(In
millions)
|
||||||||||||||||
Segment
Earnings (Loss) before Depreciation, Depletion and Amortization Expense
and Amortization of Excess Cost of Equity Investments:1
|
|||||||||||||||||
NGPL
|
$
|
8.7
|
$
|
166.5
|
$
|
59.4
|
$
|
107.1
|
|||||||||
Power
|
0.7
|
5.6
|
2.4
|
3.2
|
|||||||||||||
Express
|
5.2
|
4.5
|
2.7
|
1.8
|
|||||||||||||
Products
Pipelines – KMP2
|
(977.2
|
)
|
138.1
|
47.4
|
90.7
|
||||||||||||
Natural
Gas Pipelines – KMP2
|
(2,072.9
|
)
|
143.6
|
49.8
|
93.8
|
||||||||||||
CO2 –
KMP
|
250.6
|
141.8
|
57.2
|
84.6
|
|||||||||||||
Terminals
– KMP2
|
(536.3
|
)
|
110.1
|
38.3
|
71.8
|
||||||||||||
Trans
Mountain – KMP2
|
33.4
|
29.6
|
8.8
|
20.8
|
|||||||||||||
Segment
Earnings (Loss) before Depreciation, Depletion and Amortization Expense
and Amortization of Excess Cost of Equity Investments
|
(3,287.8
|
)
|
739.8
|
266.0
|
473.8
|
||||||||||||
Depreciation,
Depletion and Amortization Expense
|
(215.7
|
)
|
(180.2
|
)
|
(72.2
|
)
|
(108.0
|
)
|
|||||||||
Amortization
of Excess Cost of Equity Investments
|
(1.4
|
)
|
(1.5
|
)
|
(0.5
|
)
|
(1.0
|
)
|
|||||||||
Other
|
17.6
|
3.5
|
0.6
|
2.9
|
|||||||||||||
Interest
and Corporate Expenses, Net
|
(355.9
|
)
|
(458.3
|
)
|
(144.7
|
)
|
(313.6
|
)
|
|||||||||
Income
(Loss) from Continuing Operations before Income Taxes1
|
(3,843.2
|
)
|
103.3
|
49.2
|
54.1
|
||||||||||||
Income
Taxes1
|
(17.1
|
)
|
(62.5
|
)
|
(21.3
|
)
|
(41.2
|
)
|
|||||||||
Income
(Loss) from Continuing Operations
|
(3,860.3
|
)
|
40.8
|
27.9
|
12.9
|
||||||||||||
Income
(Loss) from Discontinued Operations, Net of Tax
|
(0.3
|
)
|
67.7
|
2.3
|
65.4
|
||||||||||||
Net
Income (Loss)
|
$
|
(3,860.6
|
)
|
$
|
108.5
|
$
|
30.2
|
$
|
78.3
|
1
|
Income
taxes of Kinder Morgan Energy Partners of $2.3 million, $6.6 million and
$6.6 million for the three months ended June 30, 2008, the combined three
months ended June 30, 2007 and the two months ended May 31, 2007,
respectively, are included in segment
earnings.
|
2
|
Results
include non-cash goodwill charges; see Note 3 of the accompanying Notes to
Consolidated Financial Statements.
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||
Six
Months
Ended
June
30, 2008
|
Six
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
||||||||||||||
(In
millions)
|
(In
millions)
|
||||||||||||||||
Segment
Earnings (Loss) before Depreciation, Depletion and Amortization Expense
and Amortization of Excess Cost of Equity Investments:1
|
|||||||||||||||||
NGPL
|
$
|
104.7
|
$
|
326.8
|
$
|
59.4
|
$
|
267.4
|
|||||||||
Power
|
2.8
|
11.3
|
2.4
|
8.9
|
|||||||||||||
Express
|
9.2
|
8.1
|
2.7
|
5.4
|
|||||||||||||
Products
Pipelines – KMP2
|
(836.9
|
)
|
271.8
|
47.4
|
224.4
|
||||||||||||
Natural
Gas Pipelines – KMP2
|
(1,884.5
|
)
|
278.3
|
49.8
|
228.5
|
||||||||||||
CO2 –
KMP
|
483.9
|
267.2
|
57.2
|
210.0
|
|||||||||||||
Terminals
– KMP2
|
(410.5
|
)
|
210.6
|
38.3
|
172.3
|
||||||||||||
Trans
Mountain – KMP2
|
63.6
|
(328.6
|
)
|
8.8
|
(337.4
|
)
|
|||||||||||
Segment
Earnings (Loss) before Depreciation, Depletion and Amortization Expense
and Amortization of Excess Cost of Equity Investments
|
(2,467.7
|
)
|
1,045.5
|
266.0
|
779.5
|
||||||||||||
Depreciation,
Depletion and Amortization Expense
|
(433.8
|
)
|
(333.2
|
)
|
(72.2
|
)
|
(261.0
|
)
|
|||||||||
Amortization
of Excess Cost of Equity Investments
|
(2.9
|
)
|
(2.9
|
)
|
(0.5
|
)
|
(2.4
|
)
|
|||||||||
Other
|
18.4
|
3.5
|
0.6
|
2.9
|
|||||||||||||
Interest
and Corporate Expenses, Net
|
(773.3
|
)
|
(776.5
|
)
|
(144.7
|
)
|
(631.8
|
)
|
|||||||||
Income
(Loss) from Continuing Operations before Income Taxes1
|
(3,659.3
|
)
|
(63.6
|
)
|
49.2
|
(112.8
|
)
|
||||||||||
Income
Taxes1
|
(95.2
|
)
|
(141.2
|
)
|
(21.3
|
)
|
(119.9
|
)
|
|||||||||
Income
(Loss) from Continuing Operations
|
(3,754.5
|
)
|
(204.8
|
)
|
27.9
|
(232.7
|
)
|
||||||||||
Income
(Loss) from Discontinued Operations, Net of Tax
|
(0.4
|
)
|
300.9
|
2.3
|
298.6
|
||||||||||||
Net
Income (Loss)
|
$
|
(3,754.9
|
)
|
$
|
96.1
|
$
|
30.2
|
$
|
65.9
|
1
|
Income
taxes of Kinder Morgan Energy Partners of $11.3 million, $15.6 million,
and $15.6 million for the six months ended June 30, 2008, the combined six
months ended June 30, 2007, and the five months ended May 31, 2007,
respectively, are included in segment
earnings.
|
2
|
Results
include non-cash goodwill charges; see Note 3 of the accompanying Notes to
Consolidated Financial Statements.
|
Business
Segment
|
Business
Conducted
|
Referred
to As:
|
|
Natural
Gas Pipeline Company of
America
and certain affiliates
|
The
ownership and operation of a major interstate natural gas pipeline and
storage system until February 14, 2008, after which time an equity method
investment; see Note 12 of the accompanying Notes to Consolidated
Financial Statements.
|
Natural
Gas Pipeline Company of America, or NGPL
|
|
Power
Generation
|
The
ownership and operation of natural gas-fired electric generation
facilities. Our principal remaining power assets were sold in January
2008; see Note 12 of the accompanying Notes to Consolidated Financial
Statements.
|
Power
|
|
Express
Pipeline System
|
The
ownership of a one-third interest in the Express and Platte Pipelines, a
crude pipeline system, which investment we account for under the equity
method, and certain related entities.
|
Express
|
|
Petroleum
Products Pipelines (Kinder Morgan Energy Partners)
|
The
ownership and operation of refined petroleum products pipelines that
deliver gasoline, diesel fuel, jet fuel and natural gas liquids to various
markets; plus associated product terminals and petroleum pipeline transmix
processing facilities.
|
Products
Pipelines – KMP
|
|
Natural
Gas Pipelines (Kinder Morgan Energy Partners)
|
The
ownership and operation of major interstate and intrastate natural gas
pipeline and storage systems.
|
Natural
Gas Pipelines – KMP
|
|
CO2
(Kinder Morgan Energy Partners)
|
The
production, transportation and marketing of carbon dioxide (CO2) to
oil fields that use CO2 to
increase production of oil; plus ownership interests in and/or operation
of oil fields in West Texas; plus the ownership and operation of a crude
oil pipeline system in West Texas.
|
CO2 –
KMP
|
|
Liquids
and Bulk Terminals (Kinder Morgan Energy Partners)
|
The
ownership and/or operation of liquids and bulk terminal facilities and
rail transloading and materials handling facilities that together
transload, store and deliver a wide variety of bulk, petroleum,
petrochemical and other liquids products.
|
Terminals
– KMP
|
|
Trans
Mountain Pipeline (Kinder Morgan Energy Partners)
|
The
ownership and operation of crude and refined petroleum pipelines,
principally located in Canada.
|
Trans
Mountain – KMP
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||
Three
Months
Ended
June
30, 2008
|
Three
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Two
Months
Ended
May
31, 2007
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Segment
Earnings Before DD&A
|
$
|
8.7
|
$
|
166.5
|
$
|
59.4
|
$
|
107.1
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||
Six
Months
Ended
June
30, 2008
|
Six
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Segment
Earnings Before DD&A
|
$
|
104.7
|
$
|
326.8
|
$
|
59.4
|
$
|
267.4
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||
Three
Months Ended
June
30, 2008
|
Three
Months Ended
June
30, 2007
|
One
Month Ended
June
30, 2007
|
Two
Months Ended
May
31, 2007
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Operating
Revenues
|
$
|
13.2
|
$
|
17.2
|
$
|
8.9
|
$
|
8.3
|
||||||||
Operating
Expenses and Minority Interests
|
(12.5
|
)
|
(14.8
|
)
|
(7.8
|
)
|
(7.0
|
)
|
||||||||
Equity
in Earnings of Thermo Cogeneration Partnership
|
-
|
3.2
|
1.3
|
1.9
|
||||||||||||
Segment
Earnings Before DD&A
|
$
|
0.7
|
$
|
5.6
|
$
|
2.4
|
$
|
3.2
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||
Six
Months
Ended
June
30, 2008
|
Six
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Operating
Revenues
|
$
|
20.7
|
$
|
28.8
|
$
|
8.9
|
$
|
19.9
|
||||||||
Operating
Expenses and Minority Interests
|
(17.9
|
)
|
(23.9
|
)
|
(7.8
|
)
|
(16.1
|
)
|
||||||||
Equity
in Earnings of Thermo Cogeneration Partnership
|
-
|
6.4
|
1.3
|
5.1
|
||||||||||||
Segment
Earnings Before DD&A
|
$
|
2.8
|
$
|
11.3
|
$
|
2.4
|
$
|
8.9
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||
Three
Months Ended
June
30, 2008
|
Three
Months Ended
June
30, 2007
|
One
Month Ended
June
30, 2007
|
Two
Months Ended
May
31, 2007
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Segment
Earnings Before DD&A
|
$
|
5.2
|
$
|
4.5
|
$
|
2.7
|
$
|
1.8
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||
Six
Months
Ended
June
30, 2008
|
Six
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Segment
Earnings Before DD&A
|
$
|
9.2
|
$
|
8.1
|
$
|
2.7
|
$
|
5.4
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||
Three
Months
Ended
June
30, 2008
|
Three
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Two
Month
Ended
May
31, 2007
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Operating
Revenues
|
$
|
198.5
|
$
|
201.4
|
$
|
66.8
|
$
|
134.6
|
||||||||
Operating
Expenses1
|
(68.5
|
)
|
(71.4
|
)
|
(23.1
|
)
|
(48.3
|
)
|
||||||||
Other
Income (Expense)2
|
(0.2
|
)
|
1.0
|
1.1
|
(0.1
|
)
|
||||||||||
Goodwill
Impairment3
|
(1,113.9
|
)
|
-
|
-
|
-
|
|||||||||||
Earnings
from Equity Investments
|
5.5
|
8.5
|
2.9
|
5.6
|
||||||||||||
Interest
Income and Other Income (Expense), Net4
|
1.3
|
4.2
|
0.6
|
3.6
|
||||||||||||
Income
Tax Benefit (Expense)
|
0.1
|
(5.6
|
)
|
(0.9
|
)
|
(4.7
|
)
|
|||||||||
Segment
Earnings (Loss) Before DD&A
|
$
|
(977.2
|
)
|
$
|
138.1
|
$
|
47.4
|
$
|
90.7
|
|||||||
|
||||||||||||||||
Operating
Statistics:
|
||||||||||||||||
Gasoline
(MMBbl)
|
100.5
|
113.6
|
38.0
|
75.6
|
||||||||||||
Diesel
Fuel (MMBbl)
|
41.6
|
42.0
|
13.5
|
28.5
|
||||||||||||
Jet
Fuel (MMBbl)
|
29.9
|
31.9
|
10.8
|
21.1
|
||||||||||||
Total
Refined Product Volumes (MMBbl)
|
172.0
|
187.5
|
62.3
|
125.2
|
||||||||||||
Natural
Gas Liquids (MMBbl)
|
6.1
|
5.9
|
1.8
|
4.1
|
||||||||||||
Total
Delivery Volumes (MMBbl)5
|
178.1
|
193.4
|
64.1
|
129.3
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||
Six
Months
Ended
June
30, 2008
|
Six
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Operating
Revenues
|
$
|
396.9
|
$
|
398.5
|
$
|
66.8
|
$
|
331.7
|
||||||||
Operating
Expenses1
|
(130.9
|
)
|
(139.4
|
)
|
(23.1
|
)
|
(116.3
|
)
|
||||||||
Other
Income (Expense)2
|
(0.3
|
)
|
0.5
|
1.1
|
(0.6
|
)
|
||||||||||
Goodwill
Impairment3
|
(1,113.9
|
)
|
-
|
-
|
-
|
|||||||||||
Earnings
from Equity Investments
|
10.3
|
15.3
|
2.9
|
12.4
|
||||||||||||
Interest
Income and Other Income (Expense), Net4
|
1.8
|
5.3
|
0.6
|
4.7
|
||||||||||||
Income
Tax Expense
|
(0.8
|
)
|
(8.4
|
)
|
(0.9
|
)
|
(7.5
|
)
|
||||||||
Segment
Earnings (Loss) Before DD&A
|
$
|
(836.9
|
)
|
$
|
271.8
|
$
|
47.4
|
$
|
224.4
|
|||||||
|
||||||||||||||||
Operating
Statistics:
|
||||||||||||||||
Gasoline
(MMBbl)
|
198.4
|
220.8
|
38.0
|
182.8
|
||||||||||||
Diesel
Fuel (MMBbl)
|
80.2
|
80.1
|
13.5
|
66.6
|
||||||||||||
Jet
Fuel (MMBbl)
|
59.6
|
62.1
|
10.8
|
51.3
|
||||||||||||
Total
Refined Product Volumes (MMBbl)
|
338.2
|
363.0
|
62.3
|
300.7
|
||||||||||||
Natural
Gas Liquids (MMBbl)
|
13.0
|
15.5
|
1.8
|
13.7
|
||||||||||||
Total
Delivery Volumes (MMBbl)5
|
351.2
|
378.5
|
64.1
|
314.4
|
1
|
2008
amounts include a $3.0 million decrease in expense to our Pacific
operations and a $3.0 million increase in expense to our Calnev Pipeline
associated with offsetting legal liability adjustments. For the two and
five months ended May 31, 2007, amounts include an increase in expense of
$2.2 million associated with environmental liability
adjustments.
|
2
|
June
2007 results include a $1.8 million decrease in segment earnings resulting
from valuation adjustments related to assets sold in June, recorded in the
application of the purchase method of accounting to the Going Private
transaction (see Note 2 of the accompanying Notes to Consolidated
Financial Statements).
|
3
|
2008
amount includes a non-cash goodwill impairment charge of $1,113.9
million.
|
4
|
Three
and six month 2008 amounts include an increase in income of $0.1 million
and a decrease in income of $0.7 million, respectively, resulting from
unrealized foreign currency losses on long-term debt transactions. One
month ended June 30, 2007 amounts include an increase in income of $0.8
million resulting from unrealized foreign currency gains on long-term debt
transactions.
|
5
|
Includes
Pacific, Plantation, Calnev, Central Florida, Cochin and Cypress pipeline
volumes.
|
EBDA
Increase/(Decrease)
|
Revenues
Increase/(Decrease)
|
||||||||||||
Pacific
Operations
|
$
|
(4.6
|
)
|
(7
|
)%
|
$
|
(0.4
|
)
|
—
|
||||
West
Coast Terminals
|
(2.4
|
)
|
(17
|
)%
|
(0.2
|
)
|
(1
|
)%
|
|||||
Cochin
Pipeline System
|
(1.3
|
)
|
(18
|
)%
|
(5.7
|
)
|
(34
|
)%
|
|||||
Central
Florida Pipeline
|
2.1
|
23
|
%
|
2.0
|
18
|
%
|
|||||||
Southeast
Terminals
|
1.0
|
9
|
%
|
0.4
|
2
|
%
|
|||||||
All
Other (Including Eliminations)
|
0.5
|
2
|
%
|
1.0
|
2
|
%
|
|||||||
Total
Products Pipelines
|
$
|
(4.7
|
)
|
(3
|
)%
|
$
|
(2.9
|
)
|
(1
|
)%
|
EBDA
Increase/(Decrease)
|
Revenues
Increase/(Decrease)
|
||||||||||||
Pacific
Operation
|
$
|
(1.4
|
)
|
(1
|
)%
|
$
|
2.6
|
1
|
%
|
||||
West
Coast Terminals
|
(2.3
|
)
|
(9
|
)%
|
1.0
|
3
|
%
|
||||||
Cochin
Pipeline System
|
(1.8
|
)
|
(10
|
)%
|
(12.5
|
)
|
(33
|
)%
|
|||||
Central
Florida Pipeline
|
2.9
|
16
|
%
|
2.4
|
11
|
%
|
|||||||
Southeast
Terminals
|
3.4
|
17
|
%
|
2.0
|
5
|
%
|
|||||||
All
Other (Including Eliminations)
|
1.9
|
3
|
%
|
2.9
|
3
|
%
|
|||||||
Total
Products Pipelines
|
$
|
2.7
|
1
|
%
|
$
|
(1.6
|
)
|
-
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||
Three
Months Ended
June
30, 2008
|
Three
Months Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Two
Months
Ended
May
31, 2007
|
||||||||||||||
(In
millions)
|
(In
millions)
|
||||||||||||||||
Operating
Revenues
|
$
|
2,644.7
|
$
|
1,693.1
|
$
|
587.9
|
$
|
1,105.2
|
|||||||||
Operating
Expenses1
|
(2,515.2
|
)
|
(1,555.0
|
)
|
(542.2
|
)
|
(1,012.8
|
)
|
|||||||||
Other
Income (Expense)2
|
2.7
|
1.3
|
1.4
|
(0.1
|
)
|
||||||||||||
Goodwill
Impairment3
|
(2,242.8
|
)
|
-
|
-
|
-
|
||||||||||||
Earnings
from Equity Investments4
|
31.3
|
3.8
|
1.3
|
2.5
|
|||||||||||||
Interest
Income and Other Income (Expense), Net
|
4.7
|
0.2
|
-
|
0.2
|
|||||||||||||
Income
Tax Benefit (Expense)
|
1.7
|
0.2
|
1.4
|
(1.2
|
)
|
||||||||||||
Segment
Earnings (Loss) Before DD&A
|
$
|
(2,072.9
|
)
|
$
|
143.6
|
$
|
49.8
|
$
|
93.8
|
||||||||
|
|||||||||||||||||
Operating
Statistics:
|
|||||||||||||||||
Natural
Gas Transport Volumes (Trillion Btus)5
|
545.1
|
429.5
|
127.1
|
302.4
|
|||||||||||||
Natural
Gas Sales Volumes (Trillion Btus)6
|
224.9
|
207.6
|
70.8
|
136.8
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||
Six
Months
Ended
June
30, 2008
|
Six
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
||||||||||||||
(In
millions)
|
(In
millions)
|
||||||||||||||||
Operating
Revenues
|
$
|
4,557.2
|
$
|
3,228.5
|
$
|
587.9
|
$
|
2,640.6
|
|||||||||
Operating
Expenses1
|
(4,260.2
|
)
|
(2,960.7
|
)
|
(542.2
|
)
|
(2,418.5
|
)
|
|||||||||
Other
Income (Expense)2
|
2.7
|
1.3
|
1.4
|
(0.1
|
)
|
||||||||||||
Goodwill
Impairment3
|
(2,242.8
|
)
|
-
|
-
|
-
|
||||||||||||
Earnings
from Equity Investments4
|
54.9
|
10.2
|
1.3
|
8.9
|
|||||||||||||
Interest
Income and Other Income (Expense), Net
|
4.9
|
0.2
|
-
|
0.2
|
|||||||||||||
Income
Tax Benefit (Expense)
|
(1.2
|
)
|
(1.2
|
)
|
1.4
|
(2.6
|
)
|
||||||||||
Segment
Earnings (Loss) Before DD&A
|
$
|
(1,884.5
|
)
|
$
|
278.3
|
$
|
49.8
|
$
|
228.5
|
||||||||
|
|||||||||||||||||
Operating
Statistics:
|
|||||||||||||||||
Natural
Gas Transport Volumes (Trillion Btus)5
|
1,040.5
|
834.5
|
127.1
|
707.4
|
|||||||||||||
Natural
Gas Sales Volumes (Trillion Btus)6
|
440.0
|
416.6
|
70.8
|
345.8
|
1
|
Three
and six month 2008 amounts include a $13.1 million increase in expense
resulting from unrealized mark to market losses due to the discontinuance
of hedge accounting. Beginning in the second quarter of 2008, our Casper
and Douglas gas processing operations discontinued hedge accounting.
Amounts also include increases in segment earnings of $0.3 million and
$0.5 million for the three and six month periods ended June 30, 2008,
respectively, and of $0.4 million for both the three and six month periods
ended June 30, 2007, resulting from valuation adjustments related to
derivative contracts in
|
|
place
at the time of the Going Private transaction and recorded in the
application of the purchase method of accounting (see Note 2 of the
accompanying Notes to Consolidated Financial
Statements).
|
2
|
June
2007 amounts include a $1.4 million decrease in segment earnings resulting
from valuation adjustments, related to assets sold in June, recorded in
the application of the purchase method of accounting to the Going Private
transaction (see Note 2 of the accompanying Notes to Consolidated
Financial Statements).
|
3
|
2008
amount includes a non-cash goodwill impairment charge of $2,242.8
million.
|
4
|
Six
month 2007 amount includes an expense of $1.0 million reflecting our
portion of a loss from the early extinguishment of debt by Red Cedar
Gathering Company.
|
5
|
Includes
Kinder Morgan Interstate Gas Transmission LLC, Trailblazer Pipeline
Company LLC, TransColorado Gas Transmission Company LLC, Rockies Express
Pipeline LLC, and Texas intrastate natural gas pipeline group pipeline
volumes.
|
6
|
Represents
Texas intrastate natural gas pipeline group
volumes.
|
EBDA
Increase/(Decrease)
|
Revenues
Increase/(Decrease)
|
||||||||||||
Rockies
Express Pipeline
|
$
|
28.5
|
724
|
%
|
$
|
—
|
n/a
|
||||||
Texas
Intrastate Natural Gas Pipeline Group
|
4.5
|
5
|
%
|
928.3
|
58
|
%
|
|||||||
TransColorado
Pipeline
|
3.0
|
28
|
%
|
3.1
|
25
|
%
|
|||||||
Kinder
Morgan Louisiana Pipeline
|
3.0
|
n/a
|
—
|
n/a
|
|||||||||
Casper
and Douglas Gas Processing
|
(2.1
|
)
|
(42
|
)%
|
17.8
|
77
|
%
|
||||||
All
Others
|
1.2
|
2
|
%
|
2.4
|
4
|
%
|
|||||||
Intrasegment
Eliminations
|
—
|
n/a
|
—
|
n/a
|
|||||||||
Total
Natural Gas Pipelines
|
$
|
38.1
|
26
|
%
|
$
|
951.6
|
56
|
%
|
EBDA
Increase/(Decrease)
|
Revenues
Increase/(Decrease)
|
||||||||||||
Rockies
Express Pipeline
|
$
|
45.3
|
808
|
%
|
$
|
—
|
n/a
|
||||||
Texas
Intrastate Natural Gas Pipeline Group
|
36.5
|
22
|
%
|
1,284.2
|
25
|
%
|
|||||||
TransColorado
Pipeline
|
6.1
|
29
|
%
|
6.8
|
27
|
%
|
|||||||
Kinder
Morgan Louisiana Pipeline
|
3.0
|
n/a
|
—
|
n/a
|
|||||||||
Casper
and Douglas Gas Processing
|
(2.8
|
)
|
(32
|
)%
|
36.9
|
87
|
%
|
||||||
All
Others
|
2.5
|
3
|
%
|
3.2
|
3
|
%
|
|||||||
Intrasegment
Eliminations
|
—
|
n/a
|
(2.4
|
)
|
(385
|
)%
|
|||||||
Total
Natural Gas Pipelines
|
$
|
90.6
|
32
|
%
|
$
|
1,328.7
|
41
|
%
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||
Three
Months
Ended
June
30, 2008
|
Three
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Two
Months
Ended
May
31, 2007
|
||||||||||||||
(In
millions)
|
(In
millions)
|
||||||||||||||||
Operating
Revenues1
|
$
|
342.6
|
$
|
212.4
|
$
|
79.8
|
$
|
132.6
|
|||||||||
Operating
Expenses
|
(96.6
|
)
|
(76.2
|
)
|
(25.3
|
)
|
(50.9
|
)
|
|||||||||
Earnings
from Equity Investments
|
5.5
|
5.0
|
1.5
|
3.5
|
|||||||||||||
Other
Income (Expense), Net
|
-
|
-
|
0.1
|
(0.1
|
)
|
||||||||||||
Income
Tax Benefit (Expense)
|
(0.9
|
)
|
0.6
|
1.1
|
(0.5
|
)
|
|||||||||||
Segment
Earnings Before DD&A
|
$
|
250.6
|
$
|
141.8
|
$
|
57.2
|
$
|
84.6
|
|||||||||
|
|||||||||||||||||
Operating
Statistics:
|
|||||||||||||||||
Carbon
Dioxide Delivery Volumes(Bcf)2
|
178.6
|
156.6
|
49.9
|
106.7
|
|||||||||||||
SACROC
Oil Production (Gross)(MBbl/d)3
|
27.5
|
28.0
|
28.1
|
28.0
|
|||||||||||||
SACROC
Oil Production (Net)(MBbl/d)4
|
22.9
|
23.3
|
23.4
|
23.3
|
|||||||||||||
Yates
Oil Production (Gross)(MBbl/d)5
|
28.1
|
27.0
|
27.4
|
26.9
|
|||||||||||||
Yates
Oil Production (Net)(MBbl/d)4
|
12.5
|
12.0
|
12.1
|
11.9
|
|||||||||||||
Natural
Gas Liquids Sales Volumes (Net)(MBbl/d)4
|
9.1
|
9.7
|
10.0
|
9.6
|
|||||||||||||
Realized
Weighted Average Oil Price per Bbl5,
6
|
$
|
53.01
|
$
|
34.76
|
$
|
34.67
|
$
|
34.81
|
|||||||||
Realized
Weighted Average Natural Gas Liquids Price per Bbl6,
7
|
$
|
77.28
|
$
|
50.35
|
$
|
51.01
|
$
|
50.02
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||
Six
Months
Ended
June
30, 2008
|
Six
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
||||||||||||||
(In
millions)
|
(In
millions)
|
||||||||||||||||
Operating
Revenues1
|
$
|
662.5
|
$
|
404.0
|
$
|
79.8
|
$
|
324.2
|
|||||||||
Operating
Expenses
|
(187.3
|
)
|
(146.8
|
)
|
(25.3
|
)
|
(121.5
|
)
|
|||||||||
Earnings
from Equity Investments
|
11.1
|
10.2
|
1.5
|
8.7
|
|||||||||||||
Other
Income (Expense), Net
|
(0.2
|
)
|
-
|
0.1
|
(0.1
|
)
|
|||||||||||
Income
Tax Benefit (Expense)
|
(2.2
|
)
|
(0.2
|
)
|
1.1
|
(1.3
|
)
|
||||||||||
Segment
Earnings Before DD&A
|
$
|
483.9
|
$
|
267.2
|
$
|
57.2
|
$
|
210.0
|
|||||||||
|
|||||||||||||||||
Operating
Statistics:
|
|||||||||||||||||
Carbon
Dioxide Delivery Volumes(Bcf)2
|
358.8
|
322.2
|
49.9
|
272.3
|
|||||||||||||
SACROC
Oil Production (Gross)(MBbl/d)3
|
27.4
|
28.9
|
28.1
|
29.1
|
|||||||||||||
SACROC
Oil Production (Net)(MBbl/d)4
|
22.8
|
24.1
|
23.4
|
24.2
|
|||||||||||||
Yates
Oil Production (Gross)(MBbl/d)3
|
28.3
|
26.6
|
27.4
|
26.4
|
|||||||||||||
Yates
Oil Production (Net)(MBbl/d)4
|
12.6
|
11.8
|
12.1
|
11.7
|
|||||||||||||
Natural
Gas Liquids Sales Volumes (Net)(MBbl/d)4
|
9.3
|
9.7
|
10.0
|
9.7
|
|||||||||||||
Realized
Weighted Average Oil Price per Bbl5,
6
|
$
|
51.52
|
$
|
34.97
|
$
|
34.67
|
$
|
35.03
|
|||||||||
Realized
Weighted Average Natural Gas Liquids Price per Bbl6,
7
|
$
|
71.48
|
$
|
46.05
|
$
|
51.01
|
$
|
45.04
|
1
|
Amounts
include increases in segment earnings resulting from valuation adjustments
of $34.0 million and $67.5 million for the three and six month periods
ended June 30, 2008, respectively, and $12.9 million (net of a $0.6
million loss on sale of assets) for both the three and six month periods
ended June 30, 2007, primarily related to derivative contracts in place at
the time of the Going Private transaction and recorded in the application
of the purchase method of accounting (see Note 2 of the accompanying Notes
to Consolidated Financial
Statements).
|
2
|
Includes
Cortez, Central Basin, Canyon Reef Carriers, Centerline and Pecos pipeline
volumes.
|
3
|
Represents
100% of the production from the field. Kinder Morgan Energy Partners owns
an approximate 97% working interest in the SACROC unit and an approximate
50% working interest in the Yates
unit.
|
4
|
Net
to Kinder Morgan Energy Partners, after royalties and outside working
interests.
|
5
|
Includes
all of Kinder Morgan Energy Partners’ crude oil production
properties.
|
6
|
Hedge
gains/losses for crude oil and natural gas liquids are included with crude
oil.
|
7
|
Includes
production attributable to leasehold ownership and production attributable
to Kinder Morgan Energy Partners’ ownership in processing plants and third
party processing agreements.
|
EBDA
Increase/(Decrease)
|
Revenues
Increase/(Decrease)
|
||||||||||||
(Dollars
in millions)
|
|||||||||||||
Sales
and Transportation Activities
|
$
|
28.1
|
64
|
%
|
$
|
34.2
|
77
|
%
|
|||||
Oil
and Gas Producing Activities
|
59.6
|
70
|
%
|
84.5
|
51
|
%
|
|||||||
Intrasegment
Eliminations
|
-
|
-
|
(9.6
|
)
|
(91
|
)%
|
|||||||
Total
|
$
|
87.7
|
68
|
%
|
$
|
109.1
|
55
|
%
|
EBDA
Increase/(Decrease)
|
Revenues
Increase/(Decrease)
|
||||||||||||
(Dollars
in millions)
|
|||||||||||||
Sales
and Transportation Activities
|
$
|
57.1
|
69
|
%
|
$
|
65.4
|
75
|
%
|
|||||
Oil
and Gas Producing Activities
|
105.0
|
61
|
%
|
154.2
|
47
|
%
|
|||||||
Intrasegment
Eliminations
|
-
|
-
|
(15.7
|
)
|
(71
|
)%
|
|||||||
Total
|
$
|
162.1
|
64
|
%
|
$
|
203.9
|
52
|
%
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||
Three
Months
Ended
June
30, 2008
|
Three
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Two
Months
Ended
May
31, 2007
|
||||||||||||||
(In
millions)
|
(In
millions)
|
||||||||||||||||
Operating
Revenues
|
$
|
300.7
|
$
|
229.0
|
$
|
79.6
|
$
|
149.4
|
|||||||||
Operating
Expenses
|
(156.1
|
)
|
(117.1
|
)
|
(40.7
|
)
|
(76.4
|
)
|
|||||||||
Other
Income
|
(0.2
|
)
|
1.7
|
1.4
|
0.3
|
||||||||||||
Goodwill
Impairment1
|
(676.6
|
)
|
-
|
-
|
-
|
||||||||||||
Earnings
from Equity Investments
|
0.7
|
-
|
-
|
-
|
|||||||||||||
Interest
Income and Other Income (Expense), Net
|
1.4
|
-
|
(0.3
|
)
|
0.3
|
||||||||||||
Income
Tax Expense
|
(6.2
|
)
|
(3.5
|
)
|
(1.7
|
)
|
(1.8
|
)
|
|||||||||
Segment
Earnings (Loss) Before DD&A
|
$
|
(536.3
|
)
|
$
|
110.1
|
$
|
38.3
|
$
|
71.8
|
||||||||
|
|||||||||||||||||
Operating
Statistics:
|
|||||||||||||||||
Bulk
Transload Tonnage (MMtons)2
|
26.7
|
25.1
|
6.9
|
18.2
|
|||||||||||||
Liquids
Leaseable Capacity (MMBbl)
|
52.4
|
43.7
|
43.7
|
43.6
|
|||||||||||||
Liquids
Utilization
|
98.1
|
%
|
97.1
|
%
|
97.1
|
%
|
97.5
|
%
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||
Six
Months
Ended
June
30, 2008
|
Six
Months
Ended
June
30, 2007
|
One
Month Ended
June
30, 2007
|
Five
Months Ended
May
31, 2007
|
||||||||||||||
(In
millions)
|
(In
millions)
|
||||||||||||||||
Operating
Revenues
|
$
|
580.9
|
$
|
444.1
|
$
|
79.6
|
$
|
364.5
|
|||||||||
Operating
Expenses
|
(308.9
|
)
|
(232.9
|
)
|
(40.7
|
)
|
(192.2
|
)
|
|||||||||
Other
Income3
|
0.4
|
4.4
|
1.4
|
3.0
|
|||||||||||||
Goodwill
Impairment1
|
(676.6
|
)
|
-
|
-
|
-
|
||||||||||||
Earnings
from Equity Investments
|
1.7
|
-
|
-
|
-
|
|||||||||||||
Interest
Income and Other Income (Expense), Net
|
2.7
|
-
|
(0.3
|
)
|
0.3
|
||||||||||||
Income
Tax Expense
|
(10.7
|
)
|
(5.0
|
)
|
(1.7
|
)
|
(3.3
|
)
|
|||||||||
Segment
Earnings (Loss) Before DD&A
|
$
|
(410.5
|
)
|
$
|
210.6
|
$
|
38.3
|
$
|
172.3
|
||||||||
|
|||||||||||||||||
Operating
Statistics:
|
|||||||||||||||||
Bulk
Transload Tonnage (MMtons)2
|
49.8
|
48.3
|
6.9
|
41.4
|
|||||||||||||
Liquids
Leaseable Capacity (MMBbl)
|
52.4
|
43.7
|
43.7
|
43.6
|
|||||||||||||
Liquids
Utilization
|
98.1
|
%
|
97.1
|
%
|
97.1
|
%
|
97.5
|
%
|
1
|
2008
amounts include a non-cash goodwill impairment charge of $676.6
million.
|
2
|
Volumes
for acquired terminals are included for all
periods.
|
3
|
The
five months ended May 31, 2007 amount includes an increase in income of
$1.8 million from property casualty gains associated with the 2005
hurricane season.
|
|
·
|
the
Vancouver Wharves bulk marine terminal, which includes five deep-sea
vessel berths and terminal assets located on the north shore of the Port
of Vancouver’s main harbor. The assets include significant rail
infrastructure, dry bulk and liquid storage, and material handling
systems, and were acquired May 30, 2007;
and
|
|
·
|
the
terminal assets and operations acquired from Marine Terminals, Inc., which
acquired assets are primarily involved in the handling and storage of
steel and alloys and consist of two separate facilities located in
Blytheville, Arkansas, and individual terminal facilities located in
Decatur, Alabama; Hertford, North Carolina; and Berkley, South Carolina.
The assets were acquired September 1,
2007.
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||
Three
Months
Ended
June
30, 2008
|
Three
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Two
Months
Ended
May
31, 2007
|
||||||||||||||
(In
millions)
|
(In
millions)
|
||||||||||||||||
Operating
Revenues
|
$
|
43.4
|
$
|
43.3
|
$
|
14.2
|
$
|
29.1
|
|||||||||
Operating
Expenses
|
(17.0
|
)
|
(16.0
|
)
|
(4.9
|
)
|
(11.1
|
)
|
|||||||||
Interest
Income and Other Income (Expense), Net
|
4.0
|
0.6
|
(0.6
|
)
|
1.2
|
||||||||||||
Income
Tax Benefit
|
3.0
|
1.7
|
0.1
|
1.6
|
|||||||||||||
Segment
Earnings Before DD&A
|
$
|
33.4
|
$
|
29.6
|
$
|
8.8
|
$
|
20.8
|
|||||||||
|
|||||||||||||||||
Operating
Statistics:
|
|||||||||||||||||
Transport
Volumes (MMBbl)
|
21.5
|
25.0
|
8.4
|
16.6
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||
Six
Months Ended
June
30, 2008
|
Six
Months Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Five
Months Ended
May
31, 2007
|
||||||||||||||
(In
millions)
|
(In
millions)
|
||||||||||||||||
Operating
Revenues
|
$
|
86.5
|
$
|
76.1
|
$
|
14.2
|
$
|
61.9
|
|||||||||
Operating
Expenses
|
(32.7
|
)
|
(27.9
|
)
|
(4.9
|
)
|
(23.0
|
)
|
|||||||||
Other
Income (Expense)
1
|
-
|
(377.1
|
)
|
-
|
(377.1
|
)
|
|||||||||||
Earnings
from Equity Investments
|
0.1
|
-
|
-
|
-
|
|||||||||||||
Interest
Income and Other Income (Expense), Net
|
6.1
|
1.1
|
(0.6
|
)
|
1.7
|
||||||||||||
Income
Tax Benefit (Expense)
|
3.6
|
(0.8
|
)
|
0.1
|
(0.9
|
)
|
|||||||||||
Segment
Earnings (Loss) Before DD&A
|
$
|
63.6
|
$
|
(328.6
|
)
|
$
|
8.8
|
$
|
(337.4
|
)
|
|||||||
|
|||||||||||||||||
Operating
Statistics:
|
|||||||||||||||||
Transport
Volumes (MMBbl)
|
40.9
|
44.8
|
8.4
|
36.4
|
1
|
Five
and six month period 2007 amounts represent a goodwill impairment
expense.
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||||
Three
Months
Ended
June
30, 2008
|
Three
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Two
Months
Ended
May
31, 2007
|
Earnings
Increase
(Decrease)
|
|||||||||||||||||
(In
millions)
|
(In
millions)
|
||||||||||||||||||||
General
and Administrative Expense
|
$
|
(91.8
|
)
|
$
|
(203.2
|
)
|
$
|
(30.0
|
)
|
$
|
(173.2
|
)
|
$
|
111.4
|
|||||||
Interest
Expense, Net
|
(141.6
|
)
|
(180.5
|
)
|
(83.5
|
)
|
(97.0
|
)
|
38.9
|
||||||||||||
Interest
Expense – Deferrable Interest Debentures
|
(0.6
|
)
|
(5.5
|
)
|
(1.9
|
)
|
(3.6
|
)
|
4.9
|
||||||||||||
Minority
Interests
|
(126.4
|
)
|
(67.0
|
)
|
(34.5
|
)
|
(32.5
|
)
|
(59.4
|
)
|
|||||||||||
Other,
Net
|
4.5
|
(2.1
|
)
|
5.2
|
(7.3
|
)
|
6.6
|
||||||||||||||
$
|
(355.9
|
)
|
$
|
(458.3
|
)
|
$
|
(144.7
|
)
|
$
|
(313.6
|
)
|
$
|
102.4
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||||
Six
Months
Ended
June
30, 2008
|
Six
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
Earnings
Increase
(Decrease)
|
|||||||||||||||||
(In
millions)
|
(In
millions)
|
||||||||||||||||||||
General
and Administrative Expense
|
$
|
(178.1
|
)
|
$
|
(313.6
|
)
|
$
|
(30.0
|
)
|
$
|
(283.6
|
)
|
$
|
135.5
|
|||||||
Interest
Expense, Net
|
(352.3
|
)
|
(324.6
|
)
|
(83.5
|
)
|
(241.1
|
)
|
(27.7
|
)
|
|||||||||||
Interest
Expense – Deferrable Interest Debentures
|
6.1
|
(11.0
|
)
|
(1.9
|
)
|
(9.1
|
)
|
17.1
|
|||||||||||||
Minority
Interests
|
(252.6
|
)
|
(125.2
|
)
|
(34.5
|
)
|
(90.7
|
)
|
(127.4
|
)
|
|||||||||||
Other,
Net
|
3.6
|
2.1
|
5.2
|
(7.3
|
)
|
5.7
|
|||||||||||||||
$
|
(773.3
|
)
|
$
|
(776.5
|
)
|
$
|
(144.7
|
)
|
$
|
(631.8
|
)
|
$
|
(3.2
|
)
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
June
30,
2008
|
December
31,
2007
|
December
31,
2006
|
December
31,
2005
|
|||||||||||||
(Dollars
in millions)
|
(Dollars
in millions)
|
|||||||||||||||
Long-term
Debt:
|
||||||||||||||||
Outstanding
Notes and Debentures
|
$
|
10,534.3
|
$
|
14,714.6
|
$
|
10,623.9
|
$
|
6,286.8
|
||||||||
Deferrable
Interest Debentures Issued to Subsidiary Trusts
|
35.7
|
283.1
|
283.6
|
283.6
|
||||||||||||
Preferred
Interest in General Partner of KMP
|
100.0
|
100.0
|
-
|
-
|
||||||||||||
Capital
Securities
|
-
|
-
|
106.9
|
107.2
|
||||||||||||
Value
of Interest Rate Swaps
|
164.8
|
199.7
|
46.4
|
51.8
|
||||||||||||
10,834.8
|
15,297.4
|
11,060.8
|
6,729.4
|
|||||||||||||
Minority
Interests
|
2,872.0
|
3,314.0
|
3,095.5
|
1,247.3
|
||||||||||||
Common
Equity, Excluding Accumulated Other Comprehensive Loss
|
4,302.1
|
8,069.2
|
3,657.5
|
4,051.4
|
||||||||||||
18,008.9
|
26,680.6
|
17,813.8
|
12,028.1
|
|||||||||||||
Value
of Interest Rate Swaps
|
(164.8
|
)
|
(199.7
|
)
|
(46.4
|
)
|
(51.8
|
)
|
||||||||
Capitalization
|
17,844.1
|
26,480.9
|
17,767.4
|
11,976.3
|
||||||||||||
Short-term
Debt, Less Cash and Cash Equivalents1
|
360.0
|
819.3
|
2,046.7
|
841.4
|
||||||||||||
Invested
Capital
|
$
|
18,204.1
|
$
|
27,300.2
|
$
|
19,814.1
|
$
|
12,817.7
|
||||||||
|
||||||||||||||||
Capitalization:
|
||||||||||||||||
Outstanding
Notes and Debentures
|
59.0%
|
55.5%
|
59.8%
|
52.5%
|
||||||||||||
Minority
Interests
|
16.1%
|
12.5%
|
17.4%
|
10.4%
|
||||||||||||
Common
Equity
|
24.1%
|
30.5%
|
20.6%
|
33.8%
|
||||||||||||
Deferrable
Interest Debentures Issued to Subsidiary Trusts
|
0.2%
|
1.1%
|
1.6%
|
2.4%
|
||||||||||||
Preferred
Interest in General Partner of KMP
|
0.6%
|
0.4%
|
-%
|
-%
|
||||||||||||
Capital
Securities
|
-%
|
-%
|
0.6%
|
0.9%
|
||||||||||||
|
||||||||||||||||
Invested
Capital:
|
||||||||||||||||
Net
Debt2,
3
|
59.8%
|
56.9%
|
63.9%
|
55.6%
|
||||||||||||
Common
Equity, Excluding Accumulated Other Comprehensive Loss and Including
Deferrable Interest Debentures Issued to Subsidiary Trusts, Preferred
Interest in General Partner of KMP, Capital Securities and Minority
Interests
|
40.2%
|
43.1%
|
36.1%
|
44.4%
|
|
1
|
Cash
and cash equivalents netted against short-term debt were $180.9 million,
$148.6 million, $129.8 million and $116.6 million for June 30, 2008 and
December 31, 2007, 2006 and 2005,
respectively.
|
|
2
|
Outstanding
notes and debentures plus short-term debt, less cash and cash
equivalents.
|
|
3
|
Our
ratio of net debt to invested capital, not including the effects of
consolidating Kinder Morgan Energy Partners, was 40.9%, 45.6% and 56.2% at
June 30, 2008 and December 31, 2007 and 2006,
respectively.
|
At
June 30, 2008
|
At
July 31, 2008
|
||||||||||
Short-term
Debt
Outstanding
|
Available
Borrowing
Capacity
|
Short-term
Debt
Outstanding
|
Available
Borrowing
Capacity
|
||||||||
(In
millions)
|
|||||||||||
Credit
Facilities:
|
|||||||||||
Knight
Inc.
|
|||||||||||
$1.0
billion, six-year secured revolver, due May 2013
|
$
|
265.0
|
$
|
677.5
|
$
|
265.0
|
$
|
677.5
|
|||
|
|||||||||||
Kinder
Morgan Energy Partners
|
|||||||||||
$1.85
billion, five-year unsecured revolver, due August 2010
|
$
|
-
|
$
|
920.8
|
$
|
-
|
$
|
920.8
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||
Six
Months
Ended
June
30, 2008
|
Six
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Cash
Flows from Operating Activities:
|
||||||||||||||||
Net
Income (Loss)
|
$
|
(3,754.9
|
)
|
$
|
96.1
|
$
|
30.2
|
$
|
65.9
|
|||||||
Adjustments
to Reconcile Net Income to Net Cash Flows from Operating
Activities:
|
||||||||||||||||
Loss
(Income) from Discontinued Operations, Net of Tax
|
0.4
|
(288.4
|
)
|
(0.5
|
)
|
(287.9
|
)
|
|||||||||
Loss
from Goodwill Impairment
|
4,033.3
|
377.1
|
-
|
377.1
|
||||||||||||
Loss
on Early Extinguishment of Debt
|
23.6
|
-
|
-
|
-
|
||||||||||||
Depreciation,
Depletion and Amortization
|
433.8
|
337.9
|
73.0
|
264.9
|
||||||||||||
Deferred
Income Taxes
|
33.6
|
142.8
|
4.1
|
138.7
|
||||||||||||
Equity
in Earnings of Equity Investees
|
(99.0
|
)
|
(48.6
|
)
|
(9.5
|
)
|
(39.1
|
)
|
||||||||
Distributions
from Equity Investees
|
83.7
|
70.7
|
22.5
|
48.2
|
||||||||||||
Minority
Interests in Income of Consolidated Subsidiaries
|
252.6
|
125.2
|
34.5
|
90.7
|
||||||||||||
Gains
from Property Casualty Indemnifications
|
-
|
(1.8
|
)
|
-
|
(1.8
|
)
|
||||||||||
Net
Gains on Sales of Assets
|
(2.8
|
)
|
(7.1
|
)
|
(4.5
|
)
|
(2.6
|
)
|
||||||||
Mark-to-Market
Interest Rate Swap Gain
|
(19.8
|
)
|
-
|
-
|
-
|
|||||||||||
Foreign
Currency (Gain) Loss
|
(0.2
|
)
|
15.5
|
-
|
15.5
|
|||||||||||
Changes
in Gas in Underground Storage
|
(28.0
|
)
|
(89.2
|
)
|
(5.0
|
)
|
(84.2
|
)
|
||||||||
Changes
in Working Capital Items
|
(542.0
|
)
|
(95.0
|
)
|
107.9
|
(202.9
|
)
|
|||||||||
(Payment
for) Proceeds from Termination of Interest Rate Swaps
|
(2.5
|
)
|
51.9
|
-
|
51.9
|
|||||||||||
Kinder
Morgan Energy Partners’ Rate Reparations, Refunds and Reserve
Adjustments
|
(23.3
|
)
|
-
|
-
|
-
|
|||||||||||
Other,
Net
|
(7.3
|
)
|
26.9
|
(31.9
|
)
|
58.8
|
||||||||||
Cash
Flows Provided by Continuing Operations
|
381.2
|
714.0
|
220.8
|
493.2
|
||||||||||||
Net
Cash Flows (Used in) Provided by Discontinued Operations
|
(0.5
|
)
|
107.7
|
(2.1
|
)
|
109.8
|
||||||||||
Net
Cash Flows Provided by Operating Activities
|
380.7
|
821.7
|
218.7
|
603.0
|
||||||||||||
|
||||||||||||||||
Cash
Flows from Investing Activities:
|
||||||||||||||||
Purchase
of Predecessor Stock
|
-
|
(11,534.3
|
)
|
(11,534.3
|
)
|
-
|
||||||||||
Capital
Expenditures
|
(1,269.2
|
)
|
(801.6
|
)
|
(148.8
|
)
|
(652.8
|
)
|
||||||||
Proceeds
from Sale of 80% Interest in NGPL PipeCo LLC, Net of $1.1
Million Cash Sold
|
2,899.3
|
-
|
-
|
-
|
||||||||||||
Proceeds
from NGPL PipeCo LLC Restricted Cash
|
3,106.4
|
-
|
-
|
-
|
||||||||||||
Acquisitions
|
(4.2
|
)
|
(47.8
|
)
|
(5.7
|
)
|
(42.1
|
)
|
||||||||
Net
(Investments in) Proceeds from Margin Deposits
|
(207.1
|
)
|
(19.0
|
)
|
35.8
|
(54.8
|
)
|
|||||||||
Distributions
from Equity Investees
|
89.1
|
-
|
-
|
-
|
||||||||||||
Other
Investments
|
(339.4
|
)
|
(44.3
|
)
|
(14.6
|
)
|
(29.7
|
)
|
||||||||
Change
in Natural Gas Storage and NGL Line Fill Inventory
|
(2.7
|
)
|
9.9
|
1.5
|
8.4
|
|||||||||||
Property
Casualty Indemnifications
|
-
|
8.0
|
-
|
8.0
|
||||||||||||
Net
Proceeds (Cost of Removal) from Sales of Other Assets
|
113.0
|
6.0
|
7.5
|
(1.5
|
)
|
|||||||||||
Net
Cash Flows Provided by (Used in) Continuing Investing
Activities
|
4,385.2
|
(12,423.1
|
)
|
(11,658.6
|
)
|
(764.5
|
)
|
|||||||||
Net
Cash Flows Provided by Discontinued Investing Activities
|
-
|
1,688.1
|
199.9
|
1,488.2
|
||||||||||||
Net
Cash Flows Provided by (Used in) Investing Activities
|
$
|
4,385.2
|
$
|
(10,735.0
|
)
|
$
|
(11,458.7
|
)
|
$
|
723.7
|
Successor
Company
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||
Six
Months
Ended
June
30, 2008
|
Six
Months
Ended
June
30, 2007
|
One
Month
Ended
June
30, 2007
|
Five
Months
Ended
May
31, 2007
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Cash
Flows from Financing Activities:
|
||||||||||||||||
Short-term
Debt, Net
|
$
|
(623.1
|
)
|
$
|
(477.7
|
)
|
$
|
(230.2
|
)
|
$
|
(247.5
|
)
|
||||
Long-term
Debt Issued
|
1,600.1
|
6,305.0
|
5,305.0
|
1,000.0
|
||||||||||||
Long-term
Debt Retired
|
(5,861.5
|
)
|
(757.9
|
)
|
(455.5
|
)
|
(302.4
|
)
|
||||||||
Discount
on Early Extinguishment of Debt
|
69.2
|
-
|
-
|
-
|
||||||||||||
Cash
Book Overdraft
|
18.5
|
(14.4
|
)
|
0.5
|
(14.9
|
)
|
||||||||||
Common
Stock Issued
|
-
|
9.9
|
-
|
9.9
|
||||||||||||
Excess
Tax Benefits from Share-based Payment Arrangements
|
-
|
56.7
|
-
|
56.7
|
||||||||||||
Cash
Paid to Share-based Award Holders Due to Going
Private Transaction
|
-
|
(181.1
|
)
|
(181.1
|
)
|
-
|
||||||||||
Issuance
of Kinder Morgan Management, LLC Shares
|
-
|
297.9
|
-
|
297.9
|
||||||||||||
Contributions
from Successor Investors
|
-
|
5,112.0
|
5,112.0
|
-
|
||||||||||||
Short-term
Advances from (to) Unconsolidated Affiliates
|
(11.5
|
)
|
-
|
(2.3
|
)
|
2.3
|
||||||||||
Cash
Dividends, Common Stock
|
-
|
(234.9
|
)
|
-
|
(234.9
|
)
|
||||||||||
Minority
Interests, Contributions
|
384.8
|
-
|
-
|
-
|
||||||||||||
Minority
Interests, Distributions
|
(300.9
|
)
|
(248.9
|
)
|
-
|
(248.9
|
)
|
|||||||||
Debt
Issuance Costs
|
(12.1
|
)
|
(75.8
|
)
|
(62.7
|
)
|
(13.1
|
)
|
||||||||
Other,
Net
|
3.9
|
(4.3
|
)
|
-
|
(4.3
|
)
|
||||||||||
Net
Cash Flows (Used in) Provided by Continuing Financing
Activities
|
(4,732.6
|
)
|
9,786.5
|
9,485.7
|
300.8
|
|||||||||||
Net
Cash Flows Provided by Discontinued Financing Activities
|
-
|
140.1
|
-
|
140.1
|
||||||||||||
Net
Cash Flows (Used in) Provided by Financing Activities
|
(4,732.6
|
)
|
9,926.6
|
9,485.7
|
440.9
|
|||||||||||
Effect
of Exchange Rate Changes on Cash
|
(1.0
|
)
|
7.6
|
-
|
7.6
|
|||||||||||
Cash
Balance Included in Assets Held for Sale
|
-
|
(2.7
|
)
|
-
|
(2.7
|
)
|
||||||||||
|
||||||||||||||||
Net
(Decrease) Increase in Cash and Cash Equivalents
|
32.3
|
18.2
|
(1,754.3
|
)
|
1,772.5
|
|||||||||||
Cash
and Cash Equivalents at Beginning of Period
|
148.6
|
129.8
|
1,902.3
|
129.8
|
||||||||||||
Cash
and Cash Equivalents at End of Period
|
$
|
180.9
|
$
|
148.0
|
$
|
148.0
|
$
|
1,902.3
|
|
·
|
price
trends and overall demand for natural gas liquids, refined petroleum
products, oil, carbon dioxide, natural gas, electricity, coal and other
bulk materials and chemicals in North
America;
|
|
·
|
economic
activity, weather, alternative energy sources, conservation and
technological advances that may affect price trends and
demand;
|
|
·
|
changes
in tariff rates charged by our pipeline subsidiaries implemented by the
FERC, Canada National Energy Board or other regulatory agency and, with
respect to Kinder Morgan Energy Partners, the California Public Utilities
Commission;
|
|
·
|
our
ability to acquire new businesses and assets and integrate those
operations into existing operations, as well as the ability to expand our
facilities;
|
|
·
|
difficulties
or delays experienced by railroads, barges, trucks, ships or pipelines in
delivering products to or from our terminals or
pipelines;
|
|
·
|
our
ability to successfully identify and close acquisitions and make
cost-saving changes in operations;
|
|
·
|
shut-downs
or cutbacks at major refineries, petrochemical or chemical plants, ports,
utilities, military bases or other businesses that use our services or
provide services or products to us;
|
|
·
|
crude
oil and natural gas production from exploration and production areas that
we serve, such as the Permian Basin area of West Texas, the U.S. Rocky
Mountains and the Alberta oilsands;
|
|
·
|
changes
in laws or regulations, third-party relations and approvals and decisions
of courts, regulators and governmental bodies that may adversely affect
our business or our ability to
compete;
|
|
·
|
changes
in accounting pronouncements that impact the measurement of our results of
operations, the timing of when such measurements are to be made and
recorded, and the disclosures surrounding these
activities;
|
|
·
|
our
ability to offer and sell equity securities and our ability to sell debt
securities or obtain debt financing in sufficient amounts to implement
that portion of our business plan that contemplates growth through
acquisitions of operating businesses and assets and expansions of our
facilities;
|
|
·
|
our
indebtedness, which could make us vulnerable to general adverse economic
and industry conditions, limit our ability to borrow additional funds,
and/or place us at competitive disadvantages compared to our competitors
that have less debt or have other adverse
consequences;
|
|
·
|
interruptions
of electric power supply to our facilities due to natural disasters, power
shortages, strikes, riots, terrorism, war or other
causes;
|
|
·
|
our
ability to obtain insurance coverage without significant levels of
self-retention of risk;
|
|
·
|
acts
of nature, sabotage, terrorism or other similar acts causing damage
greater than our insurance coverage
limits;
|
|
·
|
capital
markets conditions, inflation and interest
rates;
|
|
·
|
the
political and economic stability of the oil producing nations of the
world;
|
|
·
|
national,
international, regional and local economic, competitive and regulatory
conditions and developments;
|
|
·
|
our
ability to achieve cost savings and revenue
growth;
|
|
·
|
foreign
exchange fluctuations;
|
|
·
|
the
timing and extent of changes in commodity prices for oil, natural gas,
electricity and certain agricultural
products;
|
|
·
|
the
extent of our success in discovering, developing and producing oil and gas
reserves, including the risks inherent in exploration and development
drilling, well completion and other development
activities;
|
|
·
|
engineering
and mechanical or technological difficulties that we may experience with
operational equipment, in well completions and workovers, and in drilling
new wells;
|
|
·
|
the
uncertainty inherent in estimating future oil and natural gas production
or reserves that Kinder Morgan Energy Partners may
experience;
|
|
·
|
the
ability to complete expansion projects on time and on
budget;
|
|
·
|
the
timing and success of our business development efforts;
and
|
|
·
|
unfavorable
results of litigation and the fruition of contingencies referred to in the
accompanying Notes to Consolidated Financial
Statements.
|
|
·
|
limiting
our ability to obtain additional financing to fund our working capital,
capital expenditures, debt service requirements or potential growth or for
other purposes;
|
|
·
|
limiting
our ability to use operating cash flow in other areas of our business
because we must dedicate a substantial portion of these funds to make
payments on our debt;
|
|
·
|
placing
us at a competitive disadvantage compared to competitors with less debt;
and
|
|
·
|
increasing
our vulnerability to adverse economic and industry
conditions.
|
|
4.1
|
Certain
instruments with respect to the long-term debt of Knight Inc. and its
consolidated subsidiaries that relate to debt that does not exceed 10% of
the total assets of Knight Inc. and its consolidated subsidiaries are
omitted pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K, 17 C.F.R.
sec.229.601. Knight Inc. hereby agrees to furnish supplementally to the
Securities and Exchange Commission a copy of each such instrument upon
request.
|
|
10.1
|
First
Amendment to Retention and Relocation Agreement dated as of July 16, 2008,
between Knight Inc. and Scott E. Parker (filed as Exhibit 10.1 to Knight
Inc. Form 8-K, filed July 25,
2008).
|
|
31.1*
|
Section
13a – 14(a) / 15d – 14(a) Certification of Chief Executive
Officer
|
|
31.2*
|
Section
13a – 14(a) / 15d – 14(a) Certification of Chief Financial
Officer
|
|
32.1*
|
Section
1350 Certification of Chief Executive
Officer
|
|
32.2*
|
Section
1350 Certification of Chief Financial
Officer
|
|
KNIGHT
INC.
(Registrant)
|
August
15, 2008
|
/s/
Kimberly A. Dang
|
Kimberly
A. Dang
Vice
President and Chief Financial
Officer
|