Kinder Morgan, Inc. Earnings Up 23% in First Quarter; Expects 40% Growth in EPS for Year 2001

Apr 18, 2001, 01:00 ET from Kinder Morgan, Inc.

    HOUSTON, April 18 /PRNewswire/ -- Kinder Morgan, Inc. (NYSE:   KMI) today
 reported a 23 percent increase in first quarter 2001 earnings over the first
 quarter of 2000.  Income was $56.8 million, or $0.47 per diluted common share,
 before an extraordinary item for the early extinguishment of debt, compared to
 $46.3 million, or $0.41 per diluted common share, in the first quarter of
 2000.  After the previously announced extraordinary loss for early
 extinguishment of debt, net income for the first quarter was $44.7 million or
 $0.37 per diluted common share.
     "We had an outstanding first quarter, and we are on track to deliver
 40 percent growth in earnings per share this year," said Richard D. Kinder,
 chairman and CEO of KMI.  "Earnings were principally driven by our ownership
 of the general partner of Kinder Morgan Energy Partners, L.P. (NYSE:   KMP), as
 earnings from KMP more than doubled compared to the first quarter a year ago.
 Additionally, all of our other business segments produced increased earnings.
 We have assembled a premier, fee-based portfolio of midstream assets capable
 of delivering strong financial results even in a slowing economy."
     The KMI board of directors declared a common stock dividend of $0.05 per
 share payable on May 15, 2001 to shareholders of record as of April 30, 2001.
     Taking a look at business segments, KMI will receive $57.5 million in
 total cash distributions from KMP for the first quarter of 2001, up 83 percent
 from $31.4 million during the same period last year.  "As KMP's cash flow
 grows, KMI's general partner share of that cash flow grows dramatically,"
 Kinder explained.  "KMI's cash flow from KMP increased dramatically due to
 internal growth in KMP's pipeline and terminal segments and the strong
 performance of recent KMP acquisitions."  After the effects of equity
 accounting and amortization, KMP contributed $48.1 million of pre-tax earnings
 to KMI in the first quarter compared to approximately $22 million in the first
 quarter of 2000.  KMP is the largest pipeline master limited partnership in
 America.
     Natural Gas Pipeline Company of America (NGPL), a wholly owned subsidiary
 of KMI, had segment earnings of $93.9 million, slightly higher than the
 $92.0 million it reported in the first quarter of 2000.  NGPL had another very
 solid quarter, increasing the amount of firm transportation capacity under
 contract.
     Segment earnings in Retail were $23.5 million in the first quarter,
 19 percent higher than the $19.8 million reported during the same period last
 year.  "It is important to remember that we have established a weather-hedging
 program to reduce the weather-related volatility in this business segment, as
 we are willing to give up some of the upside to produce consistent results,"
 Kinder said.  "Last year's results in the first quarter were un-hedged and
 were affected by warmer than normal weather in our service territory
 (Colorado, Nebraska and Wyoming), creating much of the year-to-year gain."
     Power and other operations recorded segment earnings of $8.9 million,
 about 50 percent higher than the $5.9 million it recorded in the first quarter
 of 2000.  The increase in earnings primarily reflects fee income associated
 with natural gas-fired power plant development.
     The following were among KMI's accomplishments during the first quarter.
     --  NGPL continued to focus on solidifying relationships with existing
         customers and aggressively connecting new customers to the pipeline
         system.  To date, NGPL has entered into long-term transportation
         agreements to serve 20 power plants capable of generating more than
         11,500 megawatts of electricity.  NGPL is expected to realize more
         than $11 million in annual transportation revenue from these contracts
         beginning in 2001, with revenues growing each year as more plants come
         on-line.  In addition, NGPL sold out virtually all of its winter-only
         capacity during the first quarter.
 
     --  KMI and a unit of Williams announced plans to build 3,300 megawatts of
         natural gas-fired generation.  Kinder Morgan Power Company will build
         six plants, including the Jackson, Mich. plant already under
         construction, utilizing its proprietary Orion technology.  Through a
         16-year tolling agreement, Williams will supply fuel to and market
         electricity from the plants, virtually eliminating KMI's commodity
         price risk.  The Michigan plant is expected to come on-line in the
         second quarter of 2002.  The second and third plants, which will be
         built in the Chicago and St. Louis areas, are expected to be completed
         in the second quarter of 2003.  The final three facilities are
         scheduled to be completed by the second quarter of 2004.
 
     --  KMI retired $400 million of Reset Put Securities (REPS) due
         March 1, 2021, and $20 million of debentures due 2020, utilizing a
         combination of cash and incremental short-term borrowings.  Retiring
         the debt early benefited shareholders, as it was immediately accretive
         to earnings per share due to decreased interest expense.  As
         previously announced, KMI reported a one-time extraordinary loss from
         the early extinguishment of debt, net of tax, of approximately
         $12 million.
 
     "Looking ahead, we still anticipate 2001 earnings per share growth in the
 previously announced 40 percent range (approximately $1.80 earnings per
 share)," Kinder said.  "Due to the transfer of Kinder Morgan Texas Pipeline to
 KMP, KMI's earnings in 2001 are expected to be more evenly distributed from
 quarter to quarter than in the past.  We expect 50 to 60 percent growth in our
 second quarter diluted earnings per share ($0.32 to $0.34) versus the second
 quarter of 2000 ($0.21)."
     Kinder Morgan, Inc. is one of the largest midstream energy companies in
 America, operating more than 30,000 miles of natural gas and products
 pipelines.  It also has significant retail distribution, electric generation
 and terminal assets.  Kinder Morgan, Inc., through its general partner
 interest, operates Kinder Morgan Energy Partners, L.P., America's largest
 pipeline master limited partnership.  Combined, the two companies have an
 enterprise value of approximately $17 billion.
     Please join us at 5 p.m. Eastern Time on Wednesday, April 18, at
 www.kindermorgan.com for a LIVE webcast conference call.
     This news release includes forward-looking statements within the meaning
 of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
 Exchange Act of 1934.  Although Kinder Morgan believes that its expectations
 are based on reasonable assumptions, it can give no assurance that such
 assumptions will materialize.  Important factors that could cause actual
 results to differ materially from those in the forward-looking statements
 herein are enumerated in Kinder Morgan's Form 10-K and 10-Q as filed with the
 Securities and Exchange Commission.
 
 
                       KINDER MORGAN, INC. AND SUBSIDIARIES
                         CONSOLIDATED STATEMENTS OF INCOME
                     (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
 
                                                  Three Months Ended March 31,
                                                      2001              2000
     Operating Revenues:
     Natural Gas Sales                             $150,685          $287,478
     Natural Gas Transportation and Storage         170,815           165,276
     Other                                           25,988            27,727
       Total Operating Revenues                     347,488           480,481
 
     Operating Costs and Expenses:
     Gas Purchases and Other Costs of Sales         155,584           277,911
     Operations and Maintenance                      30,518            41,880
     General and Administrative                      15,590            14,354
     Depreciation and Amortization                   26,965            26,840
     Taxes, Other Than Income Taxes                   6,409             6,807
       Total Operating Costs and Expenses           235,066           367,792
 
     Operating Income                               112,422           112,689
 
     Other Income and (Expenses):
     Kinder Morgan Energy Partners:
         Equity in Earnings                          55,037            29,583
         Amortization of Excess Investment           (6,951)           (7,577)
     Equity in Losses of Other Equity Investments    (4,879)             (988)
     Interest Expense, Net                          (58,287)          (60,584)
     Minority Interests                              (5,645)           (5,984)
     Other, Net                                       2,973            10,073
       Total Other Income and (Expenses)            (17,752)          (35,477)
 
     Income Before Income Taxes and
      Extraordinary Item                             94,670            77,212
     Income Taxes                                    37,868            30,887
     Income Before Extraordinary Item                56,802            46,325
 
     Extraordinary Item - Loss on Early
      Extinguishment of Debt, Net of Income
      Tax Benefit of $8,080                         (12,119)              ---
 
     Net Income                                     $44,683           $46,325
 
     Basic Earnings (Loss) Per Common Share:
     Income Before Extraordinary Item                 $0.50             $0.41
     Extraordinary Item - Loss on Early
      Extinguishment of Debt                          (0.11)              ---
     Total Basic Earnings Per Common Share            $0.39             $0.41
 
     Number of Shares Used in Computing Basic
      Earnings Per Common Share (Thousands)         114,844           113,058
 
     Diluted Earnings (Loss) Per Common Share:
     Income Before Extraordinary Item                 $0.47             $0.41
     Extraordinary Item - Loss on Early
      Extinguishment of Debt                          (0.10)              ---
     Total Diluted Earnings Per Common Share          $0.37             $0.41
 
     Number of Shares Used in Computing Diluted
      Earnings Per Common Share (Thousands)         121,320           113,456
 
     Dividends Per Common Share                       $0.05             $0.05
 
 
                        KINDER MORGAN, INC. AND SUBSIDIARIES
                              SUPPLEMENTAL INFORMATION
                               (DOLLARS IN THOUSANDS)
 
                                                        Three Months Ended
                                                             March 31,
                                                      2001               2000
     Investment in Kinder Morgan Energy Partners:
            Equity in Earnings(A)                   $55,037            $29,583
            Amortization of Excess Investment        (6,951)            (7,577)
     Segment Earnings(B):
            NGPL                                     93,882             91,950
            Retail                                   23,514             19,787
            Power and Other                           8,859              5,887
            KMTP(C)                                     ---             11,330
                                                    174,341            150,960
 
     General and Administrative Expenses            (15,590)           (14,354)
     Interest Expense, Net                          (58,287)           (60,584)
     Other, Net                                      (5,794)             1,190
     Income Before Income Taxes and
      Extraordinary Item                             94,670             77,212
     Income Taxes                                    37,868             30,887
 
     Income Before Extraordinary Item               $56,802            $46,325
 
 
                               Volume Highlights
 
                                                        Three Months Ended
                                                              March 31,
                                                       2001               2000
     Systems Throughput (Trillion Btus):
         NGPL(D)                                      399.0              415.0
         Retail(E)                                     14.8               13.1
         KMTP
 
     Btus = British thermal units
 
     (A) Actual cash distributions to KMI from Kinder Morgan Energy Partners
         for the three months ended March 31, 2001 and 2000, respectively, are
         $57.5 million and $31.4 million.
 
     (B) Operating Income before corporate costs, and for Power includes
         earnings from equity method investments.
 
     (C) Kinder Morgan Texas Pipeline, Inc. (KMTP) was sold to KMP effective
         December 31, 2000.
 
     (D) Excludes transport for KMTP.
 
     (E) Excludes transport volumes of intrastate pipelines.
 
 

SOURCE Kinder Morgan, Inc.
    HOUSTON, April 18 /PRNewswire/ -- Kinder Morgan, Inc. (NYSE:   KMI) today
 reported a 23 percent increase in first quarter 2001 earnings over the first
 quarter of 2000.  Income was $56.8 million, or $0.47 per diluted common share,
 before an extraordinary item for the early extinguishment of debt, compared to
 $46.3 million, or $0.41 per diluted common share, in the first quarter of
 2000.  After the previously announced extraordinary loss for early
 extinguishment of debt, net income for the first quarter was $44.7 million or
 $0.37 per diluted common share.
     "We had an outstanding first quarter, and we are on track to deliver
 40 percent growth in earnings per share this year," said Richard D. Kinder,
 chairman and CEO of KMI.  "Earnings were principally driven by our ownership
 of the general partner of Kinder Morgan Energy Partners, L.P. (NYSE:   KMP), as
 earnings from KMP more than doubled compared to the first quarter a year ago.
 Additionally, all of our other business segments produced increased earnings.
 We have assembled a premier, fee-based portfolio of midstream assets capable
 of delivering strong financial results even in a slowing economy."
     The KMI board of directors declared a common stock dividend of $0.05 per
 share payable on May 15, 2001 to shareholders of record as of April 30, 2001.
     Taking a look at business segments, KMI will receive $57.5 million in
 total cash distributions from KMP for the first quarter of 2001, up 83 percent
 from $31.4 million during the same period last year.  "As KMP's cash flow
 grows, KMI's general partner share of that cash flow grows dramatically,"
 Kinder explained.  "KMI's cash flow from KMP increased dramatically due to
 internal growth in KMP's pipeline and terminal segments and the strong
 performance of recent KMP acquisitions."  After the effects of equity
 accounting and amortization, KMP contributed $48.1 million of pre-tax earnings
 to KMI in the first quarter compared to approximately $22 million in the first
 quarter of 2000.  KMP is the largest pipeline master limited partnership in
 America.
     Natural Gas Pipeline Company of America (NGPL), a wholly owned subsidiary
 of KMI, had segment earnings of $93.9 million, slightly higher than the
 $92.0 million it reported in the first quarter of 2000.  NGPL had another very
 solid quarter, increasing the amount of firm transportation capacity under
 contract.
     Segment earnings in Retail were $23.5 million in the first quarter,
 19 percent higher than the $19.8 million reported during the same period last
 year.  "It is important to remember that we have established a weather-hedging
 program to reduce the weather-related volatility in this business segment, as
 we are willing to give up some of the upside to produce consistent results,"
 Kinder said.  "Last year's results in the first quarter were un-hedged and
 were affected by warmer than normal weather in our service territory
 (Colorado, Nebraska and Wyoming), creating much of the year-to-year gain."
     Power and other operations recorded segment earnings of $8.9 million,
 about 50 percent higher than the $5.9 million it recorded in the first quarter
 of 2000.  The increase in earnings primarily reflects fee income associated
 with natural gas-fired power plant development.
     The following were among KMI's accomplishments during the first quarter.
     --  NGPL continued to focus on solidifying relationships with existing
         customers and aggressively connecting new customers to the pipeline
         system.  To date, NGPL has entered into long-term transportation
         agreements to serve 20 power plants capable of generating more than
         11,500 megawatts of electricity.  NGPL is expected to realize more
         than $11 million in annual transportation revenue from these contracts
         beginning in 2001, with revenues growing each year as more plants come
         on-line.  In addition, NGPL sold out virtually all of its winter-only
         capacity during the first quarter.
 
     --  KMI and a unit of Williams announced plans to build 3,300 megawatts of
         natural gas-fired generation.  Kinder Morgan Power Company will build
         six plants, including the Jackson, Mich. plant already under
         construction, utilizing its proprietary Orion technology.  Through a
         16-year tolling agreement, Williams will supply fuel to and market
         electricity from the plants, virtually eliminating KMI's commodity
         price risk.  The Michigan plant is expected to come on-line in the
         second quarter of 2002.  The second and third plants, which will be
         built in the Chicago and St. Louis areas, are expected to be completed
         in the second quarter of 2003.  The final three facilities are
         scheduled to be completed by the second quarter of 2004.
 
     --  KMI retired $400 million of Reset Put Securities (REPS) due
         March 1, 2021, and $20 million of debentures due 2020, utilizing a
         combination of cash and incremental short-term borrowings.  Retiring
         the debt early benefited shareholders, as it was immediately accretive
         to earnings per share due to decreased interest expense.  As
         previously announced, KMI reported a one-time extraordinary loss from
         the early extinguishment of debt, net of tax, of approximately
         $12 million.
 
     "Looking ahead, we still anticipate 2001 earnings per share growth in the
 previously announced 40 percent range (approximately $1.80 earnings per
 share)," Kinder said.  "Due to the transfer of Kinder Morgan Texas Pipeline to
 KMP, KMI's earnings in 2001 are expected to be more evenly distributed from
 quarter to quarter than in the past.  We expect 50 to 60 percent growth in our
 second quarter diluted earnings per share ($0.32 to $0.34) versus the second
 quarter of 2000 ($0.21)."
     Kinder Morgan, Inc. is one of the largest midstream energy companies in
 America, operating more than 30,000 miles of natural gas and products
 pipelines.  It also has significant retail distribution, electric generation
 and terminal assets.  Kinder Morgan, Inc., through its general partner
 interest, operates Kinder Morgan Energy Partners, L.P., America's largest
 pipeline master limited partnership.  Combined, the two companies have an
 enterprise value of approximately $17 billion.
     Please join us at 5 p.m. Eastern Time on Wednesday, April 18, at
 www.kindermorgan.com for a LIVE webcast conference call.
     This news release includes forward-looking statements within the meaning
 of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
 Exchange Act of 1934.  Although Kinder Morgan believes that its expectations
 are based on reasonable assumptions, it can give no assurance that such
 assumptions will materialize.  Important factors that could cause actual
 results to differ materially from those in the forward-looking statements
 herein are enumerated in Kinder Morgan's Form 10-K and 10-Q as filed with the
 Securities and Exchange Commission.
 
 
                       KINDER MORGAN, INC. AND SUBSIDIARIES
                         CONSOLIDATED STATEMENTS OF INCOME
                     (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
 
                                                  Three Months Ended March 31,
                                                      2001              2000
     Operating Revenues:
     Natural Gas Sales                             $150,685          $287,478
     Natural Gas Transportation and Storage         170,815           165,276
     Other                                           25,988            27,727
       Total Operating Revenues                     347,488           480,481
 
     Operating Costs and Expenses:
     Gas Purchases and Other Costs of Sales         155,584           277,911
     Operations and Maintenance                      30,518            41,880
     General and Administrative                      15,590            14,354
     Depreciation and Amortization                   26,965            26,840
     Taxes, Other Than Income Taxes                   6,409             6,807
       Total Operating Costs and Expenses           235,066           367,792
 
     Operating Income                               112,422           112,689
 
     Other Income and (Expenses):
     Kinder Morgan Energy Partners:
         Equity in Earnings                          55,037            29,583
         Amortization of Excess Investment           (6,951)           (7,577)
     Equity in Losses of Other Equity Investments    (4,879)             (988)
     Interest Expense, Net                          (58,287)          (60,584)
     Minority Interests                              (5,645)           (5,984)
     Other, Net                                       2,973            10,073
       Total Other Income and (Expenses)            (17,752)          (35,477)
 
     Income Before Income Taxes and
      Extraordinary Item                             94,670            77,212
     Income Taxes                                    37,868            30,887
     Income Before Extraordinary Item                56,802            46,325
 
     Extraordinary Item - Loss on Early
      Extinguishment of Debt, Net of Income
      Tax Benefit of $8,080                         (12,119)              ---
 
     Net Income                                     $44,683           $46,325
 
     Basic Earnings (Loss) Per Common Share:
     Income Before Extraordinary Item                 $0.50             $0.41
     Extraordinary Item - Loss on Early
      Extinguishment of Debt                          (0.11)              ---
     Total Basic Earnings Per Common Share            $0.39             $0.41
 
     Number of Shares Used in Computing Basic
      Earnings Per Common Share (Thousands)         114,844           113,058
 
     Diluted Earnings (Loss) Per Common Share:
     Income Before Extraordinary Item                 $0.47             $0.41
     Extraordinary Item - Loss on Early
      Extinguishment of Debt                          (0.10)              ---
     Total Diluted Earnings Per Common Share          $0.37             $0.41
 
     Number of Shares Used in Computing Diluted
      Earnings Per Common Share (Thousands)         121,320           113,456
 
     Dividends Per Common Share                       $0.05             $0.05
 
 
                        KINDER MORGAN, INC. AND SUBSIDIARIES
                              SUPPLEMENTAL INFORMATION
                               (DOLLARS IN THOUSANDS)
 
                                                        Three Months Ended
                                                             March 31,
                                                      2001               2000
     Investment in Kinder Morgan Energy Partners:
            Equity in Earnings(A)                   $55,037            $29,583
            Amortization of Excess Investment        (6,951)            (7,577)
     Segment Earnings(B):
            NGPL                                     93,882             91,950
            Retail                                   23,514             19,787
            Power and Other                           8,859              5,887
            KMTP(C)                                     ---             11,330
                                                    174,341            150,960
 
     General and Administrative Expenses            (15,590)           (14,354)
     Interest Expense, Net                          (58,287)           (60,584)
     Other, Net                                      (5,794)             1,190
     Income Before Income Taxes and
      Extraordinary Item                             94,670             77,212
     Income Taxes                                    37,868             30,887
 
     Income Before Extraordinary Item               $56,802            $46,325
 
 
                               Volume Highlights
 
                                                        Three Months Ended
                                                              March 31,
                                                       2001               2000
     Systems Throughput (Trillion Btus):
         NGPL(D)                                      399.0              415.0
         Retail(E)                                     14.8               13.1
         KMTP
 
     Btus = British thermal units
 
     (A) Actual cash distributions to KMI from Kinder Morgan Energy Partners
         for the three months ended March 31, 2001 and 2000, respectively, are
         $57.5 million and $31.4 million.
 
     (B) Operating Income before corporate costs, and for Power includes
         earnings from equity method investments.
 
     (C) Kinder Morgan Texas Pipeline, Inc. (KMTP) was sold to KMP effective
         December 31, 2000.
 
     (D) Excludes transport for KMTP.
 
     (E) Excludes transport volumes of intrastate pipelines.
 
 SOURCE  Kinder Morgan, Inc.