EXHIBIT 11 TO
PROXY STATEMENT OF
KINDER MORGAN MANAGEMENT, LLC
Current Report on Form 8-K of Kinder Morgan, Inc. filed on June 19, 2002
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
June 19, 2002
(Date of earliest event reported)
KINDER MORGAN, INC.
(Exact name of registrant as specified in its charter)
Kansas
(State or other jurisdiction
of incorporation) | 1-6446
(Commission
File Number) | 48-0290000
(I.R.S. Employer
Identification No.) |
500 Dallas, Suite 1000
Houston, Texas 77002
(Address of principal executive offices, including zip code)
713-369-9000
(Registrant’s telephone number, including area code)
Item 5. Other Events.
As previously disclosed in Kinder Morgan, Inc.’s Form 10-Q for the period ended March 31, 2002 as filed with the Securities and Exchange Commission on May 10, 2002, Kinder Morgan, Inc. adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, referred to in this report as SFAS 142, effective January 1, 2002. In order to illustrate how the provisions of SFAS 142 would have affected the financial statements of Kinder Morgan, Inc. if SFAS 142 had been in effect for the five years ended December 31, 2001, and to set forth the transitional disclosures described in SFAS 142, Kinder Morgan, Inc. has filed as Exhibit 99.1 to this report (1) the Five-Year Review of Kinder Morgan, Inc. and subsidiaries previously filed as Item 6 to Kinder Morgan, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2001 as filed with the Securities and Exchange Commission on February 20, 2002, and (2) a table showing the changes that would have been reflected in its net income and earnings per share if the provisions of SFAS 142 had been in effect for the five years ended December 31, 2001.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
| a) | Financial Statements. Not Applicable. |
| | |
| b) | Pro Forma Financial Information. Not Applicable. |
| | |
| c) | Exhibits. |
| | |
| The following materials are filed as exhibits to this Current Report on Form 8-K. |
| | |
Exhibit Number | |
Description |
99.1 | | Selected Financial Data, including transitional disclosures described in SFAS No. 142 |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| KINDER MORGAN, INC.
|
Dated: June 19, 2002 | By: | /s/ JOSEPH LISTENGART |
| | Joseph Listengart
Vice President and General Counsel |
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EXHIBIT INDEX
| | |
Exhibit Number | |
Description |
| | | |
99.1 | | Selected Financial Data, including transitional disclosures described in SFAS No. 142 |
| | |
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Exhibit 99.1
Selected Financial Data.
In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, referred to in the following discussion as "SFAS 142." SFAS 142, which superceded Accounting Principles Board Opinion No. 17, Intangible Assets, addresses financial accounting and reporting for (1) intangible assets acquired individually or with a group of other assets (but not those acquired in a business combination) at acquisition and (2) goodwill and other intangible assets subsequent to their acquisition. SFAS 142 is required to be applied starting with fiscal years beginning after December 15, 2001. As previously disclosed in Kinder Morgan, Inc.'s Form 10-Q for the period ended March 31, 2002 as filed with the Securities and Exchange Commission on May 10, 2002, Kinder Morgan, Inc. adopted SFAS 142 effective January 1, 2002.
1
The following sets forth the Five-Year Review of Kinder Morgan, Inc. and subsidiaries as presented in Item 6 of Kinder Morgan, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001 as filed with the Securities and Exchange Commission on February 20, 2002. The footnotes to the Five-Year Review as presented in Kinder Morgan, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001 referred to "the accompanying Consolidated Financial Statements." The corresponding references in the footnotes included herein refer to the Consolidated Financial Statements included in Kinder Morgan, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001.
Five-Year Review
Kinder Morgan, Inc. and Subsidiaries
| Year Ended December 31, |
| 2001 | | 2000 | | 19991 | | 19982 | | 1997 |
| (In thousands except per share amounts) |
Operating Revenues | $1,054,918 | | $2,679,722 | | $1,836,368 | | $1,660,259 | | $ 340,685 |
Gas Purchases and Other Costs of Sales | 339,353 | | 1,926,068 | | 1,050,250 | | 836,614 | | 134,476 |
Gross Margin | 715,565 | | 753,654 | | 786,118 | | 823,645 | | 206,209 |
Other Operating Expenses | 331,246 | | 358,511 | | 490,416 | | 427,953 | | 128,059 |
Operating Income | 384,319 | | 395,143 | | 295,702 | | 395,692 | | 78,150 |
Other Income and (Expenses)3 | 22,917 | | (87,977) | | (81,151) | | (172,787) | | (21,039) |
Income From Continuing Operations Before | | | | | | | | | |
Income Taxes | 407,236 | | 307,166 | | 214,551 | | 222,905 | | 57,111 |
Income Taxes | 168,601 | | 123,017 | | 79,124 | | 82,710 | | 12,777 |
Income From Continuing Operations | 238,635 | | 184,149 | | 135,427 | | 140,195 | | 44,334 |
Gain (Loss) From Discontinued Operations, | | | | | | | | | |
Net of Tax | - | | (31,734) | | (395,319) | | (77,984) | | 33,163 |
Income (Loss) Before Extraordinary Item | 238,635 | | 152,415 | | (259,892) | | 62,211 | | 77,497 |
Extraordinary Item - Loss on Early | | | | | | | | | |
Extinguishment of Debt, Net of Income Taxes | (13,565) | | - | | - | | - | | - |
Net Income (Loss) | 225,070 | | 152,415 | | (259,892) | | 62,211 | | 77,497 |
Less-Preferred Dividends | - | | - | | 129 | | 350 | | 350 |
Less-Premium Paid on Preferred Stock | | | | | | | | | |
Redemption | - | | - | | 350 | | - | | - |
Earnings (Loss) Available for Common Stock | $ 225,070 | | $ 152,415 | | $ (260,371) | | $ 61,861 | | $ 77,147 |
| ========== | | ========== | | ========== | | ========== | | ========== |
Basic Earnings (Loss) Per Common Share: | | | | | | | | | |
Continuing Operations | $ 2.07 | | $ 1.62 | | $ 1.68 | | $ 2.19 | | $ 0.95 |
Discontinued Operations | - | | (0.28) | | (4.92) | | (1.22) | | 0.71 |
Extraordinary Item - Loss on Early | | | | | | | | | |
Extinguishment of Debt | (0.12) | | - | | - | | - | | - |
Total Basic Earnings (Loss) Per Common Share | $ 1.95 | | $ 1.34 | | $ (3.24) | | $ 0.97 | | $ 1.66 |
| ========== | | ========== | | ========== | | ========== | | ========== |
Number of Shares Used in Computing Basic | | | | | | | | | |
Earnings (Loss) Per Common Share | 115,243 | | 114,063 | | 80,284 | | 64,021 | | 46,589 |
| ========== | | ========== | | ========== | | ========== | | ========== |
Diluted Earnings (Loss) Per Common Share: | | | | | | | | | |
Continuing Operations | $ 1.97 | | $ 1.61 | | $ 1.68 | | $ 2.17 | | $ 0.93 |
Discontinued Operations | - | | (0.28) | | (4.92) | | (1.21) | | 0.70 |
Extraordinary Item - Loss on Early | | | | | | | | | |
Extinguishment of Debt | (0.11) | | - | | - | | - | | - |
Total Diluted Earnings (Loss) Per Common | | | | | | | | | |
Share | $ 1.86 | | $ 1.33 | | $ (3.24) | | $ 0.96 | | $ 1.63 |
| ========== | | ========== | | ========== | | ========== | | ========== |
Number of Shares Used in Computing | | | | | | | | | |
Diluted Earnings (Loss) Per Common Share | 121,326 | | 115,030 | | 80,358 | | 64,636 | | 47,307 |
| ========== | | ========== | | ========== | | ========== | | ========== |
Dividends Per Common Share | $ 0.20 | | $ 0.20 | | $ 0.65 | | $ 0.76 | | $ 0.73 |
| ========== | | ========== | | ========== | | ========== | | ========== |
Capital Expenditures4 | $ 124,171 | | $ 85,654 | | $ 92,841 | | $ 120,881 | | $ 230,814 |
| ========== | | ========== | | ========== | | ========== | | ========== |
1 Reflects the acquisition of Kinder Morgan Delaware on October 7, 1999. See Note 3 of the Notes to Consolidated Financial
Statements included in the Kinder Morgan, Inc. Annual Report on Form 10-K for the year ended December 31, 2001.
2 Reflects the acquisition of MidCon Corp. on January 30, 1998.
3 Includes significant impacts from sales of assets. See Note 1 (N) of the Notes to Consolidated Financial Statements included in the
Kinder Morgan, Inc. Annual Report on Form 10-K for the year ended December 31, 2001.
4 Capital Expenditures shown are for continuing operations only.
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Five-Year Review (Continued)
Kinder Morgan, Inc. and Subsidiaries
| As of December 31, |
| 2001 | | 2000 | | 1999 | | 1998 | | 1997 | |
| (In thousands except per share amounts) |
Total Assets | $ 9,533,085 | | $ 8,386,989 | | $ 9,393,834 | | $ 9,623,779 | | $ 2,305,805 | |
| =========== | | =========== | | =========== | | =========== | | =========== | |
Capitalization: | | | | | | | | | | |
Common Equity | $ 2,259,997 | 39% | $ 1,777,624 | 39% | $ 1,649,615 | 32% | $ 1,219,043 | 25% | $ 606,132 | 46% |
Preferred Stock | - | - | - | - | - | - | 7,000 | - | 7,000 | - |
Preferred Capital Trust | | | | | | | | | | |
Securities | 275,000 | 5% | 275,000 | 6% | 275,000 | 5% | 275,000 | 6% | 100,000 | 8% |
Minority Interests | 817,513 | 14% | 4,910 | - | 9,523 | - | 63,354 | 1% | 47,303 | 4% |
Long-term Debt | 2,404,967 | 42% | 2,478,983 | 55% | 3,293,326 | 63% | 3,300,025 | 68% | 553,816 | 42% |
Total Capitalization | $ 5,757,477 | 100% | $ 4,536,517 | 100% | $ 5,227,464 | 100% | $ 4,864,422 | 100% | $ 1,314,251 | 100% |
| =========== | === | =========== | === | =========== | === | =========== | === | =========== | === |
Book Value Per | | | | | | | | | | |
Common Share | $ 18.24 | | $ 15.53 | | $ 14.64 | | $ 17.77 | | $ 12.63 | |
| =========== | | =========== | | =========== | | =========== | | =========== | |
Had the provisions of SFAS 142 been in effect during the years presented above, goodwill amortization would have been eliminated, increasing net income and earnings per share as follows:
| Year Ended December 31, |
| 2001 | | 2000 | | 1999 | | 1998 | | 1997 |
| (In thousands except per share amounts) |
Reported Income (Loss) Before | | | | | | | | | |
Extraordinary Item | $ 238,635 | | $ 152,415 | | $(259,892) | | $ 62,211 | | $ 77,497 |
Add Back: Goodwill Amortization, | | | | | | | | | |
Net of Related Tax Benefit | 16,198 | | 17,368 | | 5,449 | | 292 | | - |
Adjusted Income (Loss) Before | | | | | | | | | |
Extraordinary Item | 254,833 | | 169,783 | | (254,443) | | 62,503 | | 77,497 |
Extraordinary Item | (13,565) | | - | | - | | - | | - |
Adjusted Net Income (Loss) | $ 241,268 | | $ 169,783 | | $(254,443) | | $ 62,503 | | $ 77,497 |
| ========= | | ========= | | ========= | | ========= | | ========= |
| | | | | | | | | |
Basic Earnings (Loss) Per Share: | | | | | | | | | |
Reported Net Income (Loss) | $ 1.95 | | $ 1.34 | | $ (3.24) | | $ 0.97 | | $ 1.66 |
Goodwill Amortization | 0.14 | | 0.15 | | 0.06 | | - | | - |
Adjusted Net Income (Loss) | $ 2.09 | | $ 1.49 | | $ (3.18) | | $ 0.97 | | $ 1.66 |
| ========= | | ========= | | ========= | | ========= | | ========= |
| | | | | | | | | |
Diluted Earnings (Loss) Per Share: | | | | | | | | | |
Reported Net Income (Loss) | $ 1.86 | | $ 1.33 | | $ (3.24) | | $ 0.96 | | $ 1.63 |
Goodwill Amortization | 0.13 | | 0.15 | | 0.07 | | - | | - |
Adjusted Net Income (Loss) | $ 1.99 | | $ 1.48 | | $ (3.17) | | $ 0.96 | | $ 1.63 |
| ========= | | ========= | | ========= | | ========= | | ========= |
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