þ
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
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Kansas
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48-0290000
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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500
Dallas Street, Suite 1000, Houston, Texas 77002
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(Address
of principal executive offices, including zip
code)
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Page
Number
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4-38
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5
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27
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31
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32
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33
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36
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38-44
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44
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45
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45
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46
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46-47
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48-91
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48
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49
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52
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53
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56
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58
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59
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59
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62
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64
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68
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69
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71
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83
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89
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89
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90
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91-92
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93-207
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207
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208
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208
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208
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208
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208
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209-211
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211-220
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221
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221-226
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226
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227-231
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232
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Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
|
·
|
Going Private
Transaction
|
|
·
|
Sale of U.S. Retail
Operations
|
|
·
|
Sale of Terasen Gas Business
Segment
|
|
·
|
Sale of Corridor Pipeline
System
|
|
·
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Sale of 80% Ownership Interest
in NGPL Business Segment
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
|
·
|
Debt Securities
Buyback
|
|
·
|
Repayment of Senior Secured
Credit Facilities Debt
|
|
·
|
NGPL Re-Contracting
Transportation and Storage
Capacity
|
|
·
|
NGPL Storage
Expansions
|
|
·
|
NGPL Amarillo-Gulf Coast Line
Expansion
|
|
·
|
NGPL Louisiana Line
Expansion
|
|
·
|
Kinder Morgan Illinois
Pipeline
|
|
·
|
Products Pipelines – KMP North
System Sale
|
|
·
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Products Pipelines – KMP
Pacific Operations East Line
Expansion
|
|
·
|
Products Pipelines – KMP CALNEV
Pipeline System Expansion
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
|
·
|
Products Pipelines – KMP Cochin
Pipeline System Ownership Interest Increased to
100%
|
|
·
|
Natural Gas Pipelines – KMP
Rockies Express Pipeline
|
|
·
|
Natural Gas Pipelines – KMP
Texas Intrastate Pipeline
Project
|
|
·
|
Natural Gas Pipelines – KMP
Kinder Morgan Louisiana
Pipeline
|
|
·
|
Natural Gas Pipelines – KMP
Kinder Morgan Interstate Gas Transmission Colorado Lateral
Project
|
|
·
|
Natural Gas Pipelines – KMP
Midcontinent Express
Pipeline
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
|
·
|
Natural Gas Pipelines – KMP
Kinder Morgan Interstate Gas Transmission Pipeline System
Expansion
|
|
·
|
Natural Gas Pipelines – KMP
TransColorado Gas Transmission
Expansion
|
|
·
|
CO2 – KMP Carbon Dioxide Expansion
Projects
|
|
·
|
Terminals – KMP Biodiesel
Liquids Terminal Expansion
|
|
·
|
Terminals – KMP Vancouver
Wharves Terminal Acquisition
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
|
·
|
Terminals – KMP Louisiana
Terminal Assets Expansion
|
|
·
|
Terminals – KMP Steel Terminals
Acquisition
|
|
·
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Terminals – KMP Petroleum Coke
Terminal Project
|
|
·
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Trans Mountain – KMP Sale of
Trans Mountain to Kinder Morgan Energy
Partners
|
|
·
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Trans Mountain – KMP Trans
Mountain Pipeline Expansion
|
|
·
|
Kinder Morgan Management Public
Offering
|
|
·
|
Kinder Morgan Energy Partners
Public Offerings
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
|
·
|
Kinder Morgan Energy Partners
Debt Offerings
|
|
·
|
Kinder Morgan Energy Partners
Cash Distribution Expectations for
2008
|
|
·
|
Kinder Morgan Energy Partners
2007 Capital Expenditures
|
|
·
|
$480.0
million in the Terminals – KMP segment, largely related to expanding the
petroleum products storage capacity at liquids terminal facilities,
including the construction of additional liquids storage tanks at
facilities in Canada and at facilities located on the Houston Ship Channel
and the New York Harbor, and to various expansion projects and
improvements undertaken at multiple terminal
facilities;
|
|
·
|
$382.5
million in the CO2 –
KMP segment, mostly related to additional infrastructure, including wells
and injection and compression facilities, to support the expanding carbon
dioxide flooding operations at the SACROC and Yates oil field units in
West Texas and to expand Kinder Morgan Energy Partners’ capacity to
produce and deliver CO2 from
the McElmo Dome and Doe Canyon source
fields;
|
|
·
|
$305.7
million in the Trans Mountain – KMP segment, mostly related to pipeline
expansion and improvement projects undertaken to increase crude oil and
refined products delivery volumes;
|
|
·
|
$264.0
million in the Natural Gas Pipelines – KMP segment, mostly related to
current construction of the Kinder Morgan Louisiana Pipeline and to
various expansion and improvement projects on the Texas intrastate natural
gas pipeline systems, including the development of additional natural gas
storage capacity at natural gas storage facilities located at Markham and
Dayton, Texas; and
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
|
·
|
$259.4
million in the Products Pipelines – KMP segment, mostly related to the
continued expansion work on the Pacific operations’ East Line products
pipeline, completion of construction projects resulting in additional
capacity, and an additional refined products line on the CALNEV Pipeline
in order to increase delivery service to the growing Las Vegas, Nevada
market.
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||||||
Seven
Months Ended
December
31, 2007
|
Five
Months Ended
May
31, 2007
|
Year
Ended
December
31, 2006
|
|||||||||||||||||||
Amount
|
%
of Total
|
Amount
|
%
of Total
|
Amount
|
%
of Total
|
||||||||||||||||
(Dollars
in millions)
|
(Dollars
in millions)
|
||||||||||||||||||||
Net
Pre-tax Impact of Kinder Morgan Energy Partners1
|
$
|
412.0
|
47.8
|
%
|
$
|
255.2
|
47.5
|
%
|
$
|
582.9
|
47.5
|
%
|
|||||||||
Segment
Earnings:
|
|||||||||||||||||||||
NGPL
|
422.8
|
49.0
|
%
|
267.4
|
49.8
|
%
|
603.5
|
49.2
|
%
|
||||||||||||
Power
|
13.4
|
1.5
|
%
|
8.9
|
1.7
|
%
|
23.2
|
1.9
|
%
|
||||||||||||
Express
|
14.4
|
1.7
|
%
|
5.4
|
1.0
|
%
|
17.2
|
1.4
|
%
|
||||||||||||
Total
|
$
|
862.6
|
100.0
|
%
|
$
|
536.9
|
100.00
|
%
|
$
|
1,226.8
|
100.00
|
%
|
1
|
Represents
Knight Inc.’s general partner incentive and earnings from its ownership of
limited partner interests in Kinder Morgan Energy Partners, net of
associated minority interests.
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Toll
Per Barrel (US$)
|
|||||
2007
|
2006
|
||||
Hardisty,
Alberta to Casper, Wyoming
|
$
|
1.869
|
$
|
1.612
|
|
Hardisty,
Alberta to Casper, Wyoming (committed)
|
$
|
1.340
|
$
|
1.313
|
|
Casper,
Wyoming to Wood River, Illinois
|
$
|
1.562
|
$
|
1.497
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
|
·
|
Kinder
Morgan Texas Pipeline;
|
|
·
|
Kinder
Morgan Tejas Pipeline;
|
|
·
|
Mier-Monterrey
Mexico Pipeline; and
|
|
·
|
Kinder
Morgan North Texas Pipeline.
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
|
·
|
Kinder
Morgan Interstate Gas Transmission
Pipeline;
|
|
·
|
Trailblazer
Pipeline;
|
|
·
|
Trans-Colorado
Pipeline; and
|
|
·
|
51%
ownership interest in the Rockies Express
Pipeline.
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
|
·
|
a
132-mile, 42-inch diameter pipeline with firm capacity of approximately
2.0 billion cubic feet per day of natural gas that will extend from the
Sabine Pass terminal to a point of interconnection with an existing
Columbia Gulf Transmission line in Evangeline Parish, Louisiana (an
offshoot will consist of approximately 2.3 miles of 24-inch diameter
pipeline with firm peak day capacity of approximately 300 million cubic
feet per day extending away from the 42-inch diameter line to the existing
Florida Gas Transmission Company compressor station in Acadia Parish,
Louisiana). This segment is expected to be in service by January 1, 2009;
and
|
|
·
|
a
1-mile, 36-inch diameter pipeline with firm capacity of approximately 1.2
billion cubic feet per day that will extend from the Sabine Pass terminal
and connect to NGPL’s natural gas pipeline. This portion of the project is
expected to be in service in the third quarter of
2008.
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Productive Wells1
|
Service Wells2
|
Drilling Wells3
|
|||||||||
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
||||||
Crude
Oil
|
2,463
|
1,587
|
1,066
|
789
|
2
|
2
|
|||||
Natural
Gas
|
8
|
4
|
-
|
-
|
─
|
─
|
|||||
Total
Wells
|
2,471
|
1,591
|
1,066
|
789
|
2
|
2
|
1
|
Includes
active wells and wells temporarily shut-in. As of December 31, 2007,
Kinder Morgan Energy Partners did not operate any productive wells with
multiple completions.
|
2
|
Consists
of injection, water supply, disposal wells and service wells temporarily
shut-in. A disposal well is used for disposal of saltwater into an
underground formation; a service well is a well drilled in a known oil
field in order to inject liquids that enhance recovery or dispose of salt
water.
|
3
|
Consists
of development wells in the process of being drilled as of December 31,
2007. A development well is a well drilled in an already discovered oil
field.
|
2007
|
2006
|
2005
|
|||
Productive
|
|||||
Development
|
31
|
37
|
42
|
||
Exploratory
|
-
|
-
|
-
|
||
Dry
|
|||||
Development
|
-
|
-
|
-
|
||
Exploratory
|
-
|
-
|
-
|
||
Total
Wells
|
31
|
37
|
42
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Notes:
|
The
above table includes wells that were completed during each year regardless
of the year in which drilling was initiated, and does not include any
wells where drilling operations were not completed as of the end of the
applicable year. Development wells include wells drilled in the proved
area of an oil or gas reservoir.
|
Gross
|
Net
|
||
Developed
Acres
|
72,435
|
67,731
|
|
Undeveloped
Acres
|
8,788
|
8,129
|
|
Total
|
81,223
|
75,860
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months Ended
December
31,
|
Five
Months Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
Consolidated
Companies1
|
||||||||||||||||
Production
Costs per Barrel of Oil Equivalent2,3,4
|
$
|
17.00
|
$
|
15.15
|
$
|
13.30
|
$
|
10.00
|
||||||||
Crude
Oil Production (MBbl/d)
|
34.9
|
36.6
|
37.8
|
37.9
|
||||||||||||
Natural
Gas Liquids Production (MBbl/d)4
|
5.4
|
5.6
|
5.0
|
5.3
|
||||||||||||
Natural
Gas liquids Production from Gas Plants(MBbl/d)5
|
4.2
|
4.1
|
3.9
|
4.1
|
||||||||||||
Total
Natural Gas Liquids Production(MBbl/d)
|
9.6
|
9.7
|
8.9
|
9.4
|
||||||||||||
Natural
Gas Production (MMcf/d)4,6
|
0.8
|
0.8
|
1.3
|
3.7
|
||||||||||||
Natural
Gas Production from Gas Plants(MMcf/d)5,6
|
0.3
|
0.2
|
0.3
|
3.1
|
||||||||||||
Total
Natural Gas Production(MMcf/d)6
|
1.1
|
1.0
|
1.6
|
6.8
|
||||||||||||
Average
Sales Prices Including Hedge Gains/Losses:
|
||||||||||||||||
Crude
Oil Price per Bbl7
|
$
|
36.80
|
$
|
35.03
|
$
|
31.42
|
$
|
27.36
|
||||||||
Natural
Gas Liquids Price per Bbl7
|
$
|
57.78
|
$
|
44.55
|
$
|
43.52
|
$
|
38.79
|
||||||||
Natural
Gas Price per Mcf8
|
$
|
5.86
|
$
|
6.41
|
$
|
6.36
|
$
|
5.84
|
||||||||
Total
Natural Gas Liquids Price per Bbl5
|
$
|
58.55
|
$
|
45.04
|
$
|
43.90
|
$
|
38.98
|
||||||||
Total
Natural Gas Price per Mcf5
|
$
|
5.65
|
$
|
6.27
|
$
|
7.02
|
$
|
5.80
|
||||||||
Average
Sales Prices Excluding Hedge Gains/Losses:
|
||||||||||||||||
Crude
Oil Price per Bbl7
|
$
|
78.65
|
$
|
57.43
|
$
|
63.27
|
$
|
54.45
|
||||||||
Natural
Gas Liquids Price per Bbl7
|
$
|
57.78
|
$
|
44.55
|
$
|
43.52
|
$
|
38.79
|
||||||||
Natural
Gas Price per Mcf8
|
$
|
5.86
|
$
|
6.41
|
$
|
6.36
|
$
|
5.84
|
1
|
Amounts
relate to Kinder Morgan CO2
Company, L.P. and its consolidated
subsidaries.
|
2
|
Computed
using production costs, excluding transportation costs, as defined by the
Securities and Exchange Commisson. Natural gas volumes were converted to
barrels of oil equivalent (BOE) using a conversion factor of six mcf of
natural gas to one barrel of oil.
|
3
|
Production
costs include labor, repairs and maintenance, materials, supplies, fuel
and power, property taxes, severance taxes, and general and administrative
expenses directly related to oil and gas producing
activities.
|
4
|
Includes
only production attributable to leasehold
ownership.
|
5
|
Includes
production attributable to Kinder Morgan Energy Partners’ ownership in
processing plants and third-party processing
agreements.
|
6
|
Excludes
natural gas production used as
fuel.
|
7
|
Hedge
gains/losses for crude oil and natural gas liquids are included with crude
oil.
|
8
|
Natural
gas sales were not hedged.
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
|
·
|
Order
No. 436 (1985) requiring open-access, nondiscriminatory transportation of
natural gas;
|
|
·
|
Order
No. 497 (1988) which set forth new standards and guidelines imposing
certain constraints on the interaction between interstate natural gas
pipelines and their marketing affiliates and imposing certain disclosure
requirements regarding that interaction;
and
|
|
·
|
Order
No. 636 (1992) which required interstate natural gas pipelines that
perform open-access transportation under blanket certificates to
“unbundle” or separate their traditional merchant sales services from
their transportation and storage services and to provide comparable
transportation and storage services with respect to all natural gas
supplies whether purchased from the pipeline or from other merchants such
as marketers or producers.
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
Items 1. and 2. Business
and Properties. (continued)
|
Knight
Form 10-K
|
|
·
|
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.
|
Item 1A.
Risk
Factors. (continued)
|
Knight
Inc. Form 10-K
|
Item 1A.
Risk
Factors. (continued)
|
Knight
Inc. Form 10-K
|
Item 1A.
Risk
Factors. (continued)
|
Knight
Inc. Form 10-K
|
|
·
|
demands
on management related to the increase in our size after an acquisition, an
expansion, or a completed construction
project;
|
|
·
|
the
diversion of our management’s attention from the management of daily
operations;
|
|
·
|
difficulties
in implementing or unanticipated costs of accounting, estimating,
reporting and other systems;
|
|
·
|
difficulties
in the assimilation and retention of necessary employees;
and
|
|
·
|
potential
adverse effects on operating
results.
|
Item 1A.
Risk
Factors. (continued)
|
Knight
Inc. Form 10-K
|
Item 1A.
Risk
Factors. (continued)
|
Knight
Inc. Form 10-K
|
Item 1A.
Risk
Factors. (continued)
|
Knight
Inc. Form 10-K
|
Knight
Form 10-K
|
Knight
Form 10-K
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
|
Market
Price Per Share
|
|||||||
2007
|
2006
|
||||||
Low
|
High
|
Low
|
High
|
||||
Quarter
Ended:
|
|||||||
March
31
|
$104.97
|
$107.02
|
$89.13
|
$103.75
|
|||
June
301
|
$105.32
|
$108.14
|
$81.00
|
$103.00
|
|||
September
30
|
n/a
|
n/a
|
$99.50
|
$105.00
|
|||
December
31
|
n/a
|
n/a
|
$104.00
|
$106.20
|
Dividends
Paid Per Share
|
|||
2007
|
2006
|
||
Quarter
Ended:
|
|||
March
31
|
$0.8750
|
$0.8750
|
|
June
301
|
$0.8750
|
$0.8750
|
|
September
30
|
n/a
|
$0.8750
|
|
December
31
|
n/a
|
$0.8750
|
1
|
As
a result of the Going Private transaction, our common stock ceased trading
on May 30, 2007.
|
Item
6.
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||||||||||
Seven
Months Ended
|
Five
Months
|
|||||||||||||||||||||||
December
31,
|
Ended
|
Year
Ended December 31,
|
||||||||||||||||||||||
20072
|
May
31, 2007
|
20063,4
|
20054
|
2004
|
2003
|
|||||||||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||||||||||
Operating
Revenues
|
$
|
6,394.7
|
$
|
4,165.1
|
$
|
10,208.6
|
$
|
1,025.6
|
$
|
877.7
|
$
|
848.8
|
||||||||||||
Gas
Purchases and Other Costs of Sales
|
3,656.6
|
2,490.4
|
6,339.4
|
302.6
|
194.2
|
232.1
|
||||||||||||||||||
Other
Operating Expenses5,6
|
1,695.3
|
1,469.9
|
2,124.0
|
341.7
|
342.5
|
316.5
|
||||||||||||||||||
Operating
Income
|
1,042.8
|
204.8
|
1,745.2
|
381.3
|
341.0
|
300.2
|
||||||||||||||||||
Other
Income and (Expenses)
|
(566.9
|
)
|
(302.0
|
)
|
(858.9
|
)
|
470.0
|
365.2
|
281.5
|
|||||||||||||||
Income
(Loss) from Continuing Operations
Before
Income Taxes
|
475.9
|
(97.2
|
)
|
886.3
|
851.3
|
706.2
|
581.7
|
|||||||||||||||||
Income
Taxes
|
227.4
|
135.5
|
285.9
|
337.1
|
208.0
|
225.1
|
||||||||||||||||||
Income
(Loss) from Continuing Operations
|
248.5
|
(232.7
|
)
|
600.4
|
514.2
|
498.2
|
356.6
|
|||||||||||||||||
Income
(Loss) from Discontinued Operations, Net of Tax7
|
(1.5
|
)
|
298.6
|
(528.5
|
)
|
40.4
|
23.9
|
25.1
|
||||||||||||||||
Net
Income
|
$
|
247.0
|
$
|
65.9
|
$
|
71.9
|
$
|
554.6
|
$
|
522.1
|
$
|
381.7
|
||||||||||||
|
||||||||||||||||||||||||
Capital
Expenditures8
|
$
|
1,287.0
|
$
|
652.8
|
$
|
1,375.6
|
$
|
134.1
|
$
|
103.2
|
$
|
132.0
|
1
|
Includes
significant impacts from acquisitions and dispositions of assets. See
Notes 4 and 5 of the accompanying Notes to Consolidated Financial
Statements for additional
information.
|
Item 6.
Selected
Financial Data (continued)
|
Knight
Form 10-K
|
2
|
Includes
significant impacts resulting from the Going Private transaction. See Note
1(B) of the accompanying Notes to Consolidated Financial Statements for
additional information.
|
3
|
Due
to our adoption of EITF No. 04-5, effective January 1, 2006 the accounts,
balances and results of operations of Kinder Morgan Energy Partners are
included in our financial statements and we no longer apply the equity
method of accounting to our investments in Kinder Morgan Energy Partners.
See Note 1(B) of the accompanying Notes to Consolidated Financial
Statements.
|
4
|
Includes
the results of Terasen Inc. subsequent to its November 30, 2005
acquisition by us. See Notes 4, 6 and 7 of the accompanying Notes to
Consolidated Financial Statements for information regarding
Terasen.
|
5
|
Includes
charges of $1.2 million, $6.5 million, $33.5 million, and $44.5 million in
2006, 2005, 2004 and 2003, respectively, to reduce the carrying value of
certain power assets.
|
6
|
Includes
an impairment charge of $377.1 million in the five months ended May 31,
2007 relating to Kinder Morgan Energy Partners’ acquisition of Trans
Mountain pipeline from Knight Inc. on April 30, 2007. See Note 1(I) of the
accompanying Notes to Consolidated Financial
Statements.
|
7
|
Includes
a charge of $650.5 million in 2006 to reduce the carrying value of Terasen
Inc.; see Note 6 of the accompanying Notes to Consolidated Financial
Statements.
|
8
|
Capital
Expenditures shown are for continuing operations
only.
|
As
of December 31,
|
||||||||||||||||||||||||||||||
Successor
Company
|
Predecessor
Company
|
|||||||||||||||||||||||||||||
20071
|
20062
|
20053
|
2004
|
2003
|
||||||||||||||||||||||||||
(In
millions)
|
(In
millions, except percentages)
|
|||||||||||||||||||||||||||||
Total
Assets
|
$
|
36,101.0
|
$
|
26,795.6
|
$
|
17,451.6
|
$
|
10,116.9
|
$
|
10,036.7
|
||||||||||||||||||||
|
||||||||||||||||||||||||||||||
Capitalization:
|
||||||||||||||||||||||||||||||
Common
Equity4
|
$
|
8,069.2
|
30
|
%
|
$
|
3,657.5
|
20
|
%
|
$
|
4,051.4
|
34
|
%
|
$
|
2,919.5
|
45
|
%
|
$
|
2,691.8
|
39
|
%
|
||||||||||
Deferrable
Interest Debentures
|
283.1
|
1
|
%
|
283.6
|
2
|
%
|
283.6
|
2
|
%
|
283.6
|
4
|
%
|
283.6
|
4
|
%
|
|||||||||||||||
Capital
Securities
|
-
|
-
|
106.9
|
1
|
%
|
107.2
|
1
|
%
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Minority
Interests
|
3,314.0
|
13
|
%
|
3,095.5
|
17
|
%
|
1,247.3
|
10
|
%
|
1,105.4
|
17
|
%
|
1,010.1
|
15
|
%
|
|||||||||||||||
Outstanding
Notes and Debentures5
|
14,814.6
|
56
|
%
|
10,623.9
|
60
|
%
|
6,286.8
|
53
|
%
|
2,258.0
|
34
|
%
|
2,837.5
|
42
|
%
|
|||||||||||||||
Total
Capitalization
|
$
|
26,480.9
|
100
|
%
|
$
|
17,767.4
|
100
|
%
|
$
|
11,976.3
|
100
|
%
|
$
|
6,566.5
|
100
|
%
|
$
|
6,823.0
|
100
|
%
|
1
|
Includes
significant impacts resulting from the Going Private transaction. See Note
1(B) of the accompanying Notes to Consolidated Financial Statements for
additional information.
|
2
|
Due
to our adoption of EITF No. 04-5, effective January 1, 2006 the accounts,
balances and results of operations of Kinder Morgan Energy Partners are
included in our financial statements and we no longer apply the equity
method of accounting to our investments in Kinder Morgan Energy Partners.
See Note 1(B) of the accompanying Notes to Consolidated Financial
Statements.
|
3
|
Reflects
the acquisition of Terasen Inc. on November 30, 2005. See Notes 4, 6 and 7
of the accompanying Notes to Consolidated Financial Statements for
information regarding this
acquisition.
|
4
|
Excluding
Accumulated Other Comprehensive
Income/Loss.
|
5
|
Excluding
the value of interest rate swaps and short-term debt. See Note 10 of the
accompanying Notes to Consolidated Financial
Statements.
|
Knight
Form 10-K
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||||
For
the Year Ended December 31, 2007
|
Seven
Months Ended December 31, 2007
|
Five
Months Ended May 31, 2007
|
Year
Ended December 31, 2006
|
Year
Ended December 31, 2005
|
||||||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||||||
Equity
in Earnings of Kinder Morgan Energy Partners1,2
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
605.4
|
||||||||||
Segment
Earnings before Depreciation, Depletion and Amortization of Excess Cost of
Equity Investments:
|
||||||||||||||||||||
NGPL
|
690.2
|
422.8
|
267.4
|
603.5
|
534.8
|
|||||||||||||||
Power
|
22.3
|
13.4
|
8.9
|
23.2
|
16.5
|
|||||||||||||||
Express
|
19.8
|
14.4
|
5.4
|
17.2
|
2.0
|
|||||||||||||||
Products
Pipelines – KMP3
|
386.9
|
162.5
|
224.4
|
467.9
|
-
|
|||||||||||||||
Natural
Gas Pipelines – KMP
|
601.8
|
373.3
|
228.5
|
574.8
|
-
|
|||||||||||||||
CO2 –
KMP
|
643.0
|
433.0
|
210.0
|
488.2
|
-
|
|||||||||||||||
Terminals
– KMP
|
416.0
|
243.7
|
172.3
|
408.1
|
-
|
|||||||||||||||
Trans
Mountain – KMP4
|
(293.6
|
)
|
43.8
|
(337.4
|
)
|
76.5
|
-
|
|||||||||||||
Segment
Earnings before Depreciation, Depletion and Amortization of Excess Cost of
Equity Investments
|
2,486.4
|
1,706.9
|
779.5
|
2,659.4
|
1,158.7
|
|||||||||||||||
Depreciation,
Depletion and Amortization Expense
|
(733.3
|
)
|
(472.3
|
)
|
(261.0
|
)
|
(531.4
|
)
|
(104.6
|
)
|
||||||||||
Amortization
of Excess Cost of Equity Investments
|
(5.8
|
)
|
(3.4
|
)
|
(2.4
|
)
|
(5.6
|
)
|
-
|
|||||||||||
Other
|
3.2
|
0.3
|
2.9
|
8.2
|
6.5
|
|||||||||||||||
Interest
and Other Corporate Expenses, Net5
|
(1,431.4
|
)
|
(799.6
|
)
|
(631.8
|
)
|
(1,273.3
|
)
|
(209.3
|
)
|
||||||||||
Income
(Loss) From Continuing Operations Before Income Taxes6
|
319.1
|
431.9
|
(112.8
|
)
|
857.3
|
851.3
|
||||||||||||||
Income
Taxes6
|
(303.3
|
)
|
(183.4
|
)
|
(119.9
|
)
|
(256.9
|
)
|
(337.1
|
)
|
||||||||||
Income
(Loss) From Continuing Operations
|
15.8
|
248.5
|
(232.7
|
)
|
600.4
|
514.2
|
||||||||||||||
Income
(Loss) From Discontinued Operations, Net of Tax7
|
297.1
|
(1.5
|
)
|
298.6
|
(528.5
|
)
|
40.4
|
|||||||||||||
Net
Income
|
$
|
312.9
|
$
|
247.0
|
$
|
65.9
|
$
|
71.9
|
$
|
554.6
|
1
|
Due
to our adoption of EITF No. 04-5, effective January 1, 2006 the accounts,
balances and results of operations of Kinder Morgan Energy Partners are
included in our financial statements and we no longer apply the equity
method of accounting to our investment in Kinder Morgan Energy Partners.
See Note 1(B) of the accompanying Notes to Consolidated Financial
Statements.
|
2
|
Equity
in Earnings of Kinder Morgan Energy Partners for 2005 includes a reduction
in pre-tax earnings of approximately $63.3 million ($40.3 million after
tax) resulting principally from the effects of certain regulatory,
environmental, litigation and inventory items on Kinder Morgan Energy
Partners’ earnings.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
3
|
2007
includes (i) a $136.8 million increase in expense associated with rate
case and other legal liability adjustments (in the seven months ended
December 31, 2007); (ii) a $15.9 million increase in expense associated
with environmental liability adjustments ($2.2 million in the five months
ended May 31, 2007 and $13.7 million in the seven months ended December
31, 2007); (iii) a $15.0 million expense for a litigation settlement
reached with Contra Costa County, California (in the seven months ended
December 31, 2007); (iv) a $3.2 million increase in expense from the
settlement of certain litigation matters related to the West Coast refined
product terminal operations (in the seven months ended December 31, 2007);
and (v) a $1.8 million increase in income resulting from unrealized
foreign currency gains on long-term debt transactions (in the seven months
ended December 31, 2007). 2006 amount includes a $16.5 million increase in
expense associated with environmental liability adjustments and a $5.7
million increase in income resulting from certain transmix contract
settlements.
|
4
|
Trans
Mountain – KMP Segment Earnings before Depreciation, Depletion and
Amortization of Excess Cost of Equity Investments (“Segment Earnings”) for
2007 includes a $377.1 million goodwill impairment charge as discussed
under Intangible
Assets elsewhere in this report. Excluding the impairment charge,
Segment Earnings increased by $7.0 million for the year ended December 31,
2007, over the comparable period in
2006.
|
5
|
Interest
and Other Corporate Expenses, Net for 2006 include (i) a reduction in
pre-tax income of $22.3 million ($14.1 million after tax) resulting from
non-cash charges to mark to market certain interest rate swaps and (ii)
miscellaneous other items totaling a net decrease of $0.8 million in
pre-tax income ($0.5 million after
tax).
|
6
|
Income
taxes of Kinder Morgan Energy Partners of $59.6 million, $44.0 million,
$15.6 million and $29.0 million for the combined year ended December 31,
2007, the seven months ended December 31, 2007, the five months ended May
31, 2007 and the year ended December 31, 2006, respectively, are included
in segment earnings.
|
7
|
2006
includes a $650.5 million goodwill impairment associated with Terasen (see
Note 6 of the accompanying Notes to Consolidated Financial
Statements).
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
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
|
Natural
Gas Pipeline Company of America, or NGPL
|
||
Power
Generation
|
The
ownership and operation of natural gas-fired electric generation
facilities
|
Power
|
||
Express
Pipeline System
|
The
ownership of a one-third interest in the Express Pipeline System, a crude
oil 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
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
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 oil and refined petroleum pipelines,
principally located in Canada
|
Trans
Mountain – KMP
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||||
For
the Year
Ended
December
31,
2007
|
Seven
Months
Ended
December
31,
2007
|
Five
Months
Ended
May
31, 2007
|
Year
Ended
December
31,
2006
|
Year
Ended
December
31,
2005
|
||||||||||||||||
(In
millions except systems throughput)
|
(In
millions except systems throughput)
|
|||||||||||||||||||
Operating
Revenues
|
$
|
1,183.7
|
$
|
757.2
|
$
|
426.5
|
$
|
1,118.0
|
$
|
947.3
|
||||||||||
Gas
Purchases and Other Costs of Sales
|
(341.4
|
)
|
(242.1
|
)
|
(99.3
|
)
|
(362.9
|
)
|
(299.2
|
)
|
||||||||||
Other
Operating Expenses
|
(153.7
|
)
|
(93.3
|
)
|
(60.4
|
)
|
(154.2
|
)
|
(115.3
|
)
|
||||||||||
Equity
in Earnings of Horizon
|
1.6
|
1.0
|
0.6
|
1.8
|
1.8
|
|||||||||||||||
Gain
on Asset Sales
|
-
|
-
|
-
|
0.8
|
0.2
|
|||||||||||||||
Segment
Earnings Before DD&A
|
$
|
690.2
|
$
|
422.8
|
$
|
267.4
|
$
|
603.5
|
$
|
534.8
|
||||||||||
|
||||||||||||||||||||
Systems
Throughput (Trillion Btus)
|
1,785.7
|
1,027.2
|
758.5
|
1,696.3
|
1,664.8
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||||
For
the Year
Ended
December
31,
2007
|
Seven
Months
Ended
December
31,
2007
|
Five
Months
Ended
May
31, 2007
|
Year
Ended
December
31,
2006
|
Year
Ended
December
31,
2005
|
||||||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||||||
Operating
Revenues
|
$
|
60.1
|
$
|
40.2
|
$
|
19.9
|
$
|
60.0
|
$
|
54.2
|
||||||||||
Operating
Expenses and Minority Interests
|
(50.9
|
)
|
(34.8
|
)
|
(16.1
|
)
|
(49.6
|
)
|
(42.7
|
)
|
||||||||||
Other
Income (Expense)1
|
-
|
-
|
-
|
(1.2
|
)
|
(6.5
|
)
|
|||||||||||||
Equity
in Earnings of Thermo Cogeneration Partnership
|
13.1
|
8.0
|
5.1
|
11.3
|
11.5
|
|||||||||||||||
Gain
on Asset Sales
|
-
|
-
|
-
|
2.7
|
-
|
|||||||||||||||
Segment
Earnings Before DD&A
|
$
|
22.3
|
$
|
13.4
|
$
|
8.9
|
$
|
23.2
|
$
|
16.5
|
1
|
To
record the impairment of certain assets, as discussed
below.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||||
For
the Year
Ended
December
31,
2007
|
Seven
Months
Ended
December
31,
2007
|
Five
Months
Ended
May
31, 2007
|
Year
Ended
December
31,
2006
|
Year
Ended
December
31,
2005
|
||||||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||||||
Segment
Earnings Before DD&A
|
$
|
19.8
|
$
|
14.4
|
$
|
5.4
|
$
|
17.2
|
$
|
2.0
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||||
For
the Year
Ended
December
31,
2007
|
Seven
Months
Ended
December
31,
2007
|
Five
Months
Ended
May
31, 2007
|
Year
Ended
December
31,
2006
|
Year
Ended
December
31,
2005
|
||||||||||||||||
(In
millions, except
operating
statistics)
|
(In
millions, except operating statistics)
|
|||||||||||||||||||
Operating
Revenues
|
$
|
803.3
|
$
|
471.6
|
$
|
331.7
|
$
|
732.5
|
$
|
670.6
|
||||||||||
Operating
Expenses1
|
(437.0
|
)
|
(320.7
|
)
|
(116.3
|
)
|
(285.5
|
)
|
(330.8
|
)
|
||||||||||
Other
Income (Expense)2
|
0.2
|
0.8
|
(0.6
|
)
|
-
|
-
|
||||||||||||||
Earnings
from Equity Investments3
|
23.9
|
11.5
|
12.4
|
14.2
|
26.4
|
|||||||||||||||
Interest
Income and Other Income (Expense), Net4
|
9.4
|
4.7
|
4.7
|
11.9
|
6.1
|
|||||||||||||||
Income
Taxes5
|
(12.9
|
)
|
(5.4
|
)
|
(7.5
|
)
|
(5.2
|
)
|
(10.3
|
)
|
||||||||||
Segment
Earnings Before DD&A
|
$
|
386.9
|
$
|
162.5
|
$
|
224.4
|
$
|
467.9
|
$
|
362.0
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||||
For
the Year
Ended
December
31,
2007
|
Seven
Months
Ended
December
31,
2007
|
Five
Months
Ended
May
31, 2007
|
Year
Ended
December
31,
2006
|
Year
Ended
December
31,
2005
|
||||||||||||||||
Gasoline
(MMBbl)
|
435.5
|
252.7
|
182.8
|
449.8
|
452.1
|
|||||||||||||||
Diesel
Fuel (MMBbl)
|
164.1
|
97.5
|
66.6
|
158.2
|
163.1
|
|||||||||||||||
Jet
Fuel (MMBbl)
|
125.1
|
73.8
|
51.3
|
119.5
|
118.1
|
|||||||||||||||
Total
Refined Products Volumes (MMBbl)
|
724.7
|
424.0
|
300.7
|
727.5
|
733.3
|
|||||||||||||||
Natural
Gas Liquids (MMBbl)
|
30.4
|
16.7
|
13.7
|
34.0
|
33.5
|
|||||||||||||||
Total
Delivery Volumes (MMBbl)6
|
755.1
|
440.7
|
314.4
|
761.5
|
766.8
|
1
|
2007,
2006 and 2005 amounts include increases in expense of $15.9 million ($2.2
million in the five months ended May 31, 2007 and $13.7 million in the
seven months ended December 31, 2007), $13.5 million and $19.6 million,
respectively, associated with environmental liability adjustments. 2007
amount also includes a $136.7 million increase in expense associated with
rate case and other legal liability adjustments, a $15.0 million expense
for a litigation settlement reached with Contra Costa County, California,
and a $3.2 million increase in expense from the settlement of certain
litigation matters related to our West Coast refined product terminal
operations (all in the seven months ended December 31, 2007). 2005 amount
also includes a $105.0 million increase in expense associated with a rate
case liability adjustment.
|
2
|
2007
amount includes 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.
|
3
|
2007
amount includes a $0.1 million increase in expense associated with legal
liability adjustments on Plantation Pipe Line Company. 2006 amount
includes a $4.9 million increase in expense associated with environmental
liability adjustments on Plantation Pipe Line
Company.
|
4
|
2007
amount includes a $1.8 million increase in income resulting from
unrealized foreign currency gains on long-term debt transactions (in the
seven months ended December 31, 2007). 2006 amount includes a $5.7 million
increase in income resulting from transmix contract
settlements.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
5
|
2006
amount includes a $1.9 million decrease in expense associated with the tax
effect on our share of environmental expenses incurred by Plantation Pipe
Line Company and described in footnote
3.
|
6
|
Includes
Pacific, Plantation, CALNEV, Central Florida, Cochin, and Cypress pipeline
volumes.
|
Year Ended December
31, 2007 versus Year Ended December 31, 2006
|
|||||||||||||
EBDA
increase/(decrease)
|
Revenues
increase/(decrease)
|
||||||||||||
(In
millions, except percentages)
|
|||||||||||||
Cochin
Pipeline System
|
$
|
30.0
|
212
|
%
|
$
|
39.2
|
110
|
%
|
|||||
West
Coast Terminals
|
12.3
|
34
|
%
|
7.5
|
12
|
%
|
|||||||
Plantation
Pipeline
|
8.6
|
27
|
%
|
1.0
|
2
|
%
|
|||||||
Transmix
operations
|
8.0
|
36
|
%
|
10.6
|
32
|
%
|
|||||||
Pacific
operations
|
5.8
|
2
|
%
|
18.4
|
5
|
%
|
|||||||
CALNEV
Pipeline
|
5.1
|
11
|
%
|
3.4
|
5
|
%
|
|||||||
Southeast
Terminals
|
5.0
|
13
|
%
|
(12.9
|
)
|
(16
|
)%
|
||||||
All
other (including eliminations)
|
4.3
|
11
|
%
|
3.5
|
7
|
%
|
|||||||
Total
Products Pipelines
|
$
|
79.1
|
17
|
%
|
$
|
70.7
|
10
|
%
|
Year Ended December
31, 2006 versus Year Ended December 31, 2005
|
|||||||||||||
EBDA
increase/(decrease)
|
Revenues
increase/(decrease)
|
||||||||||||
(In
millions, except percentages)
|
|||||||||||||
Cochin
Pipeline System
|
$
|
(5.2
|
)
|
(27
|
)%
|
$
|
(0.5
|
)
|
(1
|
)%
|
|||
Southeast
Terminals
|
4.9
|
15
|
%
|
24.5
|
43
|
%
|
|||||||
Plantation
Pipeline
|
(4.2
|
)
|
(12
|
)%
|
1.5
|
4
|
%
|
||||||
Pacific
operations
|
(5.4
|
)
|
(2
|
)%
|
16.2
|
5
|
%
|
||||||
West
Coast Terminals
|
(2.6
|
)
|
(7
|
)%
|
6.5
|
11
|
%
|
||||||
Transmix
operations
|
2.6
|
13
|
%
|
3.9
|
13
|
%
|
|||||||
All
other (including eliminations)
|
2.0
|
3
|
%
|
9.9
|
9
|
%
|
|||||||
Total
Products Pipelines
|
$
|
(7.9
|
)
|
(2
|
)%
|
$
|
62.0
|
9
|
%
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
|
·
|
a
$4.9 million (15%) increase from the Southeast refined products terminal
operations, driven by higher liquids throughput volumes at higher rates,
relative to 2005, and higher margins from ethanol blending and sales
activities;
|
|
·
|
a
$4.1 million (1%) increase from the combined Pacific and CALNEV Pipeline
operations, primarily due to a $22.6 million (6%) increase in operating
revenues, which more than offset an $18.3 million (18%) increase in
combined operating expenses. The increase in operating revenues consisted
of a $14.7 million (5%) increase from refined products deliveries and a
$7.9 million (8%) increase from terminal and other fee revenue. The
increase in operating expenses was primarily due to higher fuel and power
expenses; and
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
|
·
|
a
$3.7 million (12%) increase from the Central Florida Pipeline, mainly due
to higher product delivery revenues in 2006 driven by higher average
tariff and terminal rates.
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||||
For
the Year
Ended
December
31,
2007
|
Seven
Months
Ended
December
31,
2007
|
Five
Months
Ended
May
31, 2007
|
Year
Ended
December
31,
2006
|
Year
Ended
December
31,
2005
|
||||||||||||||||
(In
millions, except
operating
statistics)
|
(In
millions, except operating statistics)
|
|||||||||||||||||||
Operating
Revenues
|
$
|
6,466.5
|
$
|
3,825.9
|
$
|
2,640.6
|
$
|
6,577.7
|
$
|
7,718.4
|
||||||||||
Operating
Expenses1
|
(5,879.9
|
)
|
(3,461.4
|
)
|
(2,418.5
|
)
|
(6,057.8
|
)
|
(7,255.0
|
)
|
||||||||||
Earnings
from Equity Investments2
|
19.2
|
10.3
|
8.9
|
40.5
|
36.8
|
|||||||||||||||
Other
Income (Expense)3
|
1.8
|
1.9
|
(0.1
|
)
|
15.1
|
-
|
||||||||||||||
Interest
Income and Other Income (Expense), Net
|
0.2
|
-
|
0.2
|
0.7
|
2.7
|
|||||||||||||||
Income
taxes
|
(6.0
|
)
|
(3.4
|
)
|
(2.6
|
)
|
(1.4
|
)
|
(2.6
|
)
|
||||||||||
Segment
Earnings Before DD&A
|
$
|
601.8
|
$
|
373.3
|
$
|
228.5
|
$
|
574.8
|
$
|
500.3
|
||||||||||
|
||||||||||||||||||||
Operating
Statistics:
|
||||||||||||||||||||
Natural
Gas Transport Volumes (Trillion Btus)4
|
1,577.3
|
931.7
|
645.6
|
1,440.9
|
1,317.9
|
|||||||||||||||
Natural
Gas Sales Volumes (Trillion Btus)5
|
865.5
|
519.7
|
345.8
|
909.3
|
924.6
|
1
|
Seven
months ended December 31, 2007 amount includes a gain of $7.4 million
resulting from valuation adjustments related to derivative contracts in
place and a settlement of tax reserves, partially offset by a $4.4 million
charge related to the revaluation of cushion gas at the time of the Going
Private transaction and recorded in the application of the purchase method
of accounting. Seven months ended December 31, 2007 and year ended
December 31, 2006 and 2005 amounts include a $0.4 million decrease in
expense, a $1.5 million increase in expense and a $0.1 million decrease in
expense, respectively, associated with environmental liability
adjustments. 2006 amount also includes a $6.3 million reduction in expense
due to the revaluation of a reserve related to a natural gas
purchase/sales contract.
|
2
|
Five
months ended May 31, 2007 amount includes an expense of $1.0 million
reflecting Kinder Morgan Energy Partners’ portion of a loss from the early
extinguishment of debt by Red Cedar Gathering
Company.
|
3
|
Seven
months ended December 31, 2007 amount includes a $1.4 million charge
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. 2006 amount includes a $15.1 million gain from
the combined sale of Kinder Morgan Energy Partners’ Douglas natural gas
gathering system and Painter Unit fractionation
facility.
|
4
|
Includes
Rocky Mountain pipeline group and Texas intrastate natural gas pipeline
group pipeline volumes.
|
5
|
Represents
Texas intrastate natural gas pipeline
group.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Year Ended December
31, 2007 versus Year Ended December 31, 2006
|
|||||||||||||
EBDA
increase/(decrease)
|
Revenues
increase/(decrease)
|
||||||||||||
(In
millions, except percentages)
|
|||||||||||||
Texas
Intrastate Natural Gas Pipeline Group
|
$
|
57.0
|
19
|
%
|
$
|
(142.2
|
)
|
(2
|
)%
|
||||
Casper
and Douglas gas processing
|
8.6
|
67
|
%
|
5.6
|
6
|
%
|
|||||||
Rocky
Mountain Pipeline Group
|
(11.6
|
)
|
(6
|
)%
|
29.0
|
10
|
%
|
||||||
Red
Cedar Gathering Company
|
(7.4
|
)
|
(20
|
)%
|
-
|
-
|
|||||||
All
others
|
(0.7
|
)
|
(15
|
)%
|
(3.8
|
)
|
(94
|
)%
|
|||||
Intrasegment
Eliminations
|
-
|
-
|
0.2
|
11
|
%
|
||||||||
Total
Natural Gas Pipelines
|
$
|
45.9
|
8
|
%
|
$
|
(111.2
|
)
|
(2
|
)%
|
Year Ended December
31, 2006 versus Year Ended December 31, 2005
|
|||||||||||||
EBDA
increase/(decrease)
|
Revenues
increase/(decrease)
|
||||||||||||
(In
millions, except percentages)
|
|||||||||||||
Texas
Intrastate Natural Gas Pipeline Group
|
$
|
34.6
|
13
|
%
|
$
|
(1,165.7
|
)
|
(16
|
)%
|
||||
Rocky
Mountain Pipeline Group
|
14.3
|
8
|
%
|
27.9
|
11
|
%
|
|||||||
Red
Cedar Gathering Company
|
4.3
|
13
|
%
|
-
|
-
|
||||||||
Casper
and Douglas gas processing
|
2.9
|
30
|
%
|
(6.4
|
)
|
(6
|
)%
|
||||||
All
others
|
(1.4
|
)
|
(21
|
)%
|
2.5
|
167
|
%
|
||||||
Intrasegment
Eliminations
|
-
|
-
|
1.0
|
39
|
%
|
||||||||
Total
Natural Gas Pipelines
|
$
|
54.7
|
11
|
%
|
$
|
(1,140.7
|
)
|
(15
|
)%
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||||
For
the Year
Ended
December
31,
2007
|
Seven
Months
Ended
December
31,
2007
|
Five
Months
Ended
May
31, 2007
|
Year
Ended
December
31,
2006
|
Year
Ended
December
31,
2005
|
||||||||||||||||
(In
millions, except operating statistics)
|
(In
millions, except operating statistics)
|
|||||||||||||||||||
Operating
Revenues1
|
$
|
930.1
|
$
|
605.9
|
$
|
324.2
|
$
|
736.5
|
$
|
657.6
|
||||||||||
Operating
Expenses2
|
(304.2
|
)
|
(182.7
|
)
|
(121.5
|
)
|
(268.1
|
)
|
(212.6
|
)
|
||||||||||
Earnings
from Equity Investments
|
19.2
|
10.5
|
8.7
|
19.2
|
26.3
|
|||||||||||||||
Other
Income (Expense), Net
|
-
|
0.1
|
(0.1
|
)
|
0.8
|
-
|
||||||||||||||
Income
Taxes
|
(2.1
|
)
|
(0.8
|
)
|
(1.3
|
)
|
(0.2
|
)
|
(0.4
|
)
|
||||||||||
Segment
Earnings Before DD&A
|
$
|
643.0
|
$
|
433.0
|
$
|
210.0
|
$
|
488.2
|
$
|
470.9
|
||||||||||
|
||||||||||||||||||||
Operating
Statistics:
|
||||||||||||||||||||
Carbon
Dioxide Delivery Volumes (Bcf)3
|
637.3
|
365.0
|
272.3
|
669.2
|
649.3
|
|||||||||||||||
SACROC
Oil Production (Gross)(MBbl/d)4
|
27.6
|
26.5
|
29.1
|
30.8
|
32.1
|
|||||||||||||||
SACROC
Oil Production (Net)(MBbl/d)5
|
23.0
|
22.1
|
24.2
|
25.7
|
26.7
|
|||||||||||||||
Yates
Oil Production (Gross)(MBbl/d)4
|
27.0
|
27.4
|
26.4
|
26.1
|
24.2
|
|||||||||||||||
Yates
Oil Production (Net)(MBbl/d)5
|
12.0
|
12.2
|
11.7
|
11.6
|
10.8
|
|||||||||||||||
Natural
Gas Liquids Sales Volumes (Net)(MBbl/d)5
|
9.6
|
9.5
|
9.7
|
8.9
|
9.4
|
|||||||||||||||
Realized
Weighted Average Oil Price per Bbl6,7
|
$
|
36.05
|
$
|
36.80
|
$
|
35.03
|
$
|
31.42
|
$
|
27.36
|
||||||||||
Realized
Weighted Average Natural Gas Liquids Price per Bbl7,8
|
$
|
52.91
|
$
|
58.55
|
$
|
45.04
|
$
|
43.90
|
$
|
38.98
|
1
|
2007
results include an increase of $106.0 million in segment earnings,
resulting from valuation adjustments related to assets sold in June 2007
and derivative contracts in place at the time of the Going Private
transaction and recorded in the application of the purchase method of
accounting. 2006 amount also includes a $1.8 million loss (from a decrease
in revenues) on derivative contracts used to hedge forecasted crude oil
sales.
|
2
|
2007
and 2005 amounts include increases in expense associated with
environmental liability adjustments of $0.2 million (in the seven months
ended December 31, 2007) and $0.3 million,
respectively.
|
3
|
Includes
Cortez, Central Basin, Canyon Reef Carriers, Centerline and Pecos pipeline
volumes.
|
4
|
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.
|
5
|
Net
to Kinder Morgan, after royalties and outside working
interests.
|
6
|
Includes
all Kinder Morgan crude oil production
properties.
|
7
|
Hedge
gains/losses for crude oil and natural gas liquids are included with crude
oil.
|
8
|
Includes
production attributable to leasehold ownership and production attributable
to our ownership in processing plants and third-party processing
agreements.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Year Ended December
31, 2007 versus Year Ended December 31, 2006
|
|||||||||||||
EBDA
increase/(decrease)
|
Revenues
increase/(decrease)
|
||||||||||||
(In
millions, except percentages)
|
|||||||||||||
Sales
and Transportation Activities
|
$
|
(9.3
|
)
|
(5
|
)%
|
$
|
(8.8
|
)
|
(4
|
)%
|
|||
Oil
and Gas Producing Activities
|
56.5
|
19
|
%
|
81.6
|
14
|
%
|
|||||||
Intrasegment
Eliminations
|
-
|
-
|
13.0
|
21
|
%
|
||||||||
Total
CO2
|
$
|
47.2
|
10
|
%
|
$
|
85.8
|
12
|
%
|
Year Ended December
31, 2006 versus Year Ended December 31, 2005
|
|||||||||||||
EBDA
increase/(decrease)
|
Revenues
increase/(decrease)
|
||||||||||||
(In
millions, except percentages)
|
|||||||||||||
Sales
and Transportation Activities
|
$
|
24.4
|
15
|
%
|
$
|
35.7
|
22
|
%
|
|||||
Oil
and Gas Producing Activities
|
(5.6
|
)
|
(2
|
)%
|
57.1
|
10
|
%
|
||||||
Intrasegment
Eliminations
|
-
|
-
|
(12.1
|
)
|
(25
|
)%
|
|||||||
Total
CO2
|
$
|
18.8
|
4
|
%
|
$
|
80.7
|
12
|
%
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||||
For
the Year
Ended
December
31,
2007
|
Seven
Months
Ended
December
31,
2007
|
Five
Months
Ended
May
31, 2007
|
Year
Ended
December
31,
2006
|
Year
Ended
December
31,
2005
|
||||||||||||||||
(In
millions, except
operating
statistics)
|
(In
millions, except operating statistics)
|
|||||||||||||||||||
Operating
Revenues
|
$
|
963.7
|
$
|
599.2
|
$
|
364.5
|
$
|
864.8
|
$
|
699.3
|
||||||||||
Operating
Expenses1
|
(536.4
|
)
|
(344.2
|
)
|
(192.2
|
)
|
(461.9
|
)
|
(373.4
|
)
|
||||||||||
Other
Income2
|
6.3
|
3.3
|
3.0
|
15.2
|
-
|
|||||||||||||||
Earnings
from Equity Investments
|
0.6
|
0.6
|
-
|
0.2
|
0.1
|
|||||||||||||||
Interest
Income and Other Income (Expense), Net
|
1.0
|
0.7
|
0.3
|
2.1
|
(0.2
|
)
|
||||||||||||||
Income
Taxes3
|
(19.2
|
)
|
(15.9
|
)
|
(3.3
|
)
|
(12.3
|
)
|
(11.2
|
)
|
||||||||||
Segment
Earnings Before DD&A
|
$
|
416.0
|
$
|
243.7
|
$
|
172.3
|
$
|
408.1
|
$
|
314.6
|
||||||||||
|
||||||||||||||||||||
Operating
Statistics:
|
||||||||||||||||||||
Bulk
Transload Tonnage (MMtons)4
|
87.1
|
53.4
|
33.7
|
95.1
|
85.5
|
|||||||||||||||
Liquids
Leaseable Capacity (MMBbl)
|
47.5
|
47.5
|
43.6
|
43.5
|
42.4
|
|||||||||||||||
Liquids
Utilization %
|
95.9
|
%
|
95.9
|
%
|
97.5
|
%
|
96.3
|
%
|
95.4
|
%
|
1
|
2007
and 2005 amounts include increases in expense associated with
environmental liability adjustments of $2.0 million (in the seven
months ended December 31, 2007) and $3.5 million, respectively. 2007
amount also includes a $25.0 million increase in expense from the
settlement of certain litigation matters related to the Coral coal
terminal, and a $1.2 million increase in expense associated with legal
liability adjustments (both in the seven months ended December 31, 2007).
2006 amount includes a $2.8 million increase in expense related to
hurricane clean-up and repair
activities.
|
2
|
2007
and 2006 amounts include increases in income of $1.8 million (in the five
months ended May 31, 2007) and $15.2 million, respectively, from property
casualty gains associated with the 2005 hurricane
season.
|
3
|
2006
amount includes a $1.1 million increase in expense associated with
hurricane expenses and casualty
gain.
|
4
|
Volumes
for acquired terminals are included for 2007 and
2006.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
|
·
|
all
of the membership interests of Transload Services, LLC, which provides
material handling and steel processing services at 14 steel-related
terminal facilities located in the Chicago metropolitan area and various
cities in the United States, acquired November 20,
2006;
|
|
·
|
all
of the membership interests of Devco USA L.L.C., which includes a
proprietary technology that transforms molten sulfur into solid pellets
that are environmentally friendly and easier to transport, acquired
December 1, 2006;
|
|
·
|
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
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
effective September 1, 2007.
|
|
·
|
the
Texas Petcoke terminals, located in and around the Ports of Houston and
Beaumont, Texas, acquired effective April 29,
2005;
|
|
·
|
three
terminals acquired separately in July 2005: the Kinder Morgan Staten
Island terminal, a dry-bulk terminal located in Hawesville, Kentucky and a
liquids/dry-bulk facility located in Blytheville, Arkansas;
and
|
|
·
|
all
of the ownership interests in General Stevedores, L.P., which operates a
break-bulk terminal facility located along the Houston Ship Channel,
acquired effective July 31, 2005.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||
For
the Year
Ended
December
31,
2007
|
Seven
Months
Ended
December
31,
2007
|
Five
Months
Ended
May
31, 2007
|
Year
Ended
December
31,
2006
|
|||||||||||||
(In
millions, except
operating
statistics)
|
(In
millions, except operating statistics)
|
|||||||||||||||
Operating
Revenues
|
$
|
160.8
|
$
|
98.9
|
$
|
61.9
|
$
|
137.8
|
||||||||
Operating
Expenses
|
(65.9
|
)
|
(42.9
|
)
|
(23.0
|
)
|
(53.3
|
)
|
||||||||
Other
Income (Expense)1
|
(377.1
|
)
|
-
|
(377.1
|
)
|
0.9
|
||||||||||
Interest
Income and Other Income (Expense), Net
|
8.0
|
6.3
|
1.7
|
1.0
|
||||||||||||
Income
Tax Benefit (Expense)
|
(19.4
|
)
|
(18.5
|
)
|
(0.9
|
)
|
(9.9
|
)
|
||||||||
Segment
Earnings Before DD&A2
|
$
|
(293.6
|
)
|
$
|
43.8
|
$
|
(337.4
|
)
|
$
|
76.5
|
||||||
|
||||||||||||||||
Operating
Statistics:
|
||||||||||||||||
Transport
Volumes (MMBbl)
|
94.4
|
58.0
|
36.4
|
83.7
|
1
|
Amount
for the year ended December 31, 2007 and the five months ended May 31,
2007 represents a goodwill impairment
expense.
|
2
|
Amounts
for the year and the seven months ended December 31, 2007 include a $1.3
million decrease in income from an oil loss
allowance.
|
Year
Ended December 31,
|
|||
2005
|
|||
(In
millions)
|
|||
General
Partner Interest, Including Minority Interest in the Operating
Limited Partnerships
|
$
|
484.6
|
|
Limited
Partner Units (Kinder Morgan Energy Partners)
|
32.3
|
||
Limited
Partner i-units (Kinder Morgan Management)
|
88.5
|
||
605.4
|
|||
Pre-tax
Minority Interest in Kinder Morgan Management
|
(70.6
|
)
|
|
Pre-tax
Earnings from Investment in Kinder Morgan Energy Partners1
|
$
|
534.8
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
1
|
Pre-tax
earnings from our investment in Kinder Morgan Energy Partners in 2005,
when we accounted for Kinder Morgan Energy Partners under the equity
method, was negatively impacted by approximately $63.3 million due
principally to the effects of certain regulatory, environmental,
litigation and inventory items on Kinder Morgan Energy Partners’ 2005
earnings.
|
Combined
Results
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||||
For
the Year
Ended
December
31,
2007
|
Seven
Months
Ended
December
31,
2007
|
Five
Months
Ended
May
31, 2007
|
Year
Ended
December
31,
2006
|
Year
Ended
December
31,
2005
|
||||||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||||||
General
and Administrative Expense
|
$
|
(459.2
|
)
|
$
|
(175.6
|
)
|
$
|
(283.6
|
)
|
$
|
(305.1
|
)
|
$
|
(64.1
|
)
|
|||||
Interest
Expense, Net
|
(839.7
|
)
|
(587.8
|
)
|
(251.9
|
)
|
(559.0
|
)
|
(147.5
|
)
|
||||||||||
Interest
Expense – Deferrable Interest Debentures
|
(21.9
|
)
|
(12.8
|
)
|
(9.1
|
)
|
(21.9
|
)
|
(21.9
|
)
|
||||||||||
Minority
Interests
|
(128.3
|
)
|
(37.6
|
)
|
(90.7
|
)
|
(374.2
|
)
|
(50.5
|
)
|
||||||||||
Loss
on Mark-to-market Interest Rate Swaps
|
-
|
-
|
-
|
(22.3
|
)
|
-
|
||||||||||||||
Gain
on Sale of Kinder Morgan Management Shares
|
-
|
-
|
-
|
-
|
78.5
|
|||||||||||||||
Contribution
to Kinder Morgan Foundation
|
-
|
-
|
-
|
-
|
(15.0
|
)
|
||||||||||||||
Other,
Net
|
17.7
|
14.2
|
3.5
|
9.2
|
11.2
|
|||||||||||||||
$
|
(1,431.4
|
)
|
$
|
(799.6
|
)
|
$
|
(631.8
|
)
|
$
|
(1,273.3
|
)
|
$
|
(209.3
|
)
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
December
31,
|
December
31,
|
|||||||||||
2007
|
2006
|
2005
|
||||||||||
(Dollars
in millions)
|
(Dollars
in millions)
|
|||||||||||
Long-term
Debt:
|
||||||||||||
Outstanding
Notes and Debentures
|
$
|
14,714.6
|
$
|
10,623.9
|
$
|
6,286.8
|
||||||
Deferrable
Interest Debentures Issued to Subsidiary Trusts
|
283.1
|
283.6
|
283.6
|
|||||||||
Preferred
Interest in General Partner of KMP
|
100.0
|
|||||||||||
Capital
Securities
|
-
|
106.9
|
107.2
|
|||||||||
Value
of Interest Rate Swaps1
|
199.7
|
46.4
|
51.8
|
|||||||||
15,297.4
|
11,060.8
|
6,729.4
|
||||||||||
Minority
Interests
|
3,314.0
|
3,095.5
|
1,247.3
|
|||||||||
Common
Equity, Excluding Accumulated
Other
Comprehensive Loss
|
8,069.2
|
3,657.5
|
4,051.4
|
|||||||||
26,680.6
|
17,813.8
|
12,028.1
|
||||||||||
Value
of Interest Rate Swaps
|
(199.7
|
)
|
(46.4
|
)
|
(51.8
|
)
|
||||||
Capitalization
|
26,480.9
|
17,767.4
|
11,976.3
|
|||||||||
Short-term
Debt, Less Cash and Cash Equivalents2
|
819.3
|
2,046.7
|
841.4
|
|||||||||
Invested
Capital
|
$
|
27,300.2
|
$
|
19,814.1
|
$
|
12,817.7
|
||||||
|
||||||||||||
Capitalization:
|
||||||||||||
Outstanding
Notes and Debentures
|
55.5%
|
59.8%
|
52.5%
|
|||||||||
Minority
Interests
|
12.5%
|
17.4%
|
10.4%
|
|||||||||
Common
Equity
|
30.5%
|
20.6%
|
33.8%
|
|||||||||
Deferrable
Interest Debentures Issued to Subsidiary Trusts
|
1.1%
|
1.6%
|
2.4%
|
|||||||||
Preferred
Interest in General Partners of KMP
|
0.4%
|
-%
|
-%
|
|||||||||
Capital
Securities
|
-%
|
0.6%
|
0.9%
|
|||||||||
|
||||||||||||
Invested
Capital:
|
||||||||||||
Net
Debt3,
4
|
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 Partners of KMP, Capital Securities and Minority
Interests
|
43.1%
|
36.1%
|
44.4%
|
1
|
See
“Interest Rate Swaps” following.
|
2
|
Cash
and cash equivalents netted against short-term debt were $148.6 million,
$129.8 million and $116.6 million at December 31, 2007, 2006 and 2005,
respectively.
|
3
|
Outstanding
notes and debentures plus short-term debt, less cash and cash
equivalents.
|
4
|
Our
ratio of net debt to invested capital at December 31, 2007 and 2006, not
including the effects of consolidating Kinder Morgan Energy Partners
(effective January 1, 2006), was 45.6% and 56.2%,
respectively.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
At
December 31, 2007
|
At
February 29, 2008
|
||||||||||
Short-term
Debt
Outstanding
|
Available
Borrowing
Capacity
|
Short-term
Debt
Outstanding
|
Available
Borrowing
Capacity
|
||||||||
(In
millions)
|
|||||||||||
Credit
Facilities:
|
|||||||||||
Knight Inc.1
|
|||||||||||
$1.0
billion, six-year secured revolver, due May 2013
|
$
|
299.0
|
$
|
558.0
|
$
|
-
|
$
|
857.0
|
|||
|
|||||||||||
Commercial
Paper:
|
|||||||||||
Kinder Morgan Energy
Partners2
|
|||||||||||
$1.85
billion, five-year unsecured revolver, due August 2010
|
$
|
589.1
|
$
|
723.1
|
$
|
589.6
|
$
|
682.4
|
1
|
On
January 5, 2007, after shareholder approval of the Going Private
transaction was announced, Kinder Morgan, Inc.’s secured senior debt
rating was downgraded by Standard & Poor’s Rating Services to BB- due
to the anticipated increase in debt related to the proposed transaction.
On April 11, 2007 and May 30, 2007, Fitch and Moody’s Investor Services
lowered their ratings to BB and Ba2, respectively, also related to the
transaction. Following the sale of an 80% ownership interest in our NGPL
business segment on February 15, 2008 (see Note 1(M) of the accompanying
Notes to Consolidated Financial Statements), Standard & Poor’s Rating
Services upgraded Knight Inc.’s secured senior debt to BB, and Fitch
upgraded its rating to BB+. Because we have a non-investment grade credit
rating, we no longer have access to the commercial paper market. As a
result, we are currently utilizing our $1.0 billion revolving credit
facility for Knight Inc.’s short-term borrowing
needs.
|
|
As
discussed following, the loan agreements we had in place prior to the
Going Private transaction were cancelled and replaced with a new loan
agreement. Our indentures related to publicly issued notes do not contain
covenants related to maintenance of credit ratings. Accordingly, no such
covenants were impacted by the downgrade in our credit ratings occasioned
by the Going Private transaction.
|
2
|
On
January 5, 2007, after shareholder approval of the Going Private
transaction was announced, Kinder Morgan Energy Partners’ unsecured senior
debt was downgraded to BBB by Standard & Poor’s Rating Services due to
the anticipated increase in our unsecured senior debt related to the
proposed transaction. Kinder Morgan Energy Partners’ debt was downgraded
by Fitch Ratings from BBB+ to BBB on April 11, 2007 and, upon completion
of the Going Private transaction, was downgraded from Baa1 to Baa2 by
Moody’s Investors Service.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
|
·
|
a
$1.0 billion senior secured Tranche A term loan facility with a term of
six years and six months (subsequently retired, see
below);
|
|
·
|
a
$3.3 billion senior secured Tranche B term loan facility, with a term of
seven years (subsequently retired, see
below);
|
|
·
|
a
$455 million senior secured Tranche C term loan facility with a term of
three years (subsequently retired, see below)
and
|
|
·
|
a
$1.0 billion senior secured revolving credit facility with a term of six
years. This revolving credit facility includes a sublimit of $300 million
for the issuance of letters of credit and a sublimit of $50 million for
swingline loans.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
|
·
|
a
rate equal to LIBOR (London Interbank Offered Rate) plus an applicable
margin, or
|
|
·
|
a
rate equal to the higher of (a) U.S. prime rate and (b) the federal funds
effective rate plus 0.50%, in each case, plus an applicable
margin.
|
|
·
|
a
rate equal to the higher of (a) U.S. prime rate or (b) the federal funds
effective rate plus 0.50%, in each case, plus an applicable
margin.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Off-Balance
Sheet Arrangements
At
December 31, 2007
|
||||||||||||||||||||||
Entity
|
Investment
Amount
|
Investment
Percent
|
Entity
Assets1
|
Entity
Debt
|
Our
Debt
Responsibility
|
|||||||||||||||||
(Millions
of Dollars)
|
||||||||||||||||||||||
Ft.
Lupton Power Plant
|
$
|
53.5
|
2
|
49.5
|
%
|
$
|
127.4
|
$
|
38.3
|
3
|
$
|
-
|
||||||||||
Express
System
|
402.1
|
33.3
|
%
|
942.6
|
416.7
|
3
|
-
|
|||||||||||||||
Horizon
Pipeline Company4
|
14.6
|
50
|
%
|
87.1
|
49.5
|
3
|
-
|
|||||||||||||||
Plantation
Pipeline Company
|
351.4
|
51
|
%
|
264.6
|
175.3
|
3
|
-
|
|||||||||||||||
Red
Cedar Gathering Company
|
135.6
|
49
|
%
|
261.4
|
100.0
|
3
|
-
|
|||||||||||||||
Cortez
Pipeline Company
|
14.2
|
50
|
%
|
79.9
|
157.3
|
78.7
|
5
|
|||||||||||||||
West2East
Pipeline LLC7
|
191.9
|
51
|
%
|
2,730.2
|
2,225.4
|
1,135.0
|
6
|
|||||||||||||||
Midcontinent
Express Pipeline LLC
|
63.0
|
50.0
|
%
|
136.8
|
-
|
97.7
|
8
|
|||||||||||||||
Nassau
County, Florida Ocean Highway and Port Authority
|
N/A
|
N/A
|
N/A
|
N/A
|
22.5
|
9
|
1
|
At
recorded value, in each case consisting principally of property, plant and
equipment.
|
2
|
Does
not include any portion of the goodwill recognized in conjunction with the
1998 acquisition of the Thermo
Companies.
|
3
|
Debtors
have recourse only to the assets of the entity, not to the
owners.
|
4
|
Included
in the caption “Assets Held for Sale, Non-current” in the accompanying
Consolidated Balance Sheet.
|
5
|
Kinder
Morgan Energy Partners is severally liable for its percentage ownership
share of the Cortez Pipeline Company debt. As of December 31, 2007, Shell
Oil Company shares Kinder Morgan Energy Partners’ several guaranty
obligations jointly and severally for $64.3 million of Cortez’s debt
balance; however, Kinder Morgan Energy Partners is obligated to indemnify
Shell for liabilities it incurs in connection with such guaranty.
Accordingly, as of December 31, 2007 Kinder Morgan Energy Partners has a
letter of credit in the amount of $37.5 million issued by JP Morgan Chase,
in order to secure its indemnification obligations to Shell for 50% of the
Cortez debt balance of $64.3
million.
|
Further,
pursuant to a Throughput and Deficiency Agreement, the partners of Cortez
Pipeline Company are required to contribute capital to Cortez in the event
of a cash deficiency. The agreement contractually supports the financings
of Cortez Capital Corporation, a wholly owned subsidiary of Cortez
Pipeline Company, by obligating the partners of Cortez Pipeline to fund
cash deficiencies at Cortez Pipeline, including anticipated deficiencies
and cash deficiencies relating to the repayment of principal and interest
on the debt of Cortez Capital Corporation. The partners’ respective parent
or other companies further severally guarantee the obligations of the
Cortez Pipeline owners under this
agreement.
|
6
|
Debt
responsibility of Kinder Morgan Energy
Partners.
|
7
|
West2East
Pipeline LLC is a limited liability company and is the sole owner of
Rockies Express Pipeline LLC. As of December 31, 2007, the remaining
limited liability member interests in West2East Pipeline LLC are owned by
ConocoPhillips (24%) and Sempra Energy (25%). Kinder Morgan Energy
Partners owned a 66 2/3% ownership interest in West2East Pipeline LLC from
October 21, 2005 until June 30, 2006, and included its results in its
consolidated financial statements until June 30, 2006. On June 30, 2006,
Kinder Morgan Energy Partners’ ownership interest was reduced to 51%,
West2East Pipeline LLC was deconsolidated, and Kinder Morgan Energy
Partners subsequently accounted for its investment under the equity method
of accounting. Upon completion of the pipeline, Kinder Morgan Energy
Partners’ ownership percentage is expected to be reduced to
50%.
|
8
|
Midcontinent
Express Pipeline LLC is a limited liability company. As of December 31,
2007, the remaining limited liability interest in Midcontinent Express
Pipeline LLC is owned by Energy Transfer Partners, L.P. Debt
responsibility represents Kinder Morgan Energy Partners’ guarantee of its
proportionate share of letters of credit outstanding at December 31,
2007.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
9
|
Arose
from Kinder Morgan Energy Partners’ Vopak terminal acquisition in July
2001. Nassau County, Florida Ocean Highway and Port Authority is a
political subdivision of the state of Florida. During 1990, Ocean Highway
and Port Authority issued its Adjustable Demand Revenue Bonds in the
aggregate principal amount of $38.5 million for the purpose of
constructing certain port improvements located in Fernandino Beach, Nassau
County, Florida. A letter of credit was issued as security for the
Adjustable Demand Revenue Bonds and was guaranteed by the parent company
of Nassau Terminals LLC, the operator of the port facilities. In July
2002, Kinder Morgan Energy Partners acquired Nassau Terminals LLC and
became guarantor under the letter of credit agreement. In December 2002,
Kinder Morgan Energy Partners issued a $28 million letter of credit under
its credit facilities and the former letter of credit guarantee was
terminated. As of December 31, 2007, the face amount of this letter of
credit outstanding under Kinder Morgan Energy Partners’ credit facility
was $22.5 million. Principal payments on the bonds are made on the first
of December each year and reductions are made to the letter of
credit.
|
|
Aggregate
Contractual Obligations
|
|
Aggregate
Contractual Obligations
|
Total
|
Less
than
1
year
|
2-3
years
|
4-5
years
|
After
5 years
|
||||||||||
(In
millions)
|
||||||||||||||
Contractual
Obligations:
|
||||||||||||||
Short-term
Borrowings
|
$
|
888.1
|
$
|
888.1
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
Long-term
Debt, Including Current Maturities:
|
||||||||||||||
Principal
Payments
|
18,284.1
|
79.8
|
633.0
|
4,777.4
|
12,793.9
|
|||||||||
Interest
Payments1
|
14,942.1
|
1,195.9
|
2,310.2
|
2,083.7
|
9,352.3
|
|||||||||
Lease
Obligations2,3
|
676.2
|
58.1
|
96.2
|
82.0
|
439.9
|
|||||||||
Pension
and Postretirement Benefit Plans4
|
62.1
|
4.6
|
9.7
|
10.9
|
36.9
|
|||||||||
Total
Contractual Cash Obligations7
|
$
|
34,852.6
|
$
|
2,226.5
|
$
|
3,049.1
|
$
|
6,954.0
|
$
|
22,623.0
|
||||
|
||||||||||||||
Other
Commercial Commitments:
|
||||||||||||||
Standby
Letters of Credit5
|
$
|
815.6
|
$
|
768.5
|
$
|
9.6
|
$
|
-
|
$
|
37.5
|
||||
Capital
Expenditures6
|
$
|
259.1
|
$
|
259.1
|
$
|
-
|
$
|
-
|
$
|
-
|
1
|
Interest
payments have not been adjusted for any amounts receivable related to our
interest rate swaps outstanding. See Item 7A Quantitative and Qualitative
Disclosures About Market Risk.
|
2
|
Represents
commitments for capital leases, including interest, and operating
leases.
|
3
|
Approximately
$458.2 million, $20.6 million, $41.2 million, $41.6 million and $354.8
million in each respective column is attributable to the lease obligation
associated with the Jackson, Michigan power generation
facility.
|
4
|
In
addition to the amounts shown, we are also required to contribute $0.2
million per year to these plans. We currently do not expect to make any
additional significant contributions to these plans in the next few years,
although we could elect or be required to make such contributions
depending on, among other factors, the return generated by plan assets and
changes in actuarial assumptions.
|
5
|
Letters
of credit totaling $815.6 million outstanding at December 31, 2007
consisted of the following: (i) four letters of credit, totaling $323.0
million, supporting our hedging of commodity risk, (ii) a $100 million
letter of credit that supports certain proceedings with the California
Public Utilities commission involving refined products tariff charges on
the intrastate common carrier operations of Kinder Morgan Energy Partners’
Pacific operations’ pipelines in the State of California, (iii) a combined
$58.3 million in ten letters of credit supporting Kinder Morgan Energy
Partners’ Trans Mountain pipeline system operations, (iv) a $52.1 million
letter of credit supporting our Canadian pipeline operations (v) a $37.5
million letter of credit supporting Kinder Morgan Energy Partners’
indemnification obligations on the Series D note borrowings of Cortez
Capital Corporation, (vi) Kinder Morgan Energy Partners’ $30.3 million
guarantee under letters of credit totaling $45.5 million supporting its
International Marine Terminals Partnership Plaquemines, Louisiana Port,
Harbor, and Terminal Revenue Bonds, (vii) a $25.3 million letter of credit
supporting Kinder Morgan Energy Partners’ Kinder Morgan Liquids Terminals
LLC New Jersey Economic Development Revenue Bonds, (viii) a $24.1 million
letter of credit supporting Kinder Morgan Energy Partners’ Kinder Morgan
Operating L.P. “B” tax-exempt bonds, (ix) a $22.5 million letter of credit
supporting Nassau County, Florida Ocean Highway and Port Authority
tax-exempt bonds, (x) four letters of credit, totaling $21.4 million,
required under provisions of our property and casualty, worker’s
compensation and general liability insurance policies, (xi) a $19.9
million letter of credit supporting the construction of Kinder Morgan
Energy Partners’ Kinder Morgan Louisiana Pipeline, (xii) a $15.3 million
letter of credit to fund the Debt Service Reserve Account required under
the Express System’s trust indenture, (xiii) a $15.5 million letter of
credit supporting Kinder
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
|
Morgan
Energy Partners’ pipeline and terminal operations in Canada, (xiv) two
letters of credit totaling $20.3 million supporting the subordination of
operating fees payable to us for operation of the Jackson, Michigan power
generation facility to payments due under the operating lease of the
facilities and (xv) 14 letters of credit, totaling $34.9 million
supporting various company
functions.
|
6
|
Represents
commitments for the purchase of property, plant and equipment at December
31, 2007.
|
7
|
As
of December 31, 2007, the liability for uncertain income tax positions,
excluding associated interest and penalties, was $41.5 million pursuant to
FASB Interpretation No. 48. This liability represents an estimate of tax
positions that we have taken in our tax returns which may ultimately not
be sustained upon examination by the tax authorities. Since the ultimate
amount and timing of any future cash settlements cannot be predicted with
reasonable certainty, this estimated liability has been excluded from the
Aggregate Contractual Obligations.
|
Contingent
Liabilities:
|
Contingency
|
Amount
of Contingent Liability
at
December 31, 2007
|
||
Guarantor
of the Bushton Gas
Processing
Plant Lease1
|
Default
by ONEOK, Inc.
|
Total
$103.0 million; Averages $23 million per year through 2012
|
||
Jackson,
Michigan Power Plant
Incremental
Investment
|
Operational
Performance
|
$3
to $8 million per year for 12 years
|
||
Jackson,
Michigan Power Plant
Incremental
Investment
|
Cash
Flow Performance
|
Up
to a total of $25 million beginning in
2018
|
1
|
In
conjunction with our sale of the Bushton gas processing facility to ONEOK,
Inc., at December 31, 1999, ONEOK became primarily liable under the
associated operating lease and we became secondarily liable. Should ONEOK,
Inc. fail to make payments as required under the lease, we would be
required to make such payments, with recourse only to
ONEOK.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||||||
Combined
|
Seven
Months
|
|||||||||||||||||||
Year
Ended
|
Ended
|
Five
Months
|
||||||||||||||||||
December
31,
|
December
31,
|
Ended
|
Year
Ended December 31,
|
|||||||||||||||||
2007
|
2007
|
May
31, 2007
|
2006
|
2005
|
||||||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||||||
INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
||||||||||||||||||||
Cash
Flows from Operating Activities:
|
||||||||||||||||||||
Net
Income
|
$
|
312.9
|
$
|
247.0
|
$
|
65.9
|
$
|
71.9
|
$
|
554.6
|
||||||||||
Adjustments
to Reconcile Net Income to Net Cash Flows from Operating
Activities:
|
||||||||||||||||||||
Loss
(Income) from Discontinued Operations, Net of Tax
|
(286.4
|
)
|
1.5
|
(287.9
|
)
|
542.8
|
(40.4
|
)
|
||||||||||||
Loss
from Impairment of Assets
|
377.1
|
-
|
377.1
|
1.2
|
6.5
|
|||||||||||||||
Depreciation
and Amortization
|
741.1
|
476.2
|
264.9
|
540.3
|
104.6
|
|||||||||||||||
Deferred
Income Taxes
|
48.9
|
(89.8
|
)
|
138.7
|
10.8
|
92.1
|
||||||||||||||
Equity
in Earnings of Kinder Morgan Energy Partners
|
-
|
-
|
-
|
-
|
(605.4
|
)
|
||||||||||||||
Distributions
from Kinder Morgan Energy Partners
|
-
|
-
|
-
|
-
|
530.8
|
|||||||||||||||
Equity
in Earnings of Other Equity Investments
|
(93.4
|
)
|
(54.3
|
)
|
(39.1
|
)
|
(100.6
|
)
|
(15.3
|
)
|
||||||||||
Distributions
from Other Equity Investees
|
134.7
|
86.5
|
48.2
|
74.8
|
8.1
|
|||||||||||||||
Minority
Interests in Income of Consolidated Subsidiaries
|
138.7
|
48.0
|
90.7
|
374.2
|
50.5
|
|||||||||||||||
Gains
from Property Casualty Indemnifications
|
(1.8
|
)
|
-
|
(1.8
|
)
|
(15.2
|
)
|
-
|
||||||||||||
Net
Gains on Sales of Assets
|
(8.9
|
)
|
(6.3
|
)
|
(2.6
|
)
|
(22.0
|
)
|
(76.4
|
)
|
||||||||||
Mark-to-Market
Interest Rate Swap Loss
|
-
|
-
|
-
|
22.3
|
-
|
|||||||||||||||
Foreign
Currency Loss (Gain)
|
15.5
|
-
|
15.5
|
-
|
(5.0
|
)
|
||||||||||||||
Pension
Contribution in Excess of Expense
|
-
|
-
|
-
|
-
|
(23.8
|
)
|
||||||||||||||
Changes
in Gas in Underground Storage
|
(32.9
|
)
|
51.3
|
(84.2
|
)
|
(35.3
|
)
|
6.5
|
||||||||||||
Changes
in Working Capital Items
|
(98.9
|
)
|
104.0
|
|
(202.9
|
)
|
80.0
|
(13.4
|
)
|
|||||||||||
(Payment
for) Proceeds from Termination of Interest Rate Swap
|
49.7
|
(2.2
|
)
|
51.9
|
-
|
(3.5
|
)
|
|||||||||||||
Kinder
Morgan Energy Partners’ Rate Reparations, Refunds and Reserve
Adjustments
|
140.0
|
140.0
|
-
|
(19.1
|
)
|
-
|
||||||||||||||
Other,
Net
|
104.6
|
45.8
|
58.8
|
(31.4
|
)
|
0.7
|
||||||||||||||
Net
Cash Flows Provided by Continuing Operations
|
1,540.9
|
1,047.7
|
493.2
|
1,494.7
|
571.2
|
|||||||||||||||
Net
Cash Flows (Used in) Provided by Discontinued Operations
|
106.6
|
(3.2
|
)
|
109.8
|
212.6
|
45.0
|
||||||||||||||
Net
Cash Flows Provided by Operating Activities
|
1,647.5
|
1,044.5
|
603.0
|
1,707.3
|
616.2
|
|||||||||||||||
|
||||||||||||||||||||
Cash
Flows from Investing Activities:
|
||||||||||||||||||||
Purchase
of Predecessor Stock
|
(11,534.3
|
)
|
(11,534.3
|
)
|
-
|
-
|
-
|
|||||||||||||
Capital
Expenditures
|
(1,939.8
|
)
|
(1,287.0
|
)
|
(652.8
|
)
|
(1,375.6
|
)
|
(134.1
|
)
|
||||||||||
Terasen
Acquisition, Net of $73.7 Cash Acquired
|
-
|
-
|
-
|
(10.6
|
)
|
(2,065.5
|
)
|
|||||||||||||
Other
Acquisitions
|
(164.1
|
)
|
(122.0
|
)
|
(42.1
|
)
|
(396.5
|
)
|
-
|
|||||||||||
Investment
in Kinder Morgan Energy Partners
|
-
|
-
|
-
|
-
|
(4.5
|
)
|
||||||||||||||
Investment
in NGPL PipeCo LLC Restricted Cash
|
(3,030.0
|
)
|
(3,030.0
|
)
|
-
|
-
|
-
|
|||||||||||||
Net
(Investments in) Proceeds from Margin Deposits
|
(94.1
|
)
|
(39.3
|
)
|
(54.8
|
)
|
38.6
|
27.5
|
||||||||||||
Other
Investments
|
(276.1
|
)
|
(246.4
|
)
|
(29.7
|
)
|
(6.1
|
)
|
(0.4
|
)
|
||||||||||
Proceeds
from Sales of Kinder Morgan Management, LLC Shares
|
-
|
-
|
-
|
-
|
254.8
|
|||||||||||||||
Change
in Natural Gas Storage and NGL Line Fill Inventory
|
18.4
|
10.0
|
8.4
|
(12.9
|
)
|
-
|
||||||||||||||
Property
Casualty Indemnifications
|
8.0
|
-
|
8.0
|
13.1
|
-
|
|||||||||||||||
Net
Proceeds (Costs of Removal) from Sales of Assets
|
299.8
|
301.3
|
(1.5
|
)
|
92.2
|
(4.1
|
)
|
|||||||||||||
Net
Cash Flows Used in Continuing Investing Activities
|
(16,712.2
|
)
|
(15,947.7
|
)
|
(764.5
|
)
|
(1,657.8
|
)
|
(1,926.3
|
)
|
||||||||||
Net
Cash Flows Provided by (Used in) Discontinued Investing
Activities
|
1,684.8
|
196.6
|
1,488.2
|
(138.1
|
)
|
(52.4
|
)
|
|||||||||||||
Net
Cash Flows (Used in) Provided by Investing Activities
|
$
|
(15,027.4
|
)
|
$
|
(15,751.1
|
)
|
$
|
723.7
|
$
|
(1,795.9
|
)
|
$
|
(1,978.7
|
)
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||||||
Combined
|
Seven
Months
|
|||||||||||||||||||
Year
Ended
|
Ended
|
Five
Months
|
||||||||||||||||||
December
31,
|
December
31,
|
Ended
|
Year
Ended December 31,
|
|||||||||||||||||
2007
|
2007
|
May
31, 2007
|
2006
|
2005
|
||||||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||||||
Cash
Flows from Financing Activities:
|
||||||||||||||||||||
Short-term
Debt, Net
|
$
|
(300.1
|
)
|
$
|
(52.6
|
)
|
$
|
(247.5
|
)
|
$
|
1,009.5
|
$
|
25.0
|
|||||||
Bridge
Facility Issued
|
-
|
-
|
-
|
-
|
2,134.7
|
|||||||||||||||
Bridge
Facility Retired
|
-
|
-
|
-
|
-
|
(2,129.7
|
)
|
||||||||||||||
Long-term
Debt Issued
|
9,805.0
|
8,805.0
|
1,000.0
|
-
|
2,400.0
|
|||||||||||||||
Long-term
Debt Retired
|
(1,131.6
|
)
|
(829.2
|
)
|
(302.4
|
)
|
(140.7
|
)
|
(505.0
|
)
|
||||||||||
Issuance
of Kinder Morgan, G.P., Inc. Preferred Stock
|
100.0
|
100.0
|
-
|
-
|
-
|
|||||||||||||||
Cash
Book Overdraft
|
(28.9
|
)
|
(14.0
|
)
|
(14.9
|
)
|
17.9
|
-
|
||||||||||||
Issuance
of Shares by Kinder Morgan Management, LLC
|
297.9
|
-
|
297.9
|
-
|
-
|
|||||||||||||||
Other
Common Stock Issued
|
9.9
|
-
|
9.9
|
38.7
|
62.8
|
|||||||||||||||
Excess
Tax Benefits from Share-based Payments
|
56.7
|
-
|
56.7
|
18.6
|
-
|
|||||||||||||||
Cash
Paid to Share-based Award Holders Due to Going Private
Transaction
|
(181.1
|
)
|
(181.1
|
)
|
-
|
-
|
-
|
|||||||||||||
Contributions
from Successor Investors
|
5,112.0
|
5,112.0
|
-
|
-
|
-
|
|||||||||||||||
Short-term
Advances from (to) Unconsolidated Affiliates
|
13.2
|
10.9
|
2.3
|
(4.9
|
)
|
(11.7
|
)
|
|||||||||||||
Treasury
Stock Acquired
|
-
|
-
|
-
|
(34.3
|
)
|
(317.1
|
)
|
|||||||||||||
Cash
Dividends, Common Stock
|
(234.9
|
)
|
-
|
(234.9
|
)
|
(468.5
|
)
|
(355.2
|
)
|
|||||||||||
Minority
Interests, Distributions
|
(508.5
|
)
|
(259.6
|
)
|
(248.9
|
)
|
(575.0
|
)
|
(2.4
|
)
|
||||||||||
Minority
Interests, Contributions
|
342.9
|
342.9
|
-
|
353.8
|
-
|
|||||||||||||||
Debt
Issuance Costs
|
(94.6
|
)
|
(81.5
|
)
|
(13.1
|
)
|
(4.8
|
)
|
(14.3
|
)
|
||||||||||
Other,
Net
|
(0.3
|
)
|
4.0
|
(4.3
|
)
|
(3.5
|
)
|
-
|
||||||||||||
Net
Cash Flows Provided by Continuing Financing Activities
|
13,257.6
|
12,956.8
|
300.8
|
206.8
|
1,287.1
|
|||||||||||||||
Net
Cash Flows Provided by (Used in) Discontinued Financing
Activities
|
140.1
|
-
|
140.1
|
(118.1
|
)
|
15.2
|
||||||||||||||
Net
Cash Flows Provided by Financing Activities
|
13,397.7
|
12,956.8
|
440.9
|
88.7
|
1,302.3
|
|||||||||||||||
Effect
of Exchange Rate Changes on Cash
|
4.8
|
(2.8
|
)
|
7.6
|
6.6
|
0.3
|
||||||||||||||
|
||||||||||||||||||||
Effect
of Accounting Change on Cash
|
-
|
-
|
-
|
12.1
|
-
|
|||||||||||||||
|
||||||||||||||||||||
Cash
Balance Included in Assets Held for Sale
|
(3.8
|
)
|
(1.1
|
)
|
(2.7
|
)
|
(5.6
|
)
|
-
|
|||||||||||
|
||||||||||||||||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
18.8
|
(1,753.7
|
)
|
1,772.5
|
13.2
|
(59.9
|
)
|
|||||||||||||
Cash
and Cash Equivalents at Beginning of Period
|
129.8
|
1,902.3
|
129.8
|
116.6
|
176.5
|
|||||||||||||||
Cash
and Cash Equivalents at End of Period
|
$
|
148.6
|
$
|
148.6
|
$
|
1,902.3
|
$
|
129.8
|
$
|
116.6
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
|
·
|
first,
98% to the owners of all classes of units pro rata and 2% to Kinder Morgan
G.P., Inc. as general partner of Kinder Morgan Energy Partners until the
owners of all classes of units have received a total of $0.15125 per unit
in cash or equivalent i-units for such
quarter;
|
|
·
|
second,
85% of any available cash then remaining to the owners of all classes of
units pro rata and 15% to Kinder Morgan G.P., Inc. as general partner of
Kinder Morgan Energy Partners until the owners of all classes of units
have received a total of $0.17875 per unit in cash or equivalent i-units
for such quarter;
|
|
·
|
third,
75% of any available cash then remaining to the owners of all classes of
units pro rata and 25% to Kinder Morgan G.P., Inc. as general partner of
Kinder Morgan Energy Partners until the owners of all classes of units
have received a total of $0.23375 per unit in cash or equivalent i-units
for such quarter; and
|
|
·
|
fourth,
50% of any available cash then remaining to the owners of all classes of
units pro rata, to owners of common units in cash and to Kinder Morgan
Management as owners of i-units in the equivalent number of i-units, and
50% to Kinder Morgan G.P., Inc. as general partner of Kinder Morgan Energy
Partners.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
|
|
During
the seven months ended December 31, 2007 and the five months ended May 31,
2007, Kinder Morgan Energy Partners paid distributions of $1.73 and $1.66
per common unit, respectively, of which $257.3 million and $246.6 million,
respectively, was paid to the public holders (represented in minority
interests) of Kinder Morgan Energy Partners’ common units. On January 16,
2008, Kinder Morgan Energy Partners declared a quarterly distribution of
$0.92 per common unit for the quarterly period ended December 31, 2007.
The distribution was paid on February 14, 2008, to unitholders of record
as of January 31, 2008.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
|
·
|
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 our tariff rates or those of Kinder Morgan Energy Partners implemented
by the FERC, the NEB or another regulatory agency or, with respect to
Kinder Morgan Energy Partners, the California Public Utilities
Commission;
|
|
·
|
Kinder
Morgan Energy Partners’ ability and our ability to acquire new businesses
and assets and integrate those operations into existing operations, as
well as the ability to expand our respective
facilities;
|
|
·
|
difficulties
or delays experienced by railroads, barges, trucks, ships or pipelines in
delivering products to or from Kinder Morgan Energy Partners’ terminals or
pipelines or our terminals or
pipelines;
|
|
·
|
Kinder
Morgan Energy Partners’ ability and 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 Kinder Morgan
Energy Partners’ or our services or provide services or products to Kinder
Morgan Energy Partners or 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, 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 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 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;
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (continued)
|
Knight
Form 10-K
|
|
·
|
capital
markets conditions;
|
|
·
|
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;
|
|
·
|
inflation;
|
|
·
|
interest
rates;
|
|
·
|
the
pace of deregulation of retail natural gas and
electricity;
|
|
·
|
foreign
exchange fluctuations;
|
|
·
|
the
timing and extent of changes in commodity prices for oil, natural gas,
electricity and certain agricultural
products;
|
|
·
|
the
extent of Kinder Morgan Energy Partners’ 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 Kinder Morgan Energy
Partners 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 Kinder Morgan Energy Partners’ and our business
development efforts; and
|
|
·
|
unfavorable
results of litigation and the fruition of contingencies referred to in the
accompanying Notes to Consolidated Financial
Statements.
|
Item 7A.
Quantitative
and Qualitative Disclosures About Market Risk. (continued)
|
Knight
Form 10-K
|
Knight
Form 10-K
|
Page
|
|
|
|
94-95
|
|
96
|
|
97
|
|
98-99
|
|
100-101
|
|
102-103
|
|
104-202
|
|
203
|
|
203-207
|
|
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
|
·
|
The
Vancouver Wharves bulk marine terminal, acquired May 30, 2007;
and
|
|
·
|
The
terminal assets and operations acquired from Marine Terminals, Inc.,
effective September 30, 2007,
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||
Seven
Months
Ended
|
Five
Months
|
||||||||||||||||
December
31,
|
Ended
|
Year
Ended December 31,
|
|||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
||||||||||||||
(In
millions)
|
(In
millions)
|
||||||||||||||||
Operating
Revenues:
|
|||||||||||||||||
Natural
Gas Sales
|
$
|
3,623.1
|
$
|
2,430.6
|
$
|
6,225.6
|
$
|
199.1
|
|||||||||
Transportation
and Storage
|
2,012.8
|
1,332.6
|
3,080.3
|
753.0
|
|||||||||||||
Oil
and Product Sales
|
621.4
|
325.8
|
740.2
|
3.0
|
|||||||||||||
Other
|
137.4
|
76.1
|
162.5
|
70.5
|
|||||||||||||
Total
Operating Revenues
|
6,394.7
|
4,165.1
|
10,208.6
|
1,025.6
|
|||||||||||||
|
|||||||||||||||||
Operating
Costs and Expenses:
|
|||||||||||||||||
Purchases
and Other Costs of Sales
|
3,656.6
|
2,490.4
|
6,339.4
|
302.6
|
|||||||||||||
Operations
and Maintenance
|
943.3
|
476.1
|
1,155.4
|
135.7
|
|||||||||||||
General
and Administrative
|
175.6
|
283.6
|
305.1
|
64.1
|
|||||||||||||
Depreciation
and Amortization
|
472.3
|
261.0
|
531.4
|
104.6
|
|||||||||||||
Taxes,
Other Than Income Taxes
|
110.1
|
74.4
|
165.0
|
30.8
|
|||||||||||||
Other
Expenses (Income)
|
(6.0
|
)
|
(2.3
|
)
|
(34.1
|
)
|
-
|
||||||||||
Impairment
of Assets
|
-
|
377.1
|
1.2
|
6.5
|
|||||||||||||
Total
Operating Costs and Expenses
|
5,351.9
|
3,960.3
|
8,463.4
|
644.3
|
|||||||||||||
Operating
Income
|
1,042.8
|
204.8
|
1,745.2
|
381.3
|
|||||||||||||
|
|||||||||||||||||
Other
Income and (Expenses):
|
|||||||||||||||||
Equity
in Earnings of Kinder Morgan Energy Partners
|
-
|
-
|
-
|
605.4
|
|||||||||||||
Equity
in Earnings of Other Equity Investments
|
53.4
|
38.3
|
98.6
|
15.3
|
|||||||||||||
Interest
Expense, Net
|
(587.8
|
)
|
(251.9
|
)
|
(559.0
|
)
|
(147.5
|
)
|
|||||||||
Interest
Expense – Deferrable Interest Debentures
|
(12.8
|
)
|
(9.1
|
)
|
(21.9
|
)
|
(21.9
|
)
|
|||||||||
Minority
Interests
|
(37.6
|
)
|
(90.7
|
)
|
(374.2
|
)
|
(50.5
|
)
|
|||||||||
Other,
Net
|
17.9
|
11.4
|
(2.4
|
)
|
69.2
|
||||||||||||
Total
Other Income and (Expenses)
|
(566.9
|
)
|
(302.0
|
)
|
(858.9
|
)
|
470.0
|
||||||||||
Income
(Loss) from Continuing Operations Before Income Taxes
|
475.9
|
(97.2
|
)
|
886.3
|
851.3
|
||||||||||||
Income
Taxes
|
227.4
|
135.5
|
285.9
|
337.1
|
|||||||||||||
Income
(Loss) from Continuing Operations
|
248.5
|
(232.7
|
)
|
600.4
|
514.2
|
||||||||||||
Income
(Loss) from Discontinued Operations, Net of Tax
|
(1.5
|
)
|
298.6
|
(528.5
|
)
|
40.4
|
|||||||||||
Net
Income
|
$
|
247.0
|
$
|
65.9
|
$
|
71.9
|
$
|
554.6
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||
Seven
Months
Ended
|
Five
Months
|
||||||||||||||||
December
31,
|
Ended
|
Year
Ended December 31,
|
|||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
||||||||||||||
(In
millions)
|
(In
millions)
|
||||||||||||||||
Net
Income
|
$
|
247.0
|
$
|
65.9
|
$
|
71.9
|
$
|
554.6
|
|||||||||
Other
Comprehensive Income (Loss), Net of Tax:
|
|||||||||||||||||
Change
in Fair Value of Derivatives Utilized for Hedging Purposes (Net of Tax
Benefit of $140.8 and $19.1, Tax of $26.8 and Tax Benefit of $106.1,
Respectively)
|
(249.6
|
)
|
(21.3
|
)
|
44.6
|
(174.7
|
)
|
||||||||||
Reclassification
of Change in Fair Value of Derivatives to Net Income (Net of Tax Benefit
of $0.6, Tax of $12.8, $11.9 and $60.6, Respectively)
|
-
|
10.3
|
21.7
|
102.3
|
|||||||||||||
Employee
Benefit Plans:
|
|||||||||||||||||
Prior
Service Cost Arising During Period (Net of Tax Benefit of
$1.0)
|
-
|
(1.7
|
)
|
-
|
-
|
||||||||||||
Net
Gain Arising During Period (Net of Tax Benefit of $15.3 and Tax of $6.7,
Respectively)
|
(28.4
|
)
|
11.4
|
-
|
-
|
||||||||||||
Amortization
of Prior Service Cost Included in Net Periodic Benefit Costs (Net of Tax
Benefit of $0.2)
|
-
|
(0.4
|
)
|
-
|
-
|
||||||||||||
Amortization
of Net Loss Included in Net Periodic Benefit Costs (Net of Tax Benefit of
Less than $0.1 and Tax of $0.8, Respectively)
|
(0.2
|
)
|
1.4
|
-
|
-
|
||||||||||||
Change
in Foreign Currency Translation Adjustment
|
27.6
|
40.1
|
(31.9
|
)
|
3.4
|
||||||||||||
Adjustment
to Recognize Minimum Pension Liability (Net of Tax of $1.7 and Tax Benefit
of $1.6, Respectively)
|
-
|
-
|
3.5
|
(3.3
|
)
|
||||||||||||
Total
Other Comprehensive Income (Loss)
|
(250.6
|
)
|
39.8
|
37.9
|
(72.3
|
)
|
|||||||||||
|
|||||||||||||||||
Comprehensive
Income
|
$
|
(3.6
|
)
|
$
|
105.7
|
$
|
109.8
|
$
|
482.3
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||
December
31,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(In
millions)
|
(In
millions)
|
|||||||
ASSETS:
|
||||||||
Current
Assets:
|
||||||||
Cash
and Cash Equivalents
|
$
|
148.6
|
$
|
129.8
|
||||
Restricted
Deposits
|
67.9
|
-
|
||||||
Accounts
Receivable, Net:
|
||||||||
Trade
|
970.0
|
1,173.3
|
||||||
Related
Parties
|
5.2
|
10.4
|
||||||
Inventories
|
37.8
|
275.0
|
||||||
Gas
Imbalances
|
26.9
|
14.9
|
||||||
Rate
Stabilization
|
-
|
124.3
|
||||||
Assets
Held for Sale
|
3,353.3
|
87.9
|
||||||
Other
|
73.9
|
204.2
|
||||||
|
4,683.6
|
2,019.8
|
||||||
|
||||||||
Notes
Receivable – Related Parties
|
87.9
|
89.7
|
||||||
|
||||||||
Investments
|
1,996.2
|
1,084.6
|
||||||
|
||||||||
Goodwill
|
8,174.0
|
3,043.8
|
||||||
|
||||||||
Other
Intangibles, Net
|
321.1
|
229.5
|
||||||
|
||||||||
Property,
Plant and Equipment, Net
|
14,803.9
|
18,839.6
|
||||||
|
||||||||
Assets
Held for Sale, Non-current
|
5,634.6
|
422.3
|
||||||
|
||||||||
Deferred
Charges and Other Assets
|
399.7
|
1,066.3
|
||||||
|
||||||||
Total
Assets
|
$
|
36,101.0
|
$
|
26,795.6
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||
December
31,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(In
millions)
|
(In
millions)
|
|||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY:
|
||||||||
Current
Liabilities:
|
||||||||
Current
Maturities of Long-term Debt
|
$
|
79.8
|
$
|
511.2
|
||||
Notes
Payable
|
888.1
|
1,665.3
|
||||||
Cash
Book Overdrafts
|
30.7
|
59.6
|
||||||
Accounts
Payable, Net:
|
||||||||
Trade
|
943.1
|
1,115.5
|
||||||
Related
Parties
|
0.6
|
-
|
||||||
Accrued
Interest
|
242.7
|
220.4
|
||||||
Accrued
Taxes
|
61.8
|
85.5
|
||||||
Gas
Imbalances
|
23.7
|
29.2
|
||||||
Rate
Stabilization
|
-
|
11.4
|
||||||
Liabilities
Held for Sale
|
168.2
|
78.3
|
||||||
Deferred
Income Taxes – Current
|
666.4
|
-
|
||||||
Other
|
834.7
|
840.0
|
||||||
|
3,939.8
|
4,616.4
|
||||||
Other
Liabilities and Deferred Credits:
|
||||||||
Deferred
Income Taxes, Non-current
|
1,849.4
|
3,144.0
|
||||||
Liabilities
Held for Sale, Non-current
|
2,424.1
|
7.9
|
||||||
Other
|
1,454.8
|
1,349.4
|
||||||
|
5,728.3
|
4,501.3
|
||||||
Long-term
Debt:
|
||||||||
Outstanding
Notes and Debentures
|
14,714.6
|
10,623.9
|
||||||
Deferrable
Interest Debentures Issued to Subsidiary Trusts
|
283.1
|
283.6
|
||||||
Preferred
Interest in General Partner of KMP
|
100.0
|
-
|
||||||
Capital
Securities
|
-
|
106.9
|
||||||
Value
of Interest Rate Swaps
|
199.7
|
46.4
|
||||||
|
15,297.4
|
11,060.8
|
||||||
Minority Interests in Equity of Subsidiaries
|
3,314.0
|
3,095.5
|
||||||
|
||||||||
Commitments
and Contingent Liabilities (Notes 14 and 17)
|
||||||||
Stockholders’
Equity:
|
||||||||
Common
Stock-
|
||||||||
Authorized
– 100 Shares, Par Value $0.01 Per Share at December 31, 2007 and 300,000
Shares Par Value $5 Per Share at December 31, 2006
|
||||||||
Outstanding
– 100 Shares at December 31, 2007 and 149,166,709 Shares at December 31,
2006 Before Deducting 15,022,751 Shares Held in Treasury
|
-
|
745.8
|
||||||
Additional
Paid-in Capital
|
7,822.2
|
3,048.9
|
||||||
Retained
Earnings
|
247.0
|
778.7
|
||||||
Treasury
Stock
|
-
|
(915.9
|
)
|
|||||
Accumulated
Other Comprehensive Loss
|
(247.7
|
)
|
(135.9
|
)
|
||||
Total
Stockholders’ Equity
|
7,821.5
|
3,521.6
|
||||||
|
||||||||
Total Liabilities and Stockholders’ Equity
|
$
|
36,101.0
|
$
|
26,795.6
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor Company
|
|||||||
Seven
Months Ended
December
31, 2007
|
|||||||
Shares
|
Amount
|
||||||
(Dollars
in millions)
|
|||||||
Common
Stock:
|
100
|
$
|
-
|
||||
|
|||||||
Additional
Paid-in Capital:
|
|||||||
Beginning
Balance
|
-
|
||||||
MBO
Purchase Price
|
7,831.2
|
||||||
Revaluation
of Kinder Morgan Energy Partners (KMP) Investment (Note 5)
|
(13.4
|
)
|
|||||
A-1
Unit Amortization
|
4.4
|
||||||
Ending
Balance
|
7,822.2
|
||||||
|
|||||||
Retained
Earnings:
|
|||||||
Beginning
Balance
|
-
|
||||||
Net
Income
|
247.0
|
||||||
Ending
Balance
|
247.0
|
||||||
Accumulated
Other Comprehensive Loss (Net of Tax):
|
|||||||
Derivatives:
|
|||||||
Beginning Balance
|
2.9
|
||||||
Change
in Fair Value of Derivatives Utilized for Hedging Purposes
|
(249.6
|
)
|
|||||
Reclassification
of Change in Fair Value of Derivatives to Net Income
|
-
|
||||||
Ending
Balance
|
(246.7
|
)
|
|||||
Foreign
Currency Translation:
|
|||||||
Beginning
Balance
|
-
|
||||||
Currency
Translation Adjustment
|
27.6
|
||||||
Ending
Balance
|
27.6
|
||||||
Employee
Benefit Plans:
|
|||||||
Beginning
Balance
|
-
|
||||||
Benefit
Plan Adjustments
|
(28.4
|
)
|
|||||
Benefit
Plan Amortization
|
(0.2
|
)
|
|||||
Ending
Balance
|
(28.6
|
)
|
|||||
Total
Accumulated Other Comprehensive Loss
|
(247.7
|
)
|
|||||
|
|||||||
Total
Stockholders’ Equity
|
100
|
$
|
7,821.5
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Predecessor
Company
|
||||||||||||||||||||
Five
Months Ended May 31,
|
Year
Ended December 31,
|
|||||||||||||||||||
2007
|
2006
|
2005
|
||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||
(Dollars
in millions)
|
||||||||||||||||||||
Common
Stock:
|
||||||||||||||||||||
Beginning
Balance
|
149,166,709
|
$
|
745.8
|
148,479,863
|
$
|
742.4
|
134,198,905
|
$
|
671.0
|
|||||||||||
Acquisition
of Terasen
|
-
|
-
|
-
|
-
|
12,476,974
|
62.4
|
||||||||||||||
Employee
Benefit Plans
|
149,894
|
0.8
|
686,846
|
3.4
|
1,803,984
|
9.0
|
||||||||||||||
Ending
Balance
|
149,316,603
|
746.6
|
149,166,709
|
745.8
|
148,479,863
|
742.4
|
||||||||||||||
Additional
Paid-in Capital:
|
||||||||||||||||||||
Beginning
Balance
|
3,048.9
|
3,056.3
|
1,863.2
|
|||||||||||||||||
Acquisition
of Terasen
|
-
|
-
|
1,084.4
|
|||||||||||||||||
Revaluation
of Kinder Morgan Energy Partners (KMP) Investment
(Note 5)
|
3.4
|
(40.3
|
)
|
7.8
|
||||||||||||||||
Employee
Benefit Plans
|
7.7
|
33.2
|
78.9
|
|||||||||||||||||
Tax
Benefits from Employee Benefit Plans
|
56.7
|
18.6
|
22.0
|
|||||||||||||||||
Implementation
of SFAS No. 123(R) Deferred Compensation Balance
|
-
|
(36.9
|
)
|
-
|
||||||||||||||||
Deferred
Compensation (Note 13)
|
21.9
|
18.0
|
-
|
|||||||||||||||||
Ending
Balance
|
3,138.6
|
3,048.9
|
3,056.3
|
|||||||||||||||||
Retained
Earnings:
|
||||||||||||||||||||
Beginning
Balance
|
778.7
|
1,175.3
|
975.9
|
|||||||||||||||||
Net
Income
|
65.9
|
71.9
|
554.6
|
|||||||||||||||||
Cash
Dividends, Common Stock
|
(234.9
|
)
|
(468.5
|
)
|
(355.2
|
)
|
||||||||||||||
Implementation
of FIN 48 (Note 18)
|
(4.8
|
)
|
-
|
-
|
||||||||||||||||
Ending
Balance
|
604.9
|
778.7
|
1,175.3
|
|||||||||||||||||
Treasury
Stock at Cost:
|
||||||||||||||||||||
Beginning
Balance
|
(15,022,751
|
)
|
(915.9
|
)
|
(14,712,901
|
)
|
(885.7
|
)
|
(10,666,801
|
)
|
(558.9
|
)
|
||||||||
Treasury
Stock Acquired
|
-
|
-
|
(339,800
|
)
|
(31.5
|
)
|
(3,865,800
|
)
|
(314.1
|
)
|
||||||||||
Employee
Benefit Plans
|
(7,384
|
)
|
(0.5
|
)
|
29,950
|
1.3
|
(180,300
|
)
|
(12.7
|
)
|
||||||||||
Ending
Balance
|
(15,030,135
|
)
|
(916.4
|
)
|
(15,022,751
|
)
|
(915.9
|
)
|
(14,712,901
|
)
|
(885.7
|
)
|
||||||||
Deferred
Compensation Plans:
|
||||||||||||||||||||
Beginning
Balance
|
-
|
(36.9
|
)
|
(31.7
|
)
|
|||||||||||||||
Current
Year Activity (Note 13)
|
-
|
-
|
(5.2
|
)
|
||||||||||||||||
Implementation
of SFAS No. 123(R) Balance Transfer to Additional Paid-in
Capital
|
-
|
36.9
|
-
|
|||||||||||||||||
Ending
Balance
|
-
|
-
|
(36.9
|
)
|
||||||||||||||||
Accumulated
Other Comprehensive Loss (Net of Tax):
|
||||||||||||||||||||
Derivatives:
|
||||||||||||||||||||
Beginning Balance
|
(60.8
|
)
|
(127.1
|
)
|
(54.7
|
)
|
||||||||||||||
Change
in Fair Value of Derivatives Utilized for Hedging Purposes
|
(21.3
|
)
|
44.6
|
(174.7
|
)
|
|||||||||||||||
Reclassification
of Change in Fair Value of Derivatives to Net Income
|
10.3
|
21.7
|
102.3
|
|||||||||||||||||
Ending
Balance
|
(71.8
|
)
|
(60.8
|
)
|
(127.1
|
)
|
||||||||||||||
Foreign
Currency Translation:
|
||||||||||||||||||||
Beginning
Balance
|
(24.5
|
)
|
7.4
|
-
|
||||||||||||||||
Terasen
Acquisition
|
-
|
-
|
4.0
|
|||||||||||||||||
Currency
Translation Adjustment
|
40.1
|
(31.9
|
)
|
3.4
|
||||||||||||||||
Ending
Balance
|
15.6
|
(24.5
|
)
|
7.4
|
||||||||||||||||
Minimum
Pension Liability:
|
||||||||||||||||||||
Beginning
Balance
|
-
|
(7.3
|
)
|
-
|
||||||||||||||||
Terasen
Acquisition
|
-
|
-
|
(4.0
|
)
|
||||||||||||||||
Minimum
Pension Liability Adjustments
|
-
|
7.3
|
(3.3
|
)
|
||||||||||||||||
Ending
Balance
|
-
|
-
|
(7.3
|
)
|
||||||||||||||||
Employee
Retirement Benefits:
|
||||||||||||||||||||
Beginning
Balance
|
(50.6
|
)
|
-
|
-
|
||||||||||||||||
Adjustment
to Initially Apply SFAS No. 158
|
-
|
(50.6
|
)
|
-
|
||||||||||||||||
SFAS
No. 158 Amortization/Adjustments
|
10.7
|
-
|
-
|
|||||||||||||||||
Ending
Balance
|
(39.9
|
)
|
(50.6
|
)
|
-
|
|||||||||||||||
Total
Accumulated Other Comprehensive Loss
|
(96.1
|
)
|
(135.9
|
)
|
(127.0
|
)
|
||||||||||||||
|
||||||||||||||||||||
Total
Stockholders’ Equity
|
134,286,468
|
$
|
3,477.6
|
134,143,958
|
$
|
3,521.6
|
133,766,962
|
$
|
3,924.4
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
|
||||||||||||||||
Ended
|
Five
Months
|
|||||||||||||||
December
31,
|
Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
||||||||||||||||
Cash
Flows from Operating Activities:
|
||||||||||||||||
Net
Income
|
$
|
247.0
|
$
|
65.9
|
$
|
71.9
|
$
|
554.6
|
||||||||
Adjustments
to Reconcile Net Income to Net Cash Flows from Operating
Activities:
|
||||||||||||||||
Loss
(Income) from Discontinued Operations, Net of Tax
|
1.5
|
(287.9
|
)
|
542.8
|
(40.4
|
)
|
||||||||||
Loss
from Impairment of Assets
|
-
|
377.1
|
1.2
|
6.5
|
||||||||||||
Depreciation
and Amortization
|
476.2
|
264.9
|
540.3
|
104.6
|
||||||||||||
Deferred
Income Taxes
|
(89.8
|
)
|
138.7
|
10.8
|
92.1
|
|||||||||||
Equity
in Earnings of Kinder Morgan Energy Partners
|
-
|
-
|
-
|
(605.4
|
)
|
|||||||||||
Distributions
from Kinder Morgan Energy Partners
|
-
|
-
|
-
|
530.8
|
||||||||||||
Equity
in Earnings of Other Equity Investments
|
(54.3
|
)
|
(39.1
|
)
|
(100.6
|
)
|
(15.3
|
)
|
||||||||
Distributions
from Other Equity Investees
|
86.5
|
48.2
|
74.8
|
8.1
|
||||||||||||
Minority
Interests in Income of Consolidated Subsidiaries
|
48.0
|
90.7
|
374.2
|
50.5
|
||||||||||||
Gains
from Property Casualty Indemnifications
|
-
|
(1.8
|
)
|
(15.2
|
)
|
-
|
||||||||||
Net
Gains on Sales of Assets
|
(6.3
|
)
|
(2.6
|
)
|
(22.0
|
)
|
(76.4
|
)
|
||||||||
Mark-to-Market
Interest Rate Swap Loss
|
-
|
-
|
22.3
|
-
|
||||||||||||
Foreign
Currency Loss (Gain)
|
-
|
15.5
|
-
|
(5.0
|
)
|
|||||||||||
Pension
Contribution in Excess of Expense
|
-
|
-
|
-
|
(23.8
|
)
|
|||||||||||
Changes
in Gas in Underground Storage
|
51.3
|
(84.2
|
)
|
(35.3
|
)
|
6.5
|
||||||||||
Changes
in Working Capital Items (Note 1(R))
|
104.0
|
(202.9
|
)
|
80.0
|
(13.4
|
)
|
||||||||||
(Payment
for) Proceeds from Termination of Interest Rate Swap
|
(2.2
|
)
|
51.9
|
-
|
(3.5
|
)
|
||||||||||
Kinder
Morgan Energy Partners’ Rate Reparations, Refunds and
Reserve Adjustments
|
140.0
|
-
|
(19.1
|
)
|
-
|
|||||||||||
Other,
Net
|
45.8
|
58.8
|
(31.4
|
)
|
0.7
|
|||||||||||
Net
Cash Flows Provided by Continuing
Operations
|
1,047.7
|
493.2
|
1,494.7
|
571.2
|
||||||||||||
Net
Cash Flows (Used in) Provided by Discontinued Operations
|
(3.2
|
)
|
109.8
|
212.6
|
45.0
|
|||||||||||
Net
Cash Flows Provided by Operating Activities
|
1,044.5
|
603.0
|
1,707.3
|
616.2
|
||||||||||||
|
||||||||||||||||
Cash
Flows from Investing Activities:
|
||||||||||||||||
Purchase
of Predecessor Stock
|
(11,534.3
|
)
|
-
|
-
|
-
|
|||||||||||
Capital
Expenditures
|
(1,287.0
|
)
|
(652.8
|
)
|
(1,375.6
|
)
|
(134.1
|
)
|
||||||||
Terasen
Acquisition, Net of $73.7 Cash Acquired
|
-
|
-
|
(10.6
|
)
|
(2,065.5
|
)
|
||||||||||
Other
Acquisitions
|
(122.0
|
)
|
(42.1
|
)
|
(396.5
|
)
|
-
|
|||||||||
Investment
in Kinder Morgan Energy Partners (Note 2)
|
-
|
-
|
-
|
(4.5
|
)
|
|||||||||||
Investment
in NGPL PipeCo LLC Restricted Cash
|
(3,030.0
|
)
|
-
|
-
|
-
|
|||||||||||
Net
(Investments in) Proceeds from Margin Deposits
|
(39.3
|
)
|
(54.8
|
)
|
38.6
|
27.5
|
||||||||||
Other
Investments
|
(246.4
|
)
|
(29.7
|
)
|
(6.1
|
)
|
(0.4
|
)
|
||||||||
Proceeds
from Sales of Kinder Morgan Management, LLC Shares
|
-
|
-
|
-
|
254.8
|
||||||||||||
Change
in Natural Gas Storage and NGL Line Fill Inventory
|
10.0
|
8.4
|
(12.9
|
)
|
-
|
|||||||||||
Property
Casualty Indemnifications
|
-
|
8.0
|
13.1
|
-
|
||||||||||||
Net
Proceeds (Costs of Removal) from Sales of Assets
|
301.3
|
(1.5
|
)
|
92.2
|
(4.1
|
)
|
||||||||||
Net
Cash Flows Used in Continuing Investing Activities
|
(15,947.7
|
)
|
(764.5
|
)
|
(1,657.8
|
)
|
(1,926.3
|
)
|
||||||||
Net
Cash Flows Provided by (Used in) Discontinued Investing
Activities
|
196.6
|
1,488.2
|
(138.1
|
)
|
(52.4
|
)
|
||||||||||
Net
Cash Flows (Used in) Provided by Investing Activities
|
$
|
(15,751.1
|
)
|
$
|
723.7
|
$
|
(1,795.9
|
)
|
$
|
(1,978.7
|
)
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
|
||||||||||||||||
Ended
|
Five
Months
|
|||||||||||||||
December
31,
|
Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Cash
Flows from Financing Activities:
|
||||||||||||||||
Short-term
Debt,
Net
|
$
|
(52.6
|
)
|
$
|
(247.5
|
)
|
$
|
1,009.5
|
$
|
25.0
|
||||||
Bridge
Facility
Issued
|
-
|
-
|
-
|
2,134.7
|
||||||||||||
Bridge
Facility
Retired
|
-
|
-
|
-
|
(2,129.7
|
)
|
|||||||||||
Long-term
Debt
Issued
|
8,805.0
|
1,000.0
|
-
|
2,400.0
|
||||||||||||
Long-term
Debt
Retired
|
(829.2
|
)
|
(302.4
|
)
|
(140.7
|
)
|
(505.0
|
)
|
||||||||
Issuance of Kinder Morgan, G.P., Inc. Preferred Stock
|
100.0
|
-
|
-
|
-
|
||||||||||||
Cash
Book
Overdraft
|
(14.0
|
)
|
(14.9
|
)
|
17.9
|
-
|
||||||||||
Issuance
of Shares by Kinder Morgan Management, LLC
|
-
|
297.9
|
-
|
-
|
||||||||||||
Other
Common Stock Issued
|
-
|
9.9
|
38.7
|
62.8
|
||||||||||||
Excess
Tax Benefits from Share-based Payments
|
-
|
56.7
|
18.6
|
-
|
||||||||||||
Cash
Paid to Share-based Award Holders Due to Going Private
Transaction
|
(181.1
|
)
|
-
|
-
|
-
|
|||||||||||
Contributions
from Successor Investors
|
5,112.0
|
-
|
-
|
-
|
||||||||||||
Short-term
Advances from (to) Unconsolidated Affiliates
|
10.9
|
2.3
|
(4.9
|
)
|
(11.7
|
)
|
||||||||||
Treasury
Stock Acquired
|
-
|
-
|
(34.3
|
)
|
(317.1
|
)
|
||||||||||
Cash
Dividends, Common Stock
|
-
|
(234.9
|
)
|
(468.5
|
)
|
(355.2
|
)
|
|||||||||
Minority
Interests, Distributions
|
(259.6
|
)
|
(248.9
|
)
|
(575.0
|
)
|
(2.4
|
)
|
||||||||
Minority
Interests, Contributions
|
342.9
|
-
|
353.8
|
-
|
||||||||||||
Debt
Issuance Costs
|
(81.5
|
)
|
(13.1
|
)
|
(4.8
|
)
|
(14.3
|
)
|
||||||||
Other,
Net
|
4.0
|
(4.3
|
)
|
(3.5
|
)
|
-
|
||||||||||
Net
Cash Flows Provided by Continuing Financing Activities
|
12,956.8
|
300.8
|
206.8
|
1,287.1
|
||||||||||||
Net
Cash Flows Provided by (Used in) Discontinued Financing
Activities
|
-
|
140.1
|
(118.1
|
)
|
15.2
|
|||||||||||
Net Cash Flows Provided by Financing Activities
|
12,956.8
|
440.9
|
88.7
|
1,302.3
|
||||||||||||
Effect of Exchange Rate Changes on
Cash
|
(2.8
|
)
|
7.6
|
6.6
|
0.3
|
|||||||||||
|
||||||||||||||||
Effect of Accounting Change
on Cash
|
-
|
-
|
12.1
|
-
|
||||||||||||
|
||||||||||||||||
Cash Balance Included in Assets Held for Sale
|
(1.1
|
)
|
(2.7
|
)
|
(5.6
|
)
|
-
|
|||||||||
|
||||||||||||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
(1,753.7
|
)
|
1,772.5
|
13.2
|
(59.9
|
)
|
||||||||||
Cash
and Cash Equivalents at Beginning of Period
|
1,902.3
|
129.8
|
116.6
|
176.5
|
||||||||||||
Cash
and Cash Equivalents at End of Period
|
$
|
148.6
|
$
|
1,902.3
|
$
|
129.8
|
$
|
116.6
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
(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
Preliminary Allocation of the Purchase Price is as
Follows:
|
|||
Current
Assets
|
$
|
1,551.2
|
|
Goodwill
|
13,407.2
|
||
Investments
|
1,072.2
|
||
Property,
Plant and Equipment, Net
|
15,638.7
|
||
Deferred
Charges and Other Assets
|
1,673.6
|
||
Current
Liabilities
|
(3,279.5
|
)
|
|
Deferred
Income Taxes
|
(2,588.0
|
)
|
|
Other
Deferred Credits
|
(1,777.5
|
)
|
|
Long-term
Debt
|
(9,855.9
|
)
|
|
Minority
Interests
|
(3,314.6
|
)
|
|
$
|
12,527.4
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||
December
31,
|
December
31,
|
|||||
2007
|
2006
|
|||||
(In
millions)
|
(In
millions)
|
|||||
Regulatory
Assets:
|
||||||
Employee
Benefit Costs
|
$
|
0.6
|
$
|
12.5
|
||
Deferred
Income Taxes
|
-
|
19.1
|
||||
Rate
Regulation and Application Costs
|
5.8
|
6.8
|
||||
Debt
Issuance Costs
|
-
|
11.1
|
||||
Foreign
Currency Rate Stabilization
|
-
|
71.4
|
||||
Changes
in Fair Value of Derivatives
|
-
|
114.9
|
||||
Deferred
Development Costs on Capital Projects
|
-
|
20.2
|
||||
Commercial
Commodity Unbundling Costs
|
-
|
2.2
|
||||
Replacement
Transportation Agreement
|
-
|
3.2
|
||||
Tax
Reassessment Dispute
|
-
|
8.6
|
||||
Other
Regulatory Assets
|
-
|
17.5
|
||||
Total
Regulatory Assets
|
6.4
|
287.5
|
||||
|
||||||
Regulatory
Liabilities:
|
||||||
Deferred
Income Taxes
|
-
|
13.0
|
||||
Rate
Regulation and Application Costs
|
-
|
25.3
|
||||
Foreign
Currency Rate Stabilization
|
-
|
11.4
|
||||
Changes
in Fair Value of Derivatives
|
-
|
1.1
|
||||
Other
Regulatory Liabilities
|
-
|
30.5
|
||||
Total
Regulatory Liabilities
|
-
|
81.3
|
||||
|
||||||
Net
Regulatory
Assets
|
$
|
6.4
|
$
|
206.2
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
|
||||||||||||||||
Ended
|
Five
Months
|
|||||||||||||||
December
31,
|
Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Beginning
Balance1
|
$
|
-
|
$
|
14.0
|
$
|
5.8
|
$
|
3.1
|
||||||||
Additions:
Charged to Cost and Expenses2
|
0.4
|
0.7
|
16.9
|
4.9
|
||||||||||||
Deductions:
|
||||||||||||||||
Write-off
of Uncollectible Accounts
|
(0.5
|
)
|
(4.7
|
)
|
(7.8
|
)
|
(2.2
|
)
|
||||||||
Reclassification
to Assets Held for Sale
|
-
|
-
|
(0.9
|
)
|
-
|
|||||||||||
Reclassification
to Accounts Receivable
|
0.1
|
-
|
-
|
-
|
||||||||||||
Ending
Balance
|
$
|
-
|
$
|
10.0
|
$
|
14.0
|
$
|
5.8
|
|
1
|
The
beginning balance as of June 1, 2007 has been adjusted to reflect the fair
value of accounts receivable as the result of the Going Private
transaction (see Note 1(B)).
|
|
2
|
Additions
include $0.7 million and $2.4 million associated with assets classified as
held for sale for the five months ended May 31, 2007 and the year ended
December 31, 2006, respectively, as discussed in Note 7, and $6.5 million
representing allowance for doubtful accounts balances of Kinder Morgan
Energy Partners as of December 31, 2005. Due to our adoption of EITF No.
04-5, beginning January 1, 2006, the accounts and balances of Kinder
Morgan Energy Partners are included in our consolidated results as
discussed in Note 1(B). Additions in 2005 include $3.1 million acquired
with Terasen.
|
Successor
Company
|
Predecessor
Company
|
|||||
December
31,
|
December
31,
|
|||||
2007
|
20061
|
|||||
(In
millions)
|
(In
millions)
|
|||||
Gas
in Underground Storage (Current)
|
$
|
-
|
$
|
225.2
|
||
Product
Inventory
|
19.5
|
20.4
|
||||
Materials
and Supplies
|
18.3
|
29.4
|
||||
$
|
37.8
|
$
|
275.0
|
Successor
Company
|
Predecessor
Company
|
||||||
December
31,
|
December
31,
|
||||||
2007
|
2006
|
||||||
(In
millions)
|
(In
millions)
|
||||||
Assets
Held for Sale - Turbines and Boilers1
|
$
|
0.7
|
$
|
4.9
|
|||
Current
Deferred Tax Asset
|
-
|
12.9
|
|||||
Derivatives
|
47.0
|
134.0
|
|||||
Prepaid
Expenses
|
22.3
|
32.2
|
|||||
Income
Tax Overpayments
|
-
|
6.5
|
|||||
Other
|
3.9
|
13.7
|
|||||
$
|
73.9
|
$
|
204.2
|
1
|
See
Notes 5 and 6.
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Predecessor
Company
|
||||||||||||||||||||
Balance
December 31, 2005
|
KMP
Goodwill Consolidated into KMI1
|
Reallocation
of Equity Method Goodwill
|
Acquisitions
and Purchase Price Adjustments
|
Other2
|
Balance
December
31,
2006
|
|||||||||||||||
(In
millions)
|
||||||||||||||||||||
Kinder
Morgan Energy Partners
|
$
|
859.4
|
$
|
-
|
$
|
(859.4
|
)
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
Power
Segment
|
24.8
|
-
|
-
|
-
|
-
|
24.8
|
||||||||||||||
Kinder
Morgan Canada Segment3
|
658.2
|
-
|
-
|
-
|
(1.2
|
)
|
657.0
|
|||||||||||||
Terasen
Gas Segment3
|
1,238.6
|
-
|
-
|
100.0
|
(646.0
|
)
|
692.6
|
|||||||||||||
Products
Pipelines Segment
|
-
|
263.2
|
695.5
|
-
|
(15.3
|
)
|
943.4
|
|||||||||||||
Natural
Gas Pipelines Segment
|
-
|
288.4
|
-
|
-
|
-
|
288.4
|
||||||||||||||
CO2
Segment
|
-
|
46.1
|
26.9
|
-
|
(0.6
|
)
|
72.4
|
|||||||||||||
Terminals
Segment
|
-
|
201.2
|
137.0
|
30.0
|
(3.0
|
)
|
365.2
|
|||||||||||||
|
||||||||||||||||||||
Consolidated
Total
|
$
|
2,781.0
|
$
|
798.9
|
$
|
-
|
$
|
130.0
|
$
|
(666.1
|
)
|
$
|
3,043.8
|
1
|
At
January 1, 2006.
|
2
|
Other
adjustments include the translation of goodwill denominated in foreign
currencies and reductions of the reallocation of equity method goodwill
due to reductions in Knight Inc.’s ownership percentage of KMP. The
adjustment of $646.0 to the Terasen Gas Segment was due mainly to an
impairment charge (see Note 6).
|
3
|
Goodwill
assigned to the Kinder Morgan Canada and Terasen Gas business segments is
based on the purchase price allocation for our November 30, 2005
acquisition of Terasen (see Note
4).
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Predecessor
Company
|
|||||||||||||||||||
Balance
December
31,
2006
|
Acquisitions
and
Purchase
Price Adjustments
|
Dispositions
|
Other3
|
Balance
May
31, 2007
|
|||||||||||||||
(In
millions)
|
|||||||||||||||||||
Power
Segment
|
$
|
24.8
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
24.8
|
|||||||||
Kinder
Morgan Canada Segment1
|
65.0
|
-
|
(65.0
|
)
|
-
|
-
|
|||||||||||||
Terasen
Gas Segment2
|
692.6
|
-
|
(692.6
|
)
|
-
|
-
|
|||||||||||||
KMP
– Products Pipelines Segment
|
943.4
|
-
|
-
|
(14.1
|
)
|
929.3
|
|||||||||||||
KMP
– Natural Gas Pipelines Segment
|
288.4
|
-
|
-
|
-
|
288.4
|
||||||||||||||
KMP
– CO2
Segment
|
72.4
|
-
|
-
|
(0.5
|
)
|
71.9
|
|||||||||||||
KMP
– Terminals Segment
|
365.2
|
(2.7
|
)
|
-
|
-
|
362.5
|
|||||||||||||
KMP
– Trans Mountain Segment1
|
592.0
|
-
|
-
|
(360.2
|
)
|
231.8
|
|||||||||||||
|
|||||||||||||||||||
Consolidated
Total
|
$
|
3,043.8
|
$
|
(2.7
|
)
|
$
|
(757.6
|
)
|
$
|
(374.8
|
)
|
$
|
1,908.7
|
Successor
Company
|
|||||||||||||||||||
Balance
June
1,
2007
|
Acquisitions
and
Purchase
Price Adjustments
|
Dispositions
|
Other3
|
Balance
December
31, 2007
|
|||||||||||||||
(In
millions)
|
|||||||||||||||||||
NGPL
Segment4
|
$
|
4,624.3
|
$
|
592.1
|
$
|
(5,216.4
|
)
|
$
|
-
|
$
|
-
|
||||||||
KMP
– Products Pipelines Segment
|
2,586.9
|
(398.4
|
)
|
-
|
(9.1
|
)
|
2,179.4
|
||||||||||||
KMP
– Natural Gas Pipelines Segment
|
3,058.7
|
155.5
|
-
|
(13.2
|
)
|
3,201.0
|
|||||||||||||
KMP
– CO2
Segment
|
1,454.2
|
(372.1
|
)
|
-
|
(4.5
|
)
|
1,077.6
|
||||||||||||
KMP
– Terminals Segment
|
1,546.1
|
(74.1
|
)
|
-
|
(6.1
|
)
|
1,465.9
|
||||||||||||
KMP
– Trans Mountain Segment1
|
231.8
|
-
|
-
|
18.3
|
250.1
|
||||||||||||||
|
|||||||||||||||||||
Consolidated
Total
|
$
|
13,502.0
|
$
|
(97.0
|
)
|
$
|
(5,216.4
|
)
|
$
|
(14.6
|
)
|
$
|
8,174.0
|
1
|
Kinder
Morgan Energy Partners acquired Trans Mountain from us on April 30, 2007.
Prior to this transaction, Trans Mountain was in the Kinder Morgan Canada
Segment. After the $377.1 million impairment of this asset, discussed
further below, the remaining goodwill related to Trans Mountain was
transferred to the KMP – Trans Mountain Segment. As a result of the sale
of Terasen Pipelines (Corridor) Inc. and the transfer of Trans Mountain to
Kinder Morgan Energy Partners, the business segment referred to in
previous filings as Kinder Morgan Canada is no longer reported.
|
2
|
As
discussed in Note 6, we closed the sale of our Terasen Gas segment on May
17, 2007.
|
3
|
Adjustments
include (i) the translation of goodwill denominated in foreign currencies,
(ii) reductions in the allocation of goodwill due to reductions in
Knight’s ownership percentage of KMP and (iii) the $377.1 million goodwill
impairment on the KMP-Trans Mountain
Segment.
|
4
|
In
the fourth quarter of 2007 the assets, including goodwill, of the NGPL
Segment were transferred to assets held for sale. See Note
1(M).
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||
December
31,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(In
millions)
|
(In
millions)
|
|||||||
Customer
Relationships, Contracts and Agreements:
|
||||||||
Gross
Carrying
Amount
|
$
|
321.3
|
$
|
253.8
|
||||
Accumulated
Amortization
|
(11.6
|
)
|
(36.2
|
)
|
||||
Net
Carrying
Amount
|
309.7
|
217.6
|
||||||
Technology-based
Assets, Lease Value and Other:
|
||||||||
Gross
Carrying
Amount
|
11.7
|
13.3
|
||||||
Accumulated
Amortization
|
(0.3
|
)
|
(1.4
|
)
|
||||
Net
Carrying
Amount
|
11.4
|
11.9
|
||||||
Total
Other Intangibles,
Net
|
$
|
321.1
|
$
|
229.5
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||
Seven
Months
|
Year
Ended December 31,
|
|||||||||||||
Ended
|
Five
Months
|
|||||||||||||
December
31, 2007
|
Ended
May
31, 2007
|
2006
|
2005
|
|||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||
Customer
Relationships, Contracts and Agreements
|
$
|
11.6
|
$
|
6.1
|
$
|
15.0
|
$
|
1.5
|
||||||
Technology-based
Assets, Lease Value and Other
|
0.3
|
0.2
|
0.2
|
-
|
||||||||||
Total
Amortizations
|
$
|
11.9
|
$
|
6.3
|
$
|
15.2
|
$
|
1.5
|
|
·
|
NGPL
PipeCo LLC (20%, see Note 1(M));
|
|
·
|
Express
Pipeline System (33.33%);
|
|
·
|
Plantation
Pipe Line Company (51%);
|
|
·
|
Thermo
Cogeneration Partnership, L.P. and Greenhouse Holdings, LLC (Thermo
Companies) (49.5%);
|
|
·
|
West2East
Pipeline LLC (51%);
|
|
·
|
Red
Cedar Gathering Company (49%);
|
|
·
|
Midcontinent
Express Pipeline LLC (50%);
|
|
·
|
Thunder
Creek Gas Services, LLC (25%);
|
|
·
|
Cortez
Pipeline Company (50%); and
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
|
·
|
Horizon
Pipeline Company (50%);
|
Successor
Company
|
Predecessor
Company
|
|||||
December
31,
|
December
31,
|
|||||
2007
|
2006
|
|||||
(In
millions)
|
(In
millions)
|
|||||
NGPL
PipeCo
LLC
|
$
|
720.0
|
$
|
-
|
||
Express
Pipeline
System
|
402.1
|
449.7
|
||||
Plantation
Pipe Line Company
|
351.4
|
199.6
|
||||
Thermo
Companies
|
53.5
|
153.9
|
||||
West
2 East Pipeline LLC
|
191.9
|
-
|
||||
Red
Cedar Gathering Company
|
135.6
|
160.7
|
||||
Midcontinent
Express Pipeline LLC
|
63.0
|
-
|
||||
Customer
Works
LP
|
-
|
30.0
|
||||
Thunder
Creek Gas Services, LLC
|
37.0
|
37.2
|
||||
Cortez
Pipeline Company
|
14.2
|
16.2
|
||||
Horizon
Pipeline Company1
|
-
|
16.0
|
||||
Subsidiary
Trusts Holding Solely Debentures of Kinder Morgan
|
8.6
|
8.6
|
||||
All
Others
|
18.9
|
12.7
|
||||
Total
Equity Investments
|
$
|
1,996.2
|
$
|
1,084.6
|
|
______________
|
1
|
Balance
for 2007 is included in the caption “Assets Held for Sale, Non-current” in
the accompanying Consolidated Balance
Sheet.
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
Ended
December
31,
|
Five
Months
Ended
May
31,
|
Year
Ended December 31,
|
||||||||||||||
2007
|
2007
|
2006
|
2005
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Cortez
Pipeline Company
|
$
|
10.5
|
$
|
8.7
|
$
|
19.2
|
$
|
-
|
||||||||
Express
Pipeline System
|
14.9
|
5.0
|
17.1
|
2.0
|
||||||||||||
Plantation
Pipe Line Company
|
10.8
|
11.9
|
12.8
|
-
|
||||||||||||
Thermo
Companies
|
8.0
|
5.1
|
11.3
|
11.6
|
||||||||||||
Red
Cedar Gathering Company
|
16.1
|
11.9
|
36.3
|
-
|
||||||||||||
Customer
Works LP1
|
-
|
-
|
-
|
-
|
||||||||||||
Thunder
Creek Gas Services, LLC
|
1.2
|
1.0
|
2.5
|
-
|
||||||||||||
Midcontinent
Express Pipeline
|
1.2
|
0.2
|
-
|
-
|
||||||||||||
West2East
Pipeline LLC
|
(8.2
|
)
|
(4.2
|
)
|
-
|
-
|
||||||||||
Horizon
Pipeline Company
|
1.0
|
0.6
|
1.8
|
1.7
|
||||||||||||
Heartland
Pipeline Company2
|
-
|
-
|
-
|
-
|
||||||||||||
All
Others
|
1.3
|
0.5
|
3.2
|
-
|
||||||||||||
Total
|
$
|
56.8
|
$
|
40.7
|
$
|
104.2
|
$
|
15.3
|
||||||||
Amortization
of Excess Costs
|
$
|
(3.4
|
)
|
$
|
(2.4
|
)
|
$
|
(5.6
|
)
|
$
|
-
|
1
|
This
investment was part of the Terasen Inc. sale, therefore our earnings from
it are included in “(Loss) Income from Discontinued Operations, Net of
Tax” in the accompanying Consolidated Statements of Operations; see Note
7.
|
2
|
This
investment was part of the North System sale, therefore our earnings from
it are included in “(Loss) Income from Discontinued Operations, Net of
Tax” in the accompanying Consolidated Statements of Operations; see Note
7.
|
Year
Ended December 31,
|
|||||||||||
2007
|
2006
|
2005
|
|||||||||
(In
millions)
|
|||||||||||
Revenues
|
$
|
738.4
|
$
|
692.1
|
$
|
76.7
|
|||||
Costs
and Expenses
|
534.4
|
483.2
|
48.1
|
||||||||
Net
Income
|
$
|
204.0
|
$
|
208.9
|
$
|
28.6
|
December
31,
|
|||||
20071
|
2006
|
||||
(In
millions)
|
|||||
Current
Assets
|
$
|
3,566.2
|
$
|
241.2
|
|
Non-current
Assets
|
11,469.5
|
2,580.3
|
|||
Current
Liabilities
|
572.3
|
319.6
|
|||
Non-current
Liabilities
|
6,078.4
|
1,671.2
|
|||
Minority
Interest in Equity of Subsidiaries
|
1.7
|
-
|
|||
Partners’/Owners’
Equity
|
8,383.2
|
830.7
|
1
|
Includes
amounts associated with our NGPL business segment. In December 2007, we
entered into a definitive agreement to sell an 80% ownership interest in
our NGPL business segment. The closing of the sale occurred on February
15, 2008 (see Note 1(M)).
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Seven
Months
Ended
December
31,
2007
|
Five
Months
Ended
May
31, 2007
|
Year
Ended
December
31,
2006
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Balance
at Beginning of Period
|
$
|
53.1
|
$
|
52.5
|
$
|
3.2
|
||||||
KMP
ARO Consolidated into Knight Inc.1
|
n/a
|
n/a
|
43.2
|
|||||||||
Additions
|
1.2
|
0.2
|
6.8
|
|||||||||
Liabilities
Settled
|
(0.8
|
)
|
(0.7
|
)
|
(3.2
|
)
|
||||||
Accretion
Expense
|
1.5
|
1.1
|
2.5
|
|||||||||
Balance
at End of Period
|
$
|
55.0
|
$
|
53.1
|
$
|
52.5
|
1
|
Represents
asset retirement obligation balances of Kinder Morgan Energy Partners as
of December 31, 2005. Due to our adoption of EITF No. 04-5, beginning
January 1, 2006, the accounts and balances of Kinder Morgan Energy
Partners are included in our consolidated results as discussed in Note
1(B).
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
Ended
December
31,
|
Five
Months
Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Interest
Expense
|
$
|
609.7
|
$
|
264.1
|
$
|
582.3
|
$
|
148.7
|
||||||||
Capitalized
Interest1
|
(25.5
|
)
|
(12.2
|
)
|
(23.3
|
)
|
(1.2
|
)
|
||||||||
Interest
Expense, Net
|
584.2
|
251.9
|
559.0
|
147.5
|
||||||||||||
Interest
Expense – Preferred Interest in General Partner of KMP
|
3.6
|
-
|
-
|
-
|
||||||||||||
Interest
Expense – Deferrable Interest Debentures
|
12.8
|
9.1
|
21.9
|
21.9
|
||||||||||||
Total
Interest Expense
|
$
|
600.6
|
$
|
261.0
|
$
|
580.9
|
$
|
169.4
|
1
|
Includes
the debt component of the allowance for funds used during construction for
our regulated utility operations, which are accounted for in accordance
with the provisions of SFAS No. 71, Accounting for the Effects of
Certain Types of Regulation.
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
Ended
December
31,
|
Five
Months
Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Accounts
Receivable
|
$
|
(64.3
|
)
|
$
|
(31.9
|
)
|
$
|
192.5
|
$
|
(15.1
|
)
|
|||||
Materials
and Supplies Inventory
|
(8.1
|
)
|
(1.7
|
)
|
(0.5
|
)
|
(0.1
|
)
|
||||||||
Other
Current Assets
|
(65.2
|
)
|
0.5
|
103.2
|
(52.0
|
)
|
||||||||||
Accounts
Payable
|
68.7
|
26.3
|
(243.4
|
)
|
6.6
|
|||||||||||
Income
Tax Benefits from Employee Benefit Plans
|
-
|
-
|
-
|
22.0
|
||||||||||||
Other
Current Liabilities
|
172.9
|
(196.1
|
)
|
28.2
|
25.2
|
|||||||||||
$
|
104.0
|
|
$
|
(202.9
|
)
|
$
|
80.0
|
$
|
(13.4
|
)
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
Ended
December
31,
|
Five
Months
Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Cash
Paid for:
|
||||||||||||||||
Interest
(Net of Amount Capitalized)
|
$
|
586.5
|
$
|
381.8
|
$
|
731.6
|
$
|
184.0
|
||||||||
Income
Taxes Paid (Net of Refunds)1
|
$
|
146.4
|
$
|
133.3
|
$
|
314.9
|
$
|
204.0
|
1
|
Income
taxes paid includes taxes paid related to prior
periods.
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
Ended
December
31,
|
Five
Months
Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Natural
Gas Transportation and Storage
|
$
|
6.7
|
$
|
4.5
|
$
|
6.1
|
$
|
4.4
|
||||||||
Natural
Gas
Sales
|
-
|
-
|
-
|
9.4
|
||||||||||||
Other
Revenues
|
-
|
-
|
-
|
1.6
|
||||||||||||
Total
Related-party Operating Revenues
|
$
|
6.7
|
$
|
4.5
|
$
|
6.1
|
$
|
15.4
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||
December
31,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(In
millions)
|
(In
millions)
|
|||||||
Kinder
Morgan Energy Partners
|
$
|
1,616.0
|
$
|
1,727.7
|
||||
Kinder
Morgan Management, LLC
|
1,657.7
|
1,328.4
|
||||||
Triton
Power
|
29.2
|
25.9
|
||||||
Other
|
11.1
|
13.5
|
||||||
$
|
3,314.0
|
$
|
3,095.5
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Year
Ended
December
31, 2005
|
||||
(In
millions)
|
||||
Operating
Revenues
|
$
|
9,787.1
|
||
Operating
Expenses
|
8,773.6
|
|||
Operating
Income
|
$
|
1,013.5
|
||
|
||||
Net
Income
|
$
|
812.2
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
The Total Purchase
Price Consisted of the Following:
|
(In
millions)
|
||
Total
Market Value of Kinder Morgan, Inc. Common Shares Issued
|
$
|
1,146.8
|
|
Cash
Paid – U.S. Dollar Equivalent
|
2,134.3
|
||
Transaction
Fees
|
15.7
|
||
Total
Purchase Price
|
$
|
3,296.8
|
The Allocation of the
Purchase Price was as Follows:
|
(In
millions)
|
||
Current
Assets
|
$
|
812.7
|
|
Goodwill
|
1,990.4
|
||
Investments
|
504.8
|
||
Property,
Plant and Equipment
|
3,592.7
|
||
Deferred
Charges and Other Assets
|
602.4
|
||
Current
Liabilities
|
(1,517.8
|
)
|
|
Deferred
Income
Taxes
|
(667.2
|
)
|
|
Other
Deferred
Credits
|
(264.5
|
)
|
|
Long-term
Debt
|
(1,756.7
|
)
|
|
$
|
3,296.8
|
Allocation of
Goodwill:
|
(In
millions)
|
|
Terasen
Gas
|
$
|
1,334.3
|
Kinder
Morgan Canada
|
656.1
|
|
$
|
1,990.4
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Purchase
Price:
|
||
Cash
Paid, Including Transaction Costs
|
$
|
244.6
|
Liabilities
Assumed
|
-
|
|
Total
Purchase Price
|
$
|
244.6
|
Allocation
of Purchase Price:
|
||
Current
Assets
|
$
|
-
|
Property,
Plant and Equipment
|
244.6
|
|
Deferred
Charges and Other Assets
|
-
|
|
$
|
244.6
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Purchase
Price:
|
||
Cash
Paid, Including Transaction Costs
|
$
|
60.0
|
Liabilities
Assumed
|
3.6
|
|
Total
Purchase Price
|
$
|
63.6
|
Allocation
of Purchase Price:
|
||
Current
Assets
|
$
|
0.1
|
Property,
Plant and Equipment
|
63.5
|
|
$
|
63.6
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Purchase
Price:
|
||
Cash
Paid, Including Transaction Costs
|
$
|
61.6
|
Liabilities
Assumed
|
0.3
|
|
Total
Purchase Price
|
$
|
61.9
|
Allocation
of Purchase Price:
|
||
Current
Assets
|
$
|
0.5
|
Property,
Plant and Equipment
|
43.6
|
|
Goodwill
|
17.8
|
|
$
|
61.9
|
Purchase
Price:
|
||
Cash
Paid, Including Transaction Costs
|
$
|
15.8
|
Liabilities
Assumed
|
0.8
|
|
Total
Purchase Price
|
$
|
16.6
|
Allocation
of Purchase Price:
|
||
Current
Assets
|
$
|
1.6
|
Property,
Plant and Equipment
|
6.6
|
|
Goodwill
|
8.4
|
|
$
|
16.6
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Purchase
Price:
|
||
Cash
Paid, Including Transaction Costs
|
$
|
4.8
|
Issuance
of Common Units
|
1.6
|
|
Liabilities
Assumed
|
0.9
|
|
Total
Purchase Price
|
$
|
7.3
|
Allocation
of Purchase Price:
|
||
Current
Assets
|
$
|
0.8
|
Deferred
Charges and Other Assets
|
6.5
|
|
$
|
7.3
|
Purchase
Price:
|
||
Cash
Paid, Including Transaction Costs
|
$
|
6.4
|
Liabilities
Assumed
|
-
|
|
Total
Purchase Price
|
$
|
6.4
|
Allocation
of Purchase Price:
|
||
Property,
Plant and Equipment
|
$
|
6.4
|
$
|
6.4
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Purchase
Price:
|
||
Cash
Paid, Including Transaction Costs
|
$
|
5.5
|
Notes
Payable (Fair Value)
|
42.3
|
|
Total
Purchase Price
|
$
|
47.8
|
Allocation
of Purchase Price:
|
||
Property,
Plant and Equipment
|
$
|
47.8
|
$
|
47.8
|
Purchase
Price:
|
||
Cash
Paid, Including Transaction Costs
|
$
|
38.8
|
Assumed
Liabilities
|
18.4
|
|
Total
Purchase Price
|
$
|
57.2
|
Allocation
of Purchase Price:
|
||
Current
Assets
|
$
|
6.5
|
Property,
Plant and Equipment
|
50.7
|
|
$
|
57.2
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Purchase
Price:
|
||
Cash
Paid, Including Transaction Costs
|
$
|
100.3
|
Assumed
Liabilities
|
1.2
|
|
Total
Purchase Price
|
$
|
101.5
|
Allocation
of Purchase Price:
|
||
Current
Assets
|
$
|
0.2
|
Property,
Plant and Equipment
|
60.8
|
|
Deferred
Charges and Other
|
40.5
|
|
$
|
101.5
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
Ended
December
31,
|
Five
Months
Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Operating
Revenues
|
$
|
24.1
|
$
|
921.8
|
$
|
1,999.3
|
$
|
569.0
|
||||||||
Earnings
(Loss) from Discontinued Operations Before Income Taxes
|
$
|
(10.2
|
)
|
$
|
393.2
|
$
|
(530.6
|
)
|
$
|
65.8
|
||||||
Income
Taxes
|
8.7
|
(94.6
|
)
|
2.1
|
(25.4
|
)
|
||||||||||
Earnings
(Loss) from Discontinued Operations
|
$
|
(1.5
|
)
|
$
|
298.6
|
$
|
(528.5
|
)
|
$
|
40.4
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||
December
31,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(In
millions)
|
(In
millions)
|
|||||||
Knight
Inc.:
|
||||||||
Natural
Gas and Liquids Pipelines
|
$
|
16.1
|
$
|
4,320.4
|
||||
Storage
Facilities
|
-
|
1,035.2
|
||||||
Electric
Generation
|
10.3
|
37.9
|
||||||
General
and Other
|
43.9
|
149.0
|
||||||
Terasen:
|
||||||||
Natural
Gas Pipelines
|
-
|
968.8
|
||||||
Petroleum
Pipelines
|
-
|
1,104.9
|
||||||
Retail
Natural Gas Distribution
|
-
|
1,180.7
|
||||||
General
and Other
|
-
|
381.0
|
||||||
Kinder Morgan Energy
Partners1:
|
||||||||
Natural
Gas, Liquids and Carbon Dioxide Pipelines
|
6,572.6
|
4,559.7
|
||||||
Pipeline
and Terminals Station Equipment
|
5,596.0
|
4,508.8
|
||||||
General
and Other
|
1,095.9
|
850.8
|
||||||
|
||||||||
Accumulated
Amortization, Depreciation and Depletion
|
(277.0
|
)
|
(2,306.3
|
)
|
||||
13,057.8
|
16,790.9
|
|||||||
Land
|
297.3
|
273.9
|
||||||
Natural
Gas, Liquids (including Line Fill) and Transmix Processing
|
168.2
|
615.9
|
||||||
Construction
Work in Process
|
1,280.6
|
1,158.9
|
||||||
Property,
Plant and Equipment, Net
|
$
|
14,803.9
|
$
|
18,839.6
|
|
____________
|
1
|
Includes
allocation of purchase accounting adjustment associated with the Going
Private transaction (see note
1(B)).
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
Ended
December
31,
|
Five
Months
Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
United
States
|
$
|
474.2
|
$
|
279.2
|
$
|
903.6
|
$
|
844.8
|
||||||||
Foreign
|
1.7
|
(376.4
|
)
|
(17.3
|
)
|
6.5
|
||||||||||
Total
|
$
|
475.9
|
$
|
(97.2
|
)
|
$
|
886.3
|
$
|
851.3
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
Ended
December
31,
|
Five
Months
Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Current
Tax Provision:
|
||||||||||||||||
U.S.
|
||||||||||||||||
Federal
|
$
|
268.6
|
$
|
(7.0
|
)
|
$
|
246.6
|
$
|
213.9
|
|||||||
State
|
25.1
|
3.2
|
10.2
|
27.4
|
||||||||||||
Foreign
|
23.5
|
0.6
|
18.3
|
3.8
|
||||||||||||
317.2
|
(3.2
|
)
|
275.1
|
245.1
|
||||||||||||
|
||||||||||||||||
Deferred
Tax Provision:
|
||||||||||||||||
U.S.
|
||||||||||||||||
Federal
|
(95.2
|
)
|
134.0
|
46.9
|
86.3
|
|||||||||||
State
|
0.5
|
6.4
|
(36.3
|
)
|
5.5
|
|||||||||||
Foreign
|
4.9
|
(1.7
|
)
|
0.2
|
0.2
|
|||||||||||
(89.8
|
)
|
138.7
|
10.8
|
92.0
|
||||||||||||
Total
Tax Provision
|
$
|
227.4
|
$
|
135.5
|
$
|
285.9
|
$
|
337.1
|
||||||||
Effective
Tax Rate
|
47.8
|
%
|
139.3
|
%
|
32.3
|
%
|
39.6
|
%
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months Ended
December
31,
|
Five
Months Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Federal
Income Tax Rate
|
35.0
|
%
|
(35.0
|
%)
|
35.0
|
%
|
35.0
|
%
|
||||||||
Increase
(Decrease) as a Result of:
|
%
|
|||||||||||||||
Nondeductible
Goodwill Impairment
|
-
|
|
135.8
|
%
|
-
|
-
|
||||||||||
Terasen
Acquisition Financing Structure
|
-
|
(17.1
|
%)
|
(5.1
|
%)
|
-
|
||||||||||
Nondeductible
Going Private Costs
|
-
|
31.6
|
%
|
-
|
-
|
|||||||||||
Deferred
Tax Rate Change
|
-
|
-
|
(4.3
|
%)
|
-
|
|||||||||||
Kinder
Morgan Management Minority Interest
|
2.7
|
%
|
6.4
|
%
|
2.7
|
%
|
1.9
|
%
|
||||||||
Foreign
Earnings Subject to Different Tax Rates
|
5.8
|
%
|
8.6
|
%
|
2.6
|
%
|
-
|
|||||||||
Net
Effects of Consolidating Kinder Morgan Energy Partners’ United
States Income Tax Provision
|
2.5
|
%
|
4.1
|
%
|
1.4
|
%
|
-
|
|||||||||
State
Income Tax, Net of Federal Benefit
|
2.3
|
%
|
6.9
|
%
|
1.7
|
%
|
2.4
|
%
|
||||||||
Other
|
(0.5
|
%)
|
(2.0
|
%)
|
(1.7
|
%)
|
0.3
|
%
|
||||||||
Effective
Tax Rate
|
47.8
|
%
|
139.3
|
%
|
32.3
|
%
|
39.6
|
%
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months Ended
December
31,
|
Five
Months Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Continuing
Operations
|
$
|
227.4
|
$
|
135.5
|
$
|
285.9
|
$
|
337.1
|
||||||||
Discontinued
Operations
|
(8.7
|
)
|
94.6
|
(2.1
|
)
|
25.4
|
||||||||||
Equity
Items
|
(219.4
|
)
|
(51.7
|
)
|
(22.2
|
)
|
(121.2
|
)
|
||||||||
Total
|
$
|
(0.7
|
)
|
$
|
178.4
|
$
|
261.6
|
$
|
241.3
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||
December
31,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(In
millions)
|
(In
millions)
|
|||||||
Deferred
Tax Assets:
|
||||||||
Postretirement
Benefits
|
$
|
12.1
|
$
|
57.7
|
||||
Book
Accruals
|
-
|
10.4
|
||||||
Derivatives
|
270.9
|
118.6
|
||||||
Capital
Loss Carryforwards
|
279.5
|
0.9
|
||||||
Rate
Matters
|
-
|
29.3
|
||||||
Other
|
-
|
5.7
|
||||||
Total
Deferred Tax
Assets
|
562.5
|
222.6
|
||||||
Deferred
Tax Liabilities:
|
||||||||
Property,
Plant and Equipment
|
125.2
|
2,380.0
|
||||||
Investments
|
1,909.0
|
953.6
|
||||||
Book
Accruals
|
62.1
|
-
|
||||||
Rate
Matters
|
0.4
|
-
|
||||||
Prepaid
Pension Costs
|
17.9
|
16.5
|
||||||
Assets/Liabilities
Held for Sale
|
897.5
|
-
|
||||||
Other
|
66.2
|
3.5
|
||||||
Total
Deferred Tax
Liabilities
|
3,078.3
|
3,353.6
|
||||||
Net
Deferred Tax
Liabilities
|
$
|
2,515.8
|
$
|
3,131.0
|
||||
|
||||||||
Current
Deferred Tax
Asset
|
$
|
-
|
$
|
13.0
|
||||
Current
Deferred Tax
Liability
|
666.4
|
-
|
||||||
Non-current
Deferred Tax
Liability
|
1,849.4
|
3,144.0
|
||||||
Net
Deferred Tax
Liabilities
|
$
|
2,515.8
|
$
|
3,131.0
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Credit
Facilities
|
Knight
Inc.
|
$1.0
billion, six-year secured revolver, due May 2013
|
$1.0
billion, six-year and six-month secured term facility, due November
2013
|
$3.3
billion, seven-year secured term facility, due May 2014
|
Kinder
Morgan Energy Partners
|
$1.85
billion, five-year unsecured revolver, due August
2010
|
Successor
Company
|
|||||||||||||
December
31, 2007
|
|||||||||||||
Short-term
Borrowings
Outstanding
Under
Revolving
Credit
Facility
|
Commercial
Paper
Outstanding
|
Weighted
Average
Interest
Rate of
Short-term
Debt
Outstanding
|
|||||||||||
(In
millions)
|
|||||||||||||
Knight
Inc.
|
|||||||||||||
$1.0
billion
|
$
|
299.0
|
$
|
-
|
6.42
|
%
|
|||||||
Kinder
Morgan Energy Partners
|
|||||||||||||
$1.85
billion
|
$
|
-
|
$
|
589.1
|
5.58
|
%
|
Predecessor
Company
|
|||||||||||||
December
31, 2006
|
|||||||||||||
Short-term
Borrowings
Outstanding
Under
Revolving
Credit
Facility
|
Commercial
Paper
and
Bankers’
Acceptances
Outstanding
|
Weighted-Average
Interest
Rate of
Short-term
Debt
Outstanding
|
|||||||||||
(In
millions of U.S. dollars)
|
|||||||||||||
Knight
Inc.
|
|||||||||||||
$800
million
|
$
|
90.0
|
$
|
-
|
5.70
|
%
|
|||||||
Kinder
Morgan Energy Partners
|
|||||||||||||
$1.85
billion
|
$
|
-
|
$
|
1,098.2
|
5.42
|
%
|
|||||||
Terasen
|
|||||||||||||
C$450
million
|
$
|
-
|
$
|
97.8
|
4.34
|
%
|
|||||||
Terasen
Gas Inc.
|
|||||||||||||
C$500
million
|
$
|
-
|
$
|
186.2
|
4.22
|
%
|
|||||||
Terasen
Pipelines (Corridor) Inc.
|
|||||||||||||
C$225
million
|
$
|
-
|
$
|
193.1
|
4.22
|
%
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
||||||||||||||||||||||||||
Seven
Months Ended
December
31, 2007
|
Five
Months Ended
May
31, 2007
|
Twelve
Months Ended
December
31, 2006
|
|||||||||||||||||||||||||
Average
Short-term
Debt
Outstanding
|
Weighted-
Average
Interest
Rate of
Short-term
Debt
Outstanding
|
Average
Short-term
Debt
Outstanding
|
Weighted-
Average
Interest
Rate of
Short-term
Debt
Outstanding
|
Average
Short-term
Debt
Outstanding
|
Weighted-
Average
Interest
Rate of
Short-term
Debt
Outstanding
|
||||||||||||||||||||||
(In
millions of U.S. dollars)
|
(In
millions of U.S. dollars)
|
||||||||||||||||||||||||||
Credit
Facilities:
|
|||||||||||||||||||||||||||
Knight Inc.1
|
|||||||||||||||||||||||||||
$1.0
billion
|
$
|
346.0
|
6.61
|
%
|
$
|
-
|
-
|
%
|
$
|
-
|
-
|
%
|
|||||||||||||||
Kinder Morgan, Inc.2
|
|||||||||||||||||||||||||||
$800
million
|
$
|
-
|
-
|
%
|
$
|
134.5
|
5.81
|
%
|
$
|
114.6
|
5.77
|
%
|
|||||||||||||||
|
|||||||||||||||||||||||||||
Commercial
Paper and Bankers’ Acceptances:
|
|||||||||||||||||||||||||||
Kinder Morgan, Inc.2
|
|||||||||||||||||||||||||||
$800
million
|
$
|
-
|
-
|
%
|
$
|
-
|
-
|
%
|
$
|
6.6
|
4.77
|
%
|
|||||||||||||||
Kinder
Morgan Energy Partners
|
|||||||||||||||||||||||||||
$1.85
billion
|
$
|
575.2
|
5.46
|
%
|
$
|
614.0
|
5.40
|
%
|
$
|
1,000.8
|
5.16
|
%
|
|||||||||||||||
Terasen Inc.3
|
|||||||||||||||||||||||||||
C$450
million
|
$
|
-
|
-
|
%
|
$
|
79.9
|
4.34
|
%
|
$
|
92.0
|
4.69
|
%
|
|||||||||||||||
Terasen Gas Inc.3
|
|||||||||||||||||||||||||||
C$500
million
|
$
|
-
|
-
|
%
|
$
|
141.5
|
4.23
|
%
|
$
|
169.3
|
4.03
|
%
|
|||||||||||||||
Terasen Pipelines (Corridor)
Inc.3
|
|||||||||||||||||||||||||||
C$375
million
|
$
|
443.7
|
4.33
|
%
|
$
|
298.8
|
4.24
|
%
|
$
|
134.9
|
3.93
|
%
|
1
|
In
conjunction with the Going Private transaction, Knight Inc. entered into a
$5.755 billion credit agreement dated May 30, 2007, which included three
term credit facilities, discussed following, and one revolving credit
facility. Knight Inc. does not have a commercial paper
program.
|
2
|
Our
$800 million credit facility was terminated on May 30,
2007.
|
3
|
On
February 26, 2007 and March 5, 2007, we entered into two definitive
agreements to sell Terasen Inc., including Terasen Gas Inc., and Terasen
Pipelines (Corridor) Inc., respectively. These transactions closed on May
17, 2007 and June 15, 2007, respectively (See Note 7). Accordingly, the
average short-term debt outstanding and the associated weighted-average
interest rate under the Terasen Inc. facilities for the five months ended
May 31, 2007 and under the Terasen Pipelines (Corridor) Inc. facility for
the seven months ended December 31, 2007 are only through the respective
dates of sale.
|
|
·
|
a
$1.0 billion senior secured Tranche A term loan facility with a term of
six years and six months (subsequently retired in February 2008, see
below);
|
|
·
|
a
$3.3 billion senior secured Tranche B term loan facility, with a term of
seven years (subsequently retired in February 2008, see
below);
|
|
·
|
a
$455 million senior secured Tranche C term loan facility with a term of
three years (subsequently retired in June 2007, see below)
and
|
|
·
|
a
$1.0 billion senior secured revolving credit facility with a term of six
years. The revolving credit facility includes a sublimit of $300 million
for the issuance of letters of credit and a sublimit of $50 million for
swingline loans.
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
|
·
|
a
rate equal to LIBOR (London Interbank Offered Rate) plus an applicable
margin, or
|
|
·
|
a
rate equal to the higher of (a) U.S. prime rate and (b) the federal funds
effective rate plus 0.50%, in each case, plus an applicable
margin.
|
|
·
|
a
rate equal to the higher of (a) U.S. prime rate and (b) the federal funds
effective rate plus 0.50%, in each case, plus an applicable
margin.
|
|
·
|
Total
debt divided by earnings before interest, income taxes, depreciation and
amortization for (i) the test period ending December 31, 2007 may not
exceed 8.75:1.00, (ii) January 1, 2008 to December 31, 2008 may not exceed
8.00:1.00, (iii) January 1, 2009 to December 31, 2009 may not exceed
7.00:1.00 and (iv) thereafter may not exceed
6.00:1.00
|
|
·
|
Certain
limitations on indebtedness, including payments and
amendments;
|
|
·
|
Certain
limitations on entering into mergers, consolidations, sales of assets and
investments;
|
|
·
|
Limitations
on granting liens; and
|
|
·
|
Prohibitions
on making any dividend to shareholders if an event of default exists or
would exist upon making such
dividend.
|
|
·
|
Nonpayment
of interest, principal or fees;
|
|
·
|
Failure
to make required payments under other agreements that exceed
$75,000,000;
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
|
·
|
Unsatisfied
and unbonded judgments (for a period of 60 days from entry) in excess of
$75,000,000; and
|
|
·
|
Voluntary
or involuntary bankruptcy or
liquidation.
|
|
·
|
Total
debt divided by earnings before interest, income taxes, depreciation and
amortization for the preceding four quarters may not exceed (i) 5.5, in
the case of any such period ended on the last day of (1) a fiscal quarter
in which Kinder Morgan Energy Partners makes any Specified Acquisition, or
(2) the first or second fiscal quarter next succeeding such a fiscal
quarter or (ii) 5.0, in the case of any such period ended on the last day
of any other fiscal quarter;
|
|
·
|
Certain
limitations on entering into mergers, consolidations and sales of
assets;
|
|
·
|
Limitations
on granting liens; and
|
|
·
|
Prohibitions
on making any distribution to holders of units if an event of default
exists or would exist upon making such
distribution.
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
|
·
|
Nonpayment
of interest, principal or fees;
|
|
·
|
Failure
to make required payments under hedging agreements that equal or exceed
$75 million;
|
|
·
|
Failure
of the general partner of Kinder Morgan Energy Partners to make required
payments equal to or in excess of $75
million;
|
|
·
|
Adverse
judgments in excess of $75 million;
and
|
|
·
|
Voluntary
or involuntary bankruptcy or
liquidation.
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
December
31,
|
|||||||
2007
|
2006
|
||||||
|
(In
millions)
|
||||||
Knight Inc.1
|
|||||||
Debentures:
|
|||||||
6.50%
Series, Due
2013
|
$
|
30.1
|
$
|
35.0
|
|||
6.67%
Series, Due
2027
|
148.3
|
150.0
|
|||||
7.25%
Series, Due
2028
|
494.3
|
493.0
|
|||||
7.45%
Series, Due
2098
|
146.3
|
150.0
|
|||||
Senior
Notes:
|
|||||||
6.80%
Series, Due
2008
|
-
|
300.0
|
|||||
6.50%
Series, Due
2012
|
1,010.5
|
1,000.0
|
|||||
5.15%
Series, Due
2015
|
231.2
|
250.0
|
|||||
Senior
Secured Credit Term Loan Facilities (See Note 10(A)):
|
|||||||
Tranche
A Term Loan, Due 2013
|
997.5
|
-
|
|||||
Tranche
B Term Loan, Due 2014
|
3,191.7
|
-
|
|||||
Deferrable
Interest Debentures Issued to Subsidiary Trusts:
|
|||||||
8.56%
Junior Subordinated Deferrable Interest Debentures Due
2027
|
106.9
|
103.1
|
|||||
7.63%
Junior Subordinated Deferrable Interest Debentures Due
2028
|
176.2
|
180.5
|
|||||
Carrying Value Adjustment for
Interest Rate Swaps2
|
-
|
24.1
|
|||||
|
|||||||
Unamortized
Gain (Loss) on Termination of Interest Rate Swap
|
11.5
|
(2.7
|
)
|
||||
|
|||||||
Kinder Morgan Finance Company,
ULC1
|
|||||||
5.35%
Series, Due 2011
|
738.5
|
750.0
|
|||||
5.70%
Series, Due 2016
|
801.9
|
850.0
|
|||||
6.40%
Series, Due 2036
|
503.8
|
550.0
|
|||||
Carrying Value Adjustment for
Interest Rate Swaps2
|
23.2
|
(18.7
|
)
|
||||
Unamortized
Gain on Termination of Interest Rate Swap
|
11.6
|
-
|
|||||
|
|||||||
$1,000
Liquidation Value Series A Fixed-to-Floating Rate Term Cumulative
Preferred Stock
|
100.0
|
-
|
|||||
|
|||||||
Kinder Morgan Energy
Partners1
|
|||||||
Senior
Notes:
|
|||||||
5.35%
Series, Due
2007
|
-
|
250.0
|
|||||
6.30%
Series, Due
2009
|
250.9
|
250.0
|
|||||
7.50%
Series, Due
2010
|
255.7
|
250.0
|
|||||
6.75%
Series, Due
2011
|
710.6
|
700.0
|
|||||
7.125%
Series, Due
2012
|
461.1
|
450.0
|
|||||
5.85%
Series, Due
2012
|
500.0
|
-
|
|||||
5.00%
Series, Due
2013
|
489.8
|
500.0
|
|||||
5.125%
Series, Due
2014
|
488.9
|
500.0
|
|||||
6.00%
Series, Due
2017
|
597.5
|
-
|
|||||
7.40%
Series, Due
2031
|
310.5
|
300.0
|
|||||
7.75%
Series, Due
2032
|
316.7
|
300.0
|
|||||
7.30%
Series, Due
2033
|
514.1
|
500.0
|
|||||
5.80%
Series, Due
2035
|
477.1
|
500.0
|
|||||
6.50%
Series, Due
2037
|
395.7
|
-
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
6.95%
Series, Due
2038
|
550.0
|
-
|
|||||
Other
|
1.1
|
1.1
|
|||||
Carrying Value Adjustment for
Interest Rate Swaps2
|
146.2
|
42.6
|
|||||
Unamortized
Gain on Termination of Interest Rate Swap
|
7.2
|
-
|
|||||
Central
Florida Pipe Line LLC
|
|||||||
7.84%
Series, Due
2008
|
5.0
|
10.0
|
|||||
|
|||||||
Arrow Terminals
L.P.
|
|||||||
Illinois
Development Finance Authority Adjustable Rate Industrial Development
Revenue Bonds, Due 2010, weighted-average interest rate of 3.87% for the
five months ended May 31, 2007 and 3.77% for the seven months ended
December 31, 2007 (2006 - 4.089%)
|
5.3
|
5.3
|
|||||
|
|||||||
Kinder
Morgan Texas Pipeline, L.P.
|
|||||||
8.85%
Series, Due
2014
|
43.2
|
49.1
|
|||||
|
|||||||
KM
Liquids Terminals LLC
|
|||||||
New
Jersey Economic Development Revenue Refunding Bonds, Due 2018,
weighted-average interest rate of 3.63% for the five months ended May 31,
2007 and 3.48 % for the seven months ended December 31, 2007 (2006 -
3.87%)
|
25.0
|
25.0
|
|||||
|
|||||||
Kinder
Morgan Operating, L.P. “A” and Kinder Morgan Canada
|
|||||||
5.40%
Note, Due 2012
|
44.6
|
-
|
|||||
|
|||||||
Kinder
Morgan Operating, L.P. “B”
|
|||||||
Jackson-Union
Counties Illinois Regional Port District Tax-exempt Floating Rate Bonds,
Due 2024, weighted-average interest rate of 3.58% for the five months
ended May 31, 2007 and 3.68% for the seven months ended December 31, 2007
(2006 - 3.90%)
|
23.7
|
23.7
|
|||||
Other
|
0.2
|
0.2
|
|||||
|
|||||||
International
Marine Terminals
|
|||||||
Plaquemines
Port, Harbor and Terminal District (Louisiana) Adjustable Rate Annual
Tender Port Facilities Revenue Refunding Bonds, Due 2025, weighted-average
interest rate of 3.59% for the five months ended May 31, 2007 and 3.65%
for the seven months ended December 31, 2007 (2006 -
3.50%)
|
40.0
|
40.0
|
|||||
|
|||||||
Terasen Inc.3
|
|||||||
Medium
Term Notes:
|
|||||||
6.30%
Series 1, Due 20084
|
-
|
178.3
|
|||||
5.56%
Series 3, Due 20144
|
-
|
112.4
|
|||||
8% Capital Securities, Due
20404
|
-
|
106.9
|
|||||
Carrying Value Adjustment for
Interest Rate Swaps2
|
-
|
1.1
|
|||||
|
|||||||
Terasen Gas Inc.
3
|
|||||||
Purchase
Money Mortgages:
|
|||||||
11.80%
Series A, Due 2015
|
-
|
64.3
|
|||||
10.30%
Series B, Due 2016
|
-
|
171.6
|
|||||
Debentures
and Medium Term Notes:
|
|||||||
10.75%
Series E, Due 2009
|
-
|
51.4
|
|||||
6.20%
Series 9, Due 2008
|
-
|
161.4
|
|||||
6.95%
Series 11, Due 2029
|
-
|
128.7
|
|||||
6.50%
Series 13, Due 2007
|
-
|
85.8
|
|||||
6.50%
Series 18, Due 2034
|
-
|
128.7
|
|||||
5.90%
Series 19, Due 2035
|
-
|
128.7
|
|||||
5.55%
Series 21, Due 2036
|
-
|
103.0
|
|||||
Floating
Rate Series 20, interest rate of 4.55% in 2006, Due 2007
|
-
|
128.7
|
|||||
Obligations
under Capital Leases, at interest rate of 5.62% in 2006
|
-
|
6.2
|
|||||
|
|||||||
Terasen Gas (Vancouver Island)
Inc.3
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Syndicated
credit facility at short-term floating rates,
weighted-average
interest
rate of 4.43% for the five months ended May 31, 2007 (2006 –
4.41%)
|
-
|
257.2
|
|||||
Government
Loans
|
-
|
3.1
|
|||||
Terasen Pipelines (Corridor)
Inc.3
|
|||||||
Debentures:
|
|||||||
4.24%
Series A, Due 2010
|
-
|
128.7
|
|||||
5.033%
Series B, Due 2015
|
-
|
128.7
|
|||||
Unamortized
Premium on Long-term Debt
|
-
|
2.5
|
|||||
Unamortized
Debt Discount on Long-term Debt
|
(6.4
|
)
|
(16.7
|
)
|
|||
Current
Maturities of Long-term Debt
|
(79.8
|
)
|
(511.2
|
)
|
|||
Total
Long-term
Debt
|
$
|
15,297.4
|
$
|
11,060.8
|
1
|
Includes
purchase accounting adjustments to the carrying value of the debt to
reflect fair value at the time of the Going Private transaction (See Note
1(B)). The purchase accounting adjustments are being amortized over the
remaining lives of the debt
securities.
|
2
|
Adjustment
of carrying value of long-term securities subject to outstanding interest
rate swaps; see Note 11.
|
3
|
We
closed transactions to sell Terasen Inc., which included Terasen Gas Inc.
and Terasen Gas (Vancouver Island) Inc., and Terasen Pipelines (Corridor)
Inc. on May 17, 2007 and June 15, 2007, respectively (see Note 7).
Accordingly, the weighted-average interest rate under the Terasen Gas
(Vancouver Island) Inc. facility for the five months ended May 31, 2007 is
only through the Terasen Inc. date of sale. Debt shown in the above table
for Terasen Inc. and its subsidiaries is denominated in Canadian dollars
but has been converted to and reported above in U.S. dollars at the
exchange rate at December 31, 2006 of 0.8581 U.S. dollars per Canadian
dollar.
|
4
|
Includes
purchase accounting adjustments made to adjust the carrying values of the
debt instruments and related interest rate swap agreements to their fair
values at the date of acquisition. The adjustments were being amortized
over the remaining lives of the Medium-Term Notes and Capital Securities
until their disposition (see Note
4).
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||
December
31,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(In
millions)
|
(In
millions)
|
|||||||
Derivatives
Asset (Liability)
|
||||||||
Current
Assets: Other
|
$
|
37.1
|
$
|
133.6
|
||||
Current
Assets: Assets Held for Sale
|
$
|
8.4
|
$
|
9.0
|
||||
Deferred
Charges and Other Assets
|
$
|
4.4
|
$
|
13.8
|
||||
Assets
Held for Sale, Non-current
|
$
|
-
|
$
|
0.1
|
||||
Current
Liabilities: Other
|
$
|
(594.7
|
)
|
$
|
(556.9
|
)
|
||
Current
Liabilities: Liabilities Held for Sale
|
$
|
(0.4
|
)
|
$
|
(18.0
|
)
|
||
Other
Liabilities and Deferred Credits: Other
|
$
|
(836.8
|
)
|
$
|
(510.2
|
)
|
||
Other
Liabilities and Deferred Credits: Liabilities Held for Sale,
Non-current
|
$
|
-
|
$
|
(0.1
|
)
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
Ended
December
31,
|
Five
Months
Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Net
Periodic Pension Benefit Cost:
|
||||||||||||||||
Service
Cost
|
$
|
5.6
|
$
|
4.5
|
$
|
10.6
|
$
|
9.6
|
||||||||
Interest
Cost
|
8.1
|
5.6
|
12.7
|
12.1
|
||||||||||||
Expected
Return on Assets
|
(14.0
|
)
|
(9.6
|
)
|
(21.3
|
)
|
(20.2
|
)
|
||||||||
Amortization
of Transition Asset
|
-
|
-
|
-
|
(0.1
|
)
|
|||||||||||
Amortization
of Prior Service Cost
|
-
|
0.1
|
0.2
|
0.2
|
||||||||||||
Amortization
of Loss
|
-
|
0.2
|
0.9
|
0.6
|
||||||||||||
Net
Periodic Pension Benefit Cost
|
$
|
(0.3
|
)
|
$
|
0.8
|
$
|
3.1
|
$
|
2.2
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Seven
Months
Ended
December
31, 2007
|
Five
Months
Ended
May
31, 2007
|
Year
Ended
December
31, 2006
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Benefit
Obligation at Beginning of Period
|
$
|
236.5
|
$
|
232.0
|
$
|
224.5
|
||||||
Service
Cost
|
5.6
|
4.5
|
10.6
|
|||||||||
Interest
Cost
|
8.1
|
5.6
|
12.7
|
|||||||||
Actuarial
Loss (Gain)
|
18.5
|
(2.5
|
)
|
(4.3
|
)
|
|||||||
Plan
Amendments
|
-
|
2.7
|
-
|
|||||||||
Business
Combinations/Mergers
|
-
|
-
|
0.2
|
|||||||||
Benefits
Paid
|
(10.7
|
)
|
(5.8
|
)
|
(11.7
|
)
|
||||||
Benefit
Obligation at End of Period
|
$
|
258.0
|
$
|
236.5
|
$
|
232.0
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Seven
Months
Ended
December
31, 2007
|
Five
Months
Ended
May
31, 2007
|
Year
Ended
December
31, 2006
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Fair
Value of Plan Assets at Beginning of Period
|
$
|
273.4
|
$
|
261.6
|
$
|
242.4
|
||||||
Actual
Return on Plan Assets During the Period
|
1.9
|
17.6
|
30.7
|
|||||||||
Contributions
by Employer
|
-
|
-
|
-
|
|||||||||
Benefits
Paid During the Period
|
(10.7
|
)
|
(5.8
|
)
|
(11.7
|
)
|
||||||
Business
Combinations/Mergers
|
-
|
-
|
0.2
|
|||||||||
Fair
Value of Plan Assets at End of Period
|
264.6
|
273.4
|
261.6
|
|||||||||
Benefit
Obligation at End of Period
|
(258.0
|
)
|
(236.5
|
)
|
(232.0
|
)
|
||||||
Funded
Status at End of Period
|
$
|
6.6
|
$
|
36.9
|
$
|
29.6
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Seven
Months
Ended
December
31, 2007
|
Five
Months
Ended
May
31, 2007
|
Year
Ended
December
31, 2006
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Application
of SFAS 158 – Net Loss
|
$
|
-
|
$
|
-
|
$
|
19.6
|
||||||
Application
of SFAS 158 – Prior Service Cost
|
-
|
-
|
1.5
|
|||||||||
Net
(Gain)/Loss Arising During Period
|
30.6
|
(10.5
|
)
|
-
|
||||||||
Prior
Service Cost Arising During Period
|
-
|
2.7
|
-
|
|||||||||
Business
Combinations
|
-
|
(13.0
|
)
|
-
|
||||||||
Amortization
of (Gain)/Loss
|
-
|
(0.2
|
)
|
-
|
||||||||
Amortization
of Prior Service Cost
|
-
|
(0.1
|
)
|
-
|
||||||||
$
|
30.6
|
$
|
(21.1
|
)
|
$
|
21.1
|
Fiscal
Year
|
Expected
Net
Benefit
Payments
|
|||
(In
millions)
|
||||
2008
|
$
|
13.7
|
||
2009
|
$
|
14.9
|
||
2010
|
$
|
15.9
|
||
2011
|
$
|
17.4
|
||
2012
|
$
|
18.8
|
||
2013-2016
|
$
|
114.2
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
Ended
December
31,
|
Five
Months
Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||||||
Net
Periodic Postretirement Benefit Cost:
|
||||||||||||||||
Service
Cost
|
$
|
0.2
|
$
|
0.2
|
$
|
0.4
|
$
|
0.4
|
||||||||
Interest
Cost
|
2.7
|
1.9
|
4.9
|
5.3
|
||||||||||||
Expected
Return on Assets
|
(3.9
|
)
|
(2.7
|
)
|
(5.8
|
)
|
(5.7
|
)
|
||||||||
Amortization
of Prior Service Credit
|
-
|
(0.7
|
)
|
(1.6
|
)
|
(1.7
|
)
|
|||||||||
Amortization
of Loss
|
-
|
2.0
|
5.2
|
5.0
|
||||||||||||
Net
Periodic Postretirement Benefit Cost
|
$
|
(1.0
|
)
|
$
|
0.7
|
$
|
3.1
|
$
|
3.3
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Seven
Months
Ended
December
31,
2007
|
Five
Months
Ended
May
31, 2007
|
December
31,
2006
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Benefit
Obligation at Beginning of Period
|
$
|
78.7
|
$
|
84.0
|
$
|
89.8
|
||||||
Service
Cost
|
0.2
|
0.2
|
0.4
|
|||||||||
Interest
Cost
|
2.7
|
1.9
|
4.9
|
|||||||||
Actuarial
Loss (Gain)
|
7.5
|
(3.5
|
)
|
(3.5
|
)
|
|||||||
Benefits
Paid
|
(8.5
|
)
|
(5.3
|
)
|
(10.8
|
)
|
||||||
Retiree
Contributions
|
1.4
|
1.4
|
2.7
|
|||||||||
Plan
Amendments
|
-
|
-
|
0.5
|
|||||||||
Benefit
Obligation at End of Period
|
$
|
82.0
|
$
|
78.7
|
$
|
84.0
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Seven
Months
Ended
December
31,
2007
|
Five
Months
Ended
May
31, 2007
|
December
31,
2006
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Fair
Value of Plan Assets at Beginning of Period
|
$
|
76.9
|
$
|
67.5
|
$
|
59.4
|
||||||
Actual
Return on Plan Assets
|
0.1
|
4.5
|
7.2
|
|||||||||
Contributions
by Employer
|
-
|
8.7
|
8.7
|
|||||||||
Retiree
Contributions
|
1.6
|
1.2
|
2.7
|
|||||||||
Transfers
In
|
0.1
|
-
|
-
|
|||||||||
Benefits
Paid
|
(9.5
|
)
|
(5.0
|
)
|
(10.5
|
)
|
||||||
Fair
Value of Plan Assets at End of Period
|
69.2
|
76.9
|
67.5
|
|||||||||
Benefit
Obligation at End of Period
|
(82.0
|
)
|
(78.7
|
)
|
(84.0
|
)
|
||||||
Funded
Status at End of Period
|
$
|
(12.8
|
)
|
$
|
(1.8
|
)
|
$
|
(16.5
|
)
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
Seven
Months
Ended
December
31, 2007
|
Five
Months
Ended
May
31, 2007
|
Year
Ended
December
31, 2006
|
||||||||||
(In
millions)
|
(In
millions)
|
|||||||||||
Application
of SFAS 158 – Net Loss
|
$
|
-
|
$
|
-
|
$
|
60.2
|
||||||
Application
of SFAS 158 – Prior Service Cost
|
-
|
-
|
(15.8
|
)
|
||||||||
Net
(Gain)/Loss Arising During Period
|
12.0
|
(5.4
|
)
|
-
|
||||||||
Business
Combinations
|
-
|
(37.7
|
)
|
-
|
||||||||
Amortization
of (Gain)/Loss
|
-
|
(2.0
|
)
|
-
|
||||||||
Amortization
of Prior Service Cost
|
-
|
0.7
|
-
|
|||||||||
$
|
12.0
|
$
|
(44.4
|
)
|
$
|
44.4
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Fiscal
Year
|
Expected
Net
Benefit
Payments
|
|||
(In
millions)
|
||||
2008
|
$
|
7.7
|
||
2009
|
$
|
7.5
|
||
2010
|
$
|
7.2
|
||
2011
|
$
|
7.0
|
||
2012
|
$
|
6.8
|
||
2013-2016
|
$
|
31.8
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
Ended
December
31,
|
Five
Months
Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
Discount
Rate
|
5.75
|
%
|
6.00
|
%
|
6.00%
|
5.75%
|
||||||||||
Expected
Long-term Return on Assets
|
9.00
|
%
|
9.00
|
%
|
9.00%
|
9.00%
|
||||||||||
Rate
of Compensation Increase (Pension Plan Only)
|
3.50
|
%
|
3.50
|
%
|
3.50%
|
3.50%
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
Ended
December
31,
|
Five
Months
Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
Discount
Rate
|
6.00
|
%
|
6.00
|
%
|
5.75%
|
6.00%
|
||||||||||
Expected
Long-term Return on Assets
|
9.00
|
%
|
9.00
|
%
|
9.00%
|
9.00%
|
||||||||||
Rate
of Compensation Increase (Pension Plan Only)
|
3.50
|
%
|
3.50
|
%
|
3.50%
|
3.50%
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months
Ended
December
31,
|
Five
Months
Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
Healthcare
Cost Trend Rate Assumed for Next Year
|
3.0%
|
3.0%
|
3.0%
|
3.0%
|
||||||||||||
Rate
to which the Cost Trend Rate is Assumed to Decline (Ultimate Trend
Rate)
|
3.0%
|
3.0%
|
3.0%
|
3.0%
|
||||||||||||
Year
the Rate Reaches the Ultimate Trend Rate
|
2007
|
2007
|
2006
|
2005
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Year
Ended
December
31, 2006
|
Month
Ended
December
31, 2005
|
||||||||||||||
Pension
Benefit
Plans
|
Postretirement
Benefit
Plans
|
Pension
Benefit
Plans
|
Postretirement
Benefit
Plans
|
||||||||||||
(In
millions)
|
|||||||||||||||
Service
Cost
|
$
|
7.7
|
$
|
1.5
|
$
|
0.7
|
$
|
0.1
|
|||||||
Interest
Cost
|
14.8
|
3.6
|
1.2
|
0.3
|
|||||||||||
Expected
Return on Assets
|
(17.4
|
)
|
-
|
(1.6
|
)
|
-
|
|||||||||
Expense
Load
|
0.1
|
0.1
|
-
|
-
|
|||||||||||
Actuarial
Loss
|
0.2
|
-
|
-
|
-
|
|||||||||||
Special
Termination Benefits
|
0.4
|
-
|
-
|
-
|
|||||||||||
Net
Periodic Pension Benefit Cost
|
5.8
|
5.2
|
0.3
|
0.4
|
|||||||||||
Defined
Contribution Cost
|
0.1
|
-
|
0.2
|
-
|
|||||||||||
Total
Benefit Expense
|
$
|
5.9
|
$
|
5.2
|
$
|
0.5
|
$
|
0.4
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Year
Ended
December
31, 2006
|
|||||||
Pension
Benefit
Plans
|
Postretirement
Benefit
Plans
|
||||||
(In
millions)
|
|||||||
Benefit
Obligation at Beginning of Period
|
$
|
296.1
|
$
|
70.5
|
|||
Change
in Foreign Exchange Rates
|
(0.6
|
)
|
(0.2
|
)
|
|||
Service
Cost
|
7.7
|
1.5
|
|||||
Interest
Cost
|
14.8
|
3.6
|
|||||
Change
in Discount Rate
|
-
|
-
|
|||||
Actuarial
Loss
|
11.5
|
3.0
|
|||||
Contributions
by Members
|
2.9
|
-
|
|||||
Special
Termination Benefits
|
0.4
|
-
|
|||||
Benefits
Paid
|
(15.3
|
)
|
(1.5
|
)
|
|||
Benefit
Obligation at End of Period
|
$
|
317.5
|
$
|
76.9
|
Year
Ended
December
31, 2006
|
|||||||
Pension
Benefit
Plans
|
Postretirement
Benefit
Plans
|
||||||
(In
millions)
|
|||||||
Fair
Value of Plan Assets at Beginning of Period
|
$
|
256.7
|
$
|
-
|
|||
Change
in Foreign Exchange Rates
|
(0.5
|
)
|
-
|
||||
Actual
Return on Plan Assets During the Period
|
35.9
|
-
|
|||||
Contributions
by Employer
|
7.6
|
1.6
|
|||||
Contributions
by Members
|
2.9
|
-
|
|||||
Expense
Load
|
(0.1
|
)
|
(0.1
|
)
|
|||
Benefits
Paid During the Period
|
(15.3
|
)
|
(1.5
|
)
|
|||
Fair
Value of Plan Assets at End of Year
|
287.2
|
-
|
|||||
Benefit
Obligation at End of Year
|
(317.5
|
)
|
(76.9
|
)
|
|||
Funded
Status at End of Year
|
$
|
(30.3
|
)
|
$
|
(76.9
|
)
|
December
31, 2006
|
|||||||
Pension
Benefit
Plans
|
Postretirement
Benefit
Plans
|
||||||
(In
millions)
|
|||||||
Non-current
Assets
|
$
|
10.2
|
$
|
-
|
|||
Non-current
Liabilities
|
(40.5
|
)
|
(76.9
|
)
|
|||
$
|
(30.3
|
)
|
$
|
(76.9
|
)
|
December
31, 2006
|
|||||||
Pension
Benefit
Plans
|
Postretirement
Benefit
Plans
|
||||||
(In
millions)
|
|||||||
Net
Loss
|
$
|
2.2
|
$
|
5.4
|
|||
Prior
Service Cost (Credit)1
|
-
|
-
|
|||||
$
|
2.2
|
$
|
5.4
|
1
|
Net
prior service credit for the pension benefit plan was less than $0.1
million at December 31, 2006.
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
|
(C)
Actuarial Assumptions
|
December
31,
|
|||
2006
|
2005
|
||
Discount
Rate
|
5.00%
|
5.00%
|
|
Expected
Long-term Return on Assets
|
7.25%
|
7.50%
|
|
Rate
of Compensation Increase (Pension Plan Only)1
|
3.84%
|
3.50%
|
1
|
Rate
of compensation increase is for the next five years. Thereafter, the rate
decreases to 3.50%.
|
Year
Ended
December
31,
|
Month
Ended
December
31,
|
||
2006
|
2005
|
||
Discount
Rate
|
5.00%
|
5.25%
|
|
Expected
Long-term Return on Assets
|
7.25%
|
7.50%
|
|
Rate
of Compensation Increase (Pension Plan Only)
|
3.84%
|
3.50%
|
December
31,
|
|||
2006
|
2005
|
||
Healthcare
Cost Trend Rate Assumed for Next Year
|
10.0%
|
7.0%
|
|
Rate
to which the Cost Trend Rate is Assumed to Decline (Ultimate Trend
Rate)
|
5.0%
|
5.0%
|
|
Year
the Rate Reaches the Ultimate Trend Rate
|
2011
|
2008
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Predecessor
Company
|
|||||||||||||
Five
Months Ended
May 31, 20071
|
Year
Ended
December
31, 2006
|
||||||||||||
Shares
|
Weighted
Average
Grant
Date
Fair
Value
|
Shares
|
Weighted
Average
Grant
Date
Fair
Value
|
||||||||||
(Dollars
in millions)
|
|||||||||||||
Outstanding
at Beginning of Period
|
812,240
|
$
|
55.6
|
880,310
|
$
|
56.6
|
|||||||
Granted
|
-
|
-
|
89,400
|
8.7
|
|||||||||
Reinstated
|
-
|
-
|
50,000
|
2.7
|
|||||||||
Vested
|
(59,117
|
)
|
(4.8
|
)
|
(193,620
|
)
|
(11.3
|
)
|
|||||
Forfeited
|
(12,016
|
)
|
(1.0
|
)
|
(13,850
|
)
|
(1.1
|
)
|
|||||
Outstanding
at End of Period
|
741,107
|
$
|
49.8
|
812,240
|
$
|
55.6
|
|||||||
Intrinsic
Value of Restricted Stock Vested
During the Period
|
$
|
3.6
|
$
|
19.2
|
1
|
As
discussed above, all remaining restricted stock at the end of the period
became fully vested and was exercised upon the closing of the Going
Private transaction.
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Predecessor
Company
|
||||||||||||||||||||
Five
Months Ended
|
Year
Ended December 31,
|
|||||||||||||||||||
May 31, 20071
|
2006
|
2005
|
||||||||||||||||||
Shares
|
Weighted
Average
Exercise
Price
|
Shares
|
Weighted
Average
Exercise
Price
|
Shares
|
Weighted
Average
Exercise
Price
|
|||||||||||||||
Outstanding
at Beginning of Period
|
2,604,217
|
$
|
46.02
|
3,421,849
|
$
|
45.21
|
5,026,436
|
$
|
44.18
|
|||||||||||
Granted
|
-
|
$
|
-
|
-
|
$
|
-
|
-
|
$
|
-
|
|||||||||||
Exercised
|
(160,838
|
)
|
$
|
44.67
|
(618,746
|
)
|
$
|
44.82
|
(1,505,399
|
)
|
$
|
41.48
|
||||||||
Forfeited
|
(35,975
|
)
|
$
|
50.10
|
(198,886
|
)
|
$
|
41.95
|
(99,188
|
)
|
$
|
50.48
|
||||||||
Outstanding
at End of Period
|
2,407,404
|
$
|
46.06
|
2,604,217
|
$
|
46.02
|
3,421,849
|
$
|
45.21
|
|||||||||||
Exercisable
at End of Period
|
2,183,379
|
$
|
44.55
|
2,310,392
|
$
|
44.49
|
2,260,059
|
$
|
41.01
|
|||||||||||
Weighted-Average
Fair Value of Options Granted
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||
Aggregate
Intrinsic Value of Options Exercisable at End of Period (in
millions)
|
$
|
142.0
|
$
|
147.9
|
||||||||||||||||
Intrinsic
Value of Options Exercised During the Period (In millions)
|
$
|
9.9
|
$
|
34.1
|
||||||||||||||||
Cash
Received from Exercise of Options During the Period (In
millions)
|
$
|
7.2
|
$
|
27.7
|
1
|
As
discussed above, all remaining stock options at the end of the period
became fully vested and were exercised upon the closing of the Going
Private transaction.
|
Predecessor
Company
|
||||||||||||
Options
Outstanding
|
Options
Exercisable
|
|||||||||||
Price
Range
|
Number
Outstanding
|
Wtd.
Avg. Exercise
Price
|
Wtd.
Avg. Remaining Contractual Life
|
Number
Exercisable
|
Wtd.
Avg. Exercise
Price
|
|||||||
$00.00
- $23.81
|
358,280
|
$
|
23.81
|
2.35
years
|
358,280
|
$
|
23.81
|
|||||
$24.75
- $43.10
|
505,674
|
$
|
35.99
|
4.02
years
|
505,474
|
$
|
35.99
|
|||||
$49.00
- $53.20
|
585,278
|
$
|
50.76
|
3.74
years
|
585,078
|
$
|
50.76
|
|||||
$53.60
- $60.18
|
663,097
|
$
|
55.00
|
3.75
years
|
663,072
|
$
|
55.00
|
|||||
$60.79
- $61.40
|
295,075
|
$
|
60.91
|
4.52
years
|
71,475
|
$
|
61.30
|
|||||
2,407,404
|
$
|
46.06
|
3.69
years
|
2,183,379
|
$
|
44.55
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Year
|
Operating
Leases1
|
|||
2008
|
$
|
57.9
|
||
2009
|
49.4
|
|||
2010
|
46.4
|
|||
2011
|
42.5
|
|||
2012
|
39.1
|
|||
Thereafter
|
439.3
|
|||
Total
|
$
|
674.6
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
1
|
Approximately
$2.3 million, $0.3 million, $0.3 million, $0.3 million, $0.3 million and
$2.2 million in 2008, 2009, 2010, 2011, 2012 and thereafter, respectively,
is attributable to operating lease obligations associated with our NGPL
business segment classified as held for
sale.
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
December
31, 2007
|
December 31, 20061
|
|||||||||||
Property,
Plant and
Equipment
|
$
|
2.2
|
$
|
22.6
|
||||||||
Less:
Accumulated Amortization
|
(0.3
|
)
|
(15.3
|
)
|
||||||||
$
|
1.9
|
$
|
7.3
|
1
|
Approximately
$18.5 million of property, plant and equipment and $12.3 million of
accumulated amortization are associated with our discontinued
operations.
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
|
15.
Business Segment Information
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months Ended
December
31,
|
Five
Months Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
Segment
Earnings before Depreciation, Depletion, Amortization and Amortization of
Excess Cost of Equity Investments:
|
||||||||||||||||
NGPL
|
$
|
422.8
|
$
|
267.4
|
$
|
603.5
|
$
|
534.8
|
||||||||
Power
|
13.4
|
8.9
|
23.2
|
16.5
|
||||||||||||
Express
|
14.4
|
5.4
|
17.2
|
2.0
|
||||||||||||
Products
Pipelines – KMP1
|
162.5
|
224.4
|
467.9
|
-
|
||||||||||||
Natural
Gas Pipelines – KMP1
|
373.3
|
228.5
|
574.8
|
-
|
||||||||||||
CO2 –
KMP1
|
433.0
|
210.0
|
488.2
|
-
|
||||||||||||
Terminals
– KMP1
|
243.7
|
172.3
|
408.1
|
-
|
||||||||||||
Trans
Mountain – KMP1
|
43.8
|
(337.4
|
)
|
76.5
|
-
|
|||||||||||
Total
Segment Earnings Before DD&A
|
1,706.9
|
779.5
|
2,659.4
|
553.3
|
||||||||||||
Depreciation,
Depletion and Amortization
|
(472.3
|
)
|
(261.0
|
)
|
(531.4
|
)
|
(104.6
|
)
|
||||||||
Amortization
of Excess Cost of Equity Investments
|
(3.4
|
)
|
(2.4
|
)
|
(5.6
|
)
|
-
|
|||||||||
Earnings
from Investment in Kinder Morgan Energy Partners2
|
-
|
-
|
-
|
605.4
|
||||||||||||
Other
|
0.3
|
2.9
|
8.2
|
6.5
|
||||||||||||
Interest
and Corporate Expenses, Net3, 4,
5,
|
(799.6
|
)
|
(631.8
|
)
|
(1,273.3
|
)
|
(209.3
|
)
|
||||||||
Add
Back Income Taxes Included in Segments Above1
|
44.0
|
15.6
|
29.0
|
-
|
||||||||||||
Income
from Continuing Operations Before Income Taxes
|
$
|
475.9
|
$
|
(97.2
|
)
|
$
|
886.3
|
$
|
851.3
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months Ended
December
31,
|
Five
Months Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
Revenues
from External Customers
|
||||||||||||||||
NGPL
|
$
|
752.4
|
$
|
424.5
|
$
|
1,114.4
|
$
|
947.3
|
||||||||
Power
|
40.2
|
19.9
|
60.0
|
54.2
|
||||||||||||
Products
Pipelines – KMP
|
471.4
|
331.9
|
732.5
|
-
|
||||||||||||
Natural
Gas Pipelines – KMP
|
3,825.9
|
2,637.6
|
6,558.4
|
-
|
||||||||||||
CO2 –
KMP
|
605.9
|
324.2
|
736.5
|
-
|
||||||||||||
Terminals
– KMP
|
598.8
|
364.2
|
864.1
|
-
|
||||||||||||
Trans
Mountain – KMP
|
98.0
|
62.8
|
137.8
|
-
|
||||||||||||
Other6
|
2.1
|
-
|
4.9
|
24.1
|
||||||||||||
Total
Revenues
|
$
|
6,394.7
|
$
|
4,165.1
|
$
|
10,208.6
|
$
|
1,025.6
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months Ended
December
31,
|
Five
Months Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
Intersegment
Revenues
|
||||||||||||||||
NGPL
|
$
|
4.8
|
$
|
2.0
|
$
|
3.6
|
$
|
-
|
||||||||
Natural
Gas Pipelines – KMP
|
-
|
3.0
|
19.3
|
-
|
||||||||||||
Terminals
– KMP
|
0.4
|
0.3
|
0.7
|
-
|
||||||||||||
Total
Intersegment
Revenues
|
$
|
5.2
|
$
|
5.3
|
$
|
23.6
|
$
|
-
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months Ended
December
31,
|
Five
Months Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
Depreciation,
Depletion and Amortization
|
||||||||||||||||
NGPL
|
$
|
42.3
|
$
|
45.3
|
$
|
104.5
|
$
|
99.6
|
||||||||
Power
|
0.2
|
(4.2
|
)
|
2.1
|
3.3
|
|||||||||||
Products
Pipelines – KMP
|
58.1
|
33.6
|
74.0
|
-
|
||||||||||||
Natural
Gas Pipelines – KMP
|
52.3
|
26.8
|
65.4
|
-
|
||||||||||||
CO2 –
KMP
|
243.5
|
116.3
|
190.9
|
-
|
||||||||||||
Terminals
– KMP
|
62.1
|
34.4
|
74.6
|
-
|
||||||||||||
Trans
Mountain – KMP
|
13.3
|
8.2
|
19.0
|
-
|
||||||||||||
Other
|
0.5
|
0.6
|
0.9
|
1.7
|
||||||||||||
Total
Consolidated Depreciation, Depletion and Amortization
|
$
|
472.3
|
$
|
261.0
|
$
|
531.4
|
$
|
104.6
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months Ended
December
31,
|
Five
Months Ended
|
Year
Ended December 31,
|
||||||||||||||
2007
|
May
31, 2007
|
2006
|
2005
|
|||||||||||||
Capital
Expenditures
|
||||||||||||||||
NGPL
|
$
|
152.0
|
$
|
77.3
|
$
|
193.4
|
$
|
129.7
|
||||||||
Power
|
-
|
-
|
-
|
-
|
||||||||||||
Products
Pipelines – KMP
|
179.9
|
79.5
|
196.0
|
-
|
||||||||||||
Natural
Gas Pipelines – KMP
|
197.4
|
66.6
|
271.6
|
-
|
||||||||||||
CO2 –
KMP
|
249.2
|
133.3
|
283.0
|
-
|
||||||||||||
Terminals
– KMP
|
310.1
|
169.9
|
307.7
|
-
|
||||||||||||
Trans
Mountain – KMP
|
196.7
|
109.0
|
123.8
|
-
|
||||||||||||
Other
|
1.7
|
17.2
|
0.1
|
4.4
|
||||||||||||
Total
Consolidated Capital Expenditures
|
$
|
1,287.0
|
$
|
652.8
|
$
|
1,375.6
|
$
|
134.1
|
Successor
Company
|
Predecessor
Company
|
|||||||||||
2007
|
2006
|
2005
|
||||||||||
Assets
at December 317
|
||||||||||||
NGPL
|
$
|
720.0
|
$
|
5,728.9
|
$
|
5,597.8
|
||||||
Power
|
120.6
|
387.4
|
372.5
|
|||||||||
Express
|
404.3
|
449.7
|
431.9
|
|||||||||
Products
Pipelines – KMP
|
6,941.4
|
4,812.9
|
-
|
|||||||||
Natural
Gas Pipelines – KMP
|
8,439.8
|
3,796.6
|
-
|
|||||||||
CO2 –
KMP
|
3,919.2
|
1,875.6
|
-
|
|||||||||
Terminals
– KMP
|
4,643.3
|
2,564.1
|
-
|
|||||||||
Trans
Mountain – KMP
|
1,473.5
|
2,094.8
|
-
|
|||||||||
Total
segment assets
|
26,662.1
|
21,710.0
|
6,402.2
|
|||||||||
Investment
in Kinder Morgan Energy Partners
|
-
|
-
|
2,202.9
|
|||||||||
Goodwill7
|
-
|
-
|
2,781.0
|
|||||||||
Assets
Held for Sale
|
8,987.9
|
510.2
|
-
|
|||||||||
Other8
|
451.0
|
4,575.4
|
6,065.5
|
|||||||||
Total
Consolidated Assets
|
$
|
36,101.0
|
$
|
26,795.6
|
$
|
17,451.6
|
1
|
Income
taxes of Kinder Morgan Energy Partners of $44.0 million, $15.6 million and
$29.0 million for the seven months ended December 31, 2007, the five
months ended May 31, 2007 and the twelve months ended December 31, 2006,
respectively, are included in segment
earnings
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
2
|
Equity
in Earnings of Kinder Morgan Energy Partners for 2005 includes a reduction
in pre-tax earnings of approximately $63.3 million ($40.3 million after
tax) resulting principally from the effects of certain regulatory,
environmental, litigation and inventory items on Kinder Morgan Energy
Partners’ earnings.
|
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
|
Results
for 2006 include a reduction in pre-tax income of $22.3 million ($14.1
million after tax) resulting from non-cash charges to mark to market
certain interest rate swaps.
|
5
|
Results
for 2005 include (i) pre-tax gains of $78.5 million from the sale of
Kinder Morgan Management shares and (ii) a pre-tax charge of $15.0 million
for our contribution to the Kinder Morgan
Foundation.
|
6
|
Includes
revenues of $10.8 million from KM Insurance Ltd., our wholly owned
subsidiary that was formed during the second quarter of 2005 for the
purpose of providing insurance services to Knight Inc. and Kinder Morgan
Energy Partners. KM Insurance Ltd. was formed as a Class 2 Bermuda
insurance company, the sole business of which is to issue policies for
Knight Inc. and Kinder Morgan Energy Partners to secure the deductible
portion of our workers’ compensation, automobile liability and general
liability policies placed in the commercial insurance market. Due to our
adoption of EITF 04-5 (see Note 1(B)), effective January 1, 2006 the
results of operations of Kinder Morgan Energy Partners are included in our
consolidated results of operations and, consequently, all 2006 revenues of
KM Insurance Ltd. have been eliminated in
consolidation.
|
7
|
For
2007 and 2006, segment assets include goodwill allocated to the
segments.
|
8
|
Includes
assets of discontinued operations, 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.
|
|
Geographic
Information
|
Successor
Company
|
|||||||||||
Seven
Months Ended December 31, 2007
|
|||||||||||
United
States
|
Canada
|
Mexico
and
Other1
|
Total
|
||||||||
(In
millions)
|
|||||||||||
NGPL
|
$
|
752.4
|
$
|
-
|
$
|
-
|
$
|
752.4
|
|||
Power
|
40.2
|
-
|
-
|
40.2
|
|||||||
Products
Pipelines – KMP
|
449.8
|
21.6
|
-
|
471.4
|
|||||||
Natural
Gas Pipelines – KMP
|
3,817.7
|
-
|
8.2
|
3,825.9
|
|||||||
CO2 –
KMP
|
605.9
|
-
|
605.9
|
||||||||
Terminals
– KMP
|
566.4
|
29.1
|
3.3
|
598.8
|
|||||||
Trans
Mountain
|
7.3
|
90.7
|
-
|
98.0
|
|||||||
Other
|
-
|
2.1
|
-
|
2.1
|
|||||||
$
|
6,239.7
|
$
|
143.5
|
$
|
11.5
|
$
|
6,394.7
|
Predecessor
Company
|
|||||||||||
Five
Months Ended May 31, 2007
|
|||||||||||
United
States
|
Canada
|
Mexico and Other1
|
Total
|
||||||||
(In
millions)
|
|||||||||||
NGPL
|
$
|
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
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Predecessor
Company
|
|||||||||||
Year
Ended December 31, 2006
|
|||||||||||
United
States
|
Canada
|
Mexico and Other1
|
Total
|
||||||||
(In
millions)
|
|||||||||||
NGPL
|
$
|
1,114.4
|
$
|
-
|
$
|
-
|
$
|
1,114.4
|
|||
Power
|
60.0
|
-
|
-
|
60.0
|
|||||||
Products
Pipelines – KMP
|
720.8
|
11.7
|
-
|
732.5
|
|||||||
Natural Gas Pipelines – KMP
|
6,544.3
|
-
|
14.1
|
6,558.4
|
|||||||
CO2 – KMP
|
736.5
|
-
|
-
|
736.5
|
|||||||
Terminals – KMP
|
858.7
|
-
|
5.4
|
864.1
|
|||||||
Trans Mountain
|
11.2
|
126.6
|
-
|
137.8
|
|||||||
Other
|
-
|
4.9
|
-
|
4.9
|
|||||||
$
|
10,045.9
|
$
|
143.2
|
$
|
19.5
|
$
|
10,208.6
|
Predecessor
Company
|
|||||||||||
Year
Ended December 31, 2005
|
|||||||||||
United
States
|
Canada
|
Mexico and Other1
|
Total
|
||||||||
(In
millions)
|
|||||||||||
NGPL
|
$
|
947.3
|
$
|
-
|
$
|
-
|
$
|
947.3
|
|||
Power
|
54.2
|
-
|
-
|
54.2
|
|||||||
Other
|
0.9
|
12.4
|
10.8
|
24.1
|
|||||||
$
|
1,002.4
|
$
|
12.4
|
$
|
10.8
|
$
|
1,025.6
|
Successor
Company
|
||||||||||||
At
December 31, 2007
|
||||||||||||
United
States
|
Canada
|
Mexico and Other1
|
Total
|
|||||||||
(In
millions)
|
||||||||||||
NGPL
|
$
|
720.0
|
$
|
-
|
$
|
-
|
$
|
720.0
|
||||
Power
|
95.4
|
-
|
-
|
95.4
|
||||||||
Express
|
281.5
|
120.6
|
-
|
402.1
|
||||||||
Products
Pipelines – KMP
|
4,552.0
|
109.5
|
-
|
4,661.5
|
||||||||
Natural
Gas Pipelines – KMP
|
4,513.6
|
-
|
82.7
|
4,596.3
|
||||||||
CO2 – KMP
|
2,656.5
|
-
|
-
|
2,656.5
|
||||||||
Terminals – KMP
|
2,533.7
|
196.1
|
5.5
|
2,735.3
|
||||||||
Trans Mountain – KMP
|
17.7
|
1,128.3
|
-
|
1,146.0
|
||||||||
Assets Held for Sale
|
418.2
|
-
|
-
|
418.2
|
||||||||
Other
|
263.3
|
11.3
|
-
|
274.6
|
||||||||
$
|
16,051.9
|
$
|
1,565.8
|
$
|
88.2
|
$
|
17,705.9
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Predecessor
Company
|
||||||||||||
At
December 31, 2006
|
||||||||||||
United
States
|
Canada3
|
Mexico and Other1
|
Total
|
|||||||||
(In
millions)
|
||||||||||||
NGPL
|
$
|
5,558.2
|
$
|
-
|
$
|
-
|
$
|
5,558.2
|
||||
Power
|
346.4
|
-
|
-
|
346.4
|
||||||||
Express
|
314.8
|
134.9
|
-
|
449.7
|
||||||||
Products
Pipelines – KMP
|
3,712.1
|
47.3
|
-
|
3,759.4
|
||||||||
Natural
Gas Pipelines – KMP
|
2,712.7
|
-
|
84.3
|
2,797.0
|
||||||||
CO2 –
KMP
|
1,653.1
|
-
|
-
|
1,653.1
|
||||||||
Terminals
– KMP
|
1,820.5
|
33.2
|
8.3
|
1,862.0
|
||||||||
Trans
Mountain – KMP
|
11.3
|
1,417.6
|
-
|
1,428.9
|
||||||||
Assets
Held for Sale
|
397.9
|
-
|
24.4
|
422.3
|
||||||||
Other
|
252.7
|
2,972.8
|
-
|
3,225.5
|
||||||||
$
|
16,779.7
|
$
|
4,605.8
|
$
|
117.0
|
$
|
21,502.5
|
1
|
Terminals
– KMP includes revenues of $3.3 million, $2.2 million and $5.4 million for
the seven months ended December 31, 2007, the five months ended May 31,
2007 and the twelve months ended December 31, 2006, respectively, and
long-lived assets of $5.5 million and 8.3 million at December 31, 2007 and
2006, respectively, attributable to operations in the Netherlands. Other
includes revenues of $10.8 million for the twelve months ended December
31, 2005 attributable to KM Insurance
Ltd.
|
2
|
Long-lived
assets exclude goodwill and other intangibles,
net.
|
3
|
The
decrease in Canada-based “Long-lived Assets – Other” is the result of the
sale of our Canada-based retail natural gas distribution operations (see
Note 7).
|
|
·
|
the
Standards of Conduct apply only to the relationship between interstate 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 gas pipelines must still maintain a log of discretionary tariff
waivers);
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
|
·
|
lawyers
providing legal advice may be shared employees;
and
|
|
·
|
new
interstate gas transmission pipelines are not subject to the Standards of
Conduct until they commence
service.
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
·
|
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
|
|
Consolidated
proceeding involving shipper complaints against certain East Line and West
Line rates. All five issues (and others) described four paragraphs above
are involved in these proceedings. Portions of this proceeding were
appealed (and re-appealed) to the D.C. Court and remanded to the FERC. BP
WCP, Chevron, and ExxonMobil requested a hearing before the FERC on
remanded grandfathering and income tax allowance issues. The FERC issued
an Order on Rehearing, Remand, Compliance, and Tariff Filings on December
26, 2007, which denied the requests for a hearing, affirmed the income tax
allowance policy and further clarified the implementation of that policy,
and required SFPP to file a compliance
filing;
|
·
|
FERC
Docket Nos. OR92-8-028,
et al.—Complainants/Protestants:
BP WCP; ExxonMobil; Chevron; ConocoPhillips; and Ultramar—Defendant:
SFPP
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
|
Proceeding
involving shipper complaints against SFPP’s Watson Station rates. A
settlement was reached for April 1, 1999 forward; whether SFPP owes
reparations for shipments prior to that date is still before the
FERC;
|
·
|
FERC
Docket No. OR96-2, et
al.—Complainants/Protestants: All Shippers except Chevron (which is
an intervenor)—Defendant: SFPP
|
|
Consolidated
proceeding involving shipper complaints against all SFPP rates. All five
issues (and others) described four paragraphs above are involved in these
proceedings. Portions of this proceeding were appealed (and re-appealed)
to the D.C. Court and remanded to the FERC. The FERC issued an Order on
Rehearing, Remand, Compliance, and Tariff Filings on December 26, 2007,
which denied the requests for a hearing, affirmed the income tax allowance
policy and further clarified the implementation of that policy, and
required SFPP to file a compliance
filing;
|
·
|
FERC
Docket Nos. OR02-4 and OR03-5—Complainants/Protestant: Chevron—Defendant:
SFPP
|
|
Chevron
initiated proceeding to permit Chevron to become complainant in OR96-2.
Appealed to the D.C. Court and held in abeyance pending final disposition
of the OR96-2 proceedings;
|
·
|
FERC
Docket No. OR04-3—Complainants/Protestants: America West Airlines;
Southwest Airlines; Northwest Airlines; and Continental
Airlines—Defendant: SFPP
|
|
Complaint
alleges that West Line and Watson Station rates are unjust and
unreasonable. Watson Station issues severed and consolidated into a
proceeding focused only on Watson-related issues. The FERC has set the
complaints against the West Line rates for hearing but denied the request
to consolidate the dockets with the ongoing proceedings involving SFPP’s
North and Oregon Line rates;
|
·
|
FERC
Docket Nos. OR03-5, OR05-4 and OR05-5—Complainants/Protestants: BP WCP;
ExxonMobil; and ConocoPhillips (other shippers intervened)—Defendant:
SFPP
|
|
Complaints
allege that SFPP’s interstate rates are not just and reasonable. The FERC
has set the complaints against the West and East Line rates for hearing,
but denied the request to consolidate the dockets with the ongoing
proceedings involving SFPP’s North and Oregon Line
rates;
|
·
|
FERC
Docket No. OR03-5-001—Complainants/Protestants: BP WCP; ExxonMobil; and
ConocoPhillips (other shippers intervened)—Defendant:
SFPP
|
|
The
FERC severed the portions of the complaints in Docket Nos. OR03-5, OR05-4,
and OR05-5 regarding SFPP’s North and Oregon Line rates into a separate
proceeding in Docket No. OR03-5-001, which has been set for
hearing;
|
·
|
FERC
Docket No. OR07-1—Complainant/Protestant: Tesoro—Defendant:
SFPP
|
|
Complaint
alleges that SFPP’s North Line rates are not just and reasonable.
Complaint held in abeyance pending resolution at the D.C. Court of, among
other things, income tax allowance and grandfathering issues. The D.C.
Court issued an opinion on these issues on May 29, 2007, upholding the
FERC’s income tax allowance policy;
|
·
|
FERC
Docket No. OR07-2—Complainant/Protestant: Tesoro—Defendant:
SFPP
|
|
Complaint
alleges that SFPP’s West Line rates are not just and reasonable. Complaint
held in abeyance pending resolution at the D.C. Court of, among other
things, income tax allowance and grandfathering issues. The D.C. Court
issued an opinion on these issues on May 29, 2007, upholding the FERC’s
income tax allowance policy. A request that the FERC set the complaint for
hearing – which SFPP opposed – is pending before the
FERC;
|
·
|
FERC
Docket No. OR07-3—Complainants/Protestants: BP WCP; Chevron; ExxonMobil;
Tesoro; and Valero Marketing—Defendant:
SFPP
|
|
Complaint
alleges that SFPP’s North Line indexed rate increase was not just and
reasonable. The FERC has dismissed the complaint and denied rehearing the
dismissal. Petitions for review filed by BP WCP and ExxonMobil at the D.C.
Court;
|
·
|
FERC
Docket No. OR07-4—Complainants/Protestants: BP WCP; Chevron; and
ExxonMobil—Defendants: SFPP; Kinder Morgan G.P., Inc.; and Knight
Inc.
|
|
Complaint
alleges that SFPP’s rates are not just and reasonable. Complaint held in
abeyance pending resolution at the D.C. Court of, among other things,
income tax allowance and grandfathering issues. The D.C. Court issued an
opinion on these issues on May 29, 2007, upholding the FERC’s income tax
allowance policy;
|
·
|
FERC
Docket Nos. OR07-5 and OR07-7 (consolidated)—Complainants/Protestants:
ExxonMobil and Tesoro—Defendants: Calnev; Kinder Morgan G.P., Inc.; and
Knight Inc.
|
|
Complaints
allege that none of Calnev’s current rates are just or reasonable. In
light of the D.C. Court’s May 29, 2007 ruling, on July 19, 2007, the FERC,
among other things, dismissed with prejudice the complaints against Kinder
Morgan G.P. Inc. and Knight Inc. and allowed complainants to file amended
complaints. ExxonMobil filed a request for rehearing of the dismissal of
the complaints against Kinder Morgan G.P., Inc. and Knight Inc., which is
currently pending before the FERC. The FERC has not acted on the amended
complaints;
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
·
|
FERC
Docket No. OR07-6—Complainant/Protestant: ConocoPhillips—Defendant:
SFPP
|
|
Complaint
alleges that SFPP’s North Line indexed rate increase was not just and
reasonable. The FERC has dismissed the complaint and denied rehearing the
dismissal. The FERC had consolidated this case with OR07-3 and issued
orders that applied to both OR07-3 and OR07-6. Although the FERC orders in
these dockets have been appealed by certain of the complainants in OR07-3,
they have not been appealed by ConocoPhillips in
OR07-6;
|
·
|
FERC
Docket No. OR07-8 (consolidated with Docket No.
OR07-11)—Complainant/Protestant: BP WCP—Defendant:
SFPP
|
|
Complaint
alleges that SFPP’s 2005 indexed rate increase was not just and
reasonable. On June 6, 2007, the FERC dismissed challenges to SFPP’s
underlying rate but held in abeyance the portion of the Complaint
addressing SFPP’s July 1, 2005 index-based rate increases. SFPP requested
rehearing on July 6, 2007, which the FERC denied. On February 13, 2008,
the FERC set this complaint for hearing, but referred it to settlement
negotiations;
|
·
|
FERC
Docket No. OR07-9—Complainant/Protestant: BP WCP—Defendant:
SFPP
|
|
Complaint
alleges that SFPP’s ultra low sulphur diesel (ULSD) recovery fee violates
the filed rate doctrine and that, in any event, the recovery fee is unjust
and unreasonable. On July 6, 2007, the FERC dismissed the complaint. BP
WCP requested a rehearing, which the FERC denied. A petition for review
was filed by BP WCP. The FERC’s motion to dismiss or hold the case in
abeyance is pending;
|
·
|
FERC
Docket No. OR07-10—Complainants/Protestants: BP WCP; ConocoPhillips;
Valero; and ExxonMobil—Defendant:
Calnev
|
|
Calnev
filed a petition with the FERC on May 14, 2007, requesting that the FERC
issue a declaratory order approving Calnev’s proposed rate methodology and
granting other relief with respect to a substantial proposed expansion of
Calnev’s mainline pipeline system. On July 20, 2007, the FERC granted
Calnev’s petition for declaratory
order;
|
·
|
FERC
Docket No. OR07-11 (consolidated with Docket No.
OR07-8)—Complainant/Protestant: ExxonMobil—Defendant:
SFPP
|
|
Complaint
alleges that SFPP’s 2005 indexed rate increase was not just and
reasonable. On February 13, 2008, the FERC set this complaint for hearing,
but referred it to settlement negotiations. It is now consolidated with
the complaint in Docket No. OR07-8;
|
·
|
FERC
Docket No. OR07-14—Complainants/Protestants: BP WCP and
Chevron—Defendants: SFPP; Calnev; Operating Limited Partnership “D”;
Kinder Morgan Energy Partners, L.P.; Kinder Morgan Management LLC; Kinder
Morgan G.P., Inc.; Knight Inc.; and Knight Holdco,
LLC
|
|
Complaint
alleges violations of the Interstate Commerce Act and the FERC’s cash
management regulations, seeks review of the FERC Form 6 annual reports of
SFPP and Calnev, and again requests interim refunds and reparations. The
FERC dismissed the complaint;
|
·
|
FERC
Docket No. OR07-16—Complainant/Protestant: Tesoro—Defendant:
Calnev
|
|
Complaint
challenges Calnev’s 2005, 2006, and 2007 indexing adjustments. The FERC
dismissed the complaint. A petition for review was filed by
Tesoro. A scheduling order for briefs and oral argument has not yet been
issued by the D.C. Court;
|
·
|
FERC
Docket No. OR07-18—Complainants/Protestants: Airline Complainants;
Chevron; and Valero Marketing—Defendant:
Calnev
|
|
Complaint
alleges that Calnev’s rates are unjust and unreasonable and that none of
Calnev’s rates are grandfathered under EPAct 1992. In December 2007, the
FERC issued an order accepting and holding in abeyance the portion of the
complaint against the non-grandfathered portion of Calnev’s rates. The
order also gave complainants 45 days to amend their complaint against the
grandfathered portion of Calnev’s rates in light of clarifications
provided in the FERC’s order;
|
·
|
FERC
Docket No. OR07-19—Complainant/Protestant: ConocoPhillips—Defendant:
Calnev
|
|
Complaint
alleges that Calnev’s rates are unjust and unreasonable and that none of
Calnev’s rates are grandfathered under EPAct 1992. In December 2007, the
FERC issued an order accepting and holding in abeyance the portion of the
complaint against the non-grandfathered portion of Calnev’s rates. The
order also gave complainants 45 days to amend their complaint against the
grandfathered portion of Calnev’s rates in light of clarifications
provided in the FERC’s order;
|
·
|
FERC
Docket No. OR07-20—Complainant/Protestant: BP WCP—Defendant:
SFPP
|
|
Complaint
alleges that SFPP’s 2007 indexed rate increase was not just and
reasonable. In December 2007, the FERC dismissed the complaint.
Complainant filed a request for rehearing which is currently pending
before the FERC. In February 2008, the FERC accepted a joint offer of
settlement that dismisses, with prejudice, the East Line index rate
portion of the complaint in
OR07-20;
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
·
|
FERC
Docket No. OR07-22—Complainant/Protestant: BP WCP—Defendant:
Calnev
|
|
Complaint
alleges that Calnev’s rates are unjust and unreasonable and that none of
Calnev’s rates are grandfathered under EPAct 1992. In December 2007, the
FERC issued an order giving complainant 45 days to amend its complaint in
light of guidance provided by the
FERC;
|
·
|
FERC
Docket No. IS05-230 (North Line rate case)—Complainants/Protestants:
Shippers—Defendant: SFPP
|
|
SFPP
filed to increase North Line rates to reflect increased costs due to
installation of new pipe between Concord and Sacramento, California.
Various shippers protested. An administrative law judge decision is
pending before the FERC on exceptions. On August 31, 2007, BP WCP and
ExxonMobil filed a motion to reopen the record on the issue of SFPP’s
appropriate rate of return on equity, which SFPP answered on September 18,
2007. The FERC has yet to issue an order on shipper’s
motion;
|
·
|
FERC
Docket No. IS05-327—Complainants/Protestants: Shippers—Defendant:
SFPP
|
|
SFPP
filed to increase certain rates on its pipelines pursuant to the FERC’s
indexing methodology. Various shippers protested, but the FERC determined
that the tariff filings were consistent with its regulations. The D.C.
Court dismissed a petition for review, citing a lack of jurisdiction to
review a decision by the FERC not to order an
investigation;
|
·
|
FERC
Docket No. IS06-283 (East Line rate case)—Complainants/Protestants:
Shippers—Defendant: SFPP
|
|
SFPP
filed to increase East Line rates to reflect increased costs due to
installation of new pipe between El Paso, Texas and Tucson, Arizona.
Various shippers protested. In November 2007, the parties submitted a
joint offer of settlement which was certified to the FERC in December
2007. In February 2008, the FERC accepted the joint offer of settlement
which, among other things, resolved all protests and complaints related to
the East Line Phase I Expansion
Tariff;
|
·
|
FERC
Docket No. IS06-296—Complainant/Protestant: ExxonMobil—Defendant:
Calnev
|
|
Calnev
sought to increase its interstate rates pursuant to the FERC’s indexing
methodology. ExxonMobil filed a protest respecting Calnev’s indexing
adjustments. This proceeding is currently held in abeyance pending ongoing
settlement discussions. Calnev has also filed a motion to dismiss or to
hold the investigation in abeyance, which is pending before the FERC.
Calnev and ExxonMobil have reached an agreement in principle to settle
this and other dockets;
|
·
|
FERC
Docket No. IS06-356—Complainants/Protestants: Shippers—Defendant:
SFPP
|
|
SFPP
filed to increase certain rates on its pipelines pursuant to the FERC’s
indexing methodology. Various shippers protested, but the FERC found the
tariff filings consistent with its regulations. The FERC has rescinded the
index increase for the East Line rates, and SFPP has requested rehearing.
The D.C. Court dismissed a petition for review, citing the rehearing
request pending before the FERC. On September 20, 2007, the FERC denied
SFPP’s request for rehearing. In November 2007, all parties submitted a
joint offer of settlement. In February 2008, the FERC accepted the joint
offer of settlement which, among other things, resolved all protests and
complaints related to the East Line 2006 Index
Tariff;
|
·
|
FERC
Docket No. IS07-137 (ULSD surcharge)—Complainants/Protestants:
Shippers—Defendant: SFPP
|
|
SFPP
filed tariffs to include a per barrel ULSD recovery fee and a surcharge
for ULSD-related litigation costs on diesel products. Various shippers
protested. Tariffs related to ULSD recovery fee accepted subject to refund
and proceeding is being held in abeyance pending resolution of other
proceedings involving SFPP. SFPP rescinded the ULSD litigation surcharge
in compliance with a FERC order. Request for rehearing filed by Chevron
and Tesoro. Request for rehearing filed by Chevron and Tesoro. The FERC
ultimately denied rehearing in an order issued on November 13,
2007;
|
·
|
FERC
Docket No. IS07-229—Complainants/Protestants: BP WCP and
ExxonMobil—Defendant: SFPP
|
|
SFPP
filed to increase certain rates on its pipelines pursuant to the FERC’s
indexing methodology. Two shippers filed protests. The FERC found the
tariff filings consistent with its regulations, but suspended the
increased rates subject to refund pending challenges to SFPP’s underlying
rates. In November 2007, all parties submitted a joint offer of
settlement. In February 2008, the FERC accepted the joint offer of
settlement which, among other things, resolved all protests and complaints
related to the East Line 2007 Index
Tariff;
|
·
|
FERC
Docket No. IS07-234—Complainants/Protestants: BP WCP and
ExxonMobil—Defendant: Calnev
|
|
Calnev
filed to increase certain rates on its pipeline pursuant to the FERC’s
indexing methodology. Two shippers protested. The FERC found the tariff
filings consistent with its regulations, but suspended the increased rates
subject to refund pending challenges to SFPP’s underlying rates. Calnev
and ExxonMobil have reached an agreement in principle to settle this and
other dockets;
|
·
|
FERC
Docket No. IS08-28—Complainants/Protestants: ConocoPhillips; Chevron; BP
WCP; ExxonMobil; Southwest Airlines; Western; and Valero—Defendant:
SFPP
|
|
SFPP
filed to increase its East Line rates based on costs incurred related to
an expansion. Various shippers filed protests, which SFPP answered. The
FERC issued an order on November 29, 2007 accepting and suspending the
tariff subject to refund. The proceeding is being held in abeyance
pursuant to ongoing settlement negotiations;
and
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
·
|
Motions
to compel payment of interim damages (various
dockets)—Complainants/Protestants: Shippers—Defendants: SFPP; Kinder
Morgan G.P., Inc.; and Knight Inc.
|
|
Motions
seek payment of interim refunds or escrow of funds pending resolution of
various complaints and protests involving SFPP. The FERC denied shippers’
refund requests in an order issued on December 26, 2007 in Docket Nos.
OR92-8, et
al
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
2007
|
|||
Balance
at January 1,
2007
|
$
|
63.1
|
|
Additions
based on current year tax positions
|
9.8
|
||
Additions
based on prior year tax positions
|
0.5
|
||
Reductions
based on settlements with taxing authority
|
(21.4
|
)
|
|
Reductions
due to lapse in statute of limitations
|
(2.7
|
)
|
|
Reductions
for tax positions related to prior year
|
(7.8
|
)
|
|
Balance
at December 31,
2007
|
$
|
41.5
|
|
·
|
taxes
assessed by a governmental authority that are directly imposed on a
revenue-producing transaction between a seller and a customer may include,
but are not limited to, sales, use, value added, and some excise taxes;
and
|
|
·
|
that
the presentation of such taxes on either a gross (included in revenues and
costs) or a net (excluded from revenues) basis is an accounting policy
decision that should be disclosed pursuant to Accounting Principles Board
Opinion No. 22 (as amended), Disclosure of Accounting
Policies. In addition, for any such taxes that are reported on a
gross basis, a company should disclose the amounts of those taxes in
interim and annual financial statements for each period for which an
income statement is presented if those amounts are significant. The
disclosure of those taxes can be done on an aggregate
basis.
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Predecessor
Company
|
Successor
Company
|
||||||||||||||||
Three
Months
Ended
|
Two
Months
Ended
|
One
Month
Ended
|
Three
Months Ended
|
||||||||||||||
March
31
|
May
31
|
June
30
|
September
30
|
December
31
|
|||||||||||||
(In
millions)
(Unaudited)
|
(In
millions)
(Unaudited)
|
||||||||||||||||
Operating
Revenues
|
$
|
2,444.4
|
$
|
1,720.7
|
$
|
936.9
|
$
|
2,609.0
|
$
|
2,848.8
|
|||||||
Gas
Purchases and Other Costs of Sales
|
1,452.5
|
1,037.9
|
557.2
|
1,482.8
|
1,616.6
|
||||||||||||
Other
Operating Expenses
|
968.0
|
501.9
|
220.5
|
683.2
|
791.6
|
||||||||||||
Operating
Income
|
23.9
|
180.9
|
159.2
|
443.0
|
440.6
|
||||||||||||
Other
Income and (Expenses)
|
(181.8
|
)
|
(120.2
|
)
|
(110.0
|
)
|
(278.3
|
)
|
(178.6
|
)
|
|||||||
Income
(Loss) from Continuing Operations Before Income Taxes
|
(157.9
|
)
|
60.7
|
49.2
|
164.7
|
262.0
|
|||||||||||
Income
Taxes
|
87.7
|
47.8
|
21.3
|
74.6
|
131.5
|
||||||||||||
Income
(Loss) from Continuing Operations
|
(245.6
|
)
|
12.9
|
27.9
|
90.1
|
130.5
|
|||||||||||
Income
(Loss) from Discontinued Operations, Net of Tax
|
233.2
|
65.4
|
2.3
|
(4.4
|
)
|
0.6
|
|||||||||||
Net
Income (Loss)
|
$
|
(12.4
|
)
|
$
|
78.3
|
$
|
30.2
|
$
|
85.7
|
$
|
131.1
|
Predecessor
Company
|
||||||||||||
March
31
|
June
30
|
September
30
|
December
31
|
|||||||||
(In
millions)
(Unaudited)
|
||||||||||||
Operating
Revenues
|
$
|
2,675.7
|
2,479.0
|
2,606.9
|
2,447.0
|
|||||||
Gas
Purchases and Other Costs of Sales
|
1,745.9
|
1,521.4
|
1,612.4
|
1,459.7
|
||||||||
Other
Operating Expenses
|
503.4
|
534.3
|
566.3
|
520.0
|
||||||||
Operating
Income
|
426.4
|
423.3
|
428.2
|
467.3
|
||||||||
Other
Income and (Expenses)
|
(213.4
|
)
|
(210.3
|
)
|
(206.0
|
)
|
(229.2
|
)
|
||||
Income
from Continuing Operations Before Income Taxes
|
213.0
|
213.0
|
222.2
|
238.1
|
||||||||
Income
Taxes
|
79.1
|
64.3
|
73.5
|
69.0
|
||||||||
Income
from Continuing Operations
|
133.9
|
148.7
|
148.7
|
169.1
|
||||||||
Income
(Loss) from Discontinued Operations, Net of Tax
|
59.8
|
8.5
|
(4.5
|
)
|
(592.3
|
)
|
||||||
Net
Income (Loss)
|
$
|
193.7
|
157.2
|
144.2
|
(423.2
|
)
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
December
31,
|
|||||||||||
Consolidated
Companies
|
20071
|
20061
|
20052
|
||||||||
Wells
and equipment, facilities and other
|
$
|
1,612.5
|
$
|
1,369.5
|
$
|
166.8
|
|||||
Leasehold
|
348.1
|
347.4
|
48.7
|
||||||||
Total
proved oil and gas properties
|
1,960.6
|
1,716.9
|
215.5
|
||||||||
Accumulated
depreciation and depletion
|
(725.5
|
)
|
(470.2
|
)
|
(46.1
|
)
|
|||||
Net
capitalized costs
|
$
|
1,235.1
|
$
|
1,246.7
|
$
|
169.4
|
1
|
Amounts
relate to Kinder Morgan CO2
Company, L.P. and its consolidated
subsidiaries.
|
2
|
For
the period presented, we accounted for Kinder Morgan Energy Partners under
the equity method; therefore, amounts reflect our proportionate share of
Kinder Morgan Energy Partners’ capitalized costs related to oil and gas
producing activities.
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months Ended
December
31,
|
Five
Months Ended
|
Year
Ended December 31,
|
||||||||||||||
20071
|
May 31, 20071
|
20061
|
20052
|
|||||||||||||
Consolidated
Companies
|
||||||||||||||||
Property
Acquisition
|
||||||||||||||||
Proved
oil and gas properties
|
$
|
-
|
$
|
-
|
$
|
36.6
|
$
|
1.0
|
||||||||
Development
|
156.9
|
87.5
|
261.8
|
42.8
|
1
|
Amounts
relate to Kinder Morgan CO2
Company, L.P. and its consolidated
subsidaries.
|
2
|
During
the period presented, we accounted for Kinder Morgan Energy Partners under
the equity method; therefore, amounts reflect our proportionate share of
Kinder Morgan Energy Partners’ costs incurred in exploration, property
acquisitions and development.
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
Seven
Months Ended
December
31,
|
Five
Months Ended
|
Year
Ended December 31,
|
||||||||||||||
20071
|
May 31, 20071
|
20061
|
20052
|
|||||||||||||
Consolidated
Companies
|
||||||||||||||||
Revenues3
|
$
|
352.0
|
$
|
237.7
|
$
|
524.7
|
||||||||||
Expenses:
|
||||||||||||||||
Production
costs
|
147.2
|
96.7
|
208.9
|
|||||||||||||
Other
operating expenses4
|
34.9
|
22.0
|
66.4
|
|||||||||||||
Depreciation,
depletion and amortization expenses
|
151.9
|
106.6
|
169.4
|
|||||||||||||
Total
expenses
|
334.0
|
225.3
|
444.7
|
|||||||||||||
Results
of operations for oil and gas producing activities
|
$
|
18.0
|
$
|
12.4
|
$
|
80.0
|
$
|
18.2
|
1
|
Amounts
relate to Kinder Morgan CO2
Company, L.P. and its consolidated
subsidaries.
|
2
|
During
the period presented, we accounted for Kinder Morgan Energy Partners under
the equity method, therefore, amounts reflect our proportionate share of
Kinder Morgan Energy Partners’ results of operations for oil and gas
producing activities.
|
3
|
Revenues
include losses attributable to our hedging contracts of $311.5 million,
$122.7 million and $441.7 million for the seven months ended December 31,
2007, the five months ended May 31, 2007 and the year ended December 31,
2006, respectively.
|
4
|
Consists
primarily of carbon dioxide
expense.
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Consolidated
Companies
|
||||||||
Crude
Oil
(MBbls)
|
NGLs
(MBbls)
|
Nat.
Gas
(MMcf)1
|
||||||
Proved
developed and undeveloped reserves:
|
||||||||
As
of December 31, 20042
|
22,862
|
3,741
|
294
|
|||||
As
of December 31, 20052
|
21,567
|
2,884
|
327
|
|||||
As
of December 31, 20063
|
123,978
|
10,333
|
291
|
|||||
Revisions
of Previous Estimates3,4
|
10,361
|
2,784
|
1,077
|
|||||
Production3
|
(12,984
|
)
|
(2,005
|
)
|
(290
|
)
|
||
As
of December 31, 20073
|
121,355
|
11,112
|
1,078
|
|||||
|
||||||||
Proved
developed reserves:
|
||||||||
As
of December 31, 20042
|
13,176
|
1,640
|
251
|
|||||
As
of December 31, 20052
|
11,965
|
1,507
|
251
|
|||||
As
of December 31, 20063
|
69,073
|
5,877
|
291
|
|||||
As
of December 31, 20073
|
70,868
|
5,517
|
1,078
|
1
|
Natural
gas reserves are computed at 14.65 pounds per square inch absolute and 60
degrees Fahrenheit.
|
2
|
For
the period presented, we accounted for Kinder Morgan Energy Partners under
the equity method, therefore, amounts reflect our proportionate share of
Kinder Morgan Energy Partners’ proved
reserves.
|
3
|
Amounts
relate to Kinder Morgan CO2
Company, L.P. and its consolidated
subsidaries.
|
4
|
Associated
with an expansion of the carbon dioxide flood project area of the SACROC
unit.
|
|
·
|
the
standardized measure includes our estimate of proved crude oil, natural
gas liquids and natural gas reserves and projected future production
volumes based upon year-end economic
conditions;
|
|
·
|
pricing
is applied based upon year-end market prices adjusted for fixed or
determinable contracts that are in existence at
year-end;
|
|
·
|
future
development and production costs are determined based upon actual cost at
year-end;
|
|
·
|
the
standardized measure includes projections of future abandonment costs
based upon actual costs at year-end;
and
|
|
·
|
a
discount factor of 10% per year is applied annually to the future net cash
flows.
|
Year
Ended December 31,
|
|||||||||||
20071
|
20061
|
20052
|
|||||||||
Consolidated
Companies
|
|||||||||||
Future
Cash Inflows from Production
|
$
|
12,099.5
|
$
|
7,534.6
|
$
|
1,390.3
|
|||||
Future
Production Costs
|
(3,536.2
|
)
|
(2,617.9
|
)
|
(418.8
|
)
|
|||||
Future
Development Costs3
|
(1,919.2
|
)
|
(1,256.7
|
)
|
(132.1
|
)
|
|||||
Undiscounted
Future Net Cash Flows
|
6,644.1
|
3,660.0
|
839.4
|
||||||||
10%
Annual Discount
|
(2,565.7
|
)
|
(1,452.2
|
)
|
(372.2
|
)
|
|||||
Standardized
Measure of Discounted Future Net Cash Flows
|
$
|
4,078.4
|
$
|
2,207.8
|
$
|
467.2
|
1
|
Amounts
relate to Kinder Morgan CO2
Company, L.P. and its consolidated
subsidaries.
|
2
|
During
the period presented, we accounted for Kinder Morgan Energy Partners under
the equity method, therefore, amounts reflect our proportionate share of
Kinder Morgan Energy Partners’ standardized measure of discounted future
net cash flows.
|
3
|
Includes
abandonment costs.
|
Item 8:
Financial
Statements and Supplementary Data (continued)
|
Knight
Form 10-K
|
Year
Ended December 31,
|
|||||||||||
20071
|
20061
|
20052
|
|||||||||
Consolidated
Companies
|
|||||||||||
Present
Value as of January 1
|
$
|
2,207.8
|
$
|
3,075.0
|
|||||||
Changes
During the Year:
|
|||||||||||
Revenues
Less Production and Other Costs3
|
(722.1
|
)
|
(690.0
|
)
|
|||||||
Net
Changes in Prices, Production and Other Costs3
|
2,153.2
|
(123.0
|
)
|
||||||||
Development
Costs Incurred
|
244.5
|
261.8
|
|||||||||
Net
Changes in Future Development Costs
|
(547.8
|
)
|
(446.0
|
)
|
|||||||
Purchases
of Reserves in Place
|
-
|
3.2
|
|||||||||
Revisions
of Previous Quantity Estimates4
|
510.8
|
(179.5
|
)
|
||||||||
Improved
Recovery
|
-
|
-
|
|||||||||
Accretion
of Discount
|
198.1
|
307.4
|
|||||||||
Timing
Differences and Other
|
33.9
|
(1.1
|
)
|
||||||||
Net
Change For the Year
|
1,870.6
|
(867.2
|
)
|
||||||||
Present
Value as of December 31
|
$
|
4,078.4
|
$
|
2,207.8
|
$
|
467.2
|
1
|
Amounts
relate to Kinder Morgan CO2
Company, L.P. and its consolidated
subsidaries.
|
2
|
During
the period presented, we accounted for Kinder Morgan Energy Partners under
the equity method, therefore, amounts reflect our proportionate share of
Kinder Morgan Energy Partners’ standardized measure of discounted future
net cash flows.
|
3
|
Excludes
the effect of losses attributable to our hedging contracts of $434.2
million and $441.7 million for the years ended December 31, 2007 and 2006,
respectively.
|
4
|
2007
revisions are associated with an expansion of the carbon dioxide flood
project area for the SACROC unit. 2006 revisions are based on lower than
expected recoveries from a section of the SACROC unit carbon dioxide flood
project.
|
Knight
Form 10-K
|
|
·
|
the
Vancouver Wharves bulk marine terminal, acquired May 30, 2007;
and
|
|
·
|
the
terminal assets and operations acquired from Marine Terminals, Inc.,
effective September 1, 2007.
|
Knight
Form 10-K
|
Name
|
Age
|
Position
|
Richard
D.
Kinder
|
63
|
Director,
Chairman and Chief Executive Officer
|
C.
Park
Shaper
|
39
|
Director
and President
|
Steven
J.
Kean
|
46
|
Executive
Vice President and Chief Operating Officer
|
Kenneth
A. Pontarelli
|
44
|
Director
|
Kimberly
A.
Dang
|
38
|
Vice
President, Investor Relations and Chief Financial
Officer
|
David
D.
Kinder
|
33
|
Vice
President, Corporate Development and Treasurer
|
Joseph
Listengart
|
39
|
Vice
President, General Counsel and Secretary
|
Scott
E.
Parker
|
47
|
Vice
President (President, Natural Gas Pipelines)
|
James
E.
Street
|
51
|
Vice
President, Human Resources and
Administration
|
Item 10. Directors,
Executive Officers and Corporate Governance.
(continued)
|
Knight
Form 10-K
|
Item 10. Directors,
Executive Officers and Corporate Governance.
(continued)
|
Knight
Form 10-K
|
Item 11. Executive
Compensation. (continued)
|
Knight
Form 10-K
|
Item 11. Executive
Compensation. (continued)
|
Knight
Form 10-K
|
Item 11. Executive
Compensation. (continued)
|
Knight
Form 10-K
|
|
·
|
our
EBITDA less capital spending, or the EBITDA less capital spending of one
of our subsidiaries or business
units;
|
|
·
|
our
net income or the net income of one of our subsidiaries or business
units;
|
|
·
|
our
revenues or the revenues of one of our subsidiaries or business
units;
|
|
·
|
our
unit revenues minus unit variable costs or the unit revenues minus unit
variable costs of one of our subsidiaries or business
units;
|
|
·
|
our
return on capital, return on equity, return on assets, or return on
invested capital, or the return on capital, return on equity, return on
assets, or return on invested capital of one of our subsidiaries or
business units;
|
|
·
|
our
cash flow return on assets or cash flows from operating activities, or the
cash flow return on assets or cash flows from operating activities of one
of our subsidiaries or business
units;
|
|
·
|
our
capital expenditures or the capital expenditures of one of our
subsidiaries or business units;
|
|
·
|
our
operations and maintenance expense or general and administrative expense,
or the operations and maintenance expense or general and administrative
expense of one of our subsidiaries or business units;
or
|
|
·
|
our
debt-equity ratios and key profitability ratios, or the debt-equity ratios
and key profitability ratios of one of our subsidiaries or business
units.
|
Name
and Principal Position
|
Dollar
Value
|
|||
Richard
D. Kinder, Chairman and Chief Executive Officer
|
$
|
-
|
1
|
|
Kimberly
A. Dang, Vice President and Chief Financial Officer
|
1,000,000
|
2
|
||
Steven
J. Kean, Executive Vice President and Chief Operating
Officer
|
1,500,000
|
3
|
||
Scott
E. Parker, Vice President (President, Natural Gas
Pipelines)
|
1,500,000
|
3
|
||
C.
Park Shaper, Director and
President
|
1,500,000
|
3
|
Item 11. Executive
Compensation. (continued)
|
Knight
Form 10-K
|
2
|
Under
the plan, for 2007, if neither of the targets was met, no bonus
opportunities would have been provided; if one of the targets was met,
$500,000 in bonus opportunities would have been available; if both of the
targets had been exceeded by 10%, $1,500,000 in bonus opportunities would
have been available. Our compensation committee may reduce the award
payable by us to any participant for any
reason.
|
3
|
Under
the plan, for 2007, if neither of the targets was met, no bonus
opportunities would have been provided; if one of the targets was met,
$750,000 in bonus opportunities would have been available; if both of the
targets had been exceeded by 10%, $2,000,000 in bonus opportunities would
have been available. Our compensation committee may reduce the award
payable by us to any participant for any
reason.
|
Item 11. Executive
Compensation. (continued)
|
Knight
Form 10-K
|
Pension
Benefits
|
|||||||||||||||
Name
|
Plan
Name
|
Current
Credited
Yrs
of
Service
|
Present
Value of
Accumulated
Benefit1
|
Contributions
During
2007
|
|||||||||||
Richard
D. Kinder
|
Cash
Balance
|
7
|
$
|
-
|
$
|
-
|
|||||||||
Kimberly
A. Dang
|
Cash
Balance
|
6
|
31,408
|
7,294
|
|||||||||||
Steven
J.
Kean
|
Cash
Balance
|
6
|
41,724
|
7,767
|
|||||||||||
Scott
E.
Parker
|
Cash
Balance
|
9
|
71,515
|
9,130
|
|||||||||||
C.
Park
Shaper
|
Cash
Balance
|
7
|
51,079
|
8,194
|
1
|
The
present values in the Pension Benefits table are based on certain
assumptions-including a 5.75% discount rate, RP 2000 mortality
(post-retirement only), 5% cash balance interest crediting rate, and lump
sums calculated using a 5% interest rate and IRS mortality. We assumed
benefits would commence at normal retirement date or unreduced retirement
date, if earlier. No death or turnover was assumed prior to retirement
date.
|
Item 11. Executive
Compensation. (continued)
|
Knight
Form 10-K
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
||||||||||||||||||||||
Name
and
Principal
Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
by
KMI
|
Option
Awards
by
KMI
|
Non-Equity
Incentive
Plan
Compensation
|
Change
in
Pension
Value
|
All
Other
Compensation
|
Unit
Awards
by
Knight
Holdco
LLC
|
Total
|
|||||||||||||||||
Richard
D. Kinder
|
2007
|
$
|
1
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
385,200
|
$
|
385,201
|
||||||||
Director,
Chairman and
|
2006
|
1
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1
|
|||||||||||||||||
Chief
Executive Officer
|
|||||||||||||||||||||||||||
Kimberly
A. Dang
|
2007
|
200,000
|
-
|
338,095
|
-
|
400,000
|
7,294
|
32,253
|
27,980
|
1,005,622
|
|||||||||||||||||
Vice
President and
|
2006
|
200,000
|
-
|
139,296
|
37,023
|
270,000
|
6,968
|
46,253
|
-
|
699,540
|
|||||||||||||||||
Chief
Financial Officer
|
|||||||||||||||||||||||||||
Steven
J. Kean
|
2007
|
200,000
|
-
|
4,397,080
|
-
|
1,100,000
|
7,767
|
147,130
|
111,820
|
5,963,797
|
|||||||||||||||||
Executive
Vice President
|
2006
|
200,000
|
-
|
1,591,192
|
147,943
|
-
|
7,422
|
284,919
|
-
|
2,231,476
|
|||||||||||||||||
And
|
|||||||||||||||||||||||||||
Chief
Operating Officer
|
|||||||||||||||||||||||||||
Scott
E. Parker
|
2007
|
200,000
|
-
|
2,340,080
|
-
|
1,100,000
|
9,130
|
307,688
|
-
|
3,956,898
|
|||||||||||||||||
Vice
President (President,
|
2006
|
200,000
|
350,000
|
881,317
|
29,490
|
500,000
|
8,735
|
164,630
|
-
|
2,134,172
|
|||||||||||||||||
Natural
Gas Pipelines)
|
|||||||||||||||||||||||||||
C.
Park Shaper
|
2007
|
200,000
|
-
|
1,950,300
|
-
|
1,200,000
|
8,194
|
155,953
|
176,660
|
3,691,107
|
|||||||||||||||||
Director
and President
|
2006
|
200,000
|
-
|
1,134,283
|
24,952
|
-
|
7,835
|
348,542
|
-
|
1,715,612
|
|||||||||||||||||
1
|
Consists
of expense calculated in accordance with SFAS No. 123R attributable to
restricted KMI stock awarded in 2003, 2004 and 2005 according to the
provisions of the KMI Stock Plan. No restricted stock was awarded in 2007
or 2006. For grants of restricted stock, we take the value of the award at
time of grant and accrue the expense over the vesting period according to
SFAS No. 123R. For grants made July 16, 2003—KMI closing price was $53.80,
twenty-five percent of the shares in each grant vest on the third
anniversary after the date of grant and the remaining seventy-five percent
of the shares in each grant vest on the fifth anniversary after the date
of grant. For grants made July 20, 2004—KMI closing price was $60.79,
fifty percent of the shares vest on the third anniversary after the date
of grant and the remaining fifty percent of the shares vest on the fifth
anniversary after the date of grant. For grants made July 20, 2005—KMI
closing price was $89.48, twenty-five percent of the shares in each grant
vest on the third anniversary after the date of grant and the remaining
seventy-five percent of the shares in each grant vest on the fifth
anniversary after the date of grant. As a result of the Going Private
transaction, all outstanding restricted shares vested in 2007 and
therefore all remaining compensation expense with respect to restricted
stock was recognized in 2007 in accordance with SFAS No. 123R. We bore all
of the costs associated with this
acceleration.
|
2
|
Consists
of expense calculated in accordance with SFAS No. 123R attributable to
options to purchase KMI shares awarded in 2002 and 2003 according to the
provisions of the KMI Stock Plan. No options were granted in 2007 or 2006.
For options granted in 2002—volatility of 0.3912 using a 6 year term,
4.01% five year risk free interest rate return, and a 0.71% expected
annual dividend rate. For options granted in 2003—volatility of 0.3853
using a 6.25 year term, 3.37% treasury strip quote at time of grant, and a
2.973% expected annual dividend rate. As a result of the Going Private
transaction, all outstanding options vested in 2007 and therefore all
remaining compensation expense with respect to options was recognized in
2007 in accordance with SFAS No. 123R. As a condition to their being
permitted to participate in the Going Private transaction, Messrs. Kean
and Shaper agreed to the cancellation of 10,467 and 22,031 options,
respectively. These cancelled options had weighted average exercise prices
of $39.12 and $24.75 per share, respectively. We bore all of the costs
associated with this acceleration.
|
3
|
Represents
amounts paid according to the provisions of our Annual Incentive Plan. In
the case of Mr. Parker, for the year 2006, an additional $350,000 was paid
outside of the plan, as reflected in the Bonus column. Amounts were earned
in the fiscal year indicated but were paid in the next fiscal year.
Messrs. Kean and Shaper refused to accept a bonus for 2006. The committee
agreed that this was not a reflection of performance on either
person.
|
4
|
Represents
the 2007 and 2006, as applicable, change in the actuarial present value of
accumulated defined pension benefit (including unvested benefits)
according to the provisions of our Cash Balance Retirement
Plan.
|
5
|
Amounts
represent value of contributions to our Savings Plan (a 401(k) plan),
value of group-term life insurance exceeding $50,000, taxable parking
subsidy and dividends paid on unvested restricted stock awards. Amounts
each year include $10,000 representing the value of contributions to our
Savings Plan. Amounts representing the value of dividends paid on unvested
restricted stock awards are as follows: for 2007—Mrs. Dang $21,875; Mr.
Kean $136,500; Mr. Parker $77,000; and Mr. Shaper $144,375; for 2006—Mrs.
Dang $35,875; Mr. Kean $273,000; Mr. Parker $154,000; and Mr. Shaper
$336,875. Mr. Parker’s 2007 amount also includes amounts for imputed
income for company provided cell phone, a $100,000 relocation allowance,
and a $130,000 payment consistent with Mr. Parker’s retention
agreement.
|
6
|
Such
amounts represent the amount of the non-cash compensation expense
calculated in accordance with SFAS No. 123R attributable to the Class A-1
and Class B units of Knight Holdco LLC and allocated to us for financial
reporting purposes but does not include any such expense allocated to any
of its other subsidiaries. None of the named executive officers has
received any payments in connection with such units, and none of us or our
subsidiaries are obligated, nor do we expect,
to
|
Item 11. Executive
Compensation. (continued)
|
Knight
Form 10-K
|
|
pay
any amounts in respect of such units. See Item 13. “Certain Relationships
and Related Transactions, and Director Independence—Related
Transactions—Going Private Transaction” for further discussion of these
units.
|
|
·
|
each
option or other award to purchase shares of KMI common stock granted under
any Kinder Morgan employee or director equity plan, whether vested or
unvested, that was outstanding immediately prior to the effective time of
the buyout, vested as of the effective time of the buyout, and was
cancelled and converted into the right to receive a cash payment equal to
the number of shares of KMI common stock underlying such options
multiplied by the amount (if any) by which the $107.50 per share merger
consideration issued in the Going Private transaction exceeded the option
exercise price, without interest and less any applicable withholding tax;
and
|
|
·
|
each
share of restricted stock or restricted stock unit under any Kinder Morgan
stock plan or benefit plan vested as of the effective time of the buyout
and was cancelled and converted into the right to receive a cash payment
equal to the number of outstanding shares of restricted stock or
restricted stock units, multiplied by the $107.50 per share merger
consideration, without interest and less any applicable withholding
tax.
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||
Name
|
Stock
Options
|
Value Realized1
|
Shares
of
Restricted
Stock
|
Value Realized2
|
||||||||||||
Richard
D. Kinder
|
-
|
$
|
-
|
-
|
$
|
-
|
||||||||||
Kimberly
A. Dang
|
24,750
|
1,443,178
|
8,000
|
860,000
|
||||||||||||
Steven
J. Kean3
|
25,533
|
1,375,772
|
78,000
|
8,385,000
|
||||||||||||
Scott
E. Parker
|
10,000
|
537,000
|
44,000
|
4,730,000
|
||||||||||||
C.
Park Shaper4
|
197,969
|
12,529,810
|
82,500
|
8,868,750
|
1
|
Calculated
based on the actual exercise prices underlying the related options, as
opposed to the weighted average exercise price per share of
options.
|
2
|
Calculated
as $107.50 multiplied by the number of shares of restricted
stock.
|
3
|
Mr.
Kean, as a condition to his being permitted to participate as an investor
in Knight, agreed to the cancellation of 10,467 of his options shown
above, with a weighted average exercise price of $39.12 per share, prior
to the Going Private transaction.
|
4
|
Mr.
Shaper, as a condition to his being permitted to participate as an
investor in Knight, agreed to the cancellation of 22,031 of his options
shown above, with a weighted average exercise price of $24.75 per share,
prior to the Going Private
transaction.
|
Item 11. Executive
Compensation. (continued)
|
Knight
Form 10-K
|
Estimated
Possible Payouts Under
Non-Equity Incentive Plan
Awards1
|
All
other stock awards2
|
Grant
date
|
||||||||||||||
Name
|
Grant
date
|
Threshold
|
Target
|
Maximum
|
Number
of units
|
fair
value of
stock
awards3
|
||||||||||
Richard
D. Kinder
|
May
30, 2007
|
$
|
-
|
$
|
-
|
$
|
-
|
791,405,452
|
$
|
9,200,000
|
||||||
Kimberly
A. Dang
|
January
17, 2007
|
$500,000
|
$1,000,000
|
$1,500,000
|
||||||||||||
May
30, 2007
|
49,893,032
|
672,409
|
||||||||||||||
Steven
J. Kean
|
January
17, 2007
|
750,000
|
1,500,000
|
2,000,000
|
||||||||||||
May
30, 2007
|
162,114,878
|
2,708,095
|
||||||||||||||
Scott
E. Parker
|
January
17, 2007
|
500,000
|
1,500,000
|
2,000,000
|
||||||||||||
C.
Park Shaper
|
January
17, 2007
|
750,000
|
1,500,000
|
2,000,000
|
||||||||||||
May
30, 2007
|
225,436,274
|
4,296,125
|
1
|
Represents
grants under the Knight Annual Incentive Plan for performance in 2007. See
“Elements of Compensation—Possible Annual Cash Bonus (Non-Equity Cash
Incentive)” for a discussion of these
awards.
|
2
|
Represents
the sum of the number of Class A-1 units and the number of Class B units
of Knight Holdco LLC awarded to the named executive officers in connection
with the Going Private transaction. See Item 13. “Certain Relationships
and Related Transactions, and Director Independence—Related
Transactions—Going Private Transaction” for detail regarding these
awards.
|
3
|
Amounts
represent the fair value calculated in accordance with SFAS No. 123R
attributable to Class A-1 and Class B units of Knight Holdco LLC awarded
by Knight Holdco LLC to the named executive officers in connection with
the Going Private transaction. None of the named executive officers has
received any payments in connection with such units, and none of us or our
subsidiaries are obligated, nor do we expect, to pay any amounts in
respect of such units. See Item 13. “Certain Relationships and Related
Transactions, and Director Independence—Related Transactions—Going Private
Transaction” for further discussion of these
units.
|
Stock
awards
|
||||||
Name
|
Type
of units
|
Number
of units
that
have not vested
|
Market
value of
units
of stock that
have not vested1
|
|||
Richard
D.
Kinder
|
Class
B units
|
791,405,452
|
N/A
|
|||
Kimberly
A.
Dang
|
Class
B units
|
49,462,841
|
N/A
|
|||
Steven
J.
Kean
|
Class
B units
|
158,281,090
|
N/A
|
|||
C.
Park
Shaper
|
Class
B units
|
217,636,499
|
N/A
|
1
|
Because
the Class B units are equity interests of Knight Holdco LLC, a private
limited liability company, the market value of such interests is not
readily determinable. None of the named executive officers has received
any payments in connection with such units, and none of us or our
subsidiaries are obligated, nor do we expect, to pay any amounts in
respect of such units. See Item 13. “Certain Relationships and Related
Transactions, and Director Independence—Related Transactions—Going Private
Transaction” for further discussion of these
units.
|
Item 11. Executive
Compensation. (continued)
|
Knight
Form 10-K
|
(1)
|
(1)
|
||||||||||||||||||||
Name
|
Fees
Earned or
Paid
in Cash
|
Stock
Awards
|
Option
Awards
|
All
Other Compensation
|
Total
|
||||||||||||||||
Edward
H. Austin
|
$
|
82,506
|
-
|
-
|
$
|
-
|
$
|
82,506
|
|||||||||||||
Charles
W. Battey
|
82,506
|
-
|
-
|
-
|
82,506
|
||||||||||||||||
Stewart
A. Bliss
|
95,010
|
-
|
-
|
-
|
95,010
|
||||||||||||||||
Ted
A. Gardner
|
85,008
|
-
|
-
|
-
|
85,008
|
||||||||||||||||
William
J. Hybl
|
80,004
|
-
|
-
|
-
|
80,004
|
||||||||||||||||
Michael
C. Morgan
|
80,004
|
-
|
-
|
-
|
80,004
|
||||||||||||||||
Kenneth
A. Pontarelli
|
–
|
-
|
-
|
-
|
-
|
||||||||||||||||
Edward
Randall, III
|
80,004
|
-
|
-
|
-
|
80,004
|
||||||||||||||||
James
M. Stanford
|
80,004
|
-
|
-
|
-
|
80,004
|
||||||||||||||||
Fayez
Sarofim
|
80,004
|
-
|
-
|
-
|
80,004
|
||||||||||||||||
H.
A. True, III
|
80,004
|
-
|
-
|
-
|
80,004
|
||||||||||||||||
Douglas
W.G. Whitehead
|
82,506
|
-
|
-
|
-
|
82,506
|
1
|
Prior
to 2007 all stock and option awards to the directors had vested;
consequently, we incurred no expense calculated in accordance with SFAS
No. 123R in 2007 in respect of any such stock and/or option awards,
including as a result of the closing of the Going Private
transaction.
|
Knight
Form 10-K
|
Kinder
Morgan Energy Partners
Common
Units
|
Kinder
Morgan
Management
Shares
|
||||||
Number
of Units2
|
Percent
of
Class
|
Number
of Shares
|
Percent
of
Class
|
||||
Richard
D. Kinder4
|
315,979
|
*
|
84,663
|
*
|
|||
C.
Park
Shaper
|
4,000
|
*
|
23,793
|
*
|
|||
Kenneth
A.
Pontarelli
|
-
|
-
|
-
|
-
|
|||
Steven
J.
Kean
|
-
|
-
|
-
|
-
|
|||
Scott
E.
Parker
|
-
|
-
|
-
|
-
|
|||
Kimberly
A.
Dang
|
121
|
*
|
440
|
*
|
|||
Directors
and Executive Officers as a group (9 persons)5
|
336,484
|
*
|
128,335
|
*
|
1
|
Except
as noted otherwise, each individual has sole voting power and sole
disposition power over the units and shares
listed.
|
2
|
As
of January 31, 2008, Kinder Morgan Energy Partners had 170,224,734 common
units issued and outstanding.
|
3
|
As
of January 31, 2008, Kinder Morgan Management had 72,432,482 issued and
outstanding shares representing limited liability company interests,
including two voting shares owned by Kinder Morgan G.P.,
Inc.
|
4
|
Includes
7,879 common units owned by Mr. Kinder’s spouse. Mr. Kinder disclaims any
and all beneficial or pecuniary interest in these
units.
|
5
|
Includes
9,090 common units owned by spouses of our executives and includes 671
Kinder Morgan Management shares purchased by one of our executives for his
children. The executives disclaim any beneficial ownership in such common
units and shares.
|
Item 13. Certain
Relationships and Related Transactions, and Director Independence.
(continued)
|
Knight
Form 10-K
|
|
·
|
he
retires, dies or becomes unable to serve due to
disability,
|
|
·
|
such
time as he is removed by the members of Knight Holdco LLC for cause or for
the failure to meet performance targets for Knight Holdco LLC set forth in
the business plan, or
|
|
·
|
such
time as he ceases to own at least 2.5% of the Class A units of Knight
Holdco LLC.
|
|
·
|
he
retires, dies or becomes unable to serve as a result of
disability,
|
|
·
|
he
is removed for cause,
|
|
·
|
Knight
Holdco LLC fails to meet performance targets set forth in the business
plan, and the members of Knight Holdco LLC either decide to remove him or
to strip him of the powers of chief
manager,
|
|
·
|
Mr. Kinder
or his heirs or representatives has approved the board of managers’
decision to remove him,
|
|
·
|
Mr. Kinder
ceases to own at least 2.5% of the Class A units of Knight Holdco
LLC, or
|
|
·
|
upon
the occurrence of other circumstances relating to the reasons for
Mr. Kinder ceasing to be chief manager and/or Knight Holdco LLC’s
performance.
|
Item 13. Certain
Relationships and Related Transactions, and Director Independence.
(continued)
|
Knight
Form 10-K
|
Class
A Units
|
% of Class
A Units1
|
Class
A-1 Units
|
% of Class
A-1 Units2
|
Class
B Units
|
% of Class
B Units3
|
|||||||
Current
Directors and Executive Officers:
|
||||||||||||
Richard
D. Kinder4
|
2,424,000,000
|
30.6
|
–
|
–
|
791,405,452
|
40.0
|
||||||
C.
Park Shaper5
|
13,598,785
|
*
|
7,799,775
|
28.3
|
217,636,499
|
11.0
|
||||||
Steven
J. Kean6
|
6,684,149
|
*
|
3,833,788
|
13.9
|
158,281,090
|
8.0
|
||||||
Kimberly
A. Dang7
|
750,032
|
*
|
430,191
|
1.6
|
49,462,841
|
2.5
|
||||||
David
D. Kinder8
|
1,075,981
|
*
|
617,144
|
2.2
|
55,398,382
|
2.8
|
||||||
Joseph
Listengart9
|
6,059,449
|
*
|
3,475,483
|
12.6
|
79,140,545
|
4.0
|
||||||
Scott
E. Parker
|
–
|
–
|
–
|
–
|
–
|
–
|
||||||
James
E. Street10
|
3,813,005
|
*
|
2,187,003
|
7.9
|
49,462,841
|
2.5
|
||||||
Kenneth
A. Pontarelli11
|
957,082,454
|
12.1
|
–
|
–
|
–
|
–
|
||||||
Executive
officers and directors as a group (9 persons)
|
3,413,063,855
|
43.1
|
18,343,384
|
66.5
|
1,400,787,650
|
70.8
|
||||||
Former
Directors:
|
||||||||||||
Fayez
Sarofim12
|
349,018,612
|
4.4
|
-
|
-
|
-
|
-
|
||||||
Michael
C. Morgan13
|
64,500,000
|
*
|
-
|
-
|
-
|
-
|
*
|
Less
than 1%.
|
1
|
As
of January 31, 2008, Knight Holdco LLC had 7,914,367,913 Class A Units
issued and outstanding.
|
2
|
As
of January 31, 2008, Knight Holdco LLC had 27,225,694 Class A-1 Units
issued and outstanding and 345,042 phantom Class A-1 Units issued and
outstanding. The phantom Class A-1 Units were issued to Canadian
management employees.
|
3
|
As
of January 31, 2008, Knight Holdco LLC had 1,922,620,621 Class B Units
issued and outstanding and 55,893,008 phantom Class B Units issued and
outstanding. The phantom Class B Units were issued to Canadian management
employees.
|
4
|
Includes
522,372 Class A units owned by Mr. Kinder’s wife. Mr. Kinder disclaims any
and all beneficial or pecuniary interest in the Class A units held by his
wife. Also includes 263,801,817 Class B Units that Mr. Kinder transferred
to a limited partnership. Mr. Kinder may be deemed to be the beneficial
owner of these transferred Class B Units, because Mr. Kinder controls the
voting and disposition power of these Class B Units, but he disclaims
ninety-nine percent of any beneficial and pecuniary interest in them. Mr.
Kinder contributed 23,994,827 shares of KMI common stock and his wife
contributed 5,173 shares of KMI common stock to Knight Holdco LLC that
were valued for purposes of Knight
Holdco
|
Item 13. Certain
Relationships and Related Transactions, and Director Independence.
(continued)
|
Knight
Form 10-K
|
|
LLC’s
limited liability agreement at $2,423,477,628 and $522,372, respectively,
in exchange for their respective Class A units. The Class B units received
by Mr. Kinder had a grant date fair value as calculated in accordance with
SFAS No. 123R of $9,200,000.
|
5
|
Includes
217,636,499 Class B Units that Mr. Shaper transferred to a limited
partnership. Mr. Shaper may be deemed to be the beneficial owner of these
transferred Class B Units, because Mr. Shaper controls the voting and
disposition power of these Class B Units, but he disclaims approximately
twenty-two percent of any beneficial and pecuniary interest in them. Mr.
Shaper made a cash investment of $13,598,785 of his after-tax proceeds
from the conversion in the Going Private transaction of 82,500 shares of
KMI restricted stock and options to acquire 197,969 shares of KMI common
stock in exchange for his Class A units. The Class A-1 units and Class B
units received by Mr. Shaper had an aggregate grant date fair value as
calculated in accordance with SFAS No. 123R of
$4,296,125.
|
6
|
Mr.
Kean made a cash investment of $6,684,149 of his after-tax proceeds from
the conversion in the Going Private transaction of 78,000 shares of KMI
restricted stock and options to acquire 25,533 shares of KMI common stock
in exchange for his Class A units. The Class A-1 units and Class B units
received by Mr. Kean had an aggregate grant date fair value as calculated
in accordance with SFAS No. 123R of
$2,708,095.
|
7
|
Includes
49,462,841 Class B Units that Ms. Dang transferred to a limited
partnership. Ms. Dang may be deemed to be the beneficial owner of these
transferred Class B Units, because Ms. Dang has voting and disposition
power of these Class B Units, but she disclaims ten percent of any
beneficial and pecuniary interest in them. Ms. Dang made a cash investment
of $750,032 of her after-tax proceeds from the conversion in the Going
Private transaction of 8,000 shares of KMI restricted stock and options to
acquire 24,750 shares of KMI common stock in exchange for her Class A
units. The Class A-1 units and Class B units received by Ms. Dang had an
aggregate grant date fair value as calculated in accordance with SFAS No.
123R of $672,409.
|
8
|
Includes
55,398,382 Class B Units that Mr. Kinder transferred to a limited
partnership. Mr. Kinder may be deemed to be the beneficial owner of these
transferred Class B Units, because Mr. Kinder controls the voting and
disposition power of these Class B Units, but he disclaims eight percent
of any beneficial and pecuniary interest in them. Mr. Kinder made a cash
investment of $1,075,981 of his after-tax proceeds from the conversion in
the Going Private transaction of 15,750 shares of KMI restricted stock in
exchange for his Class A units. The Class A-1 units and Class B units
received by Mr. Kinder had an aggregate grant date fair value as
calculated in accordance with SFAS No. 123R of
$783,742.
|
9
|
Mr.
Listengart made a cash investment of $6,059,449 of his after-tax proceeds
from the conversion in the Going Private transaction of 52,500 shares of
KMI restricted stock and options to acquire 48,459 shares of KMI common
stock in exchange for his Class A units. The Class A-1 units and Class B
units received by Mr. Listengart had an aggregate grant date fair value as
calculated in accordance with SFAS No. 123R of
$1,706,963.
|
10
|
Includes
49,462,841 Class B units Mr. Street transferred to a limited partnership.
Mr. Street may be deemed to be the beneficial owner of these transferred
Class B units, because Mr. Street has voting and disposition power of
these Class B units, but he disclaims twenty-five percent of any
beneficial or pecuniary interest in them. Mr. Street made a cash
investment of $3,813,005 of his after-tax proceeds from the conversion in
the Going Private transaction of 30,000 shares of KMI restricted stock and
options to acquire 34,588 shares of KMI common stock in exchange for his
Class A units. The Class A-1 units and Class B units received by Mr.
Street had an aggregate grant date fair value as calculated in accordance
with SFAS No. 123R of $1,070,209.
|
11
|
Consists
of 240,454,180 units owned by GS Capital Partners V Fund, L.P.; a Delaware
limited partnership; 124,208,587 units owned by GS Capital Partners V
Offshore Fund, L.P., a Cayman Islands exempted limited partnership;
82,455,031 units owned by GS Capital Partners V Institutional, L.P., a
Delaware limited partnership; 9,533,193 units owned by GS Capital Partners
V GmbH & Co. KG, a German limited partnership; 233,596,750 units owned
by GS Capital Partners VI Fund, L.P., a Delaware limited partnership;
194,297,556 units owned by GS Capital Partners VI Offshore Fund, L.P., a
Cayman Islands exempted limited partnership; 64,235,126 units owned by GS
Capital Partners VI Parallel, L.P., a Delaware limited partnership; and
8,302,031 units owned by GS Capital Partners VI GmbH & Co. KG, a
German limited partnership (collectively the “GS Entities”). The GS
Entities, of which affiliates of The Goldman Sachs Group, Inc. (“GSG”) are
the general partner, managing general partner or investment manager, share
voting and investment power with certain of its respective affiliates. Mr.
Pontarelli is a managing director of Goldman, Sachs & Co. (“GS”),
which is a direct and indirect wholly owned subsidiary of GSG. Each of GS,
GSG and Mr. Pontarelli disclaims beneficial ownership of the equity
interests and the units held directly or indirectly by the GS Entities
except to the extent of their pecuniary interest therein, if any. GS, an
NASD member, is an investment banking firm that regularly performs
services such as acting as a financial advisor and serving as principal or
agent in the purchase and sale of securities. In the future, GS may be
called upon to provide similar or other services for us or our affiliates.
Each of Mr. Pontarelli, GS and GSG has a mailing address of ℅ Goldman,
Sachs & Co., 85 Broad Street, 10th Floor, New York, NY 10004. GSG’s
affiliates that are registered broker-dealers (including specialists and
market makers) may from time to time engage in brokerage and trading
activities with respect to our securities or those of our
affiliates.
|
12
|
An
aggregate of 1,711,801 shares of KMI common stock and $165,000,000 of cash
were contributed by Mr. Sarofim, either individually or by trusts and
other entities in which Mr. Sarofim has or shares voting and investment
power, to Knight Holdco LLC that were valued for purposes of Knight Holdco
LLC’s limited liability agreement at $349,018,612 in exchange for their
Class A units.
|
13
|
Portcullis
Partners, LP, a private investment partnership, contributed 600,000 shares
of KMI common stock to Knight
|
Item 13. Certain
Relationships and Related Transactions, and Director Independence.
(continued)
|
Knight
Form 10-K
|
|
Holdco
LLC that were valued for purposes of Knight Holdco LLC’s limited liability
agreement at $64,500,000 in exchange for its Class A units. Mr. Morgan is
President of Portcullis Partners, LP and therefore may be deemed to have
beneficial ownership of the units owned by Portcullis Partners,
LP.
|
|
·
|
If
the director was an employee, or had an immediate family member who was an
executive officer of Kinder Morgan Management, Kinder Morgan Energy
Partners or us or any of their or our affiliates, but the employment
relationship ended more than three years prior to the date of
determination (or, in the case of employment of a director as an interim
chairman, interim chief executive officer or interim executive officer,
such employment relationship ended by the date of
determination);
|
|
·
|
If
during any twelve month period within the three years prior to the
determination the director received no more than, and has no immediate
family member that received more than, $100,000 in direct compensation
from us or our affiliates, other than (i) director and committee fees
and pension or other forms of deferred compensation for prior service
(provided such compensation is not contingent in any way on continued
service), (ii) compensation received by a director for former service
as an interim chairman, interim chief executive officer or interim
executive officer, and (iii) compensation received by an immediate
family member for service as an employee (other than an executive
officer);
|
|
·
|
If
the director is a current employee, or has an immediate family member that
is a current executive officer, of another company that has made payments
to, or received payments from, us and our affiliates for property or
services in an amount which, in each of the three fiscal years prior to
the date of determination, was less than the greater of $1.0 million
or 2% of such other company’s annual consolidated gross
revenues. Contributions to tax-exempt organizations are not
considered payments for purposes of this
determination;
|
|
·
|
If
the director is also a director, but is not an employee or executive
officer, of Kinder Morgan G.P., Inc. or another affiliate of Kinder Morgan
Management or us, so long as such director is otherwise independent;
and
|
|
·
|
If
the director beneficially owns less than 10% of each class of voting
securities of Kinder Morgan G.P., Inc., Kinder Morgan Management or
us.
|
Item 13. Certain
Relationships and Related Transactions, and Director Independence.
(continued)
|
Knight
Form 10-K
|
Year
Ended December 31,
|
|||||
2007
|
2006
|
||||
Audit
fees1
|
$
|
5,689,710
|
$
|
4,126,700
|
|
Tax
fees2
|
2,974,126
|
1,994,650
|
|||
Total
|
$
|
8,663,836
|
$
|
6,121,350
|
|
_____________
|
1
|
Includes
fees for integrated audit of annual financial statements and internal
control over financial reporting, reviews of the related quarterly
financial statements, and reviews of documents filed with the Securities
and Exchange Commission.
|
2
|
Includes
fees for professional services rendered for tax return review services and
for federal, state, local and foreign income tax compliance and consulting
services. For 2007 and 2006, amounts include fees of $2,352,533 and
$1,356,399, respectively, billed to Kinder Morgan Energy Partners for
professional services rendered for tax processing and preparation of Forms
K-1 for its unitholders.
|
Knight
Form 10-K
|
(a)
|
(1)
|
Financial
Statements
|
(2)
|
Financial
Statement Schedules
|
(3)
|
Exhibits
|
|
2.1
|
Agreement
and Plan of Merger dated August 28, 2006, among Kinder Morgan, Inc.,
Knight Holdco LLC and Knight Acquisition Co. (filed as Exhibit 2.1 to
Knight Inc.’s Current Report on Form 8-K filed on August 28, 2006 and
incorporated herein by reference)
|
|
3.1
|
Amended
and Restated Articles of Incorporation of Knight Inc. and amendments
thereto (filed as Exhibit 3.1 to Knight Inc.’s Quarterly Report on Form
10-Q for the quarter ended June 30, 2007 and incorporated herein by
reference)
|
|
3.2
|
Bylaws
of Kinder Morgan, Inc. (filed as Exhibit 3.2 to Knight Inc.’s Current
Report on Form 8-K filed on June 5, 2007 and incorporated herein by
reference)
|
|
4.1
|
Indenture
dated as of September 1, 1988, between K N Energy, Inc. and Continental
Illinois National Bank and Trust Company of Chicago (filed as Exhibit 4(a)
to Knight Inc.’s Annual Report on Form 10-K/A, Amendment No. 1 filed on
May 22, 2000 and incorporated herein by
reference)
|
|
4.2
|
First
supplemental indenture dated as of January 15, 1992, between
K N Energy, Inc. and Continental Illinois National Bank and
Trust Company of Chicago (filed as Exhibit 4.2 to the Registration
Statement on Form S-3 (File No. 33-45091) of K N Energy, Inc. filed on
January 17, 1992 and incorporated herein by
reference)
|
|
4.3
|
Second
supplemental indenture dated as of December 15, 1992, between
K N Energy, Inc. and Continental Bank, National Association
(filed as Exhibit 4(c) to Knight Inc.’s Annual Report on Form 10-K/A,
Amendment No. 1 filed on May 22, 2000 and incorporated herein by
reference)
|
|
4.4
|
Indenture
dated as of November 20, 1993, between K N Energy, Inc. and Continental
Bank, National Association (filed as Exhibit 4.1 to the Registration
Statement on Form S-3 (File No. 33-51115) of K N Energy, Inc. filed on
November 19, 1993 and incorporated herein by
reference)
|
|
4.5
|
Registration
Rights Agreement among Kinder Morgan Management, LLC, Kinder Morgan Energy
Partners, L.P. and Kinder Morgan, Inc. dated May 18, 2001 (filed as
Exhibit 4.7 to Knight Inc.’s Annual Report on Form 10-K for the year ended
December 31, 2002 and incorporated herein by
reference)
|
|
4.6
|
Rights
Agreement between K N Energy, Inc. and the Bank of New York, as Rights
Agent, dated as of August 21, 1995 (filed as Exhibit 1 on Form 8-A dated
August 21, 1995 (File No. 1-6446) and incorporated herein by
reference)
|
Item 15. Exhibits,
Financial Statement Schedules. (continued)
|
Knight
Form 10-K
|
|
4.7
|
Amendment
No. 1 to Rights Agreement between K N Energy, Inc. and the Bank of New
York, as Rights Agent, dated as of September 8, 1998 (filed as Exhibit
10(cc) to K N Energy, Inc.’s Annual Report on Form 10-K for the
year ended December 31, 1998 (File No. 1-6446) and incorporated herein by
reference)
|
|
4.8
|
Amendment
No. 2 to Rights Agreement of Kinder Morgan, Inc. dated July 8, 1999,
between Kinder Morgan, Inc. and First Chicago Trust Company of New York,
as successor-in-interest to the Bank of New York, as Rights Agent (filed
as Exhibit 4.1 to Knight Inc.’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999 and incorporated herein by
reference)
|
|
4.9
|
Form
of Amendment No. 3 to Rights Agreement of Kinder Morgan, Inc. dated
September 1, 2001, between Kinder Morgan, Inc. and First Chicago Trust
Company of New York, as Rights Agent (filed as Exhibit 4(m) to Knight
Inc.’s Annual Report on Form 10-K for the year ended December 31, 2001 and
incorporated herein by reference)
|
|
4.10
|
Form
of Indenture dated as of August 27, 2002 between Kinder Morgan, Inc. and
Wachovia Bank, National Association, as Trustee (filed as Exhibit 4.1 to
Knight Inc.’s Registration Statement on Form S-4 (File No. 333-100338)
filed on October 4, 2002 and incorporated herein by
reference)
|
|
4.11
|
Form
of First Supplemental Indenture dated as of December 6, 2002 between
Kinder Morgan, Inc. and Wachovia Bank, National Association, as Trustee
(filed as Exhibit 4.2 to Knight Inc.’s Registration Statement on Form S-4
(File No. 333-102873) filed on January 31, 2003 and incorporated herein by
reference)
|
|
4.12
|
Form
of 6.50% Note (filed as contained in the Indenture incorporated by
reference to Exhibit 4.12 hereto and incorporated herein by
reference)
|
|
4.13
|
Form
of Senior Indenture between Kinder Morgan, Inc. and Wachovia Bank,
National Association, as Trustee (filed as Exhibit 4.2 to Knight Inc.’s
Registration Statement on Form S-3 (File No. 333-102963) filed on February
4, 2003 and incorporated herein by
reference)
|
|
4.14
|
Form
of Senior Note of Kinder Morgan, Inc. (included in the Form of Senior
Indenture filed as Exhibit 4.13
hereto)
|
|
4.15
|
Form
of Subordinated Indenture between Kinder Morgan, Inc. and Wachovia Bank,
National Association, as Trustee (filed as Exhibit 4.4 to Knight Inc.’s
Registration Statement on Form S-3 (File No. 333-102963) filed on February
4, 2003 and incorporated herein by
reference)
|
|
4.16
|
Form
of Subordinated Note of Kinder Morgan, Inc. (included in the Form of
Subordinated Indenture filed as Exhibit 4.15
hereto)
|
|
4.17
|
Indenture
dated as of December 9, 2005, among Kinder Morgan Finance Company, ULC,
Kinder Morgan, Inc. and Wachovia Bank, National Association, as Trustee
(filed as Exhibit 4.1 to Knight Inc.’s Current Report on Form 8-K filed on
December 15, 2005 and incorporated herein by
reference)
|
|
4.18
|
Forms
of Kinder Morgan Finance Company, ULC notes (included in the Indenture
filed as Exhibit 4.17 hereto)
|
|
4.20
|
Certificate
of the President and the Vice President and Chief Financial Officer of
Kinder Morgan Management, LLC and Kinder Morgan G.P., Inc., on behalf of
Kinder Morgan Energy Partners, L.P., establishing the terms of the 6.00%
senior notes due 2017 and 6.50% senior notes due 2037 (filed as Exhibit
1.01 to Kinder Morgan Energy Partners, L.P.’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2007 and incorporated herein by
reference)
|
|
4.21
|
Certificate
of the Vice President and Treasurer and the Vice President and Chief
Financial Officer of Kinder Morgan Management, LLC and Kinder Morgan G.P.,
Inc., on behalf of Kinder Morgan Energy Partners, L.P., establishing the
terms of the 5.85% senior notes due 2012 (filed as Exhibit 4.2 to Kinder
Morgan Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2007 and incorporated herein by
reference)
|
Item 15. Exhibits,
Financial Statement Schedules. (continued)
|
Knight
Form 10-K
|
|
4.22
|
Indenture
dated as of December 21, 2007, between NGPL PipeCo LLC and U.S. Bank
National Association, as Trustee (filed as Exhibit 4.1 to Knight Inc.’s
Current Report on Form 8-K filed on December 21, 2007 and incorporated
herein by reference)
|
|
4.23
|
Forms
of notes of NGPL PipeCo LLC (included in the Indenture filed as Exhibit
4.22 hereto)
|
|
4.24
|
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
|
1994
Amended and Restated Knight Inc. Long-term Incentive Plan (filed as
Appendix A to Knight Inc.’s 2000 Proxy Statement on Schedule 14A and
incorporated herein by reference)
|
|
10.2
|
Knight
Inc. Amended and Restated 1999 Stock Plan (filed as Appendix B to Knight
Inc.’s 2004 Proxy Statement on Schedule 14A and incorporated herein by
reference)
|
|
10.3
|
Knight
Inc. Amended and Restated 1992 Stock Option Plan for Nonemployee Directors
(filed as Appendix A to Knight Inc.’s 2001 Proxy Statement on Schedule 14A
and incorporated herein by
reference)
|
|
10.4
|
2000
Annual Incentive Plan of Knight Inc. (filed as Appendix D to Knight Inc.’s
2000 Proxy Statement on Schedule 14A and incorporated herein by
reference)
|
|
10.5
|
Knight
Inc. Employees Stock Purchase Plan (filed as Appendix E to Knight Inc.’s
2000 Proxy Statement on Schedule 14A and incorporated herein by
reference)
|
|
10.6
|
Form
of Nonqualified Stock Option Agreement (filed as Exhibit 10(f) to Knight
Inc.’s Annual Report on Form 10-K for the year ended December 31, 2000 and
incorporated herein by reference)
|
|
10.7
|
Form
of Restricted Stock Agreement (filed as Exhibit 10(g) to Knight Inc.’s
Annual Report on Form 10-K for the year ended December 31, 2000 and
incorporated herein by reference)
|
|
10.8
|
Directors
and Executives Deferred Compensation Plan effective January 1, 1998 for
executive officers and directors of K N Energy, Inc. (filed as Exhibit
10(aa) to K N Energy, Inc.’s Annual Report on Form 10-K for the year ended
December 31, 1998 (File No. 1-6446) and incorporated herein by
reference)
|
|
10.9
|
Employment
Agreement dated October 7, 1999, between the Company and Richard D. Kinder
(filed as Exhibit 99.D of the Schedule 13D filed by Mr. Kinder on November
16, 1999 and incorporated herein by
reference)
|
|
10.10
|
Form
of Purchase Provisions between Kinder Morgan Management, LLC and Knight
Inc. (included as Annex B to the Second Amended and Restated Limited
Liability Company Agreement of Kinder Morgan Management, LLC filed as
Exhibit 4.2 to Kinder Morgan Management, LLC’s Registration Statement on
Form 8-A/A filed on July 24, 2002 and incorporated herein by
reference)
|
|
10.11
|
Resignation
and Non-Compete Agreement, dated as of July 21, 2004, between KMGP
Services, Inc. and Michael C. Morgan (filed as Exhibit 10.12 to Knight
Inc.’s Form 10-Q for the quarter ended June 30, 2004 and incorporated
herein by reference)
|
|
10.12
|
Credit
Agreement, dated as of August 5, 2005, by and among Knight Inc., the
lenders party thereto, Citibank, N.A., as Administrative Agent and
Swingline Lender, Wachovia Bank, National Association and JPMorgan Chase
Bank, N.A., as Co-Syndication Agents and The Bank of Tokyo-Mitsubishi,
Ltd. and Suntrust Bank, as Co-Documentation Agents (filed as Exhibit 10.1
to Knight Inc.’s Current Report on Form 8-K, filed on August 11, 2005 and
incorporated herein by reference)
|
Item 15. Exhibits,
Financial Statement Schedules. (continued)
|
Knight
Form 10-K
|
|
10.13
|
Amendment
Number 1 to Credit Agreement, dated as of August 5, 2005, by and among
Knight Inc., the lenders party thereto, Citibank, N.A., as Administrative
Agent and Swingline Lender, Wachovia Bank, National Association and
JPMorgan Chase Bank, N.A., as Co-Syndication Agents and The Bank of
Tokyo-Mitsubishi, Ltd. and Suntrust Bank, as Co-Documentation Agents
(filed as Exhibit 10.2 to Knight Inc.’s Quarterly Report on Form 10-Q for
the quarter ended September 30, 2005 and incorporated herein by
reference)
|
|
10.14
|
Knight
Inc. Non-Employee Directors Stock Awards Plan (filed as Exhibit 10.1 to
Knight Inc.’s Current Report on Form 8-K filed on May 13, 2005 and
incorporated herein by reference)
|
|
10.15
|
Form
of Restricted Stock Agreement (filed as Exhibit 10.2 to Knight Inc.’s
Current Report on Form 8-K filed on May 13,
2005)
|
|
10.16
|
Form
of Nonqualified Stock Option Agreement (filed as Exhibit 10.3 to Knight
Inc.’s Current Report on Form 8-K filed on May 13, 2005 and incorporated
herein by reference)
|
|
10.17
|
364-Day
Credit Agreement dated as of November 23, 2005, by and among 1197774
Alberta ULC, as Borrower, Knight Inc., as Guarantor, the lenders party
thereto, and Citibank, N.A., Canadian Branch, as Administrative Agent
(filed as Exhibit 10.1 to Knight Inc.’s Current Report on Form 8-K filed
on November 30, 2005 and incorporated herein by
reference)
|
|
10.18
|
Form
of 2005 Credit Agreement dated as of January 13, 2006 among Terasen Gas
(Vancouver Island) Inc., the lenders party thereto and RBC Capital Markets
as Lead Arranger and Book Runner (filed as Exhibit 10.2 to Knight Inc.’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 and
incorporated herein by reference)
|
|
10.19
|
Knight
Inc. Amended and Restated 1999 Stock Plan (filed as Appendix A to Knight
Inc.’s 2006 Proxy Statement on Schedule 14A filed on April 3, 2006 and
incorporated herein by reference)
|
|
10.20
|
Knight
Inc. Foreign Subsidiary Employees Stock Purchase Plan (filed as Appendix B
to Knight Inc.’s 2006 Proxy Statement on Schedule 14A filed on April 3,
2006 and incorporated herein by
reference)
|
|
10.21
|
First
Amendment to the Knight Inc. Employees Stock Purchase Plan (filed as
Appendix C to Knight Inc.’s 2006 Proxy Statement on Schedule 14A filed on
April 3, 2006 and incorporated herein by
reference)
|
|
10.22
|
Form
of Credit Agreement, dated as of May 5, 2006, by and among Terasen Inc.,
the lenders party thereto and The Toronto-Dominion Bank, as Administrative
Agent (filed as Exhibit 10.1 to Knight Inc.’s Current Report on Form 8-K
filed on May 15, 2006 and incorporated herein by
reference)
|
|
10.23
|
Form
of Indemnification Agreement between Knight Inc. and each member of the
Special Committee of the Board of Directors (filed as Exhibit 10.1 to
Knight Inc.’s Current Report on Form 8-K filed on June 16, 2006 and
incorporated herein by reference)
|
|
10.24
|
Form
of Credit Agreement, dated as of June 21, 2006, by and among Terasen Gas
Inc.; Canadian Imperial Bank of Commerce, as Administrative Agent, Lead
Arranger and Sole Bookrunner; The Bank of Nova Scotia, as Syndication
Agent; and the other lenders identified in the Credit Agreement (filed as
Exhibit 10.1 to Knight Inc.’s Current Report on Form 8-K filed on June 27,
2006 and incorporated herein by
reference)
|
|
10.25
|
Acquisition
Agreement dated as of February 26, 2007, by and among Kinder Morgan, Inc.,
3211953 Nova Scotia Company and Fortis Inc. (filed as Exhibit 1.01 to
Kinder Morgan, Inc.’s Current Report on Form 8-K filed on March 1, 2007
and incorporated herein by
reference)
|
|
10.26
|
Retention
Agreement, dated as of March 5, 2007, between Kinder Morgan, Inc. and
Scott E. Parker (filed as Exhibit 10.2 to Kinder Morgan, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2007 and incorporated
herein by reference)
|
Item 15. Exhibits,
Financial Statement Schedules. (continued)
|
Knight
Form 10-K
|
|
10.27
|
Purchase
Agreement, dated as of December 10, 2007, between Knight Inc. and Myria
Acquisition Inc. (filed as Exhibit 10.1 to Knight Inc.’s Current Report on
Form 8-K filed on December 11, 2007 and incorporated herein by
reference)
|
|
21.1*
|
Subsidiaries
of the Registrant
|
|
23.1*
|
Consent
of PricewaterhouseCoopers LLP
|
|
23.2*
|
Consent
of Netherland, Sewell & Associates,
Inc.
|
|
31.1*
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
31.2*
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
32.1*
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
32.2*
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
99.1
|
The
financial statements of Kinder Morgan Energy Partners, L.P. and
subsidiaries (incorporated by reference to pages 114 through 210 of the
Annual Report on Form 10-K of Kinder Morgan Energy Partners, L.P. for the
year ended December 31, 2007)
|
Knight
Form 10-K
|
|
KNIGHT
INC.
(Registrant)
|
||
By
|
/s/
Kimberly A. Dang
|
||
|
Kimberly
A. Dang
Vice
President and Chief Financial Officer
|
||
Date:
March 31, 2008
|
|
|
||
/s/
Kimberly A. Dang
|
Vice
President and Chief Financial Officer (Principal
|
|
Kimberly
A. Dang
|
Financial
Officer and Principal Accounting Officer)
|
|
|
||
/s/
Richard D. Kinder
|
Director,
Chairman and Chief Executive Officer
|
|
Richard
D. Kinder
|
(Principal
Executive Officer)
|
|
|
||
/s/
Kenneth A. Pontarelli
|
Director
|
|
Kenneth
A. Pontarelli
|
||
|
||
/s/
C. Park Shaper
|
Director
|
|
C.
Park Shaper
|
||
|