Business Context and Reporting Period
This Form 8-K is filed by Kinder Morgan, Inc. on May 4, 2012, reporting events occurring on May 1, 2012. The filing addresses regulatory approval for the pending acquisition of El Paso Corporation (EP) and the resulting requirement to reclassify certain assets as discontinued operations.
Key Financial Metrics
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. Instead, it announces the revision of historical financial statements (as of December 31, 2011 and 2010, and for the three years ended December 31, 2011) to reflect the reclassification of specific assets. These revised statements are attached as Exhibit 99.1.
Material Changes Versus Prior Period
The primary material change is the reclassification of Kinder Morgan Energy Partners, L.P.'s (KMP) "FTC Natural Gas Pipelines disposal group" as discontinued operations. This change applies to:
- The Quarterly Report on Form 10-Q for the period ended March 31, 2012.
- Historical financial statements for the years ended December 31, 2011 and 2010.
- Selected financial data for the five-year period ended December 31, 2011.
This reclassification was necessitated by a Federal Trade Commission (FTC) settlement order requiring the divestiture of these assets within 180 days of closing the EP acquisition.
Guidance, Outlook, and Material Events
Regulatory Approval: The FTC voted to accept a proposed settlement order regarding the acquisition of El Paso Corporation and granted early termination of the waiting period, allowing the transaction to close.
Divestiture Requirement: The settlement mandates the divestiture of the following KMP assets to an FTC-approved buyer within 180 days of closing:
- Kinder Morgan Interstate Gas Transmission natural gas pipeline system.
- Trailblazer natural gas pipeline system.
- Casper and Douglas natural gas processing operations.
- 50% equity investment in the Rockies Express natural gas pipeline system.
Financial Reporting Impact: Management has revised the Annual Report on Form 10-K and related disclosures to reflect these assets as discontinued operations for all periods presented.
Investor Verification Checklist
- Review Exhibit 99.1 for the specific numerical impact of the discontinued operations reclassification on historical earnings and cash flows.
- Verify the timeline for the divestiture of the four specified asset groups within the 180-day window post-closing.
- Confirm the identity of the FTC-approved buyer for the disposal group.
- Assess the impact of the El Paso Corporation acquisition on the company's overall capital structure and leverage ratios.