HOUSTON, March 10 /PRNewswire-FirstCall/ -- Kinder Morgan, Inc. today announced that it expects to record a non-cash, non- recurring charge of approximately $14 million after tax, or approximately $0.10 per fully diluted share, in the first quarter of 2006 related to the financing of the Terasen Inc. acquisition. The charge is necessary because certain hedges put in place related to the debt financing for the acquisition did not qualify for hedge treatment under Generally Accepted Accounting Principles (GAAP), thus requiring that they be marked-to-market through the income statement. These hedges have now been modified so that they do qualify for hedge accounting.
"While these hedges always provided the economic protection that we are seeking, we have now modified them so that they will not impact the income statement going forward," said Chairman and CEO Richard D. Kinder. "The first quarter charge arose primarily because we had to mark-to-market on our income statement the impact of the strengthening of the Canadian dollar versus the U.S. dollar from the beginning of 2006 until we modified the hedges. The strengthening of the Canadian dollar is actually a positive for KMI because the cash flow from our Canadian operations is now more valuable than we expected. Absent this charge, we still expect to meet or exceed our 2006 budget target of $5.00 of earnings per share at KMI."
Kinder Morgan, Inc. is one of the largest energy transportation, storage and distribution companies in North America with approximately 40,000 miles of natural gas and products pipelines, 1.1 million natural gas distribution customers and 150 terminals. Kinder Morgan, Inc. owns the general partner interest of Kinder Morgan Energy Partners, L.P. , one of the largest publicly traded pipeline limited partnerships in the United States. Combined, the two companies have an enterprise value of over $35 billion.
This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Kinder Morgan believes that its expectations are based on reasonable assumptions, it can give no assurance that such assumptions will materialize. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein are enumerated in Kinder Morgan's Forms 10-K and 10-Q as filed with the Securities and Exchange Commission.
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