Table of Contents

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FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION**Washington, DC 20549**

| x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)    OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended**June 30, 2004**or

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)    OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________to_____________Commission file number 1-06446**Kinder Morgan, Inc.**(Exact name of registrant as specified in its charter)

Kansas
  
48-0290000
(State or other jurisdiction of    incorporation or organization)
  
(I.R.S. Employer    Identification No.)  
500 Dallas    Street, Suite 1000, Houston, Texas 77002
(Address of principal executive offices, including zip    code)  
(713)    369-9000
(Registrant's telephone number, including area code)  
  
(Former name, former address and former fiscal year, if    changed since last report)
Indicate by check mark whether the registrant: (1) has filed allreports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filing requirements forthe past 90 days.

Yes x  No o

Indicate by check mark whether the registrant is an accelerated filer(as defined in Rule 12b-2 of the Exchange Act).

Yes x  No o

The number of shares outstanding of the registrant's common stock, $5par value, as of July 30, 2004 was 123,537,348 shares.

KINDER MORGAN, INC. AND SUBSIDIARIESFORM 10-QQUARTER ENDED JUNE 30, 2004Contents

 
  
Page    NumberPART I.FINANCIAL    INFORMATION  Item    1.Financial    Statements (Unaudited)  
   Consolidated Balance Sheets
3-4
   Consolidated Statements of Operations
5
   Consolidated Statements of Cash Flows
6
   Notes to Consolidated Financial    Statements
7-25  Item 2.
Management's Discussion    and Analysis of Financial
   Condition and Results of    Operations
26-43  Item 3.
Quantitative and    Qualitative Disclosures About Market Risk
43  Item    4.
Controls and Procedures
43  PART II.
OTHER    INFORMATION  Item 1.
Legal Proceedings
44  Item 2.Changes    in Securities, Use of Proceeds and Issuer Purchases        of Equity    Securities
44  Item 3.
Defaults Upon Senior    Securities
44  Item 4.
Submission of Matters to a Vote    of Security Holders
44-45  Item 5.
Other Information
45  Item 6.
Exhibits and Reports on Form    8-K
46  SIGNATURE
47
2
**PART I. - FINANCIAL INFORMATION
*Item 1.  FinancialStatements.*
CONSOLIDATED BALANCE SHEETS(Unaudited)Kinder Morgan, Inc. and Subsidiaries****June 30,**December 31,**2004**2003
(In    thousands)**ASSETS:****Current Assets:**Cash and Cash Equivalents 
$     6,715 
$    11,076 Restricted Deposits 
      8,097 
     17,158 Accounts Receivable, Net:   Trade 
     68,526 
     75,903    Related Parties 
        843 
      1,584 Note Receivable 
      8,315 
          - Inventories 
     58,799 
     22,096 Gas Imbalances 
     17,077 
     33,320 Other 
    113,630 
    115,183 
    282,002 
    276,320    **Investments:**Kinder Morgan Energy Partners 
  2,140,877 
  2,106,312 Goodwill 
    947,730 
    972,380 Other 
    202,709 
    208,860 
  3,291,316 
  3,287,552    **Property, Plant and Equipment, Net**
  6,085,579 
  6,083,937 **  ****Deferred Charges and Other Assets**
    326,410 
    388,902   **Total Assets**
$ 9,985,307 
$10,036,711 
=========== 
=========== 
The accompanying notes are an integral part of these statements.

3
**CONSOLIDATED BALANCE SHEETS(Unaudited)Kinder Morgan, Inc. and Subsidiaries****June 30,**December 31,**2004**2003
(In thousands    except shares)**LIABILITIES AND STOCKHOLDERS' EQUITY:****Current Liabilities:**Current Maturities of Long-term Debt 
$   655,000 
$     5,000 Notes Payable 
     65,500 
    127,900 Accounts Payable:   Trade 
     22,474 
     61,385    Related Parties 
      1,074 
     10,632 Accrued Interest 
     68,516 
     68,596 Accrued Taxes 
     32,446 
     35,795 Gas Imbalances 
     65,649 
     38,494 Other 
    115,238 
    128,559 
  1,025,897 
    476,361 **  ****Other Liabilities and Deferred Credits:**Deferred Income Taxes 
  2,512,028 
  2,477,329 Other 
    162,996 
    197,435 
  2,675,024 
  2,674,764   **Long-term Debt:**  Outstanding Notes and    Debentures 
  2,187,533 
  2,837,487   Deferrable Interest Debentures    Issued to Subsidiary Trusts 
    283,600 
    283,600   Value of Interest Rate Swaps 
     31,062 
     88,242   
  2,502,195 
  3,209,329   **Minority Interests in Equity of    Subsidiaries**
  1,040,061 
  1,010,140   **Stockholders' Equity:**Common Stock-  Authorized - 150,000,000    Shares, Par Value $5 Per Share  Outstanding - 133,149,990 and    132,229,622 Shares,    Respectively,    Before Deducting 9,559,084 and 8,912,660    Shares Held in    Treasury 
    665,750 
    661,148 Additional Paid-in Capital 
  1,815,771 
  1,780,761 Retained Earnings 
    824,544 
    732,492 Treasury Stock 
   (484,966)
   (446,095)Deferred Compensation 
    (31,281)
    (36,506)Accumulated Other Comprehensive Loss 
    (47,688)
    (25,683)Total Stockholders' Equity 
  2,742,130 
  2,666,117   **Total Liabilities and Stockholders'    Equity**
$ 9,985,307 
$10,036,711 
=========== 
=========== 
The accompanying notes are an integral part of these statements.

4
**CONSOLIDATED STATEMENTSOF OPERATIONS (Unaudited)Kinder Morgan, Inc. and Subsidiaries****Three Months Ended    June 30,**Six Months Ended    June 30,**2004**2003**2004**2003
(In thousands    except per share amounts)**Operating Revenues:**Natural Gas Transportation and Storage 
$ 171,946 
$ 162,974 
$ 370,739 
$ 345,827 Natural Gas Sales 
   42,941 
   70,490 
  180,043 
  193,489 Other 
   21,980 
   18,401 
   38,671 
   31,417     Total Operating    Revenues 
  236,867 
  251,865 
  589,453 
  570,733   **Operating Costs and Expenses:**Gas Purchases and Other Costs of Sales 
   52,210 
   79,852 
  185,681 
  192,807 Operations and Maintenance 
   37,934 
   31,549 
   74,128 
   61,450 General and Administrative 
   19,879 
   18,786 
   42,167 
   35,194 Depreciation and Amortization 
   29,707 
   29,047 
   59,188 
   58,672 Taxes, Other Than Income Taxes 
    8,451 
    7,383 
   16,832 
   14,557     Total Operating    Costs and Expenses 
  148,181 
  166,617 
  377,996 
  362,680   **Operating Income**
   88,686 
   85,248 
  211,457 
  208,053   **Other Income and (Expenses):**Equity in Earnings of Kinder Morgan Energy    Partners 
  132,802 
  113,732 
  261,569 
  225,227 Equity in Earnings of Other Equity    Investments 
    2,695 
    2,719 
    5,502 
    5,202 Interest Expense, Net 
  (32,361)
  (31,314)
  (64,795)
  (71,288)Interest Expense - Deferrable Interest    Debentures 
   (5,478)
        - 
  (10,956)
        - Minority Interests 
  (15,089)
  (15,476)
  (24,397)
  (31,397)Other, Net 
      762 
     (874)
    1,521 
      122     Total Other Income    and (Expenses) 
   83,331 
   68,787 
  168,444 
  127,866   **Income Before Income Taxes**
  172,017 
  154,035 
  379,901 
  335,919 Income Taxes 
   67,627 
   59,841 
  148,469 
  130,655   **Net Income**
$ 104,390 
$  94,194 
$ 231,432 
$ 205,264 
========= 
========= 
========= 
=========   **Basic Earnings Per Common Share**
$    0.84 
$    0.77 
$    1.87 
$    1.68 
========= 
========= 
========= 
========= Number of Shares Used in Computing Basic    Earnings Per Common    Share (Thousands) 
  123,882 
  122,218 
  123,799 
  122,048 
========= 
========= 
========= 
=========   **Diluted Earnings Per Common Share**
$    0.84 
$    0.76 
$    1.85 
$    1.66 
========= 
========= 
========= 
========= Number of Shares Used in Computing Diluted    Earnings Per Common    Share (Thousands) 
  124,955 
  123,474 
  124,942 
  123,285 
========= 
========= 
========= 
=========   **Dividends Per Common Share**
$  0.5625 
$  0.1500 
$  1.1250 
$  0.3000 
========= 
========= 
========= 
========= 
The accompanying notes are an integral part of these statements.

5
**CONSOLIDATED STATEMENTSOF CASH FLOWS (Unaudited)Kinder Morgan, Inc. and SubsidiariesIncrease (Decrease) in Cash and Cash Equivalents****Six Months Ended    June 30,**2004**2003
(In thousands)**Cash Flows From Operating Activities:**Net Income 
$ 231,432 
$ 205,264 Adjustments to Reconcile Net Income to Net    Cash Flows from Operating Activities:    Depreciation and    Amortization 
   59,188 ********************************** |
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