Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549**FORM 10-Q**[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE    SECURITIES    EXCHANGE ACT OF 1934
For the quarterly period ended **September 30, 2001**or
[  ]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 1-6446KINDER 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, Suite 1000, Houston, Texas
77002
(Address of    principal executive offices)
(Zip Code)
  

Registrant's telephone number, including area code (713) 369-9000
   
(Former name, former address and former fiscal year,    if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filing requirements for the past 90days.

Yes X    No___

The number of shares outstanding for each of the registrant's classesof common stock, as of the latest practicable date was: Common Stock, $5 par value;outstanding 111,629,087 shares as of October 31, 2001.

 

KINDER MORGAN, INC. AND SUBSIDIARIESFORM 10-QQUARTER ENDED SEPTEMBER 30, 2001Contents

 
PART I.FINANCIAL    INFORMATION
PageItem 1.Financial Statements    (Unaudited)
Number     Consolidated    Balance Sheets
3-4   Consolidated Statements of Income
5   Consolidated    Statements of Cash Flows
6   Notes to Consolidated    Financial Statements
7-20  Item 2.Management’s Discussion and    Analysis of Financial   Condition and    Results of Operations
21-33  Item 3.Quantitative and Qualitative    Disclosures About Market Risk
33  PART II.OTHER INFORMATION  Item 1.Legal    Proceedings
34  Item 2.Change in Securities    and Use of Proceeds
34  Item 3.Defaults Upon Senior    Securities
34  Item 4.Submission    of Matters to a Vote of Security Holders
34  Item 5.Other    Information
34  Item 6.Exhibits and Reports on Form    8-K
35  SIGNATURE
36**2**PART I - FINANCIAL INFORMATION
*Item 1. Financial Statements.*
CONSOLIDATED BALANCE SHEETS (Unaudited)Kinder Morgan, Inc. and Subsidiaries 
**September 30,**December 31,**2001**2000
(In    Thousands)**ASSETS:****Current Assets:**Cash and Cash Equivalents
$   18,659 
$  141,923 Restricted Deposits
     8,057 
    14,063 Note Receivable
   219,085 
         - Accounts Receivable, Net:   Trade
    63,432 
   109,722    Related Parties
     4,426 
     2,046    Other
         - 
    56,750 Inventories
    71,394 
    19,600 Gas Imbalances
    51,216 
    40,838 Other
    23,505 
    48,700 
   459,774 
   433,642    **Investments:**Kinder Morgan Energy Partners
 2,831,823 
 1,819,281 Other
   217,405 
   200,324 
 3,049,228 
 2,019,605    **Property, Plant and Equipment**
 6,074,025 
 6,080,383 **Less Accumulated Depreciation and    Amortization**
   391,163 
   412,392 
 5,682,862 
 5,667,991    **Deferred Charges and Other Assets**
   309,151 
   265,751   **Total Assets**
$9,501,015 
$8,386,989    
========== 
========== 
The accompanying notes are an integral part of these statements.
**3**CONSOLIDATED BALANCE SHEETS (Unaudited)Kinder Morgan, Inc. and Subsidiaries
**September    30,**December    31,**2001**2000
(In    Thousands)**LIABILITIES AND STOCKHOLDERS' EQUITY:****Current Liabilities:**Current Maturities of Long-term Debt
$  406,267 
$  808,167 Notes Payable
   703,220 
   100,000 Accounts Payable:   Trade
    75,910 
   126,245    Related Parties
     2,866 
    13,556 Accrued Interest
    44,658 
    72,222 Accrued Taxes
    33,692 
    26,584 Gas Imbalances
    55,763 
    39,496 Payable for Purchase of Thermo Companies
         - 
    15,000 Reserve for Loss on Disposal of    Discontinued Operations
     3,371 
    23,694 Other
   141,827 
   129,911 
 1,467,574 
 1,354,875 **  ****Other Liabilities and Deferred Credits:**Deferred Income Taxes
 2,403,213 
 2,273,177 Other
   243,532 
   222,420 
 2,646,745 
 2,495,597   **Long-term Debt**
 2,432,441 
 2,478,983   **Kinder Morgan-Obligated Mandatorily    Redeemable Preferred****  Capital Trust Securities of    Subsidiary Trusts Holding****  Solely Debentures of Kinder    Morgan**
   275,000 
   275,000   **Minority Interests in Equity of    Subsidiaries**
   845,244 
     4,910   **Stockholders' Equity:**Common Stock-  Authorized - 150,000,000    Shares, Par Value $5 Per Share  Outstanding – 115,525,776    and 114,578,800 Shares,    Respectively,    Before Deducting 3,279,000 and 96,140    Shares Held in    Treasury
   577,629 
   572,894 Additional Paid-in Capital
 1,248,367 
 1,189,270 Retained Earnings
   153,325 
    17,787 Treasury Stock
  (169,747)
    (2,327)Other
    24,437 
         - Total Stockholders' Equity
 1,834,011 
 1,777,624   **Total Liabilities and Stockholders'    Equity**
$9,501,015 
$8,386,989 
========== 
========== 
The accompanying notes are an integral part of these statements.
**4**CONSOLIDATED STATEMENTS OF INCOME(Unaudited)Kinder Morgan, Inc. and Subsidiaries (In Thousands Except Per Share Amounts)
**Three Months Ended    September 30,**Nine Months Ended    September 30,**2001**2000**2001**2000**Operating Revenues:**Natural Gas Sales
$  36,037 
$ 571,348 
$ 205,854 
$1,246,725 Natural Gas Transportation and Storage
  161,197 
  138,306 
  478,439 
   443,546 Other
   29,792 
   31,763 
   86,810 
    83,744     Total Operating    Revenues
  227,026 
  741,417 
  771,103 
 1,774,015   **Operating Costs and Expenses:**Gas Purchases and Other Costs of Sales
   53,492 
  568,430 
  246,121 
 1,228,977 Operations and Maintenance
   32,964 
   38,653 
   93,017 
   120,563 General and Administrative
   15,912 
   14,611 
   46,953 
    42,863 Depreciation and Amortization
   26,702 
   27,013 
   80,826 
    80,865 Taxes, Other Than Income Taxes
    6,560 
    7,240 
   19,543 
    20,926     Total Operating    Costs and Expenses
  135,630 
  655,947 
  486,460 
 1,494,194   **Operating Income**
   91,396 
   85,470 
  284,643 
   279,821   **Other Income and (Expenses):**Investment in Kinder Morgan Energy    Partners:    Equity in Earnings
   76,249 
   34,562 
  198,344 
    99,287     Amortization of    Excess Investment
   (5,907)
   (6,927)
  (19,449)
   (21,366)Equity in Earnings (Losses) of Other Equity    Investments
    2,091 
     (680)
   (3,512)
    (2,751)Interest Expense, Net
  (53,175)
  (61,956)
 (167,700)
  (185,431)Minority Interests 
  (10,865)
   (5,986)
  (25,038)
   (18,059)Other, Net
    3,325 
      363 
   15,580 
    11,638     Total Other Income    and (Expenses)
   11,718 
  (40,624)
   (1,775)
  (116,682)  **Income Before Income Taxes and    Extraordinary Items**
  103,114 
   44,846 
  282,868 
   163,139 Income Taxes
   43,443 
   18,138 
  116,495 
    65,993 **Income Before Extraordinary Items**
   59,671 
   26,708 
  166,373 
    97,146   Extraordinary Items - Losses on Early    Extinguishment     of Debt, Net of    Income Tax Benefits of $964 and $9,044
   (1,446)
        - 
  (13,565)
         -   **Net Income**
$  58,225 
$  26,708 
$ 152,808 
$   97,146 
========= 
========= 
========= 
==========   **Basic Earnings (Loss) Per Common Share:**Income Before Extraordinary Items
$    0.52 
$    0.23 
$    1.45 
$     0.85 Extraordinary Items - Losses on Early    Extinguishment of Debt
    (0.01)
        - 
    (0.12)
         - Total Basic Earnings Per Common Share
$    0.51 
$    0.23 
$    1.33 
$     0.85 
========= 
========= 
========= 
==========   Number of Shares Used in Computing Basic    Earnings Per Common    Share (Thousands)
  114,980 
  114,461 
  115,027 
   113,906 
========= 
========= 
========= 
==========   **Diluted Earnings (Loss) Per Common    Share:**Income Before Extraordinary Items
$    0.49 
$    0.23 
$    1.37 
$     0.85 Extraordinary Items - Losses on Early    Extinguishment of Debt
    (0.01)
        - 
    (0.11)
         - Total Diluted Earnings Per Common Share
$    0.48 
$    0.23 
$    1.26 
$     0.85 
========= 
========= 
========= 
==========   Number of Shares Used in Computing Diluted    Earnings Per Common    Share (Thousands)
  121,446 
  116,177 
  121,717 
   114,686 
========= 
========= 
========= 
==========   **Dividends Per Common Share**
$    0.05 
$    0.05 
$    0.15 
$     0.15 
========= 
========= 
========= 
==========   
The accompanying notes are an integral part of these statements.
**5**CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)Kinder Morgan, Inc. and SubsidiariesIncrease (Decrease) in Cash and Cash Equivalents
**Nine Months Ended    September 30,**2001**2000
(In    Thousands)**Cash Flows From Operating Activities:**Net Income
$   152,808 
$    97,146 Adjustments to Reconcile Net Income to Net    Cash Flows from Operating Activities:    Depreciation and    Amortization
     80,826 
     80,865     Extraordinary    Losses on Early Extinguishment of Debt
     22,609 
          -     Deferred Income    Taxes
     91,908 
     58,058     Equity in Earnings    of Kinder Morgan Energy Partners
   (178,895)
    (77,921)    Distributions from    Kinder Morgan Energy Partners
    168,225 
     84,315     Deferred Purchased    Gas Costs
     20,939 
      2,329     Net Gains on Sales    of Facilities
     (6,183)
     (2,130)    Changes in Gas in    Underground Storage
    (75,074)
     (7,540)    Changes in Other    Working Capital Items
     (2,362)
     (2,244)    Other, Net
      4,444 
    (32,653)  Net Cash Flows Provided by    Continuing Operations
    279,245 
    200,225   Net Cash Flows Used in    Discontinued Operations
     (5,577)
    (98,916)**Net Cash Flows Provided by Operating    Activities**
    273,668 
    101,309   **Cash Flows From Investing Activities:**Capital Expenditures
    (64,154)
    (54,299)Proceeds from Transfers to Kinder Morgan    Energy Partners
          - 
    330,000 Acquisitions
    (15,000)
    (19,412)Investment in Kinder Morgan Energy Partners
   (991,869)
          - Other Investments
   (222,253)
    (64,581)Proceeds from Sale of Tom Brown, Inc. Stock
          - 
     14,864 Proceeds from Sales of Other Assets
      5,074 
     11,415 Net Cash Flows Provided by (Used in)    Continuing Investing Activities
 (1,288,202)
    217,987 Net Cash Flows Provided by Discontinued    Investing Activities
     25,742 
    129,494 **Net Cash Flows Provided by (Used in)    Investing Activities**
 (1,262,460)
    347,481   **Cash Flows From Financing Activities:**Short-term Debt, Net
    603,220 
   (313,200)Long-term Debt Retired
   (466,848)
     (1,622)Premiums Paid on Early Extinguishment of    Debt
    (30,694)
          - Premium Equity Participating Securities    Contract Fee
     (5,449)
     (5,469)Common Stock Issued
     26,085 
     15,022 Issuance of Membership Shares by Kinder    Morgan Management, LLC
    942,614 
          - Securities Issuance Costs
    (54,480)
          - Other Financing, Net
          - 
   (133,409)Treasury Stock Issued
      2,464 
        997 Treasury Stock Acquired
   (133,916)
        (18)Cash Dividends, Common Stock
    (17,269)
    (17,068)Minority Interests, Net
       (199)
     (1,203)**Net Cash Flows Provided by (Used in)    Financing Activities**
    865,528 
   (455,970)  Net Decrease in Cash and Cash Equivalents
   (123,264)
     (7,180)Cash and Cash Equivalents at Beginning of    Period
    141,923 
     26,378 Cash and Cash Equivalents at End of Period
$    18,659 
$    19,198   
=========== 
=========== 
For supplemental cash flow information, see Note 5.The accompanying notes are an integral part of these statements.
**6**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**
1.     General
Unless the context requires otherwise, references to "we,""us," "our," or the "Company" are intended to mean KinderMorgan, Inc. and its consolidated subsidiaries. We have prepared the accompanyingunaudited consolidated financial statements under the rules and regulations of theSecurities and Exchange Commission. Under such rules and regulations, we have condensed oromitted certain information and notes normally included in financial statements preparedin conformity with accounting principles generally accepted in the United States ofAmerica. We believe, however, that our disclosures are adequate to make the informationpresented not misleading. The consolidated financial statements reflect all adjustmentsthat are, in the opinion of management, necessary for a fair presentation of our financialresults for the interim periods presented. You should read these consolidated financialstatements in conjunction with our consolidated financial statements and related notesincluded in our 2000 Form 10-K. Certain prior period amounts have been reclassified toconform to the current presentation.

2.     Kinder Morgan Management, LLC
On May 18, 2001, Kinder Morgan Management, LLC, an indirect subsidiaryof Kinder Morgan, Inc., issued and sold its common shares in an underwritten publicoffering. Upon completion of the offering, Kinder Morgan Management, LLC became a partnerin Kinder Morgan Energy Partners, L.P. and assumed the responsibility to manage andcontrol its business and affairs. The net proceeds from the offering were used by KinderMorgan Management, LLC to buy i-units from Kinder Morgan Energy Partners for $991.9million. The i-units are a new class of Kinder Morgan Energy Partners' limited partnerinterests and will be issued only to Kinder Morgan Management, LLC. As described in our2000 Form 10-K, we have certain rights and obligations with respect to these securities,including an obligation to purchase the Kinder Morgan Management, LLC shares or exchangethem for Kinder Morgan Energy Partners' common units as discussed following.

In the initial public offering, Kinder Morgan Management, LLC issued atotal of 14,875,000 shares, of which 1,487,500 shares (in each case, before adjustment forthe stock split described following) were purchased by Kinder Morgan, Inc. (utilizingincremental short-term borrowings), with the balance purchased by the public. The equityinterest in Kinder Morgan Management, LLC (our consolidated subsidiary) purchased by thepublic created a minority interest on our balance sheet of $892.7 million at the time ofthe transaction, which is described in more detail in our Form 10-Q for the quarter endedJune 30, 2001.

On July 18, 2001, Kinder Morgan Energy Partners announced a two-for-onesplit of its common units. The common unit split, in the form of a one-common-unitdistribution for each common unit outstanding, occurred on August 31, 2001. This splitresulted in Kinder Morgan, Inc. receiving one additional common unit for each common unitit owned and Kinder Morgan Management, LLC receiving one additional i-unit for each i-unitit owned. Also on July 18, 2001, Kinder Morgan Management, LLC announced a two-for-onesplit of its shares. This share split, in the form of a one-share distribution for eachshare outstanding, occurred on August 31, 2001.

Holders of Kinder Morgan Management, LLC shares are entitled to presentthem to Kinder Morgan, Inc. who will, at its option, either (i) exchange one common unitof Kinder Morgan Energy Partners for each share presented or (ii) redeem the shares for anamount of cash based on the market price of Kinder Morgan Energy Partners' common units asspecified in the registration statements. As of September 30, 2001, approximately 1.8million Kinder Morgan Management, LLC shares (after adjustment for the stock split asdiscussed preceding) had been exchanged for Kinder Morgan Energy Partners' common units.As a result of these exchanges, at September 30, 2001, Kinder Morgan, Inc. ownedapproximately 4.8 million (16%) of Kinder Morgan Management, LLC's outstanding shares. Ourincome statement is not affected by these exchanges, 
**7****
which are taxable events for income tax purposes. The impacts on ourbalance sheet are a decrease in minority interest and a change in paid-in capital equal tothe difference between the book value of the minority interest associated with the KinderMorgan Management, LLC shares received in the exchange and the book value of the KinderMorgan Energy Partners' units surrendered, net of the associated tax liability. ThroughSeptember 30, 2001, these exchanges have increased our paid-in capital by approximately$8.7 million.

On October 17, 2001, Kinder Morgan Management, LLC announced that itsboard of directors had approved a share distribution equal to $0.55 per share payable onNovember 14, 2001 to its shareholders of record as of October 31, 2001. This distributionwill be paid in the form of additional shares based on the average market price of a sharedetermined for a ten trading day period ending on the trading day immediately prior to theex-dividend date for the shares.

3.     Investments and Sales
On November 5, 2001, the Horizon Pipeline Company announced thatconstruction has started on its new $79 million natural gas pipeline in northern Illinois.Horizon Pipeline is a joint venture of Nicor-Horizon, a subsidiary of Nicor Inc. (NYSE:GAS), and Natural Gas Pipeline Company of America. Completion of the entire project isprojected for April 2002. The action allowing work to get under way included aconfirmation from the Federal Energy Regulatory Commission ("FERC") that HorizonPipeline was in compliance with pre-construction conditions of the original certificate ofpublic convenience and necessity issued in July 2001.

The Horizon natural gas pipeline entails the new construction of 27miles of 36-inch diameter pipe, the lease of capacity in 46 miles of existing pipelinefrom Natural Gas Pipeline Company of America, and the installation of gas compressionfacilities. Upon completion of the project, Horizon Pipeline will be able to transport 380million cubic feet of natural gas per day from near Joliet into McHenry County, connectingthe emerging supply hub at Joliet with the northern part of the Nicor Gas distributionsystem and the existing Natural Gas Pipeline Company of America pipeline system.

In early October 2001, we contributed $100 million to TransColorado GasTransmission Company, our 50/50 joint venture with a subsidiary of Questar PipelineCompany. This contribution, together with a contribution in like amount from our jointventure partner, was used to retire TransColorado's outstanding debt.

In September 2001, Kinder Morgan Power (included with our "Powerand Other" business segment as discussed in Note 6) transferred ownership of theJackson, Michigan power generation facility currently under construction to a third partyin exchange for cash and a note receivable. Collection of the $219 million note isexpected in late 2001 or early 2002 upon closing of debt financing under arrangements withfinancial institutions.

As more fully described in our 2000 Form 10-K, we transferredapproximately $300 million of assets, effective December 31, 2000, to Kinder Morgan EnergyPartners. The largest asset we transferred was our wholly owned subsidiary Kinder MorganTexas Pipeline, L.P. and certain associated entities (a major Texas intrastate natural gaspipeline system).

4.     Earnings Per Share
Basic earnings per common share is computed based on the monthlyweighted-average number of common shares outstanding during each period. Diluted earningsper common share is computed based on the monthly weighted-average number of common sharesoutstanding during each period, increased by the assumed exercise or conversion ofsecurities (stock options and Premium Equity Participating Security Units) convertibleinto 
**8****
common stock, for which the effect of conversion or exercise using thetreasury stock method would be dilutive. Note 7 contains more information regarding ourPremium Equity Participating Security Units.
**Three Months Ended    September 30,**Nine Months Ended    September 30,**2001**2000**2001**2000
(In    Thousands)
(In    Thousands)Weighted-average Common Shares Outstanding
 114,980
 114,461
 115,027
 113,906Dilutive Common Stock Options
   1,722
   1,096
   1,824
     780Dilutive Premium Equity Participating    Security Units
   4,744
     620
   4,866
       -Shares Used to Compute Diluted Earnings Per    Common Share
 121,446
 116,177
 121,717
 114,686
========
========
========
========
There were approximately 11,000 weighted-average stock optionsoutstanding during the three months ended September 30, 2001 that were excluded from thediluted earnings per share calculation because the effect of including them would havebeen antidilutive. There were no antidilutive stock options outstanding for the ninemonths ended September 30, 2001. Weighted-average stock options outstanding totalingapproximately 38,000 and 700,000 for the three months and nine months ended September 30,2000, respectively, were excluded from the diluted earnings per share calculation in thoseperiods because the effect of including them would have been antidilutive.

5.     Supplemental Cash Flow Information
We consider all highly liquid investments purchased with an originalmaturity of three months or less to be cash equivalents. "Other, Net," presentedas a component of "Net Cash Flows Provided by Operating Activities" in theaccompanying Consolidated Statements of Cash Flows includes, among other things, equity inundistributed earnings or losses of unconsolidated subsidiaries (other than Kinder MorganEnergy Partners) and joint ventures.
**Changes in Other Working Capital Items,****Nine Months Ended    September 30,**   Net of Effects of    Acquisitions and Sales****2001**2000**Increase (Decrease) in Cash and Cash    Equivalents**
(In    Thousands) Accounts Receivable
$  40,237 
$    (908)Material and Supplies Inventory
   (1,497)
   (2,852)Other Current Assets
   (7,538)
  (30,668)Accounts Payable
  (37,888)
   99,487 Other Current Liabilities
    4,324 
  (67,303)
$  (2,362)
$  (2,244)
========= 
=========   **Supplemental Disclosures of Cash Flow    Information:**  **Cash Paid During the Period for:**Interest, Net of Amount Capitalized
$ 193,226 
$ 224,261 
========= 
========= Distributions on Preferred Capital Trust    Securities
$  10,956 
$  10,956 
========= 
========= Income Taxes Paid
$  23,878 
$   7,141 
========= 
========= 
As discussed in Note 2, Kinder Morgan, Inc. exchanged approximately 1.8million Kinder Morgan Energy Partners common units for additional shares of Kinder MorganManagement, LLC during the third quarter of 2001 in non-cash exchange transactions. Asdiscussed in Note 3, in September 2001, Kinder Morgan Power transferred ownership of theJackson, Michigan power generation facility to a third party in a transaction with bothcash and non-cash components.
**9****
6.     Business Segments
In accordance with the manner in which we currently manage ourbusinesses, including the allocation of capital and evaluation of business unitperformance, we report our operations in the following segments: (1) Natural Gas PipelineCompany of America, our wholly owned subsidiary which, together with certain associatedentities, operates a major interstate natural gas pipeline system; (2) Kinder MorganRetail, which distributes, on a largely regulated basis, natural gas to retail customersand (3) Power and Other which, through Kinder Morgan Power, constructs and operateselectric power generation facilities and which includes various other activities notconstituting business segments. Prior to the December 31, 2000 transfer to Kinder MorganEnergy Partners (see Note 3), we also owned and operated Kinder Morgan Texas Pipeline, amajor Texas intrastate natural gas pipeline system.

The accounting policies we apply in the generation of business segmentinformation are generally the same as those described in Note 1 of Notes to ConsolidatedFinancial Statements included in our 2000 Form 10-K, except that certain items below the"Operating Income" line are either not allocated to business segments or are notconsidered by management in its evaluation of business unit performance. An exception tothis is that Kinder Morgan Power, which routinely conducts its business activities in theform of joint operations with other parties that are accounted for under the equity methodof accounting, includes its equity in earnings of these investees in its operatingresults. These equity method earnings are included in "Other Income and(Expenses)" in our Consolidated Statements of Income. In addition, (i) certain itemsincluded in operating income (such as general and administrative expenses) are notallocated to individual business segments and (ii) gains and losses from incidental salesof assets are included in segment earnings. With adjustment for these items, we currentlyevaluate business segment performance primarily based on operating income in relation tothe level of capital employed. We account for intersegment sales at market prices, whilewe account for asset transfers at either market value or, in some instances, book value.As necessary for comparative purposes, we have reclassified prior period results andbalances to conform to the current presentation.
**10****
BUSINESS SEGMENT INFORMATION
  **Three Months Ended September 30, 2001**Income**Revenues From    External    Customers**IntersegmentRevenues**Depreciation    And    Amortization**CapitalExpenditures**SegmentAssetsat 9/30/01  
(In    Thousands)  Natural Gas Pipeline Company of America
$   83,612 
$  145,152 
$        - 
$   21,015 
$   21,193
$5,603,922 Kinder Morgan Retail
     5,621 
    47,156 
         - 
     3,153 
     4,919
   317,188 Power and Other
    20,586 
    34,718 
         - 
     2,534 
     4,659
 3,579,9051  Consolidated
  109,819 
$  227,026 
$        - 
$   26,702 
$   30,771
$9,501,015 
========== 
========== 
========== 
==========
========== General and Administrative Expenses
   (15,912)Other Income and (Expenses)
     9,207 Income Before Income Taxes and   Extraordinary Items
$  103,114 
==========     **Three Months Ended September 30, 2000**Income**Revenues From    External    Customers**IntersegmentRevenues**Depreciation    And    Amortization**CapitalExpenditures  
(In Thousands)  Natural Gas Pipeline Company of America
$   82,309 
$  163,113 
$        - 
$   21,021 
$    9,067 Kinder Morgan Retail
     4,875 
    41,585 
         - 
     2,928 
     1,499 Kinder Morgan Texas Pipeline2
     3,957 
   515,694 
         - 
       712 
       422 Power and Other
    10,032 
    21,025 
        49 
     2,352 
     4,233   Consolidated
   101,173 
$  741,417 
$       49 
$   27,013 
$   15,221 
========== 
========== 
========== 
========== General and Administrative Expenses
   (14,611)Other Income and (Expenses)
   (41,716)Income Before Income Taxes and   Extraordinary Items
$   44,846 
==========     **Nine Months Ended September 30, 2001**Income**Revenues From    External    Customers**IntersegmentRevenues**Depreciation    And    Amortization**CapitalExpenditures
(In    Thousands)  Natural Gas Pipeline Company of America
$  257,788 
$  455,562 
$        - 
$   64,098 
$   40,722 Kinder Morgan Retail
    33,322 
   217,338 
        44 
     9,158 
    13,795 Power and Other
    48,220 
    98,203 
     2,032 
     7,570 
     9,637   Consolidated
   339,330 
$  771,103 
$    2,076 
$   80,826 
$   64,154 
========== 
========== 
========== 
========== General and Administrative Expenses
   (46,953)Other Income and (Expenses)
    (9,509)Income Before Income Taxes and   Extraordinary Items
$  282,868 
==========   **Nine Months Ended September 30, 2000**Income**Revenues From    External    Customers**IntersegmentRevenues**Depreciation    And    Amortization**CapitalExpenditures
(In Thousands)  Natural Gas Pipeline Company of America
$  254,246 
$  433,013 
$      (18)
$   63,336 
$   27,656 Kinder Morgan Retail
    31,016 
   146,171 
         - 
     8,705 
     6,051 Kinder Morgan Texas Pipeline2
    18,384 
 1,139,124 
         - 
     2,105 
    10,511 Power and Other
    25,846 
    55,707 
        97 
     6,719 
    10,081 Discontinued Operations
         - 
         - 
         - 
         - 
    5,998   Consolidated
   329,492 
$1,774,015 
$       79 
$   80,865 
$   60,297 
========== 
========== 
========== 
========== General and Administrative Expenses
   (42,863)Other Income and (Expenses)
  (123,490)Income Before Income Taxes and   Extraordinary Items
$  163,139 
========== 
1Principally our investment in Kinder Morgan Energy Partners and corporate cashand receivables. Earnings attributable to our investment in Kinder Morgan Energy Partnersare included with "Other Income and (Expenses)."

2Kinder Morgan Texas Pipeline was transferred to Kinder Morgan Energy Partnerseffective December 31, 2000.
**11****
GEOGRAPHIC INFORMATION

All but an insignificant amount of our assets and operations arelocated in the continental United States of America.

7.     Financing
We have available a $500 million 364-day credit facility, dated October24, 2001, and a $400 million amended and restated five-year revolving credit agreementdated January 30, 1998. These bank facilities can be used for general corporate purposes,including backup for our commercial paper program, and include covenants which are commonin such arrangements. Under these bank facilities, we are required to pay a facility feebased on the total commitment, whether used or unused, at a rate which varies based on oursenior debt rating. We had no borrowings under our bank facilities at September 30, 2001.

The commercial paper we issue, which is supported by the creditfacilities described above, is comprised of unsecured short-term notes with maturities notto exceed 270 days from the date of issue. Commercial paper outstanding at September 30,2001 was $703.2 million. Our weighted-average interest rate on short-term borrowingsoutstanding at September 30, 2001 was 3.47 percent. Average short-term borrowingsoutstanding during the third quarter of 2001 were $513.1 million and our weighted-averageinterest rate was 3.78 percent. Average short-term borrowings outstanding during the firstnine months of 2001 were $369.2 million and the weighted-average interest rate was 4.54percent.

On October 10, 2001, we issued $200 million of Floating Rate Notes dueOctober 10, 2002 in an offering made pursuant to Rule 144A of the regulations of theSecurities and Exchange Commission. These notes bear interest at the three-month LondonInterbank Offered Rate (LIBOR) plus 95 basis points, with interest paid quarterly. Theproceeds from the offering were used to retire a portion of outstanding short-termborrowings.

On September 10, 2001, we retired our $45 million of 9.625% SeriesSinking Fund Debentures due March 1, 2021, utilizing incremental short-term borrowings. InMarch 2001, we retired (i) our $400 million of Reset Put Securities due March 1, 2021 and(ii) our $20 million of 9.95% Series Sinking Fund Debentures due 2020, utilizing acombination of cash and incremental short-term borrowings. In conjunction with these earlyextinguishments of debt, we recorded extraordinary losses of $1.4 million (net ofassociated tax benefit of $1.0 million) for the three months ended September 30, 2001, and$13.6 million (net of associated tax benefit of $9.0 million) for the nine months endedSeptember 30, 2001. These losses are included under the caption, "ExtraordinaryItems, Losses on Early Extinguishment of Debt" in the accompanying ConsolidatedStatements of Income.

We currently have outstanding $460 million of Premium EquityParticipating Security Units as described in detail in Note 12(B) of the Notes toConsolidated Financial Statements included in our 2000 Form 10-K. On November 30, 2001,these securities will mature, resulting in our receipt of $460 million in cash and ourissuance of $460 million of additional common stock. We expect to use the cash proceeds toretire the $400 million of 6.45% Series of Senior Notes due on the same date and a portionof the short-term borrowings then outstanding.

On October 17, 2001, our Board of Directors approved a common stockdividend of $0.05 per share payable on November 14, 2001 to shareholders of record as ofOctober 31, 2001.
**12****
8.     Common Stock Repurchase Plan
On August 14, 2001, we announced a plan to repurchase $300 million ofour outstanding common stock under a program expected to be completed by the end of 2002.At the trading price at the time of the announcement, the $300 million representedapproximately 5.7 million shares, or about 4.4 percent of the shares expected to beoutstanding after the November 2001 maturity of our Premium Equity Participating SecurityUnits. As of September 30, 2001, we had repurchased approximately $169.8 million(3,279,000 shares) of our outstanding common stock under the program.

9.     Regulatory Matters
On July 17, 2000, Natural Gas Pipeline Company of America filed itscompliance plan, including pro forma tariff sheets, pursuant to the FERC's Order Nos. 637and 637-A. The FERC directed all interstate pipelines to file pro forma tariff sheets tocomply with new regulatory requirements in the Orders regarding scheduling procedures,capacity segmentation, imbalance management services and penalty credits, or in thealternative, to explain why no changes to existing tariff provisions are necessary. Atechnical conference was held on July 10, 2001 to discuss Natural Gas Pipeline Company ofAmerica's Order 637 filing. Parties have filed comments on Natural Gas Pipeline Company ofAmerica's filing and all parties are awaiting the FERC's decision. Numerous issuesregarding Order Nos. 637 and 637-A are on appeal in the Court of Appeals for the Districtof Columbia. Initial briefs were filed in April 2001, and oral argument is scheduled forNovember 2001.

Currently, there are no material proceedings challenging the rates onany of our pipeline systems. Nonetheless, shippers on our pipelines do have rights tochallenge the rates we charge under certain circumstances prescribed by applicableregulations. There can be no assurance that we will not face challenges to the rates wereceive for services on our pipeline systems in the future.

10.    Comprehensive Income
During the third quarter and first nine months of 2001, the onlydifference between our net income and our comprehensive income is the unrealized gain orloss on derivatives we utilized for hedging purposes, as discussed in Note 11. There wasno difference between our net income and our comprehensive income during the third quarterof 2000. The only difference between our net income and our comprehensive income duringthe first nine months of 2000 was the reclassification of the unrealized gain on ourinvestment in available-for-sale securities, which were sold during the first quarter of2000.
**Three Months Ended    September 30,**Nine Months Ended    September 30,**2001** 2000**2001** 2000
(In    Thousands)
(In    Thousands)Net Income
$  58,225
$  26,708
$ 152,808
$  97,146Unrealized Gain on Derivatives Utilized    for Hedging Purposes
    8,213
        -
   37,654
        -Reclassification of Unrealized Gain    on Available-for-Sale    Securities
        -
        -
        -
    1,602Comprehensive Income
$  66,438
$  26,708
$ 190,462
$  98,748
  =========
==================
=========**13****
The balance of Accumulated Other Comprehensive Income, included in thecaption "Other" under the Stockholders' Equity heading in the accompanyingConsolidated Balance Sheets, has been derived as follows:
**Accumulated Other    Comprehensive Income
(In Thousands)Balance at January 1, 2001
$    (8,658)  Change in Fair Value of    Derivatives Utilized      for Hedging    Purposes, Before Income Taxes
     35,735   Reclassification of Change in    Fair Value of Derivatives     to Net    Income, Before Income Taxes
     21,249   Income Tax Effects of Above    Activities
    (19,330)Balance at September 30, 2001
$    28,996 
=========== 
11.    Accounting for Derivative Instruments andHedging Activities
Effective January 1, 2001, we adopted SFAS No. 133, *Accounting forDerivative Instruments and Hedging Activities,*as amended by SFAS No. 137, *Accountingfor Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASBStatement No.133* and SFAS No. 138, *Accounting for Certain Derivative Instrumentsand Certain Hedging Activities*, collectively, "Statement 133."**Statement133 established accounting and reporting standards requiring that every derivativefinancial instrument (including certain derivative instruments embedded in othercontracts) be recorded in the balance sheet as either an asset or liability measured atits fair value. Statement 133 requires that changes in the derivative's fair value berecognized currently in earnings unless specific hedge accounting criteria are met. If thederivatives meet those criteria, Statement 133 allows a derivative's gains and losses tooffset related results on the hedged item in the income statement, and requires that acompany formally designate a derivative as a hedge and document and assess theeffectiveness of derivatives associated with transactions that receive hedge accounting.

Our normal business activities expose us to risks associated withchanges in the market price of natural gas and associated transportation. As of January 1,2001 and during the three month and nine month periods ended September 30, 2001, ourderivative activities relating to the mitigation of these risks were designated andqualified as cash flow hedges, and the impact of hedge ineffectiveness, while included inour net income, was immaterial. As the hedged sales and purchases take place and we recordthem into earnings, we also reclassify the gains and losses included in accumulated othercomprehensive income into earnings. We expect to reclassify into earnings, during the nexttwelve months, substantially all of our accumulated other comprehensive income balance of$29.0 million, representing unrecognized net gains on derivative activities at September30, 2001. During the three month and nine month periods ended September 30, 2001, wereclassified no gains or losses into earnings as a result of the discontinuance of cashflow hedges due to a determination that the forecasted transactions will no longer occurby the end of the originally specified time period.

In order to maintain a cost effective capital structure, it is ourpolicy to borrow funds utilizing a mix of fixed-interest-rate and floating-interest-ratedebt and, in the third quarter of 2001, we adjusted our mix to be closer to our targetratio. Accordingly, in August 2001, we entered into fixed-to-floating interest rate swapagreements with a notional principal amount of $1.0 billion. These agreements effectivelyconvert the interest expense associated with our 6.65% senior notes due in 2005 and our7.25% debentures due in 2028 from fixed rates to floating rates based on the three-monthLIBOR plus a credit spread. The swap agreement for the longer dated issue (7.25% due in2028) contains mutual cash out agreements at the then-current economic value every fiveyears. These swaps have been designated as fair value hedges as defined by Statement 133.These swaps meet the conditions required to assume no ineffectiveness under Statement 133and, therefore, we have accounted for them utilizing the "shortcut" methodprescribed for fair value hedges. Accordingly, the carrying value of the 
**14****
swap is adjusted to its fair value each quarter, with an offsettingentry to adjust the carrying value of the debt securities whose fair value is beinghedged. We record interest expense equal to the floating rate payments, which is accruedmonthly and paid semi-annually.

12.    Interest Expense, Net
"Interest Expense, Net" as presented in the accompanyingConsolidated Statements of Income is net of (i) the debt component of the allowance forfunds used during construction ("AFUDC - Interest") and (ii) in the first ninemonths of 2000, interest income attributable to our note receivable associated with thetransfer of certain interests to Kinder Morgan Energy Partners at December 31, 1999 asdiscussed in Note 5 of Notes to Consolidated Financial Statements included in our 2000Form 10-K.
**Three Months Ended    September 30, **Nine Months Ended    September 30, **2001**2000**2001**2000
(In    Thousands)
(In    Thousands)AFUDC - Interest
$  1,789 
$    771 
$  4,484 
$  1,823 Interest Income
$      - 
$      - 
$      - 
$  2,647 
13.    Other, Net
"Other, Net" as presented in the accompanying ConsolidatedStatements of Income consists of interest income, gains or losses on the sale of assetsand other miscellaneous items. For the three month period ended September 30, 2001,"Other, Net" included (i) $11.5 million of income attributable to the reductionof a liability resulting from Kinder Morgan Energy Partners' buyout of a lease associatedwith assets previously owned by Kinder Morgan, Inc. and (ii) an increase of $9.0 millionin our provision for anticipated litigation costs. For the nine month period endedSeptember 30, 2001, "Other, Net" included, in addition to the third-quarteritems given previously, a $6.1 million gain from the sale of certain assets. For the ninemonths ended September 30, 2000, "Other, Net" included (i) $4.1 million due tothe recovery of note receivable proceeds in excess of its carrying value, (ii) $3.9million attributable to the settlement of a regulatory matter for an amount less than thatpreviously reserved and (iii) $2.1 million attributable to gains from the sale of assets.
**15****
14.    Summarized Income Statement Informationfor Kinder Morgan Energy Partners, L.P.
Following is summarized income statement information for Kinder MorganEnergy Partners, a publicly traded master limited partnership in which Kinder Morgan, Inc.owns, through a wholly owned subsidiary, the general partner interest. In addition, KinderMorgan, Inc. owns, directly and through consolidated subsidiaries, a limited partnerinterest in the form of Kinder Morgan Energy Partners common units, i-units and Class Blimited partner units. This investment, which is accounted for under the equity method ofaccounting, is described in more detail in our 2000 Form 10-K. Additional information onKinder Morgan Energy Partners' results of operations and financial position are containedin its Form 10-Q for the quarter ended September 30, 2001 and in its 2000 Form 10-K.
**Three Months Ended    September 30,**Nine Months Ended    September 30,**2001**2000**2001**2000
(In    Thousands)
(In    Thousands)Operating Revenues
$   638,544
$   202,575
$ 2,402,944
$   553,691Operating Expenses
    493,652
    122,749
  1,981,105
    330,828Operating Income
$   144,892
$    79,826
$   421,839
$   222,863
===========
===========
===========
===========Net Income
$   115,792
$    69,860
$   321,685
$   201,229
===========
===========
===========
===========
15.    Environmental and Legal Matters
(A)    Environmental Matters

We are subject to a variety of federal, state and local laws thatregulate permitted activities relating to air and water quality, waste disposal, and otherenvironmental matters. Additionally, we have established reserves to address knownenvironmental remediation sites. After consideration of reserves established, we believethat costs for environmental remediation and ongoing compliance with these regulationswill not have a material adverse effect on our cash flows, financial position or resultsof operations or diminish our ability to operate our businesses. However, there can be noassurances that future events, such as changes in existing laws, the promulgation of newlaws, or the development of new facts or conditions will not cause us to incur significantcosts.

See Note 9(A) of Notes to Consolidated Financial Statements in our 2000Form 10-K for additional information regarding environmental matters.

(B)    Litigation Matters
*K N TransColorado, Inc. v. TransColorado Gas Transmission Company, et.al, Case No. 00-CV-129, District Court, County of Garfield, State of Colorado. On June15, 2000, K N TransColorado filed suit against Questar TransColorado, its parent QuestarPipeline Company, and other affiliated Questar entities, asserting claims for breach offiduciary duties, breach of contract, constructive trust, rescission of the partnershipagreement, breach of good faith and fair dealing, tortious concealment, misrepresentation,aiding and abetting a breach of fiduciary duty, dissolution of the TransColoradopartnership, and seeking a declaratory judgment, among other claims. The TransColoradopartnership has been made a defendant for purposes of an accounting. The lawsuit alleges,among other things, Questar breached its fiduciary duties as a partner. K N TransColoradoseeks to recover damages in excess of $152 million due to Questar's breaches and, inaddition, seeks punitive damages. In response to the complaint, on July 28, 2000, theQuestar entities filed a counterclaim and third party claims against Kinder Morgan andcertain of its affiliates for claims arising out of the construction and operation of theTransColorado pipeline project. The claims allege, among other things, that the KinderMorgan entities 
**16****
interfered with and delayed construction of the pipeline and mademisrepresentations about marketing of capacity. The Questar entities seek to recoverdamages in excess of $185 million for an alleged breach of fiduciary duty and otherclaims. The parties agreed to stay the exercise of a contractual provision purportedlyrequiring K N TransColorado to purchase Questar's interest in the pipeline and toinvestigate the appointment of an independent operator for the pipeline during thelitigation. The Court dismissed Questar's counterclaims for breach of duty of good faithand fair dealing and for indemnity and contribution and dismissed Questar's Third PartyComplaint. On July 19, 2001, the Court granted K N TransColorado's motion for summaryjudgment that: a) fiduciary duties existed between the partners; b) these fiduciary dutieswere not modified or waived; and c) the affiliates and directors of Questar PipelineCompany and Questar TransColorado acting in their dual capacity had fiduciary obligationswhich required those individuals to disclose, to the partnership and the partners,information that affected the fundamental business purpose of the partnership. On August14, 2001, the Court granted leave to Questar to file its First Amended Answer andCounterclaim, once again naming Kinder Morgan, Inc. as a counterclaim defendant, andmaking similar allegations against us as set forth above. Fact discovery has closed andexpert discovery is ongoing.
*Jack J. Grynberg, individually and as general partner for the GreaterGreen River Basin Drilling Program: 72-73 v. Rocky Mountain Natural Gas Company and K NEnergy, Inc., Case No. 90-CV-3686. On June 5, 1990, Jack J. Grynberg filed suit, whichis presently pending in Jefferson County District Court for Colorado, against RockyMountain Natural Gas Company and us alleging breach of contract and fraud. In essence,Grynberg asserts claims that the named companies failed to pay Grynberg the proper price,impeded the flow of natural gas, mismeasured natural gas, delayed his development ofnatural gas reserves, and other claims arising out of a contract to purchase natural gasfrom a field in northwest Colorado. On February 13, 1997, the trial judge entered partialsummary judgment for Grynberg on his contract claim that he failed to receive the properprice for his natural gas. This ruling followed an appellate decision that was adverse tous on the contract interpretation of the price issue, but which did not address thequestion of whether Grynberg could legally receive the price he claimed or whether he hadillegally diverted natural gas from a prior purchase. Grynberg has previously claimeddamages in excess of $30 million. On August 29, 1997, the trial judge stayed the summaryjudgment pending resolution of a proceeding at the FERC to determine if Grynberg wasentitled to administrative relief from an earlier dedication of the same natural gas tointerstate commerce. On March 15, 1999, an Administrative Law Judge for the FERC ruled,after an evidentiary hearing, that Mr. Grynberg had illegally diverted the natural gaswhen he entered the contract with the named companies and was not entitled to relief.Grynberg filed exceptions to this ruling. In late March 2000, the FERC issued an orderaffirming in part and denying in part the motions for rehearing of its Initial Decision.On November 21, 2000, the FERC upheld the Administrative Law Judge's factual findings anddenial of retroactive abandonment. Grynberg filed a Notice of Appeal of the FERC'sdecision to the United States Court of Appeals for the D.C. Circuit. Grynberg recentlywithdrew this appeal. On June 14, 2001, Rocky Mountain Natural Gas Company filed a motionfor Summary Judgment and To Vacate the February 13, 1997, Partial Summary Judgment, as aresult of the conclusion of the FERC proceedings. On August 16, 2001, the Court grantedPlaintiff's Motion to Continue the Stay of these proceedings.
*Jack J. Grynberg v. K N Energy, Inc., Rocky Mountain Natural GasCompany, and GASCO, Inc., Civil Action No. 92-N-2000. On October 9, 1992, Jack J.Grynberg filed suit in the United States District Court for the District of Coloradoagainst us, Rocky Mountain Natural Gas Company and GASCO, Inc. alleging that theseentities, the K N Entities, as well as K N Production Company and K N Gas Gathering, Inc.,have violated federal and state antitrust laws. In essence, Grynberg asserts that thecompanies have engaged in an illegal exercise of monopoly power, have illegally denied himeconomically feasible access to essential facilities to store, transport and distributegas, and illegally have attempted to monopolize or to enhance or maintain an existingmonopoly. Grynberg also asserts certain state causes of action relating to a gas purchasecontract. In February 1999, the Federal District Court granted summary judgment for the KN Entities as to some of Grynberg's antitrust and state law claims, while allowing otherclaims to proceed to trial. Grynberg has 
**17****
previously claimed damages in excess of $50 million. In addition tomonetary damages, Grynberg has requested that the K N Entities be ordered to divest allinterests in natural gas exploration, development and production properties, all interestsin distribution and marketing operations, and all interests in natural gas storagefacilities, in order to separate these interests from our natural gas gathering andtransportation system in northwest Colorado. Settlement conferences have occurred. A finalpretrial status conference and settlement conference was held on August 24, 2001. TheCourt has ordered a settlement conference for December 6, 2001. The case is set for trialon January 7, 2002.
*United States of America, ex rel., Jack J. Grynberg v. K N Energy,Civil Action No. 97-D-1233, filed in the U.S. District Court, District of Colorado. Thisaction was filed pursuant to the federal False Claim Act and involves allegations ofmismeasurement of natural gas produced from federal and Indian lands. The Department ofJustice has decided not to intervene in support of the action. The complaint is part of alarger series of similar complaints filed by Mr. Grynberg against 77 natural gas pipelines(approximately 330 other defendants). An earlier single action making substantiallysimilar allegations against the pipeline industry was dismissed by Judge Hogan of the U.S.District Court for the District of Columbia on grounds of improper joinder and lack ofjurisdiction. As a result, Mr. Grynberg filed individual complaints in various courtsthroughout the country. These cases were recently consolidated by the Judicial Panel forMultidistrict Litigation, and transferred to the District of Wyoming. Motions to Dismisswere filed and an oral argument on the Motion to Dismiss occurred on March 17, 2000. OnJuly 20, 2000 the United States of America filed a motion to dismiss those claims byGrynberg that deal with the manner in which defendants valued gas produced from federalleases. Judge Downes denied the defendant's motion to dismiss on May 18, 2001. Thedefendants have sought reconsideration of this Order and have requested a statusconference. 
*Quinque Operating Company, et. al. v. Gas Pipelines, et. al., CauseNo. 99-1390-CM, United States District Court for the District of Kansas. This action wasoriginally filed in Kansas state court in Stevens County, Kansas as a class action againstapproximately 245 pipeline companies and their affiliates, including certain Kinder Morganentities. The plaintiffs in the case seek to have the Court certify the case as a classaction, a class of natural gas producers and fee royalty owners who allege that they havebeen subject to systematic mismeasurement of natural gas by the defendants for more than25 years. Among other things, the plaintiffs allege a conspiracy among the pipelineindustry to under-measure gas and have asserted joint and several liability against thedefendants. Subsequently, one of the defendants removed the action to Kansas FederalDistrict Court. Thereafter, we filed a motion with the Judicial Panel for MultidistrictLitigation to consolidate this action for pretrial purposes with the Grynberg False ClaimAct cases referred to above, because of common factual questions. On April 10, 2000, theMDL Panel ordered that this case be consolidated with the Grynberg federal False ClaimsAct cases. On January 12, 2001, the Federal District Court of Wyoming issued an oralruling remanding the case back to the State Court in Stevens County, Kansas. A casemanagement conference recently occurred in State Court in Stevens County, and a briefingschedule was established for preliminary matters. Personal jurisdiction discovery hascommenced. Merits discovery has not commenced.
*K N Energy, Inc., et al. v. James P. Rode and Patrick R. McDonald,Case No. 99CV1239, filed in the District Court, Jefferson County, Division 8, Colorado.Defendants counterclaimed and filed third party claims against several of our formerofficers and/or directors. Messrs. Rode and McDonald are former principal shareholders ofInterenergy Corporation. We acquired Interenergy on December 19, 1997 pursuant to a MergerAgreement dated August 25, 1997. Rode and McDonald allege that K N Energy committedsecurities fraud, common law fraud and negligent misrepresentation as well as breach incontract. Plaintiffs are seeking an unspecified amount of compensatory damages, greaterthan $2 million, plus unspecified exemplary or punitive damages, attorney's fees and theircosts. We filed a motion to dismiss, and on April 21, 2000, the Jefferson County DistrictCourt Judge dismissed the case against the individuals and us with prejudice. Defendantsalso filed a federal securities fraud action in the United States District Court for theDistrict of Colorado on January 27, 2000 titled:*James P. Rode and Patrick R. McDonaldv.**K**N**Energy,**Inc.,**et**al.,*Civil Action No. 00-N-190. 
**18****
This case initially raised the identical state law claims contained inthe counterclaim and third party complaint in state court. Rode and McDonald filed anamended Complaint, which dropped the state-law claims. On February 23, 2000, the federaldistrict court dismissed this Complaint with prejudice. Recently, Rode and McDonald filednotices of appeal of both the state court and federal court dismissals. A third relatedclass action case styled, *Adams vs. Kinder Morgan, Inc., et. al.,* Civil Action No.00-M-516, in the United States District Court for the District of Colorado was served onus on April 10, 2000. As of this date no class has been certified. On February 23, 2001,the federal district court dismissed several claims raised by the plaintiff, withprejudice, and dismissed the remaining claims, without prejudice. On April 27, 2001, theAdams plaintiffs filed their second amended complaint. We have moved to dismiss thiscomplaint and the briefing on the motion is complete.

We believe that we have meritorious defenses to all lawsuits and legalproceedings in which we are defendants and will vigorously defend against them. Based onour evaluation of the above matters, and after consideration of reserves established, webelieve that the resolution of such matters will not have a material adverse effect on ourbusinesses, cash flows, financial position or results of operations.

See Note 9(B) of Notes to Consolidated Financial Statements of our 2000Form 10-K for additional information regarding legal matters.

16.    Discontinued Operations
During 1999, we adopted and implemented a plan to discontinue a numberof lines of business. During 2000, we essentially completed the disposition of thesediscontinued operations. The cash flows attributable to discontinued operations includedin the accompanying Statements of Consolidated Cash Flows in the caption "Net CashFlows Used in Discontinued Operations," for the nine month period ended September 30,2001, results from cash activity attributable to the remaining reserve for disposal ofdiscontinued operations. For the nine months ended September 30, 2000, the cash outflowsshown in this caption result from termination of our receivables sales facility partiallyoffset by inflows from working capital items. The caption "Net Cash Flows Provided ByDiscontinued Investing Activities," for the nine month period ended September 30,2001, includes cash received in this period for discontinued operations sold during 2000.For the nine months ended September 30, 2000, the cash inflows shown in this captionprimarily result from cash received for the sale of stock and assets to ONEOK, Inc.,partially offset by cash paid for a lease buyout on assets included in discontinuedoperations prior to divestiture. Note 6 of Notes to Consolidated Financial Statements ofour 2000 Form 10-K contains additional information on these matters.

17.    Accounting Standards Issued but Not Effective
In June 2001, the Financial Accounting Standards Board("FASB") issued SFAS No. 141, *Business Combinations*. This Statementaddresses financial accounting and reporting for business combinations and supersedesAccounting Principles Board ("APB") Opinion No. 16, *Business Combinations*,and SFAS No. 38, *Accounting for Preacquisition Contingencies of Purchased Enterprises*.All business combinations in the scope of this Statement are to be accounted for using onemethod - the purchase method. The provisions of this Statement apply to all businesscombinations initiated after June 30, 2001 and all business combinations accounted forunder the purchase method for which the date of acquisition is July 1, 2001, or later. Wehave engaged in significant acquisition activity in the past, including businesscombinations, and future business combinations are likely. The provisions of thisStatement require all future business combinations to be accounted for using the purchasemethod.

In June 2001, the FASB also issued SFAS No. 142, *Goodwill and OtherIntangible Assets*. This Statement addresses financial accounting and reporting for (i)intangible assets acquired individually or with a group of 
**19****
other assets (but not those acquired in a business combination) atacquisition and (ii) goodwill and other intangible assets subsequent to their acquisition.This Statement supersedes APB Opinion No. 17, *Intangible Assets.* Under theprovisions of this Statement, if an intangible asset is determined to have an indefiniteuseful life, it shall not be amortized until its useful life is determined to be no longerindefinite. An intangible asset that is not subject to amortization shall be tested forimpairment annually, or more frequently if events or changes in circumstances indicatethat the asset might be impaired. Goodwill will not be amortized. Goodwill will be testedfor impairment on an annual basis and between annual tests in certain circumstances at alevel of reporting referred to as a reporting unit. This Statement is required to beapplied starting with fiscal years beginning after December 15, 2001. Goodwill andintangible assets acquired after June 30, 2001 will be subject immediately to thenonamortization and amortization provisions of this Statement. We estimate that thereduction of amortization expense following the implementation of this Statement willresult in a $0.12 increase in earnings per diluted common share in 2002.

In June 2001, the FASB issued SFAS No. 143, *Accounting for AssetRetirement Obligations*. This Statement addresses financial accounting and reportingfor obligations associated with the retirement of tangible long-lived assets and theassociated asset retirement costs. This Statement requires that the fair value of aliability for an asset retirement obligation be recognized in the period in which it isincurred if a reasonable estimate of fair value can be made. The associated assetretirement costs are capitalized as part of the carrying amount of the long-lived asset.This Statement contains disclosure requirements that provide descriptions of assetretirement obligations and reconciliations of changes in the components of thoseobligations. This Statement is effective for financial statements issued for fiscal yearsbeginning after June 15, 2002. Earlier applications are encouraged. We have not yetquantified the impacts of adopting this Statement on our financial position or results ofoperations.

In August 2001, the FASB issued SFAS No. 144, *Accounting for theImpairment or Disposal of Long-Lived Assets*. This Statement addresses financialaccounting and reporting for the impairment or disposal of long-lived assets. ThisStatement retains the requirements to (a) recognize an impairment loss only if thecarrying amount of a long-lived asset is not recoverable from its undiscounted cash flowsand (b) measure an impairment loss as the difference between the carrying amount and fairvalue of the asset. This Statement removes goodwill from its scope, eliminating therequirement to allocate goodwill to long-lived assets to be tested for impairment. ThisStatement requires that a long-lived asset to be abandoned, exchanged for a similarproductive asset, or distributed to owners in a spin-off be considered held and used untilit is disposed of. This Statement requires the accounting model for long-lived assets tobe disposed of by sale be used for all long-lived assets, whether previously held and usedor newly acquired. Discontinued operations are no longer measured on a net realizablevalue basis, and future operating losses are no longer recognized before they occur. ThisStatement broadens the presentation of discontinued operations in the income statement toinclude a component of an entity (rather than a segment of a business). A component of anentity comprises operations and cash flows that can be clearly distinguished,operationally and for financial reporting purposes, from the rest of the entity. Theprovisions of this Statement are effective for financial statements issued for fiscalyears beginning after December 15, 2001, and interim periods within those fiscal years,with early application encouraged. The provisions of this Statement generally are to beapplied prospectively.
**20***Item 2. Management's Discussion and Analysis of FinancialCondition and Results of Operations.*
General**
The following discussion should be read in conjunction with theaccompanying interim Consolidated Financial Statements and related Notes and theConsolidated Financial Statements, related Notes and Management's Discussion and Analysisof Financial Condition and Results of Operations included in our 2000 Form 10-K. Due tothe seasonal variation in energy demand, among other factors, the following interimresults may not be indicative of the results to be expected for an entire year. Asdiscussed in Note 3 of the accompanying Notes to Consolidated Financial Statements, wehave engaged in acquisition and divestiture transactions (and may engage in additionalsuch transactions), which may affect the comparison of results of operations betweenperiods.
**Results of Operations**  **Three Months Ended September 30,**Nine Months Ended September 30,  **2001**2000**Increase(Decrease)**2001**2000**Increase    (Decrease)  
(In Thousands    Except Per Share Amounts) Operating Revenues
$  227,026 
$  741,417 
$ (514,391)
$  771,103 
$1,774,015 
$(1,002,912)
========== 
========== 
========== 
========== 
========== 
=========== Gross Margin
$  173,534 
$  172,987 
$      547 
$  524,982 
$  545,038 
$   (20,056)
========== 
========== 
========== 
========== 
========== 
=========== General and Administrative Expenses
$   15,912 
$   14,611 
$    1,301 
$   46,953 
$   42,863 
$     4,090 
========== 
========== 
========== 
========== 
========== 
=========== Operating Income
$   91,396 
$   85,470 
$    5,926 
$  284,643 
$  279,821 
$     4,822 Other Income and (Expenses)
    11,718 
   (40,624)
    52,342 
    (1,775)
  (116,682)
    114,907 Income Taxes
   (43,443)
   (18,138)
   (25,305)
  (116,495)
   (65,993)
    (50,502)Extraordinary Items - Losses on Early    Extinguishment of    Debt, Net of Tax
    (1,446)
         - 
    (1,446)
   (13,565)
         - 
    (13,565)Net Income
$   58,225 
$   26,708 
$   31,517 
$  152,808 
$   97,146 
$    55,662 
========== 
========== 
========== 
========== 
========== 
===========   Diluted Earnings (Loss) Per Common Share:Income Before Extraordinary Items
$     0.49 
$     0.23 
$     0.26 
$     1.37 
$     0.85 
$      0.52 Extraordinary Items - Losses on Early    Extinguishment of    Debt
     (0.01)
         - 
     (0.01)
     (0.11)
         - 
      (0.11)Total Diluted Earnings Per Common Share
$     0.48 
$     0.23 
$     0.25 
$     1.26 
$     0.85 
$      0.41 
========== 
========== 
========== 
========== 
========== 
=========== 
Diluted earnings per common share before extraordinary items for the third quarter andfirst nine months of 2001 was $0.49 and $1.37, respectively, in comparison to $0.23 and$0.85 reported in the corresponding periods of 2000. For both the third quarter and ninemonths ended September 30, 2001, earnings were positively affected by (i) increasedoperating income (primarily from the Power and Other segment, partially offset by reduced2001 operating income due to the December 2000 transfer of Kinder Morgan Texas Pipeline toKinder Morgan Energy Partners), (ii) increased equity in earnings of Kinder Morgan EnergyPartners, L.P. and (iii) decreased interest expense. In addition, results for the thirdquarter and first nine months of 2001 include extraordinary after-tax losses of $1.4million and $13.6 million, respectively, due to the early extinguishment of debt. Sharesused in the diluted earnings per share calculations were higher in the third quarter andfirst nine months of 2001 by 5.3 million (4.5%) and 7.0 million (6.1%), respectively, incomparison to the corresponding periods of 2000 (see Note 4 of the accompanying Notes toConsolidated Financial Statements). The following comparative discussion of our results ofoperations is by business unit for factors affecting segment earnings, and on aconsolidated basis for other factors.

We manage our various businesses by, among other things, allocatingcapital and monitoring operating performance. This management process includes dividingthe company into business units so that performance can be effectively monitored andreported for a limited number of discrete businesses. Currently, we manage and report ouroperations in the following business units:

21

 
**Business Unit****Business Conducted****  ****Referred to As:**  Natural Gas Pipeline Company of       America and certain affiliates      The operation of a major interstate natural gas pipeline and    storage systemNatural Gas Pipeline Company of AmericaRetail Natural Gas Distribution      The regulated sale of natural gas to residential, commercial    and industrial customers and the non-utility sales of natural gas to certain utility    customers under the Choice Gas ProgramKinder Morgan RetailPower Generation and Other      The construction and operation of natural gas-fired electric    generation facilities, together with various other activities not constituting separately    managed or reportable business segmentsPower and Other
We also owned and operated Kinder Morgan Texas Pipeline, a majorintrastate natural gas pipeline system, until it was transferred (together with certainassociated entities and other assets) to Kinder Morgan Energy Partners in December 2000.

The accounting policies we apply in the generation of business segmentinformation are generally the same as those described in Note 1 of Notes to ConsolidatedFinancial Statements included in our 2000 Form 10-K, except that certain items below the"Operating Income" line are either not allocated to business segments or are notconsidered by management in its evaluation of business unit performance. An exception tothis is that Kinder Morgan Power, which routinely conducts its business activities in theform of joint operations with other parties that are accounted for under the equity methodof accounting, includes its equity in earnings of these investees in its operatingresults. These equity method earnings are included in "Other Income and(Expenses)" in our Consolidated Statements of Income. In addition, (i) certain itemsincluded in operating income (such as general and administrative expenses) are notallocated to individual business segments and (ii) gains and losses from incidental salesof assets are included in segment earnings. With adjustment for these items, we currentlyevaluate business segment performance primarily based on operating income in relation tothe level of capital employed. We account for intersegment sales at market prices, whilewe account for asset transfers at either market value or, in some instances, book value.As necessary for comparative purposes, we have reclassified prior period results andbalances to conform to the current presentation.

22

Following are operating results by individual business unit (beforeintersegment eliminations), including explanations of significant variances between theperiods presented.
**Natural Gas Pipeline Company of America**  **Three Months Ended September 30,  **Nine Months Ended September 30,**2001**2000**Increase (Decrease)  **2001**2000**Increase (Decrease)
(In Thousands    Except Systems Throughput)  Operating Revenues
$145,152 
$163,113 
$(17,961)
$455,562 
$432,995 
$ 22,567 
======== 
======== 
======== 
======== 
======== 
========   Gross Margin
$127,190 
$122,389 
$  4,801 
$381,644 
$376,220 
$  5,424 
======== 
======== 
======== 
======== 
======== 
========   Segment Earnings
$ 83,612 
$ 82,309 
$  1,303 
$257,788 
$254,246 
$  3,542 
======== 
======== 
======== 
======== 
======== 
========     Systems Throughput (Trillion Btus)
   309.4 
   323.5 
   (14.1)
 1,016.6 
 1,072.2 
   (55.6)
======== 
======== 
======== 
======== 
======== 
======== 
Natural Gas Pipeline Company of America's segment earnings increasedfrom $82.3 million in the third quarter of 2000 to $83.6 million in the third quarter of2001, an increase of $1.3 million (1.6%). Results for the third quarter of 2001 werepositively affected, relative to 2000, by increased natural gas transportation and storagemargins. The positive impact of improved transportation and storage margins was partiallyoffset by (i) reduced operational gas sales, (ii) increased operations and maintenanceexpenses, primarily attributable to the higher costs of electric power for compression and(iii) increased ad valorem taxes.

Natural Gas Pipeline Company of America's segment earnings increased by$3.5 million (1.4%) for the nine months ended September 30, 2001, in comparison to thecorresponding period of 2000. Results for the first nine months of 2001, relative to 2000,were affected principally by the same factors affecting the third quarter, as discussedpreviously. Additionally, the comparison of results for the first nine months of 2001 and2000 is affected by (i) a $6.1 million pre-tax gain on the sale of offshore laterals in2001 and (ii) a $3.3 million refund of previously expensed transportation charges from anunaffiliated interstate pipeline in 2000.

In accordance with the "fee-based" aspect of our businessstrategy, Natural Gas Pipeline Company of America has achieved significant successextending existing contracts and obtaining new contracts for firm transportation capacityon its pipeline system. In addition to extending key capacity arrangements, we have alsopursued throughput growth on Natural Gas Pipeline Company of America's system through newtransportation and balancing services and by pursuing agreements to provide natural gastransportation and storage services to new and existing gas-fired electric generationfacilities along the system. On October 2, 2001, we announced that Natural Gas PipelineCompany of America had signed a firm-transportation contract to provide FPL Energy, LLC, asubsidiary of FPL Group, Inc., with natural gas to power its new 1,789-megawatt electricgenerating facility in Kaufman County, located 20 miles east of Dallas, Texas. Under thelong-term agreement, FPL Energy has subscribed for 250,000 MMBtu per day of firm capacityon the Natural Gas Pipeline Company of America system, effective with the startup ofoperations at the new plant in mid-year 2003. FPL also agreed to extend an existing 50,000MMBtu per day firm-transportation service contract it holds on Natural Gas PipelineCompany of America for an additional 18 years. Since the announcement of our"back-to-basics" approach to business operations, we have contracted to supplynatural gas transportation services to approximately 23 natural gas-fired electricgeneration facilities along our system totaling approximately 13,000 megawatts of electricgeneration capacity.

In addition to internal growth on Natural Gas Pipeline Company ofAmerica's existing pipeline system, we are also pursuing opportunities to expand thesystem. Two major expansion projects under way are the Horizon 

23

Pipeline project in Northern Illinois (see Note 3 of the accompanyingNotes to Consolidated Financial Statements) and the extension of Natural Gas PipelineCompany of America's system into the metropolitan east area of St. Louis. Both the HorizonPipeline and the St. Louis extension are expected to be placed into service by mid-year2002. Please refer to our 2000 Form 10-K for additional information regarding the NaturalGas Pipeline Company of America business unit.
**Kinder Morgan Retail****Three Months Ended September    30,****Nine Months Ended September    30,****2001**2000**Increase (Decrease)**2001**2000**Increase (Decrease)
(In Thousands    Except Systems Throughput)  Total Operating Revenues
$ 47,156 
$ 41,585 
$  5,571
$217,382 
$146,171 
$ 71,211
======== 
======== 
========
======== 
======== 
========  Gross Margin
$ 19,563 
$ 17,578 
$  1,985
$ 75,491 
$ 68,870 
$  6,621
======== 
======== 
========
======== 
======== 
========  Segment Earnings
$  5,621 
$  4,875 
$    746
$ 33,322 
$ 31,016 
$  2,306
======== 
======== 
========
======== 
======== 
========    Systems Throughput (Trillion Btus)1
     8.4 
     7.7 
     0.7
    28.6 
    27.7 
     0.9
======== 
======== 
========
======== 
======== 
========  
1 Excludes transport volumes of intrastate pipelines.

Kinder Morgan Retail's segment earnings increased from $4.9 million inthe third quarter of 2000 to $5.6 million in the third quarter of 2001, an increase of$0.7 million (15.3%). Gross margin increased from $17.6 million in the third quarter of2000 to $19.6 million in the third quarter of 2001, an increase of $2.0 million (11.3%).Kinder Morgan Retail's operating results were positively impacted in 2001, relative to2000, by (i) increased 2001 gas sales and transportation margins resulting from increasedsystem throughput, (ii) continued successful risk management of gas supply needs and (iii)the inclusion, in 2001 results, of income from the Wolf Creek storage system. Thesepositive impacts were partially offset by higher operating expenses resulting from overallsystem expansion.

Kinder Morgan Retail's segment earnings increased from $31.0 million inthe first nine months of 2000 to $33.3 million in the first nine months of 2001, anincrease of $2.3 million (7.4%). Gross margin increased from $68.9 million in the firstnine months of 2000 to $75.5 million in the first nine months of 2001, an increase of $6.6million (9.6%). Kinder Morgan Retail's operating results for the first nine months of2001, in comparison to 2000, were affected principally by the same factors affecting thethird quarter comparisons, as discussed previously.

On July 25, 2001, we announced that we had signed a definitiveagreement to purchase natural gas distribution assets from Citizens Communications Company(NYSE: CZN, CZB) for approximately $11 million. The natural gas distribution assets serveapproximately 13,400 residential, commercial and agricultural customers in Bent, Crowley,Otero, Archuleta, La Plata and Mineral Counties in Colorado. This transaction was approvedby the Colorado Public Utilities Commission on October 31, 2001.

In an effort to reduce income volatility in this weather-dependentbusiness unit, we utilize a weather hedging program. We believe that this weather hedgingprogram reduces our potential future income volatility caused by abnormal weather,allowing us to concentrate on future growth via system throughput expansion and otheroperating efficiencies. Please refer to our 2000 Form 10-K for additional informationregarding the Kinder Morgan Retail business unit.

24
**Power and Other****Three Months Ended September    30,****Nine Months Ended September    30,****2001 **2000**Increase(Decrease)**2001**2000**Increase (Decrease)
(In    Thousands)
(In    Thousands)  Total Operating Revenues
$ 34,718 
$ 21,075 
$ 13,643
$100,235 
$ 55,805 
$ 44,430
======== 
======== 
========
======== 
======== 
========  Gross Margin
$ 26,781 
$ 15,151 
$ 11,630
$ 67,847 
$ 42,057 
$ 25,790
======== 
======== 
========
======== 
======== 
========  Segment Earnings
$ 20,586 
$ 10,032 
$ 10,554
$ 48,220 
$ 25,846 
$ 22,374
======== 
======== 
========
======== 
======== 
========
Power and Other segment earnings increased from $10.0 million in thethird quarter of 2000 to $20.6 million in the third quarter of 2001, an increase of $10.6million (105.2%). Results for 2001 were positively affected, relative to 2000, by (i)increased fee revenues for power plant development and construction and (ii) increasedequity in earnings from our investment in Thermo Cogeneration Partnership, reflecting (1)lower fuel costs for power generation as the price of natural gas decreased and (2) lowerinterest costs on external debt, a portion of which is tied to various short-term LondonInterbank Offered Rates (LIBOR). These positive impacts were partially offset by increasedoperations and maintenance expenses resulting from overall expansion in the scope of thisbusiness unit as the number of power projects has increased. Earnings in this businessunit are largely project driven and may be expected to vary from period to period asindividual projects are completed and other projects are initiated. As announced inFebruary 2001, we have entered into agreements with a unit of The Williams Companies, Inc.(NYSE:WMB) under which Williams will supply fuel to and market 3,300 megawatts of electricgeneration capacity for six natural gas-fired electric generation facilities to bedeveloped by Kinder Morgan Power Company. These facilities are expected to be placed intoservice between 2002 and 2004. In the third quarter of 2001, Kinder Morgan Power beganrecording earnings associated with its development of the 550 megawatt natural gas-firedelectric power plant currently under construction in Jackson, Michigan. This facility isbeing developed under the previously described series of agreements with a unit of theWilliams Companies. In September 2001, Kinder Morgan Power transferred ownership of theJackson, Michigan power generation facility to a third party in exchange for cash and anote receivable. Collection of the $219 million note is expected in late 2001 or early2002 upon closing of debt financing under arrangements with financial institutions.Results from our international operations, our arrangement with HS Resources and internalcommunications services, which activities are also included in this business unit, had anegligible impact on the period to period changes in operating income.

Power and Other segment earnings increased from $25.8 million in thefirst nine months of 2000 to $48.2 million in the first nine months of 2001, an increaseof $22.4 million (86.6%). Results for the first nine months of 2001, compared to 2000,were positively impacted by increased fee revenues for power plant development andconstruction, as discussed previously. This positive impact was partially offset by (i)lower equity in earnings from our investment in Thermo Cogeneration Partnership, primarilydue to higher fuel costs during the first five months of 2001 and (ii) higher operationsand maintenance expenses resulting from overall expansion of this business unit. Pleaserefer to our 2000 Form 10-K for additional information regarding the Power and Otherbusiness unit.

25
**Kinder Morgan Texas Pipeline****Three    Months Ended**Nine    Months Ended**September    30, 2000**September    30, 2000
(In Thousands    Except Systems Throughput)  Total Operating Revenues
$  515,694
$1,139,124
==========
==========  Gross Margin
$   17,918
$   57,989
==========
==========  Segment Earnings
$    3,957
$   18,384
==========
==========    Systems Throughput (*Trillion Btus*)
     175.6
     490.5
==========
==========
Effective December 31, 2000, we completed the transfer of severalassets to Kinder Morgan Energy Partners, including Kinder Morgan Texas Pipeline.Additional information on this transaction is contained in Note 3 of the accompanyingNotes to Consolidated Financial Statements.
**Other Income and (Expenses)****Three Months Ended September 30,**Nine Months Ended September 30,**2001**2000**Earnings    Increase(Decrease**2001**2000**Earnings    Increase(Decrease)
(In    Thousands)
(In    Thousands)Interest Expense, Net
$ (53,175)
$ (61,956)
$   8,781 
$(167,700)
$(185,431)
$  17,731 Equity in Earnings of Kinder   Morgan Energy Partners:    Equity in Earnings
   76,249 
   34,562 
   41,687 
  198,344 
   99,287 
   99,057     Amortization of    Excess        Investment
   (5,907)
   (6,927)
    1,020 
  (19,449)
  (21,366)
    1,917 Equity in Earnings of Power  Segment
    2,511 
    1,103 
    1,408 
    1,551 
    4,648 
   (3,097)Other Equity in Losses
     (420)
   (1,783)
    1,363 
   (5,063)
   (7,399)
    2,336 Minority Interests
  (10,865)
   (5,986)
   (4,879)
  (25,038)
  (18,059)
   (6,979)Other, Net
    3,325 
      363 
    2,962 
   15,580 
   11,638 
    3,942     
$  11,718 
$ (40,624)
$  52,342 
$  (1,775)
$(116,682)
$ 114,907 
========= 
========= 
========= 
========= 
========= 
========= 
Interest expense decreased by $8.8 million (14.2%) for the thirdquarter and $17.7 million (9.6%) for the nine months ended September 30, 2001, incomparison with the corresponding periods in 2000. These decreases are principally due toreduced debt levels resulting from (i) increased cash distributions from Kinder MorganEnergy Partners, (ii) proceeds from the transfer of Kinder Morgan Texas Pipeline and otherassets to Kinder Morgan Energy Partners in December 2000 and (iii) proceeds from sales ofdiscontinued businesses. In addition, 2001 interest expense has been reduced due to loweraverage interest rates caused by (i) early extinguishment of higher interest rate debt and(ii) utilization of fixed-to-floating interest rate swaps. Notes 3, 11 and 16 of theaccompanying Notes to Consolidated Financial Statements contain additional information onthese matters.

Our equity in earnings of Kinder Morgan Energy Partners, net ofassociated amortization, increased by $42.7 million (154.5%) for the third quarter and$101.0 million (129.6%) for the nine months ended September 30, 2001, in comparison withthe corresponding periods in 2000. These increases are the result of (i) increasedincentive distributions from Kinder Morgan Energy Partners resulting from our ownership ofthe general partner 

26

of Kinder Morgan Energy Partners and (ii) increased income from ourlimited partner interests in Kinder Morgan Energy Partners due to our and our affiliates'ownership of 20.8 million common limited partner units, 5.3 million Class B limitedpartner units and 4.8 million i-units (net of the minority interest in Kinder MorganManagement, LLC) at September 30, 2001. The reader is directed to Note 14 of theaccompanying Notes to Consolidated Financial Statements for additional informationregarding the results of operations of Kinder Morgan Energy Partners.

The deduction for "Minority Interests" increased by $4.9million (81.5%) for the third quarter and $7.0 million (38.6%) for the nine months endedSeptember 30, 2001, in comparison to the corresponding periods of 2000. These increasesare due principally to the inclusion, in 2001 results, of the minority interest in KinderMorgan Management, LLC (see Note 2 of the accompanying Notes to Consolidated FinancialStatements).

The change in "Other, Net" from the third quarter of 2000 tothe third quarter of 2001 is principally due to the inclusion in 2001 results of an $11.4million gain attributable to the reduction of a liability resulting from Kinder MorganEnergy Partners' buyout of a lease associated with assets previously owned by KinderMorgan, Inc., partially offset by an increase of $9.0 million in our provision foranticipated legal costs. For the nine months ended September 30, 2001, "Other,Net" includes, in addition to the third-quarter items mentioned previously, a $6.1million gain from the sale of certain assets, while the corresponding period in 2000includes (i) $4.1 million due to the recovery of note receivable proceeds in excess ofcarrying value, (ii) $3.9 million attributable to the settlement of a regulatory matterfor an amount less than that previously reserved and (iii) $2.1 million attributable togains from the sale of assets.
**Income Taxes****Three    Months Ended September 30,**Nine    Months Ended September 30,**2001**2000**Increase (Decrease)**2001**2000**Increase (Decrease)
(In    Thousands)
(In    Thousands)  Income Tax    Provision
$  43,443 
$  18,138 
$  25,305 
$ 116,495 
$  65,993 
$  50,502 
========= 
========= 
========= 
========= 
========= 
=========   Effective Tax Rate
     42.1%
     40.4%
      1.7%
     41.2%
     40.4%
      0.8%
========= 
========= 
========= 
========= 
========= 
========= 
The increases of $25.3 million and $50.5 million in the income taxprovision for the third quarter and first nine months of 2001, respectively, in comparisonto the corresponding periods of 2000, are principally the result of increases of $58.3million and $119.7 million, respectively, in income before income taxes and extraordinaryitems. The increases of 1.7% and 0.8% in the effective tax rate for the third quarter andfirst nine months of 2001, respectively, in comparison to the corresponding periods of2000, are due primarily to the impact on the effective tax rate of recording the minorityinterest in the earnings of Kinder Morgan Management, LLC on an after-tax basis. 
**Discontinued Operations**
During 1999, we adopted and implemented a plan to discontinue a numberof lines of business. During 2000, we essentially completed the disposition of thesediscontinued operations. The cash flow impacts associated with discontinued operations arediscussed under "Cash Flows" following. Note 16 of the accompanying Notes toConsolidated Financial Statements contains additional information on these matters.

27
**Liquidity and Capital Resources**
The following table illustrates the sources of our invested capital.The balances at December 31, 1999 and 2000, and September 30, 2001 reflect the impactsassociated with our acquisition of Kinder Morgan (Delaware), Inc. and our transfer ofcertain assets to Kinder Morgan Energy Partners. The balances at September 30, 2001 alsoreflect the early retirement of three series of debt securities and the sale of shares ofKinder Morgan Management, LLC in a public offering. In October 2001, we issued $200million of one-year notes. Our capitalization during the remainder of 2001 will beaffected by, among other things, the November 30, 2001 maturity of our Premium EquityParticipating Security Units. Additional information on these matters is contained under"Net Cash Flows from Financing Activities" following and in Note 7 of theaccompanying Notes to Consolidated Financial Statements.
**September 30,**December 31,**2001**2000**1999**1998
(Dollars In    Thousands)Long-term Debt
$ 2,432,441 
$ 2,478,983 
$ 3,293,326 
$ 3,300,025 Minority Interests
    845,244 
      4,910 
      9,523 
     63,354 Common Equity
  1,834,011 
  1,777,624 
  1,649,615 
  1,219,043 Preferred Stock
          - 
          - 
          - 
      7,000 Capital Trust Securities
    275,000 
    275,000 
    275,000 
    275,000     Capitalization
  5,386,696 
  4,536,517 
  5,227,464 
  4,864,422 Short-term Debt
  1,109,487 
    908,167 
    581,567 
  1,702,0131    Invested Capital
$ 6,496,183 
$ 5,444,684 
$ 5,809,031 
$ 6,566,435 
=========== 
=========== 
=========== 
===========   Capitalization:    Long-term Debt
45.2%
54.6%
63.0%
67.8%    Minority Interests
15.7%
 0.1%
 0.2%
 1.3%    Common Equity
34.0%
39.2%
31.5%
25.1%    Preferred Stock
   - 
   - 
   - 
 0.1%    Capital Trust    Securities
 5.1%
 6.1%
 5.3%
 5.7%Invested Capital:    Total Debt
54.5%2
62.2%
66.7%
76.2%    Equity, Including    Capital Trust Securities
45.5%2
37.8%
33.3%
23.8%  
1 Includes the $1,394,846 Substitute Noteassumed in conjunction with the acquisition of MidCon Corp., which note was repaid inJanuary 1999.2 If adjusted toreflect the November 2001 maturity of the Premium Equity Participating Security Units (see"Net Cash Flows from Financing Activities") and the associated $460 millionincrease in equity and decrease in debt, the ratios would be: Debt - 47.4%, Equity -52.6%.
On August 14, 2001, we announced a plan to repurchase $300 million ofour outstanding common stock under a program expected to be completed by the end of 2002.At the trading price at the time of the announcement, the $300 million representedapproximately 5.7 million shares, or about 4.4 percent of the shares expected to beoutstanding after the November 2001 maturity of our Premium Equity Participating SecurityUnits. As of September 30, 2001, we had repurchased approximately $169.8 million(3,279,000 shares) of our outstanding common stock under the program.

On May 18, 2001, Kinder Morgan Management, LLC, an indirect subsidiaryof Kinder Morgan, Inc., issued and sold its common shares in an underwritten publicoffering. Upon completion of the offering, Kinder Morgan Management, LLC became a partnerin Kinder Morgan Energy Partners and assumed the responsibility to manage and control itsbusiness and affairs. The net proceeds from the offering were used by Kinder MorganManagement, LLC to buy i-units from Kinder Morgan Energy Partners. The i-units are a newclass of Kinder Morgan Energy Partners' limited partner interests and will be issued onlyto Kinder Morgan Management, LLC. As described in our 2000 Form 10-K, we have certainrights and obligations with respect to these securities, 

28

including an obligation to purchase the Kinder Morgan Management, LLCshares or exchange them for Kinder Morgan Energy Partners' common units as discussedfollowing.

On July 18, 2001, Kinder Morgan Energy Partners announced a two-for-onesplit of its common units. The common unit split, in the form of a one-common-unitdistribution for each common unit outstanding, occurred on August 31, 2001. This splitresulted in Kinder Morgan, Inc. receiving one additional common unit for each common unitit owned and Kinder Morgan Management, LLC receiving one additional i-unit for each i-unitit owned. Also on July 18, 2001, Kinder Morgan Management, LLC announced a two-for-onesplit of its shares. This share split, in the form of a one-share distribution for eachshare outstanding, occurred on August 31, 2001.

Holders of Kinder Morgan Management, LLC shares are entitled to presentthem to Kinder Morgan, Inc. who will, at its option, either (i) exchange one common unitof Kinder Morgan Energy Partners for each share presented or (ii) redeem the shares for anamount of cash based on the market price of Kinder Morgan Energy Partners' common units asspecified in the registration statements. As of September 30, 2001, approximately 1.8million Kinder Morgan Management, LLC shares (after adjustment for the stock split asdiscussed preceding) had been exchanged for Kinder Morgan Energy Partners' common units.As a result of these exchanges, at September 30, 2001, Kinder Morgan, Inc. ownedapproximately 4.8 million (16%) of Kinder Morgan Management, LLC's outstanding shares. Ourincome statement is not affected by these exchanges, which are taxable events for incometax purposes. The impacts on our balance sheet are a decrease in minority interest and achange in paid-in capital equal to the difference between the book value of the minorityinterest associated with the Kinder Morgan Management, LLC shares received in the exchangeand the book value of the Kinder Morgan Energy Partners' units surrendered, net of theassociated tax liability. Through September 30, 2001, these exchanges have increased ourpaid-in capital by approximately $8.7 million.

We are continuing to assess the effect of the terrorist attacks ofSeptember 11, 2001 on our businesses. In response to the attacks, we have performedsecurity surveys on certain sections of our pipelines and other assets. In addition, weface the possibility that on January 1, 2002, property insurance carriers generally mayterminate insurance coverage for all companies for incidents of sabotage and terrorism. Weare exploring the availability of sabotage and terrorism insurance from other sources.Furthermore, proposed federal legislation may provide an insurance framework that willcause current insurers to continue to provide sabotage and terrorism coverage understandard property insurance policies. Nonetheless, there is no assurance that federallegislation will be passed or that adequate sabotage and terrorism insurance will beavailable after January 1, 2002.

We do not believe that the increased cost associated with thesemeasures will have a material effect on our operating results. As of October 31, 2001, wehave not noticed a significant decrease in the volumes moving through our systems or othernegative impacts on our businesses as a result of the September 11, 2001 attacks. However,if demand for the products that we handle were to significantly decrease, our shipperswould decrease the volumes that they ship through our systems, which could have a negativeimpact on our financial performance.

CASH FLOWS

The following discussion of cash flows should be read in conjunctionwith the accompanying interim Consolidated Statements of Cash Flows and relatedsupplemental disclosures, and the Statements of Consolidated Cash Flows and relatedsupplemental disclosures included in our 2000 Form 10-K.

29

Net Cash Flows from Operating Activities

"Net Cash Flows Provided by Operating Activities" increasedfrom $101.3 million for the nine months ended September 30, 2000 to $273.7 million for thenine months ended September 30, 2001, an increase of $172.4 

million. This increase is primarily due to (i) a decrease of $93.3million in cash flows used for discontinued operations, primarily attributable to thetermination of our receivables sales facility as further discussed in the followingparagraph and (ii) an $83.9 million increase in cash inflows from our investment in KinderMorgan Energy Partners. Net cash flows used in discontinued operations in 2001 result fromcash activity attributable to the remaining reserve for disposal of discontinuedoperations.

As more fully discussed in our 2000 Form 10-K, in September 1999, weestablished a receivables sales facility that provided up to $150 million of additionalliquidity. In accordance with this agreement, proceeds of $150 million were received onSeptember 30, 1999. In February 2000, we reduced our participation in the receivablesprogram by $124.9 million and on April 25, 2000, we repaid the residual balance andterminated the agreement. In accordance with authoritative accounting guidelines, cashflows associated with this facility are included with "Cash flows from OperatingActivities" in the accompanying interim Consolidated Statements of Cash Flows.

Net Cash Flows from Investing Activities

"Net Cash Flows Provided by (Used in) Investing Activities"decreased from a source of $347.5 million for the nine months ended September 30, 2000 toa use of $1.3 billion for the nine months ended September 30, 2001, a net decrease of $1.6billion. This decrease is principally due to (i) an outflow of $991.9 million for the ninemonths ended September 30, 2001 for additional investment in Kinder Morgan EnergyPartners, (ii) a $330 million decrease due to the fact that nine months ended September30, 2000 cash flows included proceeds from our December 1999 transfer of certain assetsand interests to Kinder Morgan Energy Partners, (iii) an outflow of $201.8 million for thenine months ended September 30, 2001 for investments in power plant facilities and (iv) a$103.8 million decrease in cash flows from discontinued operations as a result of (1)$25.7 million received for the nine months ended September 30, 2001 for discontinuedoperations sold during 2000 and (2) for the nine months ended September 30, 2000, aninflow of $163.9 million received for discontinued operations sold partially offset by anoutflow of $59.9 million for a lease buyout on assets included in discontinued operationsprior to divestiture. Please refer to Notes 2 and 16 of the accompanying Notes toConsolidated Financial Statements and Notes 5 and 6 of Notes to Consolidated FinancialStatements included in our 2000 Form 10-K for additional information regarding thesetransactions.

Net Cash Flows from Financing Activities

"Net Cash Flows Provided By (Used In) Financing Activities"increased from a use of $456.0 million for the nine months ended September 30, 2000 to asource of $865.5 million for the nine months ended September 30, 2001, an increase of $1.3billion. This increase is principally due to (i) net proceeds of $888.1 million for thenine months ended September 30, 2001 from the issuance of membership shares by KinderMorgan Management, LLC (see Note 2 of the accompanying Notes to Consolidated FinancialStatements), (ii) $495.7 million of cash used in the nine months ended September 30, 2001for the early extinguishment of three series of debt securities (see Note 7 of theaccompanying Notes to Consolidated Financial Statements) and (iii) a change in netshort-term borrowing of $916.4 million principally due to (1) a reduction in netshort-term borrowing in the nine months ended September 30, 2000 facilitated by cashinflows from investing activities (see "Net Cash Flows from InvestingActivities" above) and (2) an increase in net short-term borrowing in the nine monthsended September 30, 2001, principally to fund a portion of the early extinguishment oflong-term debt and the reacquisition of a portion of our outstanding common shares, ineach case as discussed previously.

30

Our principal sources of short-term liquidity are our revolving bankfacilities totaling $900 million. At September 30, 2001, we had $703.2 million ofcommercial paper (which is backed by the bank facilities) issued and outstanding. Thecorresponding amount outstanding was $692.5 million at October 31, 2001. After inclusionof applicable letters of credit, the remaining available borrowing capacity under the bankfacilities was 

$185.1 million and $195.8 million at September 30, 2001 and October 31,2001, respectively. For additional information on utilization of these facilities, seeNote 7 of the accompanying Notes to Consolidated Financial Statements.

On October 10, 2001, we issued $200 million of Floating Rate Notes dueOctober 10, 2002 in an offering made pursuant to Rule 144A of the regulations of theSecurities and Exchange Commission. These notes bear interest at the three-month LIBORplus 95 basis points, with interest paid quarterly. The proceeds from the offering wereused to retire a portion of outstanding short-term borrowings.

On September 10, 2001, we retired our $45 million of 9.625% SeriesSinking Fund Debentures due March 1, 2021, utilizing incremental short-term borrowings. InMarch 2001, we retired (i) our $400 million of Reset Put Securities due March 1, 2021 and(ii) our $20 million of 9.95% Series Sinking Fund Debentures due 2020, utilizing acombination of cash and incremental short-term debt. In conjunction with these earlyextinguishments of debt, we recorded an extraordinary loss of $13.6 million (net ofassociated tax benefit of $9.0 million), presented as a separate line item in theaccompanying interim Consolidated Statement of Income for the nine months ended September30, 2001.

As further described in Note 11 of the accompanying Notes toConsolidated Financial Statements, in August 2001, we entered into $1 billion face valueof fixed-to-floating interest rate swaps, effectively converting the interest expenseassociated with two of our fixed-rate debt issues to a floating rate based on thethree-month LIBOR. These swaps are accounted for as hedges under Statement of FinancialAccounting Standards ("SFAS") No. 133, *Accounting for Derivative Instrumentsand Hedging Activities*.

We currently have outstanding $460 million of Premium EquityParticipating Security Units as described in detail in Note 12(B) of the Notes toConsolidated Financial Statements included in our 2000 Form 10-K. On November 30, 2001,these securities will mature, which will result in our receipt of $460 million in cash andour issuance of $460 million of additional common stock. We expect to use the cashproceeds to retire the $400 million of 6.45% Series of Senior Notes due on the same dateand a portion of the short-term borrowings then outstanding.

On October 17, 2001, our Board of Directors approved a common stockdividend of $0.05 per share payable on November 14, 2001 to shareholders of record as ofOctober 31, 2001.
**Accounting Standards Issued but Not Effective**
In June 2001, the Financial Accounting Standards Board("FASB") issued SFAS No. 141, *Business Combinations*. This Statementaddresses financial accounting and reporting for business combinations and supersedesAccounting Principles Board ("APB") Opinion No. 16, *Business Combinations*,and SFAS No. 38, *Accounting for Preacquisition Contingencies of Purchased Enterprises*.All business combinations in the scope of this Statement are to be accounted for using onemethod - the purchase method. The provisions of this Statement apply to all businesscombinations initiated after June 30, 2001 and all business combinations accounted forunder the purchase method for which the date of acquisition is July 1, 2001, or later. Wehave engaged in significant acquisition activity in the past, including businesscombinations, and future business combinations are likely. The provisions of thisStatement require all future business combinations to be accounted for using the purchasemethod.

31

In June 2001, the FASB also issued SFAS No. 142, *Goodwill and OtherIntangible Assets*. This Statement addresses financial accounting and reporting for (i)intangible assets acquired individually or with a group of other assets (but not thoseacquired in a business combination) at acquisition and (ii) goodwill and other intangibleassets subsequent to their acquisition. This Statement supersedes APB Opinion No. 17, *IntangibleAssets.* Under the provisions of this Statement, if an intangible asset is determinedto have an indefinite useful life, it shall not be amortized until its useful life isdetermined to be no longer indefinite. An intangible asset that is not subject toamortization shall be tested for impairment annually, or more frequently if events orchanges in circumstances indicate that the asset might be impaired. Goodwill will not beamortized. Goodwill will be tested for impairment on an annual basis and between annualtests in certain circumstances at a level of reporting referred to as a reporting unit.This Statement is required to be applied starting with fiscal years beginning afterDecember 15, 2001. Goodwill and intangible assets acquired after June 30, 2001 will besubject immediately to the nonamortization and amortization provisions of this Statement.We estimate that the reduction of amortization expense following the implementation ofthis Statement will result in a $0.12 increase in earnings per diluted common share in2002.

In June 2001, the FASB issued SFAS No. 143, *Accounting for AssetRetirement Obligations*. This Statement addresses financial accounting and reportingfor obligations associated with the retirement of tangible long-lived assets and theassociated asset retirement costs. This Statement requires that the fair value of aliability for an asset retirement obligation be recognized in the period in which it isincurred if a reasonable estimate of fair value can be made. The associated assetretirement costs are capitalized as part of the carrying amount of the long-lived asset.This Statement contains disclosure requirements that provide descriptions of assetretirement obligations and reconciliations of changes in the components of thoseobligations. This Statement is effective for financial statements issued for fiscal yearsbeginning after June 15, 2002. Earlier applications are encouraged. We have not yetquantified the impacts of adopting this Statement on our financial position or results ofoperations.

In August 2001, the FASB issued SFAS No. 144, *Accounting for theImpairment or Disposal of Long-Lived Assets*. This Statement addresses financialaccounting and reporting for the impairment or disposal of long-lived assets. ThisStatement retains the requirements to (i) recognize an impairment loss only if thecarrying amount of a long-lived asset is not recoverable from its undiscounted cash flowsand (ii) measure an impairment loss as the difference between the carrying amount and fairvalue of the asset. This Statement removes goodwill from its scope, eliminating therequirement to allocate goodwill to long-lived assets to be tested for impairment. ThisStatement requires that a long-lived asset to be abandoned, exchanged for a similarproductive asset, or distributed to owners in a spin-off be considered held and used untilit is disposed of. This Statement requires the accounting model for long-lived assets tobe disposed of by sale be used for all long-lived assets, whether previously held and usedor newly acquired. Discontinued operations are no longer measured on a net realizablevalue basis, and future operating losses are no longer recognized before they occur. ThisStatement broadens the presentation of discontinued operations in the income statement toinclude a component of an entity (rather than a segment of a business). A component of anentity comprises operations and cash flows that can be clearly distinguished,operationally and for financial reporting purposes, from the rest of the entity. Theprovisions of this Statement are effective for financial statements issued for fiscalyears beginning after December 15, 2001, and interim periods within those fiscal years,with early application encouraged. The provisions of this Statement generally are to beapplied prospectively.
**Information Regarding Forward-looking Statements**
This filing includes forward-looking statements within the meaning ofSection 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Actof 1934. These forward-looking statements are identified as any statement that does notrelate strictly to historical or current facts. They use words such as"anticipate," "believe," "intend," "plan,""projection," "forecast," "strategy," "position,""continue," "estimate," "expect,"

32

"may," "will," or the negative of those terms orother variations of them or by comparable terminology. In particular, statements, expressor implied, concerning future operating results or the ability to generate sales, incomeor cash flow are forward-looking statements. Forward-looking statements are not guaranteesof performance. They involve risks, uncertainties and assumptions. The future results ofour operations may differ materially from those expressed in these forward-lookingstatements. Many of the factors that will determine these results are beyond our abilityto control or predict. Specific factors that could cause actual results to differ fromthose in the forward-looking statements include but are not limited to the following:

•
price trends, stability and overall demand    for natural gas and electricity in the United States; economic activity, weather,    alternative energy sources, conservation and technological advances that may affect price    trends and demand;
•
national, international, regional and    local economic, competitive and regulatory conditions and developments;
•
the various factors which affect Kinder    Morgan Energy Partners' ability to maintain or increase its level of earnings and    distributions;
•
our ability to integrate any acquired    operations into our existing operations;
•
changes in laws or regulations,    third-party relationships and approvals, decisions of courts, regulators and governmental    bodies that may affect our business or our ability to compete;
•
our ability to achieve cost savings and    revenue growth;
•
conditions in capital markets;
•
rates of inflation;
•
interest rates;
•
political and economic stability of oil    producing nations;
•
the pace of deregulation of retail natural    gas and electricity;•the availability of terrorism and sabotage insurance at    reasonable premiums;
•
the timing and extent of changes in    commodity prices for oil, natural gas, electricity and certain agricultural products; and
•
the timing and success of business    development efforts.
You should not put an undue reliance on forward-looking statements.
***Item 3.  Quantitative andQualitative Disclosures about Market Risk.***
There have been no material changes in market risk exposures that wouldaffect the quantitative and qualitative disclosures presented as of December 31, 2000, inthe "Risk Management" section of Management's Discussion and Analysis ofFinancial Condition and Results of Operations contained in our 2000 Form 10-K. EffectiveJanuary 1, 2001, we adopted SFAS No. 133, as amended by SFAS No. 137 and SFAS No. 138. SeeNote 11 of the accompanying Notes to Consolidated Financial Statements.

33
**PART II - OTHER INFORMATION
*Item 1.  Legal Proceedings.***
The reader is directed to Note 15 of the accompanying Notes toConsolidated Financial Statements in Part I, Item 1, which is incorporated herein byreference.***Item2.  Changes in Securities and Use of Proceeds.***
During the quarter ended September 30, 2001, we did not sell any equitysecurities that were not registered under the Securities Act of 1933, as amended.
***Item3.  Defaults Upon Senior Securities.***
None.
***Item4.  Submission of Matters to a Vote of Security Holders.***
None.
***Item 5.  Other Information.***
None.

 

34
***Item6.  Exhibits and Reports on Form 8-K.*****(A)     Exhibits.**  None  **  ****(B)     Reports on    Form 8-K.**  **(1)****Current Report on Form 8-K dated July    30, 2001 was filed on July 31, 2001 pursuant to Item 9. of that form.
    Pursuant to Item 9. of that form, Kinder Morgan, Inc. announced its intention to make    several presentations beginning on July 31, 2001 to a group of analysts and others to    address various strategic and financial issues relating to the business plans and    objectives of Kinder Morgan, Inc., Kinder Morgan Energy Partners, L.P. and Kinder Morgan    Management, LLC, and the availability of materials to be presented at the meetings on    Kinder Morgan, Inc.'s website.  **(2)****Current Report on Form 8-K dated August    17, 2001 was filed on August 20, 2001 pursuant to Items 5. and 7. of that form.
    Pursuant to Item 5. of that form, Kinder Morgan, Inc. disclosed that Kinder Morgan    Management, LLC, a subsidiary of Kinder Morgan, Inc., issued a press release on July 18,    2001 announcing a two-for-one split of Kinder Morgan Management, LLC's shares, in the form    of a distribution of one share for each share outstanding, which distribution took place    on August 31, 2001. Kinder Morgan, Inc. stated that, pursuant to Rule 416 promulgated    under the Securities Act of 1933, as amended, the Registration Statements on Form S-3    (File Nos. 333-60912 and 333-55866) of Kinder Morgan, Inc. are deemed to cover the    additional exchange feature and purchase obligations of Kinder Morgan, Inc. arising out of    the split of Kinder Morgan Management, LLC shares.

Pursuant to Item 7. of that form, Kinder Morgan, Inc. filed, as an    exhibit, the press release of Kinder Morgan Management, LLC dated July 18, 2001 announcing    a two-for-one split of its shares.  **(3)****Current Report on Form 8-K dated    September 6, 2001 was filed on September 6, 2001 pursuant to Item 9. of that form.
    Pursuant to Item 9. of that form, Kinder Morgan, Inc. announced its intention to make    several presentations beginning on September 6, 2001 to analysts and others to address    various strategic and financial issues relating to the business plans and objectives of    Kinder Morgan, Inc., Kinder Morgan Energy Partners, L.P. and Kinder Morgan Management,    LLC, and the availability of materials to be presented at the meetings on Kinder Morgan,    Inc.'s website.  **(4)****Current Report on Form 8-K dated    November 9, 2001 was filed on November 9, 2001 pursuant to Item 9. of that form.
    Pursuant to Item 9. of that form, Kinder Morgan, Inc. announced its intention to make    several presentations beginning on November 9, 2001 to institutional investors and others    to address various strategic and financial issues relating to the business plans and    objectives of Kinder Morgan, Inc., Kinder Morgan Energy Partners, L.P. and Kinder Morgan    Management, LLC, and the availability of materials to be presented at the meetings on    Kinder Morgan, Inc.'s website.
35
**SIGNATURE**
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant hasduly caused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.  
KINDER MORGAN, INC.    (Registrant)November 14, 2001/s/ C.    Park Shaper                                         C. Park Shaper    Vice President and Chief Financial Officer    (Principal Financial and Accounting Officer)
36********************************************************************************************************************************************************************************************************************************************************************************************************************