UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2013
or
o | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from _____________to_____________
Commission File Number 001-35081
A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
KINDER MORGAN SAVINGS PLAN
B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
Kinder Morgan, Inc.
1001 Louisiana, Suite 1000
Houston, Texas 77002
Kinder Morgan Savings Plan
Index to Financial Statements and Supplemental Schedule
Pages | |
Financial Statements: | |
Supplemental Schedule*: | |
* | Other schedules required by Section 2520.103-10 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, as amended, have been omitted because they are not applicable. |
Report of Independent Registered Public Accounting Firm
Fiduciary Committee
Kinder Morgan Savings Plan
We have audited the accompanying Statements of Net Assets Available for Benefits of Kinder Morgan Savings Plan (the “Plan”) as of December 31, 2013 and 2012, and the related Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 2013. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2013 and 2012, and the change in net assets available for benefits for the year ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets (Held at End of Year) as of December 31, 2013 is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Houston, Texas
June 30, 2014
/s/ Ham, Langston & Brezina, L.L.P.
1
Kinder Morgan Savings Plan
Statements of Net Assets Available for Benefits
December 31, | |||||||
2013 | 2012 | ||||||
Assets | |||||||
Investments, at fair value (See Notes 2, 3, 4 and 5) | $ | 1,971,819,096 | $ | 1,784,521,416 | |||
Notes receivable from Participants | 43,715,712 | 43,308,338 | |||||
Total assets | 2,015,534,808 | 1,827,829,754 | |||||
Liabilities | |||||||
Administrative expenses payable | 353,308 | 86,277 | |||||
Total liabilities | 353,308 | 86,277 | |||||
Net assets available for benefits at fair value | 2,015,181,500 | 1,827,743,477 | |||||
Adjustment from fair value to contract value for interest in collective trust relating to fully benefit-responsive investment contracts | (8,249,586) | (17,947,612) | |||||
Net assets available for benefits | $ | 2,006,931,914 | $ | 1,809,795,865 | |||
The accompanying notes are an integral part of these financial statements.
2
Kinder Morgan Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2013 | |||
Additions to net assets attributable to: | |||
Investment income: | |||
Interest income | $ | 876,397 | |
Dividend income | 15,696,835 | ||
Net appreciation in fair value of investments (See Note 4) | 263,529,796 | ||
Other, net | 156,326 | ||
Total investment income | 280,259,354 | ||
Interest income on notes receivable from Participants | 1,907,754 | ||
Contributions | |||
Participant contributions | 67,078,802 | ||
Employer contributions | 38,136,121 | ||
Rollovers | 6,643,053 | ||
Total contributions | 111,857,976 | ||
Total additions | 394,025,084 | ||
Deductions from net assets attributable to: | |||
Benefits paid to Participants | 211,417,576 | ||
Administrative fees | 1,812,477 | ||
Total deductions | 213,230,053 | ||
Net increase in net assets available for benefits before transfer from Copano Employees 401(k) Plan | 180,795,031 | ||
Transfer from Copano Employees 401(k) Plan | 25,053,428 | ||
Transfer out of the Plan | (8,712,410) | ||
Net increase in net assets available for benefits | 197,136,049 | ||
Net assets available for benefits | |||
Beginning of year | 1,809,795,865 | ||
End of year | $ | 2,006,931,914 | |
The accompanying notes are an integral part of this financial statement.
3
Kinder Morgan Savings Plan Notes to Financial Statements |
1. DESCRIPTION OF THE PLAN
General
The Kinder Morgan Savings Plan, (the “Plan”) was established in 1945 for the benefit of eligible employees of Kinder Morgan, Inc. (the “Company”). The following description of the Plan provides only general information. Plan participants (“Participants”) should refer to the Plan document for a more complete description of the Plan’s provisions. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Benefits under the Plan are not guaranteed by the Pension Benefit Guaranty Corporation.
Effective July 9, 2013, the Copano Employees 401(k) Plan merged into the Kinder Morgan Savings Plan.
Effective November 1, 2013, the Plan was amended and restated to incorporate all previous amendments.
Plan Administration
The Plan is administered by the Company's Fiduciary Committee. J.P. Morgan Retirement Plan Services, LLC (“J.P. Morgan”) provides record keeping services to the Plan and the Plan assets are maintained under the custody of J.P. Morgan Chase Bank, N.A. (the “Trustee”).
Contributions
Participants may elect to make pretax contributions from 1% to 50% of their annual compensation, limited by requirements of the Internal Revenue Code (“IRC”). Participants may discontinue their election to contribute at any time. All new Participants are automatically enrolled in the Plan with a pretax contribution by the Participant of 3% of their eligible annual compensation. Within the first 30 days of hire, employees may opt out of automatic enrollment. The Company has established a Company goal percentage rate of 6% (“SmartGoal”). Every February the Participants who have a participation rate below the SmartGoal will automatically get a 1% increase until the Participant meets the SmartGoal. Beginning the first pay period of February 2013, the SmartGoal percentage rate increased from 6% to 8%. Participants can opt out of SmartGoal at any time.
The Company makes Qualified Non-Elective Contributions (“QNEC”) to the Plan on behalf of each eligible employee. The QNEC are equal to 5% of eligible compensation and are allocated as of each pay period.
Company contributions for bargaining employees follow the collective bargaining agreements. All QNEC and other Company contributions (matched or fixed contributions) are invested according to Participants’ investment elections on file or the default, if no election is filed. Participants can transfer from the default fund(s) to any other available investment fund(s) at any time.
For the year ended December 31, 2013, the Company contribution was approximately $38.1 million.
The Plan provides an option to all Participants to make after-tax “Roth” contributions (Roth 401(k) option) to a separate Participant account. Unlike traditional 401(k) plans, where Participant contributions are made with pre-tax dollars, earnings grow tax-deferred and the withdrawals are treated as taxable income, Roth 401(k) contributions are made with after-tax dollars, earnings are tax-free, and the withdrawals are tax-free if they occur after both (i) the fifth year of participation in the Roth 401(k) option, and (ii) attainment of age 59 ½, death or disability. The employer contribution will still be considered taxable income at the time of withdrawal.
Under Internal Revenue Service (“IRS”) regulation, annual additions under the Plan and all other qualified plans sponsored by the Company are limited to the lesser of 100% of eligible compensation or $50,000 for each employee. Annual additions are defined as employer contributions and employee contributions.
4
Kinder Morgan Savings Plan Notes to Financial Statements |
Benefits/Vesting
Company contributions vest on the second anniversary of the date of hire. Vesting of Company contributions for bargaining employees will follow the collective bargaining agreements.
Participant contributions may be withdrawn, with the approval of the Company's Fiduciary Committee, in the event of unusual expenses connected with illness or disability, for college or funeral expenses for a Participant or his or her dependents, for the repair of damage to a primary residence caused by fire, storm, or other casualties, or for the purchase of a primary residence, as defined in the Plan document. If not withdrawn earlier, a Participant’s account will be available for distribution, rollover, or payable in the event of termination of employment, death, or termination of the Plan. If a Participant’s account is $1,000 or less, a lump-sum distribution will automatically be made. If a Participant’s account is greater than $1,000, the Participant’s distribution options are: lump-sum distribution, partial distributions, or periodic installments. Upon termination, Participants whose accounts exceed $1,000 may choose to leave their accounts in the Plan until age 70 ½, when minimum distributions are required under the IRC.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA.
Notes Receivable from Participants
Effective December 1, 2012, Participants may borrow, from the vested portion of their Plan accounts, a minimum of $1,000 up to a maximum equal to the lesser of 50% of their vested balance or $50,000, minus the highest outstanding loan balance from the previous 12 months. Prior to December 1, 2012, the minimum loan was $500. All loans are charged a variable interest rate equal to the prime rate published on the first day of each month. The loans are subject to certain restrictions as defined in the Plan document and applicable restrictions under the IRC.
Forfeitures
Forfeitures of non-vested employer contributions remain in the Plan and earn interest income. During 2013, terminated Participants forfeited $1,576,012 of employer contributions, and available forfeitures in the amount of $2,383,064 were used to reduce future Company QNEC, pay administrative expenses of the Plan, or were reallocated to participant accounts.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of the financial statements in conformity with GAAP requires the Plan’s management to use estimates and assumptions that affect the accompanying financial statements and disclosures. Actual results could differ from these estimates. Subsequent events have been evaluated, which are events or transactions that occurred after December 31, 2013 through the issuance of the accompanying financial statements on June 30, 2014, and there were no significant events to be disclosed.
As described in Accounting Standards Codification (“ASC”) Topic 962, Defined Contribution Pension Plans, investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount Participants would receive if they were to initiate permitted transactions under the terms of the Plan. The Plan invests in fully benefit-responsive investment contracts through a collective trust. Contract value for this collective trust is based on the net asset value of the fund as reported by the investment advisor. As required, the Statements of Net Assets Available for Benefits present the fair value of the investment in the collective trust as well as the adjustment of the investment in the collective trust from fair value to contract value relating to the investment contracts. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis. The Plan also invests in insurance contracts through a group annuity contract with Principal Financial Group. Such insurance
5
Kinder Morgan Savings Plan Notes to Financial Statements |
contracts are reported at fair value which approximates contract value and, accordingly, no adjustment from fair value to contract value is required.
Investment Valuation and Income Recognition
The Plan’s investments are stated at fair value. Shares of registered investment companies (mutual funds) are accounted for at fair market values as determined by quoted market prices in an active market. The Plan’s interest in the collective trust is based on the fair value of the collective trust’s underlying investments as based on information reported by the investment advisor using the audited financial statements of the collective trust at year-end. Life insurance contracts are stated at cash surrender value, which approximates fair value. Common stocks are valued at the closing price reported on the active markets on which the individual securities are traded.
The Plan presents in the accompanying Statement of Changes in Net Assets Available for Benefits the net appreciation in the fair value of investments, which consists of realized gains and losses, and the net change in unrealized appreciation (depreciation) on investments (see Note 4). Unrealized appreciation (depreciation) is the difference between the fair value of the investment at the end of the current year and the cost of the investment if acquired during the Plan year or the fair value of the investment at the beginning of the Plan year. Purchases and sales of the funds are reflected on a trade date basis. Gain or loss on sale of investments is based on average cost.
Notes Receivable from Participants
Notes receivable from Participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Delinquent notes receivable from Participants are reclassified as distributions based upon the terms of the Plan document.
Administrative Expenses
Accounting and certain administrative services for the Plan are provided by the Company at no cost to the Plan. All other expenses are paid by the Plan with the exception of a Qualified Domestic Relations Order which is paid by the Plan Participants.
Expense Offset Arrangement
Fees incurred by the Plan for the investment management services or record keeping services are included in net appreciation in fair value of investments, as they are paid through revenue sharing, rather than a direct payment.
Payment of Benefits
Benefits are recorded when paid.
3. INVESTMENT CONTRACTS
The Plan, through its Stable Value Fund (the “Fund”), holds investments in common/collective trust funds. To reduce the risk of market losses on these investments, the Fund enters into synthetic investment contracts (which consist of common/collective trust funds and wrapper contracts) with financial institutions and insurance companies. Synthetic investment contracts enable participants to transact at the investments' contract value by protecting the principal amount invested over a specified period of time. The assets underlying the investment contracts are owned by the Plan. These investment contracts are fully benefit-responsive and an adjustment of these contracts to their contract value is reflected in the accompanying Statements of Net Assets Available for Benefits. Contract value represents the original cost of the contract, plus interest (based upon the crediting rates of the underlying contracts) and deposits, reduced by administrative fees, transfers out, and withdrawals.
The Plan's investments that are covered by the synthetic investment contracts earn interest at interest crediting rates that typically reset on a monthly or quarterly basis. These interest crediting rates use a formula that is based on the characteristics of the underlying fixed income portfolio. The minimum interest crediting rate for all investment contracts is zero percent. Factors that can influence the future average crediting rates are (i) the level of market interest rates; (ii) the amount and timing of participant contributions, transfers and withdrawals in or out of the investment contract; (iii) the investment returns generated by the fixed income investments that underlie the investment contracts; or (iv) the duration of the investments underlying the
6
Kinder Morgan Savings Plan Notes to Financial Statements |
investment contracts. The crediting rate formula amortizes the market value gains and losses over the duration of the underlying investments. The resulting gains and losses in the fair value of the underlying investments relative to the contract value are reported in the accompanying Statements of Net Assets Available for Benefits as an adjustment from fair value to contract value for fully benefit-responsive investment contracts.
For the Plan's investments covered by synthetic investment contracts, the average yield earned by the Plan and the average yield earned by the Plan adjusted for actual interest credited to Participants at December 31, 2013 and 2012 are as follows:
December 31, | |||
2013 | 2012 | ||
Average yield earned by the Plan | 1.436% | 1.179% | |
Average yield earned by the Plan adjusted for actual interest credited to Participants | 1.913% | 2.223% | |
The average yield earned by the Plan (which may differ from the interest rate credited to Participants in the Plan) is calculated by dividing the yield to maturity (an estimate of annualized earnings) of the Fund on December 31, 2013 (irrespective of the interest rate credit to participants in the Fund) by the fair value of all investments in the Fund, as applicable at December 31, 2013.
The average yield earned by the Plan with an adjustment to reflect the actual interest rate credited to Participants in the Plan is calculated by dividing the interest crediting rate (an estimate of annualized earnings) credited to participants on December 31, 2013 (irrespective of the actual earnings of the investments in the Fund) by the fair value of all investments in the Fund, as applicable at December 31, 2013.
Under certain events, the amounts withdrawn from investment contracts may be payable at fair value rather than contract value. These events include termination of the Plan, a material adverse change to the provisions of the Plan, if the employer elects to withdraw from an investment contract or if the terms of a successor plan do not meet the contract issuer’s criteria for the issuance of a similar contract. In some cases, an investment contract issuer may terminate a contract with the Plan and settle at an amount different than the contract value. Examples of these events include the Plan's loss of its qualified status, material breaches of responsibilities that are not cured or material and adverse changes to the provisions of the Plan.
4. INVESTMENTS
Participants may designate their contributions and their allocated portion of the employer contributions, in one percentage increments, to one or more of the eligible investment programs. New Plan Participants may elect to transfer investments from other qualified plans into the Plan.
The Plan’s investments that represent 5% or more of the Plan’s net assets at December 31, 2013 and 2012 are separately identified as follows:
December 31, | |||||||
2013 | 2012 | ||||||
State Street Global Advisors S&P 500 Index Fund | $ | 201,351,524 | $ | 149,196,187 | |||
Kinder Morgan, Inc. Common Stock | 148,035,430 | 149,579,438 | |||||
Columbia Trust Focused Large Cap Growth-II Fund | 136,555,746 | 114,795,048 | |||||
State Street Global Target Retirement 2020 Fund | 121,485,552 | 125,871,523 | |||||
Invesco Putnam Stable Value Fund | 112,697,139 | 117,194,722 | |||||
Dodge & Cox Stock Fund | 100,929,117 | * | |||||
IGT Invesco Short-term Bond Fund | * | 108,335,328 | |||||
MFS Institutional International Equity Fund | * | 99,320,410 | |||||
Investments less than 5% | 1,150,764,588 | 920,228,760 | |||||
Total investments at fair value | $ | 1,971,819,096 | $ | 1,784,521,416 | |||
* Investments less than 5% of the Plan’s net assets in the period indicated.
7
Kinder Morgan Savings Plan Notes to Financial Statements |
During 2013, the Plan’s investments appreciated in value, including gains and losses on investments sold during the year, as well as appreciation of investments held at the end of the year, as follows:
Year Ended December 31, 2013 | |||
Common collective trusts | $ | 187,790,940 | |
Self-directed brokerage accounts | 5,690,945 | ||
Kinder Morgan, Inc. common stock | 2,961,702 | ||
Registered investment companies (mutual funds) | 67,086,209 | ||
$ | 263,529,796 | ||
5. FAIR VALUE MEASUREMENTS
Fair value is a market-based measurement that is determined based on assumptions (inputs) that market participants would use in pricing an asset or liability. Inputs may be observable or unobservable, and valuation techniques used to measure fair value should maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The Plan uses a hierarchal disclosure framework that ranks the quality and reliability of information used to determine fair values.
The hierarchy is associated with the level of pricing observability utilized in measuring fair value and defines three levels of inputs to the fair value measurement process—quoted prices are the most reliable valuation inputs, whereas model values that include inputs based on unobservable data are the least reliable. Each fair value measurement must be assigned to a level corresponding to the lowest level input that is significant to the fair value measurement in its entirety.
The three broad levels of inputs defined by the fair value hierarchy are as follows:
Level 1 | Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access at the measurement date. |
Level 2 | Inputs to the valuation methodology include: |
• | Quoted prices for similar assets or liabilities in active markets; |
• | Quoted prices for identical or similar assets or liabilities in inactive markets; |
• | Inputs other than quoted prices that are observable for the asset or liability; and |
• | Inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 Unobservable inputs for the asset or liability. These unobservable inputs reflect the entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances (which might include the reporting entity’s own data).
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
In determining fair value, the Plan uses three different approaches (the market approach, the income approach and the cost approach) depending on the nature of the assets and liabilities. The market approach uses prices and other relevant data based on market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts such as cash flows or earnings to a single present amount, with the measurement based on the value indicated by current market expectations about those future amounts. The cost approach is the amount that would be currently required to replace an asset and indicates the cost to the Plan to acquire a substitute asset.
8
Kinder Morgan Savings Plan Notes to Financial Statements |
Following is a description of the valuation methodologies and approaches used for assets measured at fair value. There have been no changes in the methodologies used between December 31, 2013 and 2012.
Self-directed brokerage accounts and common stocks, exchange traded funds and exchange traded notes: Valued at the closing price reported on the active market on which the individual securities are traded. (Market approach)
Money market funds: Valued at amortized cost, which approximates fair value. (Cost approach)
Registered investment companies (mutual funds): Valued at the net asset value (“NAV”) of shares held by the plan at year end. (Market approach)
Common collective trusts and unitized mutual funds: The fair value of the common collective trust fund is based on its NAV, as reported by the manager of the common collective trust fund, and as supported by the unit prices of actual purchases and sales transactions occurring as of or close to the financial statement date. (Market approach except in the case of the stable value fund for which an Income approach is used)
Insurance contracts: Valued at cash surrender value, which approximates fair value, by discounting the cash flows based on current yields of similar instruments with comparable durations considering the credit-worthiness of the issuer. (Income approach)
The following tables set forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2013 and 2012:
Assets at Fair Value as of December 31, 2013 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Kinder Morgan, Inc. Common Stock | $ | 148,035,430 | $ | — | $ | — | $ | 148,035,430 | ||||||||
Registered investment companies (mutual funds) | ||||||||||||||||
Growth funds | 147,632,962 | 30,622,620 | — | 178,255,582 | ||||||||||||
Value funds | 100,929,117 | 36,885,358 | — | 137,814,475 | ||||||||||||
Fixed income funds | — | 66,662,494 | — | 66,662,494 | ||||||||||||
Money market funds | 6,497,979 | — | — | 6,497,979 | ||||||||||||
Common collective trusts | ||||||||||||||||
Target retirement | — | 477,893,098 | — | 477,893,098 | ||||||||||||
Index | — | 434,557,989 | — | 434,557,989 | ||||||||||||
Value | — | 113,693,946 | — | 113,693,946 | ||||||||||||
Fixed income | — | 214,347,162 | — | 214,347,162 | ||||||||||||
Growth funds | — | 136,555,746 | — | 136,555,746 | ||||||||||||
Insurance contracts | — | — | 468,537 | 468,537 | ||||||||||||
Insurance wrapper | — | — | 53,674 | 53,674 | ||||||||||||
Self-directed brokerage accounts | ||||||||||||||||
Common stock | 41,761,550 | — | — | 41,761,550 | ||||||||||||
Interest-bearing cash | 9,788,099 | — | — | 9,788,099 | ||||||||||||
Mutual funds | 5,350,218 | — | — | 5,350,218 | ||||||||||||
Other | 83,117 | — | — | 83,117 | ||||||||||||
$ | 460,078,472 | $ | 1,511,218,413 | $ | 522,211 | $ | 1,971,819,096 | |||||||||
9
Kinder Morgan Savings Plan Notes to Financial Statements |
Assets at Fair Value as of December 31, 2012 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Kinder Morgan, Inc. Common Stock | $ | 149,579,438 | $ | — | $ | — | $ | 149,579,438 | ||||||||
Registered investment companies (mutual funds) | ||||||||||||||||
Growth funds | 148,262,107 | 23,884,745 | — | 172,146,852 | ||||||||||||
Value funds | 74,372,778 | 24,310,094 | — | 98,682,872 | ||||||||||||
Fixed income funds | — | 88,811,326 | — | 88,811,326 | ||||||||||||
Money market fund | 9,553,704 | — | — | 9,553,704 | ||||||||||||
Common collective trusts | ||||||||||||||||
Target retirement | — | 466,585,922 | — | 466,585,922 | ||||||||||||
Index | — | 400,310,797 | — | 400,310,797 | ||||||||||||
Value | — | 117,194,722 | — | 117,194,722 | ||||||||||||
Fixed income | — | 231,954,507 | — | 231,954,507 | ||||||||||||
Insurance contracts | — | — | 480,039 | 480,039 | ||||||||||||
Insurance wrapper | — | — | 55,833 | 55,833 | ||||||||||||
Self-directed brokerage accounts | ||||||||||||||||
Common stock | 36,284,332 | — | — | 36,284,332 | ||||||||||||
Interest-bearing cash | 8,435,494 | — | — | 8,435,494 | ||||||||||||
Mutual funds | 4,411,451 | — | — | 4,411,451 | ||||||||||||
Other | 34,127 | — | — | 34,127 | ||||||||||||
$ | 430,933,431 | $ | 1,353,052,113 | $ | 535,872 | $ | 1,784,521,416 | |||||||||
Level 3 Gains and Losses
The table below sets forth a summary of changes in the fair value of the Plan’s level 3 assets for the year ended December 31, 2013:
Insurance Contracts and Wrapper | |||
Balance at January 1, 2013 | $ | 535,872 | |
Insurance contract rate adjustment | (10,186) | ||
Distributions | (3,475) | ||
Balance at December 31, 2013 | $ | 522,211 | |
6. TAX STATUS
The Plan is qualified under the IRC as exempt from federal income taxes, and the Plan received a favorable determination letter from the IRS on August 19, 2013. The Plan has been amended since receiving this determination; however, the Company believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC. Therefore, the Company believes that the Plan was tax exempt as of the financial statement dates. Employer contributions to the Plan and all earnings from Plan investments are not taxable to Participants until a partial or complete distribution of such contributions or earnings is made.
7. PARTY-IN-INTEREST TRANSACTIONS
Certain Plan investments are in accounts managed by the Trustee and the Plan has notes receivable from certain of its Participants. Additionally, the Plan invests in shares of the Company’s common stock. These transactions qualify as party-in-interest transactions, as defined by ERISA. However, such transactions are permitted under the provisions of the Plan and are exempt from the prohibition of party-in-interest transactions under ERISA.
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Kinder Morgan Savings Plan Notes to Financial Statements |
8. RISKS AND UNCERTAINTIES
The Plan provides for various investment options in mutual funds, common stocks, money market funds, common collective trusts, and insurance contracts. Investments, in general, are exposed to various risks, such as interest rate, credit and overall market volatility risk. Due to the level of risk associated with certain investments, it is reasonably possible that changes in the values of investments will occur in the near term and that such changes could materially affect Participants’ account balances and the amounts shown in the accompanying Statements of Net Assets Available for Benefits.
9. RECONCILIATION OF THE PLAN FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of the Plan’s net assets available for benefits per the accompanying financial statements to Form 5500:
December 31, | |||||||
2013 | 2012 | ||||||
Net assets available for benefits per the financial statements | $ | 2,006,931,914 | $ | 1,809,795,865 | |||
Deemed distributions of notes receivable from Participants | (1,734,095) | (1,907,797) | |||||
Adjustment from fair value to contract value for interest in collective trusts relating to fully benefit-responsive investment contracts | 8,249,586 | 17,947,612 | |||||
Net assets available for benefits per Form 5500 | $ | 2,013,447,405 | $ | 1,825,835,680 | |||
The following is a reconciliation of the change in net assets available for benefits per the accompanying financial statements to Form 5500:
Year Ended December 31, 2013 | |||
Net increase in net assets available for benefits per the financial statements | $ | 197,136,049 | |
Change in deemed distributions of notes receivable from Participants | 173,702 | ||
Change in adjustment from fair value to contract value for interest in collective trusts relating to fully benefit-responsive investment contracts | (9,698,026) | ||
Net increase in net assets available for benefits per Form 5500 | $ | 187,611,725 | |
Amounts allocated to deemed distributions of notes receivable from Participants are recorded as a receivable in the accompanying financial statements and recorded as an expense on Form 5500.
A note receivable from Participants is deemed distributed during the plan year under the provisions of IRC section 72(p) and Treasury Regulation section 1.72(p) if the note receivable is treated as a note receivable solely of the Participant’s individual account and the Participant has discontinued payment of the note receivable as of the end of the year. In accordance with GAAP, the note receivable balance is still considered as an outstanding note receivable until the note receivable obligation has been satisfied and is not treated as an actual distribution until such time the participant separates from employment and the participant’s vested account balance is fully distributed.
11
Kinder Morgan Savings Plan
Schedule H, Part IV, Line 4i - Schedule of Assets (Held at End of Year)
As of December 31, 2013
EIN: 80-0682103
PN: 002
(a) | (b) Identity of Issue, Borrower, Lessor or Similar Party | (c) Description of Investment Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value | (e) Current Value*** | |||||
State Street Global Advisors S&P 500 Index Fund | Common Collective Trust | $ | 201,351,524 | ** | ||||
* | Kinder Morgan, Inc. Common Stock | Common Stock | 148,035,430 | ** | ||||
Columbia Trust Focused Large Cap Growth-II Fund | Common Collective Trust | 136,555,746 | ** | |||||
State Street Global Target Retirement 2020 Fund | Common Collective Trust | 121,485,552 | ** | |||||
Invesco Putnam Stable Value Fund | Common Collective Trust | 112,697,139 | ** | |||||
Dodge & Cox Stock Fund | Registered Investment Company | 100,929,117 | ** | |||||
IGT Invesco Short-term Bond Fund | Common Collective Trust | 98,815,277 | ||||||
MFS Institutional International Equity Fund | Registered Investment Company | 88,137,138 | ||||||
State Street Global Advisors Global Equity EX US Index Non-lending Series | Common Collective Trust | 87,035,088 | ||||||
State Street Global Target Retirement 2030 Fund | Common Collective Trust | 79,184,040 | ||||||
State Street Global Advisors US Bond Index Fund | Common Collective Trust | 72,079,837 | ||||||
PIMCO Total Return | Registered Investment Company | 66,662,494 | ||||||
State Street Global Target Retirement 2025 Fund | Common Collective Trust | 63,920,471 | ||||||
State Street Global Target Retirement 2015 Fund | Common Collective Trust | 56,541,086 | ||||||
Self-Directed Brokerage Account | Common Stock, Interest-bearing Cash, Bonds and Mutual Fund | 54,971,962 | ||||||
Harbor Small Cap Growth Fund | Registered Investment Company | 50,618,324 | ||||||
State Street Global Advisors S&P Mid Cap Index Non-lending Series Fund | Common Collective Trust | 48,312,391 | ||||||
State Street Global Target Retirement 2040 Fund | Common Collective Trust | 44,337,142 | ||||||
Artisan Mid Cap Fund | Registered Investment Company | 30,622,620 | ||||||
State Street Global Target Retirement 2035 Fund | Common Collective Trust | 28,041,462 | ||||||
State Street Global Target Retirement 2010 Fund | Common Collective Trust | 28,009,200 | ||||||
State Street Global Advisors Russell Small Cap Index | Common Collective Trust | 25,779,149 | ||||||
Artisan Mid Cap Value Fund | Registered Investment Company | 25,001,657 | ||||||
IGT Invesco Jennison A or Better Intermediate Gov/Credit Fund | Common Collective Trust | 24,968,859 | ||||||
IGT Invesco A or Better Intermediate Gov/Credit Fund | Common Collective Trust | 24,954,231 | ||||||
IGT Invesco PIMCO A or Better Intermediate Gov/Credit Fund | Common Collective Trust | 24,922,595 | ||||||
State Street Global Target Retirement Income Fund | Common Collective Trust | 22,736,074 | ||||||
State Street Global Target Retirement 2045 Fund | Common Collective Trust | 21,547,588 | ||||||
IGT Invesco A or Better Core Fund | Common Collective Trust | 16,157,693 | ||||||
Harbor Small Cap Value Fund | Registered Investment Company | 11,883,701 | ||||||
State Street Global Target Retirement 2050 Fund | Common Collective Trust | 10,510,402 | ||||||
Lazard Emerging Markets Institutional Fund | Registered Investment Company | 8,877,500 | ||||||
IGT Invesco BlackRock A or Better Intermediate Gov/Credit Fund | Common Collective Trust | 6,611,535 | ||||||
* | JP Morgan Chase US Treasury Money Market Fund | Registered Investment Company | 6,497,979 | |||||
IGT Invesco Goldman Sachs A Core Fund | Common Collective Trust | 5,977,019 | ||||||
IGT Invesco BlackRock A or Better Core | Common Collective Trust | 5,971,723 | ||||||
IGT Invesco PIMCO A or Better Core | Common Collective Trust | 5,968,230 | ||||||
State Street Global Target Retirement 2055 Fund | Common Collective Trust | 1,580,081 | ||||||
Well Fargo J Stable Value Fund | Common Collective Trust | 996,807 | ||||||
Oneok Partners LP Unit Ltd Partnership | Self-Directed Brokerage Account - Partnership Units | 326,430 | ||||||
* | Kinder Morgan, Inc. Common Stock | Self-Directed Brokerage Account - Employer Securities | 234,864 | |||||
12
Kinder Morgan Savings Plan
Schedule H, Part IV, Line 4i - Schedule of Assets (Held at End of Year)
As of December 31, 2013
(a) | (b) Identity of Issue, Borrower, Lessor or Similar Party | (c) Description of Investment Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value | (e) Current Value*** | |||||
Compass Diversified Holdings Shares Of Beneficial Interest | Self-Directed Brokerage Account - Partnership Units | 196,300 | ||||||
Enterprise Products Partners LP | Self-Directed Brokerage Account - Partnership Units | 165,485 | ||||||
Linn Energy LLC Unit Repstg Ltd Liability Co Interests | Self-Directed Brokerage Account - LLC Units | 112,985 | ||||||
Crestwood Equity Partners LP | Self-Directed Brokerage Account - Partnership Units | 85,154 | ||||||
Breitburn Energy Partners LP Common Unit Ltd Partnership Interest | Self-Directed Brokerage Account - Partnership Units | 81,360 | ||||||
Regency Energy Partners LP | Self-Directed Brokerage Account - Partnership Units | 78,780 | ||||||
Williams Partners LP Com Unit Ltd Partnership Interest | Self-Directed Brokerage Account - Partnership Units | 66,525 | ||||||
Crestwood Midstream Partners LP New | Self-Directed Brokerage Account - Partnership Units | 66,515 | ||||||
Suburban Propane Partners LP Units Ltd Partnership Interest | Self-Directed Brokerage Account - Partnership Units | 64,722 | ||||||
Enbridge Energy Partners LP | Self-Directed Brokerage Account - Partnership Units | 59,740 | ||||||
Sunoco Logistics Partners LP Common Units | Self-Directed Brokerage Account - Partnership Units | 52,836 | ||||||
Blackstone Group LP Unit Repstg Ltd Partnership Interest | Self-Directed Brokerage Account - Partnership Units | 47,250 | ||||||
Energy Transfer Equity LP Com Unit Ltd Partnership | Self-Directed Brokerage Account - Partnership Units | 46,265 | ||||||
Ferrellgas Partners LP Units Ltd Partnership Interest | Self-Directed Brokerage Account - Partnership Units | 45,900 | ||||||
Proshares Tr Ii Proshares Ultrashort Euro | Self-Directed Brokerage Account - Exchange Traded Fund | 42,650 | ||||||
Energy Transfer Partners LP Unit Ltd Partnership Interest | Self-Directed Brokerage Account - Partnership Units | 41,978 | ||||||
Martin Midstream Partners LP | Self-Directed Brokerage Account - Partnership Units | 29,960 | ||||||
Natural Resource Partners LP | Self-Directed Brokerage Account - Partnership Units | 21,934 | ||||||
Boardwalk Pipeline Partners LP Common Unit Ltd Partner Interest | Self-Directed Brokerage Account - Partnership Units | 21,054 | ||||||
Atlas Pipeline Partners LP Unit Ltd Partnership Interest | Self-Directed Brokerage Account - Partnership Units | 20,750 | ||||||
Access Midstream Partners LP Unit | Self-Directed Brokerage Account - Partnership Units | 17,725 | ||||||
Proshares Tr Ii Proshares Ultrashort Yen | Self-Directed Brokerage Account - Exchange Traded Fund | 14,182 | ||||||
Rhino Resource Partners LP | Self-Directed Brokerage Account - Partnership Units | 11,380 | ||||||
Buckeye Partners LP Units Ltd Partnership Interest | Self-Directed Brokerage Account - Partnership Units | 10,651 | ||||||
Cheniere Energy Partners LP Common Units | Self-Directed Brokerage Account - Partnership Units | 7,449 | ||||||
Niska Gas Storage Partners LLC | Self-Directed Brokerage Account - LLC Units | 7,380 | ||||||
Proshares Tr Ii Proshares Ultra Silver Etf | Self-Directed Brokerage Account - Exchange Traded Fund | 6,335 | ||||||
KKR Financial Holdings LLC | Self-Directed Brokerage Account - LLC Units | 6,095 | ||||||
13
Kinder Morgan Savings Plan
Schedule H, Part IV, Line 4i - Schedule of Assets (Held at End of Year)
As of December 31, 2013
(a) | (b) Identity of Issue, Borrower, Lessor or Similar Party | (c) Description of Investment Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value | (e) Current Value*** | |||||
DCP Midstream Partners LP Units Ltd Partner Interest | Self-Directed Brokerage Account - Partnership Units | 5,589 | ||||||
United States Natural Gas Fund LP Unit Usd 0.001 | Self-Directed Brokerage Account - Partnership Units | 4,841 | ||||||
PAA Natural Gas Storage LP Common Unit Ltd Partnership Interest | Self-Directed Brokerage Account - Partnership Units | 4,600 | ||||||
Amerigas Partners LP Units Ltd Partnership Interest | Self-Directed Brokerage Account - Partnership Units | 4,457 | ||||||
QR Energy LP | Self-Directed Brokerage Account - Partnership Units | 856 | ||||||
Teekay LNG Partners LP Unit Ltd Partnership Interest | Self-Directed Brokerage Account - Partnership Units | 45 | ||||||
Monumental Life Insurance Wrapper | Wrapper Contract | 53,674 | ||||||
Principal Financial Group | Insurance Contracts | 468,537 | ||||||
* | Notes receivable from participants | Notes receivable from participants with terms ranging from 0 - 15 years and interest rates ranging from 3.25% to 9.25% | 43,715,712 | |||||
Total | $ | 2,015,534,808 | ||||||
* | Represents party-in-interest transactions (Note 7). | |||||||
** | Represents investment comprising at least 5% of net assets available for benefits. | |||||||
*** | Cost information is not presented because all investments are participant directed. | |||||||
14
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees have duly caused this annual report to be signed by the undersigned hereunto duly authorized.
KINDER MORGAN SAVINGS PLAN | |
By: | /s/ Matthew Wojtalewicz | |
Matthew Wojtalewicz, Member of the Fiduciary Committee of Kinder Morgan, Inc. | ||
Dated: June 30, 2014 | ||
15
EXHIBIT INDEX
Exhibit Number Description
23.1 Consent of Independent Registered Public Accounting Firm dated June 30, 2014
16