The distribution represents an 8 percent increase over the fourth quarter 2009 cash distribution per unit of $1.05 ($4.20 annualized). KMP has increased the distribution 39 times since current management took over in February of 1997.

For the fourth quarter, KMP reported distributable cash flow before certain items of $366.2 million, up 7 percent from $341.8 million for the comparable period in 2009. Distributable cash flow per unit before certain items was $1.17, flat compared to the fourth quarter last year. Net income before certain items was $425.4 million versus $371.5 million for the same period last year. Including certain items, net income was $416.3 million compared to $324.7 million for the fourth quarter of 2009. Certain items totaled a net loss of $9.1 million, the majority of which was attributable to legal reserves, offset in part by a gain on the sale of 50 percent of Cypress Pipeline.

For full year 2010, KMP produced distributable cash flow before certain items of $1.360 billion, up 14 percent from $1.196 billion for 2009. Distributable cash flow per unit before certain items was $4.43, up 4 percent from $4.25 for 2009. Net income before certain items was $1.521 billion compared to $1.342 billion for 2009. Including certain items, net income was $1.331 billion versus $1.284 billion for 2009.

Chairman and CEO Richard D. Kinder said, “We are pleased to increase our cash distribution per unit for the fourth consecutive quarter. At its current level of $1.13 per unit, the distribution is significantly higher (8 percent) than it was in the fourth quarter of 2009. Overall, 2010 was a good year at Kinder Morgan and we are very pleased with our results, particularly when you consider the state of the economy during the past year. We hit our distribution per unit target of $4.40 for the year, and we generated cash in excess of that distribution, although we did fall a bit short of our annual budget. All five of our businesses produced stronger results in the fourth quarter and for the full year of 2010 than in the comparable periods of 2009. Total segment earnings before DD&A were $876.3 million for the fourth quarter and $3.312 billion for the full year, up 8 percent for the quarter and 12 percent for the full year. These increases reflect solid asset performance and contributions from various investment initiatives. Looking ahead, the company is well positioned for additional growth. In total, we invested approximately $2.5 billion in 2010 to further grow the company, and we will continue to pursue new-build infrastructure opportunities, joint ventures, organic expansions and acquisitions across all of our businesses. As previously announced, we expect to declare cash distributions of $4.60 per unit for 2011, which would be a 4.5 percent increase over 2010.”

The Terminals business produced fourth quarter segment earnings before DD&A and certain items of $172.6 million, up 11 percent from $154.9 million for the comparable period in 2009. For the year, segment earnings before DD&A and certain items were $646.5 million, a 12 percent increase over $576.1 million for 2009, but slightly below its published annual budget target of 14 percent growth.

“Our increase in segment earnings in the fourth quarter was driven evenly by organic growth and acquisitions,” Kinder said. Growth was driven by strong performances at KMP’s liquids terminals on the Houston Ship Channel, increased throughput at the company’s petroleum coke operations, good results from the West Coast operations and significantly higher ethanol volumes.

For the full year, about 54 percent of the $70.4 million in growth was driven internally, with acquisitions accounting for the other 46 percent. “Compared to 2009, growth was driven by contract renewals and new storage capacity at our Pasadena and Galena Park terminals, strong results at our Van Wharves facility in Vancouver and our crude tank farm in Edmonton, a 48 percent increase in steel volumes to 24.7 million tons, contributions from the Slay acquisition in St. Louis and substantially higher ethanol volumes,” Kinder explained.

Ethanol handling in this segment was up 78 percent to 57.9 million barrels, with the majority of the increase attributable to the U.S. Development acquisition. Combined, the terminals and products pipelines business segments handled about 87.8 million barrels of ethanol in 2010, an increase of 58 percent over 2009. KMP continues to handle approximately 30 percent of the ethanol used in the United States.
Other Terminals News: 

• KMP closed on an initial $50 million equity investment in Watco Companies on Jan. 3 in exchange for a preferred equity position in the rail transportation company. Watco owns the largest privately held short line railroad company in the United States and also operates transload/intermodal and mechanical services divisions. The transaction provides capital to Watco for further expansion of specific projects and offers Kinder Morgan the opportunity to share in the subsequent growth. The investment complements KMP’s existing terminal network and provides customers more transportation services for many commodities that it handles. The relationship with Watco is also expected to produce additional growth opportunities through new projects such as crude unit train operations and incremental business at KMP’s terminal storage facilities. KMP may invest up to an additional $100 million in Watco this year.

• KMP acquired certain assets from Liquid Transfer Terminals for $2.5 million in December. The purchased assets include five tanks with a total of 150,000 barrels of storage, a river dock and about seven acres of land, which will be combined with KMP’s adjacent Queen City terminal in Cincinnati, Ohio.
• KMP acquired its third waterfront shipping terminal in Chesapeake, Va., in October for approximately $8.1 million. The facility handles a minimum of 250,000 tons of material annually including pumice, aggregate and sand, and sits on approximately 40 acres of land. The terminal, located near the company’s Elizabeth River Terminal, includes a dock, crane, conveyors and several customer contracts.
• KMP is installing a $16 million railcar loop track at its Deepwater Petcoke Terminal in Pasadena, Texas, to transport a major petcoke producer’s volumes to the facility. The company expects to have the track in service Jan. 31 of this year.
• KMP can now unload 50 percent more fertilizer at its Port Sutton terminal in Florida by using a new E-Crane loader/unloader and new conveyors, which were added through a $7.5 million expansion of the facility.
• KMP completed a $7.4 million expansion at its Pier IX terminal in Newport News, Va., that added additional coal export capacity of 3 million tons.
• Looking to capitalize on increasing demand for coal export capacity, KMP has also entered into letters of intent with two major coal producers that will result in expansions of two KMP terminals. The company has signed a letter of intent with a major central Appalachian coal producer to expand its IMT terminal in Louisiana. The approximately $70 million project will enable the company to handle an incremental 6 million tons of coal with a minimum commitment for 4 million tons. The project is expected to be completed in 2012. KMP has also signed a letter of intent with a major western coal producer to expand one of its Houston petcoke facilities to handle up to 2 million tons. The approximately $15 million project should be completed in the third quarter this year, pending obtaining permits.