General
The Employees Retirement Fund Trust Profit Sharing Plan (the "Profit Sharing Plan") of K N Energy, Inc. was established in 1945 for the benefit of eligible employees (as defined in the Profit Sharing Plan indenture). Effective with K N Energy, Inc.'s acquisition of Kinder Morgan (Delaware), Inc., formerly Kinder Morgan, Inc., a Delaware corporation, K N Energy, Inc. changed its name to Kinder Morgan, Inc. (the "Company").

The Profit Sharing Plan has been amended and restated, and has been renamed the Kinder Morgan, Inc. Savings Plan (the "Plan"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").

On January 31, 2002, benefits were transferred to the Plan from the Plantation Pipe Line Company - Employees Thrift Plan (the "Plantation Plan") at the election of Plantation Plan participants, and on July 1, 2002, the Plan was merged with the Laser Materials Services, Inc. 401(k) Profit Sharing Plan (the "Laser Plan"). All assets transferred from the Plantation and Laser Plans were invested in the Plan pursuant to the participants' directions.

Benefits under the Plan are not guaranteed by the Pension Benefit Guaranty Corporation. Refer to the Plan agreement for a more complete description of the Plan's provisions.

Plan Administration
The Plan is administered by the Kinder Morgan Fiduciary Committee. The Plan's recordkeeper is Putnam Defined Contribution Servicing. Plan assets are maintained under the custody of Putnam Fiduciary Trust Company ("Trustee"). The Trustee makes payments as authorized by the Plan.

Contributions
Participants may elect to make pretax contributions totaling from 1 percent to 50 percent of their annual compensation, limited by requirements of the Internal Revenue Code ("IRC"). Participants may discontinue their election to contribute at any time. Effective July 1, 2003, all new employees are automatically enrolled in the Plan with a pretax contribution of 2 percent of their annual compensation. Within the first 30 days of hire, employees may opt out of automatic enrollment.

The Company makes Qualified Non-Elective Contributions ("QNEC") to the Plan on behalf of each eligible employee. The QNEC is equal to 4 percent of eligible compensation and is allocated as of each pay period (certain collectively bargained employees receive a 3 percent QNEC contribution, and certain other collectively bargained employees receive a 25% Company match on contributions up to 6% of eligible compensation). All QNEC and other Company contributions are initially invested in Kinder Morgan, Inc. common stock,

which is immediately transferable to other available investments at the employee's discretion. In addition to the QNEC, the Company may also make discretionary contributions to the Plan, based on the Company's performance. For the year ended December 31, 2003, Company contributions totaled approximately $11.5 million.

Participants may invest in Kinder Morgan, Inc. common stock held in the ESOP portion of the Plan as described under Section 4967 (e)(7) of the IRC. Dividends on Kinder Morgan, Inc. common stock are reinvested in Kinder Morgan, Inc. common stock, unless the participant elects direct dividend payment as allowed by the Plan. All Company matching contributions are used to purchase Kinder Morgan, Inc. common stock. At any time, a participant may, by a change in investments direction, direct that shares of Kinder Morgan, Inc. common stock be converted to cash and the proceeds less any applicable sales expenses be invested in another investment option.

Under Internal Revenue Service regulation, annual additions under the Plan and all other qualified plans sponsored by the Company are limited to the lesser of 100 percent of eligible compensation or $41,000 for each employee. Annual additions are defined as employer contributions and employee contributions.

Benefits/Vesting
Participants are fully and immediately vested in all participant contributions and all Company contributions made after July 1, 2000. Participants who were employed by the former K N Energy, Inc. and received Company contributions between January 1, 1995 and June 30, 2000 are subject to a four-year vesting provision (25 percent per year of service) on those contributions. Participant contributions may be withdrawn, with the approval of the Fiduciary Committee, in the event of unusual expenses connected with illness or disability, for college expenses for a participant or his or her dependents, or for the purchase of a primary residence, as defined in the Plan document. If not withdrawn earlier, a participant's account will be distributed in the event of termination of employment, death, or termination of the Plan. If a participant's account is $5,000 or less, a lump-sum distribution will automatically be made. If a participant's account is greater than $5,000, the participant's distribution options are: lump-sum distribution, partial distributions, or periodic installments. Upon retirement, participants whose accounts exceed $5,000 may choose to leave their accounts in the Plan until age 70 1/2, when minimum distributions are required under the IRC.

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.

Loans
Participants may borrow, from the vested portion of their Plan accounts, a minimum of $500 up to a maximum equal to the lesser of 50 percent of their vested balance or $50,000. All loans are charged a variable interest rate equal to the prime rate published on the first 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. Forfeited balances of terminated participants' non-vested accounts are used to reduce future Company QNEC contributions. During 2003, $70,002 of employer contributions was forfeited by employees who were terminated before those amounts became vested. The entire forfeiture balance of $70,002 was used to reduce employer contributions, leaving a forfeiture balance at December 31, 2003 of $0.
  

Basis of Accounting
The financial statements of the Plan are prepared on the accrual basis of accounting. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America 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.

Investment Valuation and Income Recognition
Investments are accounted for at fair market values as determined by quoted market prices in an active market. Participant loans are valued at cost, which approximates fair market value. Life insurance contracts are stated at contract value (see Note 3). 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. The accompanying supplemental schedule of assets held for investment purposes reflects cost basis determined utilizing a historical cost approach as required by ERISA.

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.

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 3).

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.

Other
The Company's annual discretionary contribution, if any, is determined when annual net income and payroll amounts are known. The contribution is allocated to participants subsequent to year-end. The Company did not make a discretionary contribution in 2003.
  

Participants may designate their contributions and their allocated portion of the employer contributions, in percentage increments divisible by five, 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 investment programs of the Plan and the number of participants in each program at December 31, 2003 and 2002 are briefly described as follows:
  

Artisan Mid Cap Fund - This program consists of investments in common stocks of medium-sized companies. At December 31, 2003, 1,421 participants held 482,478 shares with a cost of $10,847,703 and a market value of $12,438,294. This investment option was not available to participants in 2002.

ChevronTexaco Corporation Common Stock - This program is restricted to former participants of the Plantation Plan and is closed to new purchases. Participants have the option of continuing to hold shares of this program or transferring to other fund options at their discretion. At December 31, 2003, 62 participants held 14,629 shares with a cost of $711,074 and a market value of $1,263,777. At December 31, 2002, 67 participants held 19,030 shares with a cost of $865,649 and a market value of $1,265,089.

Exxon Mobil Corporation Common Stock - This program is restricted to former participants of the Plantation Plan and is closed to new purchases. Participants have the option of continuing to hold shares of this program or transferring to other fund options at their discretion. At December 31, 2003, 63 participants held 73,043 shares with a cost of $1,365,391 and a market value of $2,994,771. At December 31, 2002, 69 participants held 107,759 shares with a cost of $1,837,521 and a market value of $3,765,115.

Federated Stock Trust - This program consists of investments in blue-chip stocks and seeks growth of income and capital. At December 31, 2003, 936 participants held 172,127 shares with a cost of $5,412,061 and a market value of $5,898,783. At December 31, 2002, 886 participants held 126,491 shares with a cost of $4,101,555 and a market value of $3,438,029.

Harbor Small Cap Growth Fund - This program consists of investments in common stock of growth-oriented small companies. At December 31, 2003, 912 participants held 483,126 shares with a cost of $5,305,997 and a market value of $5,966,611. This investment option was not available to participants in 2002.

Kinder Morgan, Inc. Common Stock Fund - This program consists of shares of the Company's common stock. At December 31, 2003, 6,216 participants held 2,643,387 shares with a cost of $88,235,668 and a market value of $156,224,143. At December 31, 2002, 6,089 participants held 2,782,620 shares with a cost of $85,088,657 and a market value of $117,621,334.

Lord Abbett Mid-Cap Value Fund - This program consists of investments in common stocks of medium-sized companies. At December 31, 2003, 537 participants held 263,183 shares with a cost of $4,342,438 and a market value of $4,942,580. At December 31, 2002, 264 participants held 80,554 shares with a cost of $1,227,200 and a market value of $1,238,922.

Pimco Total Return - This program consists of investments in intermediate-maturity fixed-income securities. At December 31, 2003, 1,782 participants held 2,255,712 shares with a cost of $24,346,376 and a market value of $24,158,674. At December 31, 2002, 1,392 participants held 1,206,790 shares with a cost of $12,818,075 and a market value of $12,876,449.

Putnam Asset Allocation Balanced Portfolio - This program uses a balanced strategic allocation percentage between equity securities and fixed income securities. At December 31, 2003, 1,031 participants held 1,860,728 shares with a cost of $21,066,607 and a market value of $18,383,994. At December 31, 2002, 990 participants held 1,795,443 shares with a cost of $20,944,694 and a market value of $15,027,854.

Putnam Asset Allocation Conservative Portfolio - This program uses a strategic allocation percentage between equity securities and fixed income securities that is weighted toward fixed income. At December 31, 2003, 516 participants held 703,152 shares with a cost of $6,592,795 and a market value of $6,208,829. At December 31, 2002, 494 participants held 573,620 shares with a cost of $5,566,126 and a market value of $4,554,544.

Putnam Asset Allocation Growth Portfolio - This program uses a strategic allocation percentage between equity securities and fixed income securities that is weighted toward equity. At December 31, 2003, 1,029 participants held 1,633,096 shares with a cost of $20,392,717 and a market value of $16,526,935. At December 31, 2002, 993 participants held 1,615,618 shares with a cost of $20,900,395 and a market value of $12,876,473.

Putnam Fund for Growth and Income - This program consists of investments in a portfolio of common stocks that offer the potential for capital growth, current income or both. At December 31, 2003, 2,120 participants held 1,974,146 shares with a cost of $36,891,820 and a market value of $35,001,612. At December 31, 2002, 2,225 participants held 2,026,529 shares with a cost of $38,746,779 and a market value of $28,695,653.

Putnam Growth Opportunities Fund - This program consists of investments in large, highly competitive growth companies. On June 30, 2003, this investment option was removed from the plan and any funds remaining as of that date were transferred to the Putnam Voyager Fund. At December 31, 2002, 955 participants held 290,148 shares with a cost of $6,757,753 and a market value of $3,046,550.

Putnam Income Fund - This program invests primarily in corporate bonds. On June 30, 2003, this investment option was removed from the plan and any funds remaining as of that date were transferred to the Pimco Total Return Fund. At December 31, 2002, 922 participants held 1,157,649 shares with a cost of $7,511,283 and a market value of $7,779,402.

Putnam International Equity Fund - This program consists of investments in a diversified portfolio of stocks of companies located outside the United States. At December 31, 2003, 1,667 participants held 899,826 shares with a cost of $20,264,668 and a market value of $18,698,379. At December 31, 2002, 1,739 participants held 934,761 shares with a cost of $21,773,043 and a market value of $15,442,246.

Putnam Money Market Fund - This program invests primarily in money market investments. On June 30, 2003, this investment option was removed from the plan and any funds remaining as of that date were transferred to the Putnam Stable Value Fund. At December 31, 2002, 2,566 participants held 66,966,360 shares with a cost and a market value of $66,966,360.

Putnam Money Market Fund SDB - This program invests primarily in money market investments and serves as the cash balance account for the Self-Directed Brokerage Account. At December 31, 2003, 98 participants held 2,647,291 shares with a cost and a market value of $2,647,291. At December 31, 2002, 87 participants held 1,791,744 shares with a cost and a market value of $1,791,744.

Putnam New Opportunities Fund - This program consists of investments in a portfolio of stocks in certain emerging industry groups. On June 30, 2003, this investment option was removed from the plan and any funds remaining as of that date were transferred to the Artisan Mid Cap Fund. At December 31, 2002, 1,382 participants held 291,069 shares with a cost of $21,192,112 and a market value of $8,493,401.

Putnam OTC Emerging Growth Fund - This program consists of investments in midsize emerging growth companies. On June 30, 2003, this investment option was removed from the plan and any funds remaining as of that date were transferred to the Harbor Small Cap Growth Fund. At December 31, 2002, 746 participants held 346,729 shares with a cost of $3,884,010 and a market value of $1,792,588.

Putnam S&P 500 Index Fund - This program invests in stocks that closely approximate the return of the S&P 500 index. At December 31, 2003, 1,290 participants held 431,547 shares with a cost of $11,783,394 and a market value of $11,988,389. At December 31, 2002, 1,202 participants held 338,243 shares with a cost of $9,856,804 and a market value of $7,319,580.

Putnam Stable Value Fund - This program consists of investments in investment contracts or similar investments issued by insurance companies, banks, and similar financial institutions. At December 31, 2003, 2,731 participants held 64,743,767 shares with a cost of $64,743,783 and a market value of $64,743,767. This investment option was not available to participants in 2002.

Putnam Voyager Fund - This program consists of investments in common stocks of small companies. At December 31, 2003, 2,787 participants held 2,781,521 shares with a cost of $60,301,676 and a market value of $45,366,600. At December 31, 2002, 2,847 participants held 2,567,353 shares with a cost of $60,511,915 and a market value of $33,503,962.

Royce Low-Priced Stock Fund - This program consists of investments in common stocks of small companies whose average price is less than $20 per share. At December 31, 2003, 642 participants held 561,466 shares with a cost of $6,664,367 and a market value of $7,849,294. At December 31, 2002, 222 participants held 87,347 shares with a cost of $877,514 and a market value of $851,631.

Self-Directed Brokerage Account - This program consists of participant-directed investments in individual stocks. At December 31, 2003, 89 participants held securities in this program with a market value of $4,769,736. At December 31, 2002, 80 participants held securities in this program with a market value of $2,469,826.

In 1970, the Plan entered into a deposit administration investment contract (the "Contract") with Principal Financial Group ("Principal"). Prior to January 1, 1987, participants had the option of purchasing life insurance through the Contract. Thereafter, the segment of the Plan allowing for the purchase of a life insurance policy on the life of the participant was frozen so that no new policies could be written. Participants with policies at December 31, 1986, had the following options: 1) allow the policy to remain in force with a frozen face value and fixed premium payments, 2) elect to use the cash surrender value ("CSV") of the policy to purchase paid-up life insurance or 3) reinvest the CSV of the policy in another fund. Principal maintains the contributions in a group account.

The Contract is included in the Statements of Net Assets Available for Benefits at contract value (which represents contributions made under the contract, plus earnings, less withdrawals and administrative expenses) because it is fully benefit responsive. There are no reserves against contract value for credit risk of Principal or otherwise. The value of the Contract at December 31, 2003 and 2002 was $700,346 and $683,283, respectively.
  

The following presents the fair value of investments that represent 5 percent or more of the Plan's net assets:

During 2003, the Plan's investments appreciated (depreciated) in value (including gains and losses on investments bought and sold, as well as held during the year) as follows:

Nonparticipant-directed Investments

Information about the significant components of the changes in net assets relating to the nonparticipant-directed investments in Kinder Morgan, Inc. common stock of $156,224,143 and $117,621,334 at December 31, 2003 and 2002, respectively, is as follows:

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 Internal Revenue Service on November 26, 2002. The Plan has been amended since receiving this determination; however, the Plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC. Therefore, the administrator 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.
    

Party-in-Interest Transactions

Certain Plan investments are shares of Kinder Morgan, Inc. common stock. Certain Plan investments are shares of mutual funds and money market funds managed by Putnam Investments, Inc. Putnam Fiduciary Trust Company (the Trustee of the Plan) is a subsidiary of Putnam Investments, Inc. and, therefore, these transactions qualify as party-in-interest. Any purchases and sales of these investments are open market transactions at fair market value. Consequently, such transactions are permitted under the provisions of the Plan and are exempt from the prohibition of party-in-interest transactions under ERISA.
  

Risks and Uncertainties

The Plan provides for various investment options in mutual funds, money market funds and Company common stock. 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 Statements of Net Assets Available for Benefits.
    

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 at December 31, 2003 and 2002 to Form 5500:

The following is a reconciliation of the change in net assets available for benefits per the accompanying financial statements for the year ended December 31, 2003 to Form 5500:

Amounts allocated to deemed distributions of participant loans are recorded as an investment in the accompanying financial statements and recorded as an expense on Form 5500.

A participant loan is deemed distributed during the plan year under the provisions of IRC section 72(p) and Treasury Regulation section 1.72(p) if the participant loan is treated as a direct investment solely of the participant's individual account and the participant has discontinued payment of the loan as of the end of the year. For financial statement purposes, the loan balance is still considered as an outstanding loan until the loan 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.

Cost*

Current Value

$ 10,847,703

$ 12,438,294

     711,074

   1,263,777

   1,365,391

   2,994,771

   5,412,061

   5,898,783

   5,305,997

   5,966,611

 88,235,668

 156,224,143

   4,342,438

   4,942,580

  24,346,376

  24,158,674

   6,664,367

   7,849,294

N/A

  4,769,736

  21,066,607

  18,383,994

   6,592,795

   6,208,829

  20,392,717

  16,526,935

  36,891,820

  35,001,612

  20,264,668

  18,698,379

   2,647,291

   2,647,291

  11,783,394

  11,988,389

  64,743,783

  64,743,767

  60,301,676

  45,366,600

N/A

     700,346

   9,746,893

   9,746,893

Total Investments

$401,662,719

$456,519,698

============

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**Identity of
Party Involved

Description of Asset

* Purchase Price

* Selling Price

Cost of Asset

Current Value of Asset

Net Gain (Loss)

Kinder Morgan, Inc.

Common Stock

$29,496,319

$         -

$29,496,319

$29,496,319

$         -

Kinder Morgan, Inc.

Common Stock

$         -

$36,506,629

$26,349,308

$36,506,629

$10,157,321