El Paso Corp. (ticker: EP, exchange: New York Stock Exchange (.N))
News Release -
10-Nov-2003
El Paso Corporation Reports Third Quarter 2003 Results HOUSTON, Nov. 10 /PRNewswire-FirstCall/ -- El Paso Corporation (NYSE: EP)
today reported results for the third quarter of 2003 and updated its progress
on its 2003 operational and financial plan.
Third Quarter Results Quarter Ended September 30
(In millions, except per share 2003 2002
amounts)
Net loss $(146) $(69)
Loss from discontinued operations,
net of income taxes 49 93
Income (loss) from continuing
operations $(97) $24
Significant items from continuing
operations, net of tax 91 30
Net income (loss) adjusted for
significant items $(6) $54
Loss per share-diluted $(.24) $(.12)
Loss from discontinued operations .08 .16
Earnings (loss) from continuing
operations per share-diluted $(.16) $.04
Significant items from continuing
operations .15 .05
Earnings (loss) per share-diluted
adjusted for significant items $(.01) $.09
THIRD QUARTER RESULTS
El Paso reported a net loss of $146 million, or $.24 per diluted share,
for the third quarter of 2003 compared with a net loss of $69 million, or $.12
per diluted share, in the third quarter of 2002. Adjusted for significant
items, the company had a third quarter 2003 net loss of $6 million, or $.01
per diluted share, compared with net earnings of $54 million, or $.09 per
diluted share, in the third quarter of 2002. Third quarter 2003 significant
items affecting continuing operations totaled $91 million, or $.15 per diluted
share, mostly attributable to various asset impairments. Last year's third
quarter results included significant items totaling $30 million, or $.05 per
diluted share, related to asset sales. A complete schedule of significant
items is attached to this release.
"We continued to show progress on debt reduction and liquidity in the
quarter," said Doug Foshee, El Paso's president and chief executive officer.
"In addition, we're on track to meet our asset sales goal for the year.
Unfortunately, a good quarter in the pipeline and midstream areas was offset
by disappointing results in E&P as we continue to rationalize this business.
My first two months at El Paso confirm my belief that while we have
significant challenges still ahead, our people and our core assets will allow
us to restore the long-term earnings power of the company and restore our
balance sheet. I look forward to sharing in more detail later this year our
plan for the future."
Recent Accomplishments
Since reporting its second quarter 2003 earnings, El Paso has achieved a
number of important financial and operational accomplishments that evidence
continued progress implementing its 2003 operational and financial plan.
-- Third quarter cash flow from operations totaled $752 million, raising
year-to-date cash flow to $1.8 billion.
-- The company's obligations senior to common were reduced by
approximately $620 million during the third quarter. Additionally,
approximately $775 million of obligations senior to common were
retired in October.
-- As part of the asset sales, El Paso has eliminated $710 million of
non-recourse project and power plant restructuring debt that was
consolidated on El Paso's balance sheet. Through the sale of El
Paso's interest in East Coast Power, L.L.C., the purchaser assumed
$571 million of project debt. In addition, last month the company
sold its interests in Mohawk River Funding I for $11 million,
eliminating $139 million of non-recourse power plant restructuring
debt.
-- El Paso sold a 9.9-percent general partner interest in GulfTerra
Energy Partners, L.P. (NYSE:GTM) to Goldman Sachs & Co. for $88
million. This transaction confirmed the significant value of the
general partner interest and furthered El Paso's and GulfTerra's
efforts to enhance the credit separation of the two companies. In
addition, GulfTerra redeemed all of the Series B Preference Units held
by El Paso for $156 million. These units would not have paid cash to
El Paso until late 2010.
-- The company announced a $500-million drilling venture with wholly
owned subsidiaries of Lehman Brothers and Nabors Industries Ltd. that
will result in an incremental $350 million of drilling activity over
the next nine to 12 months. El Paso is pursuing additional drilling
ventures in order to develop its substantial inventory as it reduces
the capital spending for the production business.
-- El Paso initiated a tender offer in October 2003 to exchange common
stock and cash for the company's 9.0-percent equity security units.
If all units are tendered, this would result in a reduction of up to
$575 million of balance sheet debt, an increase in shareholders equity
of approximately $475 million, and a reduction in cash of up to
$112 million.
-- In September the company reduced its exposure to fluctuations in the
Euro by entering into swap agreements that had the effect of replacing
250 million of Euro-denominated fixed-rate debt with
dollar-denominated floating rate debt.
-- El Paso made continued progress towards the liquidation of its trading
portfolio.
THIRD QUARTER SEGMENT RESULTS
Pipeline Group
The Pipeline Group's third quarter reported EBIT was $301 million compared
with $302 million during the third quarter of 2002. Third quarter 2003
results include a $20-million benefit related to the revaluation of common
stock to be issued under the western energy settlement, as the liability was
adjusted for El Paso's closing stock price on September 30, 2003. The
remaining significant item is a $3-million gain associated with an Australian
asset sale. After adjusting for significant items, third quarter 2003 EBIT
was $278 million compared with $302 million for the same 2002 period. The
decline is primarily due to a favorable resolution of measurement issues at a
processing plant serving the Tennessee Gas Pipeline Company (TGP) system in
2002, the sale of El Paso's interest in the Alliance pipeline system, and
lower revenues on the El Paso Natural Gas Company pipeline system as a result
of expired capacity contracts that the company cannot remarket due to various
Federal Energy Regulatory Commission (FERC) orders. These factors were
partially offset by completed system expansions and new transportation
contracts, primarily on the Colorado Interstate Gas Company and Southern
Natural Gas Company pipeline systems. Third quarter system throughput was
down from 2002 levels as cooler summer weather and higher natural gas prices
reduced demand.
El Paso's Pipeline Group continues its active expansion program. In
September, Cheyenne Plains Gas Pipeline Company announced plans to increase
its capacity from 560 thousand dekatherms per day (Mdth/d) to at least 730
Mdth/d due to significant customer demand. The Cheyenne Plains system is
expected to be in-service in early 2005, and the expansion is expected to be
in-service in early 2006. The FERC has granted preliminary approvals for the
original 560 Mdth/d project. In August, El Paso Natural Gas Company announced
the purchase of Copper Eagle Gas Storage, LLC, which is developing a natural
gas storage project near Phoenix, Arizona. In addition, TGP placed the first
phase of its South Texas Expansion Project, which connects TGP's existing
South Texas system to a new natural gas pipeline in northern Mexico, into
service in August 2003.
Third Quarter Ended
Pipeline Group Results September 30
(In millions) 2003 2002
Operating Income $267 $259
Equity and Other Income 34 43
Reported EBIT $301 $302
Significant items(1) (23) --
EBIT adjusted for significant
items $278 $302
Total throughput (BBtu/d) 18,799 19,508
(1) Significant items: Adjustment to stock-based charge for western energy
settlement; gain on asset sale (Australia).
Production
Production's reported EBIT for the third quarter 2003 was $103 million
versus $179 million during the third quarter of 2002. Third quarter 2003
results include a $2-million ceiling test charge primarily relating to the
company's Turkish full-cost pool that was partially offset by a $1-million
asset sale gain. Third quarter equivalent production declined 32 percent due
largely to sales of approximately 1.6 trillion cubic feet equivalent (Tcfe) of
proved reserves since the third quarter of 2002, normal declines in base
production, and mechanical failures on certain wells. The realized price for
natural gas, net of hedges, rose to $3.95 per thousand cubic feet (Mcf) in
2003 from $3.21 per Mcf in 2002, while the realized price for oil, condensate,
and liquids, net of hedges, rose to $23.82 from $22.19 per barrel (Bbl).
Total per-unit costs increased to an average of $2.95 per thousand cubic feet
equivalent (Mcfe) in the third quarter 2003 compared with $2.02 per Mcfe
during the same 2002 period. The per-unit costs were affected by a higher
DD&A rate, which resulted from higher finding and development costs. In
addition, the sale of reserves at unit prices that were lower than the average
DD&A rate contributed to the increase. Per-unit costs were also affected by
higher workover costs and by increased G&A on lower equivalent production
during the third quarter of 2003.
In the third quarter of 2003, the company produced 80 billion cubic feet
(Bcf) of natural gas, 54 Bcf of which was hedged at an average price of $3.51
per MMBtu, or $3.65 per Mcf. The company has hedged approximately 54 trillion
British thermal units (TBtu) of its fourth quarter 2003 natural gas production
at a NYMEX price of $3.38 per million British thermal units (MMBtu) or $3.52
per Mcf. For 2004, El Paso has hedged approximately 19 TBtu per quarter of
its natural gas production at an average NYMEX price of $2.55 per MMBtu or
$2.65 per Mcf. The company expects that its 2003 realized price for natural
gas will be approximately $.20 less than the NYMEX spot price due to
transportation costs and regional price differentials, net of adjustments for
Btu content.
During the third quarter of 2003, El Paso Production drilled a total of
129 wells, with an overall success rate of 90 percent. Most of this drilling
took place as part of the company's coal bed methane and Gulf of Mexico deep
shelf exploration programs. The deep shelf program continues to exceed
expectations with a 56-percent success rate (nine successful wells out of 16
drilled) thus far in 2003. The average deep shelf well has had an estimated
48 Bcf of recoverable reserves with an initial production rate of 30.5 million
cubic feet (MMcf) of gas per day and 1,479 barrels of condensate per day. The
most recent development in the deep shelf program is a confirmation well in
the Jim Bob Mountain discovery. This well doubled the aerial extent of the
original discovery to approximately 2,000 acres.
In Brazil, El Paso completed the Santos #14B "Luana" prospect well, as a
discovery in the upper Itajai, with 75 feet of pay and estimated proved
reserves of 162 Bcfe gross, 88 Bcfe net to El Paso's interest. A confirmation
well, Santos #15D, has been drilled and encountered 118 feet of upper Itajai.
This interval, along with lower Itajai sands that are present in both wells,
will be tested, and if successful, would further increase proved reserves.
Third Quarter Ended
Production Results September 30
(In millions) 2003 2002
Operating Income $101 $179
Equity and Other Income 2 --
Reported EBIT 103 179
Significant items(1) 1 --
EBIT adjusted for significant items $104 $179
Natural gas sales volumes (MMcf) 80,426 120,092
Oil, condensate and liquids
sales volumes (MBbls) 2,891 3,986
Total equivalent sales volumes (MMcfe) 97,770 144,008
Weighted average realized prices:
Natural gas ($/Mcf) $3.95 $3.21
Oil, condensate and liquids ($/Bbl) $23.82 $22.19
Non-cash per-unit costs ($/Mcfe) $1.86 $1.26
Cash per-unit costs ($/Mcfe) 1.09 .76
Total per-unit costs ($/Mcfe) $2.95 $2.02
(1) Significant items: ceiling test charge partially offset by asset
sale gain.
Field Services
Field Services reported EBIT of $33 million for the third quarter 2003
compared with a loss of $11 million during the third quarter of 2002. Third
quarter 2003 results include a $2-million asset sale loss while last year's
quarterly results included a $47-million impairment of an asset that was
contracted for sale along with a $1-million loss on an asset sale. Third
quarter 2003 EBIT, after adjusting for significant items, was lower than 2002
levels, primarily due to the loss of earnings from divestitures of midstream
assets in the mid-continent and north Louisiana. These items were partially
offset by increased earnings from GulfTerra and reduced G&A expenses.
The earnings contribution from GulfTerra increased to $40 million this
quarter from $17 million during the third quarter of 2002. GulfTerra had a
strong third quarter due in part to contributions from the completion of the
Cameron Highway transaction. Cash distributions from GulfTerra totaled $34
million during the quarter compared with $19 million in the second quarter of
2002.
Gathering, transportation, and processing volumes as well as gathering
margins were below third quarter 2002 levels due to asset sales. In addition,
processing margins were down slightly from a year ago due to an unfavorable
movement between natural gas and natural gas liquids prices.
Third Quarter Ended
Field Services Results September 30
(In millions) 2003 2002
Operating Income (loss) $(8) $20
Equity and Other Income (expense) 41 (31)
Reported EBIT (loss) 33 (11)
Significant items(1) 2 48
EBIT adjusted for significant items $35 $37
Gathering and transportation volumes
(BBtu/d) 190 2,209
Weighted average gathering and
transportation rate ($/MMBtu) $.15 $.19
Total processing volumes
(Inlet BBtu/d) 3,017 3,883
Weighted average
processing margins ($/MMBtu) $.10 $.11
Total NGL production (Bbl/d) 96,202 154,895
(1) Significant items: Losses on asset sales.
Merchant Energy
The Merchant Energy Group, consisting of domestic and international power,
energy trading, and LNG, reported an EBIT loss of $37 million in the third
quarter 2003 compared with a loss of $83 million in the prior-year period.
Significant items for 2003 total $91 million and include $68 million of
impairments for LNG and power assets, including the East Coast Power project
and turbines held in inventory. Merchant Energy also incurred losses of $13
million associated with domestic power asset sales during the quarter and $10
million of restructuring costs associated with the closure of the London
office.
El Paso's power business had third quarter EBIT, after adjusting for
significant items, of $135 million versus $98 million in 2002. EBIT from the
consolidation of Electron and Gemstone in the second quarter of this year
increased third quarter EBIT by $61 million compared with the same period last
year. This increase was offset by higher losses on the company's merchant
plants, mark-to-market losses on a derivative fuel supply contract, and lower
earnings due to asset sales.
Trading operations had a third quarter EBIT loss, after adjusting for
significant items, of $73 million compared with a $200 million EBIT loss in
the same 2002 period. 2003 results reflect $33 million of losses from a
decrease in fair value of derivative contracts and losses on accrual
transactions, primarily related to transportation and storage demand charges
not recovered during the quarter, $11 million of accretion for the western
energy settlement, and $29 million of G&A and depreciation expense.
LNG and Other had an EBIT loss, after adjusting for significant items, of
$8 million in the third quarter of 2003 versus income of $20 million last
year. The decrease was primarily due to mark-to-market income from the
execution of the Snovhit LNG supply contract in 2002 and mark-to-market losses
on LNG supply contracts in 2003.
El Paso continues to show consistent progress in exiting the trading
business. Since the beginning of the year through September 30, 2003, El
Paso's forward contract positions have declined 48 percent, including the
liquidation of its European trading portfolio and its coal, currency, and
interest rate books. In addition, the company's transportation capacity has
declined 57 percent, and storage capacity has declined 84 percent.
Third Quarter Ended
Merchant Energy Results September 30
(In millions) 2003 2002
Operating Loss $(70) $(132)
Equity and Other Income 33 49
Reported EBIT $(37) $(83)
Significant items(1) 91 1
EBIT adjusted for $54 $(82)
significant items
(1) Significant items: Impairments of power and LNG assets; restructuring
costs, losses on asset sales.
Detailed operating statistics for each of El Paso's businesses are
available at www.elpaso.com in the Investors section.
LIQUIDITY UPDATE
As of October 31, 2003, El Paso had $2.7 billion of available cash and
lines of credit as detailed below.
Sources
(in billions)
Available cash $1.6
2-year bank facility 3.0
Subtotal sources $4.6
Uses
2-year bank facility $0.9
2-year facility letters of credit 1.0
Subtotal uses $1.9
Net available cash and lines of credit $2.7
As of September 30, 2003, El Paso had $2.0 billion of available cash and
lines of credit, consisting of $1.3 billion of readily available cash and $.7
billion of lines of credit. The company had $1.6 billion of total cash on
September 30, 2003.
NEW DEBT SCHEDULES ON COMPANY WEB SITE
Today, El Paso will add a new section to its Web site that contains a
complete schedule of the company's debt as of September 30, 2003 along with a
debt maturity schedule as well as an abbreviated legal organization chart with
descriptions of the entities in the corporate structure. These materials can
be accessed at www.elpaso.com in the Investors section, by clicking "Corporate
Debt and Corporate Structure."
CONFERENCE CALL REMINDER; SLIDES TO BE AVAILABLE ON WEB SITE
El Paso Corporation has scheduled a live webcast to discuss its financial
results today at 10:00 a.m. Eastern Time, 9:00 a.m. Central Time, which may be
accessed online through El Paso's Web site at www.elpaso.com in the Investors
section. A limited number of telephone lines will also be available to
participants by dialing (303) 262-0075 ten minutes prior to the start of the
webcast.
During the webcast, management will refer to slides that will be posted on
the Web site. The slides will be available 30 minutes before the webcast and
can be accessed in the Investors section.
The webcast replay will be available online through the Web site in the
Investors section. A telephone audio replay will be also available through
November 17, 2003 by dialing (303) 590-3000 (access code 556326).
DISCLOSURE OF NON-GAAP FINANCIAL MEASURES
The SEC's Regulation G applies to any public disclosure or release of
material information that includes a non-GAAP financial measure. In the event
of such a disclosure or release, Regulation G requires (i) the presentation of
the most directly comparable financial measure calculated and presented in
accordance with GAAP and (ii) a reconciliation of the differences between the
non-GAAP financial measure presented and the most directly comparable
financial measure calculated and presented in accordance with GAAP. The
required presentations and reconciliations are provided herein and will also
be maintained on El Paso's Web site at www.elpaso.com in the Investors
section.
El Paso uses the non-GAAP financial measure "earnings before interest
expense and income taxes" or "EBIT" to assess the operating results and
effectiveness of the company and its business segments. The company defines
EBIT as net income (loss) adjusted for (i) items that do not impact its income
(loss) from continuing operations, such as extraordinary items, discontinued
operations, and the impact of accounting changes; (ii) income taxes; (iii)
interest and debt expense; and (iv) distributions on preferred interests of
consolidated subsidiaries. The company excludes interest and debt expense and
distributions on preferred interests of consolidated subsidiaries so that
investors may evaluate the company's operating results without regard to its
financing methods or capital structure. El Paso's business operations consist
of both consolidated businesses as well as substantial investments in
unconsolidated affiliates. As a result, the company believes that EBIT, which
includes the results of both these consolidated and unconsolidated operations,
is useful to its investors because it allows them to evaluate more effectively
the performance of all El Paso's businesses and investments.
The company also uses the following non-GAAP financial measures to analyze
its ongoing operating results and business segments and to monitor, assess,
and identify meaningful trends in its operating and financial performance:
-- "net income (loss) adjusted for significant items";
-- "earnings (loss) per share-diluted adjusted for significant items";
and
-- "earnings before interest and income taxes adjusted for significant
items" or "EBIT adjusted for significant items."
These measures reflect adjustments to GAAP net income (loss), GAAP
earnings (loss) per share-diluted, and EBIT, respectfully, for significant
items specified herein and in the attached schedule that management believes
are unusual due to their nature or infrequency. El Paso believes that net
income (loss) adjusted for significant items, earnings (loss) per share-
diluted adjusted for significant items and EBIT adjusted for significant items
measurements are useful to investors because they reflect adjustments for
significant items that are unusual due to their nature or infrequency, thereby
permitting a meaningful comparison of the company's financial and operating
performance between periods and providing important information regarding
performance trends.
El Paso believes that the non-GAAP financial measures described above are
also useful to investors because these measurements are used by many companies
in the industry as a measurement of operating and financial performance and
are commonly employed by financial analysts and others to evaluate the
operating and financial performance of the company and business segments and
to compare the operating and financial performance of the company and business
segments with the performance of other companies within the industry.
These non-GAAP financial measures may not be comparable to similarly
titled measurements used by other companies and should not be used as a
substitute for net income, earnings per share or other GAAP operating
measurements.
El Paso Corporation is the leading provider of natural gas services and
the largest pipeline company in North America. The company has core
businesses in pipelines, production, and midstream services. Rich in assets,
El Paso is committed to developing and delivering new energy supplies and to
meeting the growing demand for new energy infrastructure. For more
information, visit www.elpaso.com.
Cautionary Statement Regarding Forward-Looking Statements
This release includes forward-looking statements and projections, made in
reliance on the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The company has made every reasonable effort to ensure
that the information and assumptions on which these statements and projections
are based are current, reasonable, and complete. However, a variety of
factors could cause actual results to differ materially from the projections,
anticipated results or other expectations expressed in this release,
including, without limitation, the successful implementation of the 2003
operational and financial plan; the successful implementation of the
settlement related to the western energy crisis; actions by the credit rating
agencies; the successful close of financing transactions; our ability to
successfully exit the energy trading business; our ability to divest of
certain non-core assets; changes in commodity prices for oil, natural gas, and
power; general economic and weather conditions in geographic regions or
markets served by El Paso Corporation and its affiliates, or where operations
of the company and its affiliates are located; the uncertainties associated
with governmental regulation; the uncertainties associated with the outcome of
governmental investigations; the outcome of pending litigation, including
shareholder derivative and class actions; political and currency risks
associated with international operations of the company and its affiliates;
inability to realize anticipated synergies and cost savings associated with
restructurings and divestitures on a timely basis; difficulty in integration
of the operations of previously acquired companies, competition, and other
factors described in the company's (and its affiliates') Securities and
Exchange Commission filings. While the company makes these statements and
projections in good faith, neither the company nor its management can
guarantee that anticipated future results will be achieved. Reference must be
made to those filings for additional important factors that may affect actual
results. The company assumes no obligation to publicly update or revise any
forward-looking statements made herein or any other forward-looking statements
made by the company, whether as a result of new information, future events, or
otherwise.
EL PASO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Millions, Except per Share Amounts)
(UNAUDITED)
Third Quarter Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Operating revenues $1,539 $1,696 $5,143 $6,433
Operating expenses
Cost of products and services 351 546 1,370 1,929
Operation and maintenance 471 463 1,533 1,476
(Gain) loss on long-lived assets 54 3 477 (24)
Western Energy Settlement (20) --- 103 ---
Ceiling test charges 2 --- 2 267
Depreciation, depletion and
amortization 328 316 1,049 1,000
Taxes, other than income taxes 81 58 230 194
1,267 1,386 4,764 4,842
Operating income 272 310 379 1,591
Equity earnings and other income
(expense) 128 110 34 (151)
Earnings before interest expense,
income taxes, and other charges 400 420 413 1,440
Interest and debt expense 474 343 1,350 950
Return on preferred interests of
consolidated subsidiaries 8 37 45 120
Income (loss) before income taxes (82) 40 (982) 370
Income taxes (benefits) 15 16 (463) 120
Income (loss) from continuing
operations (97) 24 (519) 250
Discontinued operations, net of
income taxes (49) (93) (1,187) (149)
Cumulative effect of accounting
changes, net of income taxes --- --- (22) 168
Net income (loss) $(146) $(69) $(1,728) $269
Diluted earnings (losses) per common
share
Income (loss) from continuing
operations $(0.16) $0.04 $(0.87) $0.46
Discontinued operations, net of
income taxes (0.08) (0.16) (1.99) (0.27)
Cumulative effect of accounting
changes, net of income taxes --- --- (0.04) 0.30
Net income (loss) $(0.24) $(0.12) $(2.90) $0.49
Diluted average common shares
outstanding (000's) 596,054 586,079 595,565 549,326
EL PASO CORPORATION
CONSOLIDATED ANALYSIS OF SIGNIFICANT ITEMS
(In Millions, Except per Share Amounts)
(UNAUDITED)
Third Quarter Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Net income (loss) $(146) $(69) $(1,728) $269
Significant items affecting EBIT
Restructuring costs 10 --- 110 63
Impairment of long-lived assets 44 --- 483 ---
Impairment of equity investments 24 --- 398 286
Impairment of cost basis investments --- --- --- 56
Net (gain) loss on sale of long-
lived assets 8 1 --- (9)
Net (gain) loss on sale of equity
investments --- 48 (12) 48
Western Energy Settlement and
related expenses (20) --- 118 ---
Ceiling test charges 2 --- 2 267
Currency loss on Euro bond offering --- --- --- 45
Total significant items affecting
EBIT 68 49 1,099 756
Income tax effect of above
significant items 23 (19) (488) (245)
Discontinued operations, net of
income taxes 49 93 1,187 149
Cumulative effect of accounting
changes, net of income taxes:
Adoption of Derivatives Issue No.
C-16 --- --- --- (14)
Adoption of SFAS No. 143 -
retirement obligations --- --- 22 ---
Adoption of SFAS No. 141 -
elimination of negative goodwill --- --- --- (154)
Net income (loss) adjusted for
significant items $(6) $54 $92 $761
Diluted earnings (losses) per common
share:
Diluted earnings per common share
adjusted for significant items $(0.01) $0.09 $0.15 $1.38
Restructuring costs (0.02) --- (0.10) (0.08)
Impairment of long-lived assets (0.10) --- (0.45) ---
Impairment of equity investments (0.06) --- (0.37) (0.35)
Impairment of cost basis investments --- --- --- (0.07)
Net (gain) loss on sale of long-
lived assets (0.02) --- --- 0.01
Net (gain) loss on sale of equity
investments --- (0.05) 0.01 (0.06)
Western Energy Settlement and
related expenses 0.05 --- (0.11) ---
Ceiling test charges --- --- --- (0.32)
Currency loss on Euro bond offering --- --- --- (0.05)
Discontinued operations (0.08) (0.16) (1.99) (0.27)
Cumulative effect of accounting
changes:
Adoption of Derivatives Issue No.
C-16 --- --- --- 0.03
Adoption of SFAS No. 143 -
retirement obligations --- --- (0.04) ---
Adoption of SFAS No. 141 -
elimination of negative goodwill --- --- --- 0.27
Diluted earnings (losses) per common
share $(0.24) $(0.12) $(2.90) $0.49
Adjusted diluted average common
shares outstanding (000's) 596,054 586,079 595,573 557,138
Diluted average common shares
outstanding (000's) 596,054 586,079 595,565 549,326
EL PASO CORPORATION
SCHEDULE OF SIGNIFICANT ITEMS
(UNAUDITED)
Third Quarter Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Pre- After- Pre- After- Pre- After- Pre- After-
(In Millions) tax tax tax tax tax tax tax tax
Restructuring costs
Employee severance,
retention and
transition costs $6 $8 $--- $--- $62 $34 $23 $16
Transaction costs
and fees --- --- --- --- --- --- 40 27
LNG charter
cancellation and
other costs 4 5 --- --- 48 27 --- ---
Total
restructuring
costs 10 13 --- --- 110 61 63 43
Asset impairments and
net (gain)loss on
sales
Long-lived assets
impairment 44 58 --- --- 483 269 --- ---
Equity investments
impairment 24 33 --- --- 398 222 286 193
Cost basis investments
impairment --- --- --- --- --- --- 56 37
Long-lived assets net
(gain)loss on sales 8 12 1 1 --- --- (9) (6)
Equity investments net
(gain)loss on sales --- --- 48 29 (12) (7) 48 32
Total
(gain)/loss on
assets 76 103 49 30 869 484 381 256
Western Energy
Settlement and
related expenses (20) (27) --- --- 118 65 --- ---
Currency loss on Euro
bond offering --- --- --- --- --- --- 45 31
Ceiling test charges 2 2 --- --- 2 1 267 181
Total charges
impacting EBIT 68 91 49 30 1,099 611 756 511
Discontinued
operations, net of
income taxes --- 49 --- 93 --- 1,187 --- 149
Cumulative effect of
accounting changes,
net of income taxes --- --- --- --- --- 22 --- (168)
Total significant
items $68 $140 $49 $123 $1,099 $1,820 $756 $492
Nine Months Ended
Third Quarter 2003 September 30, 2003
Adjusted Significant Adjusted Significant
Total EBIT by segment EBIT Items EBIT EBIT Items EBIT
Pipelines $278 $(23) $301 $1,006 $131 $875
Production 104 1 103 529 14 515
Merchant Energy 54 91 (37) 22 434 (412)
Field Services 35 2 33 86 80 6
Corporate and Other (3) (3) --- (131) 440 (571)
Total $468 $68 $400 $1,512 $1,099 $413
Nine Months Ended
Third Quarter 2002 September 30, 2002
Adjusted Significant Adjusted Significant
Total EBIT by segment EBIT Items EBIT EBIT Items EBIT
Pipelines $302 $--- $302 $1,025 $1 $1,024
Production 179 --- 179 629 267 362
Merchant Energy (82) 1 (83) 364 354 10
Field Services 37 48 (11) 133 39 94
Corporate and Other 33 --- 33 45 95 (50)
Total $469 $49 $420 $2,196 $756 $1,440
SOURCE El Paso Corporation
-0- 11/10/2003
/CONTACT: Bruce L. Connery, Vice President, Investor Relations, office,
+1-713-420-5855, or fax, +1-713-420-4417, or Mel Scott, Director, Media
Relations, office, +1-713-420-3039, or fax, +1-713-420-6341, both of El Paso
Corporation/
/Web site: http://www.elpaso.com/
(EP)
CO: El Paso Corporation
ST: Texas
IN: OIL
SU: ERN CCA
GN-AH
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0405 11/10/2003 07:31 EST http://www.prnewswire.com
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El Paso Corp.
