HOUSTON, March 31, 2003 — El Paso Corp. on Monday announced its earnings for the fourth quarter and full year 2002.
El Paso reported a net loss of $1,736 million, or a loss of $2.92 per diluted share, for the fourth quarter of 2002, which compares with earnings of $375 million, or $.72 per diluted share, in the fourth quarter of 2001. For the full year 2002, El Paso reported a net loss of $1,467 million, or a loss of $2.62 per diluted share, which compares with earnings of $93 million, or $.18 per diluted share, in 2001.
On a pro forma basis, the company reported a fourth quarter 2002 loss of $407 million, or a loss of $.69 per diluted share, compared with earnings of $412 million, or $.79 per diluted share, in the fourth quarter of 2001.
Fourth quarter 2002 non-recurring items total $1,329 million, or $2.23 per diluted share, and fall into three principle categories:
* The Western energy settlement that was announced on March 21, 2003 — $644 million after-tax, or $1.08 per diluted share.
* The early implementation of EITF 02-3, which eliminates the use of mark-to-market accounting for certain energy contracts — $222 million after tax, or $.37 per diluted share.
* Various asset impairments, which include the company’s Australian pipeline investment, telecom dark fiber, power turbines, and other assets along with gains on asset sales and restructuring costs — $463 million after tax, or $.78 per diluted share.
The fourth quarter 2002 decrease in value of the trading book, which was $444 million after-tax, when added to the non-recurring charges for the implementation of EITF 02-3 and various asset impairments total $1,129 million, which is consistent with the company’s guidance of February 5, 2003.
“The events of 2002 created significant challenges for El Paso, but we have taken and continue to take the steps necessary to strengthen our financial position and preserve the value of our core businesses going forward,” said Ronald L. Kuehn, Jr., chairman and chief executive officer of El Paso Corporation.
“In 2002, we sold almost $4 billion of non-core assets, and reduced expenses by $300 million. We also took a number of important steps to enhance our liquidity. On February 5, 2003, El Paso announced a five-point business plan designed to build on last year’s progress. I am pleased to report that our 2003 non-core asset sale program is on schedule, with more than 50 percent of the $3.4-billion program either completed or under contract. The company’s liquidity has strengthened materially over the past 60 days due to the progress on asset sales and the financings that we have completed. The recent announcement of an agreement in principle to resolve the principal litigation and regulatory proceedings concerning the Western energy crisis is an important step for the company as this settlement will remove a major source of uncertainty. In addition, we are working diligently to complete an extension of our $3-billion bank facility.”
El Paso reported a net loss of $1,467 million, or a loss of $2.62 per diluted share, for the full year 2002, which compares with earnings of $93 million, or $.18 per diluted share, in 2001. 2002 and 2001 results include $1,828 million and $1,636 million of non-recurring charges, respectively, as detailed in the tables attached to this release.
On a pro forma basis, the company reported full-year 2002 earnings of $361 million, or $.64 per diluted share, compared with earnings of $1,729 million, or $3.31 per diluted share, in 2001.
Detailed operating statistics for each of El Paso’s businesses are available at www.elpaso.com in the “For Investors” section.
As of March 28, 2003, El Paso had $3.0 billion of available cash and lines of credit as detailed below.
* Available cash: $1.5 billion
* 364-day bank facility: $3.0 billion
* Multi-year bank facility: $1.0 billion
364-day bank facility: $1.5 billion
Multi-year facility letters of credit: $0.5 billion
Remainder of multi-year facility: $0.5 billion
Net available cash and lines of credit: $3.0 billion
At December 31, 2002, El Paso had $1.6 billion of total cash, $1.1 billion of which was readily available.
On February 5, 2003, El Paso gave preliminary 2003 earnings guidance of $1.00 per diluted share on a pro forma basis. Based upon a NYMEX natural gas spot price of $4.00 per MMBtu or $4.24 per Mcf for the last eight months of 2003, higher overall interest expense, and the impact of the Western energy settlement, the company continues to expect to earn approximately $1.00 per diluted share on a pro forma basis.
After taking into account the potential impact of goodwill associated with the consolidation of Electron assets and liabilities as well as potential book losses upon the disposition of non-core assets, El Paso expects to approximately break even on a GAAP basis.
For more information, visit the corporation’s web site at www.elpaso.com in the For Investors section.
El Paso Corporation is a provider of natural gas services and the largest pipeline company in North America. The company has core businesses in pipelines, production, midstream services, and power. El Paso Corporation, rich in assets and fully integrated across the natural gas value chain, is committed to developing new supplies and technologies to deliver energy. For more information, visit www.elpaso.com .