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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Rule14a-6(e)(2))
[ ] Definitive Proxy Statement
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[X] Soliciting Material Pursuant to Rule 14a-12
EL PASO CORPORATION
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(Name of Registrant as Specified in its Charter)
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NEWS
For Immediate Release [LOGO - ELPASO]
EL PASO CORPORATION ANNOUNCES FOURTH QUARTER
AND FULL YEAR 2002 RESULTS
HOUSTON, TEXAS, MARCH 31, 2003--El Paso Corporation (NYSE:EP) today
announced its earnings for the fourth quarter and full year 2002.
FOURTH QUARTER RESULTS QUARTER ENDED DEC. 31
(In millions, except per share amounts) 2002 2001
---------- -----------
GAAP net income (loss) $(1,736) $375
Non-recurring items 1,329 37
Pro Forma net income (loss) $( 407) $412
GAAP earnings (loss) per share $ (2.92) $.72
Non-recurring items 2.23 .07
Pro forma earnings (loss) per share $( .69) $.79
FOURTH QUARTER RESULTS
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.
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.
A complete schedule of non-recurring items is attached to this release.
Fourth quarter 2002 non-recurring items total $1,329 million, or $2.23 per
diluted share, and fall into three principle categories:
o The Western energy settlement that was announced on March 21,
2003--$644 million after-tax, or $1.08 per diluted share.
o 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.
o 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."
FOURTH QUARTER SEGMENT RESULTS
PIPELINE GROUP
Fourth-quarter reported earnings before interest and taxes (EBIT) for El
Paso's Pipeline Group was a loss of $206 million compared with reported
EBIT of $362 million in 2001. 2002 reported results include a charge of
$412 million for the Western energy settlement and a $153-million asset
impairment charge for the company's pipeline investment in Australia.
Expansion projects at Southern Natural Gas Company and Colorado Interstate
Gas Company (CIG), the reactivation of the Elba Island LNG facility, higher
equity earnings from pipeline joint ventures, and lower operating expenses
benefited this quarter's results. These were offset by the sale of CIG's
production properties in July 2002, the sale of ANR's ownership in the
Alliance pipeline system in November 2002, and lower revenue on the El Paso
Natural Gas system. Total pipeline throughput rose 4.8 percent from 2001
levels due to expansion projects and generally colder winter weather.
FOURTH QUARTER ENDED DEC. 31
PIPELINE GROUP RESULTS
(In millions) 2002 2001
------------ ------------
GAAP Operating Income $ (103) $ 321
Non-recurring items(1) 412 ---
-------- -------
Pro Forma Operating Income 309 321
Equity and Other Income (103) 41
Non-recurring items1 149 ---
-------- -------
Pro Forma EBIT $ 355 $ 362
Total throughput (BBtu/d) 20,154 19,225
(1) Non-recurring items include the Western energy settlement and impairment
of Australian pipeline investment.
PRODUCTION
Production had reported EBIT of $172 million for the fourth quarter 2002
versus $277 million in 2001. 2002 reported results include a $6-million
loss relating to an asset impairment on certain of the company's
international operations. Total fourth quarter equivalent production
declined 21 percent from 2001 levels, primarily due to the sale of proved
reserves of approximately 1.8 trillion cubic feet equivalent during 2002.
The realized price for natural gas, net of hedges, rose to $3.61 per
thousand cubic feet (Mcf) in 2002 from $3.33 per Mcf in 2001, while the
realized price for oil, condensate, and liquids, net of hedges, rose to
$22.39 from $16.58 per barrel. Total per-unit costs averaged $2.31 per
thousand cubic feet equivalent (Mcfe) in the fourth quarter 2002 compared
with $1.64 per Mcfe last year. Per-unit costs were affected by increased
production taxes due largely to higher commodity prices in 2002, higher
depletion costs, and increased corporate expense allocations on lower
equivalent production. Fourth quarter 2001 unit costs were favorably
impacted by a credit due to an over accrual of production taxes in the
first nine months of the year, which reduced fourth quarter per-unit costs
by approximately $.12 per Mcfe.
The company has hedged 215 trillion British thermal units (TBtu) or
approximately 44 percent of its expected 2003 natural gas production at a
NYMEX price of $3.43 per million British thermal unit (MMBtu) or $3.63 per
Mcf. The company expects that its 2003 realized price for natural gas will
be approximately $.30 less than the NYMEX spot price due to transportation
costs and regional price differentials.
PRODUCTION RESULTS FOURTH QUARTER ENDED DEC. 31
(In millions) 2002 2001
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GAAP Operating Income $170 $277
Non-recurring items(1) 6 ---
-------- ---------
Pro Forma Operating Income 176 277
Equity and Other Income 2 ---
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Pro forma EBIT $178 $277
Natural gas sales volumes (MMcf) 113,546 145,153
Oil, condensate and liquids sales 3,574 4,333
volumes (MBbls)
Total equivalent sales volumes (MMcfe) 134,992 171,152
Weighted average realized prices:
Natural gas ($/Mcf) $3.61 $3.33
Oil, condensate and liquids ($/Bbl) $22.39 $16.58
(1) Non-recurring items include asset impairments on certain international
operations.
FIELD SERVICES
Field Services' fourth quarter 2002 reported EBIT was $193 million compared
with $61 million for the fourth quarter 2001. Reported results for 2002
include a net benefit of $166 million from asset sale gains offset by an
asset impairment charge. Pro forma EBIT for the fourth quarter of 2002 was
below 2001 levels due to the sale of $1.5 billion of assets to El Paso
Energy Partners (NYSE:EPN) during 2002. Earnings contribution from El Paso
Energy Partners increased to $19 million from $11 million in the fourth
quarter in the previous year. Gathering and transportation volumes, as well
as processing volumes, were down from 2001 levels due to the asset sales.
The average gathering and transportation rate rose from the previous year
because the sold assets had lower per-unit rates. However, processing rates
were lower relative to 2001 as a result of the sale of certain processing
plants and the unfavorable pricing relationship between natural gas and
natural gas liquids in the fourth quarter of 2002.
FIELD SERVICES RESULTS FOURTH QUARTER ENDED DEC. 31
(In millions) 2002 2001
------------ -----------
GAAP Operating Income $177 $34
Non-recurring items(1) (169) --
-------- -------
Pro Forma Operating Income 8 34
Equity and Other Income 16 27
Non-recurring items(1) 3 --
-------- -------
Pro forma EBIT $27 $61
Gathering and transportation 1,839 6,157
volumes (BBtu/d)
Weighted average gathering and $.17 $.12
transportation rate ($/MMBtu)
Total processing volumes (Inlet 3,729 4,647
BBtu/d)
Weighted average processing $.09 $.11
margins ($/MMBtu)
Total NGL production (Bbl/d) 134,851 177,672
(1) Non-recurring items include net gains on asset sales offset by an asset
impairment.
MERCHANT ENERGY
The Merchant Energy Group's fourth quarter 2002 reported EBIT was a loss of
$1,620 million compared with reported EBIT of $257 million in 2001. The
2002 loss resulted primarily from trading activities, which reported losses
of $1,209 million, including a $620-million reduction in the value of its
trading portfolio and a non-recurring charge of $487 million related to the
Western energy settlement. This compares with reported EBIT of $146 million
in 2001. Global Power had a fourth quarter 2002 EBIT loss of $257 million
compared with EBIT of $161 million in 2001. The reduction is primarily due
to lower equity income from Electron and asset impairments totaling $344
million. The Petroleum division had a fourth quarter 2002 EBIT loss of $81
million compared with an EBIT loss of $3 million in 2001. Included in the
fourth quarter 2002 are $122 million of impairments and other non-recurring
charges.
MERCHANT ENERGY RESULTS FOURTH QUARTER ENDED DEC. 31
(In millions) 2002 2001
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GAAP Operating Income $(1,525) $ 24
Non-recurring items(1) 813 15
------- -----
Pro Forma Operating Income $ (712) $ 39
Equity and Other Income (Losses) (95) 233
Non-recurring items(1) 159 35
Pro forma EBIT $ (648) $ 307
(1) Non-recurring items include the Western energy settlement, asset
impairments, and severance costs.
FULL-YEAR RESULTS
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.
FULL YEAR RESULTS YEAR ENDED DEC. 31
(In millions, except per share amounts) 2002 2001
--------- ----------
GAAP net income (loss) $(1,467) $ 93
Non-recurring items 1,828 1,636
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Pro forma net income (loss) $ 361 $1,729
GAAP earnings (loss) per share $ (2.62) $ .18
------- ------
Non-recurring items 3.26 3.13
Pro forma earnings (loss) per share $ .64 $3.31
Detailed operating statistics for each of El Paso's businesses are
available at www.elpaso.com in the "For Investors" section.
LIQUIDITY UPDATE
As of March 28, 2003, El Paso had $3.0 billion of available cash and lines
of credit as detailed below.
SOURCES (in $ billions)
Available cash $1.5
364-day bank facility 3.0
Multi-year bank facility 1.0
Subtotal sources $5.5
USES
364-day bank facility ($1.5)
Multi-year facility letters of credit (0.5)
Remainder of multi-year facility (0.5)
Subtotal uses (2.5)
Net available cash and lines of credit $3.0
At December 31, 2002, El Paso had $1.6 billion of total cash, $1.1 billion
of which was readily available.
EARNINGS GUIDANCE
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.
CONFERENCE CALL REMINDER; SLIDES TO BE AVAILABLE ON WEB SITE
El Paso Corporation has scheduled a live webcast today at 10:00 a.m.
Eastern Standard Time, 9:00 a.m. Central Standard Time, to discuss its
financial results, which may be accessed online through our Web site at
www.elpaso.com in the For Investors section. A limited number of telephone
lines will also be available to participants by dialing (973) 582-2952 ten
minutes prior to the start of the webcast.
During the webcast, management will refer to slides that will be posted on
our Web site. The slides will be available 30 minutes before the call and
can be accessed in the "For Investors" section.
The webcast replay will be available online through our Web site in the For
Investors section. A telephone audio replay will be also available through
April 7, 2003 by dialing (973) 341-3080 (access code 3822493).
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, 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.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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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, our ability to attract and retain
qualified members of the Board of Directors; the successful recruitment and
retention of a qualified CEO; the successful implementation of the 2003
operational and financial plan; the successful implementation of the
settlement related to the Western Energy Crisis; material and adverse
impacts from our proxy contest with Selim Zilkha; actions by the credit
rating agencies; the successful close of financing transactions, including
an extension of our bank facilities; 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; 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.
ADDITIONAL IMPORTANT INFORMATION
Prior to its 2003 annual meeting, El Paso will furnish to its shareholders
El Paso's definitive proxy statement relating to this meeting, together
with a WHITE proxy card. Shareholders are strongly advised to read this
proxy statement when it becomes available, as it will contain important
information.
Shareholders will be able to obtain El Paso's proxy statement, any
amendments or supplements to the proxy statement and any other documents
filed by El Paso with the Securities and Exchange Commission for free at
the Internet Web site maintained by the Securities and Exchange Commission
at www.sec.gov. Copies of the proxy statement and any amendments and
supplements to the proxy statement will also be available for free at El
Paso's Internet Web site at www.elpaso.com or by writing to El Paso
Corporation, Investor Relations, PO Box 2511, Houston, TX 77252. In
addition, copies of the proxy materials may be requested by contacting our
proxy solicitor, MacKenzie Partners, Inc. at (800) 322-2885 Toll-Free or by
email at proxy@mackenziepartners.com.
To the extent that individual customers, independent industry researchers,
financial analysts, or El Paso commissioned research, are quoted herein, it
is El Paso's policy to use reasonable efforts to verify the source and
accuracy of the quote. El Paso has not, however, sought or obtained the
consent of the quoted source to the use of such quote as proxy soliciting
material. This document may contain expressions of opinion and belief.
Except as otherwise expressly attributed to another individual or entity,
these opinions and beliefs are the opinions and beliefs of El Paso.
Information regarding the names, affiliation and interests of individuals
who may be deemed participants in the solicitation of proxies of El Paso's
shareholders is contained in Schedule 14A filed by El Paso with the
Securities and Exchange Commission on February 18, 2003, as amended by a
Schedule 14A filed by El Paso on March 18, 2003.
CONTACTS
Communications and Government Affairs
Norma F. Dunn, Senior Vice President
Office: (713) 420-3750
Fax: (713) 420-3632
Investor Relations
Bruce L. Connery, Vice President
Office: (713) 420-5855
Fax: (713) 420-4417
Alternate Contacts
Joele Frank/Dan Katcher
Joele Frank, Wilkinson Brimmer Katcher
Office: (212) 355-4449
Fax: (212) 355-4554
EL PASO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Millions, Except per Share Amounts)
(UNAUDITED)
Fourth Quarter Twelve Months
Ended Ended
December 31, December 31,
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2002 2001 2002 2001
Operating revenues $2,796 $2,759 $12,194 $13,649
Operating expenses
Cost of products and services 1,944 1,084 6,447 6,353
Operation and maintenance 728 679 2,606 2,876
Restructuring and merger-related costs 18 (7) 81 1,520
(Gain) loss on long-lived assets 311 19 282 183
Western Energy Settlement 899 - 899 -
Ceiling test charges 2 - 269 135
Depreciation, depletion and amortization 348 345 1,405 1,327
Taxes, other than income taxes 65 43 277 334
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4,315 2,163 12,266 12,728
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Operating income (loss) (1,519) 596 (72) 921
Equity earnings and other income (expense) (163) 301 (153) 708
------ ------ ------ -------
Earnings before interest expense, income
taxes and other charges (1,682) 897 (225) 1,629
Interest and debt expense 392 290 1,400 1,156
Returns on preferred interests of
consolidated subsidiaries 38 48 159 217
------ ------ ------ ------
Income (loss) before income taxes (2,112) 559 (1,784) 256
Income taxes (600) 180 (495) 184
------ ------ ------ -------
Income (loss) from continuing operations
before extraordinary items
and cumulative effect of accounting changes (1,512) 379 (1,289) 72
Discontinued operations, net of income taxes (2) (4) (124) (5)
Extraordinary items, net of income taxes - - - 26
Cumulative effect of accounting changes,
net of income taxes (222) - (54) -
------ ------ ------ -------
Net income (loss) $(1,736) $375 $(1,467) $93
======= ====== ======= =======
Diluted earnings (loss) per common share $(2.92) $0.72 $ (2.62) $0.18
======= ====== ======= =======
Diluted average common shares
EL PASO CORPORATION
CONSOLIDATED ANALYSIS OF NON-RECURRING ITEMS
(In Millions, Except per Share Amounts)
(UNAUDITED)
Fourth Quarter Ended Twelve Months Ended
December 31, December 31,
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2002 2001 2002 2001
---------- --------- --------- ---------
Reported net income (loss) $(1,736) $375 $(1,467) $93
Non-recurring items affecting EBIT
Restructuring and merger-related costs 18 (7) 81 1,520
Impairment of long-lived assets 549 16 549 178
Impairment of equity investments 291 - 51 77
Impairments of cost basis investments - 6 56 66
Net gain on sale of long-lived assets (237) - (246) -
Net loss on sale of equity investments 20 34 578 -
Changes in accounting estimates (a) - - - 316
Western Energy Settlement 899 - 899 -
Ceiling test charges 2 - 269 135
------ -------- ------- -------
Total non-recurring items affecting EBIT 1,542 49 2,237 2,292
------ -------- ------- -------
Currency loss on Euro bond offering-
reported as interest and debt expense - - 45 -
Income taxes- tax effect of above
non-recurring items (437) (16) (632) (635)
Discontinued coal operations, net
of income taxes 2 4 124 5
Extraordinary items, net of income
taxes-FTC ordered asset sales - - - (26)
Cumulative effect of accounting
changes, net of income taxes
Adoption of EITF No. 02-3 222 - 222 -
Adoption of Derivatives Issue C-16 - - (14) -
Adoption of SFAS No. 141- elimination
of negative goodwill - - (154) -
------- ------- ------- -------
Pro forma net income (loss) $(407) $412 $361 $1,729
======= ======= ======= =======
Diluted earnings (loss) per common share:
Pro forma diluted earnings per common
share $(0.69) $0.79 $0.64 $3.31
Restructuring and merger-related costs (0.02) 0.01 (0.10) (2.14)
Impairment of long-lived assets (0.66) (0.02) (0.71) (0.23)
Impairment of equity investments (0.03) - (0.07) (0.10)
Impairments of cost basis investments - (0.01) (0.07) (0.08)
Net gain on sale of long-lived assets 0.28 - 0.32 -
Net loss on sale of equity investments (0.35) (0.04) (0.74) -
Changes in accounting estimates (a) - - - (0.40)
Western Energy Settlement (1.08) - (1.16) -
Ceiling test charges - - (0.35) (0.17)
Currency loss on Euro bond offering - - (0.06) -
Discontinued coal operations - (0.01) (0.22) (0.01)
Extraordinary items-FTC ordered asset sales - - - 0.05
Cumulative effect of accounting changes
Adoption of EITF No. 02-3 (0.37) - (0.40) -
Adoption of Derivatives Issue C-16 - - 0.03 -
Adoption of SFAS No. 141-
elimination of negative goodwill - - 0.27 -
Adjustment for antidilution (b) - - - (0.05)
-------- ------- -------- --------
Reported diluted earnings (loss)
per common share $(2.92) $0.72 $(2.62) $0.18
======= ======= ======= =======
Reported diluted average common
shares outstanding (000's) 593,894 529,154 559,521 515,591
======= ======= ======= =======
Adjusted pro forma diluted average
common shares outstanding (000's)(b) 593,894 529,154 560,466 530,494
======= ======= ======= =======
(a) Changes in estimates related to environmental liabilities and spare
parts inventories, as discussed in our Form 10-K for the period ended
December 31, 2001
(b) Adjusted pro forma diluted earnings (loss) per common share and
adjusted pro forma diluted average common shares outstanding for the
year ended December 31, 2002 and 2001, include the impact of
securities that are antidilutive for purposes of reporting under U.S.
generally accepted accounting principles. As a result, these amounts
differ from our reported amounts.
EL PASO CORPORATION
SCHEDULE OF NON-RECURRING ITEMS
(UNAUDITED)
Fourth Quarter Twelve Months
Ended December 31, Ended December 31,
2002 2001 2002 2001
(in Millions) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax
Restructuring and merger-related costs
Employee severance, retention and
transition costs $18 $13 $9 $6 $41 $30 $838 $569
Transaction costs and fees - - - - 40 29 70 48
Business and operational integration - - (32) (22) - - 383 260
Other - - 16 11 - - 229 257
Total restructuring and merger-related
costs 18 13 (7) (5) 81 59 1,520 1,134
Asset impairments and net (gain)/loss on sales
Long-lived assets impairment 549 93 16 11 549 397 178 121
Equity investments impairment 291 209 - - 51 37 77 52
Cost basis investments impairment - - 6 4 56 40 66 45
Long-lived assets net gain on sales (237) (169) - - (246) (177) - -
Equity investments net loss on sales 20 14 34 23 578 418 - -
Total (gain)/loss on assets 623 447 56 38 988 715 321 218
Changes in accounting estimates - - - - - - 316 214
Western Energy Settlement 899 644 - - 899 649 -
Ceiling test charges 2 1 - - 269 194 135 91
Total charges impacting EBIT 1,542 1,105 49 33 2,237 1,617 2,292 1,657
Currency Loss - - - - 45 33 - -
Discontinued operations, net of income taxes - 2 - 4 - 124 - 5
Extraordinary items, net of income taxes - - - - - - - (260)
Cumulative effect of accounting changes,
net of income taxes - 222 - - - 54 - -
Total non-recurring items $1,542 $1,329 $49 $37 $2,282 $1,828 $2,292 $1,636
Fourth quarter 2002 Twelve Months Ended 2002
Pro Forma Non-Rec Reported Pro Forma Non-Rec Reported
EBIT Charges EBIT EBIT Charges EBIT
Total EBIT by segment
Pipelines $355 $561 $(206) $1,380 $562 $818
Production 178 6 172 807 273 534
Merchant Energy (648) 972 (1,620) (328) 1,310 (1,638)
Field Services 27 (166) 193 160 (127) 287
Corporate and Other (52) 169 (221) (7) 219 (226)
Total $(140) $1,542 $(1,682) $2,012 $2,237 $(225)
Fourth quarter 2001 Twelve Months Ended 2001
Pro Forma Non-Rec Reported Pro Forma Non-Rec Reported
EBIT Charges EBIT EBIT Charges EBIT
Total EBIT by segment
Pipelines $362 $- $362 $1,372 $334 $1,038
Production 277 - 277 1,128 208 920
Merchant Energy 307 50 257 1,279 375 904
Field Services 61 - 61 251 56 195
Corporate and Other (61) (1) (60) (109) 1,319 (1,428)
Total $946 $49 $897 $3,921 $2,292 $1,629
Reconciliation of Trading Contracts
Fourth Quarter 2002
(in $ millions)
Fair value of contracts outstanding at September 30, 2002 $968
-------
Cumulative effect of accounting change (343) Inventory-related
reclassifications as a result of accounting change (254) Fair value of
contracts settled during the period 214 Change in fair value of
contracts (620) Other (24)
--------
Net change in contracts outstanding during the period (1,027)
Fair value of contracts outstanding at December 31, 2002 $(59)