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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. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[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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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
EL PASO SLIDES PRESENTED DURING MARCH 31, 2003 EARNINGS WEBCAST
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ELPASO
FOURTH QUARTER
EARNINGS REVIEW
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March 31, 2003
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
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This presentation 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
presentation, including, without limitation, the successful implementation
of the 2003 business plan; the successful implementation of the settlement
related to the western energy crisis; actions by credit rating agencies;
the successful close of financing transactions including an extension of
our bank facilities; our ability to divest of certain non-core assets;
material and adverse impacts from our proxy contest with Selim Zilkha;
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; 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.
2
ADDITIONAL IMPORTANT INFORMATION
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Prior to its 2003 annual meeting, El Paso with 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, 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.
Also, El Paso may express opinions and beliefs. Except as otherwise
expressly attributed to another individual or entity, these opinions and
beliefs are the opinion and beliefs of El Paso.
Information regarding the names, affiliations 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.
3
FINANCIAL UPDATE
SUMMARY INCOME STATEMENT
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QUARTER ENDED YEAR ENDED
DECEMBER 31, 2002 DECEMBER 31, 2002
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Reported diluted earnings (loss) per
common share $(2.92) $(2.62)
Restructuring and merger-related
costs, asset impairments and
loss on sales 1.06 1.69
Ceiling test charges - 0.35
Gain on asset disposals (0.28) (0.32)
Western Energy Settlement 1.08 1.16
Currency loss on Euro bond offering - 0.06
Discontinued coal operations - 0.22
Cumulative effect of accounting
changes
Trading 0.37 0.40
Other - (0.30)
PRO FORMA DILUTED EARNINGS (LOSS) --------------------------------------
PER COMMON SHARE $0.69) $ 0.64
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Average common shares outstanding
(millions)
Reported diluted 593.9 559.5
Adjusted pro forma diluted 593.9 560.5
5
4Q 2002 SEGMENT RESULTS
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$ MILLIONS
FIELD MERCHANT CORPORATE
PIPELINES PRODUCTION SERVICES ENERGY AND OTHER TOTAL
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Operating income (loss) $(103) $170 $ 177 $(1,525) $(238) $(1,519)
Earnings from
unconsolidated
affiliates and other (103) 2 16 (95) 17 (163)
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EBIT (206) 172 193 (1,620) (221) (1,682)
Restructuring and merger
related costs, asset
impairments and net
(gain) loss on sale
of assets 149 4 (166) 485 169 641
Western Energy Settlement 412 - - 487 - 899
Celing test charges - 2 - - - 2
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Non-recurring items 561 6 (166) 972 169 1,542
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PRO FORMA EBIT $ 355 $178 $ 27 $ (648) $ (52) $ (140)
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Depreciation, depletion,
and amortization $ 94 $192 $ 11 $ 31 $ 20 $ 348
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REVIEW OF MERCHANT RESULTS FOR 4Q 2002
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$ MILLIONS
MERCHANT BUSINESS
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PETROLEUM/ ADMIN.
POWER LNG TRADING G&A TOTAL
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Operating income (loss) $(161) $(75) $(1,215) $ (74) $(1,525)
Earnings (loss) from
unconsolidated
affiliates (96) (6) 6 1 (95)
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EBIT (257) (81) (1,209) (73) (1,620)
Restructuring and merger
related costs and asset
impairments and net
(gain) loss on sale of
assets 354 122 9 - 485
Western Energy Settlement - - 487 - 487
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Non-recurring items 354 122 496 - 972
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PRO FORMA EBIT $ 97 $ 41 $ (713) $ (73) $ (648)
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Depreciation, depletion,
and amortization $ 10 $ 17 $ 4 $ - $ 31
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DETAILED 4Q 2002 IMPAIRMENTS AND OTHER
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$ MILLIONS
QUARTER ENDED
PRE-TAX IMPAIRMENTS AND LOSS (GAIN) ON SALES DECEMBER 31, 2002
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Dark Fiber inventory $ 168
Turbine inventory 162
Australian pipelines 153
MTBE Plant 90
CE Generation Power investment 74
North Louisiana gathering system 66
Other impairments and losses 127
Net gains on sales of assets and investments (217)
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TOTAL $ 623
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OVERVIEW OF OPERATING CASH FLOW ACTIVITIES FOR 2002
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$ MILLIONS
2002 2001
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Net income (loss) $(1,467) $ 93
Non-cash income adjustments 3,516 2,320
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Cash flow before working capital
and non-working capital changes 2,049 2,413
Working capital changes (1,436) 1,914
Non-working capital changes and other (177) (207)
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Cash flow from operating activities 436 4,120
Cash flow from investing activities (1,255) (5,023)
Cash flow from financing activities 1,272 1,300
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CHANGE IN CASH $ 453 $ 397
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BALANCE SHEET AT DECEMBER 31, 2002
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$ BILLIONS
YEAR ENDED
DECEMBER 31, 2002
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Financing obligations and notes payable $18.6
Minority interests .2
Preferred interests 3.2
Common equity 8.4
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TOTAL BOOK CAPITALIZATION 30.4
Guarantees per bank agreement 2.9
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TOTAL CAPITALIZATION PER BANK AGREEMENT $33.3
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Debt to total capitalization ratio(1) 63%
(1) Per bank agreement, debt includes guarantees, and equity is adjusted for
non-cash charges; In this calculation $.7 billion was added back to book
equity
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LIQUIDITY UPDATE
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$ BILLIONS
DECEMBER 31, JANUARY 31, MARCH 28,
2002 2003 2003
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Balance sheet cash $1.6 N/A N/A
Available cash $1.1 $ .6 $ 1.5
Availability under 364-day
bank facility 1.5 1.5 1.5
Available under multiple-year
bank facility .5 .5 -
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NET AVAILABLE LIQUIDITY $3.1 $ 2.6 $ 3.0
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Note: 364-day bank facility matures in May 2003 (with one year term-out
option) and multiple-year bank facility matures in August 2003
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AVAILABLE CASH RECONCILIATION FROM JANUARY 31 TO MARCH 28
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$ BILLIONS
NET AVAILABLE CASH AT JANUARY 31, 2003 $ .6
Net proceeds from borrowing 2.3
Net payments of obligations senior to common (2.3)
Asset sales cash proceeds 1.2
Cash flow from operations less capital expenditures -
Working capital uses (.3)
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NET AVAILABLE CASH AT MARCH 28, 2003 $1.5
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2003 SOURCES AND USES OF CASH
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$ BILLIONS
Cash flow from principal operations before
working capital $2.1-$2.4
Return of working capital and other .3
Debt issuances 3.1
Other financings .4
Asset sales 3.1-3.3
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TOTAL SOURCES $9.0-$9.5
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Debt repayments $3.0
Minority interest redemptions 1.6
Other financing obligations 1.2
Maintenance capital 1.8
Discretionary capital .7
Dividends .2
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TOTAL ANTICIPATED USES $8.5
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DEBT AND OTHER MATURITIES
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$ BILLIONS
REMAINING
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2003 2004 2005
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CAPITAL MARKETS:
EP $ - $ - $0.2
EPCGP 0.3 0.2 -
Pipeline subsidiaries 0.2 - 0.2
BANK FACILITIES
364-day revolver - 1.5 -
Multi-year revolver 1.0 - -
2-year term loan and other - 0.7 0.8
PREFERRED/MINORITY INTEREST AND
OTHER:
Mustang minority interest 0.4 0.4 -
Preferred securities 0.1 - -
Equity in Electron/Gemstone 0.2 - -
Gemstone - 1.0 -
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2003 OUTLOOK UPDATE
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o We expect 2003 ongoing earnings to remain consistent with our February
target in the range of $1.00 per share
Reported diluted earnings per share $(0.00)
Restructuring and merger related
costs, asset impairments and
net loss on sale of assets $(1.00)
Pro forma diluted earnings per share $1.00+
-
o Current expectation adjusted to reflect:
- Lower production to 550 Bcfe for 2003
- Average Henry Hub price of $4.00 MMBtu in last 8 months
- Higher interest expense in 2003
o First quarter results expected to be consistent with plan
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ELPASO
FOURTH QUARTER
EARNINGS REVIEW
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MARCH 31, 2003