EX-99.2 4 d10232exv99w2.txt RECONCILIATION OF INCOME . . . EXHIBIT 99.2 RECONCILIATION OF INCOME (LOSS) FROM CONTINUING OPERATIONS TO RECURRING EARNINGS (UNAUDITED)
2002 ------------------------------------------------------------------------ (Dollars in millions, except for per-share amounts) 1st Qtr*** 2nd Qtr*** 3rd Qtr*** 4th Qtr*** Year*** ------------ ------------ ------------ ------------ ------------ INCOME (LOSS) FROM CONTINUING OPERATIONS(1) $ 46.5 $ (335.8) $ (171.2) $ (151.2) $ (611.7) PREFERRED STOCK DIVIDENDS 69.7 6.8 6.8 6.8 90.1 ------------ ------------ ------------ ------------ ------------ INCOME (LOSS) FROM CONTINUING OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS $ (23.2) $ (342.6) $ (178.0) $ (158.0) $ (701.8) ============ ============ ============ ============ ============ INCOME (LOSS) FROM CONTINUING OPERATIONS - DILUTED EARNINGS PER SHARE $ (0.05) $ (0.65) $ (0.34) $ (0.31) $ (1.35) ============ ============ ============ ============ ============ NONRECURRING ITEMS: Power Hazelton plant expansion write-off -- -- 3.3 -- 3.3 Strategic realignment-related charges -- -- 5.2 -- 5.2 Impairments and loss accruals for commitments related to assets to have been used in power projects -- 81.8 11.5 50.8 144.1 Impairment of goodwill** -- 57.5 -- 3.0 60.5 Reversal of Energy Capital Mezzanine Financing accrual -- (7.0) -- (6.2) (13.2) Write-off of costs associated with termination of certain projects -- 8.9 (1.0) -- 7.9 Early retirement expenses -- 4.2 -- -- 4.2 Severance accrual -- 3.0 -- -- 3.0 Worthington impairment -- -- -- 44.7 44.7 Capstone stock write-down** -- -- -- 2.0 2.0 Thermogas casualty and environmental costs and claim -- -- -- 4.0 4.0 Loss on Gulfmark JV dissolution -- -- -- 5.7 5.7 Accelerated compensation expense associated with workforce reductions -- -- -- -- -- Loss accrual for regulatory issue** -- -- -- -- -- Hedge accounting reclassifications -- -- -- -- -- Energy trading asset adjustment Gain on sale of Jackson EMC power contracts -- -- -- -- -- Gain on sale of crude contracts and pipeline -- -- -- -- -- Gain on sale of eSpeed stock -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ Total Power nonrecurring items -- 148.4 19.0 104.0 271.4 Gas Pipeline Cross Bay write-off -- -- 1.6 -- 1.6 Gain on sale of Northern Border Limited Partnership units -- -- (8.7) -- (8.7) Net impairment on investment Alliance US sale -- -- 11.6 (1.2) 10.4 Loss on sale of Cove Point -- -- 3.7 -- 3.7 Strategic realignment-related charges -- -- 4.5 -- 4.5 Construction completion fee - received -- (27.4) -- -- (27.4) Write-offs of terminated gas pipeline projects -- 12.3 -- -- 12.3 Early retirement expenses -- 10.7 -- -- 10.7 Loss accrual for regulatory issue -- -- -- 17.0 17.0 SCADA property write-off -- -- -- 4.7 4.7 Write-off of Oneline information system project -- -- -- -- -- Severance accrual -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ Total Gas Pipeline nonrecurring items -- (4.4) 12.7 20.5 28.8 Exploration & Production (Gain) loss on sale of certain E&P properties (3.9) -- 3.8 1.1 1.0 Gain on sale of Anadarko -- -- (21.6) 0.2 (21.4) Gain on sale of Jonah -- -- (122.3) 2.0 (120.3) Strategic realignment-related charges -- -- 0.1 -- 0.1 Early retirement expenses -- 0.4 -- -- 0.4 ------------ ------------ ------------ ------------ ------------ Total Exploration & Production nonrecurring items (3.9) 0.4 (140.0) 3.3 (140.2) Midstream Gas & Liquids Impairment of WS-1 building -- -- 2.4 -- 2.4 Strategic realignment-related charges -- -- 1.5 -- 1.5 Impairment of Canadian assets** -- -- -- 115.0 115.0 Impairment of Kansas-Hugoton facilities as assets held for sale -- 4.8 1.1 -- 5.9 Impairment of investment in Aux Sable -- -- -- -- -- Early retirement expenses -- 0.8 -- -- 0.8 La Maquina depreciable life adjustment -- -- -- -- -- Gain on sale of West Texas LPG Pipeline, L.P. -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ Total Midstream Gas & Liquids nonrecurring items -- 5.6 5.0 115.0 125.6 Other Gain on sale of Mazeikiu Nafta -- -- (58.5) -- (58.5) Strategic realignment-related charges -- -- 4.9 -- 4.9 Early retirement expenses -- 6.5 -- -- 6.5 Impairment of Wiljet assets/investments -- -- 2.1 -- 2.1 Impairment of Augusta refinery assets -- -- -- 3.0 3.0 Impairment of Longhorn and Aspen project * -- -- -- -- -- Gain on sale of butane blending inventory -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ Total Other nonrecurring items -- 6.5 (51.5) 3.0 (42.0) ------------ ------------ ------------ ------------ ------------ Nonrecurring items included in segment profit (loss) (3.9) 156.5 (154.8) 245.8 243.6 Nonrecurring items below segment profit (loss) Estimated loss on realization of amounts from WilTel Communications Group, Inc. (Investing income (loss) - Corporate) 232.0 15.0 22.9 (1.2) 268.7 Costs associated with business & liquidity issue resolution (Interest accrued, minority interest, and other income (expense) - net - Various) -- -- 21.7 -- 21.7 Strategic realignment-related charges (General corporate expenses) -- -- 3.6 -- 3.6 Corporate asset impairments (Other income (expense) - net - Corporate) -- -- 4.0 -- 4.0 Convertible preferred stock dividends** (Preferred stock dividends - Corporate) 69.4 -- -- -- 69.4 Gain on disposition of Prudential shares received from demutualization (Other income (expense) - net - Gas Pipeline) -- (11.0) -- -- (11.0) Early retirement expense (General corporate expenses) -- 6.2 -- -- 6.2 Write-off of James River accrued dividends/investment (Other income (expense) - net - Corporate) -- -- -- 8.5 8.5 Impairment of cost based investments** (Investing income (loss) - Various) -- -- -- -- -- Severance accrual - (General corporate expenses) -- -- -- 2.7 2.7 Executive retirement expenses (General corporate expenses) -- -- -- 2.2 2.2 Deferred stock award modification (General corporate expenses) -- -- -- (1.1) (1.1) Impairment of Algar Telecom investment (Investing income (loss) - International) -- -- -- -- -- Write-off of capitalized debt expense (Interest accrued - Corporate) -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ 301.4 10.2 52.2 11.1 374.9 TOTAL NONRECURRING ITEMS 297.5 166.7 (102.6) 256.9 618.5 Tax effect for above items 83.5 39.5 (39.2) 52.4 138.4 ------------ ------------ ------------ ------------ ------------ RECURRING INCOME (LOSS) FROM CONTINUING OPERATIONS $ 190.8 $ (215.4) $ (241.4) $ 46.5 $ (221.7) ============ ============ ============ ============ ============ RECURRING DILUTED EARNINGS PER COMMON SHARE $ 0.37 $ (0.41) $ (0.47) $ 0.09 $ (0.43) ============ ============ ============ ============ ============ WEIGHTED-AVERAGE SHARES - DILUTED (THOUSANDS) 521,240 520,427 516,901 517,104 516,793 2003 --------------------------------------------------------- (Dollars in millions, except for per-share amounts) 1st Qtr*** 2nd Qtr*** 3rd Qtr Year ------------ ------------ ------------ ------------ INCOME (LOSS) FROM CONTINUING OPERATIONS(1) $ (39.3) $ 116.2 $ 22.8 $ 99.7 PREFERRED STOCK DIVIDENDS 6.8 22.7 -- 29.5 ------------ ------------ ------------ ------------ INCOME (LOSS) FROM CONTINUING OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS $ (46.1) $ 93.5 $ 22.8 $ 70.2 ============ ============ ============ ============ INCOME (LOSS) FROM CONTINUING OPERATIONS - DILUTED EARNINGS PER SHARE $ (0.09) $ 0.18 $ 0.04 $ 0.13 ============ ============ ============ ============ NONRECURRING ITEMS: Power Hazelton plant expansion write-off -- -- -- -- Strategic realignment-related charges -- -- -- -- Impairments and loss accruals for commitments -- -- -- related to assets to have been used in power projects -- -- -- -- Impairment of goodwill** -- -- -- -- Reversal of Energy Capital Mezzanine Financing accrual -- -- -- -- Write-off of costs associated with termination of certain projects -- -- -- -- Early retirement expenses -- -- -- -- Severance accrual -- 0.6 -- 0.6 Worthington impairment -- -- -- -- Capstone stock write-down** -- -- -- -- Thermogas casualty and environmental costs and claim -- -- -- -- Loss on Gulfmark JV dissolution -- -- -- -- Accelerated compensation expense associated with workforce reductions 11.8 -- -- 11.8 Loss accrual for regulatory issue** -- 20.0 -- 20.0 Hedge accounting reclassifications -- (34.1) -- (34.1) Energy trading asset adjustment (46.6) -- (46.6) Gain on sale of Jackson EMC power contracts -- (175.0) (13.0) (188.0) Gain on sale of crude contracts and pipeline -- (7.1) -- (7.1) Gain on sale of eSpeed stock -- -- (13.5) (13.5) ------------ ------------ ------------ ------------ Total Power nonrecurring items 11.8 (242.2) (26.5) (256.9) Gas Pipeline Cross Bay write-off -- -- -- -- Gain on sale of Northern Border Limited Partnership units -- -- -- -- Net impairment on investment Alliance US sale -- -- -- -- Loss on sale of Cove Point -- -- -- -- Strategic realignment-related charges -- -- -- -- Construction completion fee - received -- -- -- -- Write-offs of terminated gas pipeline projects -- -- -- -- Early retirement expenses -- -- -- -- Loss accrual for regulatory issue -- -- -- -- SCADA property write-off -- -- -- -- Write-off of Oneline information system project -- 25.5 -- 25.5 Severance accrual -- 0.9 -- 0.9 ------------ ------------ ------------ ------------ Total Gas Pipeline nonrecurring items -- 26.4 -- 26.4 Exploration & Production (Gain) loss on sale of certain E&P properties -- (91.5) -- (91.5) Gain on sale of Anadarko -- -- -- -- Gain on sale of Jonah -- -- -- -- Strategic realignment-related charges -- -- -- -- Early retirement expenses -- -- -- -- ------------ ------------ ------------ ------------ Total Exploration & Production nonrecurring items -- (91.5) -- (91.5) Midstream Gas & Liquids Impairment of WS-1 building -- -- -- -- Strategic realignment-related charges -- -- -- -- Impairment of Canadian assets** -- -- -- -- Impairment of Kansas-Hugoton facilities as assets held for sale -- -- -- -- Impairment of investment in Aux Sable -- 8.5 5.6 14.1 Early retirement expenses -- -- -- -- La Maquina depreciable life adjustment -- -- 4.2 4.2 Gain on sale of West Texas LPG Pipeline, L.P. -- -- (11.0) (11.0) ------------ ------------ ------------ ------------ Total Midstream Gas & Liquids nonrecurring items -- 8.5 (1.2) 7.3 Other Gain on sale of Mazeikiu Nafta -- -- -- -- Strategic realignment-related charges -- -- -- -- Early retirement expenses -- -- -- -- Impairment of Wiljet assets/investments -- -- -- -- Impairment of Augusta refinery assets -- -- -- -- Impairment of Longhorn and Aspen project * -- 49.6 -- 49.6 Gain on sale of butane blending inventory -- -- (9.2) (9.2) ------------ ------------ ------------ ------------ Total Other nonrecurring items -- 49.6 (9.2) 40.4 ------------ ------------ ------------ ------------ Nonrecurring items included in segment profit (loss) 11.8 (249.2) (36.9) (274.3) Nonrecurring items below segment profit (loss) Estimated loss on realization of amounts from -- WilTel Communications Group, Inc. (Investing income (loss) - Corporate) -- -- -- -- Costs associated with business & liquidity issue resolution (Interest accrued, minority interest, and other income (expense) - net - Various) -- -- -- -- Strategic realignment-related charges (General corporate expenses) -- -- -- -- Corporate asset impairments (Other income (expense) - net - Corporate) -- -- -- -- Convertible preferred stock dividends** (Preferred stock dividends - Corporate) -- 13.8 -- 13.8 Gain on disposition of Prudential shares received from demutualization (Other income (expense) - net - Gas Pipeline) -- -- -- -- Early retirement expense (General corporate expenses) -- -- -- -- Write-off of James River accrued dividends/investment (Other income (expense) - net - Corporate) -- -- -- -- Impairment of cost based investments** (Investing income (loss) - Various) -- 19.1 2.3 21.4 Severance accrual - (General corporate expenses) -- 3.0 -- 3.0 Executive retirement expenses (General corporate expenses) -- -- -- -- Deferred stock award modification (General corporate expenses) -- -- -- -- Impairment of Algar Telecom investment (Investing income (loss) - International) 12.0 -- 1.2 13.2 Write-off of capitalized debt expense (Interest accrued - Corporate) -- 14.5 -- 14.5 ------------ ------------ ------------ ------------ 12.0 50.4 3.5 65.9 TOTAL NONRECURRING ITEMS 23.8 (198.8) (33.4) (208.4) Tax effect for above items 9.1 (104.0) (13.7) (108.6) ------------ ------------ ------------ ------------ RECURRING INCOME (LOSS) FROM CONTINUING OPERATIONS $ (31.4) $ (1.3) $ 3.1 $ (29.6) ============ ============ ============ ============ RECURRING DILUTED EARNINGS PER COMMON SHARE $ (0.06) $ -- $ 0.01 $ (0.06) ============ ============ ============ ============ WEIGHTED-AVERAGE SHARES - DILUTED (THOUSANDS) 517,652 534,839 524,711 523,938
* FOR $20.2 MILLION, NO TAX BENEFIT ** NO TAX BENEFIT *** AMOUNTS HAVE BEEN RESTATED TO REFLECT CERTAIN OPERATIONS AS DISCONTINUED OPERATIONS. (1) Includes $126.8 million positive valuation adjustment associated with agreement to terminate contract with Allegheny.