Exhibit 99.2
Reconciliation of Income (Loss) from Continuing Operations to Recurring Earnings
(UNAUDITED)
| 2003 | 2004 | |||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except for per-share amounts) | 1st Qtr * | 2nd Qtr * | 3rd Qtr * | 4th Qtr * | Year * | 1st Qtr * | 2nd Qtr* | 3rd Qtr | 4th Qtr | Year | ||||||||||||||||||||||||||||||
Income (loss) from continuing operations(1) | ($43.1 | ) | $ | 113.7 | $ | 20.0 | ($62.4 | ) | $ | 28.2 | ($1.5 | ) | ($18.0 | ) | $ | 16.1 | $ | 0.0 | ($3.4 | ) | ||||||||||||||||||||
Preferred stock dividends | 6.8 | 22.7 | — | — | 29.5 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Income (loss) from continuing operations available to common stockholders | ($49.9 | ) | $ | 91.0 | $ | 20.0 | ($62.4 | ) | ($1.3 | ) | ($1.5 | ) | ($18.0 | ) | $ | 16.1 | $ | 0.0 | ($3.4 | ) | ||||||||||||||||||||
Income (loss) from continuing operations — diluted earnings per share | ($0.10 | ) | $ | 0.17 | $ | 0.04 | ($0.12 | ) | ($0.01 | ) | $ | — | ($0.03 | ) | $ | 0.03 | #DIV/0! | ($0.01 | ) | |||||||||||||||||||||
Nonrecurring items: | ||||||||||||||||||||||||||||||||||||||||
Power | ||||||||||||||||||||||||||||||||||||||||
| Accelerated compensation expense associated with workforce reductions | 11.8 | — | — | — | 11.8 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Severance accrual | — | 0.6 | — | — | 0.6 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Impairment of investment in Aux Sable | — | 8.5 | 5.6 | — | 14.1 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Loss accrual for regulatory issues(2) | — | 20.0 | — | — | 20.0 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Prior period item correction(3) | (13.7 | ) | (93.1 | ) | (1.0 | ) | (9.0 | ) | (116.8 | ) | — | — | — | — | — | |||||||||||||||||||||||||
| 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 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||
| Impairment of goodwill(2) | — | — | — | 45.0 | 45.0 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Hazelton impairment | — | — | — | 44.1 | 44.1 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| California rate refund and other accrual adjustments(4) | — | — | — | 33.3 | 33.3 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Total Power nonrecurring items | (1.9 | ) | (246.1 | ) | (21.9 | ) | 113.4 | (156.5 | ) | — | — | — | — | — | ||||||||||||||||||||||||||
Gas Pipeline | ||||||||||||||||||||||||||||||||||||||||
| Write-off of Oneline information system project | — | 25.5 | — | 0.1 | 25.6 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Severance accrual | — | 0.9 | — | — | 0.9 | — | — | — | ||||||||||||||||||||||||||||||||
| Write-off of previously-capitalized costs — idled segment of Northwest’s pipeline | — | — | — | — | — | — | 9.0 | 9.0 | ||||||||||||||||||||||||||||||||
Total Gas Pipeline nonrecurring items | — | 26.4 | — | 0.1 | 26.5 | — | 9.0 | — | — | 9.0 | ||||||||||||||||||||||||||||||
Exploration & Production | ||||||||||||||||||||||||||||||||||||||||
| Gain on sale of certain E&P properties | — | (91.5 | ) | — | — | (91.5 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||
| Loss provision related to an ownership dispute | — | — | — | — | — | — | 11.3 | — | — | 11.3 | ||||||||||||||||||||||||||||||
Total Exploration & Production nonrecurring items | — | (91.5 | ) | — | — | (91.5 | ) | — | 11.3 | — | — | 11.3 | ||||||||||||||||||||||||||||
Midstream Gas & Liquids | ||||||||||||||||||||||||||||||||||||||||
| La Maquina depreciable life adjustment | — | — | 4.2 | — | 4.2 | — | — | 6.4 | — | 6.4 | ||||||||||||||||||||||||||||||
| Gain on sale of West Texas LPG Pipeline, L.P. | — | — | (11.0 | ) | — | (11.0 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||
| Gain on sale of wholesale propane | — | — | — | (16.2 | ) | (16.2 | ) | — | — | — | — | |||||||||||||||||||||||||||||
| Devil’s Tower revenue correction | — | — | — | — | — | — | (16.5 | ) | 16.5 | — | ||||||||||||||||||||||||||||||
Total Midstream Gas & Liquids nonrecurring items | — | — | (6.8 | ) | (16.2 | ) | (23.0 | ) | — | (16.5 | ) | 22.9 | — | 6.4 | ||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||||||||||
| Impairment of Longhorn and Aspen project(5) | — | 49.6 | — | — | 49.6 | — | 10.8 | — | — | 10.8 | ||||||||||||||||||||||||||||||
| Gain on sale of butane blending inventory | — | — | (9.2 | ) | — | (9.2 | ) | — | — | — | ||||||||||||||||||||||||||||||
| Longhorn recapitalization fee | — | — | — | — | — | 6.5 | — | — | — | 6.5 | ||||||||||||||||||||||||||||||
Total Other nonrecurring items | — | 49.6 | (9.2 | ) | — | 40.4 | 6.5 | 10.8 | — | — | 17.3 | |||||||||||||||||||||||||||||
| Nonrecurring items included in segment profit (loss) | (1.9 | ) | (261.6 | ) | (37.9 | ) | 97.3 | (204.1 | ) | 6.5 | 14.6 | 22.9 | — | 44.0 | ||||||||||||||||||||||||||
| Nonrecurring items below segment profit (loss) | ||||||||||||||||||||||||||||||||||||||||
Convertible preferred stock dividends(2)(Preferred stock dividends — Corporate) | — | 13.8 | — | — | 13.8 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Impairment of cost-based investments(6) (Investing income (loss) -Various) | — | 19.1 | 2.3 | — | 21.4 | — | — | 15.7 | — | 15.7 | ||||||||||||||||||||||||||||||
Severance accrual (General corporate expenses) | — | 3.0 | — | — | 3.0 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Impairment of Algar Telecom investment (Investing income (loss) — Other) | 12.0 | — | 1.2 | — | 13.2 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Write-off of capitalized debt expense (Interest accrued — Corporate) | — | 14.5 | — | — | 14.5 | — | 3.8 | — | — | 3.8 | ||||||||||||||||||||||||||||||
Premiums, fees and expenses related to the debt repurchase and debt tender offer (Other income (expense) — net — Corporate and Exploration & Production) | — | — | — | 66.8 | 66.8 | — | 96.7 | 155.1 | — | 251.8 | ||||||||||||||||||||||||||||||
Loss provision related to an ownership dispute — interest component (Interest accrued — Exploration & Production) | — | — | — | — | — | — | 1.9 | — | 1.9 | |||||||||||||||||||||||||||||||
| 12.0 | 50.4 | 3.5 | 66.8 | 132.7 | — | 102.4 | 170.8 | — | 273.2 | |||||||||||||||||||||||||||||||
Total nonrecurring items | 10.1 | (211.2 | ) | (34.4 | ) | 164.1 | (71.4 | ) | 6.5 | 117.0 | 193.7 | — | 317.2 | |||||||||||||||||||||||||||
| Tax effect for above items | 3.9 | (108.7 | ) | (14.0 | ) | 43.4 | (75.5 | ) | 2.5 | 44.8 | 74.1 | — | 121.3 | |||||||||||||||||||||||||||
Recurring income (loss) from continuing operations available to common stockholders | ($43.7 | ) | ($11.5 | ) | ($0.4 | ) | $ | 58.3 | $ | 2.8 | $ | 2.5 | $ | 54.2 | $ | 135.7 | $ | 0.0 | $ | 192.5 | ||||||||||||||||||||
Recurring diluted earnings per common share | ($0.08 | ) | ($0.02 | ) | $ | — | $ | 0.11 | $ | 0.01 | $ | — | $ | 0.10 | $ | 0.26 | #DIV/0! | $ | 0.37 | |||||||||||||||||||||
Weighted-average shares — diluted (thousands) | 517,652 | 534,839 | 524,711 | 518,502 | 518,137 | 525,752 | 521,698 | 529,525 | 0 | 521,438 | ||||||||||||||||||||||||||||||
| (1) | Includes $126.8 million positive valuation adjustment associated with agreement to terminate contract with Allegheny in second quarter 2003. | |||
| (2) | No tax benefit. | |||
| (3) | Power recognized $116.8 million of revenue in 2003 from a correction of the accounting treatment previously applied to certain third party derivative contracts during 2002 and 2001. | |||
| (4) | For $5.6 million, no tax benefit. | |||
| (5) | For $20.2 million, no tax benefit in 2nd Qtr 2003. | |||
| (6) | For $21.4 million in 2003, no tax benefit. | |||
* Amounts have been restated from 2nd quarter 2004 to reflect the transfer of our equity method investment in Aux Sable from our Midstream segment to our Power segment.
Note: The sum of earnings (loss) per share for the quarters may not equal the total earnings (loss) per share for the year due to changes in the weighted-average number of common shares outstanding.