As expected, Houston-based El Paso Corp. disclosed a huge loss for 2003 and restated previous financial results in a delayed Form 10-K filing with the Securities and Exchange Commission.
El Paso posted a full-year 2003 loss of $1.93 billion, or $3.23 a share, on revenue of $6.7 billion. The loss from continuing operations was $616 million, or $1.03 a share. The company also restated its financial results for every year since 1999 as a result of an investigation into its reserve accounting and accounting for hedging transactions. The overall impact of the restatements was to cut shareholder equity by about $2.4 billion at Sept. 30, 2003. Of this amount, about $1.7 billion related to the restatement of El Paso’s historical reserve estimates and about $700 million related to the restatement of its historical accounting for hedges. Here are the earlier posts on El Paso’s mounting financial problems.
The 10-K also disclosed that one of El Paso’s units has been subpoenaed by a grand jury from the U.S. District Court for the Southern District of New York to produce records regarding the United Nations’ Oil for Food Program governing sales of Iraqi oil. The unit, El Paso CGP Company, was formerly Coastal Corp., which the company acquired in January 2001. The former chairman of Coastal — Oscar Wyatt — was an unabashed critic of Operation Desert Storm in the first Persian Gulf War and has been a vocal public critic of El Paso’s management over the past several years.
El Paso also received a subpoena from the SEC earlier this year relating to its reserve revisions, which are also being investigated by the U.S. attorney. Moreover, the company’s hedge accounting is also the subject of an investigation by the U.S. Attorney and may become the subject of a separate inquiry by the SEC.
Man, is El Paso a white collar criminal defense attorney’s dream or what?
Finally, El Paso reported that it expects to meet its November 30 deadline for filing its delayed Form 10-Q’s for the first two quarters of 2004. El Paso remains on my reorganization watch as a likely candidate for a chapter 11 case in the near future, so stay tuned.