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Enron Mail |
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------------------------------------------------------------------------------ ------------------------------------------ To all employees: EOTT announced its financial results for the fourth quarter of 1999 today. A full copy of the press release is attached. Results set out in the press release include that recurring operating income nearly doubled to $10.5 million in the most recent quarter from $5.3 million in the same period in 1998. Crude oil lease volumes increased significantly in the fourth quarter of 1999 compared to last year, with the North America-East of the Rockies segment volumes up 26% to an average of 406,600 barrels per day. Acquisitions made in late 1998 and early 1999 were the primary reasons for the growth in recurring operating income and lease volumes. As a result of the realization of operating synergies from recent acquisitions, recurring operating expenses declined to $35.7 million in the fourth quarter of 1999 from $40.7 million in the third quarter of the same year. For the full year 1999, EOTT reported net income of $7.6 million before non-recurring items and the cumulative effect of the accounting change, or $0.30 per diluted unit, compared to a loss of $4.1 million, or $(0.21) per diluted unit, in 1998. In total, EOTT reported a loss of $2.2 million, or $(0.09) per diluted unit, before the cumulative effect of an accounting change. 1999 was a turnaround year for EOTT's operations, with recurring operating income up nearly five-fold over the prior year. With our increased scale and scope from recent acquisitions and our continuing success in reducing operating costs, we believe we are well positioned for 2000. While there were some very positive aspects to our fourth quarter performance, the overall results were disappointing due, in large part, to the negative financial impact of certain unauthorized activities which occurred in our now-discontinued NGL activities in the mid continent region. You may rest assured that the company intends to take swift and thorough legal action against the individual responsible for these activities, but you also need to be aware that these events will likely spark the curiosity of many within our industry. Accordingly, it is almost certain that EOTT employees will receive phone calls and inquiries from business acquaintances and counterparties wanting to know more about the unauthorized activities mentioned in our earnings release. These matters are extremely sensitive and potentially damaging to the company's reputation, and any indiscreet or unauthorized comments by EOTT personnel about these matters may only serve to harm the company's position. Accordingly, I am asking that EOTT employees refrain from discussing the unauthorized activities discussed in our earnings release with people outside of our company. Generally speaking, any media or other external inquiries or requests for information about any item(s) mentioned in our earnings release should be referred to Dave Schafer with the Enron GPG Communications Group, at 713-853-6758. Susan Ralph and our Credit Department will be responsible for handling any questions which may come in concerning the company's financial strength or credit posture, and Dana Gibbs will be responsible for addressing any specific questions which may come in concerning any effect which any of these matters may have upon any specific commercial transaction(s) to which EOTT is a party. If there are any questions about any of these guidelines, or if you become unsure of how to handle any particular situation, please contact your supervisor or EOTT's Legal Department right away. I am extremely angered by these unauthorized activities, not only because of the effect they have had on our 1999 results, but also because of the unfair way they have undermined countless hours of hard work by hundreds of good and dedicated EOTT employees in 1999. These events are unfortunate, but they will not have a lasting effect upon our company. EOTT's underlying earning power remains strong and our prospects for the future remain bright. Your adherence to the guidelines set forth above will assist EOTT in getting through this difficult, but passing, situation. Thank you in advance for your help. And finally, I want to take this opportunity to thank all EOTT employees for the tremendous job you have done in lowering our expenses and levels of spending throughout the organization. Your initiatives, suggestions and cooperation in this area will be a major factor in helping EOTT strive to attain its financial goals for 2000. Mike (See attached file: EOT 4Q99 Earnings v7.doc) - EOT 4Q99 Earnings v7.doc
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