-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C1LFgZSx3Le9ZCTJLHphMPJCPQgmkobTf9URVTCdW481k8OnetZt3Art5QqKpiAB YJkZMbIeeJn9qq346c/T5Q== 0000950129-99-005261.txt : 19991203 0000950129-99-005261.hdr.sgml : 19991203 ACCESSION NUMBER: 0000950129-99-005261 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991202 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EL PASO ENERGY CORP/DE CENTRAL INDEX KEY: 0001066107 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION [4922] IRS NUMBER: 760568816 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-14365 FILM NUMBER: 99767700 BUSINESS ADDRESS: STREET 1: 1001 LOUISIANA ST CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7134202131 MAIL ADDRESS: STREET 1: 1001 LOUISIANA ST CITY: HOUSTON STATE: TX ZIP: 77002 8-K 1 EL PASO ENERGY CORPORATION - DATED 12/02/1999 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: December 2, 1999 (Date of earliest event reported: October 25, 1999) EL PASO ENERGY CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 1-14365 76-0568816 (State or other jurisdiction (Commission File No.) (IRS Employer of incorporation) Identification No.) EL PASO ENERGY BUILDING 1001 LOUISIANA STREET HOUSTON, TEXAS 77002 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (713) 420-2131 ================================================================================ 2 ITEM 5. OTHER EVENTS. On October 25, 1999, Sonat Inc. ("Sonat") merged with and into El Paso Energy Corporation ("El Paso Energy"), with El Paso Energy continuing as the surviving corporation. The merger was effected in accordance with the Second Amended and Restated Agreement and Plan of Merger dated as of March 13, 1999 (the "Merger Agreement"), by and between El Paso Energy and Sonat. This Current Report on Form 8-K is being filed to update the pro forma balance sheet as of September 30, 1999, and income statement for the nine months ended September 30, 1999. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (b) Pro forma financial information. Presented below are unaudited pro forma condensed combined financial statements reflecting the merger using the pooling of interests method of accounting in accordance with United States generally accepted accounting principles. Under this accounting method, El Paso Energy's and Sonat's balance sheets and income statements are treated as if they had always been combined for accounting and financial reporting purposes. This information is included to give you a better understanding of what the combined results of operations and financial position of El Paso Energy and Sonat may have looked like had the merger occurred on an earlier date. The pro forma information reflects that (1) each outstanding share of Sonat common stock was converted into one share of El Paso Energy common stock and (2) El Paso Energy issued a total of approximately 110 million shares in the merger. In addition, outstanding options issued to Sonat employees to purchase approximately 5 million shares of Sonat common stock were converted, one for one, into stock options for El Paso Energy common stock at the merger date. The unaudited pro forma condensed combined balance sheet as of September 30, 1999, assumes the merger had been completed on September 30, 1999. The unaudited pro forma condensed combined income statements for the nine months ended September 30, 1999, and each of the three years in the period ended December 31, 1998, assume the merger had been completed on January 1, 1996, the beginning of the earliest period presented. Accounting policy differences and intercompany balances between El Paso Energy and Sonat have been determined to be immaterial and, accordingly, the pro forma condensed combined financial statements have not been adjusted for these differences. The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and are not necessarily indicative of the operating results or financial position that would have been achieved had the merger of El Paso Energy and Sonat been consummated as of the beginning of the periods presented, nor are they necessarily indicative of the future operating results or financial position of El Paso Energy. The unaudited pro forma condensed combined financial statements do not give effect to any employee separation or asset impairment charges that may be incurred as a result of the merger or any operating efficiencies or cost savings that may result from the integration of El Paso Energy's and Sonat's operations. These unaudited pro forma condensed combined financial statements should be read in conjunction with the historical financial statements and related notes of El Paso Energy and Sonat included in their respective Annual Reports on Form 10-K for the year ended December 31, 1998, and Quarterly Reports on Form 10-Q for the nine months ended September 30, 1999, and the six months ended June 30, 1999, for El Paso Energy and Sonat, respectively. The information presented for Sonat includes certain reclassifications to conform to El Paso Energy's presentation. These reclassifications have no impact on results of operations or total stockholders' equity. 2 3 UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF SEPTEMBER 30, 1999 (IN MILLIONS) ASSETS
EL PASO SONAT COMBINED COMBINED HISTORICAL HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA ---------- ---------- ---------- ----------- --------- Total current assets............................... $ 2,161 $ 828 $ 2,989 $ -- $ 2,989 Property, plant and equipment, net................. 7,305 2,630 9,935 -- 9,935 Other.............................................. 2,477 938 3,415 -- 3,415 ------- ------ ------- ----- ------- Total assets............................. $11,943 $4,396 $16,339 $ -- $16,339 ======= ====== ======= ===== =======
LIABILITIES & STOCKHOLDERS' EQUITY Total current liabilities.......................... $ 2,123 $1,237 $ 3,360 $ 64 (a) $ 3,400 (24)(c) ------- ------ ------- ----- ------- Long-term debt, less current maturities............ 3,720 1,687 5,407 -- 5,407 ------- ------ ------- ----- ------- Deferred income taxes.............................. 1,654 187 1,841 -- 1,841 ------- ------ ------- ----- ------- Other.............................................. 1,162 227 1,389 -- 1,389 ------- ------ ------- ----- ------- Company-obligated mandatorily redeemable convertible preferred securities of El Paso Energy Capital Trust I........................... 325 -- 325 -- 325 ------- ------ ------- ----- ------- Minority interest.................................. 865 -- 865 -- 865 ------- ------ ------- ----- ------- Stockholders' equity Common stock..................................... 381 111 492 219 (b) 711 Additional paid-in capital....................... 1,506 74 1,580 (278)(b) 1,302 Retained earnings................................ 501 939 1,440 (64)(a) 1,400 24 (c) Other............................................ (294) (66) (360) 59 (b) (301) ------- ------ ------- ----- ------- Total stockholders' equity............... 2,094 1,058 3,152 (40) 3,112 ------- ------ ------- ----- ------- Total liabilities and stockholders' equity................................. $11,943 $4,396 $16,339 $ -- $16,339 ======= ====== ======= ===== =======
See accompanying Notes to the Unaudited Pro Forma Condensed Combined Balance Sheet. 3 4 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET (a) Estimated costs associated with the merger of El Paso Energy and Sonat are $200 million. These costs consist of (1) $138 million of costs for compensation related programs under which certain benefits of El Paso Energy and Sonat personnel accelerated and vested as a result of the change in control associated with the merger and (2) $62 million of transaction costs, which include legal, accounting, and financial advisory services. As of September 30, 1999, $136 million in merger-related costs were incurred and estimated costs totaling $64 million remain. (b) Reflects the exchange of one share of El Paso Energy common stock for each outstanding share of Sonat common stock, as provided in the merger agreement and the cancellation of $59 million of Sonat treasury stock. (c) Reflects the income tax consequences of the remaining $64 million of costs associated with the merger assuming an effective income tax rate of 38%. 4 5 UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (IN MILLIONS, EXCEPT PER COMMON SHARE DATA)
EL PASO SONAT COMBINED COMBINED HISTORICAL HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA ---------- ---------- ---------- ----------- --------- Operating revenues................................. $5,567 $2,611 $8,178 $-- $8,178 ------ ------ ------ --- ------ Operating expenses Cost of gas and other products................... 4,316 1,946 6,262 -- 6,262 Operation and maintenance........................ 522 245 767 -- 767 Depreciation, depletion and amortization......... 218 251 469 -- 469 Ceiling test charges............................. -- 352 352 -- 352 Merger-related costs............................. 126 10 136 -- 136 Other............................................ 71 36 107 -- 107 ------ ------ ------ --- ------ 5,253 2,840 8,093 -- 8,093 ------ ------ ------ --- ------ Operating income (loss)............................ 314 (229) 85 -- 85 Interest and debt expense.......................... 230 112 342 -- 342 Other income, net.................................. (154) (56) (210) -- (210) ------ ------ ------ --- ------ Income (loss) before income taxes, minority interest, and cumulative effect of accounting change........................................... 238 (285) (47) -- (47) Income tax expense (benefit)....................... 73 (104) (31) -- (31) Minority interest.................................. 39 1 40 -- 40 ------ ------ ------ --- ------ Income (loss) before cumulative effect of accounting change................................ 126 (182) (56) -- (56) Cumulative effect of accounting change, net of income tax....................................... (13) -- (13) -- (13) ------ ------ ------ --- ------ Net income (loss).................................. $ 113 $ (182) $ (69) $-- $ (69) ====== ====== ====== === ====== Basic earnings per common share Income (loss) before cumulative effect of accounting change.............................. $ 1.08 $(0.24) Cumulative effect of accounting change, net of income tax..................................... (0.11) (0.06) ------ ------ Net income (loss)................................ $ 0.97 $(0.30) ====== ====== Diluted earnings per common share Income (loss) before cumulative effect of accounting change.............................. $ 1.06 $(0.24)(a) Cumulative effect of accounting change, net of income tax..................................... (0.11) (0.06)(a) ------ ------ Net income (loss)................................ $ 0.95 $(0.30)(a) ====== ====== Basic average common shares outstanding............ 117 110(b) 227 ====== === ====== Diluted average common shares outstanding.......... 119 111(b) 230 ====== === ======
See accompanying Notes to the Unaudited Pro Forma Condensed Combined Statements of Income. 5 6 UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1998 (IN MILLIONS, EXCEPT PER COMMON SHARE DATA)
EL PASO SONAT COMBINED COMBINED HISTORICAL HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA ---------- ---------- ---------- ----------- --------- Operating revenues................................. $5,782 $3,710 $9,492 $-- $9,492 ------ ------ ------ --- ------ Operating expenses Cost of gas and other products................... 4,212 2,745 6,957 -- 6,957 Operation and maintenance........................ 707 281 988 -- 988 Depreciation, depletion and amortization......... 269 349 618 -- 618 Ceiling test charges............................. -- 1,035 1,035 -- 1,035 Other............................................ 88 63 151 -- 151 ------ ------ ------ --- ------ 5,276 4,473 9,749 -- 9,749 ------ ------ ------ --- ------ Operating income (loss)............................ 506 (763) (257) -- (257) Interest and debt expense.......................... 267 137 404 -- 404 Other income, net.................................. (138) (67) (205) -- (205) ------ ------ ------ --- ------ Income (loss) before income taxes and minority interest......................................... 377 (833) (456) -- (456) Income tax expense (benefit)....................... 127 (299) (172) -- (172) ------ ------ ------ --- ------ Income (loss) before minority interest............. 250 (534) (284) -- (284) Minority interest.................................. 25 (3) 22 -- 22 ------ ------ ------ --- ------ Net income (loss).................................. $ 225 $ (531) $ (306) $-- $ (306) ====== ====== ====== === ====== Basic earnings (loss) per common share............ $ 1.94 $(1.35) ====== ====== Diluted earnings (loss) per common share.......... $ 1.85 $(1.35)(a) ====== ====== Basic average common shares outstanding............ 116 110(b) 226 ====== === ====== Diluted average common shares outstanding.......... 126 111(b) 237 ====== === ======
See accompanying Notes to the Unaudited Pro Forma Condensed Combined Statements of Income. 6 7 UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1997 (IN MILLIONS, EXCEPT PER COMMON SHARE DATA)
EL PASO SONAT COMBINED COMBINED HISTORICAL HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA ---------- ---------- ---------- ----------- --------- Operating revenues................................. $5,638 $4,372 $10,010 $-- $10,010 ------ ------ ------- --- ------- Operating expenses Cost of gas and other products................... 4,125 3,174 7,299 -- 7,299 Operation and maintenance........................ 664 385 1,049 -- 1,049 Depreciation, depletion and amortization......... 236 398 634 -- 634 Other............................................ 92 43 135 -- 135 ------ ------ ------- --- ------- 5,117 4,000 9,117 -- 9,117 ------ ------ ------- --- ------- Operating income................................... 521 372 893 -- 893 Interest and debt expense.......................... 238 110 348 -- 348 Other income, net.................................. (57) (66) (123) -- (123) ------ ------ ------- --- ------- Income before income taxes and minority interest... 340 328 668 -- 668 Income tax expense................................. 129 107 236 -- 236 ------ ------ ------- --- ------- Income before minority interest.................... 211 221 432 -- 432 Minority interest.................................. 25 3 28 -- 28 ------ ------ ------- --- ------- Net income......................................... $ 186 $ 218 $ 404 $-- $ 404 ====== ====== ======= === ======= Basic earnings per common share.................... $ 1.64 $ 1.80 ====== ======= Diluted earnings per common share.................. $ 1.59 $ 1.76 ====== ======= Basic average common shares outstanding............ 114 110(b) 224 ====== === ======= Diluted average common shares outstanding.......... 117 112(b) 229 ====== === =======
See accompanying Notes to the Unaudited Pro Forma Condensed Combined Statements of Income. 7 8 UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1996 (IN MILLIONS, EXCEPT PER COMMON SHARE DATA)
EL PASO SONAT COMBINED COMBINED HISTORICAL HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA ---------- ---------- ---------- ----------- --------- Operating revenues................................. $3,012 $3,204 $6,216 $-- $6,216 ------ ------ ------ --- ------ Operating expenses Cost of gas and other products................... 2,277 2,039 4,316 -- 4,316 Operation and maintenance........................ 322 301 623 -- 623 Depreciation, depletion and amortization......... 101 384 485 -- 485 Employee separation and asset impairment charge........................................ 99 -- 99 -- 99 Other............................................ 43 48 91 -- 91 ------ ------ ------ --- ------ 2,842 2,772 5,614 -- 5,614 ------ ------ ------ --- ------ Operating income................................... 170 432 602 -- 602 Interest and debt expense.......................... 110 101 211 -- 211 Other income, net.................................. (5) (53) (58) -- (58) ------ ------ ------ --- ------ Income before income taxes and minority interest... 65 384 449 -- 449 Income tax expense................................. 25 125 150 -- 150 ------ ------ ------ --- ------ Income before minority interest.................... 40 259 299 -- 299 Minority interest.................................. 2 3 5 -- 5 ------ ------ ------ --- ------ Net income......................................... $ 38 $ 256 $ 294 $-- $ 294 ====== ====== ====== === ====== Basic earnings per common share.................... $ 0.53 $ 1.62 ====== ====== Diluted earnings per common share.................. $ 0.52 $ 1.59 ====== ====== Basic average common shares outstanding............ 72 110(b) 182 ====== === ====== Diluted average common shares outstanding.......... 73 112(b) 185 ====== === ======
See accompanying Notes to the Unaudited Pro Forma Condensed Combined Statements of Income. 8 9 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME (a) As required by the accounting rules, we have excluded additional dilutive securities such as options in determining diluted earnings (loss) per common share. If we had included those securities, we would have shown less of a loss per common share. (b) The basic and diluted common shares adjustments reflect the exchange of one share of El Paso Energy common stock for each outstanding share of Sonat common stock as provided for in the Merger Agreement. 9 10 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. EL PASO ENERGY CORPORATION By: /s/ JEFFREY I. BEASON ------------------------------------ Jeffrey I. Beason Senior Vice President and Controller (Chief Accounting Officer) Date: December 2, 1999 -----END PRIVACY-ENHANCED MESSAGE-----