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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: December 21, 2004
(Date of Earliest Event Reported: September 30, 2004)
EL PASO CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 1-14365 76-0568816
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
El Paso Building
1001 Louisiana Street
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713) 420-2600
(Registrant's telephone number, including area code)
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Item 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On September 30, 2004, we completed the sale of our ownership interests
in GulfTerra Energy Partners, L.P. ("GulfTerra") and nine processing plants in
South Texas to affiliates of Enterprise Products Partners, L.P. ("Enterprise").
The sales were completed in connection with the closing of the merger between
GulfTerra and Enterprise. On October 7, 2004, we filed a Current Report on Form
8-K to provide the proforma financial impacts of the sales on our historical
financial statements. The periods included in that filing were based on the most
recent financial information available on that date. This Current Report on Form
8-K/A is being filed to provide updated financial information on the proforma
impacts of these sales.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS
b. Unaudited Pro Forma Financial Statements
The accompanying unaudited pro forma financial statements are based on
our historical consolidated financial statements as of and for the six months
ended June 30, 2004, and for the year ended December 31, 2003, adjusted for the
effects of the sales of our interests in GulfTerra and the processing plants
described above. The unaudited pro forma balance sheet as of June 30, 2004,
assumes these dispositions occurred on the balance sheet date. The unaudited pro
forma statements of income for the six months ended June 30, 2004, and for the
year ended December 31, 2003, assume these dispositions occurred on January 1,
2003. The unaudited pro forma financial statements should be read in conjunction
with the historical consolidated financial statements included in our Quarterly
Report on Form 10-Q for the six months ended June 30, 2004, and our Annual
Report on Form 10-K for the year ended December 31, 2003, and should not be
construed to be indicative of future results or results that actually would have
occurred had the transactions occurred at the dates presented. In addition,
these pro forma financial statements were prepared in accordance with Article 11
of Regulation S-X. Accordingly, we have not made any assumptions or adjustments
for possible increases or decreases in distributions to us from Enterprise or
assumed any cost savings or synergies that might occur related to these
transactions.
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EL PASO CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2004
(In millions)
EL PASO PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
ASSETS
Current assets
Cash and cash equivalents $ 1,411 $ 1,022 (a) $ 2,433
Accounts and notes receivable, net 1,881 1,881
Assets held for sale and from discontinued operations 1,281 (143)(a) 1,138
Other 1,544 (12)(a) 1,524
(8)(a)
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Total current assets 6,117 859 6,976
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Property, plant and equipment, net 18,349 (14)(a) 18,335
Other assets
Investments in unconsolidated affiliates 3,517 81 (a)
(411)(a) 3,187
Other 4,744 (661)(a) 4,083
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Total assets $ 32,727 $ (146) $ 32,581
======== ======= ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 1,506 $ 1,506
Short-term financing obligations, including
current maturities 1,574 1,574
Liabilities related to assets held for sale 268 (10)(a) 258
Other 1,797 5 (a) 1,802
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Total current liabilities 5,145 (5) 5,140
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Long-term debt 18,259 18,259
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Other liabilities
Deferred income taxes 1,335 148 (a) 1,483
Other 3,234 (84)(a) 3,150
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4,569 64 4,633
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Commitments and contingencies
Securities of subsidiaries 448 (84)(a) 364
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448 (84) 364
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Stockholders' equity
Common stock 1,950 1,950
Additional paid-in capital 4,580 4,580
Retained earnings (1,975) (121)(a) (2,096)
Other (249) (249)
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Total stockholders' equity 4,306 (121) 4,185
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Total liabilities & stockholders' equity $ 32,727 $ (146) $ 32,581
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See accompanying notes
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EL PASO CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2004
(In millions)
EL PASO PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
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Operating revenues $ 3,081 $ (397)(b) $ 2,684
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Operating expenses
Cost of products and services 825 (279)(b) 546
Operation and maintenance 774 (7)(b) 767
Depreciation, depletion and amortization 538 (6)(b) 532
Loss on long-lived assets 239 (2)(b) 237
Taxes, other than income taxes 130 (1)(b) 129
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2,506 (295) 2,211
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Operating income 575 (102) 473
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Earnings from unconsolidated affiliates 198 (50)(b) 148
Other income, net 67 67
Interest and debt expense (833) (833)
Distributions on preferred interests of consolidated
subsidiaries (12) (12)
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Loss before income taxes (5) (152) (157)
Income taxes (47) 53 (c) 6
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Loss from continuing operations $ (52) $ (99) $ (151)
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Basic and diluted loss per common share
from continuing operations $ (0.08) $ (0.24)
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Basic and diluted average common
shares outstanding 639 639
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See accompanying notes
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EL PASO CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2003
(In millions)
EL PASO PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
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Operating revenues $ 6,711 $ (782)(b) $ 5,929
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Operating expenses
Cost of products and services 1,787 (617)(b) 1,170
Operation and maintenance 2,121 (17)(b) 2,104
Depreciation, depletion and amortization 1,207 (12)(b) 1,195
Ceiling test charges 76 76
Loss on long-lived assets 949 (166)(b) 783
Taxes, other than income taxes 296 296
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6,436 (812) 5,624
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Operating income 275 30 305
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Earnings (losses) from unconsolidated affiliates 363 (378)(b) (15)
Other income, net 1 1
Interest and debt expense (1,787) (1,787)
Distributions on preferred interests of consolidated
subsidiaries (52) (52)
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Loss before income taxes (1,200) (348) (1,548)
Income taxes 584 122 (c) 706
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Loss from continuing operations $ (616) $ (226) $ (842)
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Basic and diluted loss per common share
from continuing operations $ (1.03) $ (1.41)
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Basic and diluted average common
shares outstanding 597 597
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See accompanying notes
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EL PASO CORPORATION
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
EL PASO HISTORICAL
These amounts represent our condensed historical consolidated balance
sheet and income statement information. Amounts as of and for the six months
ended June 30, 2004 were derived from our Quarterly Report on Form 10-Q for the
six months ended June 30, 2004. Amounts for the year ended December 31, 2003
were derived from our 2003 Annual Report on Form 10-K.
PRO FORMA ADJUSTMENTS
These amounts represent the historical results and balances related to
certain of our interests in GulfTerra which were accounted for as equity
investments and the nine processing plants sold to Enterprise as of and for the
periods presented. The pro forma adjusting entries reflect the following
transactions:
o The sale of all of our interest in the general partner of GulfTerra,
which includes the elimination of a minority ownership in the general
partner that arose from the interest previously sold to Enterprise in
December 2003;
o The redemption of our Series B units of GulfTerra which occurred in
October 2003;
o The elimination of all effects of our common units and Series C units
of GulfTerra, with the exception of the amounts related to the units
retained by us; and
o The elimination of all non-affiliated effects of the nine processing
plants sold.
PRO FORMA ADJUSTING ENTRIES
(a) To reflect the pro forma effects of the sale of our GulfTerra interests
and South Texas processing assets on our consolidated balance sheet. The
pro forma effects include the following:
(1) Receipt of net proceeds of $1.02 billion from the sale of all
of our interest in the general partner of GulfTerra, 10.9 million
Series C units, 2.9 million common units, nine processing plants in
South Texas, and the receipt of 9.9 percent interest in the general
partner of the combined organization that has an estimated fair
value of $81 million.
(2) Elimination of our net investment in GulfTerra of $411 million.
(3) Elimination of goodwill included in our Field Services segment of
$480 million as a result of the completion of the sale and $181
million of intangible assets associated with the assets sold.
(4) Elimination of a portion of the previously deferred gains on prior
transactions with GulfTerra of $88 million ($84 million of which
was included in non-current liabilities).
(5) Elimination of minority interest of $84 million related to the
previous sale of an effective 50 percent general partner interest
in GulfTerra to Enterprise in December 2003.
(6) Elimination of the carrying value as of June 30, 2004 of the nine
South Texas processing plants which were classified as assets held
for sale of $143 million, $12 million of inventory, $10 million
of related liabilities and $8 million of other current assets, in
addition to an accrual of $1 million of selling costs.
(7) Recording a $121 million net loss associated with the sale
transaction. The amount consists of a $27 million pretax gain on
the sale and income taxes of $148 million related to the
non-deductibility for tax purposes of goodwill eliminated in the
sale transaction.
(8) Sale of property, plant and equipment in the amount of $14
million used by general and administrative staff in support of
GulfTerra operations, and accrual of $8 million in selling costs.
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(b) To reflect the pro forma effects of the sale of our GulfTerra interests
and South Texas processing assets on our consolidated income statements.
The pro forma effects include the following:
(1) Adjustment for the historical results of operations for our South
Texas Processing Plants, including impairment charges recorded
during 2003 and 2004 on these assets;
(2) Reduction of earnings from unconsolidated affiliates for (i) our
general partner interests, (ii) all Series C units, (iii) all
Series B units redeemed by GulfTerra during 2003, and (iv) the
proportional share of income on GulfTerra common units sold; and
(3) Elimination of gains (losses) recorded in earnings from
unconsolidated affiliates during 2003 and 2004 on sales of our
GulfTerra interests, including the gain on the sale of an effective
50 percent general partner interest to Enterprise; realized gains
in 2003 on our sale of GulfTerra common units; and a realized loss
on GulfTerra's redemption of our Series B units in 2003.
(c) To reflect income taxes related to income statement adjustments at a
statutory tax rate of 35 percent, which is different from our effective
tax rate.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EL PASO CORPORATION
By: /s/ JEFFREY I. BEASON
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Jeffrey I. Beason
Senior Vice President and Controller
(Principal Accounting Officer)
Date: December 21, 2004
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