11-K 1 0001.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________ FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One): [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996) For the fiscal year ended December 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from _______ to _______ Commission File No. 1-14365 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: El Paso Energy Corporation Retirement Savings Plan (herein referred to as the "Plan") B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: El Paso Energy Corporation (herein referred to as the "Company") 1001 Louisiana Street Houston, Texas 77002 REQUIRED INFORMATION Item 4. Financial Statements and Exhibits (a) Financial Statements and Supplemental Schedules for the Years Ended December 31, 1999, and 1998: Report of Independent Accountants Financial Statements: Statement of Net Assets Available for Plan Benefits with Fund Information as of December 31, 1999 Statement of Net Assets Available for Plan Benefits with Fund Information as of December 31, 1998 Statement of Changes in Net Assets Available for Plan Benefits with Fund Information for the Year Ended December 31, 1999 Notes to Financial Statements Supplemental Schedules: Schedule H Line 4i - Schedule of Assets Held for Investment Purposes as of December 31, 1999 Schedule H Line 4j - Schedule of Reportable Transactions for the Year Ended December 31, 1999 (b) Exhibits: Exhibit No. Description ------- ----------- 23 Consent of Independent Accountants SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the plan) have duly caused this annual report to be signed by the undersigned hereunto duly authorized. El Paso Energy Corporation Retirement Savings Plan By /s/ Jeffrey I. Beason _________________________ Jeffrey I. Beason Vice President and Controller Date: June 28, 2000 EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN ------------- FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES WITH REPORT OF INDEPENDENT ACCOUNTANTS December 31, 1999 and 1998 EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN ____________ FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES WITH REPORT OF INDEPENDENT ACCOUNTANTS INDEX Page ---- Report of Independent Accountants............................... 2 Financial Statements: Statement of Net Assets Available for Plan Benefits with Fund Information as of December 31, 1999..................... 3 Statement of Net Assets Available for Plan Benefits with Fund Information as of December 31, 1998..................... 4 Statement of Changes in Net Assets Available for Plan Benefits with Fund Information for the year ended December 31, 1999............................................. 5 Notes to Financial Statements.................................. 6 Supplemental Schedules: Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes as of December 31, 1999................... 17 Schedule H, Line 4j- Schedule of Reportable Transactions for the year ended December 31, 1999................... 19 Consent of Independent Accountants............................... 20 [Letterhead of PricewaterhouseCoopers LLP] REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of El Paso Energy Corporation: In our opinion, the accompanying statements of net assets available for benefits with fund information and the related statement of changes in net assets available for benefits with fund information present fairly, in all material respects, the net assets available for benefits of the El Paso Energy Corporation Retirement Savings Plan (the "Plan") at December 31, 1999 and December 31, 1998, and the changes in net assets available for benefits with fund information for the year ended December 31, 1999 in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules listed in the index on page 1 are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The fund information in the statements of net assets available for plan benefits with fund information and the statement of changes in net assets available for plan benefits with fund information is presented for purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for plan benefits of each fund. These supplemental schedules and fund information are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ PricewaterhouseCoopers LLP Houston, Texas June 23, 2000 EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION December 31, 1999
Fund Information -------------------------------------------------------------------------------------- Large Company Equity International Capitalization Income Stock Index Equity Equity Fund Fund Fund Fund Fund(1) ---------- ------------- ------------- -------------- -------------- Assets Investments at fair value: Company common stock $ - $155,462,460 $ - $ - $ - Equity interest - - 85,209,217 13,702,589 38,382,510 Participant loan - - - - - Short-term cash investments 10,005,585 1,068,225 173 - - Investments at contract value: Deposits with financial institutions 78,667,449 - - - - Deposits with insurance companies 73,659,911 - - - - ------------ ----------- ------------- ----------- ------------ Total investment 162,332,945 156,530,685 85,209,390 13,702,589 38,382,510 ------------ ----------- ------------- ----------- ------------ Receivables: Dividends and interest 13,910 826,809 - - - Amounts due from (due to) others - 3,825,876 (396,795) (105,411) (152,618) ------------ ----------- ------------- ----------- ------------ Total net receivables 13,910 4,652,685 (396,795) (105,411) (152,618) ------------ ----------- ------------- ----------- ------------ Total assets 162,346,855 161,183,370 84,812,595 13,597,178 38,229,892 ------------ ----------- ------------- ----------- ------------ Net assets available for Plan benefits $162,346,855 $161,183,370 $84,812,595 $13,597,178 $38,229,892 =========== ============ =========== =========== =========== Small Putnam New Capitalization Asset Opportunities Equity Allocation Loan Fund Fund Fund Fund Total -------------- -------------- ---------- ---------- ------------- Assets Investments at fair value: Company common stock $ - $ - $ - $ - $155,462,460 Equity interest 66,332,522 2,477,536 18,691,362 - 224,795,736 Participant loan - - - 15,239,997 15,239,997 Short-term cash investments - - - - 11,073,983 Investments at contract value: Deposits with financial institutions - - - - 78,667,449 Deposits with insurance companies - - - - 73,659,911 ------------ ----------- ------------- ----------- ------------ Total investment 66,332,522 2,477,536 18,691,362 15,239,997 558,899,536 ------------ ----------- ------------- ----------- ------------ Receivables: Dividends and interest - - - - 840,719 Amounts due from (due to) others 245,255 - 76,333 - 3,492,640 ------------ ----------- ------------- ----------- ------------ Total net receivables 245,255 - 76,333 - 4,333,359 ------------ ----------- ------------- ----------- ------------ Total assets 66,577,777 2,477,536 18,767,695 15,239,997 563,232,895 ------------ ----------- ------------- ----------- ------------ Net assets available for Plan benefits $66,577,777 $2,477,536 $18,767,695 $15,239,997 $563,232,895 =========== ========= ========== ========== =========== (1) The Large Capitalization Equity Fund replaced the Growth Fund. See Investment Options under footnote 1. The accompanying notes are an integral part of these financial statements
EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION December 31, 1998
Fund Information -------------------------------------------------------------------------------------- Company Equity International Income Stock Index Equity Growth Fund Fund Fund Fund Fund ---------- ------------- ------------- -------------- -------------- Assets Investments at fair value: Company common stock $ - $107,917,167 $ - $ - $ - Equity interest - - 78,825,896 10,085,840 28,807,691 Deposits with insurance companies 8,710,660 - - - - Participant loan - - - - - Short-term cash investments 10,774,913 9,298,189 - - - Investments at contract value: Deposits with financial institutions 37,105,508 - - - - Deposits with insurance companies 100,844,788 - - - - ------------ ----------- ------------- ----------- ------------ Total investment 157,435,869 117,215,356 78,825,896 10,085,840 28,807,691 ------------ ----------- ------------- ----------- ------------ Receivables: Dividends and interest 20,070 580,470 - - - Amounts due from (due to) others (2,750,255) 7,738,104 (155,395) (71,386) 1,168 ------------ ----------- ------------- ----------- ------------ Total net receivables (2,730,185) 8,318,574 (155,395) (71,386) 1,168 ------------ ----------- ------------- ----------- ------------ Total assets 154,705,684 125,533,930 78,670,501 10,014,454 28,808,859 ------------ ----------- ------------- ----------- ------------ Net assets available for Plan benefits $154,705,684 $125,533,930 $78,670,501 $10,014,454 $28,808,859 =========== ============ =========== =========== =========== Small Putnam New Capitalization Asset Opportunities Equity Allocation Loan Fund Fund Fund Fund Total -------------- -------------- ---------- ---------- ------------- Assets Investments at fair value: Company common stock $ - $ - $ - $ - $107,917,167 Equity interest 39,987,627 2,023,607 25,185,591 - 184,916,252 Deposits with insurance companies - - - - 8,710,660 Participant loan - - - 16,093,331 16,093,331 Short-term cash investments - - - - 20,073,102 Investments at contract value: Deposits with financial institutions - - - - 37,105,508 Deposits with insurance companies - - - - 100,844,788 ------------ ----------- ------------- ----------- ------------ Total investment 39,987,627 2,023,607 25,185,591 16,093,331 475,660,808 ------------ ----------- ------------- ----------- ------------ Receivables: Dividends and interest - - - 131,952 732,492 Amounts due from (due to) others (10,608) (6,164) (221,739) 1,347,375 5,871,100 ------------ ----------- ------------- ----------- ------------ Total net receivables (10,608) (6,164) (221,739) 1,479,327 6,603,592 ------------ ----------- ------------- ----------- ------------ Total assets $39,977,019 $2,017,443 $24,963,852 $17,572,658 482,264,400 ------------ ----------- ------------- ----------- ------------ Net assets available for Plan benefits $39,977,019 $2,017,443 $24,963,852 $17,572,658 $482,264,400 =========== ========== ========== ========== ===========
The accompanying notes are an integral part of these financial statements EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION For the Year Ended December 31, 1999
-------------------------------------------------------------------------------------- Large Company Equity International Capitlization Income Stock Index Equity Equity Fund Fund Fund Fund Fund(1) -------------------------------------------------------------------------------------- Dividends $ - $ 2,786,192 $ - $ - $ 1,277,434 Interest 10,678,875 253,667 11 490,600 - Net appreciation (depreciation) in fair value of investments - 16,906,164 15,773,273 3,262,377 7,438,918 ----------- ----------- ---------- ------------ ---------- Net investment income 10,678,875 19,946,023 15,773,284 3,752,977 8,716,352 Contributions: Employer 84,221 9,295,566 41,338 6,108 23,357 Participants 5,695,654 3,757,438 3,353,927 746,695 2,141,041 Net loan activity 887,810 114,595 244,089 110,099 138,552 Trustee transfers 856,333 (70,919) (97,315) (22,407) (4,135) Interfund tranfers 4,988,668 8,098,674 (8,631,108) (330,658) 1,358,620 Benefits paid to participants (15,081,361) (5,351,699) (4,445,849) (680,090) (2,952,754) Administrative fees (469,029) (140,238) (96,272) - - ----------- ----------- ---------- ------------ ---------- Net increase/(decrease) 7,641,171 35,649,440 6,142,094 3,582,724 9,421,033 ----------- ----------- ---------- ------------ ---------- Net assets available for Plan benefits: Beginning of period 154,705,684 125,533,930 78,670,501 10,014,454 28,808,859 =========== =========== ========== =========== ========== End of period $162,346,855 $161,183,370 $84,812,595 $13,597,178 $38,229,892 -------------------------------------------------------------------------------------- Small Putnam New Capitalization Asset Opportunties Equity Allocation Loan Fund Fund Fund Fund Total -------------------------------------------------------------------------------------- Dividends $ 4,891,401 $ 1,676 $ - $ - $ 8,956,703 Interest - - 1,373,802 1,366,045 14,163,000 Net appreciation (depreciation) in fair value of investments 21,818,286 114,356 (1,609,924) - 63,703,450 ---------- --------- ---------- ---------- ----------- Net investment income 26,709,687 116,032 (236,122) 1,366,045 86,823,153 Contributions: Employer 25,920 2,086 14,634 - 9,493,230 Participan 2,355,030 288,798 1,248,467 - 19,587,050 Net loan activity 197,836 16,226 102,193 (1,811,400) - Trustee transfers (33,259) - (54,596) (66,496) 507,206 Interfund tranfers 594,954 98,157 (6,177,307) - - Benefits paid to participants (3,249,410) (61,206) (1,093,426) (1,820,810) (34,736,605) Administrative fees - - - - (705,539) ---------- --------- ---------- ---------- ----------- Net increase/(decrease) 26,600,758 460,093 (6,196,157) (2,332,661) 80,968,495 Net assets available for Plan benefits: Beginning of period 39,977,019 2,017,443 24,963,852 17,572,658 482,264,400 ---------- --------- ---------- ---------- ----------- End of period $66,577,777 $2,477,536 $18,767,695 $15,239,997 $563,232,895 ========== ========= ========== ========== =========== (1) The Large Capitalization Equity Fund replaced the Growth Fund. See Investment Options under footnote 1. The accompanying notes are an integral part of these financial statements
EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 1.DESCRIPTION OF PLAN ------------------- The following description of the El Paso Energy Corporation Retirement Savings Plan (the "Plan") provides general information about the Plan's provisions in effect for the plan year ending December 31, 1999. Participants should refer to the Plan documents and summary plan description for a more complete description of the Plan's provisions. General ------- The Plan is a defined contribution plan covering eligible employees of El Paso Energy Corporation (the "Company") and its participating employers, except leased employees, certain nonresident aliens, and members of any unit covered by a collective bargaining agreement. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and the reported changes in net assets available for benefits during the reporting period. Actual results could differ from those estimates. Contributions ------------- A participant may elect to make basic contributions from 2 percent to 10 percent of his or her eligible compensation on a before-tax or after-tax basis. The Company will make matching contributions of Company common stock, or cash which is initially invested in Company common stock, equal to 75 percent of a participant's basic contribution up to a maximum level of 6 percent of eligible compensation. In addition, if a participant has elected the maximum basic contribution eligible for a matching Company contribution, he or she may make after-tax supplemental contributions to the Plan from 1 percent to 5 percent of his or her eligible compensation. A participant may also elect to have the amount of available cash under the Company's FlexPlan transferred to the Plan as a flex contribution and may make an approved rollover contribution of a distribution received or direct transfer from another qualified retirement plan. There are certain legal limitations applicable to contributions to the Plan. Federal income taxes on before-tax contributions, company matching contributions, and the earnings from the investments in the Plan are deferred until amounts are withdrawn from the Plan. Participant Accounts -------------------- Each participant's account is credited with the participant's contributions, the Company's matching contribution, and the participant's share of net earnings or losses of his or her respective investment funds elected under the Plan. Net investment gains and losses in a particular investment fund are allocated in proportion to the respective participant's account balances in that fund. EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 1. DESCRIPTION OF PLAN (Continued) ------------------- Vesting ------- A participant's interest in the balance credited to his or her account is fully vested at all times. Payment of Benefits ------------------- Upon separation from service with the Company, a participant whose account balance has exceeded $5,000 may elect to receive either a lump-sum amount equal to the value of his or her account or to defer the distribution. A deferred distribution may take the form of either a lump- sum distribution payable within, or installments payable over, a period which ends on or before April 1 of the year following the calendar year in which the participant attains age 70-1/2. A participant whose account balance has never been more than $5,000 will receive an immediate lump-sum distribution of the amount equal to his or her account balance. Certain in-service withdrawals may also be available, as provided by the Plan. Participant Loans ------------------ To obtain a loan, the participant must have a total account balance of at least $2,000 excluding any amounts held in an "IRA Account" under the Plan. Loan amounts may be from $1,000 to $50,000 but may not be more than 50 percent of the total balance in the participant's account, excluding any IRA Account balance. The 50 percent limit is reduced by the participant's highest outstanding loan balance(s) during the prior 12-month period. Each loan is made from, and repaid to, the borrowing participant's account so as not to affect the accounts of other participants. A participant may not obtain more than one loan during any 12-month period and may not have more than two loans outstanding. The interest rate on a loan is 1 percent above the prime rate, which is determined on the last business day of the month proceeding the quarter in which the loan is taken. The interest rate is fixed for the term of the loan. The repayment period may be from 1 to 5 years. When a participant terminates employment with the Company, the unpaid balance of the participant's loan(s) will be deducted from any distributions to the participant. If the participant elects to defer the distributions, the loan must be repaid within 60 days after the separation from service. If the loan is not repaid, it will be automatically treated as a distribution to the participant. EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 1. DESCRIPTION OF PLAN (Continued) ------------------- Investment Options ------------------ With certain exceptions as described below, a participant could direct the investment of his or her contributions to the Plan or reallocate the existing balance in his or her account among any one or more of the following investment funds during 1999. For a more complete description of the investment objectives, general information and performance history of the funds, participants should refer to the individual mutual fund prospectus and the summary plan description. 1) Income Fund - invested primarily in a diversified portfolio of investment contracts offered by major insurance companies, banks and other financial institutions. The objective of the fund is to provide liquidity and safety of principal while providing a higher return over time than offered by money market funds. An investment contract is an agreement whereby the issuing entity promises a specific rate of return for a period of time. The contracts provide that there will not be a reduction in principal due to a change in interest rates. These contracts usually have maturity dates and interest rates that fluctuate to reflect the investment performance and activity of the underlying bonds. However, like all of the Plan's investment funds, there is an element of risk. Some of the contracts are direct obligations of the issuing entity. To enhance the safety of the fund, most of the investment contracts are backed by fixed-income securities held in a separate account of an insurance company, or in a trust fund, to protect them from the general creditors of the contract issuer. The fund may also hold cash or other short-term fixed income securities, although these are expected to be a small percentage of the Income Fund. PRIMCO Capital Management, Inc. ("PRIMCO") manages the Income Fund. 2) Company Stock Fund - invested primarily in common stock of the Company (NYSE:EPG). As with investments in any single stock, this fund may be more volatile (that is, subject to larger swings in value, both up and down) than a fund that is diversified among the stocks of many companies. Participants who invest in the Company Stock Fund may instruct the trustee regarding the voting of the Company's common stock allocated to the participant's account. Also included in the Company Stock Fund were shares of "new" Tenneco Inc. and Newport News Shipbuilding Inc. These shares were transferred to the Plan upon its merger with the Tenneco Energy Plan in 1997. At December 31, 1998, all such shares had been liquidated, in accordance with the Plan's provisions, and the proceeds not directed by the participants to other investments were reinvested in shares of Company stock in early January 1999. 3) Equity Index Fund - invested primarily in an index fund designed to match the performance of the Standard and Poors (S&P) Index by investing in stock of most of the 500 largest U.S. companies comprising that Index. This fund currently invests in a commingled fund for institutional investors known as the Daily Equity Index Fund (T) managed by Barclays Global Investors (BGI). EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 1. DESCRIPTION OF PLAN (Continued) ------------------- Investment Options ------------------ 4) International Equity Fund - invested primarily in the publicly traded mutual fund known as the Templeton Foreign Fund managed by Templeton Global Advisors Limited. The purpose of this fund is to invest in companies in locations and businesses around the world where economic conditions are favorable for growth. Because of global monetary exchange, economic and political conditions, the risks and returns for this fund can vary significantly from investments in domestic stocks. 5) Growth Fund - From June 1, 1998 to December 1, 1999, the Growth Fund was invested primarily in the publicly traded mutual fund known as the Founders Growth Fund managed by Founders Asset Management, Inc. Prior to June 1, 1998, the growth funds were invested primarily in the publicly traded mutual fund Fidelity Growth Company Fund managed by Fidelity Management & Research Company. This investment option was terminated on December 1, 1999 and participants' remaining account balances in this fund were transferred to the Large Capitalization Equity Fund (see below). 6) Large Capitalization Equity Fund - invested primarily in the publicly traded mutual fund known as the Fidelity Magellan Fund managed by Fidelity Management & Research Company. This investment option became available to participants effective December 1, 1999. 7) Putnam New Opportunities Fund - invested primarily in the publicly traded mutual fund known as the Putnam New Opportunities Fund (Class A) managed by Putnam Investments, Inc. 8) Small Capitalization Equity Fund - invested primarily in the publicly traded mutual fund known as the SSgA Small Cap Fund managed by State Street Global Advisors. This investment option became available to participants effective June 1, 1998. 9) Asset Allocation Fund - invested primarily in the publicly traded mutual fund known as the INVESCO Total Return Fund managed by INVESCO Funds Group Inc. 10) Loan Fund - invested individually for each borrowing participant in any loans to the participant. 1.DESCRIPTION OF PLAN (Continued) The following number of participants were invested in the various funds at December 31, 1999 and 1998: Number of Fund Participants --------- --------------- 1999 1998 ----- ---- Income Fund 2,555 2,708 Company Stock Fund 4,148 3,778 Equity Index Fund 2,027 2,062 International Equity Fund 900 860 Growth Fund - 1,441 Large Capitalization Equity Fund 1,585 - Putnam New Opportunities Fund 1,775 1,631 Small Capitalization Equity Fund 315 237 Asset Allocation Fund 1,027 1,159 Loan Fund 1,055 1,304 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ Valuation of Investments ------------------------ For the Plan years ending December 31, 1999 and 1998, the Plan's investment contracts with financial institutions and insurance companies are reported at contract value which approximates estimated fair value. The average yield for these investment contracts reported at contract value for 1999 equaled 6.62 percent with an averaging crediting interest rate of 6.46 percent. Crediting interest rates are normally reset quarterly for contracts with underlying investments to reflect the investment experience of that asset. Estimated fair value for investment contracts is based on discounted cash flows using current market rates for similar investments with similar terms. Short-term securities and participant loans are carried at cost which approximates fair value. All other investments are carried at fair value as determined by quoted market prices. Purchases and sales of securities are reflected on a trade- date basis. The basis of securities sold is determined by average cost. EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) ------------------------------------------ Investment Income ----------------- Dividend and interest income from investments is recorded as earned on an accrual basis and is allocated to participants' accounts based upon each participant's proportionate share of assets in each investment fund. Dividend and interest income is reported in accordance with the Internal Revenue Service ("IRS") Form 5500 instructions. Dividend income represents income for those funds holding individual equity securities. Interest income represents income received from deposits with insurance companies, short-term securities, and dividends received from funds invested in commingled equity or mutual funds. Expenses -------- Administrative expenses include participant recordkeeping and custodial fees, and certain professional fees incurred and paid by the Plan. In addition, any expenses directly relating to the purchase, sale, or transfer of the Plan's investments are charged to the particular investment fund to which the expense relates. Net Appreciation (Depreciation) in Fair Value of Investments ------------------------------------------------------------ The Plan presents in the statement of changes in net assets available for plan benefits the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Risks and Uncertainties ----------------------- The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds, and other investment securities. Investment securities are exposed to various risks, such as interest rate risk, market risk and credit risk. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statement of net assets available for plan benefits. EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 3. INVESTMENTS ----------- Investments representing 5 percent or more of the Plan's net assets are separately identified. December 31, -------------- 1999 1998 ---- ---- El Paso Energy Corporation common stock, 4,005,474 and 3,099,910 shares, respectively $155,462,460 $ 107,917,167 Barclays Equity Index Fund, 2,095,550 and 2,342,774 shares, respectively 85,209,217 78,825,896 Fidelity Magellan Fund, 280,923 shares 38,382,510* - Founders Growth Fund, 1,408,603 shares - 28,807,691* Putnam New Opportunities Fund, 729,249 and 683,206 shares, respectively 66,332,522 39,987,627 * Effective December 1,1999, the Fidelity Magellan Fund was added while the Founders Growth Fund was removed from the investment mix. 4. CONCENTRATION OF CREDIT RISK ---------------------------- The Plan invests in various investment funds, as described in Note 1, based upon participant instructions. The Income Fund held approximately 29 percent and 33 percent of the invested assets of the Plan at December 31, 1999, and 1998, respectively. The Company Stock Fund held approximately 29 percent and 25 percent of the invested assets of the Plan at December 31, 1999, and 1998, respectively. The Company believes that it offers sufficient investment options to offset any significant concentration of credit risk. 5. RELATED PARTY TRANSACTIONS -------------------------- Bankers Trust Company is the trustee for the Plan. Certain assets of the Plan were invested in the following funds and contracts issued by Bankers Trust Company: (i) BT Pyramid Directed Account Cash Fund and (ii) various investment contracts. During 1999, approximately 42 percent and 47 percent of the Plan's purchase and sale transactions, respectively, were related to these assets. 6. INVESTMENT CONTRACTS UNDER REHABILITATION ----------------------------------------- Confederation Life Insurance Company ------------------------------------ The Income Fund had investment contracts issued by Confederation Life Insurance Company ("Confederation Life"), a Canadian insurance corporation. On August 12, 1994, an Order of Rehabilitation was entered which placed the U.S. assets of Confederation Life under the regulatory supervision of the Michigan Commissioner of Insurance (the "Commissioner"). The investment contracts issued by Confederation Life were valued at $5,986,270 on August 11, 1994. As of December 31, 1994, a Bankers Trust Company (Del) BASIC investment contract was amended to ensure the benefit responsiveness of the Confederation Life contracts and therefore these contracts are reported at contract value. A plan of rehabilitation was finalized and approved by the courts on March 31, 1997. Under the plan, the estate of Confederation Life was to be liquidated and paid to the contract holders over a three-year period. On September 29, 1999, final payment from the estate of Confederation Life was received. Payments totaling $7,176,968, or 119.9% of the August 11, 1994 balance, have been received from the rehabilitated contracts with all interest reflected as income on the statement of changes in net assets available for plan benefits with fund information. Mutual Benefit Life Insurance Company ------------------------------------- On July 16, 1991, Mutual Benefit Life Insurance Company was placed in rehabilitation under the control of the Commissioner of Insurance of the State of New Jersey. On November 10, 1993, the Superior Court of New Jersey confirmed a Rehabilitation Plan for Mutual Benefit, and on March 28, 1994, PRIMCO opted to retain the investment contracts as restructured under the terms of the Rehabilitation Plan. Effective with the April 29, 1994, closing date of the Rehabilitation Plan, MBL Life Assurance Corporation assumed and reinsured the restructured contracts. At December 31, 1998, the value of the restructured contracts was $8,710,660. By June 1, 1999, principle and accrued interest totaling $8,645,692 were received by the Plan, and on July 1, 1999, $995,632 of contract value was assumed by SunAmerica Life Insurance Company at 8.08% maturing on January 2, 2004. 7. TAX STATUS ----------- The Plan is intended to be a qualified plan pursuant to Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code") and, accordingly, the trust established under the Plan to hold the Plan's assets is intended to be exempt from federal income taxes pursuant to Section 501(a) of the Code. The Company received a favorable tax determination letter from the IRS on July 2, 1998, stating that the Plan, as designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Company believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 8. AMENDMENTS ----------- On August 14, 1998, the Company, through its subsidiary, completed the acquisition of DeepTech International Inc After spin off of the assets attributable to employees of Tatham Offshore Inc., the account balances, approximating $1.4 million, of the remaining employees in the DeepTech International Inc. Section 401(k) Plan were transferred to the Plan effective April 30,1999, and are reflected in the statement of changes in net assets available for plan benefits at fair value as trustee transfers. Effective September 9, 1998, certain assets of the Company were acquired by Midcoast Energy Resources, Inc. ("Midcoast") and certain former employees of the Company became employees of Midcoast. The account balances, approximating $835,000, of the employees who became Midcoast employees were transferred from the Plan to the Midcoast Energy, Inc. 401(k) Plan effective February 1, 1999, and are reflected in the statement of changes in net assets available for plan benefits at fair value as trustee transfers. Effective December 1, 1999, the Plan's investment fund mix was amended to remove the Founders Growth Fund and add the Fidelity Magellan Fund as an investment alternative. On October 25, 1999, the Company and Sonat Inc. ("Sonat") completed a merger and the Sonat Savings Plan (the "Sonat Plan") was merged into and became part of the Plan. Account balances of participants in the Sonat Plan were frozen from participant activity until year end. Effective January 1, 2000, account balances, approximating $137 million, of Sonat Plan participants were transferred to the Plan. Effective January 1, 2000, an eligible employee becomes a participant in the Plan immediately upon employment by a participating company. 9. SUBSEQUENT EVENTS ----------------- On January 5, 2000, the Company, through its subsidiary, completed the acquisition of Crystal Gas Storage Inc. ("Crystal"). Crystal maintained the Crystal Oil Company 401(k) and Trust (the "Crystal Plan"). Effective March 1, 2000, account balances, approximating $1.6 million, of participants in the Crystal Plan were transferred to the Plan. On January 18, 2000, Bonneville Pacific Corporation ("Bonneville") merged with and into a subsidiary of the Company, with the Bonneville Pacific Corporation continuing as the surviving corporation. On March 1, 2000, all employees transferred out of the Bonneville Pacific Corporation and became employees of other Company subsidiaries. Effective May 1, 2000, account balances, approximating $2.6 million, of participants in the Bonneville Pacific Corporation 401(k) Plan (the "Bonneville Plan") were transferred to the Plan. EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 10. SUBSEQUENT EVENTS (Continued) ------------------ On January 17, 2000, the Company entered into a definitive agreement to merge with The Coastal Corporation ("Coastal"). In the merger, each share of Coastal common stock and Class A common stock will be converted on a tax- free basis into shares of Company common stock. In addition, holders of Coastal stock options and holders of Coastal preferred stock shall receive shares of Company common stock. On May 5, 2000, the shareholders of Coastal approved the merger and shareholders of the Company approved the issuance of shares to complete the merger. The merger is expected to close in the fourth quarter of 2000 and is subject to certain customary conditions, including, among others, receipt of certain required regulatory approvals. Upon completion of the merger, it is anticipanted that the Coastal Thrift Plan will be merged into the Plan. 10. PLAN TERMINATION ---------------- Although the Company has not expressed any intent to do so, the Company reserves the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. Upon termination, the Plan's assets would be distributed to the participants, as directed by the Retirement Savings Plan committee in accordance with the Plan and applicable law, on the basis of their account balances existing at the date of termination as adjusted for investment gains and losses. EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 11. RECONCILIATION WITH FORM 5500 ----------------------------- The following is a reconciliation of net assets available for Plan benefits per the financial statements to Form 5500: December 31, --------------------- 1999 1998 ---- ---- Net assets available for Plan benefits per the financial statements $ 563,232,895 $ 482,264,400 Less: final distributions and participant withdrawals that have been processed and approved but not paid by the Plan 484,690 826,872 ------------- ------------- Net assets available for Plan benefits per the Form 5500 $ 562,748,205 $ 481,437,528 ============= ============= The following is a reconciliation of the change in net assets available for Plan benefits per the financial statements to Form 5500: For the year ended December 31, 1999 ------------------ Net increase in net assets available for Plan benefits per the financial statements $ 80,968,495 plus: change in distributions and participant withdrawals that had been processed and approved but not paid by the Plan 342,182 --------------- Net increase in net assets available for Plan benefits per the the Form 5500 $ 81,310,677 ================ Final distributions and participant withdrawals that have been processed and approved but not paid by the Plan are not considered Plan obligations until paid under generally accepted accounting principles and, therefore, are not presented as liabilities or benefits paid in the accompanying financial statements. EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN EIN: 76-0568816 Plan: 002 SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES December 31, 1999
Number of shares (units) or principal Identity of issue, borrower, or amount of similar party, and bonds and Current description of investment notes Cost value ------------------------------ --------- ------------ ----------- COMPANY STOCK FUND El Paso Energy Corporation common stock 4,005,474 $131,095,888 $155,462,460 Short-term securities Bankers Trust Company BT Pyramid Directed Account Cash Fund 1,068,225 1,068,225 1,068,225 ------------ ----------- Total investments - Company Stock Fund 132,164,113 156,530,685 ------------ ----------- INCOME FUND Deposits with financial institutions Bankers Trust Company (Del) BASIC # 1- 888THT, 5.4098%, matures 09/30/00 23,991,676 23,991,676 23,991,676 BASIC # 92-407ALP, 5.110%, matures 02/28/03 3,886,086 3,886,086 3,886,086 Bank America NT & SA # 99-056, 6.220%, matures 09/15/04 15,979,613 15,979,613 15,979,613 Chase Manhattan Bank # 401728, 6.580%, matures 12/30/03 9,710,170 9,710,170 9,710,170 CDC Investment Management Corporation # 163-02, 7.77% 352 352 352 State Street Bank & Trust # 98263, 5.68%, matures 05/16/05 25,099,552 25,099,552 25,099,552 ---------- ---------- Total deposits with financial institutions 78,667,449 78,667,449 Deposits with insurance companies Allstate Life Insurance Company # 31071, 6.27%, matures 10/01/02 3,267,298 3,267,298 3,267,298 Business Men's Assurance # 1336, 5.75%, matures 11/17/03 3,193,464 3,193,464 3,193,464 Continental Assurance Company # 630-05647, 6.37%, matures 02/01/06 11,775,522 11,775,522 11,775,522 John Hancock Mutual Life Insurance Compan # 7733, 5.76% matures 02/01/02 38,211 38,211 38,211 # 7436, 6.01%, matures 5/1/07 13,388,123 13,388,123 13,388,123 # 8836, 5.95%, matures 2/01/02 3,868 3,868 3,868 Mass Mutual Life Insurance Company # 10514, 6.10%, matures 7/5/02 3,054,558 3,054,558 3,054,558 # 10733, 5.98%, matures 11/30/03 2,480,330 2,480,330 2,480,330 Monumental Life Insurance Company # 0074TR, 7.16%, matures 04/10/07 26,215,140 26,215,140 26,215,140 New York Life Insurance Company # 06749, 5.70%, matures 11/17/00 915,199 915,199 915,199 # 06749-002, 5.62%, matures 09/20/01 776,373 776,373 776,373 # 06749-003, 5.750%, matures 06/20/01 1,089,295 1,089,295 1,089,295 # 30889, 6.67%, matures 1/06/03 3,964,948 3,964,948 3,964,948 Peoples Security Life Insurance Corporation # 00204TR-1, 6.38%, matures 11/30/00 2,015,982 2,015,982 2,015,982 Prudential Insurance Company of America # 6697, 8.13%, matures 11/20/00 446,196 446,196 446,196 SunAmerica Life Insurance Company # 4891, 8.08%, matures 01/02/04 1,035,404 1,035,404 1,035,404 ---------- ---------- Total deposits with insurance companies 73,659,911 73,659,911 Short-term securities Bankers Trust Company BT Pyramid Directed Account Cash Fund 10,005,585 10,005,585 10,005,585 --------- ----------- Total investments - Income Fund 162,332,945 162,332,945 --------- ----------- LOAN FUND Participant Loans, 7% to 12.5% 15,239,997 - 15,239,997 --------- ----------- Total investments - Loan Fund - 15,239,997 --------- ----------- EQUITY INDEX FUND Barclays Equity Index Equity Index Fund 2,095,550 52,192,350 85,209,217 Short-term securities Bankers Trust Company BT Pyramid Directed Account Cash Fund 173 173 173 --------- ----------- Total investments - Equity Index Fund 52,192,523 85,209,390 --------- ----------- INTERNATIONAL EQUITY FUND Templeton Foreign Fund Templeton Foreign Fund-Internat'l Growth Mutual Fund 1,221,265 12,413,214 13,702,589 --------- ----------- Total investments - International Equity Fund 12,413,214 13,702,589 --------- ----------- LARGE CAPITALIZATION EQUITY FUND Fidelity Magellan Fund Fidelity Magellan Portfolio Mutual Fund 280,923 37,088,885 38,382,510 --------- ----------- Total investments - Large Capitalization Equity Fund 37,088,885 38,382,510 --------- ----------- PUTNAM NEW OPPORTUNITIES FUND Putnam New Opportunities Funds Putnam New Opportunities - Portfolio Mutual Fund 729,249 40,141,146 66,332,522 --------- ----------- Total investments - Putnam New Opportunities 40,141,146 66,332,522 --------- ----------- SMALL CAPITALIZATION EQUITY FUND SSgA Small Cap Fund SSgA Small Cap - Portfolio Mutual fund 123,322 2,241,003 2,477,536 --------- ----------- Total investments - Small Cap Equity Fund 2,241,003 2,477,536 --------- ----------- ASSET ALLOCATION FUND INVESCO Total Return INVESCO Total Return Manager Mutual Fund 645,420 18,105,863 18,691,362 Total investments - Asset Allocation ----------- ----------- Fund 18,105,863 18,691,362 Total Assets Held For Investment ----------- ----------- Purposes 456,679,692 558,899,536 =========== ===========
EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN EIN: 76-0568816 Plan: 002 SCHEDULE H, LINE 4j - SCHEDULE OF REPORTABLE TRANSACTIONS For the Year Ended December 31, 1999 Number of Cost of transactions Purchase Selling securities Net Security Description Purchases Sales price Proceeds sold gain --------------------- -------- ---- ----------- ----------- ----------- --------- BT Pyramid Directed Acc't Cash 272 252 $295,800,360 $301,406,905 $301,406,905 $ - El Paso Energy Corp Com Stk 48 54 112,872,849 81,725,149 64,835,383 16,889,766 Fidelity Magellan Fund 13 11 38,113,404 1,030,952 1,024,519 6,433 Founders FDS Inc. Growth Fund 111 113 9,942,931 44,831,375 37,513,294 7,318,081 Putnam New Opportunities Fund 134 113 20,898,077 16,303,562 11,662,886 4,640,676 Partn in Group Annuity with Hancock for El Paso, #7733, 5.76%, 02/01/02 17 10 11,689,391 15,201,779 15,201,779 - J. Hancock Mtl Life #8836 GAC for El Paso Energy Corp 5.95%, 02/01/02 20 13 20,065,854 20,073,104 20,073,104 - Partn in Group Annuity Contract #00081TR with People for El Paso, 9.67%, 07/15/02 9 29 2,842,632 28,988,165 28,988,165 - Monumental Life Ins Co. Contract #0074TR, 7.16%, 04/10/07 6 5 28,102,866 1,887,726 1,887,726 - State Street Bank & Trust Contract #98263, 5.68%, 05/16/05 23 30 36,807,199 12,809,062 12,809,062 - Bank of America NT & SA Contract #99-056, 6.22%, 09/15/04 15 10 26,515,705 10,536,092 10,536,092 -