-----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, QAXmpdvj3sVKXao5qRjLyeEEhP1/e7MI614GRcuwVapW06sHOSbKQMa4RRbqaAVH tuSVgHbzBpn6K/dM/YJ/+g== 0001066107-99-000012.txt : 19990630 0001066107-99-000012.hdr.sgml : 19990630 ACCESSION NUMBER: 0001066107-99-000012 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990629 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: 11-K SEC ACT: SEC FILE NUMBER: 001-14365 FILM NUMBER: 99655472 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 11-K 1 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, 1998 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, 1998, and 1997: Report of Independent Accountants Financial Statements: Statement of Net Assets Available for Plan Benefits with Fund Information as of December 31, 1998 Statement of Net Assets Available for Plan Benefits with Fund Information as of December 31, 1997 Statement of Changes in Net Assets Available for Plan Benefits with Fund Information for the Year Ended December 31, 1998 Notes to Financial Statements Supplemental Schedules: Schedule I Item 27a - Schedule of Assets Held for Investment Purposes as of December 31, 1998 Schedule II Item 27d - Schedule of Reportable Transactions for the Year Ended December 31, 1998 (b) Exhibits: Exhibit No. Description ------- ----------- 23 Consent of Independent Accountants 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, 1998..................... 3 Statement of Net Assets Available for Plan Benefits with Fund Information as of December 31, 1997..................... 4 Statement of Changes in Net Assets Available for Plan Benefits with Fund Information for the year ended December 31, 1998............................................. 5 Notes to Financial Statements.................................. 6 Supplemental Schedules: Item 27a - Schedule of Assets Held for Investment Purposes as of December 31, 1998............................. 18 Item 27d - Schedule of Reportable Transactions for the year ended December 31, 1998............................. 20 Consent of Independent Accountants............................... 21 [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 plan benefits with fund information and the related statement of changes in net assets available for plan 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, 1998 and December 31, 1997, and the changes in net assets available for plan benefits with fund information for the year ended December 31, 1998 in conformity with generally accepted accounting principles. 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 generally accepted auditing standards which require that we plan and perform the audit 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 and fund information 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 15, 1999 EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION December 31, 1998
Fund Information - -------------------------------------------------------------------------------------------------------------------------------- Small Company Equity International Putnam New Capitalization Asset Income Stock Index Equity Growth Opportunities Equity Allocation Loan Fund Fund Fund Fund Fund Fund Fund Fund Fund Total ------------ ---------- ------------ --------- ----------- ------------ ------------ ---------- ------- ------ Assets Investments at fair value: Company common stock $ - $107,917,167 $ - $ - $ - $ - $ - $ - $ - $107,917,167 Equity interest - - 78,825,896 10,085,840 28,807,691 39,987,627 2,023,607 25,185,591 - 184,916,252 Deposits with insurance companies 8,710,660 - - - - - - - - 8,710,660 Participant loans - - - - - - - - 16,093,331 16,093,331 Short-term cash investments 10,774,913 9,298,189 - - - - - - - 20,073,102 Investments at contract value: Deposits with financial institutions 37,105,508 - - - - - - - - 37,105,508 Deposits with insurance companies 100,844,788 - - - - - - - - 100,844,788 ----------- ----------- ---------- ---------- ---------- ---------- --------- ---------- ---------- ----------- Total investments 157,435,869 117,215,356 78,825,896 10,085,840 28,807,691 39,987,627 2,023,607 25,185,591 16,093,331 475,660,808 ----------- ----------- ---------- ---------- ---------- ---------- --------- ---------- ---------- ----------- Receivables: Dividends and interest 20,070 580,470 - - - - - - 131,952 732,492 Amounts due from (due to) others (2,750,255) 7,738,104 (155,395) (71,386) 1,168 (10,608) (6,164) (221,739) 1,347,375 5,871,100 ----------- ----------- ---------- ---------- ---------- ---------- --------- ---------- ---------- ----------- Total receivables (2,730,185) 8,318,574 (155,395) (71,386) 1,168 (10,608) (6,164) (221,739) 1,479,327 6,603,592 ----------- ----------- ---------- ---------- ---------- ---------- --------- ---------- ---------- ----------- Total assets 154,705,684 125,533,930 78,670,501 10,014,454 28,808,859 39,977,019 2,017,443 24,963,852 17,572,658 482,264,400 ----------- ----------- ---------- ---------- ---------- ---------- --------- ---------- ---------- ----------- Net assets available for Plan benefits $154,705,684 $125,533,930 $78,670,501 $10,014,454 $28,808,859 $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 NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION December 31, 1997
Fund Information - --------------------------------------------------------------------------------------------------------------------------- Company Equity International Putnam New Asset Income Stock Index Equity Growth Opportunities Allocation Loan Fund Fund Fund Fund Fund Fund Fund Fund Total ------------ ---------- ----------- ------------ ------------- ---------- ------------ --------- -------- Assets Investments at fair value: Company common stock $ - $94,805,784 $ - $ - $ - $ - $ - $ - $ 94,805,784 Equity interest - - 66,516,590 14,659,910 27,468,357 31,695,318 21,703,602 - 162,043,777 Deposits with insurance companies 7,860,007 - - - - - - - 7,860,007 Participant loans - - - - - - - 15,142,511 15,142,511 Short-term cash investments 5,201,340 3,031,125 - - - - - - 8,232,465 Investments at contract value: Deposits with financial institutions 35,840,595 - - - - - - - 35,840,595 Deposits with insurance companies 119,864,325 - - - - - - - 119,864,325 ----------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- ------------ Total investments 168,766,267 97,836,909 66,516,590 14,659,910 27,468,357 31,695,318 21,703,602 15,142,511 443,789,464 ----------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------- Receivables: Dividends and interest - 331,726 - - - - 22 130,779 462,527 Employer contributions - 310,232 - - - - - - 310,232 Participant contributions 209,694 92,806 100,718 34,405 66,066 65,631 38,850 - 608,170 Amounts due from (due to) others (637,678) (571,511) 254,720 (17,171) (72,335) (219,268) (113,287) 261,617 (1,114,913) ----------- ----------- ---------- ---------- ---------- ----------- ---------- ---------- ---------- Total receivables (427,984) 163,253 355,438 17,234 (6,269) (153,637) (74,415) 392,396 266,016 ----------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------- Total assets 168,338,283 98,000,162 66,872,028 14,677,144 27,462,088 31,541,681 21,629,187 15,534,907 444,055,480 ----------- ----------- ---------- ---------- ---------- ---------- ----------- ---------- ------------ Net assets available for Plan benefits $168,338,283 $ 98,000,162 $66,872,028 $14,677,144 $27,462,088 $31,541,681 $21,629,187 $15,534,907 $444,055,480 ============ ============ =========== =========== =========== =========== =========== =========== ============ 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, 1998
-------------------------------------------------------------------------------------------------------------------- Small Company Equity International Putnam New Capitalization Asset Income Stock Index Equity Growth Opportunities Equity Allocation Loan Fund Fund Fund Fund Fund Fund Fund Fund Fund Total ---------- ---------- ----------- ---------- ----------- ------------ ---------- --------- ---------- -------------- Dividends $ - $2,650,284 $ - $ - $1,811,946 $1,241,685 $ 2,280 $ - $ - $ 5,706,195 Interest 10,352,230 275,628 196 1,124,578 - - - 1,254,644 1,469,904 14,477,180 Net appreciation (depreciation) in fair value of investments - 4,064,102 17,768,006 (1,557,315) 2,870,889 6,336,893 (76,561) 1,732,563 - 31,138,577 ---------- ---------- ------------ ---------- ----------- ------------ ---------- --------- ----------- ------------- Net investment income 10,352,230 6,990,014 17,768,202 (432,737) 4,682,835 7,578,578 (74,281) 2,987,207 1,469,904 51,321,952 Contributions: Employer 139,413 9,199,042 229,258 17,496 188,958 146,145 437 80,943 - 10,001,692 Participants 5,557,726 3,506,037 2,977,880 859,617 1,726,797 2,012,475 116,397 1,227,757 - 17,984,686 Net loan activity 129,977 (731,182) 167,308 97,941 97,319 201,280 4,725 109,735 (77,103) - Trustee transfers (301,779) (317,500) (45,774) 85,369 196,801 3,038 - 32,447 821,675 474,277 Interfund tranfers (7,549,431) 16,023,845 (4,333,228)(4,700,033) (2,536,416) 163,413 2,005,230 645,741 280,879 - Benefits paid to partici- pants (21,667,810) (6,999,536) (4,879,239) (590,343) (3,002,129) (1,669,591) (35,065)(1,749,165) (457,604) (41,050,482) Administrative fees (292,925) (136,952) (85,934) - (7,394) - - - - (523,205) ----------- ---------- ----------- ---------- ----------- ------------ ---------- --------- ---------- ------------ Net increase/ (decrease) (13,632,599) 27,533,768 11,798,473 (4,662,690) 1,346,771 8,435,338 2,017,443 3,334,665 2,037,751 38,208,920 Net assets available for Plan benefits: Beginning of period 168,338,283 98,000,162 66,872,028 14,677,144 27,462,088 31,541,681 - 21,629,187 15,534,907 444,055,480 ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------- End of period $154,705,684 $125,533,930 $78,670,501 $10,014,454 $28,808,859 $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 ____________ NOTES TO FINANCIAL STATEMENTS 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, 1998. The Plan is a January 1, 1997 amendment and restatement of the El Paso Natural Gas Company Retirement Savings Plan, as amended and restated effective February 1, 1996, which was an amendment and restatement of the El Paso Natural Gas Company Retirement Savings Plan adopted in 1992. 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. EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 1. DESCRIPTION OF PLAN (Continued) ------------------- 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. 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 preceding 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 1998. 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. The Income Fund is managed by PRIMCO Capital Management, Inc. ("PRIMCO"). 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 - invested primarily in the publicly traded mutual fund known as the Founders Growth Fund managed by Founders Asset Management, Inc., effective June 1, 1998. Prior to that date, the growth fund was invested primarily in the publicly traded mutual fund Fidelity Growth Company Fund managed by Fidelity Management & Research Company. 6) 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. 7) 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. 8) Asset Allocation Fund - invested primarily in the publicly traded mutual fund known as the INVESCO Total Return Fund managed by INVESCO Funds Group Inc. 9) Loan Fund - invested individually for each borrowing participant in any loans to the participant. EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 1. DESCRIPTION OF PLAN (Continued) ------------------- The following number of participants were invested in the various funds at December 31, 1998 and 1997: Number of Fund Participants ---- ------------ 1998 1997 ---- ---- Income Fund 2,708 3,636 Company Stock Fund 3,778 4,779 Tenneco Stock Fund - 2,937 Newport News Shipbuilding Stock Fund - 2,880 Equity Index Fund 2,062 2,189 International Equity Fund 860 1,141 Growth Fund 1,441 1,572 Putnam New Opportunities Fund 1,631 1,619 Small Capitalization Equity Fund 237 - Asset Allocation Fund 1,159 1,129 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ Valuation of Investments ------------------------ For the Plan years ending December 31, 1998 and 1997, the Plan's investment contracts with financial institutions and insurance companies are reported at contract value which approximates estimated fair value except for investments issued by the Mutual Benefit Life Insurance Company ("Mutual Benefit"), as discussed in Note 6. The average yield for these investment contracts reported at contract value for 1998 equaled 6.89 percent with an averaging crediting interest rate of 6.90 percent. Crediting interest rates are normally reset quarterly for contracts with underlying investments to reflect the investment experience of that asset. Investment contracts issued by Mutual Benefit are reported at estimated fair value which approximates contract value. 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 -------- During 1998, the administrative expenses, including participant recordkeeping and custodial fees, and certain professional fees incurred were 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. Risk 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 ----------- The following table reports the values of investments. Investments representing 5 percent or more of the Plan's net assets are separately identified. December 31, ----------------------------- 1998 1997 ------- ------ Investments at estimated market value Deposits with insurance company $ 8,710,660 $ 7,860,007 Loan Fund - Participant loans 16,093,331 15,142,511 Short-term securities 20,073,102 8,232,465 ------------ ------------ 44,877,093 31,234,983 ------------ ------------ Investments at contract value Deposits with financial institutions Bankers Trust Company (Del) BASIC #97-888THT, 6.56%, matures 12/30/01 and 7.06%, matures 12/30/00, respectively 22,963,747 21,916,277 Other deposits 14,141,761 13,924,318 Deposits with insurance companies Peoples Security Life Insurance Company #00081TR, 7.12%, matures 03/30/07 26,145,532 25,314,236 Other deposits 74,699,256 94,550,089 ----------- ---------- 137,950,296 155,704,920 ----------- ----------- Investments at quoted market value Company Stock Fund - Company Common Stock 107,917,167 58,765,717 Tenneco Inc. Common Stock - 31,834,275 Other - 4,205,792 Barclays Equity Index Fund 78,825,896 66,516,590 Founders Growth Fund 28,807,691 27,468,357 Putnam New Opportunities Fund 39,987,627 31,695,318 INVESCO Total Return Fund 25,185,591 21,703,602 Other investments 12,109,447 14,659,910 ------------- ------------ 292,833,419 256,849,561 ------------- ------------ Total investments $ 475,660,808 $ 443,789,464 ============= ============ EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 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 33 percent and 38 percent of the invested assets of the Plan at December 31, 1998, and 1997, respectively. The Company Stock Fund held approximately 25 percent and 22 percent of the invested assets of the Plan at December 31, 1998, and 1997, 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 1998, approximately 48 percent and 36 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. The expected recovery value of the five contracts held in the portfolio is 111.5% of the August 11, 1994 value. As of December 31, 1998, payments totaling $6,613,428 had been received (110.5% of the August 11, 1994). An additional $41,298 was received on January 7, 1999. Additional residual payments are expected to be received by March 31, 2000. EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 6. INVESTMENT CONTRACTS UNDER REHABILITATION (Continued) ------------------------------------------ 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 and 1997, the value of the restructured contracts was $8,710,660 and $7,860,008, respectively. At December 31, 1998, the restructured contracts included a "covered" portion in the amount of $941,449, with certain guarantees by the Life Insurance Company Guaranty Corporation of New York and a "wrapped" portion in the amount of $7,769,211, which is supported by a group of life insurance company re-insurers. The restructured terms provided that the contract balance be reset at 100 percent of its value at July 16, 1991, credited at the original contract rate of interest for the period July 16, 1991 through December 31, 1991, and at rates of interest ranging from 3.00 percent to 14.40 percent for the period January 1, 1992, through December 31, 1998. In 1999, interest will be credited at the rate of 5.10 percent and 15.00 percent, on the "covered" and "wrapped" portions, respectively. The maturity structure of the Mutual Benefit contracts provides for the "covered" portion to be paid in full at the end of the Rehabilitation Period, December 31, 1999, while the "wrapped" portion of the contract is expected to be paid in five annual installments beginning on that date. If the underlying assets perform below expectations, the interest and terms are subject to further adjustments, although the Company does not anticipate this to occur. 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. 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 ---------- Effective June 1, 1998, the Plan's investment fund mix was amended to add a small capitalization equity investment option, SSgA Small Cap Fund, and to replace the Fidelity Growth Company Fund with the Founders Growth Fund as the investment vehicle under the growth fund option. Effective August 1, 1998, the Plan sponsor became El Paso Energy Corporation, a newly created holding company formed as a part of El Paso Natural Gas Company's organizational restructuring. The Company, through its subsidiary, completed the acquisition of KLT Power Inc., a subsidiary of Kansas City Power & Light Company (KCPL), on July 31, 1998. The account balances of the employees in the KCPL Cash or Deferred Arrangement were transferred to the Plan effective August 25, 1998, and are reflected in the statement of changes in net assets available for plan benefits at fair value as trustee transfers. 9. 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 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) 10. 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, ------------------------- 1998 1997 -------- -------- Net assets available for Plan benefits per the financial statements $ 482,264,400 $ 444,055,480 Less: final distributions and participant withdrawals that have been processed and approved but not paid by the Plan 826,872 270,186 ------------ ------------ Net assets available for Plan benefits per the Form 5500 $ 481,437,528 $ 443,785,294 =========== ============ 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, 1998 ------------------- Net increase in net assets available for Plan benefits per the financial statements $ 38,208,920 less: change in distributions and participant withdrawals that had been processed and approved but not paid by the Plan 556,686 Net increase in net assets ----------- available for Plan benefits per the the Form 5500 $ 37,652,234 =========== 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. SUPPLEMENTAL SCHEDULES EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN EIN: 76-0568816 Plan: 002 ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES December 31, 1998
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 3,099,910 $83,446,572 $107,917,167 Short-term securities Bankers Trust Company BT Pyramid Directed Account Cash Fund 9,298,189 9,298,189 9,298,189 ----------- ------------ Total investments - Company Stock Fund 92,744,761 117,215,356 ----------- ------------ INCOME FUND Deposits with financial institutions Bankers Trust Company (Del) BASIC # 97-888THT, 6.56%, matures 12/30/01 22,963,747 22,963,747 22,963,747 BASIC # 92-407ALP, 6.00%, matures 2/28/03 4,938,536 4,938,536 4,938,536 CDC Investment Management Corporation # 163-01, 7.62%, matures 10/25/99 3,039,927 3,039,927 3,039,927 # 163-02, 7.77%, matures 11/01/99 5,061,883 5,061,883 5,061,883 State Street Bank & Trust # 98263, 4.58%, matures 12/01/05 1,101,415 1,101,415 1,101,415 ------------ ------------- Total deposits with financial institutions 37,105,508 37,105,508 ------------ ------------- Deposits with insurance companies Allstate Life Insurance Company # 5529, 5.59%, matures 09/07/99 1,750,558 1,750,558 1,750,558 # 31071, 6.27%, matures 02/18/02 6,437,894 6,437,894 6,437,894 Business Men's Assurance # 1336, 5.75%, matures 09/02/03 3,019,824 3,019,824 3,019,824 Continental Assurance Company # 630-05647, 6.93%, matures 9/01/03 14,967,885 14,967,885 14,967,885 Jackson National Life Insurance Company # 1070, 6.33%, matures 12/30/00 6,974,426 6,974,426 6,974,426 John Hancock Mutual Life Insurance Compan # 7733, 6.60%, matures 01/03/00 3,550,599 3,550,599 3,550,599 # 7436, 7.02%, matures 5/1/07 12,624,889 12,624,889 12,624,889 # 8836, 5.60%, matures 2/01/02 11,118 11,118 11,118 Mass Mutual Life Insurance Company # 10514, 6.27%, matures 7/5/02 3,873,470 3,873,470 3,873,470 # 10733, 6.28%, matures 11/30/03 3,138,159 3,138,159 3,138,159 MBL Life Assurance Corporation # 6-5020-1, 9.75%, matures 12/31/99 2,030,385 2,030,385 2,030,385 # 6-5020-2, 9.75%, matures 12/31/99 3,117,888 3,117,888 3,117,888 # 6-5020-3, 9.75%, matures 12/31/99 2,620,938 2,620,938 2,620,938 # 9-5020-1, 5.10%, matures 12/31/99 246,502 246,502 246,502 # 9-5020-2, 5.10%, matures 12/31/99 377,671 377,671 377,671 # 9-5020-3, 5.10%, matures 12/31/99 317,276 317,276 317,276 New York Life Insurance Company # 06749, 5.70%, matures 11/18/00 915,309 915,309 915,309 # 06749-002, 5.62%, matures 9/20/00 776,446 776,446 776,446 # 06749-003, 5.75%, matures 1/12/00 1,030,136 1,030,136 1,030,136 # 30667, 6.78%, matures 1/31/02 3,717,313 3,717,313 3,717,313
EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN EIN: 76-0568816 Plan: 002 ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES December 31, 1998
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 - -------------------------------------------- ------------ ------------ ------------- Peoples Security Life Insurance Corporation # 00081TR, 7.12%, matures 3/30/07 26,145,532 26,145,532 26,145,532 # 00204TR-1, 6.45%, matures 12/01/00 2,020,960 2,020,960 2,020,960 Prudential Insurance Company of America # 6697-3, 8.40%, matures 11/20/00 727,083 727,083 727,083 Transamerica Life & Annuity # 76562, 6.40%, matures 11/15/04 9,163,187 9,163,187 9,163,187 ----------- ----------- Total deposits with insurance companies 109,555,448 109,555,448 ----------- ----------- Short-term securities Bankers Trust Company BT Pyramid Directed Account Cash Fund 10,774,913 10,774,913 10,774,913 ----------- ----------- Total investments - Income Fund 157,435,869 157,435,869 ----------- ----------- LOAN FUND Participant Loans, 7% to 12.5% 16,093,331 - 16,093,331 ----------- ----------- Total investments - Loan Fund - 16,093,331 ----------- ----------- EQUITY INDEX FUND Barclays Equity Index Equity Index Fund 2,342,774 54,724,907 78,825,896 ----------- ----------- Total investments - Equity Index Fund 54,724,907 78,825,896 ----------- ----------- INTERNATIONAL EQUITY FUND Templeton Foreign Fund Templeton Foreign Fund-International Growth Portfolio Mutual Fund 1,199,394 12,247,694 10,085,840 ----------- ----------- Total investments - International Equity Fund 12,247,694 10,085,840 ----------- ----------- GROWTH FUND Founders Growth Fund Founders Growth Portfolio Mutual Fund 1,408,603 27,570,363 28,807,691 ----------- ----------- Total investments - Growth Fund 27,570,363 28,807,691 ----------- ----------- PUTNAM NEW OPPORTUNITIES FUND Putnam New Opportunities Funds Putnam New Opportunities - Portfolio Mutual Fund 683,206 30,905,955 39,987,627 ----------- ----------- Total investments - Putnam New Opportunities Fund 30,905,955 39,987,627 ----------- ----------- SMALL CAPITALIZATION EQUITY FUND SSgA Small Cap Fund SSgA Small Cap - Portfolio Mutual Fund 103,895 1,952,155 2,023,607 ----------- ----------- Total investments - Small Cap Equity Fund 1,952,155 2,023,607 ----------- ----------- ASSET ALLOCATION FUND INVESCO Total Return INVESCO Total Return Manager Mutual Fund 801,758 21,962,294 25,185,591 ----------- ----------- Total investments - Asset Allocation Fund 21,962,294 25,185,591 ----------- ----------- Total Assets Held For Investment Purposes $399,543,998 $475,660,808 =========== ===========
EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN EIN: 76-0568816 Plan: 002 ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS For the Year Ended December 31, 1998
Number of transactions Cost of Identity of party involved ------------------ Purchase Selling securities Net and description of asset Purchases Sales price price sold gain (loss) - ----------------------------- ---------- ------- ---------- ----------- ----------- ----------- BT Pyramid Directed Account Cash Fund 477 669 $253,993,236 $240,973,972 $240,973,972 $ - El Paso Energy PRIMCO IT INCM 39 62 15,564,020 35,707,511 33,326,575 2,380,936 Barclays Equity Index Fund 120 131 15,927,443 21,488,244 16,785,664 4,702,580 El Paso Natural Gas Co Com New 37 12 40,008,197 76,552,598 74,146,876 2,405,722 El Paso Energy Corporation Del Com 11 11 92,685,767 11,710,995 9,070,987 2,640,008 Fidelity Growth Company Fund 42 61 2,395,603 31,731,665 26,539,405 5,192,260 Founders FDS Inc Growth FD 73 78 33,216,982 5,470,582 5,646,619 (176,037) John Hancock Life # 7733 13 18 20,165,747 16,615,148 16,615,148 - Tenneco Stock Fund - 53 - 29,301,917 32,262,382 (2,960,465)
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 25, 1999 EX-23 2 Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File Numbers 33-49956 and 333-26813) of El Paso Energy Corporation of our report dated June 15, 1999 relating to the financial statements and supplemental schedules of the El Paso Energy Corporation Retirement Savings Plan, which appears in this Form 11-K. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Houston, Texas June 28, 1999 -----END PRIVACY-ENHANCED MESSAGE-----