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
<PAGE>
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
<PAGE>
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
<PAGE>
[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
<PAGE>
EL PASO ENERGY CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
December 31, 1998
<TABLE>
<CAPTION>
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
------------ ---------- ------------ --------- ----------- ------------ ------------ ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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.
</TABLE>
<PAGE>
EL PASO ENERGY CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
December 31, 1997
<TABLE>
<CAPTION>
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
------------ ---------- ----------- ------------ ------------- ---------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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.
</TABLE>
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
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
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
---------- ---------- ----------- ---------- ----------- ------------ ---------- --------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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.
</TABLE>
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.
<PAGE>
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.
<PAGE>
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).
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
============= ============
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
SUPPLEMENTAL SCHEDULES
<PAGE>
EL PASO ENERGY CORPORATION
RETIREMENT SAVINGS PLAN
EIN: 76-0568816 Plan: 002
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1998
<TABLE>
<CAPTION>
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
- -------------------------------------------- ------------ ------------ -------------
<S> <C> <C> <C>
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
</TABLE>
<PAGE>
EL PASO ENERGY CORPORATION
RETIREMENT SAVINGS PLAN
EIN: 76-0568816 Plan: 002
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1998
<TABLE>
<CAPTION>
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
- -------------------------------------------- ------------ ------------ -------------
<S> <C> <C> <C>
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
=========== ===========
</TABLE>
<PAGE>
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
<TABLE>
<CAPTION>
Number of transactions Cost of
Identity of party involved ------------------ Purchase Selling securities Net
and description of asset Purchases Sales price price sold gain (loss)
- ----------------------------- ---------- ------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
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)
</TABLE>
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
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
