<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 K/A
AMENDMENT NO. 2 TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 12, 1999
PLAINS RESOURCES INC.
(Exact name of registrant as specified in charter)
Delaware 0-9808 13-2898764
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
500 Dallas Street, Suite 700
Houston, Texas 77002
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 654-1414
================================================================================
<PAGE>
The sole purpose of this amendment to the Registrant's Current Report on
Form 8-K/A Amendment No. 1 dated May 12, 1999 and filed June 28, 1999, is to
amend the pro forma financial statements, in their entirety. This amendment
reflects adjustments made to pro forma entries K, M, N O and P.
Item 7. Financial Statements of Business Acquired and Exhibits
(a) Pro Forma Financial Information (unaudited)
PLAINS RESOURCES INC.
PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS:
Introduction F-1
Pro Forma Consolidated Balance Sheet as of March 31, 1999 F-2
Pro Forma Consolidated Statement of Income for the three
months ended March 31, 1999 F-3
Pro Forma Consolidated Statement of Operations for the year
ended December 31, 1998 F-4
Notes to Pro Forma Consolidated Financial Statements F-5
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: September 16, 1999
PLAINS RESOURCES INC.
By: /s/ Cynthia A. Feeback
----------------------------
Name: Cynthia A. Feeback
Title: Vice President - Accounting,
and Assistant Treasurer
3
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS OF
PLAINS RESOURCES INC. AND SUBSIDIARIES
Introduction
The accompanying unaudited pro forma consolidated financial statements are
presented to reflect the acquisition of Scurlock Permian LLC and certain other
pipeline assets (the "Scurlock Acquisition") from Marathon Ashland Petroleum LLC
("MAP") by Plains Scurlock Permian, L.P. ("Plains Scurlock"), a newly formed
operating limited partnership of Plains All American Pipeline, L.P. ("PAA"). The
Scurlock Acquisition was consummated on May 12, 1999, and has been accounted for
using the purchase method of accounting. Plains Resources Inc. (the
"Registrant") has a 57% ownership interest (59% subsequent to the Scurlock
Acquisition and related transactions) in PAA, through which the Registrant's
midstream operations are conducted. Plains All American Inc., a wholly owned
subsidiary of the Registrant, is the general partner ("General Partner") of PAA.
PAA's results are consolidated into the Registrant's results with the public's
43% ownership interest (41% subsequent to the Scurlock Acquisition and related
transactions) reflected as a minority interest deduction from income. The pro
forma financial statements are based upon the historical financial statements of
the Registrant and the Scurlock Permian Businesses ("Scurlock"). The Scurlock
financial statements pertain to the businesses sold to Plains Scurlock by MAP
and represent a carve-out financial statement presentation of a MAP operating
unit. Certain reclassifications have been made to the historical Scurlock
financial statements to conform to PAA's presentation (see pro forma note K).
The unaudited pro forma consolidated financial statements are not
necessarily indicative of the results of the future operations of the
Registrant. The unaudited pro forma consolidated financial statements should be
read in conjunction with the notes thereto and the historical financial
statements of Scurlock, included in Item 7(a) of Amendment No. 1 to Form 8-K/A
filed with the Securities and Exchange Commission on June 28, 1999. In addition,
reference should be made to the historical financial statements of PAA included
in Form 10-K for the year ended December 31, 1998, and included in Form 10-Q for
the three months ended March 31, 1999, filed with the Securities and Exchange
Commission.
The following unaudited pro forma consolidated financial statements have
been prepared as if the Scurlock Acquisition and related transactions had taken
place on March 31, 1999, in the case of the pro forma consolidated balance sheet
or as of January 1, 1998, in the case of the pro forma consolidated statement of
income for the three months ended March 31, 1999, and pro forma consolidated
statement of operations for the year ended December 31, 1998.
F-1
<PAGE>
PLAINS RESOURCES INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET (unaudited)
MARCH 31, 1999
(in thousands)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------
SCURLOCK
PLAINS PERMIAN PRO FORMA
RESOURCES INC. BUSINESSES ADJUSTMENTS NOTE PRO FORMA
-------------- ----------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 889 $ 36 $ 142,112 A $ 672
(142,365) B
Accounts receivable 161,742 243,998 42,743 C 310,349
(10,499) J
(127,635) K
Inventory 28,826 37,208 (16,057) B 47,518
(2,459) B
Prepaid expenses and other 2,464 2,988 - 5,452
-------------- ----------- ----------- ----------
Total current assets 193,921 284,230 (114,160) 363,991
-------------- ----------- ----------- ----------
PROPERTY AND EQUIPMENT
Oil and natural gas properties - full cost method 669,212 - - 669,212
Crude oil pipeline, gathering and terminal assets 380,956 143,425 124,725 B 505,681
(138,287) B
(5,138) D
Other property and equipment 8,869 - 1,503 B 10,372
-------------- ----------- ----------- ----------
1,059,037 143,425 (17,197) 1,185,265
Less allowance for depreciation,
depletion and amortization (382,382) (15,215) 14,646 B (382,382)
569 D
-------------- ----------- ----------- ----------
676,655 128,210 (1,982) 802,883
-------------- ----------- ----------- ----------
OTHER ASSETS 134,405 4,218 16,057 B 153,562
(2,514) B
(1,704) B
3,100 B
-------------- ----------- ----------- ----------
$ 1,004,981 $ 416,658 $ (101,203) $1,320,436
============== =========== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other current liabilities $ 190,063 $ 310,477 $ 1,000 B $ 363,400
(10,499) J
(127,635) K
Notes payable and other current obligations 4,611 - - 4,611
-------------- ----------- ----------- ----------
Total current liabilities 194,674 310,477 (137,134) 368,017
BANK DEBT 76,800 - 25,000 A 101,800
BANK DEBT OF A SUBSIDIARY 181,000 - 117,112 A 298,112
SUBORDINATED DEBT 202,365 - - 202,365
OTHER LONG-TERM DEBT 2,556 - - 2,556
OTHER LONG-TERM LIABILITIES 7,678 - - 7,678
-------------- ----------- ----------- ----------
665,073 310,477 4,978 980,528
-------------- ----------- ----------- ----------
MINORITY INTEREST 175,756 - - 175,756
-------------- ----------- ----------- ----------
PARENT COMPANY INVESTMENT - 106,181 (144,355) B -
42,743 C
(4,569) D
-------------- ----------- ----------- ----------
SERIES E CUMULATIVE CONVERTIBLE
PREFERRED STOCK, STATED AT
LIQUIDATION PREFERENCE 90,517 - - 90,517
-------------- ----------- ----------- ----------
NON-REDEEMABLE PREFERRED STOCK,
COMMON STOCK AND
OTHER STOCKHOLDERS' EQUITY
Series D Cumulative Convertible Preferred Stock 22,277 - - 22,277
Common Stock 1,689 - - 1,689
Additional paid-in capital 124,815 - - 124,815
Accumulated deficit (75,146) - - (75,146)
-------------- ----------- ----------- ----------
73,635 - - 73,635
-------------- ----------- ----------- ----------
$ 1,004,981 $ 416,658 $ (101,203) $1,320,436
============== =========== =========== ==========
</TABLE>
See notes to pro forma consolidated financial statements.
F-2
<PAGE>
PLAINS RESOURCES INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------
SCURLOCK
PLAINS PERMIAN PRO FORMA
RESOURCES INC. BUSINESSES ADJUSTMENTS NOTE PRO FORMA
-------------- ---------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
REVENUES
Oil and natural gas sales $ 21,142 $ -- $ -- $ 21,142
Marketing, transportation, storage
and terminalling revenues 455,760 775,331 (493) D 727,359
(26,511) J
(476,728) K
Interest and other income 69 -- (547) D 519
997 K
-------- --------- --------- --------
476,971 775,331 (503,282) 749,020
-------- --------- --------- --------
EXPENSES
Production expenses 11,563 -- -- 11,563
Marketing, transportation, storage
and terminalling expenses 436,396 763,511 (94) D 697,947
(569) H
(372) I
(26,511) J
(474,974) K
(498) L
1,058 O
General and administrative 4,062 7,956 (443) D 11,084
(256) H
(235) L
Depreciation, depletion and amortization 7,170 2,952 (59) D 8,678
1,507 F
(2,892) G
Taxes other than income taxes -- 757 (757) K --
Inventory market valuation credit -- (10,014) 515 P (9,499)
Interest expense 8,753 -- 2,654 E 11,407
-------- --------- --------- --------
467,944 765,162 (501,926) 731,180
-------- --------- --------- --------
Income before income taxes
and minority interest 9,027 10,169 (1,356) 17,840
Minority interest 4,820 - 3,598 M 8,418
-------- --------- --------- --------
Income before income taxes 4,207 10,169 (4,954) 9,422
Income tax expense:
Current - - - -
Deferred 1,641 - 2,034 N 3,675
-------- --------- --------- --------
NET INCOME 2,566 10,169 (6,988) 5,747
Less: cumulative preferred stock dividends 2,361 - - 2,361
-------- --------- --------- --------
NET INCOME AVAILABLE TO
COMMON STOCKHOLDERS $ 205 $ 10,169 $ (6,988) $ 3,386
======== ========= ========= ========
EARNINGS PER COMMON SHARE:
Basic $ 0.01 $ 0.20
======== ========
Diluted $ 0.01 $ 0.19
======== ========
</TABLE>
See notes to pro forma consolidated financial statements.
F-3
<PAGE>
PLAINS RESOURCES INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
FOR THE YEAR ENDED DECEMBER 31, 1998
(in thousands, except per share data)
<TABLE>
<CAPTION>
HISTORICAL
-----------------------
PLAINS SCURLOCK
RESOURCES PERMIAN PRO FORMA
INC. BUSINESSES ADJUSTMENTS NOTE PRO FORMA
---------- ---------- ----------- ---- ---------
<S> <C> <C> <C> <C> <C>
REVENUES
Oil and natural gas sales $ 102,754 $ _ $ _ $ 102,754
Marketing, transportation, storage
and terminalling revenues 1,129,689 3,773,536 (2,502) D 2,364,304
(116,825) J
(2,419,594) K
Gain on formation of PAA 60,815 - - 60,815
Interest and other income 834 - 65 D 1,685
786 K
---------- ---------- ----------- ----------
1,294,092 3,773,536 (2,538,070) 2,529,558
---------- ---------- ----------- ----------
EXPENSES
Production expenses 50,827 - - 50,827
Marketing, transportation, storage
and terminalling expenses 1,091,328 3,742,276 (1,451) D 2,293,170
(2,277) H
(1,460) I
(116,825) J
(2,416,155) K
(2,781) L
515 O
General and administrative 10,778 31,033 (585) D 38,460
(1,023) H
(1,743) L
Depreciation, depletion and amortization 31,020 11,136 (248) D 37,046
6,026 F
(10,888) G
Reduction in carrying cost of oil
and natural gas properties 173,874 - - 173,874
Taxes other than income taxes - 2,653 (2,653) K -
Inventory market valuation charge - 10,014 (515) P 9,499
Interest expense 35,730 - 10,764 E 46,494
---------- ---------- ----------- ----------
1,393,557 3,797,112 (2,541,299) 2,649,370
---------- ---------- ----------- ----------
Loss before income taxes and minority interest (99,465) (23,576) 3,229 (119,812)
Minority interest 1,809 - (7,764) M (5,955)
---------- ---------- ----------- ----------
Loss before income taxes (101,274) (23,576) 10,993 (113,857)
Income tax expense (benefit):
Current 862 - - 862
Deferred (43,582) - (4,907) N (48,489)
---------- ---------- ----------- ----------
NET LOSS (58,554) (23,576) 15,900 (66,230)
Less: cumulative preferred stock dividends 4,762 - - 4,762
---------- ---------- ----------- ----------
NET LOSS AVAILABLE TO
COMMON STOCKHOLDERS $ (63,316) $ (23,576) $ 15,900 $ (70,992)
========== ========== =========== ==========
LOSS PER COMMON SHARE:
Basic $ (3.77) $ (4.22)
========== ==========
Diluted $ (3.77) $ (4.22)
========== ==========
</TABLE>
See notes to pro forma consolidated financial statements.
F-4
<PAGE>
PLAINS RESOURCES INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Introduction
The accompanying unaudited pro forma consolidated financial statements are
presented to reflect the acquisition of Scurlock Permian LLC and certain other
pipeline assets (the "Scurlock Acquisition") from Marathon Ashland Petroleum LLC
("MAP") by Plains Scurlock Permian, L.P. ("Plains Scurlock"), a newly formed
operating limited partnership of Plains All American Pipeline, L.P. ("PAA"). The
Scurlock Acquisition was consummated on May 12, 1999, and has been accounted for
using the purchase method of accounting. Plains Resources Inc. (the
"Registrant") has a 57% ownership interest (59% subsequent to the Scurlock
Acquisition and related transactions) in PAA, through which the Registrant's
midstream operations are conducted. Plains All American Inc., a wholly owned
subsidiary of the Registrant, is the general partner ("General Partner") of PAA.
PAA's results are consolidated into the Registrant's results with the public's
43% ownership interest (41% subsequent to the Scurlock Acquisition and related
transactions) reflected as a minority interest deduction from income. The pro
forma financial statements are based upon the historical financial statements of
the Registrant and the Scurlock Permian Businesses ("Scurlock"). The Scurlock
financial statements pertain to the businesses sold to Plains Scurlock by MAP
and represent a carve-out financial statement presentation of a MAP operating
unit. Certain reclassifications have been made to the historical Scurlock
financial statements to conform to PAA's presentation (see pro forma
footnote K).
The unaudited pro forma consolidated financial statements are not
necessarily indicative of the results of the future operations of the
Registrant. The unaudited pro forma consolidated financial statements should be
read in conjunction with the notes thereto and the historical financial
statements of Scurlock, included in Item 7(a) of Amendment No. 1 to Form 8-K/A
filed with the Securities and Exchange Commission on June 28, 1999. In addition,
reference should be made to the historical financial statements of PAA included
in Form 10-K for the year ended December 31, 1998, and included in Form 10-Q for
the three months ended March 31, 1999, filed with the Securities and Exchange
Commission.
The following unaudited pro forma consolidated financial statements have
been prepared as if the Scurlock Acquisition and related transactions had taken
place on March 31, 1999, in the case of the pro forma consolidated balance sheet
or as of January 1, 1998 in the case of the pro forma consolidated statement of
income for the three months ended March 31, 1999, and pro forma consolidated
statement of operations for the year ended December 31, 1998.
In addition to the pro forma adjustments below, PAA estimates that certain
costs which are included in the historical financial statements of Scurlock will
not be incurred by PAA in its operations of Scurlock. Such amounts include (i)
approximately $1.4 million of severance costs included in the Scurlock
historical statement of operations for the year ended December 31, 1998, related
to staff reductions implemented by Scurlock in the fourth quarter of 1998 for
employees that PAA does not plan to replace, (ii) approximately $2.5 million of
compensation and benefits expense related to the staff reductions discussed in
item (i) which are included in the Scurlock historical statement of operations
for the year ended December 31 1998, and (iii) approximately $1.1 million and
$3.5 million which are reflected in the Scurlock historical statement of
operations for the three months ended March 31, 1999, and the year ended
December 31, 1998, respectively, for amounts of corporate overhead allocated by
MAP to Scurlock.
Pro Forma Adjustments
A. Reflects the financing for the Scurlock Acquisition which was provided
through (i) borrowings of approximately $92 million under Plains Scurlock's
limited recourse bank facility with BankBoston, N.A. (the "Plains Scurlock
Credit Facility"), (ii) the sale to the General Partner of 1.3 million Class B
Common Units of PAA ("Class B Units") at $19.125 per unit, the price equal to
the market value of PAA's common units, for a total cash consideration of $25
million and (iii) a $25 million draw under PAA's existing revolving credit
agreement. In addition, the General Partner's $0.3 million capital contribution
resulting from the sale of the Class B Units is reflected. The funds for the
purchase of the Class B Units by the General Partner were provided through a
capital contribution by the Registrant which was financed by the Registrant's
revolving credit facility (the "Revolving Credit Facility").
The Class B Units are initially pari passu with Common Units with respect
to distributions, and after six months are convertible into Common Units upon
approval of a majority of Common Unitholders. After such six month period, the
Class B Unitholder may request that PAA call a meeting of Common Unitholders to
consider approval of the conversion of Class B Units into Common Units. If the
approval of such conversion by the Common Unitholders is not obtained within 120
days of such request (the "Initial Approval Period"), the Class B Unitholders
will be entitled to receive distributions, on a per unit basis, equal to 110% of
the amount of distributions paid on a Common Unit, with such distribution right
increasing to 115% if such approval
F-5
<PAGE>
is not secured within 90 days after the end of the Initial Approval Period.
Except for the vote to approve the conversion, Class B Units have the same
voting rights as the Common Units.
B. Reflects the consummation of the Scurlock Acquisition and the related
purchase accounting entries. The purchase price was allocated in accordance with
APB 16 as follows (in thousands):
Crude oil pipeline, gathering and terminal assets $124,725
Other property and equipment 1,503
Pipeline linefill 16,057
Debt issue costs 3,100
Net working capital items (3,020)
--------
Cash paid $142,365
========
The purchase price allocation was based on preliminary estimates of fair
value and is subject to adjustment as additional information becomes available
and is evaluated. Approximately $16.0 million representing minimum amounts of
crude oil which are required to operate Scurlock's pipeline and gathering assets
have been classified as pipeline linefill, a long-term asset. Pipeline linefill
was classified as a current asset and included in inventory by Scurlock.
Approximately $1.7 million of intangible assets and $2.5 million of materials
and supplies inventory reflected in Scurlock's historical balance sheet has been
eliminated in the purchase accounting entries. In addition, approximately $2.5
million representing Scurlock's 50% investment in a crude oil tank has been
reclassified as property and equipment from other assets and included in the
purchase price allocation based on PAA's valuation of such asset.
The purchase accounting entries include a $1.0 million accrual for
estimated environmental remediation. Under the agreement for the sale of
Scurlock by MAP to Plains Scurlock, MAP has agreed to indemnify and hold
harmless Scurlock and Plains Scurlock for claims, liabilities and losses
(collectively "Losses") resulting from any act or omission attributable to
Scurlock's business or properties occurring prior to the date of the closing of
such sale to the extent the aggregate amount of such Losses exceed $1 million;
provided however, that claims for such Losses must be asserted by Scurlock
against MAP on or before May 15, 2003.
C. Reflects the reclassification of net Scurlock receivables from MAP for
crude oil purchases. Such amounts, which were paid by MAP in cash subsequent to
March 31, 1999, were reflected in the Scurlock historical financial statements
as a component of Parent Company Investment.
D. Reflects the elimination of certain assets that were not purchased by
PAA, including associated revenues and expenses.
E. Reflects pro forma interest expense on (i) borrowings of approximately
$92 million under the Plains Scurlock Credit Facility, (ii) borrowings of $25
million under PAA's existing credit facility and (iii) borrowings of $25 million
under the Revolving Credit Facility. PAA has entered into a series of 21 month
interest rate collars, which provide for a floor of 5.04% and a ceiling of 6.5%
on a notional principal amount of $90 million of the LIBOR portion outstanding
under the Plains Scurlock Credit Facility. Pro forma interest expense was
calculated based on a composite annual interest rate of 7.6%. The effect of a
1/8% change in the pro forma interest rate would be approximately $46,000 for
the three months ended March 31, 1999 and approximately $186,000 for the year
ended December 31, 1998.
F. Reflects pro forma depreciation and amortization expense based on the
purchase price of the Scurlock assets by Plains Scurlock. The pro forma
composite useful depreciable life of the fixed assets acquired is 23 years. Debt
issue costs incurred in connection with the Scurlock Acquisition are amortized
using the straight-line method over five years, the term of the Plains Scurlock
Credit Facility.
G. Reflects the elimination of historical Scurlock depreciation and
amortization expense.
H. Reflects the reduction in compensation and benefits expense due to staff
terminations implemented by PAA at May 12, 1999. PAA has no plans to replace
these personnel. Such amounts reflect the historical compensation expenses
incurred by Scurlock. The termination of personnel is not expected to adversely
impact the Registrant's revenues or costs.
I. Reflects the cost reduction for services provided to Scurlock by MAP
related to the operation of certain pipeline assets. The Scurlock Acquisition
agreement provides for a reduced cost for such services subsequent to the
acquisition date.
J. Reflects the elimination of historical sales and purchases and
associated receivables and payables between Scurlock, PAA and the Registrant.
F-6
<PAGE>
K. Reflects the reclassification of certain items to conform to the
classification of such items in the Registrant's historical financial
statements. In addition, in order to make the Scurlock financial data consistent
with that of PAA, purchases and sales have been adjusted to exclude buy/sell
activity where like volumes are purchased with the same customer with no effect
on net income; likewise, accounts receivable and accounts payable balances have
been netted to reflect these transactions.
L. Reflects the elimination of expenses associated with MAP's profit
sharing and post retirement pension, health and benefit plans in which
Scurlock's employees are no longer entitled to participate so that cost of sales
and operations and general and administrative expense reflect the ongoing cost
of employee benefits to the Registrant.
M. Reflects the minority interest in the pro forma net income (loss) of PAA
resulting from the Scurlock Acquisition.
N. Reflects income tax expense on pro forma pre-tax income based on an
effective tax rate of 39% which is the estimated tax rate of the Registrant.
O. Reflects the restatement of Scurlock's inventory at average cost, which
is the inventory costing method utilized by PAA. Scurlock utilized the LIFO
method to determine inventory cost.
P. Reflects the adjustment of the historical market valuation charge/credit
reflected in Scurlock's historical financial statements to reflect such amounts
based on the average cost inventory method utilized by PAA.
F-7
