<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) -January 28, 1997
FOREST OIL CORPORATION
(Exact name of registrant as specified in charter)
New York 0-4597 25-0484900
(State or other juris- (Commission (IRS Employer
diction of incorporation) file number) Identification No.)
2200 Colorado State Bank Building, 1600 Broadway, Denver, CO 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 812-1400
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<PAGE>
ITEM 5. OTHER EVENTS
Filed herewith are financial statements of ATCOR Resources Ltd. which was
acquired by the Company on January 31, 1996 and pro forma financial statements
of the Company giving effect to the ATCOR acquisition and certain other
transactions as described in such statements.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Audited financial statements of ATCOR Resources Ltd. at
December 31, 1995 and for each of the years in the three
year period ended December 31, 1995.
(b) Condensed pro forma combined financial statements of Forest
Oil Corporation at September 30, 1996 and for the nine
months ended September 30, 1996 and the year ended December
31, 1995.
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.
FOREST OIL CORPORATION
(Registrant)
Dated: February 5, 1997 By /s/ DANIEL L. MCNAMARA
--------------------------
Daniel L. McNamara
Secretary
<PAGE>
FOREST OIL CORPORATION
CONDENSED PRO FORMA COMBINED FINANCIAL STATEMENTS
On December 20, 1995, Forest Oil Corporation (Forest) purchased an interest in
Saxon Petroleum Inc. (Saxon) of Calgary, Alberta. In the transaction, Forest
received Saxon common shares, preferred shares and warrants to purchase common
shares. In exchange, Saxon received cash, Forest common stock and Forest's
investment in Archean Energy Ltd. (Archean).
On December 29, 1995, Forest entered into an agreement with Joint Energy
Development Investments Limited Partnership (JEDI), a Delaware partnership
whose general partner is an affiliate of Enron Corp., to exchange Forest
common stock for debt and warrants to purchase Forest common stock (the JEDI
Exchange).
On January 31, 1996, Forest acquired ATCOR Resources, Ltd. (ATCOR) of
Calgary, Alberta. The purchase was funded by the net proceeds of a public
offering (the 1996 Public Offering) and drawdowns under the Company's bank
credit facility. The exploration and production business of ATCOR was
renamed Canadian Forest Oil Ltd. (Canadian Forest).
On August 1, 1996, The Anschutz Corporation (Anschutz) exercised its option
to purchase Forest common stock (the Anschutz Option).
On November 5, 1996, Forest exchanged common stock plus cash to extinguish
nonrecourse secured debt owed to JEDI (the JEDI Extinguishment). In
connection with this transaction, Anschutz exercised warrants to purchase
Forest common stock (the Anschutz Warrant Exercise) and converted its Forest
Second Series Preferred Stock into common stock (the Anschutz Conversion).
The following unaudited condensed pro forma combined balance sheet assumes
that the JEDI Extinguishment, the Anschutz Warrant Exercise and the Anschutz
Conversion occurred on September 30, 1996 and reflects the September 30, 1996
historical consolidated balance sheet of Forest giving pro forma effect to
these transactions. The unaudited condensed pro forma combined balance sheet
should be read in conjunction with the historical statements and related
notes of Forest.
The following unaudited condensed pro forma combined statements of operations
for the nine months ended September 30, 1996 and for the year ended December
31, 1995 assume that the Saxon transaction, the JEDI Exchange, the ATCOR
acquisition, the Anschutz transactions and the JEDI Extinguishment occurred
as of January 1, 1995. The pro forma results of operations are not
necessarily indicative of the results of operations that would actually have
been attained if the transactions had occurred as of January 1, 1995. These
statements should be read in conjunction with the historical statements and
related notes of Forest and ATCOR.
<PAGE>
FOREST OIL CORPORATION
CONDENSED PRO FORMA COMBINED BALANCE SHEET (NOTE A)
SEPTEMBER 30, 1996
(UNAUDITED)
ASSETS
<TABLE>
Anschutz
JEDI Warrant Anschutz Pro Forma
Forest Extinguishment Exercise Conversion Combined
Historical (Note F) (Note G) (Note H) Forest
---------- -------------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 7,676 (12,946)(1) 4,083 7,676
8,863 (2)
Accounts receivable 46,768 46,768
Other current assets 4,268 4,268
---------- ------- ----- ------ --------
Total current assets 58,712 (4,083) 4,083 58,712
Property and equipment, at cost:
Oil and gas properties-full
cost accounting method 1,417,102 1,417,102
Buildings, transportation and
other equipment 10,756 10,756
---------- ------- ----- ------ --------
1,427,858 1,427,858
Less accumulated depreciation,
depletion and valuation
allowance 991,457 991,457
---------- ------- ----- ------ --------
Net property and equipment 436,401 436,401
Goodwill and other intangible
assets, net 30,138 30,138
Other assets 7,915 (272)(1) 7,643
---------- ------- ----- ------ --------
$ 533,166 (4,355) 4,083 - 532,894
---------- ------- ----- ------ --------
---------- ------- ----- ------ --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash overdraft $ 2,186 2,186
Current portion of long-term
debt 2,149 2,149
Current portion of gas
balancing liability 2,240 2,240
Accounts payable 50,583 50,583
Accrued interest 1,506 1,506
Other current liabilities 4,717 4,717
---------- ------- ----- ------ --------
Total current liabilities 63,381 63,381
Long-term debt 189,652 (42,446)(1) 156,069
8,863 (2)
Gas balancing liabilities 3,340 3,340
Other liabilities 21,962 21,962
Deferred revenue 8,569 8,569
Deferred income taxes 33,463 33,463
Minority interest 8,547 8,547
Shareholders' equity:
Preferred stock 24,345 (8,518) 15,827
Common stock 2,686 200(1) 39 124 3,049
Capital surplus 397,117 26,862(1) 4,044 8,394 436,417
Accumulated deficit (219,906) 2,166(1) (217,740)
Foreign currency translation 10 10
---------- ------- ----- ------ --------
Total shareholders' equity 204,252 29,228 4,083 - 237,563
---------- ------- ----- ------ --------
$ 533,166 (4,355) 4,083 - 532,894
---------- ------- ----- ------ --------
---------- ------- ----- ------ --------
</TABLE>
See accompanying notes to condensed pro forma
combined financial statements.
<PAGE>
FOREST OIL CORPORATION
CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS (NOTE A)
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
JEDI
Saxon JEDI ATCOR ATCOR Extinguish- Pro Forma
Forest Historical Exchange Historical Adjustments ment Combined
Historical (Note B) (Note C) (Note D) (Note D) (Note F) Forest
---------- ---------- -------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Marketing and processing $ 148,424 (8,980) (1) 139,444
Oil and gas sales 81,949 9,719 37,658 129,326
Miscellaneous, net 507 (1,040) (221) (1) 132
1,268 (1)
(382) (2)
-------- ----- ------ ------- ------- ------ -------
Total revenue 82,456 9,719 185,042 (8,315) 268,902
Expenses:
Marketing and processing 139,766 (6,574) (1) 133,192
Oil and gas production 22,463 4,280 10,769 37,512
General and administrative 9,081 871 3,468 (471) (3) 12,949
Interest 25,323 767 (1,500) 2,432 (1,647) (1) (4,018)(3) 21,357
Depreciation and depletion 43,592 3,506 25,207 (6,317) (4) 68,047
2,059 (4)
Provision for impairment of
oil and gas properties 16,812 4,514 (5) 21,326
-------- ----- ------ ------- ------- ------ -------
Total expenses 100,459 9,424 (1,500) 198,454 (8,436) (4,018) 294,383
Income (loss) before income taxes,
minority interest and extraordinary
item (18,003) 295 1,500 (13,412) 121 4,018 (25,481)
Income tax expense (benefit) (7) 278 (2,158) 54 (6) (3,091)
(1,258) (7)
Minority interest in net earnings of
subsidiary (7) (7)
-------- ----- ------ ------- ------- ------ -------
Income (loss) from continuing operations $(17,996) 10 1,500 (11,254) 1,325 4,018 (22,397)
-------- ----- ------ ------- ------- ------ -------
-------- ----- ------ ------- ------- ------ -------
Weighted average number of common shares
outstanding (Note J) 7,360 28,119
-------- -------
-------- -------
Loss from continuing operations
attributable to common stock $(20,156) (24,557)
-------- -------
-------- -------
Primary and fully diluted loss per share
from continuing operations $ (2.74) (.87)
-------- -------
-------- -------
</TABLE>
See accompanying notes to condensed pro forma combined financial statements.
<PAGE>
FOREST OIL CORPORATION
CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS (NOTE A)
NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
ATCOR ATCOR JEDI Pro Forma
Forest Historical Adjustments Extinguishment Combined
Historical (Note D) (Note D) (Note F) Forest
---------- ---------- ----------- -------------- --------
<S> <C> <C> <C> <C> <C>
Revenue:
Marketing and processing $ 135,614 14,448 (1,107)(1) 148,955
Oil and gas sales 88,062 3,710 91,772
Miscellaneous, net 707 6 (6)(1) 707
---------- ------- ------ ------ -------
Total revenue 224,383 18,164 (1,113) 241,434
Expenses:
Marketing and processing 129,115 13,567 (885)(1) 141,797
Oil and gas production 23,224 869 24,093
General and administrative 9,526 727 (36)(2) 10,217
Interest 18,042 150 (93)(3) (3,898)(3) 14,201
Depreciation and depletion 43,862 1,973 (407)(4) 45,599
171 (4)
---------- ------- ------ ------ -------
Total expenses 223,769 17,286 (1,250) (3,898) 235,907
---------- ------- ------ ------ -------
Income before income taxes
and minority interest 614 878 137 3,898 5,527
Income tax expense 3,250 359 60 (5) 3,669
Minority interest in loss of
subsidiary 228 228
---------- ------- ------ ------ -------
Income (loss) from
continuing operations $ (2,408) 519 77 3,898 2,086
---------- ------- ------ ------ -------
---------- ------- ------ ------ -------
Weighted average number of
common shares outstanding
(Note I) 23,698 31,471
---------- -------
---------- -------
Income (loss) from continuing
operations attributable to
common stock $ (4,027) 467
---------- -------
---------- -------
Primary and fully diluted
earnings (loss) per share
from continuing operations $ (.17) .01
---------- -------
---------- -------
</TABLE>
See accompanying notes to condensed pro forma
combined financial statements.
<PAGE>
FOREST OIL CORPORATION
NOTES TO CONDENSED PRO FORMA COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
A. BASIS OF PRESENTATION
The following unaudited condensed pro forma combined balance sheet assumes
that the JEDI Extinguishment, the Anschutz Warrant Exercise and the Anschutz
Conversion occurred on September 30, 1996 and reflects the September 30, 1996
historical consolidated balance sheet of Forest giving pro forma effect to
these transactions. The unaudited condensed pro forma combined balance sheet
should be read in conjunction with the historical statements and related
notes of Forest.
The following unaudited condensed pro forma combined statements of operations
for the nine months ended September 30, 1996 and for the year ended December
31, 1995 assume that the Saxon transaction, the JEDI Exchange, the ATCOR
acquisition, the Anschutz transactions and the JEDI Extinguishment occurred
as of January 1, 1995. The pro forma results of operations are not
necessarily indicative of the results of operations that would actually have
been attained if the transactions had occurred as of January 1, 1995. These
statements should be read in conjunction with the historical statements and
related notes of Forest and ATCOR.
The historical financial statements of ATCOR for the month ended January 31,
1996 have been translated at the average historical exchange rate of
approximately $1.37 CDN to $1.00.
The historical financial statements of Saxon and ATCOR for the year ended
December 31, 1995 have been translated at the average historical exchange
rate during the period of approximately $1.37 CDN to $1.00.
B. ACQUISITION OF SAXON PETROLEUM, INC.
On December 20, 1995, Forest purchased a 56% economic (49% voting) interest
in Saxon for approximately $22,000,000. In the transaction, Forest received
from Saxon 40,800,000 voting common shares, 12,300,000 nonvoting common
shares, 15,500,000 preferred shares and warrants to purchase 5,300,000 common
shares. In exchange, Forest transferred to Saxon its preferred shares of
Archean Energy Ltd., issued to Saxon 1,060,000 common shares of Forest and
paid Saxon $1,500,000 CDN.
A pro forma adjustment has been made to the accompanying historical statement
of operations for the year ended December 31, 1995 to record the historical
results of operations of Saxon for the period and to recognize the minority
interest in the net earnings of Saxon. The effects of pro forma adjustments for
the year ended December 31, 1995, including those attributable to purchase
price allocations, were insignificant and have not been shown. The historical
condensed balance sheet and statement of operations of Forest include the
accounts of Saxon at September 30, 1996 and for the nine months then ended.
C. JEDI EXCHANGE
On December 29, 1995, Forest entered into an agreement with JEDI to exchange
1,680,000 shares of Forest's common stock for approximately $22,400,000
principal amount of debt and warrants to purchase 2,250,000 shares of
Forest's common stock held by JEDI.
The accompanying condensed pro forma combined statement of operations for the
year ended December 31, 1995 includes a pro forma adjustment to reduce
interest expense by $1,500,000 to give effect to the reduction of the JEDI
debt.
<PAGE>
D. ACQUISITION OF ATCOR
On January 31, 1996 Forest acquired ATCOR for approximately $136,000,000. The
purchase was funded by the net proceeds of the 1996 Public Offering and
approximately $8,300,000 drawn under the Company's bank credit facility. The
exploration and production business of ATCOR was renamed Canadian Forest Oil
Ltd.
The accompanying condensed pro forma combined statements of operations for
the nine months ended September 30, 1996 and the year ended December 31, 1995
have been adjusted to include the historical results of operations for ATCOR
prior to the acquisition. In addition, the following pro forma adjustments
have been made to the accompanying historical statements of operations for
ATCOR for the year ended December 31, 1995 and the nine months ended September
30, 1996:
1. As part of the ATCOR acquisition, Forest agreed to sell certain assets
of ATCOR to ATCOR's controlling shareholders for an aggregate
consideration of approximately $21.5 million Cdn (or approximately
$15.6 million). These assets include one-half of ATCOR's interests in
certain frontier lands, an 18% interest in an ethane extraction plant in
Edmonton, Alberta in which ATCOR will retain a 15-1/3% interest and
certain marketable securities held by ATCOR. Accordingly, dividend
income related to the marketable securities in the amount of $221,000
for the year ended December 31, 1995 ($6,000 for the month of January
1996) and marketing and processing income related to the 18% interest in
the ethane extraction plant in the amount of $8,980,000 for the year
ended December 31, 1995 ($1,107,000 for the month of January 1996) have
been reversed in the accompanying condensed pro forma combined
statements of operations. In addition, a writedown of the investment in
marketable securities in the amount of $1,268,000 for the year ended
December 31, 1995 has been reversed in the accompanying pro forma
combined statement of operations for that period since the loss was
reported in an earlier period under U.S. GAAP.
The proceeds of the asset sale described above were used to reduce the
outstanding long-term debt of ATCOR. Interest expense in the
accompanying condensed pro forma combined statement of operations has
been reduced by $1,647,000 for the year ended December 31, 1995
($93,000 for the month of January 1996) in order to reflect the debt
reduction.
2. Under U.S. GAAP, unrealized losses on interest rate swaps that are not
considered a hedge on an existing debt obligation are charged to
earnings. A pro forma adjustment has been recorded to reduce
miscellaneous, net revenue for the year ended December 31, 1995 by
$382,000 to reflect this U.S. GAAP difference.
3. The general and administrative expenses recorded by ATCOR included
administrative, financial and management fees charged by a controlling
shareholder. These fees, which totalled $471,000 for the year ended
December 31, 1995 ($36,000 for the month of January 1996) have been
reversed in the accompanying condensed pro forma combined statements of
operations.
4. The purchase price of approximately $136,000,000 was allocated to
property, plant and equipment of approximately $144,000,000; goodwill
and other intangible assets related to ATCOR's natural gas marketing
business of approximately $32,000,000; a net working capital deficit
of approximately $1,000,000; long-term liabilities of approximately
$3,000,000; and a net deferred tax liability of approximately
$36,000,000.
The fair value allocated to property, plant and equipment was less than
the historical carrying cost of these assets less the proceeds
associated with the sale of the oil and gas assets described in Note 1
above. Accordingly, the condensed pro forma combined statements of
operations include adjustments to reduce depreciation and depletion
expense by $6,317,000 for the year ended December 31, 1995 ($407,000
for the month of January, 1996).
Goodwill and other intangibles recorded in the acquisition included
approximately $15,000,000 associated with certain natural gas marketing
contracts, which is being amortized over the average life of the
contracts of 12 years, and approximately $17,000,000 of goodwill
associated with the gas marketing business acquired which is being
amortized over 20 years. Accordingly, the condensed pro forma combined
statements of operations include adjustments to record amortization of
goodwill and other intangible assets of $2,059,000 for the year ended
December 31, 1995 ($171,000 for the month of January, 1996).
5. Under U.S. GAAP, the carrying value of petroleum and natural gas
properties, net of deferred income taxes, is limited to the present
value of after-tax future net revenue (based on prices and costs in
effect at the balance sheet date) from proved reserves, discounted at
10%, and the unimpaired cost of unproved properties. Under Canadian
GAAP, future net revenue is not discounted in computing the ceiling
limit, but projected financing costs and general and administrative
costs are deducted. These differences resulted in an additional
ceiling test write-down at December 31, 1995 under U.S. GAAP of
$4,514,000, which has been reflected as a pro forma adjustment on the
accompanying condensed pro forma combined statement of operations for
the year ended December 31, 1995.
The provision for impairment of oil and gas properties recorded in
the historical financial statements of ATCOR was also included in the
pro forma combined results of operations of Forest for the year ended
December 31, 1995 in accordance with rules of the Securities and
Exchange Commission for preparation of pro forma financial
information. Had the provision for impairment recorded in the
historical financial statements of ATCOR been excluded from the pro
forma combined results of operations of Forest, the pro forma
combined loss from continuing operations, loss from continuing
operations attributable to common stock, and primary and fully
diluted loss per share from continuing operations would have been
$10,454,000, $12,614,000 and $0.45, respectively.
6. Separate pro forma adjustments have been recorded to adjust income tax
expense for the effects, as applicable, of the pro forma adjustments
calculated at the statutory rate in effect during the periods for which
condensed pro forma combined statements of operations are presented.
7. Under U.S. GAAP, income taxes are accounted for under the asset and
liability method prescribed by Statement of Financial Accounting
Standards No. 109. Adjustments have been recorded in the accompanying
condensed pro forma combined statements of operations to reduce income
tax expense by $1,258,000 for the year ended December 31, 1995.
<PAGE>
E. ANSCHUTZ OPTION
On August 1, 1996, Anschutz exercised its option to purchase 2,250,000 shares
of Forest's common stock for $26,200,000 or approximately $11.64 per share.
The option was scheduled to expire on July 27, 1998.
F. JEDI EXTINGUISHMENT
On November 5, 1996 Forest exchanged 2,000,000 shares of its common stock
plus approximately $13,500,000 cash to extinguish approximately $43,000,000
of nonrecourse secured debt owed to JEDI. The JEDI debt bore interest at the
rate of 12-1/2% per annum.
The following pro forma adjustments have been made to the accompanying
historical balance sheet at September 30, 1996 and to the accompanying
historical statements of operations for the nine months ended September 30,
1996 and the year ended December 31, 1995:
1. To record issuance of 2,000,000 shares of Forest common stock with an
estimated fair value of $27,062,000 (determined by reference to the
quoted market price of the shares, less a discount to reflect the
restrictions placed upon the sale of such shares), and use of
$12,946,000 of cash to repay the outstanding JEDI debt of $42,446,000.
This transaction resulted in a gain of $2,166,000 after the write-off
of unamortized debt costs in the amount of $272,000.
2. To record additional borrowing of $8,863,000 on the Company's line of
credit to finance the JEDI Extinguishment.
3. To record a net reduction of interest expense of $3,898,000 for the
nine months ended September 30, 1996 and $4,018,000 for the year ended
December 31, 1995, as a result of the extinguishment of the JEDI debt.
G. ANSCHUTZ WARRANT EXERCISE
On November 5, 1996 Anschutz acquired 388,888 shares of Forest's common stock
by exercising warrants which allowed it to purchase such shares at $10.50 per
share.
A pro forma adjustment has been made to the accompanying historical balance
sheet at September 30, 1996 to record the proceeds of $4,083,000 and the
issuance of common stock.
H. ANSCHUTZ CONVERSION
On November 5, 1996 Anschutz converted 620,000 shares of Forest's Second
Series Preferred Stock into 1,240,000 shares of common stock.
A pro forma adjustment has been made to the accompanying historical balance
sheet at September 30, 1996 to record the conversion by reclassifying the
historical value of the preferred stock ($8,518,000) to common stock and
capital surplus.
<PAGE>
I. The weighted average number of common shares outstanding for the nine
months ended September 30, 1996 has been adjusted as follows:
Forest historical 23,698
Weighted average effect of shares issued in:
1996 Public Offering 1,349
JEDI Extinguishment 2,000
Anschutz Option Exercise 1,747
Anschutz Warrant Exercise 389
Anschutz Conversion 1,240
Common stock equivalents (1) 1,048
------
Pro forma weighted average shares 31,471
------
------
(1) The remaining Anschutz Warrants and employee stock options were in the
money during the period, and therefore were required to be included in
the primary earnings per share calculation since they had a dilutive
effect.
J. The weighted average number of common shares outstanding for the year ended
December 31, 1995 has been adjusted as follows:
Forest historical 7,360
Shares issued in:
Saxon acquisition 1,060
JEDI Exchange 1,680
1996 Public Offering (ATCOR acquisition) 12,140
Anschutz Option Exercise 2,250
JEDI Extinguishment 2,000
Anschutz Warrant Exercise 389
Anschutz Conversion 1,240
------
Pro forma weighted average shares 28,119
------
------
