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EXHIBIT 99.1
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF
TRANSTEXAS GAS CORPORATION
The following unaudited pro forma condensed consolidated financial
information of TransTexas Gas Corporation (the "Company") as of and for the
three months ended April 30, 1997 and for the year ended January 31, 1997,
illustrate the effect of the sale of the Company's wholly owned subsidiary,
TransTexas Transmission Corporation ("Lobo Sale"), and the following
transactions (the "Transactions") related to a private offering of debt
securities by TransAmerican Energy Corporation (the "TEC Notes Offering"):
(i) the TransTexas Intercompany Loan; (ii) the tender offer for the TransTexas
Senior Secured Notes; (iii) the June Exchange Offer; and (iv) the Stock
Repurchase Program. The unaudited pro forma condensed consolidated balance
sheet has been prepared assuming that the Lobo Sale, the TEC Notes Offering and
the Transactions were consummated on April 30, 1997. The unaudited pro forma
condensed consolidated statements of operations for the three months ended April
30, 1997 and for the year ended January 31, 1997 have been prepared assuming
that the Lobo Sale, the TEC Notes Offering and the Transactions were consummated
on February 1, 1997 and 1996, respectively.
The unaudited pro forma adjustments and the resulting unaudited pro
forma condensed consolidated financial information are based on the assumptions
noted in the footnotes thereto. The unaudited pro forma condensed consolidated
financial information does not purport to represent what the Company's
financial position or results of operations would have been had the Lobo Sale,
the TEC Notes Offering and the Transactions actually occurred on the dates
indicated or the financial position or results of operations for any future
date or period.
The unaudited pro forma condensed consolidated financial information
and notes thereto should be read in conjunction with the Company's historical
consolidated financial statements and the notes thereto included in the
Company's quarterly report on Form 10-Q for the period ended April 30, 1997 and
its annual report on Form 10-K for the period ended January 31, 1997.
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TRANSTEXAS GAS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF APRIL 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Historical Adjustments Pro Forma
---------- ----------- ---------
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . $ 11,667 $ 1,073,424 (a) $ 197,669
450,000 (b)
65,000 (c)
(1,448,422)(d)
46,000 (f)
Cash restricted for interest . . . . . . . . . 46,000 (46,000)(f) --
Accounts receivable . . . . . . . . . . . . . 30,327 -- 30,327
Receivable from affiliates . . . . . . . . . . 70,436 (65,000)(c) 5,436
Inventories . . . . . . . . . . . . . . . . . 15,164 -- 15,164
Other current assets . . . . . . . . . . . . . 13,749 -- 13,749
----------- ----------- -----------
Total current assets . . . . . . . . . . . 187,343 75,002 262,345
Net property and equipment . . . . . . . . . . . 909,481 (450,592)(a) 458,889
Other assets . . . . . . . . . . . . . . . . . . 17,436 10,000 (d) 13,823
(13,613)(g)
Deferred tax asset . . . . . . . . . . . . . . . -- 21,987 (h) 21,987
----------- ----------- -----------
$ 1,114,260 $ (357,216) $ 757,044
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current maturities of long-term debt . . . . . $ 8,406 $ -- $ 8,406
Revolving credit agreement . . . . . . . . . . 8,386 -- 8,386
Accounts payable . . . . . . . . . . . . . . . 60,377 -- 60,377
Accrued liabilities . . . . . . . . . . . . . 102,609 (13,879)(d) 53,974
(34,756)(d)
----------- ----------- -----------
Total current liabilities . . . . . . . . . 179,778 (48,635) 131,143
----------- ----------- -----------
Long-term debt, less current maturities . . . . . 13,024 -- 13,024
Intercompany loan . . . . . . . . . . . . . . . . -- 450,000 (b) 450,000
Production payments, less current portion . . . . 25,362 (7,212)(d) 18,150
Senior secured notes . . . . . . . . . . . . . . 800,000 (800,000)(d) --
Subordinated notes . . . . . . . . . . . . . . . 104,386 11,429 (e) 115,815
Deferred revenue . . . . . . . . . . . . . . . . 46,176 (46,176)(d) --
Deferred income taxes . . . . . . . . . . . . . . 35,542 (57,529)(h) --
21,987 (h)
Payable to affiliates . . . . . . . . . . . . . . 7,618 205,000 (h) 82,618
(130,000)(i)
Other liabilities . . . . . . . . . . . . . . . . 8,429 (1,309)(d) 7,120
Stockholders' deficit:
Common stock . . . . . . . . . . . . . . . . . 740 (250)(d) 490
Paid-in capital (deficit) . . . . . . . . . . (123,524) 130,000 (i) 6,476
Retained earnings (accumulated deficit) . . . 16,729 (399,034)(d) (67,792)
314,513 (j)
----------- ----------- -----------
Total stockholders' deficit . . . . . . . . (106,055) 45,229 (60,826)
----------- ----------- -----------
$ 1,114,260 $ (357,216) $ 757,044
=========== =========== ===========
The accompanying notes are an integral part of the pro forma financial
statements.
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TRANSTEXAS GAS CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(a) To record the Lobo Sale for an adjusted purchase price of $1,073.4 million:
Cash proceeds . . . . . . . . . . . . . . . . . $ 1,073,424
Carrying value of stock sold . . . . . . . . . . (450,592)
-----------
Pretax gain on Lobo Sale . . . . . . . . $ 622,832 (j)
===========
Purchase price adjustments were made for, among other things: the
value of certain NGLs and stored hydrocarbons; the value of gas in TTC's
pipeline; prepaid expenses relating to post-effective date operations;
post-closing expenses related to pre-closing operations; the value of oil
and gas produced and sold between the effective date of the Lobo Sale and
closing (approximately $44 million); property defects; and estimated costs
associated with liabilities incurred before closing. Purchase price
adjustments made at the closing of the Lobo Sale are subject to a review,
reconciliation and resolution process, which is expected to be completed
within 105 days following the closing.
(b) To record the borrowing by the Company of $450 million pursuant to the
TransTexas Intercompany Loan.
(c) To record the collection of amounts due from affiliates.
(d) To record the application of a portion of the proceeds from (a) through (c)
above:
Repurchase of Senior Secured Notes . . . . . . . $ 800,000
Premium of 11.5% for Senior Secured Notes . . . 92,000 (j)
Accrued interest on Senior Secured Notes . . . . 34,756
Lobo Sale production repayment . . . . . . . . . 43,806 (j)
Repayment of volumetric production payments
(deferred revenue), dollar-denominated
production payments and other debt . . . . . 68,576
Stock Repurchase Program . . . . . . . . . . . . 399,284
Debt issue costs . . . . . . . . . . . . . . . . 10,000
-----------
$ 1,448,422
===========
Pending completion of the Stock Repurchase Program, up to $400 million
of proceeds from the TEC Notes Offering and the Transactions will be held
by the Company in a restricted cash account. Such proceeds will be
disbursed from such account (i) for purposes of the Stock Repurchase
Program or (ii) upon completion of Phase II of TARC's Capital Improvement
Program for general corporate purposes.
In addition to the above, proceeds of approximately $11 million were
used to pay accrued interest on the Senior Secured Notes for the period
from May 1, 1997 through June 13, 1997.
During the months of April and May 1997, the Company obtained
additional financing in the aggregate amount of $49.5 million, of which
approximately $29.2 million remained outstanding at June 30, 1997.
(e) To record the premium attributable to the Subordinated Notes Exchange
Offer. See (j).
(f) To release cash restricted pursuant to the Senior Secured Notes Indenture.
(g) To write off unamortized debt issue costs related to the Senior Secured
Notes and the Subordinated Notes. See (j).
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(h) To record the income tax effects of the Lobo Sale and of expenses related
to the Senior Secured Notes Tender Offer and to reclassify $22.0 million of
deferred taxes to deferred tax assets.
Payable to TransAmerican pursuant to the Tax
Allocation Agreement . . . . . . . . . . . . $ 205,000
Deferred income taxes . . . . . . . . . . . . . (57,529)
-----------
$ 147,471
===========
(i) To record the assumption of $130 million of estimated net tax liability by
TransAmerican in accordance with the Tax Allocation Agreement.
(j) To record the effects on retained earnings as a result of (a) through (i).
Pretax gain on Lobo Sale . . . . . . . . . . . . $ 622,832
Premium of 11.5% for Senior Secured Notes . . . (92,000)(1)
Lobo Sale production repayment . . . . . . . . . (43,806)
Premium attributable to the Subordinated
Notes Exchange Offer . . . . . . . . . . . . (11,429)(1)
Unamortized debt issue costs . . . . . . . . . . (13,613)(1)
Federal income taxes . . . . . . . . . . . . . . (147,471)
-----------
$ 314,513
===========
_____________
(1) These amounts and the related income tax benefits, if any, will be
recorded as an extraordinary charge to income in the period that the
related debt is extinguished.
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TRANSTEXAS GAS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED APRIL 30, 1997
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
Historical Adjustments Pro Forma
---------- ----------- ---------
Revenues:
Gas, condensate and natural gas liquids . . . $ 72,882 $ (36,862)(a) $ 36,020
Transportation . . . . . . . . . . . . . . . . 9,291 (9,291)(a) --
Other . . . . . . . . . . . . . . . . . . . . 178 -- 178 (d)
----------- ----------- -----------
Total revenues . . . . . . . . . . . . . . 82,351 (46,153) 36,198
----------- ----------- -----------
Costs and expenses:
Operating . . . . . . . . . . . . . . . . . . 27,142 (21,936)(a) 5,206
Depreciation, depletion and amortization . . . 33,557 (14,408)(a) 19,149
General and administrative . . . . . . . . . . 15,140 (7,688)(a) 7,452
Taxes other than income taxes . . . . . . . . 5,214 (2,450)(a) 2,764
----------- ----------- -----------
Total costs and expenses . . . . . . . . . 81,053 (46,482) 34,571 (d)
----------- ----------- ------------
Operating income . . . . . . . . . . . . . 1,298 329 1,627
----------- ----------- -----------
Other income (expenses):
Interest income . . . . . . . . . . . . . . . 1,694 -- 1,694
Interest expense, net . . . . . . . . . . . . (25,358) 9,019 (b) (16,339)
----------- ----------- -----------
Total other income (expense) . . . . . . . (23,664) 9,019 (14,645)
----------- ----------- -----------
Loss before income taxes . . . . . . . . . (22,366) 9,348 (13,018)
Income taxes (benefit) . . . . . . . . . . . . . (7,828) 3,272 (c) (4,556)
----------- ----------- ------------
Net loss . . . . . . . . . . . . . . . . . $ (14,538) $ 6,076 $ (8,462)
=========== =========== ===========
Net loss per share . . . . . . . . . . . . . . . $ (0.20) $ (0.17)
=========== ===========
Weighted average number of common
shares outstanding . . . . . . . . . . . . . . 74,000,000 49,044,750 (e)
=========== ===========
The accompanying notes are an integral part of the pro forma financial
statements.
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TRANSTEXAS GAS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
Historical Adjustments Pro Forma
---------- ----------- ---------
Revenues:
Gas, condensate and natural gas liquids . . . $ 363,459 $ (173,761)(a) $ 189,698
Transportation . . . . . . . . . . . . . . . . 34,423 (34,423)(a) --
Gain on the sale of assets . . . . . . . . . . 7,856 -- 7,856
Other . . . . . . . . . . . . . . . . . . . . 609 -- 609(d)
----------- ----------- -----------
Total revenues . . . . . . . . . . . . . . 406,347 (208,184) 198,163
----------- ----------- -----------
Costs and expenses:
Operating . . . . . . . . . . . . . . . . . . 114,453 (97,494)(a) 16,959
Depreciation, depletion and amortization . . . 132,453 (78,932)(a) 53,521
General and administrative . . . . . . . . . . 45,596 (2,000)(a) 43,596
Taxes other than income taxes . . . . . . . . 22,566 (12,818)(a) 9,748
Litigation settlement . . . . . . . . . . . . (96,000) -- (96,000)
----------- ----------- -----------
Total costs and expenses . . . . . . . . . 219,068 (191,244) 27,824(d)
----------- ----------- -----------
Operating income . . . . . . . . . . . . . 187,279 (16,940) 170,339
----------- ----------- -----------
Other income (expenses):
Interest income . . . . . . . . . . . . . . . 5,544 -- 5,544
Interest expense, net . . . . . . . . . . . . (97,007) 24,368 (b) (72,639)
----------- ----------- -----------
Total other income (expense) . . . . . . . (91,463) 24,368 (67,095)
----------- ----------- -----------
Income before income taxes . . . . . . . . 95,816 7,428 103,244
Income taxes . . . . . . . . . . . . . . . . . . 12,491 23,644 (c) 36,135
----------- ----------- -----------
Net income . . . . . . . . . . . . . . . . $ 83,325 $ (16,216) $ 67,109
=========== =========== ===========
Net income per share . . . . . . . . . . . . . . $ 1.13 $ 1.37
=========== ===========
Weighted average number of common
shares outstanding . . . . . . . . . . . . . . 74,000,000 49,044,750 (e)
=========== ===========
The accompanying notes are an integral part of the pro forma financial
statements.
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TRANSTEXAS GAS CORPORATION
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
(a) To adjust revenues, including losses relating to risk management
activities, operating expenses, depreciation, depletion and amortization,
general and administrative and taxes other than income taxes as a result
of the Lobo Sale.
(b) To adjust interest expense as follows:
Three Months
Ended Year Ended
April 30, 1997 January 31, 1997
-------------- ----------------
Interest on the Intercompany Loan at a rate of 10.875% . $ 12,234 $ 48,938
Interest on estimated federal income tax liability payable
to affiliate at an assumed rate of 9.0% . . . . . . . 1,688 6,750
Historical interest on Subordinated Notes . . . . . . . (3,294) (1,646)
Interest on Subordinated Exchange Notes at a rate of 13.75% 3,981 15,925
Historical interest expense on the Senior Secured Notes (23,000) (92,000)
Historical interest expense on other debt . . . . . . . (634) (2,500)
Amortization of estimated debt issuance costs . . . . . 500 2,000
Amortization of historical debt issuance costs . . . . . (606) (1,835)
Change in interest capitalized . . . . . . . . . . . . . 112 --
---------- ----------
Total adjustment to interest expense . . . . . . $ (9,019) $ (24,368)
========== ==========
(c) To adjust income tax expense for the effects of adjustments (a) and (b)
above based on the federal statutory rate of 35%.
(d) Does not include revenues and related expenses attributable to the
Agreement for Services between the Company and Conoco Inc.
(e) Assumes 24,955,250 common shares are purchased pursuant to the Stock
Repurchase Program at $16 per share.
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