-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VA6t7focB/O/uz+nksTk3mTSpRIzvtD+1GvBCx9YCwRolEa4G6J/G3cf7nxyaVC8 N+VLbXHadinRUS9Ymwp6Qg== 0000934665-99-000004.txt : 19990511 0000934665-99-000004.hdr.sgml : 19990511 ACCESSION NUMBER: 0000934665-99-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ESI TRACTEBEL FUNDING CORP CENTRAL INDEX KEY: 0000934665 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 043255377 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-87902 FILM NUMBER: 99614959 BUSINESS ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408-2683 BUSINESS PHONE: 5616917171 MAIL ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408-2683 FORMER COMPANY: FORMER CONFORMED NAME: IEC FUNDING CORP DATE OF NAME CHANGE: 19941227 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH JERSEY ENERGY ASSOCIATES CENTRAL INDEX KEY: 0000934666 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 042955646 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-87902-01 FILM NUMBER: 99614960 BUSINESS ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408-2683 BUSINESS PHONE: 5616917171 MAIL ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408-2683 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHEAST ENERGY ASSOCIATES CENTRAL INDEX KEY: 0000934667 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 042955642 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-87902-02 FILM NUMBER: 99614961 BUSINESS ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408-2683 BUSINESS PHONE: 5616917171 MAIL ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408-2683 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHEAST ENERGY LP CENTRAL INDEX KEY: 0001059025 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 650811248 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-52397-01 FILM NUMBER: 99614962 BUSINESS ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408-2683 BUSINESS PHONE: 5616917171 MAIL ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408-2683 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ESI TRACTEBEL ACQUISITION CORP CENTRAL INDEX KEY: 0001059027 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 650827005 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-52397 FILM NUMBER: 99614963 BUSINESS ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408-2683 BUSINESS PHONE: 5616917171 MAIL ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408-2683 10-Q 1 ESI TRACT FUND NEA NJEA ESI TRACT ACQ NE LP 3/31/99 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Exact name of Registrants as specified in their charters, State of Incorporation, IRS Employer Commission address of principal executive offices and Identification File Number Registrants' telephone number Number - ----------- ------------------------------------------ -------------- 33-87902 ESI Tractebel Funding Corp. 04-3255377 (a Delaware corporation) 33-87902-02 Northeast Energy Associates, 04-2955642 A Limited Partnership (a Massachusetts limited partnership) 33-87902-01 North Jersey Energy Associates, 04-2955646 A Limited Partnership (a New Jersey limited partnership) 333-52397 ESI Tractebel Acquisition Corp. 65-0827005 (a Delaware corporation) 333-52397-01 Northeast Energy, LP 65-0811248 (a Delaware limited partnership) ------------------------------------------ c/o FPL Energy, Inc. 700 Universe Boulevard Juno Beach, Florida 33408-2683 (561) 691-7171 Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) have been subject to such filing requirements for the past 90 days. Yes X No ___ ---------------------------------- This combined Form 10-Q represents separate filings by ESI Tractebel Funding Corp., Northeast Energy Associates, A Limited Partnership, North Jersey Energy Associates, A Limited Partnership, ESI Tractebel Acquisition Corp. and Northeast Energy, LP. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Each registrant makes representations only as to itself and makes no other representations whatsoever as to any other registrant. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (Reform Act), ESI Tractebel Funding Corp. (Funding Corp.), Northeast Energy Associates, A Limited Partnership (NEA) and North Jersey Energy Associates, A Limited Partnership (NJEA) (collectively, the Partnerships), ESI Tractebel Acquisition Corp. (Acquisition Corp.) and Northeast Energy, LP (NE LP) (all five entities collectively, the Registrants) are hereby filing cautionary statements identifying important factors that could cause the Registrants' actual results to differ materially from those projected in forward-looking statements (as such term is defined in the Reform Act) of the Registrants made by or on behalf of the Registrants which are made in this combined Form 10-Q, in presentations, in response to questions or otherwise. Any statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as will likely result, are expected to, will continue, is anticipated, estimated, projection, outlook) are not statements of historical facts and may be forward-looking. Forward-looking statements involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors that could cause the Registrants' actual results to differ materially from those contained in forward-looking statements made by or on behalf of the Registrants. Any forward-looking statement speaks only as of the date on which such statement is made, and the Registrants undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. Some important factors that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements include changing governmental policies and regulatory actions with respect to the Public Utility Regulatory Policies Act of 1978, as amended, acquisition and disposal of assets and facilities, operation and construction of plant facilities, recovery of fuel and purchased power costs, and present or prospective competition. The business and profitability of the Registrants are also influenced by economic and geographic factors including political and economic risks, changes in and compliance with environmental and safety laws and policies, weather conditions, population growth rates and demographic patterns, competition for retail and wholesale customers, pricing and transportation of commodities, market demand for energy from plants or facilities, changes in tax rates or policies or in rates of inflation, unanticipated development project delays or changes in project costs, unanticipated changes in operating expenses and capital expenditures, capital market conditions, competition for new energy development opportunities, legal and administrative proceedings (whether civil, such as environmental, or criminal) and settlements, and any unanticipated impact of the year 2000, including delays or changes in costs of year 2000 compliance, or the failure of major suppliers, customers and others with whom the Registrants do business to resolve their own year 2000 issues on a timely basis. All such factors are difficult to predict, contain uncertainties which may materially affect actual results, and are beyond the control of the Registrants. PART I - FINANCIAL INFORMATION Item 1. Financial Statements NORTHEAST ENERGY, LP CONSOLIDATED BALANCE SHEETS (Thousands of Dollars) (Unaudited)
March 31, December 31, 1999 1998 ASSETS Current assets: Cash and cash equivalents ........................................................ $ 61,058 $ 36,038 Accounts receivable .............................................................. 42,820 29,746 Spare parts inventories .......................................................... 15,653 194 Fuel inventories ................................................................. 1,210 4,935 Prepaid expenses and other current assets ........................................ 957 212 Total current assets ........................................................... 121,698 71,125 Non-current assets: Deferred debt issuance costs (net of accumulated amortization of $705 and $548, respectively) ................................... 6,255 6,412 Cogeneration facilities and carbon dioxide facility (net of accumulated depreciation of $26,434 and $20,987, respectively) ............................. 487,120 492,566 Power purchase contracts (net of accumulated amortization of $61,362 and $48,545, respectively) ............................. 827,394 840,211 Other assets ..................................................................... 27 29 Total non-current assets ....................................................... 1,320,796 1,339,218 TOTAL ASSETS ....................................................................... $1,442,494 $ 1,410,343 LIABILITIES AND PARTNERS' EQUITY Current liabilities: Current portion of notes payable - the Funding Corp. ............................. $ 23,511 $ 23,511 Accounts payable ................................................................. 23,677 12,338 Accrued interest payable ......................................................... 15,483 - Due to related parties ........................................................... 1,422 800 Other accrued expenses ........................................................... 9,992 9,384 Total current liabilities ...................................................... 74,085 46,033 Non-current liabilities: Deferred credit - fuel contracts ................................................. 308,215 313,427 Notes payable - the Funding Corp. ................................................ 445,213 445,213 Note payable - the Acquisition Corp. ............................................. 220,000 220,000 Amounts due utilities for energy bank balances ................................... 171,878 173,356 Total non-current liabilities .................................................. 1,145,306 1,151,996 Partners' equity: General partners ................................................................. 4,462 4,246 Limited partners ................................................................. 218,641 208,068 Total partners' equity ......................................................... 223,103 212,314 COMMITMENTS AND CONTINGENCIES TOTAL LIABILITIES AND PARTNERS' EQUITY ............................................. $1,442,494 $ 1,410,343
This report should be read in conjunction with the Notes to Consolidated Financial Statements on page 11 herein and the Notes to Consolidated and Combined Financial Statements appearing in the 1998 Form 10-K for NE LP. NORTHEAST ENERGY, LP CONSOLIDATED STATEMENTS OF OPERATIONS (Thousands of Dollars) (Unaudited)
Three Months Ended March 31, 1999 1998 REVENUES ............................................................................. $ 90,332 $ 74,739 COSTS AND EXPENSES: Fuel ............................................................................... 35,540 29,517 Operations and maintenance ......................................................... 3,928 4,738 Depreciation and amortization ...................................................... 18,272 15,508 General and administrative ......................................................... 2,335 2,168 Total costs and expenses ......................................................... 60,075 51,931 OPERATING INCOME ..................................................................... 30,257 22,808 OTHER EXPENSE (INCOME): Amortization of debt issuance costs ................................................ 157 72 Interest expense ................................................................... 19,775 15,763 Interest income .................................................................... (464) (653) Total other expense .............................................................. 19,468 15,182 NET INCOME............................................................................ $ 10,789 $ 7,626
This report should be read in conjunction with the Notes to Consolidated Financial Statements on page 11 herein and the Notes to Consolidated and Combined Financial Statements appearing in the 1998 Form 10-K for NE LP. NORTHEAST ENERGY, LP CONSOLIDATED STATEMENTS OF CASH FLOWS (Thousands of Dollars) (Unaudited)
Three Months Ended March 31, 1999 1998 NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $ 25,020 $ 32,602 CASH FLOWS FROM INVESTING ACTIVITIES: Release of restricted cash collateral ............................................... - 69,156 Acquisition purchase price, net of $62,635 cash acquired ............................ - (483,140) Net cash used in investing activities ............................................. - (413,984) CASH FLOWS FROM FINANCING ACTIVITIES: Contributions from partners ......................................................... - 535,412 Net proceeds from loan by the Acquisition Corp. ..................................... - 215,202 Distributions to partners ........................................................... - (307,621) Net cash provided by financing activities ......................................... - 442,993 Net increase in cash and cash equivalents ............................................. 25,020 61,611 Cash and cash equivalents at beginning of period ...................................... 36,038 - Cash and cash equivalents at end of period ............................................ $ 61,058 $ 61,611 Supplemental disclosure of cash flow information: Cash paid for interest .............................................................. $ - $ -
This report should be read in conjunction with the Notes to Consolidated Financial Statements on page 11 herein and the Notes to Consolidated and Combined Financial Statements appearing in the 1998 Form 10-K for NE LP. NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP COMBINED BALANCE SHEETS (Thousands of Dollars) (Unaudited)
March 31, December 31, 1999 1998 ASSETS Current assets: Cash and cash equivalents ......................................................... $ 60,135 $ 35,152 Accounts receivable ............................................................... 42,820 29,746 Spare parts inventories ........................................................... 15,653 194 Fuel inventories .................................................................. 1,210 4,935 Prepaid expenses and other current assets ......................................... 957 212 Total current assets ............................................................ 120,775 70,239 Non-current assets: Cogeneration facilities and carbon dioxide facility (net of accumulated depreciation of $26,434 and $20,987, respectively) .............................. 487,120 492,566 Power purchase contracts (net of accumulated amortization of $61,362 and $48,545, respectively) .............................. 827,394 840,211 Other assets ...................................................................... 27 29 Total non-current assets ........................................................ 1,314,541 1,332,806 TOTAL ASSETS ........................................................................ $1,435,316 $1,403,045 LIABILITIES AND PARTNERS' EQUITY Current liabilities: Current portion of notes payable - the Funding Corp. .............................. $ 23,511 $ 23,511 Accounts payable .................................................................. 23,677 12,338 Accrued interest payable .......................................................... 11,087 - Due to related parties ............................................................ 1,283 663 Other accrued expenses ............................................................ 9,992 9,384 Total current liabilities ....................................................... 69,550 45,896 Non-current liabilities: Deferred credit - fuel contracts .................................................. 308,215 313,427 Notes payable - the Funding Corp. ................................................. 445,213 445,213 Amounts due utilities for energy bank balances .................................... 171,878 173,356 Total non-current liabilities ................................................... 925,306 931,996 Partners' equity: General partner ................................................................... 4,405 4,252 Limited partners .................................................................. 436,055 420,901 Total partners' equity .......................................................... 440,460 425,153 COMMITMENTS AND CONTINGENCIES TOTAL LIABILITIES AND PARTNERS' EQUITY .............................................. $1,435,316 $1,403,045
This report should be read in conjunction with the Notes to Combined Financial Statements on page 11 herein and the Notes to Consolidated and Combined Financial Statements appearing in the 1998 Form 10-K for NEA and NJEA. NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP COMBINED STATEMENTS OF OPERATIONS (Thousands of Dollars) (Unaudited)
Period From Period From January 1, Three Months January 14, 1998 to Ended 1998 to January 13, March 31, March 31, 1998 1999 1998 (Prior Basis) REVENUES ................................................... $ 90,332 $ 74,739 $ 13,109 COSTS AND EXPENSES: Fuel ..................................................... 35,540 29,517 5,774 Operations and maintenance ............................... 3,928 4,738 974 Depreciation and amortization ............................ 18,272 15,508 894 General and administrative ............................... 2,335 1,895 538 Total costs and expenses ............................... 60,075 51,658 8,180 OPERATING INCOME ........................................... 30,257 23,081 4,929 OTHER EXPENSE (INCOME): Interest expense ......................................... 15,379 13,712 2,422 Interest income .......................................... (428) (653) (402) Total other expense .................................... 14,951 13,059 2,020 NET INCOME ................................................. $ 15,306 $ 10,022 $ 2,909
This report should be read in conjunction with the Notes to Combined Financial Statements on page 11 herein and the Notes to Consolidated and Combined Financial Statements appearing in the 1998 Form 10-K for NEA and NJEA. NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP COMBINED STATEMENTS OF CASH FLOWS (Thousands of Dollars) (Unaudited)
Period From Period From January 1, Three Months January 14, 1998 to Ended 1998 to January 13, March 31, March 31, 1998 1999 1998 (Prior Basis) NET CASH PROVIDED BY OPERATING ACTIVITIES ................... $ 24,983 $ 33,673 $ 1,432 CASH FLOWS FROM INVESTING ACTIVITIES Release of restricted cash collateral ..................... - 69,156 - Net cash provided by investing activities ............... - 69,156 - CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to partners ................................. - (104,920) - Net cash used in financing activities ................... - (104,920) - Net increase (decrease) in cash and cash equivalents ........ 24,983 (2,091) 1,432 Cash and cash equivalents at beginning of period ............ 35,152 62,635 61,203 Cash and cash equivalents at end of period .................. $ 60,135 $ 60,544 $ 62,635 Supplemental disclosure of cash flow information: Cash paid for interest .................................... $ - $ - $ - Supplemental disclosure of noncash investing and financing activities: See Notes to Combined Financial Statements - Basis of Presentation concerning new basis of accounting subsequent to January 13, 1998
This report should be read in conjunction with the Notes to Combined Financial Statements on page 11 herein and the Notes to Consolidated and Combined Financial Statements appearing in the 1998 Form 10-K for NEA and NJEA. ESI TRACTEBEL FUNDING CORP. BALANCE SHEETS (Thousands of Dollars) (Unaudited)
March 31, December 31, 1999 1998 ASSETS Current assets: Cash .............................................................................. $ 1 $ 1 Interest receivable from the Partnerships ......................................... 10,991 - Current portion of notes receivable from the Partnerships ......................... 23,511 23,511 Total current assets ............................................................ 34,503 23,512 Notes receivable from the Partnerships .............................................. 445,213 445,213 TOTAL ASSETS ........................................................................ $ 479,716 $ 468,725 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of securities payable ............................................. $ 23,511 $ 23,511 Accrued interest .................................................................. 10,991 - Total current liabilities ....................................................... 34,502 23,511 Securities payable .................................................................. 445,213 445,213 Stockholders' equity: Common stock, no par value, 10,000 shares authorized, issued and outstanding ...... 1 1 COMMITMENTS AND CONTINGENCIES TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......................................... $ 479,716 $ 468,725
STATEMENTS OF OPERATIONS (Thousands of Dollars) (Unaudited)
Three Months Ended March 31, 1999 1998 Interest income ..................................................................... $ 10,991 $ 11,445 Interest expense .................................................................... (10,991) (11,445) NET INCOME .......................................................................... $ - $ -
These reports should be read in conjunction with the Notes to Financial Statements on page 11 herein and the Notes to Financial Statements appearing in the 1998 Form 10-K for the Funding Corp. ESI TRACTEBEL ACQUISITION CORP. BALANCE SHEETS (Thousands of Dollars) (Unaudited)
March 31, December 31, 1999 1998 ASSETS Current assets: Interest receivable from NE LP...................................................... $ 4,396 $ - Due from NE LP ....................................................................... 152 152 Note receivable from NE LP ........................................................... 220,000 220,000 TOTAL ASSETS ......................................................................... $224,548 $220,152 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Income taxes payable ............................................................... $ 5 $ 4 Accrued interest ................................................................... 4,396 - Total current liabilities ........................................................ 4,401 4 Deferred credit - interest rate hedge ................................................ 137 140 Securities payable ................................................................... 220,000 220,000 Stockholders' equity: Common stock, $.01 par value, 100 shares authorized, 20 shares issued .............. - - Subscriptions receivable ........................................................... - - Retained earnings .................................................................. 10 8 COMMITMENTS AND CONTINGENCIES TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........................................... $224,548 $220,152
STATEMENTS OF OPERATIONS (Thousands of Dollars) (Unaudited)
Period From January 12, 1998 (Date of Formation) to March 31, March 31, 1999 1998 Interest income ...................................................................... $ 4,396 $ 2,054 Interest expense ..................................................................... (4,393) (2,051) Income before income taxes ........................................................... 3 3 Income tax expense ................................................................... (1) (2) NET INCOME ........................................................................... $ 2 $ 1
These reports should be read in conjunction with the Notes to Financial Statements on page 11 herein and the Notes to Financial Statements appearing in the 1998 Form 10-K for the Acquisition Corp. NORTHEAST ENERGY, LP NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP ESI TRACTEBEL FUNDING CORP. ESI TRACTEBEL ACQUISITION CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTES TO COMBINED FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS (Unaudited) The accompanying consolidated financial statements, combined financial statements and financial statements should be read in conjunction with the 1998 Form 10-K for ESI Tractebel Funding Corp. (Funding Corp.), Northeast Energy Associates, A Limited Partnership and North Jersey Energy Associates, A Limited Partnership (collectively, the Partnerships), ESI Tractebel Acquisition Corp. (Acquisition Corp.) and Northeast Energy, LP (NE LP) (all five entities collectively, the Registrants). In the opinion of the Registrants' management, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made. Certain amounts included in the prior year's financial statements have been reclassified to conform to the current year's presentation. The Funding Corp. and the Acquisition Corp. had no cash transactions for the three months ended March 31, 1999 and 1998 and therefore have not presented a statement of cash flows. The results of operations for an interim period may not give a true indication of results for the year. 1. Summary of Significant Accounting Policies (NE LP and the Partnerships) Basis of Presentation - On January 14, 1998 NE LP acquired the Partnerships. The acquisitions were accounted for using the purchase method of accounting and were subject to pushdown accounting, which gave rise to a new basis of accounting by the Partnerships. Consequently, the Partnerships' combined balance sheets and the combined statements of operations and cash flows for the period from January 14, 1998 to March 31, 1998 and for the three months ended March 31, 1999 are reported under the new basis of accounting described above. The Partnerships' combined statements of operations and cash flows for the period from January 1, 1998 to January 13, 1998 represent historical financial data of the Partnerships prior to the acquisitions. Inventories - During the first quarter of 1999, the Partnerships purchased spare parts from the former operations and maintenance (O&M) provider. Spare parts inventories are stated at cost and are determined by specific identification. 2. Commitments and Contingencies In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and Hedging Activities." This statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Registrants are currently assessing the effect, if any, on their financial statements of implementing FAS 133. The Registrants will be required to adopt the standard in 2000. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This discussion should be read in conjunction with the Notes to Consolidated Financial Statements, Notes to Combined Financial Statements and Notes to Financial Statements contained herein and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 1998 Form 10-K for the Registrants. The results of operations for an interim period may not give a true indication of results for the year. Results of Operations NE LP and the Partnerships - In the following discussion, comparisons for NE LP are with the corresponding items in the prior year. Comparisons for the Partnerships are with the corresponding items for the prior period beginning January 14, 1998. Revenues increased $15.6 million primarily as a result of recognizing power sales for a full quarter in 1999 versus 1998 when power sales were recognized subsequent to the acquisition of the Partnerships on January 14, 1998. The remainder of the increase is the result of increased production at the Bellingham and Sayreville facilities and increased power sales to utilities. Power sales to utilities reflect changes in utility energy bank balances (which increased reported revenues) that are determined in accordance with scheduled or specified rates under certain power purchase agreements. Fuel expense, excluding $5.2 million and $4.5 million of deferred credit amortization for fuel contracts for the periods ended March 31, 1999 and 1998, respectively, increased $6.7 million. The increase is primarily the result of recognizing fuel expense for a full quarter in 1999 versus 1998 when fuel expense was recognized subsequent to the acquisition of the Partnerships on January 14, 1998. The remainder of the increase is for fuel purchased for the facilities as a result of the increased production mentioned above. O&M expense, excluding $1 million of deferred credit amortization for O&M contracts for the period ended March 31, 1998, decreased $1.8 million. The decrease is primarily the result of reduced O&M costs incurred by the new operator of the facilities and the elimination of the performance bonus paid to the previous operator, partially offset by recognizing O&M costs for a full quarter in 1999 versus 1998 when O&M costs were recognized subsequent to the acquisition of the Partnerships on January 14, 1998. Depreciation and amortization increased $2.8 million. The increase is primarily the result of recognizing depreciation and amortization on the facilities and power purchase agreements, respectively, for a full quarter in 1999 versus 1998 when depreciation and amortization was recognized subsequent to the acquisition of the Partnerships on January 14, 1998. Interest expense of NE LP and the Partnerships increased $4 million and $1.7 million, respectively. The increase is primarily the result of recognizing interest expense on notes payable to the Funding Corp. for a full quarter in 1999 versus 1998 when interest expense was recognized subsequent to the acquisition of the Partnerships on January 14, 1998 partially offset by decreasing principal balances on the notes payable. Additionally, NE LP recognized interest expense on the note payable to the Acquisition Corp. for a full quarter in 1999 versus 1998 when interest expense was recognized subsequent to the issuance of $220 million of debt in February 1998. The Partnerships for the period from January 1, 1998 to January 13, 1998 (pre-acquisition) - Revenues for the thirteen-day period totaled $13.1 million and were comprised of $12.9 million of power sales to utilities and $200 thousand of steam sales. Power sales to utilities reflect changes in utility energy bank balances which are determined in accordance with scheduled or specified rates under certain power purchase agreements. Fuel expense of $5.8 million includes fuel purchased for the Partnerships and the fixed and variable costs associated with the delivery and use of the fuel for operations. O&M expenses of $974,000 are comprised of O&M provider fees and site utility expenses. Depreciation and amortization of $894,000 is comprised of depreciation for the cogeneration and carbon dioxide facilities. General and administrative expenses of $538,000 are comprised primarily of management fees. Interest expense is comprised primarily of interest on notes payable to the Funding Corp. ($1.7 million) and interest on energy bank balances ($630,000). Interest income reflects cash balances earning investment income. The Funding Corp. and the Acquisition Corp. - Both the Funding Corp. and the Acquisition Corp. are scheduled to make semi-annual debt and/or interest payments on June 30 and December 30, 1999. Interest expense for the Funding Corp. decreased $454,000 due to decreasing principal balances on the securities payable. Interest expense for the Acquisition Corp. increased $2.3 million. The increase is primarily the result of recognizing interest expense on the Acquisition Corp. securities payable for a full quarter in 1999 versus 1998 when interest expense was recognized subsequent to the issuance of $220 million of debt in February 1998. The Registrants are continuing to work to resolve the potential impact of the year 2000 on the processing of information by their computer systems. A multi-phase plan has been developed consisting of inventorying potential problems, assessing what will be required to address each potential problem, taking the necessary action to fix each problem, testing to see that the action taken did result in year 2000 readiness and implementing the required solution. The inventory and assessment of the information technology infrastructure, computer applications and computerized processes embedded in operating equipment has been completed. The Registrants' efforts to assess the year 2000 readiness of third parties include surveying important suppliers. Meetings are being conducted with these suppliers. Results of our supplier readiness assessment are being considered in the development of our contingency plans to help ensure that critical supplies are not interrupted, that large power purchasers are able to receive power and that transactions with or processed by financial institutions will occur as intended. The Registrants are on schedule with their multi-phase plan and all phases are expected to be completed by mid-1999, except for work at NJEA which will be completed during a scheduled outage in October 1999. The cost of addressing year 2000 issues is estimated to be approximately $500,000, of which approximately 20% had been spent through March 31, 1999. At this time, the Registrants believe that the most reasonably likely worst case scenarios relating to the year 2000 could include a temporary disruption of service to customers, caused by a potential disruption in fuel supply, water supply and telecommunications. The Registrants' year 2000 contingency planning is currently underway to address risk scenarios at the operating level (such as generation, transmission and distribution), as well as at the business level (such as procurement and accounting). These plans are intended to mitigate both internal risks and potential risks in the Registrants' supply chain. Contingency plans are expected to be completed by mid-1999, allowing the second half of 1999 for communication and training. Liquidity and Capital Resources The Registrants - Cash flow generated by the Partnerships year to date has been and is expected to remain sufficient to fund operating expenses of the Registrants as well as fund the debt service requirements of the Funding Corp. and the Acquisition Corp. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits
Exhibit No. Description 27.1 Financial Data Schedule - ESI Tractebel Funding Corp. 27.2 Financial Data Schedule - Northeast Energy Associates, A Limited Partnership 27.3 Financial Data Schedule - North Jersey Energy Associates, A Limited Partnership 27.4 Financial Data Schedule - ESI Tractebel Acquisition Corp. 27.5 Financial Data Schedule - Northeast Energy, LP (b) Reports On Form 8-K None.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP (ESI Northeast Energy GP, Inc. as Administrative General Partner) NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP (ESI Northeast Energy GP, Inc. as Administrative General Partner) NORTHEAST ENERGY, LP (ESI Northeast Energy GP, Inc. as Administrative General Partner) ESI TRACTEBEL FUNDING CORP. ESI TRACTEBEL ACQUISITION CORP. (Registrants) Date: May 10, 1999 PETER D. BOYLAN Treasurer of ESI Northeast Energy GP, Inc. Treasurer of ESI Tractebel Funding Corp. Treasurer of ESI Tractebel Acquisition Corp. (Principal Financial and Principal Accounting Officer of the Registrants) EX-27.1 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from ESI Tractebel Funding Corp.'s balance sheet as of March 31, 1999 and statement of operations for the period ended March 31, 1999 and is qualified in its entirety by reference to such financial statements. 0000934665 ESI Tractebel Funding Corp. 1,000 U.S. DOLLARS JAN-1-1999 3-MOS DEC-31-1998 MAR-31-1999 1 $1 $0 $34,502 $0 $0 $34,503 $0 $0 $479,716 $34,502 $445,213 $0 $0 $1 $0 $479,716 $0 $10,991 $0 $0 $0 $0 $10,991 $0 $0 $0 $0 $0 $0 $0 $0 $0
EX-27.2 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Northeast Energy Associates, A Limited Partnership and North Jersey Energy Associates, A Limited Partnership combined balance sheet as of March 31, 1999 and combined statement of operations for the period ended March 31, 1999 and is qualified in its entirety by reference to such financial statements. 0000934667 Northeast Energy Associates, A Limited Partnership 1,000 U.S. DOLLARS JAN-01-1999 3-MOS DEC-31-1998 MAR-31-1999 1 $60,135 $0 $42,820 $0 $16,863 $120,775 $513,554 $26,434 $1,435,316 $69,550 $445,213 $0 $0 $0 $440,460 $1,435,316 $90,332 $90,332 $0 $57,740 $1,907 $0 $15,379 $15,306 $0 $15,306 $0 $0 $0 $15,306 $0 $0
EX-27.3 4 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Northeast Energy Associates, A Limited Partnership and North Jersey Energy Associates, A Limited Partnership combined balance sheet as of March 31, 1999 and combined statement of operations for the period ended March 31, 1999 and is qualified in its entirety by reference to such financial statements. 0000934666 North Jersey Energy Associates, A Limited Partnership 1,000 U.S. DOLLARS JAN-01-1999 3-MOS DEC-31-1998 MAR-31-1999 1 $60,135 $0 $42,820 $0 $16,863 $120,775 $513,554 $26,434 $1,435,316 $69,550 $445,213 $0 $0 $0 $440,460 $1,435,316 $90,332 $90,332 $0 $57,740 $1,907 $0 $15,379 $15,306 $0 $15,306 $0 $0 $0 $15,306 $0 $0
EX-27.4 5 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from ESI Tractebel Acquisition Corp.'s balance sheet as of March 31, 1999 and statement of operations for the period ended March 31, 1999 and is qualified in its entirety by reference to such financial statements. 0001059027 ESI Tractebel Acquisition Corp. 1,000 U.S. DOLLARS JAN-01-1999 3-MOS DEC-31-1998 MAR-31-1999 1 $0 $0 $4,396 $0 $0 $4,396 $0 $0 $224,548 $4,401 $220,000 $0 $0 $0 $10 $224,548 $0 $4,396 $0 $0 $0 $0 $4,393 $3 $1 $2 $0 $0 $0 $2 $0 $0
EX-27.5 6 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the consolidated balance sheet as of March 31, 1999 and the consolidated statement of operations for the period ended March 31, 1999 of Northeast Energy, LP and is qualified in its entirety by reference to such financial statements. 0001059025 Northeast Energy, LP 1,000 U.S. DOLLARS JAN-01-1999 3-MOS DEC-31-1998 MAR-31-1999 1 $61,058 $0 $42,820 $0 $16,863 $121,698 $513,554 $26,434 $1,442,494 $74,085 $665,213 $0 $0 $0 $223,103 $1,442,494 $90,332 $90,332 $0 $57,740 $2,029 $0 $19,774 $10,789 $0 $10,789 $0 $0 $0 $10,789 $0 $0
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