-----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, MCo/xXAwNgsQJKcUDiyGboO5Xy6g6jRV9D6QRfa7yCqeTnP39MZ1XGwzoVasbVxZ GhnpnlLdyDyVrjmF1YLwtQ== 0000934665-98-000006.txt : 19980814 0000934665-98-000006.hdr.sgml : 19980814 ACCESSION NUMBER: 0000934665-98-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 SROS: NONE 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: 98685878 BUSINESS ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 11760 US HIGHWAY 1 #600 CITY: N PALM BEACH STATE: FL ZIP: 33408 BUSINESS PHONE: 5616913500 MAIL ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 11760 US HIGHWAY 1 #600 CITY: N PALM BEACH STATE: FL ZIP: 33408 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: 98685879 BUSINESS ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 11760 US HIGHWAY 1 #600 CITY: N PALM BEACH STATE: FL ZIP: 02043 BUSINESS PHONE: 5616913500 MAIL ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 11760 US HIGHWAY 1 #600 CITY: N PALM BEACH STATE: FL ZIP: 33408 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: 98685880 BUSINESS ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 11760 US HIGHWAY 1 #600 CITY: N PALM BEACH STATE: FL ZIP: 33408 BUSINESS PHONE: 5616913500 MAIL ADDRESS: STREET 1: C/O FPL ENERGY INC STREET 2: 11760 US HIGHWAY 1 #600 CITY: N PALM BEACH STATE: FL ZIP: 33408 10-Q 1 ESI TRACTEBEL FUNDING CORP. NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP 6/30/98 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 June 30, 1998 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 corporation) 33-87902-01 North Jersey Energy Associates, 04-2955646 A Limited Partnership (a New Jersey corporation) ------------------------------------------ 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 and North Jersey Energy Associates, A Limited Partnership. 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. (the Company) and Northeast Energy Associates, A Limited Partnership and North Jersey Energy Associates, A Limited Partnership (collectively, the Partnerships) are hereby filing cautionary statements identifying important factors that could cause the Company and Partnerships' actual results to differ materially from those projected in forward-looking statements (as such term is defined in the Reform Act) of the Company and Partnerships made by or on behalf of the Company and Partnerships 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 Company and Partnerships' actual results to differ materially from those contained in forward-looking statements of the Company and Partnerships made by or on behalf of the Company and Partnerships. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company and Partnerships undertake no obligation to update any forward-looking statement or statements 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 statements. Some important factors that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements include prevailing governmental policies and regulatory actions with respect to allowed rates of return, industry and rate structure, 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 Company and Partnerships 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, and 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 Company and the Partnerships 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 Company and Partnerships. PART I - FINANCIAL INFORMATION Item 1. Financial Statements ESI TRACTEBEL FUNDING CORP. BALANCE SHEETS (Thousands of Dollars)
June 30, 1998 December 31, (Unaudited) 1997 ASSETS Current assets: Cash ............................................................................... $ 1 $ 1 Current portion of notes receivable from the Partnerships .......................... 22,537 21,563 Total current assets ............................................................. 22,538 21,564 Notes receivable from the Partnerships ............................................... 456,968 468,724 TOTAL ASSETS ......................................................................... $ 479,506 $ 490,288 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of securities payable .............................................. $ 22,537 $ 21,563 Securities payable ................................................................... 456,968 468,724 Stockholders' equity: Common stock, no par value, 10,000 shares authorized, issued and outstanding ....... 1 1 COMMITMENTS AND CONTINGENCIES TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........................................... $ 479,506 $ 490,288
The accompanying notes are an integral part of these financial statements. ESI TRACTEBEL FUNDING CORP. STATEMENTS OF OPERATIONS (Thousands of Dollars) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 Interest income .............................................. $ 11,446 $ 11,952 $ 22,891 $ 23,905 Interest expense ............................................. (11,446) (11,952) (22,891) (23,905) NET INCOME ................................................... $ - $ - $ - $ -
The accompanying notes are an integral part of these financial statements. ESI TRACTEBEL FUNDING CORP. STATEMENTS OF CASH FLOWS (Thousands of Dollars) (Unaudited)
Six Months Ended June 30, 1998 1997 NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................ $ - $ - CASH FLOWS FROM FINANCING ACTIVITIES: Principal payment received from the Partnerships.................................... 10,782 12,038 Principal payment on debt .......................................................... (10,782) (12,038) Net cash provided by financing activities ........................................ - - Net increase in cash ................................................................. - - Cash at beginning of period .......................................................... 1 1 Cash at end of period ................................................................ $ 1 $ 1 Supplemental disclosures of cash flow information: Cash paid for interest ............................................................. $ 22,891 $ 23,905
The accompanying notes are an integral part of these financial statements. NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP COMBINED BALANCE SHEETS (Thousands of Dollars)
June 30, December 31, 1998 1997 (Unaudited) (Prior Basis) ASSETS Current assets: Cash and cash equivalents .......................................................... $ 24,675 $ 61,203 Accounts receivable ................................................................ 36,657 34,036 Due from related party ............................................................. - 114 Fuel inventories ................................................................... 3,413 4,752 Prepaid expenses and other current assets........................................... 802 3,052 Total current assets ............................................................. 65,547 103,157 Non-current assets: Cogeneration facilities and carbon dioxide facility (net of accumulated depreciation of $10,123 and $153,963, respectively) .............................. 502,928 349,365 Power purchase contracts (net of accumulated amortization of $23,394) .............. 865,362 - Unamortized financing costs ........................................................ - 15,674 Other assets ....................................................................... 123 4,193 Restricted cash .................................................................... - 69,156 Total non-current assets ......................................................... 1,368,413 438,388 TOTAL ASSETS ......................................................................... $1,433,960 $ 541,545 LIABILITIES AND PARTNERS' EQUITY (DEFICIT) Current liabilities: Current portion of notes payable - ESI Tractebel Funding Corp. ..................... $ 22,537 $ 21,563 Accounts payable ................................................................... 14,587 15,450 Due to related party ............................................................... 1,498 71 Other accrued expenses ............................................................. 5,846 2,358 Total current liabilities ........................................................ 44,468 39,442 Non-current liabilities: Deferred credit - O&M and fuel contracts ........................................... 340,418 - Notes payable - ESI Tractebel Funding Corp. ........................................ 456,968 468,724 Amounts due utilities for energy bank balances ..................................... 172,649 230,565 Total non-current liabilities .................................................... 970,035 699,289 Partners' equity (deficit): General partner .................................................................... 4,194 (4,714) Limited partners ................................................................... 415,263 (192,472) Total partners' equity (deficit) ................................................. 419,457 (197,186) COMMITMENTS AND CONTINGENCIES TOTAL LIABILITIES AND PARTNERS' EQUITY ............................................... $1,433,960 $ 541,545
The accompanying notes are an integral part of these financial statements. NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP COMBINED STATEMENTS OF OPERATIONS (Thousands of Dollars) (Unaudited)
Six Months Ended June 30, Period from Period from January 1, Three Months Ended January 14, 1998 to June 30, 1998 to January 13, 1997 June 30, 1998 1997 1998 (Prior Basis) 1998 (Prior Basis) (Prior Basis) REVENUES .................................. $66,458 $72,092 $141,197 $13,109 $154,428 COSTS AND EXPENSES: Fuel .................................... 27,637 39,234 57,154 5,774 77,482 Operation and maintenance ............... 3,890 5,991 8,628 974 12,756 Depreciation and amortization ........... 18,024 6,253 33,532 894 12,503 General and administrative .............. 2,194 3,467 4,089 538 6,820 Total costs and expenses .............. 51,745 54,945 103,403 8,180 109,561 OPERATING INCOME .......................... 14,713 17,147 37,794 4,929 44,867 OTHER EXPENSE (INCOME): Interest expense ........................ 15,952 16,936 29,664 2,422 33,793 Interest income ......................... (857) (2,403) (1,510) (402) (4,592) Total other expense - net ............. 15,095 14,533 28,154 2,020 29,201 NET INCOME (LOSS) ......................... $ (382) $ 2,614 $ 9,640 $ 2,909 $ 15,666
The accompanying notes are an integral part of these financial statements. NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP COMBINED STATEMENTS OF CASH FLOWS (Thousands of Dollars) (Unaudited)
Six Months Ended June 30, Period from Period from January 1, January 14, 1998 to 1998 to January 13, June 30, 1998 1997 1998 (Prior Basis) (Prior Basis) NET CASH PROVIDED BY OPERATING ACTIVITIES ............................ $ 39,624 $ 1,432 $ 40,240 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ............................................... - - (216) Net cash used in investing activities .............................. - - (216) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payment on notes ......................................... (10,782) - (12,038) Release of restricted cash collateral .............................. 69,156 - - Distributions to partners .......................................... (135,958) - (32,636) Net cash used in financing activities .............................. (77,584) - (44,674) Net increase (decrease) in cash and cash equivalents ................. (37,960) 1,432 (4,650) Cash and cash equivalents at beginning of period ..................... 62,635 61,203 49,861 Cash and cash equivalents at end of period ........................... $ 24,675 $ 62,635 $ 45,211 Supplemental disclosures of cash flow information: Cash paid for interest ............................................. $ 23,315 $ - $ 24,703 Supplemental schedule of noncash investing and financing activities: See Note 1 and Note 2 - Basis of Presentation concerning new basis of accounting subsequent to January 13, 1998
The accompanying notes are an integral part of these financial statements. ESI TRACTEBEL FUNDING CORP. AND NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Unaudited) The accompanying financial statements should be read in conjunction with the 1997 Form 10-K (as amended) for the Company and the Partnerships. In the opinion of management of the Company and Partnerships, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made. Certain amounts included in the prior period's financial statements have been reclassified to conform to the current year's presentation. The results of operations for an interim period may not give a true indication of results for the year. 1. The Acquisition On January 14, 1998, pursuant to a purchase agreement dated November 21, 1997, the Partnerships were acquired by Northeast Energy, LP (a Delaware limited partnership) and Northeast Energy, LLC (a Delaware limited liability company) (collectively, the Partners). The Partners purchased their interests from Intercontinental Energy Corporation and from certain individuals. The Partners are owned by direct subsidiaries of ESI Energy, Inc. and Tractebel Power, Inc. ESI Energy, Inc. is wholly-owned by FPL Energy, Inc. which is an indirect wholly-owned subsidiary of FPL Group, Inc., a New York Stock Exchange company. Tractebel Power, Inc. is a direct wholly-owned subsidiary of Tractebel, Inc. which is a direct wholly-owned subsidiary of Tractebel, S.A., a Belgian energy and environmental services business. Each of the Partnerships was formed in 1986 to develop, construct, own, operate and manage a 300 megawatt gas-fired combined-cycle cogeneration facility. The Company is a Delaware special purpose funding corporation established in 1994 solely for the purpose of issuing debt securities in connection with the financing of the Partnerships. On January 14, 1998, the Company was acquired by a subsidiary of ESI Energy, Inc., Tractebel Power, Inc. and Broad Street Contract Services, Inc. (Broad Street). Broad Street has no economic interest in the partnership distributions and participates for the purpose of providing an independent director. The entities own a 37.5%, 37.5% and 25.0% interest in the Company, respectively. Concurrent with and related to the acquisition of the Company and the Partnerships, the Company changed its name from IEC Funding Corp. to its current name. The acquisition of the Partnerships was accounted for using the purchase method of accounting and is subject to the provisions of the Securities and Exchange Commission's Staff Accounting Bulletin No. 54 and the rules of pushdown accounting, which gave rise to the new basis of accounting. The net amount paid to acquire the interests in the Partnerships of approximately $545 million including approximately $10 million of acquisition costs, was allocated to the assets and liabilities acquired based on their fair values. 2. Summary of Significant Accounting Policies Basis of Presentation - The Partnerships' combined balance sheet as of June 30, 1998 and the combined statements of operations and cash flows for the period from January 14, 1998 to June 30, 1998 and for the three months ended June 30, 1998 are reported under the new basis of accounting described above. The Partnerships' combined balance sheet as of December 31, 1997 and the combined statements of operations and cash flows for the period from January 1, 1998 to January 13, 1998 and for the three and six months ended June 30, 1997 represent historical financial data of the Partnerships prior to the acquisition. The following is a summary of the Partnerships' assets acquired and liabilities assumed in the acquisition (thousands of dollars): Assets: Current assets ......................................... $114,554 Restricted cash ........................................ $ 69,156 Cogeneration facilities and carbon dioxide facility .... $513,066 Power purchase contracts ............................... $888,756 Other assets ........................................... $ 126 Liabilities: Current liabilities .................................... $ 47,338 Operation and maintenance (O&M) contracts .............. $ 18,749 Fuel contracts ......................................... $333,544 Energy bank balances ................................... $171,530 Notes payable .......................................... $468,723 Carrying values of current assets, restricted cash and current liabilities were considered to closely approximate fair value and were not adjusted. Power purchase contracts were assigned a value based on the estimated amount to be received over the contract period in excess of an independent appraiser's assessment of market rates for power, discounted to the date of acquisition. The cogeneration facilities and carbon dioxide facility were initially assigned value based on an assessment of current replacement cost for similar capacity, without the acquired power purchase agreements. In accordance with Accounting Principles Board Opinion No. 16, the values assigned to these long-lived assets were reduced by the net excess of the fair values of all assets acquired over the purchase price. O&M and fuel contract obligations were determined based on expected cash flows during the contract periods compared to estimated cash flows for similar services if contracted for currently, discounted to the date of acquisition. Notes payable include the previously-existing debt of the Partnerships that was considered to approximate market value. Energy bank balances were assigned a value representing the estimated present value of future payments to utilities in connection with certain existing power purchase agreements. The following unaudited pro forma information has been prepared assuming that the acquisition had occurred at the beginning of the periods presented (thousands of dollars).
Six Months Six Months Ended Ended June 30, June 30, 1998 1997 Revenues ...................................................................... $154,306 $154,428 Operating income .............................................................. $ 42,072 $ 37,064 Net income .................................................................... $ 11,711 $ 5,246
Cogeneration Facilities and Carbon Dioxide Facility - Cogeneration facilities and the carbon dioxide facility were carried at historical cost prior to January 14, 1998. Effective January 14, 1998, all facilities were revalued as a result of applying the purchase method of accounting mentioned above. Prior to January 14, 1998, the facilities were being depreciated on a straight-line method over the estimated life of each facility of 20 years. Subsequent to January 13, 1998, the facilities are being depreciated over their revised estimated lives of 34 years. Power Purchase/O&M/Fuel Contracts - Effective January 14, 1998, power purchase contracts, O&M contracts and fuel contracts which were determined to be in excess of prevailing rates for similar contracts were adjusted as a result of applying the purchase method of accounting mentioned above. These contracts are amortized over the estimated lives of the power purchase contracts of 14 to 24 years, the O&M contracts of 4 years and the fuel contracts of 16 years. Major Maintenance - Effective January 14, 1998, maintenance expenses are accrued for certain identified major maintenance and repair items related to the Partnerships' facilities. The expenses are accrued ratably over each major maintenance cycle. The amounts accrued relate to maintenance costs required for the equipment to operate over its depreciable life. The expense recognized for this accrual was $1.1 million for the second quarter and $1.7 million year to date. 3. Commitments and Contingencies Subsequent to the acquisition on January 14, 1998, certain credit arrangements were terminated and replaced with new letters of credit and a guaranty to satisfy requirements in certain power purchase agreements. Specifically, new energy bank letters of credit were issued in face amounts of $12,656,000 and $54,000,000. The $12,656,000 letter of credit expires on December 31, 1998 and can be drawn upon on one occasion in the event that a certain power purchase agreement has terminated at a time when there was a positive energy bank balance existing in favor of the power purchaser. The $54,000,000 letter of credit expires on December 31, 1998 and can be drawn upon in multiple drawings in the event that a certain power purchase agreement has terminated at the time when there was a positive energy bank balance existing in favor of the power purchaser. A guaranty was made by a subsidiary of FPL Group, Inc. in favor of the Partnerships Trustee. The guarantor unconditionally and irrevocably guarantees the payment of an amount equal to 50% of the debt service reserve requirement with respect to the Company's securities. The guaranty expires on December 31, 1998 but is automatically extended for successive one-year periods unless the guarantor gives notice that it will not renew. Once the new credit arrangements were in place, cash of approximately $69.2 million (plus approximately $2.5 million in accrued interest) was released and distributed to the Partners. Additionally, new letters of credit were issued in substitution for cash on deposit in Partnership trust accounts and approximately $33.2 million in cash was released and distributed to the Partners. 4. Related Party Information On February 12, 1998, Northeast Energy, LP received $220 million in proceeds from the issuance of 7.99% Secured Bonds Due 2011 (the Securities). The Securities were issued by an entity related to Northeast Energy, LP and the proceeds were loaned to Northeast Energy, LP. The Securities are payable solely from payments to be made by Northeast Energy, LP and are not obligations of the Partnerships. Payments with respect to the Securities will be effectively subordinated to payment of all indebtedness and other liabilities and commitments of the Partnerships. Northeast Energy, LP has guaranteed the payment of the Securities and has pledged its investment in the Partnerships as security. Administrative Services Agreement - Northeast Energy, LP and a related entity have entered into an Administrative Services Agreement (the Agreement) that provides for management and administrative services to the Partnerships. The Agreement extends for a 20-year term, expires in 2018, pays a minimum of $600,000 per year and pays costs and expenses of performing services. For the period ended June 30, 1998, the Partnerships have incurred $368 thousand dollars under the Agreement. Operation and Maintenance Agreements - Northeast Energy, LP and a related entity have entered into operation and maintenance agreements (the New O&M Agreements) that provide for the operation and maintenance of the Partnerships on the day following the expiration or early termination of the current O&M provider. The New O&M Agreements extend for an initial term of 18 years until January 14, 2016, subject to extension by mutual agreement of the parties before six months preceding expiration. The New O&M Agreements pay costs and expenses of performing services and $750,000 per year, subject to certain adjustments, for each Partnership. For the period ended June 30, 1998, the Partnerships have incurred $703 thousand dollars under the New O&M Agreements. Fuel Management Agreements - Northeast Energy, LP and a related entity have entered into Fuel Management Agreements (the Fuel Agreements) that provide for the management of all natural gas or fuel oil, transportation and storage agreements, and the location and purchase of any additional required natural gas or fuel oil for the Partnerships. The Fuel Agreements extend for 25 years and expire in 2023. The Fuel Agreements pay a minimum of $450,000 per year for each Partnership and pay all costs and expenses of performing services. For the period ended June 30, 1998, the Partnerships have incurred $424 thousand dollars under the Fuel Agreements. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Company and the Partnerships This discussion should be read in conjunction with the Notes to Financial Statements contained herein and with the 1997 Form 10-K (as amended) for the Company and the Partnerships. The results of operations for an interim period may not give a true indication of results for the year. RESULTS OF OPERATIONS The Company - Semi-annual debt principal payments and debt interest payments of $10.8 million and $22.9 million, respectively, were made by the Company in June 1998. The Partnerships for the three and six months ended June 30, 1997 - Revenues for the second quarter and year to date totaled $72.1 million and $154.4 million, respectively, and were comprised of $71.0 million and $152.0 million, respectively, of power sales to utilities and $1.1 million and $2.4 million, respectively, 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 contracts. Fuel expense of $39.2 million and $77.5 million, respectively, includes fuel purchased for the Partnerships and fixed and variable costs associated with delivery and use of the fuel for operations. O&M expenses of $6.0 million and $12.8 million, respectively, are comprised of O&M provider fees and site utility expenses, as well as performance bonuses and heat rate bonuses payable under the O&M agreements. Depreciation and amortization of $6.3 million and $12.5 million, respectively, is comprised of depreciation for the cogeneration and carbon dioxide facilities. General and administrative expenses of $3.5 million and $6.8 million, respectively, are comprised primarily of management and professional fees. Interest expense is comprised primarily of interest on notes payable to IEC Funding Corp. ($12.1 million and $24.1 million, respectively) and interest on energy bank balances ($4.3 million and $8.6 million, respectively). Interest income of $2.4 million and $4.6 million, respectively, reflects cash balances earning investment income. 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 contracts. 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 thousand are comprised of O&M provider fees and site utility expenses. Depreciation and amortization of $894 thousand is comprised of depreciation for the cogeneration and carbon dioxide facilities. General and administrative expenses of $538 thousand are comprised primarily of management fees. Interest expense is comprised primarily of interest on notes payable to IEC Funding Corp. ($1.7 million) and interest on energy bank balances ($630 thousand). Interest income reflects cash balances earning investment income. The Partnerships for the three month period ended June 30, 1998 and for the period from January 14, 1998 to June 30, 1998 (post-acquisition) - Subsequent to January 13, 1998 the basis of presentation of the results of operations for the Partnerships on a going forward basis was changed to reflect the new basis of accounting discussed in Note 1 and Note 2. Revenues for the second quarter and period to date totaled $66.5 million and $141.2 million, respectively, and were comprised of $65.5 million and $139.0 million, respectively, of power sales to utilities and $1.0 million and $2.2 million, respectively, of steam sales. Power sales to utilities reflect changes in utility energy bank balances of $3.3 million and $7.3 million, respectively, which are determined in accordance with scheduled or specified rates under certain power purchase contracts. Revenues for the second quarter and period to date reflect lower generation and availability resulting from a scheduled inspection and maintenance outage at the Bellingham, MA facility. Fuel expense of $27.6 million and $57.2 million, respectively, is comprised of $32.8 million and $66.9 million, respectively, of fuel purchased for the Partnerships and the fixed and variable costs associated with the delivery and use of the fuel for operations. These fuel costs are offset by $5.2 million and $9.7 million, respectively, of deferred credit amortization for fuel contracts as a result of the purchase price allocation of the acquisitions. Fuel expense for the second quarter and period to date reflects decreased fuel consumption as a result of the scheduled inspection and maintenance outage mentioned above. O&M expenses of $3.9 million and $8.6 million, respectively, are comprised of O&M provider fees and site expenses of $5.1 million and $10.8 million, respectively, offset by $1.2 million and $2.2 million, respectively, of deferred credit amortization for O&M contracts as a result of the purchase price allocation of the acquisitions. Included in O&M expenses is the major maintenance accrual described in Note 2. Depreciation and amortization of $18.0 million and $33.5 million, respectively, is comprised of depreciation for the cogeneration and carbon dioxide facilities of $5.4 million and $10.1 million, respectively, and $12.6 million and $23.4 million, respectively, of amortization of the power purchase contracts as a result of the purchase price allocation of the acquisitions. General and administrative expenses of $2.2 million and $4.1 million, respectively, are comprised primarily of management and professional fees and site expenses. Interest expense of $16.0 million and $29.7 million, respectively, is comprised primarily of interest on notes payable to ESI Tractebel Funding Corp. ($11.5 million and $21.3 million, respectively) and interest on energy bank balances ($4.5 million and $8.4 million, respectively). Interest income reflects cash balances earning investment income and reflects the impact of the release and distribution of debt service reserve cash on January 21, 1998 and energy bank collateral restricted cash on February 3, 1998. LIQUIDITY AND CAPITAL RESOURCES Cash flow generated by the Partnerships during the six month period ended June 30, 1998 was sufficient to fund operating expenses as well as fund the debt service requirements of the Company. For the period ended June 30, 1998, there have been $136.0 million in distributions to partners which includes a $31.0 million distribution in the second quarter of 1998 - see Note 3. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Exhibit Number Description 27.1 Financial Data Schedule for the six months ended June 30, 1998 - ESI Tractebel Funding Corp. 27.2 Financial Data Schedule for the period January 1, 1998 to January 13, 1998 - Northeast Energy Associates, A Limited Partnership 27.3 Financial Data Schedule for the period January 1, 1998 to January 13, 1998 - North Jersey Energy Associates, A Limited Partnership 27.4 Financial Data Schedule for the period January 14, 1998 to June 30, 1998 - Northeast Energy Associates, A Limited Partnership 27.5 Financial Data Schedule for the period January 14, 1998 to June 30, 1998 - North Jersey Energy Associates, A Limited Partnership (b) Reports on Form 8-K None
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, thereunto duly authorized. ESI TRACTEBEL FUNDING CORP. 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) (Registrants) Date: August 13, 1998 PETER D. BOYLAN Peter D. Boylan Treasurer 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 June 30, 1998 and statement of operations for the six months ended June 30, 1998 and is qualified in its entirety by reference to such financial statements. 0000934665 ESI Tractebel Funding Corp. 1,000 U.S. DOLLARS JAN-1-1998 6-MOS DEC-31-1997 JUN-30-1998 1 $1 $0 $22,537 $0 $0 $22,538 $0 $0 $479,506 $22,537 $456,968 $0 $0 $0 $1 $479,506 $0 $22,891 $0 $0 $0 $0 $22,891 $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 the combined statements of operations for the period January 1, 1998 to January 13, 1998 of Northeast Energy Associates, A Limited Partnership and North Jersey Energy Associates, A Limited Partnership 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-01-1998 OTHER DEC-31-1997 JAN-13-1998 1 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $13,109 $13,109 $0 $7,642 $538 $0 $2,422 $2,909 $0 $2,909 $0 $0 $0 $2,909 $0 $0
EX-27.3 4 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the combined statements of operations for the period January 1, 1998 to January 13, 1998 of Northeast Energy Associates, A Limited Partnership and North Jersey Energy Associates, A Limited Partnership 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-01-1998 OTHER DEC-31-1997 JAN-13-1998 1 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $13,109 $13,109 $0 $7,642 $538 $0 $2,422 $2,909 $0 $2,909 $0 $0 $0 $2,909 $0 $0
EX-27.4 5 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the combined balance sheet as of June 30, 1998 and the combined statements of operations for the period January 14, 1998 to June 30, 1998 of Northeast Energy Associates, A Limited Partnership and North Jersey Energy Associates, A Limited Partnership 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-14-1998 OTHER DEC-31-1997 JUN-30-1998 1 $24,675 $0 $36,657 $0 $3,413 $65,547 $513,051 $10,123 $1,433,960 $44,468 $456,968 $0 $0 $0 $419,457 $1,433,960 $141,197 $141,197 $0 $99,314 $4,089 $0 $29,664 $9,640 $0 $9,640 $0 $0 $0 $9,640 $0 $0
EX-27.5 6 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the combined balance sheet as of June 30, 1998 and the combined statements of operations for the period January 14, 1998 to June 30, 1998 of Northeast Energy Associates, A Limited Partnership and North Jersey Energy Associates, A Limited Partnership 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-14-1998 OTHER DEC-31-1997 JUN-30-1998 1 $24,675 $0 $36,657 $0 $3,413 $65,547 $513,051 $10,123 $1,433,960 $44,468 $456,968 $0 $0 $0 $419,457 $1,433,960 $141,197 $141,197 $0 $99,314 $4,089 $0 $29,664 $9,640 $0 $9,640 $0 $0 $0 $9,640 $0 $0
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