-----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, TJwzBMYMEA74t0rX5kT3C3VvjHI8JtkFzd+HWYt02rcWJiJJmu0QSYJH6xQko8W/ VuVlCxig8Pek8hXDJXORng== 0000934665-99-000006.txt : 19990809 0000934665-99-000006.hdr.sgml : 19990809 ACCESSION NUMBER: 0000934665-99-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990806 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: 99679378 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: 99679379 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: 99679380 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: 99679381 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: 99679382 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 6/30/99 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 June 30, 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 ___ APPLICABLE ONLY TO CORPORATE ISSUERS: As of June 30, 1999, there were issued and outstanding 10,000 shares of ESI Tractebel Funding Corp. its common stock. As of June 30, 1999, there were issued 20 shares of ESI Tractebel Acquisition Corp.'s common stock. ---------------------------------- 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) 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 readiness, 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)
June 30, December 31, 1999 1998 ASSETS Current assets: Cash and cash equivalents ........................................................ $ 18,141 $ 36,038 Accounts receivable .............................................................. 38,169 29,746 Spare parts inventories .......................................................... 15,803 194 Fuel inventories ................................................................. 4,444 4,935 Prepaid expenses and other current assets ........................................ 1,134 212 Total current assets ........................................................... 77,691 71,125 Non-current assets: Deferred debt issuance costs (net of accumulated amortization of $865 and $548, respectively) ................................... 6,097 6,412 Cogeneration facilities and carbon dioxide facility (net of accumulated depreciation of $31,892 and $20,987, respectively) ............................. 481,725 492,566 Power purchase contracts (net of accumulated amortization of $74,178 and $48,545, respectively) ............................. 814,578 840,211 Other assets ..................................................................... 26 29 Total non-current assets ....................................................... 1,302,426 1,339,218 TOTAL ASSETS ....................................................................... $1,380,117 $1,410,343 LIABILITIES AND PARTNERS' EQUITY Current liabilities: Current portion of notes payable - the Funding Corp. ............................. $ 24,922 $ 23,511 Accounts payable ................................................................. 19,866 12,338 Due to related parties ........................................................... 2,952 800 Other accrued expenses ........................................................... 10,595 9,384 Total current liabilities ...................................................... 58,335 46,033 Non-current liabilities: Deferred credit - fuel contracts ................................................. 303,003 313,427 Notes payable - the Funding Corp. ................................................ 432,046 445,213 Note payable - the Acquisition Corp. ............................................. 220,000 220,000 Amounts due utilities for energy bank balances ................................... 171,043 173,356 Total non-current liabilities .................................................. 1,126,092 1,151,996 Partners' equity: General partners ................................................................. 3,914 4,246 Limited partners ................................................................. 191,776 208,068 Total partners' equity ......................................................... 195,690 212,314 COMMITMENTS AND CONTINGENCIES TOTAL LIABILITIES AND PARTNERS' EQUITY ............................................. $1,380,117 $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 June 30, Six Months Ended June 30, 1999 1998 1999 1998 REVENUES .................................. $79,179 $66,458 $169,511 $141,197 COSTS AND EXPENSES: Fuel .................................... 28,283 27,637 63,823 57,154 Operations and maintenance .............. 3,205 3,890 7,133 8,628 Depreciation and amortization ........... 18,270 18,024 36,542 33,532 General and administrative .............. 2,157 2,194 4,492 4,362 Total costs and expenses .............. 51,915 51,745 111,990 103,676 OPERATING INCOME .......................... 27,264 14,713 57,521 37,521 OTHER EXPENSE (INCOME): Amortization of debt issue costs......... 160 153 317 225 Interest expense ........................ 19,837 20,297 39,612 36,060 Interest income ......................... (643) (857) (1,107) (1,510) Total other expense - net ............. 19,354 19,593 38,822 34,775 NET INCOME (LOSS) ......................... $ 7,910 $(4,880) $ 18,699 $ 2,746
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)
Six Months Ended June 30, 1999 1998 NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $ 29,244 $ 32,250 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ................................................................ (63) - Release of restricted cash collateral ............................................... - 69,156 Acquisition purchase price, net of $62,635 cash acquired ............................ - (483,140) Net cash used in investing activities ............................................. (63) (413,984) CASH FLOWS FROM FINANCING ACTIVITIES: Contributions from partners ......................................................... - 535,412 Principal payment on the Funding Corp. notes ........................................ (11,755) (10,782) Net proceeds from loan by the Acquisition Corp. ..................................... - 215,202 Distributions to partners ........................................................... (35,323) (330,746) Net cash provided by (used in) financing activities ............................... (47,078) 409,086 Net increase (decrease) in cash and cash equivalents .................................. (17,897) 27,352 Cash and cash equivalents at beginning of period ...................................... 36,038 - Cash and cash equivalents at end of period ............................................ $ 18,141 $ 27,352 Supplemental disclosure of cash flow information: Cash paid for interest .............................................................. $ 30,933 $ 29,711
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)
June 30, December 31, 1999 1998 ASSETS Current assets: Cash and cash equivalents ......................................................... $ 17,313 $ 35,152 Accounts receivable ............................................................... 38,169 29,746 Spare parts inventories ........................................................... 15,803 194 Fuel inventories .................................................................. 4,444 4,935 Prepaid expenses and other current assets ......................................... 1,134 212 Total current assets ............................................................ 76,863 70,239 Non-current assets: Cogeneration facilities and carbon dioxide facility (net of accumulated depreciation of $31,892 and $20,987, respectively) .............................. 481,725 492,566 Power purchase contracts (net of accumulated amortization of $74,178 and $48,545, respectively) .............................. 814,578 840,211 Other assets ...................................................................... 26 29 Total non-current assets ........................................................ 1,296,329 1,332,806 TOTAL ASSETS ........................................................................ $1,373,192 $1,403,045 LIABILITIES AND PARTNERS' EQUITY Current liabilities: Current portion of notes payable - the Funding Corp. .............................. $ 24,922 $ 23,511 Accounts payable .................................................................. 19,866 12,338 Due to related parties ............................................................ 2,813 663 Other accrued expenses ............................................................ 10,595 9,384 Total current liabilities ....................................................... 58,196 45,896 Non-current liabilities: Deferred credit - fuel contracts .................................................. 303,003 313,427 Notes payable - the Funding Corp. ................................................. 432,046 445,213 Amounts due utilities for energy bank balances .................................... 171,043 173,356 Total non-current liabilities ................................................... 906,092 931,996 Partners' equity: General partner ................................................................... 4,089 4,252 Limited partners .................................................................. 404,815 420,901 Total partners' equity .......................................................... 408,904 425,153 COMMITMENTS AND CONTINGENCIES TOTAL LIABILITIES AND PARTNERS' EQUITY .............................................. $1,373,192 $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, Six Months January 14, 1998 to Three Months Ended Ended 1998 to January 13, June 30, June 30, June 30, 1998 1999 1998 1999 1998 (Prior Basis) REVENUES .................................. $ 79,179 $ 66,458 $169,511 $141,197 $ 13,109 COSTS AND EXPENSES: Fuel .................................... 28,283 27,637 63,823 57,154 5,774 Operations and maintenance .............. 3,205 3,890 7,133 8,628 974 Depreciation and amortization ........... 18,270 18,024 36,542 33,532 894 General and administrative .............. 2,152 2,194 4,487 4,089 538 Total costs and expenses .............. 51,910 51,745 111,985 103,403 8,180 OPERATING INCOME .......................... 27,269 14,713 57,526 37,794 4,929 OTHER EXPENSE (INCOME): Interest expense ........................ 15,441 15,952 30,820 29,664 2,422 Interest income ......................... (633) (857) (1,061) (1,510) (402) Total other expense - net ............. 14,808 15,095 29,759 28,154 2,020 NET INCOME (LOSS) ......................... $ 12,461 $ (382) $ 27,767 $ 9,640 $ 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, Six Months January 14, 1998 to Ended 1998 to January 13, June 30, June 30, 1998 1999 1998 (Prior Basis) NET CASH PROVIDED BY OPERATING ACTIVITIES ................... $ 37,996 $ 39,624 $ 1,432 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ...................................... (63) - - Release of restricted cash collateral ..................... - 69,156 - Net cash provided by (used in) investing activities ..... (63) 69,156 - CASH FLOWS FROM FINANCING ACTIVITIES: Principal payment on notes ................................ (11,755) (10,782) - Distributions to partners ................................. (44,017) (135,958) - Net cash used in financing activities ................... (55,772) (146,740) - Net increase (decrease) in cash and cash equivalents ........ (17,839) (37,960) 1,432 Cash and cash equivalents at beginning of period ............ 35,152 62,635 61,203 Cash and cash equivalents at end of period .................. $ 17,313 $ 24,675 $ 62,635 Supplemental disclosure of cash flow information: Cash paid for interest .................................... $ 22,144 $ 23,315 $ - 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)
June 30, December 31, 1999 1998 ASSETS Current assets: Cash .............................................................................. $ 1 $ 1 Current portion of notes receivable from the Partnerships ......................... 24,922 23,511 Total current assets ............................................................ 24,923 23,512 Notes receivable from the Partnerships .............................................. 432,046 445,213 TOTAL ASSETS ........................................................................ $ 456,969 $ 468,725 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of securities payable ............................................. $ 24,922 $ 23,511 Securities payable .................................................................. 432,046 445,213 Stockholders' equity: Common stock, no par value, 10,000 shares authorized, issued and outstanding ...... 1 1 COMMITMENTS AND CONTINGENCIES TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......................................... $ 456,969 $ 468,725
STATEMENTS OF OPERATIONS (Thousands of Dollars) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 1999 1998 1999 1998 Interest income .......................................... $ 10,990 $ 11,446 $ 21,981 $ 22,891 Interest expense ......................................... (10,990) (11,446) (21,981) (22,891) NET INCOME ............................................... $ - $ - $ - $ -
STATEMENTS OF CASH FLOWS (Thousands of Dollars) (Unaudited)
Six Months Ended June 30, 1999 1998 NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................ $ - $ - CASH FLOWS FROM FINANCING ACTIVITIES: Principal payment received from the Partnerships.................................... 11,755 10,782 Principal payment on debt .......................................................... (11,755) (10,782) 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 disclosure of cash flow information: Cash paid for interest ............................................................. $ 21,981 $ 22,891
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)
June 30, December 31, 1999 1998 ASSETS Due from NE LP ....................................................................... $ 152 $ 152 Note receivable from NE LP ........................................................... 220,000 220,000 TOTAL ASSETS ......................................................................... $220,152 $220,152 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Income taxes payable ............................................................... $ 7 $ 4 Deferred credit - interest rate hedge ................................................ 133 140 Securities payable ................................................................... 220,000 220,000 Stockholders' equity: Common stock, $.10 par value, 100 shares authorized, 20 shares issued .............. - - Subscriptions receivable ........................................................... - - Retained earnings .................................................................. 12 8 COMMITMENTS AND CONTINGENCIES TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........................................... $220,152 $220,152
STATEMENTS OF OPERATIONS (Thousands of Dollars) (Unaudited)
Period from Six January 12, Months 1998 (Date of Three Months Ended Ended Formation) to June 30, June 30, June 30, 1999 1998 1999 1998 Interest income ........................................... $ 4,393 $ 4,342 $ 8,789 $ 6,396 Interest expense .......................................... (4,390) (4,340) (8,783) (6,391) Income before income taxes................................. 3 2 6 5 Income tax expense ........................................ (1) - (2) (2) NET INCOME ................................................ $ 2 $ 2 $ 4 $ 3
STATEMENTS OF CASH FLOWS (Thousands of Dollars) (Unaudited)
Period From Six January 12, Months 1998 (Date of Ended Formation) to June 30, June 30, 1999 1998 NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................ $ - $ - CASH FLOWS FROM INVESTING ACTIVITIES: Loan to NE LP ...................................................................... - (215,202) Net cash used in investing activities ............................................ - (215,202) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of debt securities ........................................................ - 215,050 Proceeds from interest rate hedge .................................................. - 152 Net cash provided by financing activities ........................................ - 215,202 Net increase in cash ................................................................. - - Cash at beginning of period .......................................................... - - Cash at end of period ................................................................ $ - $ - Supplemental disclosure of cash flow information: Cash paid for interest ............................................................. $ 8,789 $ 6,396
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 (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). 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 years financial statements have been reclassified to conform to the current years presentation. 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 June 30, 1998, the three months ended June 30, 1999 and 1998, and the six months ended June 30, 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 (FASB) issued Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and Hedging Activities". The 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 derivatives 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. In June 1999, the FASB issued FAS 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133", which delayed the adoption of FAS 133 for one year. As a result of FAS 137, the Registrants will not be required to adopt FAS 133 until 2001. 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 Managements 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 for the second quarter and period to date increased $12.7 million and $28.3 million, respectively. Increased revenues for the quarter are primarily the result of increased energy production and increased power sales to utilities at both the Bellingham, MA and Sayreville, NJ facilities. Increased revenues period to date are primarily the result of increased energy production and power sales and recognizing power sales for a full six months in 1999 versus 1998 when power sales were recognized subsequent to the acquisition of the Partnerships on January 14, 1998. 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. Additionally, revenues for the quarter and period to date for 1999 and 1998 reflect scheduled inspection and maintenance outages at the Bellingham facility. Fuel expense (excluding $5.2 million of deferred credit amortization for fuel contracts for the quarters ended June 30, 1999 and 1998 and excluding $10.4 million and $9.7 million of deferred credit amortization for fuel contracts for the periods ended June 30, 1999 and 1998, respectively) for the second quarter and period to date increased $646,000 and $7.4 million, respectively. The increase for the quarter is primarily the result of fuel purchased for the facilities as a result of the increased energy production mentioned above partially offset by favorable natural gas contract price adjustments and refunds from natural gas transportation providers. The increase period to date is primarily the result of the quarterly fuel items mentioned above and from recognizing fuel expense for a full six months in 1999 versus 1998 when fuel expense was recognized subsequent to the acquisition of the Partnerships on January 14, 1998. O&M expense (excluding $1.2 million and $2.2 million of deferred credit amortization for O&M contracts for the quarter and period ended June 30, 1998, respectively) for the second quarter and period to date decreased $1.9 million and $3.7 million, respectively. The decrease for the quarter is primarily the result of reduced O&M costs incurred by the new operator of the facilities and the elimination of a performance bonus paid to the previous operator. The decrease period to date is the result of reduced O&M costs incurred by the new operator and the elimination of the performance bonus partially offset by recognizing O&M costs for a full six months in 1999 versus 1998 when O&M costs were recognized subsequent to the acquisition of the Partnerships on January 14, 1998. Depreciation and amortization for the second quarter and period to date increased $246,000 and $3.0 million respectively. The increase for the quarter is due to scheduled changes in amortization rates. The increase period to date is primarily the result of recognizing depreciation and amortization on the facilities and power purchase agreements, respectively, for a full six months 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 decreased $460,000 for the second quarter and increased $3.6 million period to date. The quarterly decrease is primarily the result of decreasing principal balances on the notes payable to the Funding Corp. The period to date increase is primarily the result of recognizing interest expense on notes payable to the Funding Corp. for a full six months 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 six months in 1999 versus 1998 when interest expense was recognized subsequent to the issuance of $220 million of debt in February 1998. Interest expense of the Partnerships decreased $511,000 for the second quarter and increased $1.2 million period to date. The quarterly decrease is primarily the result of decreasing principal balances on the notes payable to the Funding Corp. The period to date increase is primarily the result of recognizing interest expense on notes payable to the Funding Corp. for a full six months 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. 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 $200,000 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. - The Funding Corp. made semi- annual debt principal payments and debt interest payments of $11.8 million and $22.0 million, respectively, in June 1999. The Acquisition Corp. made a semi- annual debt interest payment of $8.8 million in June 1999. Interest expense for the Funding Corp. for the second quarter and period to date decreased $456,000 and $910,000, respectively. The decrease for the quarter and period to date is due to decreasing principal balances on the securities payable. Interest expense for the Acquisition Corp. for the second quarter and period to date increased $50,000 and $2.4 million, respectively. The increase period to date is primarily the result of recognizing interest expense on the Acquisition Corp. securities payable for a full six months in 1999 versus 1998 when interest expense was recognized subsequent to the issuance of $220 million of debt in February 1998. Year 2000 - As of June 30, 1999, the Registrants are essentially complete with their plan to address the potential impact of the year 2000 on their technology systems, except for NJEAs plan which will be completed during a scheduled outage in October 1999. The Registrants have also prepared their year 2000 contingency plans, which are based upon certain hypothetical year 2000 scenarios at the operating level (such as generation and transmission), as well as at the business level (such as customer service, procurement and accounting). These plans are intended to mitigate both internal risks and potential risks in the Registrants supply chain. During the second half of 1999, the Registrants will continue to conduct training and drills, as well as evaluate and update their contingency plans. In addition, the Registrants have retained independent engineering and hardware/software remediation firms to validate and verify mission critical and other important aspects of their year 2000 program. The estimated cost of addressing year 2000 issues is expected to be approximately $500,000, of which approximately 50% had been spent through June 30, 1999. The remainder is a cost estimate for completing NJEAs plan and for verification, mitigation, training and rollover staffing. The Registrants believe that the most reasonably likely worst case scenarios relating to the year 2000 could include a temporary disruption of service to purchasing utilities, caused by a potential disruption in fuel supply, water supply and telecommunications. 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: August 5, 1999 DILEK L. SAMIL -------------- Dilek L. Samil 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 June 30, 1999 and statement of operations for the period ended June 30, 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 6-MOS DEC-31-1998 JUN-30-1999 1 $1 $0 $24,922 $0 $0 $24,923 $0 $0 $456,969 $24,922 $432,046 $0 $0 $1 $0 $456,969 $0 $21,981 $0 $0 $0 $0 $21,981 $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 June 30, 1999 and combined statement of operations for the period ended June 30, 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 6-MOS DEC-31-1998 JUN-30-1999 1 $17,313 $0 $38,169 $0 $20,247 $76,863 $513,617 $31,892 $1,373,192 $58,196 $432,046 $0 $0 $0 $408,904 $1,373,192 $169,511 $169,511 $0 $107,498 $3,426 $0 $30,820 $27,767 $0 $27,767 $0 $0 $0 $27,767 $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 June 30, 1999 and combined statement of operations for the period ended June 30, 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 6-MOS DEC-31-1998 JUN-30-1999 1 $17,313 $0 $38,169 $0 $20,247 $76,863 $513,617 $31,892 $1,373,192 $58,196 $432,046 $0 $0 $0 $408,904 $1,373,192 $169,511 $169,511 $0 $107,498 $3,426 $0 $30,820 $27,767 $0 $27,767 $0 $0 $0 $27,767 $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 June 30, 1999 and statement of operations for the period ended June 30, 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 6-MOS DEC-31-1998 JUN-30-1999 1 $0 $0 $0 $0 $0 $0 $0 $0 $220,152 $7 $220,000 $0 $0 $0 $12 $220,152 $0 $8,789 $0 $0 $0 $0 $8,783 $6 $2 $4 $0 $0 $0 $4 $0 $0
EX-27.5 6 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the consolidated balance sheet as of June 30, 1999 and the consolidated statement of operations for the period ended June 30, 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 6-MOS DEC-31-1998 JUN-30-1999 1 $18,141 $0 $38,169 $0 $20,247 $77,691 $513,617 $31,892 $1,380,117 $58,335 $652,046 $0 $0 $0 $195,690 $1,380,117 $169,511 $169,511 $0 $107,498 $3,385 $0 $39,929 $18,699 $0 $18,699 $0 $0 $0 $18,699 $0 $0
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