SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File number 33-87902
33-87902-01
33-87902-02
IEC Funding Corp.
North Jersey Energy Associates, A Limited Partnership
Northeast Energy Associates, A Limited Partnership
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(Exact Name of Registrant as Specified in its Charter)
Delaware 04-3255377
New Jersey 04-2955646
Massachusetts 04-2955642
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
350 Lincoln Place, Hingham, Massachusetts 02043
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(Address of Principal Executive Offices) (Zip Code)
(617) 749-9800
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(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has 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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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IEC FUNDING CORP.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
INDEX
PAGE
PART I FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements
NORTHEAST ENERGY ASSOCIATES AND
NORTH JERSEY ENERGY ASSOCIATES
Combined Balance Sheet at December 31, 1996 and
March 31, 1997 (Unaudited)............................... 3
Combined Statement of Operations for the Three
Months Ended March 31, 1996 and 1997 (Unaudited)......... 4
Combined Statement of Cash Flows for the Three Months
Ended March 31, 1996 and 1997 (Unaudited)................ 5
Notes to Combined Financial Statements................... 7
IEC FUNDING CORP.
Balance Sheet at December 31, 1996 and
March 31, 1997 (Unaudited)............................... 8
Statement of Operations for the Three Months Ended
March 31, 1996 and 1997 (Unaudited)..................... 9
Notes to Financial Statements............................ 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................. 11
PART II OTHER INFORMATION................................................... 12
SIGNATURES................................................................... 13
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
COMBINED BALANCE SHEET (UNAUDITED)
- --------------------------------------------------------------------------------
DECEMBER 31, MARCH 31,
1996 1997
(IN THOUSANDS)
ASSETS
Current assets
Cash and cash equivalents $ 49,861 $ 91,793
Accounts receivable 43,671 41,297
Fuel inventories 5,410 1,286
Prepaid expenses and other current assets 2,566 1,519
--------- ---------
Total current assets 101,508 135,895
--------- ---------
Cogeneration facilities and carbon dioxide facility (net of
accumulated depreciation of $129,068,000 and $135,295,000
at December 31, 1996 and March 31, 1997 respectively) 373,781 367,613
Other fixed assets (net of accumulated depreciation of $438,000
and $461,000 at December 31, 1996 and March 31, 1997, respectively) 304 291
Unamortized financing costs 17,837 17,278
Other assets 3,806 4,005
Restricted cash 69,156 69,156
--------- ---------
Total non-current assets 464,884 458,343
--------- ---------
Total assets $ 566,392 $ 594,238
========= =========
Liabilities and Partners' Deficit
Current liabilities
Current portion of loans payable - IEC Funding Corp. $ 24,075 $ 24,075
Accounts payable 14,528 14,023
Accrued interest payable - IEC Funding Corp. - 11,953
Other accrued expenses 2,037 3,498
Future obligations under interest rate swap agreements 2,022 1,697
--------- ---------
Total current liabilities 42,662 55,246
--------- ---------
Loans payable - IEC Funding Corp. 490,287 490,287
Amounts due utilities for energy bank balances 220,922 223,132
--------- ---------
Total non-current liabilities 711,209 713,419
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Total liabilities 753,871 768,665
--------- ---------
Partners' deficit
General partner (4,616) (4,485)
Limited partners (182,863) (169,942)
--------- ---------
Total partners' deficit (187,479) (174,427)
Commitments and contingencies - -
--------- ---------
Total liabilities and partners' deficit $ 566,392 $ 594,238
========= =========
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 STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
THREE MONTHS
ENDED
MARCH 31,
(IN THOUSANDS)
1996 1997
Revenue
Power sales to utilities $77,573 $81,035
Steam sales 1,316 1,301
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Total revenue 78,889 82,336
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Costs and expenses
Cost of power and steam sales 40,692 38,248
Operation and maintenance 6,614 6,765
Depreciation 6,241 6,250
General and administrative 3,449 3,353
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Total costs and expenses 56,996 54,616
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Operating income 21,893 27,720
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Other (income) expense
Amortization of financing costs 613 559
Interest expense 12,564 12,038
Interest expense on energy bank balances 4,705 4,260
Interest income (2,593) (2,189)
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Total other expense 15,289 14,668
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Net income $ 6,604 $13,052
======= =======
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 STATEMENT OF CASH FLOWS (UNAUDITED)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
- --------------------------------------------------------------------------------
THREE MONTHS
ENDED
MARCH 31,
1996 1997
(IN THOUSANDS)
Cash flows from operating activities:
Cash received from utilities and other customers $ 79,719 $ 83,268
Cash paid to suppliers (44,212) (42,758)
Interest paid (546) (401)
Bank commitment fees paid (9) (9)
Interest received 4,158 3,526
Cash payments to general partner for operating activities (1,154) (1,016)
Cash payments to owners/management (890) (524)
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Net cash provided by operating
activities 37,066 42,086
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Cash flows from investing activities:
Net expenditures for facilities - (144)
Purchase of other fixed assets (23) (10)
Decrease in restricted cash 4,098 -
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Net cash provided by (used for)
investing activities 4,075 (154)
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Cash flows from financing activities:
Net cash used for financing activities - -
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Net increase in cash and cash equivalents 41,141 41,932
Cash and cash equivalents at beginning of period 58,277 49,861
-------- --------
Cash and cash equivalents at end of period $ 99,418 $ 91,793
======== ========
Non-cash Investing Activities
At March 31, 1997 accrued capitalized facility costs
were approximately $80,000. Approximately $21,000
of these costs are related to fiscal year 1996.
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 STATEMENT OF CASH FLOWS (UNAUDITED) (CONTINUED)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
- --------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
THREE MONTHS
ENDED
MARCH 31,
1996 1997
(IN THOUSANDS)
Net income $ 6,604 $13,052
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 6,241 6,250
Amortization of financing costs 613 559
(Increase)/Decrease in accounts receivable (2,376) 2,374
Decrease in fuel inventories 3,240 4,124
Decrease in prepaid expenses and
other current assets 1,543 1,047
Increase/(Decrease) in accounts payable 1,181 (420)
Increase in accrued interest 12,484 11,953
Increase in other accrued expenses 1,694 1,461
Decrease in future obligations under
interest rate swap agreements (475) (325)
Increase in amounts due utilities for
energy bank balances 6,441 2,210
(Increase)/Decrease in other assets (124) (199)
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Net cash provided by operating activities $37,066 $42,086
======= =======
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
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying unaudited combined financial statements should be read in
conjunction with the audited combined financial statements included in the
Annual Report on Form 10-K for the year ended December 31, 1996 for
Northeast Energy Associates, A Limited Partnership, and North Jersey
Energy Associates, A Limited Partnership (together, the "Partnerships")
and IEC Funding Corp.
The results of operations for the three months ended March 31, 1997 are
unaudited and are not necessarily indicative of the results to be expected
for the full year. The unaudited financial information at March 31, 1997
and for the three months ended March 31, 1997 contains all adjustments,
consisting only of normal recurring adjustments, considered by management
necessary for a fair presentation of the operating results for such
period.
2. RECLASSIFICATION
Certain reclassifications were made to the prior year balances in order to
conform to current year presentation. These reclassifications had no
effect on prior year operating results.
IEC FUNDING CORP.
BALANCE SHEET (UNAUDITED)
- --------------------------------------------------------------------------------
DECEMBER 31, MARCH 31,
1996 1997
(IN THOUSANDS)
ASSETS
Current assets
Cash $ 1 $ 1
Current portion of notes receivable from
Northeast Energy Associates and North Jersey
Energy Associates (together, the "Partnerships") 24,075 24,075
Interest receivable from the Partnerships - 11,953
-------- --------
Total current assets 24,076 36,029
Notes receivable from the Partnerships 490,287 490,287
-------- --------
Total assets $514,363 $526,316
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of securities payable $ 24,075 $ 24,075
Accrued interest - 11,953
-------- --------
Total current liabilities 24,075 36,028
Securities payable 490,287 490,287
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Total liabilities 514,362 526,315
Stockholders' equity
Common stock, no par value, 10,000 shares
authorized, issued and outstanding 1 1
-------- --------
Total liabilities and stockholders' equity $514,363 $526,316
======== ========
The accompanying notes are an integral
part of these financial statements
IEC FUNDING CORP.
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31,
1996 1997
(IN THOUSANDS)
Interest income $ 12,484 $ 11,953
Interest expense (12,484) (11,953)
-------- --------
Net income $ - $ -
======== ========
The accompanying notes are an integral
part of these financial statements
IEC FUNDING CORP.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
BASIS OF PRESENTATION
The accompanying unaudited financial statements should be read in conjunction
with the audited financial statements included in the Annual Report on Form
10-K for the year ended December 31, 1996 for IEC Funding Corp. (the
"Company") and the Partnerships. The Company did not experience any cash
flows for the three months ended March 31, 1997 and 1996. Therefore, a
Statement of Cash Flows is not presented for these periods.
The unaudited financial information at March 31, 1997 and for the three
months ended March 31, 1997 contains all adjustments, consisting only of
normal recurring adjustments, considered by management necessary for a fair
presentation of the operating results for such period.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
RESULTS OF OPERATIONS
Total revenue for the first quarter of 1997 of $82.3 million increased by
$3.4 million (4.4%) as compared to the same period in 1996. This increase is
primarily the result of a $3.8 million reduction in the energy bank principal
balances. Energy bank balances are determined in accordance with scheduled
or specified rates under certain power purchase agreements. A decrease of $.4
million in gross revenues (gross of decrease to energy bank) is due to a slight
decrease in generation offset by higher power purchase rates under certain
Bellingham power purchase agreements.
Cost of power and steam sales as a percentage of gross revenues (gross of
decrease to energy bank) was 47.6% for the first quarter of 1997 as compared to
50.5% for the first quarter of 1996. The decreased cost is primarily
attributable to a reduction in extended gas service rights exercised by a North
Jersey Energy Associates' fuel supplier. Extended gas service, which occurs when
temperatures are below 22 degrees Fahrenheit, provides fuel at increased rates.
There were two such days during the first quarter of 1997 compared with sixteen
days during the first quarter of 1996.
Operation and maintenance expenses increased $.2 million (2.3%) as compared
to the first quarter of 1996. Increases include normal and expected escalations
on O&M contracts and an increased performance bonus payable under the Bellingham
O&M agreement.
General and administrative expenses were $3.3 million for the first quarter
of 1997 as compared to $3.4 million for the same period last year, decreasing
$.1 million. Legal and consulting costs decreased, offsetting increased
overhead costs.
Interest expense decreased $.5 million (4.2%) as compared to the first
quarter of 1996, as a result of principal payments made (semi-annually on June
30, and December 30). Interest on energy bank balances decreased $.4 million,
reflecting changes in the underlying amounts accrued for energy bank balances.
Interest income decreased $.4 million primarily as a result of reduced cash
collateral being held in support of letters of credit.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow generated during the first quarter of 1997 was more than sufficient
to fund all operating expenses and meet debt service requirements of $35.9
million, payable June 30, 1997.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
Pursuant to the requirements of the Securities Exchange Act of 1934, IEC
Funding Corp. has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
IEC FUNDING CORP.
DATE SIGNATURE AND TITLE
May 15, 1997
------------------ -----------------------------------------
Maureen P. Herbert
Vice President of Finance
Pursuant to the requirements of the Securities Exchange Act of 1934, North
Jersey Energy Associates, A Limited Partnership has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
NORTH JERSEY ENERGY ASSOCIATES,
A LIMITED PARTNERSHIP
By: INTERCONTINENTAL ENERGY CORPORATION
As General Partner
DATE SIGNATURE AND TITLE
May 15, 1997
- ------------------ -----------------------------------------
Maureen P. Herbert
Vice President of Finance
Pursuant to the requirements of the Securities Exchange Act of 1934,
Northeast Energy Associates, A Limited Partnership has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
NORTHEAST ENERGY ASSOCIATES,
A LIMITED PARTNERSHIP
By: INTERCONTINENTAL ENERGY CORPORATION
As General Partner
DATE SIGNATURE AND TITLE
May 15, 1997
- ------------------ -----------------------------------------
Maureen P. Herbert
Vice President of Finance