1
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, 1996
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
IEC FUNDING CORP.
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
--------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 04-3255377
NEW JERSEY 04-2955646
MASSACHUSETTS 04-2955642
------------- ----------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
350 LINCOLN PLACE, HINGHAM, MASSACHUSETTS 02043
----------------------------------------- -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(617) 749-9800
--------------
(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
--- ---
2
IEC FUNDING CORP.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
INDEX
PAGE NUMBER
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
Combined Balance Sheet at December 31, 1995 and
March 31, 1996 (Unaudited).............................. 3
Combined Statement of Operations for the Three
Months Ended March 31, 1995 and 1996 (Unaudited)........ 4
Combined Statement of Cash Flows for the Three Months
Ended March 31, 1995 and 1996 (Unaudited)............... 5
Notes to Financial Statements........................... 7
IEC FUNDING CORP.
Balance Sheet at December 31, 1995 and
March 31, 1996 (Unaudited).............................. 8
Statement of Operations for the Three Months Ended
March 31, 1995 and 1996 (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
3
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
COMBINED BALANCE SHEET (UNAUDITED)
- - --------------------------------------------------------------------------------
December 31, March 31,
1995 1996
(In Thousands)
ASSETS
Current assets
Cash and cash equivalents $ 58,277 $ 99,418
Accounts receivable 51,465 53,841
Fuel inventories 4,516 1,276
Prepaid expenses and other current assets 2,913 1,370
--------- ---------
Total current assets 117,171 155,905
--------- ---------
Cogeneration facilities and carbon dioxide facility (net of
accumulated depreciation of $104,157,000 and $110,370,000
at December 31, 1995 and March 31, 1996 respectively) 397,589 391,375
Unamortized financing costs 20,210 19,597
Other fixed assets (net of accumulated depreciation of $371,000
and $399,000 at December 31, 1995 and March 31, 1996, respectively) 485 481
Other assets 3,011 3,135
Restricted cash 78,568 74,470
--------- ---------
Total non-current assets 499,863 489,058
--------- ---------
Total assets $ 617,034 $ 644,963
========= =========
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities
Current portion of loans payable - IEC Funding Corp. $ 25,204 $ 25,204
Accounts payable 14,234 15,415
Accrued interest payable - IEC Funding Corp. -- 12,484
Other accrued expenses 2,104 3,798
Future obligations under interest rate swap agreements 3,654 3,179
--------- ---------
Total current liabilities 45,196 60,080
--------- ---------
Loans payable - IEC Funding Corp. 514,362 514,362
Amounts due utilities for energy bank balances 188,053 194,494
--------- ---------
Total non-current liabilities 702,415 708,856
--------- ---------
Total liabilities 747,611 768,936
--------- ---------
Partners' deficit
General partner (4,047) (3,981)
Limited partners (126,530) (119,992)
--------- ---------
Total partners' deficit (130,577) (123,973)
--------- ---------
Commitments and contingencies -- --
--------- ---------
Total liabilities and partners' deficit $ 617,034 $ 644,963
========= =========
The accompanying notes are an integral
part of these financial statements
4
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
- - --------------------------------------------------------------------------------
Three months
ended
March 31,
1995 1996
(In Thousands)
Revenue
Power sales to utilities $71,926 $72,868
Steam sales 1,327 1,316
------- -------
Total revenue 73,253 74,184
------- -------
Costs and expenses
Cost of power and steam sales 35,001 40,692
Operation and maintenance 6,434 6,614
Depreciation 6,212 6,241
General and administrative
expenses 2,608 3,449
------- -------
Total costs and expenses 50,255 56,996
------- -------
Operating income 22,998 17,188
------- -------
Other (income) expense
Amortization of financing costs 499 613
Interest expense 13,121 12,564
Interest income (2,612) (2,593)
------- -------
Total other expense 11,008 10,584
------- -------
Net income $11,990 $ 6,604
======= =======
The accompanying notes are an integral
part of these financial statements
5
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,
1995 1996
(In Thousands)
Cash flows from operating activities:
Cash received from utilities and other customers $ 81,071 $ 79,719
Cash paid to suppliers (36,824) (44,212)
Interest paid (724) (546)
Bank commitment fees paid (10) (9)
Interest received 2,346 4,158
Cash payments to general partner for operating activities (773) (1,154)
Cash payments to owners/management (866) (890)
-------- --------
Net cash provided by operating
activities 44,220 37,066
-------- --------
Cash flows from investing activities:
Net expenditures for facilities (60) --
Purchase of other fixed assets (36) (23)
Decrease in restricted cash 1,264 4,098
-------- --------
Net cash provided by
investing activities 1,168 4,075
-------- --------
Cash flows from financing activities -- --
-------- --------
Net cash used for financing activities -- --
-------- --------
Net increase in cash and cash equivalents 45,388 41,141
Cash and cash equivalents at beginning of period 76,255 58,277
-------- --------
Cash and cash equivalents at end of period $121,643 $ 99,418
======== ========
The accompanying notes are an integral
part of these financial statements
6
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,
1995 1996
(In Thousands)
Net income $11,990 $ 6,604
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 6,212 6,241
Amortization of financing costs 499 613
Increase in accounts receivable (323) (2,376)
Decrease in fuel inventories 3,192 3,240
(Increase)/Decrease in prepaid expenses and other current assets (501) 1,543
Increase in accounts payable 2,100 1,181
Increase in other accrued expenses 14,476 14,178
Decrease in future obligations under interest rate swap
agreements (432) (475)
Increase in amounts due utilities for energy bank balances 7,145 6,441
Increase in other assets (138) (124)
------- -------
Net cash provided by operating activities $44,220 $37,066
======= =======
The accompanying notes are an integral
part of these financial statements
7
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
NOTES TO 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, 1995 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, 1996 are
unaudited and are not necessarily indicative of the results to be expected
for the full year. The unaudited financial information at March 31, 1996
and for the three months ended March 31, 1996 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. Distributions
Distributions to the partners may be made only after all required funds and
sub-funds have been fully funded as described in the trust indenture. After
funding all amounts required under the indenture, the excess cash generated
during the quarterly period ended March 31, 1996 was approximately $.3
million. An additional $8.5 million of excess cash flow was generated in
April. All conditions under the trust indenture for distributions of such
excess cash were satisfied after March 31, 1996 resulting in a distribution
of $8.8 million in April to the partners in proportion to their designated
interests in the Partnerships.
8
IEC FUNDING CORP.
BALANCE SHEET (UNAUDITED)
- - --------------------------------------------------------------------------------
December 31, March 31,
1995 1996
ASSETS (In Thousands)
Current assets
Cash $ 1 $ 1
Current portion of notes receivable from
Northeast Energy Associates and North Jersey
Energy Associates (together, the "Partnerships") 25,204 25,204
Interest receivable from the Partnerships -- 12,484
-------- --------
Total current assets 25,205 37,689
Notes receivable from the Partnerships 514,362 514,362
-------- --------
Total assets $539,567 $552,051
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of securities payable $ 25,204 $ 25,204
Accrued interest -- 12,484
-------- --------
Total current liabilities 25,204 37,688
Securities payable 514,362 514,362
-------- --------
Total liabilities 539,566 552,050
Stockholders' equity
Common stock, no par value, 10,000 shares
authorized, issued and outstanding 1 1
-------- --------
Total liabilities and stockholders' equity $539,567 $552,051
======== ========
9
IEC FUNDING CORP.
STATEMENT OF OPERATIONS (UNAUDITED)
- - --------------------------------------------------------------------------------
Three Months Ended
March 31,
1995 1996
(In Thousands)
Interest income $ 12,842 $ 12,484
Interest expense (12,842) (12,484)
-------- --------
Net income $ - $ -
======== ========
10
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, 1995 for IEC Funding
Corp. (the "Company") and the Partnerships. The Company did not
experience any cash flows for the three months ended March 31, 1996 and
1995. Therefore, a Statement of Cash Flows is not presented for these
periods.
The unaudited financial information at March 31, 1996 and for the three
months ended March 31, 1996 contains all adjustments, consisting only of
normal recurring adjustments, considered by management necessary for a
fair presentation of the operating results for such period.
11
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- - --------------------------------------------------------------------------------
Total revenue for the first quarter of 1996 of $74.2 million increased by $.9
million (1.2%) as compared to the same period in 1995. This increase is a result
of increased generation during the first quarter of 1996 as compared to the same
period last year, as well as decreasing energy bank requirements.
Cost of power and steam sales, as a percentage of gross revenues, (gross of
increase to energy bank balances) was 51.3% for the first quarter of 1996 versus
44.3% for the first quarter of 1995. The increased costs are primarily
attributable to weather related increases in fuel costs including higher market
prices of spot gas and additional charges applicable under North Jersey Energy
Associates' extended gas service arrangement with a fuel supplier. Extended gas
service occurs when temperatures are below 22 degrees Fahrenheit. There were
sixteen such days during the first quarter of 1996 compared with four days in
the first quarter of 1995.
Operation and maintenance costs increased $.2 million (2.8%) as compared to
the first quarter of 1995. Increases include normal and expected escalations on
O&M contracts, increased water and sewer charges, and increased property tax
rates.
General and administrative expenses were $3.4 million for the first quarter
of 1996 as compared to $2.6 million for the same period last year, increasing
$.8 million (32.2%). Increases include legal and consulting costs related to
potential industry restructuring and normal and expected increases in overhead
costs.
Interest expense decreased $.6 million (4.2%) as compared to the first
quarter of 1995, as a result of principal payments of $20.4 million paid in
1995. Principal payments are made semi-annually on June 30, and December 30.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow generated during the first quarter of 1996 was more than sufficient
to fund all operating expenses as well as fund $37.6 million of interest and
principal required for payment on June 30, 1996. An additional debt service
reserve funding requirement of $.7 million was also fulfilled.
12
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
13
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 14, 1996
- - ------------------- -------------------------
Maureen P. Herbert
Vice President of Finance
14
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 14, 1996
- - ------------------ --------------------------------
Maureen P. Herbert
Vice President of Finance
15
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 14, 1996
- - ------------------ --------------------------------
Maureen P. Herbert
Vice President of Finance
16
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 14, 1996 /s/ Maureen P. Herbert
- - ------------------ ---------------------------------
Maureen P. Herbert
Vice President of Finance
17
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 14, 1996 /s/ Maureen P. Herbert
- - ------------------ --------------------------------
Maureen P. Herbert
Vice President of Finance
18
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 14, 1996 /s/ Maureen P. Herbert
- - ----------------------- ----------------------------
Maureen P. Herbert
Vice President of Finance