UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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, LLC
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 March 31, 2000, there were issued and outstanding 10,000 shares of
ESI Tractebel Funding Corp.'s common stock.
As of March 31, 2000, 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
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 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. 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 changes in laws or regulations, changing governmental policies and
regulatory actions, including those of the Federal Energy Regulatory
Commission and the Public Utility Regulatory Policies Act of 1978, as
amended, acquisition, disposal, depreciation and amortization 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, availability, pricing and
transportation of fuel and other energy commodities, market demand for
energy from plants or facilities, changes in tax rates or policies or in
rates of inflation or in accounting standards, unanticipated delays or
changes in costs for capital projects, 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.
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 (A PARTNERSHIP) AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
March 31, December 31,
2000 1999
ASSETS
Current assets:
Cash and cash equivalents ........................................................ $ 67,215 $ 33,085
Accounts receivable .............................................................. 40,928 32,332
Due from related party ........................................................... 22 152
Spare parts inventories .......................................................... 9,977 9,977
Fuel inventories ................................................................. 514 4,361
Prepaid expenses and other current assets ........................................ 782 335
Total current assets ........................................................... 119,438 80,242
Non-current assets:
Deferred debt issuance costs (net of accumulated amortization of $1,337 and
$1,179, respectively) .......................................................... 5,623 5,781
Cogeneration facilities and carbon dioxide facility (net of accumulated
depreciation of $48,271 and $42,807, respectively) ............................. 465,401 470,851
Power purchase agreements (net of accumulated amortization of $112,920 and
and $99,811, respectively) ..................................................... 775,836 788,945
Other assets ..................................................................... 37 39
Total non-current assets ....................................................... 1,246,897 1,265,616
TOTAL ASSETS ....................................................................... $1,366,335 $1,345,858
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Current portion of notes payable - the Funding Corp. ............................. $ 26,333 $ 26,333
Accounts payable ................................................................. 16,163 16,745
Accrued interest payable ......................................................... 14,891 -
Due to related parties ........................................................... 4,522 1,306
Other accrued expenses ........................................................... 7,610 6,974
Total current liabilities ...................................................... 69,519 51,358
Non-current liabilities:
Deferred credit - fuel contracts ................................................. 287,369 292,581
Notes payable - the Funding Corp. ................................................ 418,880 418,880
Note payable - the Acquisition Corp. ............................................. 220,000 220,000
Amounts due utilities for energy bank balances ................................... 166,872 168,885
Total non-current liabilities .................................................. 1,093,121 1,100,346
Partners' equity:
General partners ................................................................. 4,074 3,882
Limited partners ................................................................. 199,621 190,272
Total partners' equity ......................................................... 203,695 194,154
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND PARTNERS' EQUITY ............................................. $1,366,335 $1,345,858
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 combined Annual Report on
Form 10-K for the fiscal year ended December 31, 1999 (1999 Form 10-K) for
NE LP.
NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars)
(Unaudited)
Three Months Ended March 31,
2000 1999
REVENUES ................................ $ 90,102 $ 90,332
COSTS AND EXPENSES:
Fuel .................................. 37,120 35,540
Operations and maintenance ............ 3,516 3,928
Depreciation and amortization ......... 18,573 18,272
General and administrative ............ 2,286 2,335
Total costs and expenses ............ 61,495 60,075
OPERATING INCOME ........................ 28,607 30,257
OTHER EXPENSE (INCOME):
Amortization of debt issuance costs ... 157 158
Interest expense ...................... 19,239 19,774
Interest income ....................... (330) (464)
Total other expense - net ........... 19,066 19,468
NET INCOME............................... $ 9,541 $ 10,789
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 1999 Form 10-K for NE LP.
NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
Three Months Ended March 31,
2000 1999
NET CASH PROVIDED BY OPERATING ACTIVITIES ... $ 34,130 $ 25,020
CASH FLOWS FROM INVESTING ACTIVITIES ........ - -
CASH FLOWS FROM FINANCING ACTIVITIES ........ - -
Net increase in cash and cash equivalents ... 34,130 25,020
Cash and cash equivalents at beginning of period 33,085 36,038
Cash and cash equivalents at end of period .. $ 67,215 $ 61,058
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 1999 Form 10-K for NE LP.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
COMBINED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
March 31, December 31,
2000 1999
ASSETS
Current assets:
Cash and cash equivalents ......................................................... $ 66,233 $ 32,144
Accounts receivable ............................................................... 40,928 32,332
Due from related party ............................................................ 22 152
Spare parts inventories ........................................................... 9,977 9,977
Fuel inventories .................................................................. 514 4,361
Prepaid expenses and other current assets ......................................... 782 301
Total current assets ............................................................ 118,456 79,267
Non-current assets:
Cogeneration facilities and carbon dioxide facility (net of accumulated
depreciation of $48,271 and $42,807, respectively) .............................. 465,401 470,851
Power purchase agreements (net of accumulated amortization of $112,920 and
$99,811, respectively) .......................................................... 775,836 788,945
Other assets ...................................................................... 37 39
Total non-current assets ........................................................ 1,241,274 1,259,835
TOTAL ASSETS ........................................................................ $1,359,730 $1,339,102
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Current portion of notes payable - the Funding Corp. .............................. $ 26,333 $ 26,333
Accounts payable .................................................................. 16,163 16,745
Accrued interest payable .......................................................... 10,496 -
Due to related parties ............................................................ 4,383 1,167
Other accrued expenses ............................................................ 7,610 6,974
Total current liabilities ....................................................... 64,985 51,219
Non-current liabilities:
Deferred credit - fuel contracts .................................................. 287,369 292,581
Notes payable - the Funding Corp. ................................................. 418,880 418,880
Amounts due utilities for energy bank balances .................................... 166,872 168,885
Total non-current liabilities ................................................... 873,121 880,346
Partners' equity:
General partner ................................................................... 4,216 4,075
Limited partners .................................................................. 417,408 403,462
Total partners' equity .......................................................... 421,624 407,537
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND PARTNERS' EQUITY .............................................. $1,359,730 $1,339,102
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 1999 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)
Three Months Ended March 31,
2000 1999
REVENUES ................................. $ 90,102 $ 90,332
COSTS AND EXPENSES:
Fuel .................................. 37,120 35,540
Operations and maintenance ............ 3,516 3,928
Depreciation and amortization ......... 18,573 18,272
General and administrative ............ 2,286 2,335
Total costs and expenses ............ 61,495 60,075
OPERATING INCOME ........................ 28,607 30,257
OTHER EXPENSE (INCOME):
Interest expense ...................... 14,843 15,379
Interest income ....................... (323) (428)
Total other expense - net ........... 14,520 14,951
NET INCOME............................... $ 14,087 $ 15,306
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 1999 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)
Three Months Ended March 31,
2000 1999
NET CASH PROVIDED BY OPERATING ACTIVITIES ... $ 34,089 $ 24,983
CASH FLOWS FROM INVESTING ACTIVITIES ........ - -
CASH FLOWS FROM FINANCING ACTIVITIES ........ - -
Net increase in cash and cash equivalents ... 34,089 24,983
Cash and cash equivalents at beginning of period 32,144 35,152
Cash and cash equivalents at end of period .. $ 66,233 $ 60,135
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 1999 Form 10-K for NEA and
NJEA.
ESI TRACTEBEL FUNDING CORP.
BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
March 31, December 31,
2000 1999
ASSETS
Current assets:
Cash .............................................................................. $ 1 $ 1
Interest receivable from the Partnerships ......................................... 10,496 -
Current portion of notes receivable from the Partnerships ......................... 26,333 26,333
Total current assets ............................................................ 36,830 26,334
Notes receivable from the Partnerships .............................................. 418,880 418,880
TOTAL ASSETS ........................................................................ $ 455,710 $ 445,214
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of securities payable ............................................. $ 26,333 $ 26,333
Accrued interest .................................................................. 10,496 -
Total current liabilities ....................................................... 36,829 26,333
Securities payable .................................................................. 418,880 418,880
Stockholders' equity:
Common stock, no par value, 10,000 shares authorized, issued and outstanding ...... 1 1
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......................................... $ 455,710 $ 445,214
STATEMENTS OF OPERATIONS
(Thousands of Dollars)
(Unaudited)
Three Months Ended March 31,
2000 1999
Interest income ..................... $ 10,496 $ 10,991
Interest expense .................... (10,496) (10,991)
NET INCOME .......................... $ - $ -
These reports should be read in conjunction with the Notes to Financial
Statements on page 11 herein and the Notes to Financial Statements
appearing in the 1999 Form 10-K for the Funding Corp.
ESI TRACTEBEL ACQUISITION CORP.
BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
March 31, December 31,
2000 1999
ASSETS
Current assets:
Interest receivable from NE LP...................................................... $ 4,396 $ -
Due from NE LP ....................................................................... 152 152
Note receivable from NE LP ........................................................... 220,000 220,000
TOTAL ASSETS ......................................................................... $224,548 $220,152
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Income taxes payable ............................................................... $ 10 $ 9
Accrued interest ................................................................... 4,396 -
Total current liabilities ........................................................ 4,406 9
Deferred credit - interest rate hedge ................................................ 123 126
Securities payable ................................................................... 220,000 220,000
Stockholders' equity:
Common stock, $.10 par value, 100 shares authorized, 20 shares issued .............. - -
Subscriptions receivable ........................................................... - -
Retained earnings .................................................................. 19 17
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........................................... $224,548 $220,152
STATEMENTS OF OPERATIONS
(Thousands of Dollars)
(Unaudited)
Three Months Ended March 31,
2000 1999
Interest income ................... $ 4,396 $ 4,396
Interest expense .................. (4,393) (4,393)
Income before income taxes ........ 3 3
Income tax expense ................ (1) (1)
NET INCOME ........................ $ 2 $ 2
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 1999 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
1999 Form 10-K for 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. The Funding Corp. and the Acquisition Corp. had no cash transactions
for the three months ended March 31, 2000 and 1999 and therefore have not
presented a statement of cash flows. The results of operations for an
interim period may not give a true indication of results for the year.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This discussion should be read in conjunction with the Notes to
Consolidated Financial Statements, Notes to Combined Financial Statements
and Notes to Financial Statements contained herein and Management's
Discussion and Analysis of Financial Condition and Results of Operations
appearing in the 1999 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. In the following discussion, all comparisons are with the
corresponding items in the prior year.
Results of Operations
NE LP and the Partnerships - Revenues decreased as a result of slightly
lower availability at both the Bellingham, MA and Sayreville, NJ
facilities. Availability was lower primarily because of a combination of
weather conditions and minor forced curtailment. Revenues include power
sales to utilities which reflect changes in utility energy bank balances.
The changes in the energy bank balances, which increased reported revenues,
are determined in accordance with scheduled or specified rates under
certain power purchase agreements.
Fuel expense, excluding $5.2 million of deferred credit amortization for
fuel contracts for the periods ended March 31, 2000 and 1999, increased
primarily as a result of the increased price of natural gas required to
fuel the facilities.
Operations and maintenance expense decreased primarily as a result of
reduced costs incurred by the new operator of the facilities. The previous
operator was retained for January 1999 to allow for the transitioning of
the new operator's personnel but at an increased cost when compared to the
costs charged by the new operator in January 2000.
Interest expense of NE LP and the Partnerships decreased as a result of
decreasing principal balances on the notes payable.
The Funding Corp. and the Acquisition Corp. - Both the Funding Corp. and
the Acquisition Corp. are scheduled to make semi-annual debt and/or
interest payments on June 30 and December 30, 2000. Interest expense for
the Funding Corp. decreased as a result of decreasing principal balances on
the securities payable.
Liquidity and Capital Resources
The Registrants - Cash flow generated by the Partnerships year to date has
been and is expected to remain sufficient for at least the next twelve
months 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
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27.1 Financial Data Schedule - ESI Tractebel Funding Corp.
27.2 Financial Data Schedule - Northeast Energy Associates,
A Limited Partnership
27.3 Financial Data Schedule - North Jersey Energy
Associates, A Limited Partnership
27.4 Financial Data Schedule - ESI Tractebel
Acquisition Corp.
27.5 Financial Data Schedule - Northeast Energy, LP
(b) Reports On Form 8-K - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
(ESI Northeast Energy GP, Inc. as Administrative General Partner)
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
(ESI Northeast Energy GP, Inc. as Administrative General Partner)
NORTHEAST ENERGY, LP
(ESI Northeast Energy GP, Inc. as Administrative General Partner)
ESI TRACTEBEL FUNDING CORP.
ESI TRACTEBEL ACQUISITION CORP.
(Registrants)
Date: May 5, 2000
DILEK L. SAMIL
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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 )