UNITED STATES
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, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-3423-01
ENRON CAPITAL TRUST II
(Exact name of registrant as specified in its charter)
Delaware 76-6122939
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Enron Bldg.
1400 Smith Street
Houston, Texas 77002
(Address of principal executive (Zip code)
offices)
(713) 853-6161
(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.
[X] Yes [ ] No
As of March 31, 1998, the Registrant had an aggregate of
6,000,000 8 1/8% Trust Preferred Securities and 186,000 8
1/8% Trust Common Securities outstanding.
<PAGE>
ENRON CAPITAL TRUST II
FORM 10-Q
INDEX
Page No.
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements (see Note below) 3
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (see Note below) 3
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings 4
ITEM 2. Changes in Securities 4
ITEM 3. Defaults upon Senior Securities 4
ITEM 4. Submission of Matters to a Vote of Security Holders 4
ITEM 6. Exhibits and Reports on Form 8-K 4
SIGNATURES 5
<PAGE>
Part I Financial Information
Item 1. Financial Statements (see Note below)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (see Note below)
Enron Capital Trust II (the "Trust") is a statutory
business trust created under the Delaware Business Trust
Act, as amended (the "Trust Act"), pursuant to an amended
and restated declaration of trust (the "Declaration") and
the filing of a certificate of trust with the Secretary of
State of the State of Delaware. On January 16, 1997, the
Trust completed its initial public offering of the Trust
Preferred Securities described below, as a result of which
the Trust's sole assets are 6,186,000 8 1/8% Partnership
Preferred Securities ($25 liquidation amount per security)
representing an 85% limited partnership interest in Enron
Preferred Funding II, L.P., a Delaware limited partnership
(the "Partnership"). Ownership of the assets of the Trust
is evidenced by an aggregate of 6,000,000 8 1/8% Trust
Preferred Securities (the "Trust Preferred Securities"),
which are listed and traded on the New York Stock Exchange
under the symbol "ENE PrR", and 186,000 Trust Common
Securities (the "Trust Common Securities," and, together
with the Trust Preferred Securities, the "Trust
Securities"), all of which are owned by Enron Corp., an
Oregon corporation ("Enron"). The Trust makes distributions
on the Trust Securities to the extent it receives
distributions from the Partnership on the Partnership
Preferred Securities. Payments on the Partnership Preferred
Securities represent the sole source of revenue for the
Trust. Distributions on the Trust Securities are guaranteed
by Enron, but only to the extent that the Trust has
available funds to pay such distributions. The Trust was
created for the sole purpose of issuing the Trust
Securities, investing the proceeds of such issuance in the
Partnership Preferred Securities and engaging in only those
other activities necessary or incidental thereto. The Trust
Securities are subject to redemption at any time on or after
March 31, 2002 and earlier in the event of certain tax law
changes or other events.
The general partner of the Partnership is Enron, which
owns a 15% general partnership interest in the Partnership.
Since completion of the offering of the Trust Preferred
Securities on January 16, 1997, the assets of the
Partnership have been invested primarily in a $136,450,000
principal amount 7.75% Subordinated Debenture due 2016,
Series II of Enron (the "Enron Debenture") and $21,836,000
principal amount 7.75% Debentures due 2016, Series II, of
each of Enron Capital & Trade Resources Corp. and Enron
Pipeline Company (the "Subsidiary Debentures" and, together
with the Enron Debenture, the "Debentures"), each of which
is a wholly owned subsidiary of Enron. The obligations under
the Subsidiary Debentures are guaranteed by Enron. The
respective issuers of the Debentures have certain rights to
elect to defer any payments of principal and interest on the
Debentures for up to five years at a time. In addition to
the Debentures, the Partnership owns an aggregate of
approximately $1,839,000 in short-term, investment grade
debt securities (the "Eligible Debt Securities"). Under
certain circumstances, upon repayment of one or more of the
Debentures, the assets of the Partnership may be reinvested
in one or more debt securities of Enron or its subsidiaries.
Payments of interest and principal on the Enron Debenture
and the Subsidiary Debentures (or the guarantees thereof)
and the Eligible Debt Securities are the sole source of
revenue for the Partnership. The Partnership pays
distributions to the Trust as holder of the Partnership
Preferred Securities when, as and if Enron, as the general
partner, determines to do so, although Enron has no
obligation to do so.
NOTE: Because the Trust and the Partnership are special
purpose financing entities with no separate business
operations, the only assets of the Trust are the Partnership
Preferred Securities, and substantially all of the assets of
the Partnership consist of a debt security of Enron and debt
securities of subsidiaries of Enron that are guaranteed by
Enron, the Trust does not believe that financial statements
for the Trust or the Partnership are meaningful.
Accordingly, financial statements and related financial
information have not been included in this Form 10-Q. For
further information concerning Enron and its subsidiaries,
including financial statements and other financial
information, see the Enron Annual Report on Form 10-K for
the year ended December 31, 1997, and Enron Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 1998,
as filed with the Securities and Exchange Commission, copies
of which may be obtained from the Corporate Secretary of
Enron at the address listed on the cover of this Form 10-Q.
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 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
4.1 Certificate of Trust (incorporated by reference to
Exhibit 4(a) of the Registration Statement on Form
S-3 of the Trust (No. 333-18669)).
4.2 Amended and Restated Declaration of Trust dated as
of January 13, 1997 (incorporated by reference to
Exhibit 4.2 to Enron Capital Trust II Form 10-K
for the year ended December 31, 1996 ("Form 10-
K")).
4.3 Amended and Restated Agreement of Limited
Partnership of the Enron Preferred Funding II, L.P.
dated as of January 16, 1997 (incorporated by
reference to Exhibit 4.3 to Form 10-K).
4.4 Trust Preferred Guarantee Agreement dated as of
January 16, 1997 (incorporated by reference to
Exhibit 4.4 to Form 10-K).
4.5 Partnership Preferred Guarantee Agreement dated as
of January 16, 1997 (incorporated by reference to
Exhibit 4.5 to Form 10-K).
4.6 Indenture dated as of January 16, 1997 relating to
the Enron's 7.75% Subordinated Debentures due
2016, Series II (incorporated by reference to
Exhibit 4.6 to Form 10-K).
4.7 Indenture dated as of January 16, 1997 relating to
Enron Pipeline Company's 7.75% Debentures due
2016, Series II (incorporated by reference to
Exhibit 4.7 to Form 10-K).
4.8 Indenture dated as of January 16, 1997 relating to
the Enron Capital & Trade Resources Corp. 7.75%
Debentures due 2016, Series II (incorporated by
reference to Exhibit 4.8 to Form 10-K).
4.9 Guarantee Agreement of Enron dated as of January
16, 1997 relating to Enron Pipeline Company's
7.75% Debentures due 2016, Series II (incorporated
by reference to Exhibit 4.9 to Form 10-K).
4.10 Guarantee Agreement of Enron dated as of
January 16, 1997 relating to Enron Capital & Trade
Resources Corp. 7.75% Debentures due 2016, Series
II (incorporated by reference to Exhibit 4.10 to
Form 10-K).
4.11 Form of certificate representing Trust
Preferred Securities (included in Exhibit 4.2).
27.1 Financial Data Schedule.
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this amended
report to be signed on its behalf by the undersigned
thereunto duly authorized.
ENRON CAPITAL TRUST II
(Registrant)
Date: May 13, 1998 By: /s/ KEITH A. CRANE
Name: Keith A. Crane
Title: Regular Trustee
/s/ PHILLIP M. SISNEROS
Name: Phillip M. Sisneros
Title: Regular Trustee
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
4.1 Certificate of Trust (incorporated by reference to
Exhibit 4(a) of the Registration Statement on Form
S-3 of the Trust (No. 333-18669)).
4.2 Amended and Restated Declaration of Trust dated as
of January 13, 1997 (incorporated by reference to
Exhibit 4.2 to Enron Capital Trust II Form 10-K
for the year ended December 31, 1996 ("Form 10-
K")).
4.3 Amended and Restated Agreement of Limited
Partnership of the Enron Preferred Funding II, L.P.
dated as of January 16, 1997 (incorporated by
reference to Exhibit 4.3 to Form 10-K).
4.4 Trust Preferred Guarantee Agreement dated as of
January 16, 1997 (incorporated by reference to
Exhibit 4.4 to Form 10-K).
4.5 Partnership Preferred Guarantee Agreement dated as
of January 16, 1997 (incorporated by reference to
Exhibit 4.5 to Form 10-K).
4.6 Indenture dated as of January 16, 1997 relating to
the Enron's 7.75% Subordinated Debentures due
2016, Series II (incorporated by reference to
Exhibit 4.6 to Form 10-K).
4.7 Indenture dated as of January 16, 1997 relating to
Enron Pipeline Company's 7.75% Debentures due
2016, Series II (incorporated by reference to
Exhibit 4.7 to Form 10-K).
4.8 Indenture dated as of January 16, 1997 relating to
the Enron Capital & Trade Resources Corp. 7.75%
Debentures due 2016, Series II (incorporated by
reference to Exhibit 4.8 to Form 10-K).
4.9 Guarantee Agreement of Enron dated as of January
16, 1997 relating to Enron Pipeline Company's
7.75% Debentures due 2016, Series II (incorporated
by reference to Exhibit 4.9 to Form 10-K).
4.10 Guarantee Agreement of Enron dated as of
January 16, 1997 relating to Enron Capital & Trade
Resources Corp. 7.75% Debentures due 2016, Series
II (incorporated by reference to Exhibit 4.10 to
Form 10-K).
4.11 Form of certificate representing Trust
Preferred Securities (included in Exhibit 4.2).
27.1 Financial Data Schedule.
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