UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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 Identification
incorporation or organization) Number)
Enron Building
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.
Yes [X] No [ ]
As of September 30, 2000, the Registrant had an
aggregate of 6,000,000 8.125% Trust Preferred Securities and
186,000 8.125% Trust Common Securities outstanding.
1 of 10
<PAGE>
ENRON CAPITAL TRUST II
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Income Statement - Three Months Ended September 30,
2000 and 1999 and Nine Months Ended September 30,
2000 and 1999 3
Balance Sheet - September 30, 2000 and
December 31, 1999 4
Statement of Cash Flows - Nine Months Ended
September 30, 2000 and 1999 5
Notes to Financial Statements 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 9
ITEM 2. Changes in Securities 9
ITEM 3. Defaults upon Senior Securities 9
ITEM 4. Submission of Matters to a Vote of
Security Holders 9
ITEM 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ENRON CAPITAL TRUST II
INCOME STATEMENT
(In Thousands)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Revenues from Partnership
Preferred Securities $3,141 $3,141 $9,424 $9,424
Net Income $3,141 $3,141 $9,424 $9,424
<FN>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 1. FINANCIAL STATEMENTS - (Continued)
ENRON CAPITAL TRUST II
BALANCE SHEET
(In Thousands)
(Unaudited)
<CAPTION>
September 30, December 31,
2000 1999
<S> <C> <C>
ASSETS
Investment in Limited Partnership Interest $154,650 $154,650
Partnership Distributions Receivable 3,141 -
Total Assets $157,791 $154,650
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Trust Distributions Payable $ 3,141 $ -
Shareowners' Equity
Trust Preferred Securities -
authorized, issued and outstanding
6,000,000 shares, $25 liquidation value 150,000 150,000
Trust Common Securities -
authorized, issued and outstanding
186,000 shares, $25 liquidation value 4,650 4,650
Total Shareowners' Equity 154,650 154,650
Total Liabilities and Shareowners' Equity $157,791 $154,650
<FN>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 1. FINANCIAL STATEMENTS - (Continued)
ENRON CAPITAL TRUST II
STATEMENT OF CASH FLOWS
(In Thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
2000 1999
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Reconciliation of Net Income to Net
Cash Provided by Operating Activities
Net Income $9,424 $9,424
Increase in Partnership Distributions Receivable (3,141) -
Net Cash Provided by Operating Activities 6,283 9,424
CASH FLOW FROM INVESTING ACTIVITIES:
Net Cash Provided by (Used in) Investing
Activities - -
CASH FLOW FROM FINANCING ACTIVITIES:
Dividends Paid (6,283) (9,424)
Net Cash Used in Financing Activities (6,283) (9,424)
Increase (Decrease) in Cash and
Cash Equivalents - -
Cash and Cash Equivalents, Beginning
of Period - -
Cash and Cash Equivalents, End of Period $ - $ -
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Dividends Declared $3,141 $ -
<FN>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 1. FINANCIAL STATEMENTS - (Continued)
ENRON CAPITAL TRUST II
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The condensed financial statements included herein have
been prepared by management without audit pursuant to the
rules and regulations of the Securities and Exchange
Commission. Accordingly, these statements reflect all
adjustments (consisting only of normal recurring entries)
which are, in the opinion of management, necessary for a
fair statement of the financial results for the interim
periods. Certain information and notes normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although
management believes the disclosures are adequate to make the
information presented not misleading. These condensed
financial statements should be read in conjunction with the
financial statements and the notes thereto included in Enron
Capital Trust II Form 10-K for the year ended December 31,
1999.
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Enron Capital Trust II (the "Trust") is a statutory
business trust created under the Delaware Business Trust
Act. Ownership of the assets of the Trust is evidenced by
an aggregate of 6,000,000 8.125% 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 8.125% 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. ("Enron"). The Trust's sole assets are
6,186,000 8.125% Partnership Preferred Securities ($25
liquidation amount per security) representing an 85% limited
partnership interest in Enron Preferred Funding II, L.P.
(the "Partnership"). The Trust and the Partnership are
consolidated subsidiaries of Enron for financial accounting
purposes.
2. DESCRIPTION OF THE PARTNERSHIP
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, Series II,
due 2016 of Enron (the "Enron Debenture") and $21,836,000
principal amount 7.75% Debentures, Series II, due 2016 (the
"Subsidiary Debentures" and, together with the Enron
Debenture, the "Debentures"), of each of Enron North America
Corp. and Enron Pipeline Company, each of which is a wholly-
owned subsidiary of Enron. The obligations under the
Subsidiary Debentures are guaranteed by Enron. In addition
to the Debentures, the Partnership owns an aggregate of
approximately $1,900,000 in short-term, investment grade
debt securities (the "Eligible Debt Securities") as of
September 30, 2000 and December 31, 1999.
3. SUMMARIZED FINANCIAL INFORMATION OF THE PARTNERSHIP
Summarized financial information for the Partnership,
accounted for by the equity method, is as follows (in
thousands):
<TABLE>
<CAPTION>
September 30, December 31,
Balance Sheet 2000 1999
<S> <C> <C>
Current Assets $ 5,344 $ 1,852
Noncurrent Assets 180,122 180,122
Current Liabilities 3,141 -
Partners' Capital 182,325 181,974
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
Income Statement 2000 1999 2000 1999
<S> <C> <C> <C> <C>
Revenues $3,494 $3,513 $10,528 $10,537
Net Income $3,494 $3,513 $10,528 $10,537
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION - (Concluded)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
ENRON CAPITAL TRUST II
Results of Operations and Changes in Cash Flows
Third Quarter 2000 vs Third Quarter 1999
For the quarter ended September 30, 2000, distributions
totaling $3.0 and $0.1 million, respectively, were declared
to the holders of the 6,000,000 Trust Preferred Securities
and to the holder of the 186,000 Trust Common Securities.
These distributions were paid in the subsequent month. On
the quarter ended September 30, 1999, the holders of the
6,000,000 Trust Preferred Securities were paid quarterly
cash distributions totaling $3.0 million. On the same date,
the holder of the 186,000 Trust Common Securities was paid
quarterly cash distributions totaling $0.1 million. On
October 2, 2000 and September 30, 1999, the Trust received
quarterly distributions from the Partnership of $3.1 million
related to the Trust's limited partnership interest.
Nine Months Ended September 30, 2000 vs.
Nine Months Ended September 30, 1999
For the nine months ended September 30, 2000,
distributions totaling $9.1 and $0.3 million, respectively,
were declared to the holders of the 6,000,000 Trust
Preferred Securities and to the holder of the 186,000 Trust
Common Securities. $6.1 and $0.2 million of these
distributions were paid by September 30, 2000. The
remaining $3.0 and $0.1 million distributions declared were
paid in October 2000. For the nine months ended September
30, 1999, the holders of the 6,000,000 Trust Preferred
Securities were paid cash distributions totaling $9.1
million. For the nine months ended September 30, 1999, the
holder of the 186,000 Trust Common Securities was paid cash
distributions totaling $0.3 million. On October 2, 2000 and
September 30, 1999, the Trust received distributions from
the Partnership totaling $9.4 million related to the Trust's
limited partnership interest.
PART II. OTHER INFORMATION
ENRON CAPITAL TRUST II
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
None.
(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 report to
be signed on its behalf by the undersigned thereunto duly
authorized.
ENRON CAPITAL TRUST II
(Registrant)
Date: November 13, 2000 By: BEN GLISAN, JR.
Name: Ben Glisan, Jr.
Title: Regular Trustee
