<PAGE>
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 September 30, 2000
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period ______ to ______
Commission File Number 333-96239
Tenaska Georgia Partners, L.P.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 47-0812088
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1044 N. 115 Street, Suite 400
Omaha, Nebraska 68154-4446
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (402) 691-9500
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 reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
<PAGE>
Tenaska Georgia Partners, L.P.
Report on Form 10-Q
For the Quarter Ended September 30, 2000
<TABLE>
<CAPTION>
Index
Part I. Financial Information Page No.
<S> <C>
Item 1. Financial Statements
Balance Sheets 2
Statements of Operations 3
Statement of Changes in Partners' Deficit 4
Statements of Cash Flows 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 9
Part II. Other Information
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
<PAGE>
TENASKA GEORGIA PARTNERS, L.P.
(A Development Stage Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 2000 1999
(Unaudited)
------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 26,012,233 $ 40,225,109
Short-term investments 121,567,635 163,621,403
Restricted cash and short-term investments 20,070,174 37,516,471
Interest receivable 2,060,474 1,780,090
Prepaid insurance 848,913 1,027,243
------------- -------------
Total current assets 170,559,429 244,170,316
DEVELOPMENT WORK IN PROGRESS 90,151,036 20,056,087
------------- -------------
LAND 602,529 602,529
------------- -------------
OTHER ASSETS:
Contract costs 4,936,302 2,235,490
Gas pipeline costs 2,757,357 --
Deferred finance charges 4,499,729 4,190,156
------------- -------------
Total other assets 12,193,388 6,425,646
------------- -------------
Total assets $ 273,506,382 $ 271,254,578
============= =============
CURRENT LIABILITIES:
Accounts payable $ 6,432,370 $ 264,706
Payable to affiliate 138,183 53,698
Accrued interest payable 4,354,167 3,628,472
------------- -------------
Total current liabilities 10,924,720 3,946,876
------------- -------------
CONTRACT RETAINAGE PAYABLE 1,492,009 86,501
------------- -------------
LONG-TERM DEBT 275,000,000 275,000,000
------------- -------------
Total liabilities 287,416,729 279,033,377
------------- -------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' DEFICIT:
Diamond Georgia, LLC (18,395) --
Tenaska Georgia, Inc. (120,709) (77,788)
Tenaska Georgia I, L.P. (13,771,243) (7,701,011)
------------- -------------
Total partners' deficit (13,910,347) (7,778,799)
------------- -------------
Total liabilities and partners' deficit $ 273,506,382 $ 271,254,578
============= =============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
2
<PAGE>
TENASKA GEORGIA PARTNERS, L.P.
(A Development Stage Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
EXPENSES:
Start-Up Costs:
Management fees and expenses $ -- $ 631,688 $ -- $ 3,357,040
Professional and consulting fees -- 723,011 -- 2,579,318
General and administrative expenses -- 21,511 -- 153,417
Other expenses -- 39,175 -- 121,564
------------ ------------ ------------ ------------
Total operating expenses -- 1,415,385 -- 6,211,339
------------ ------------ ------------ ------------
INTEREST EXPENSE:
Interest expense 6,603,819 -- 19,666,319 --
Interest expense capitalized (1,684,897) -- (3,414,082) --
------------ ------------ ------------ ------------
Interest expense, net 4,918,922 -- 16,252,237 --
------------ ------------ ------------ ------------
INTEREST INCOME 3,159,498 -- 10,120,689 --
------------ ------------ ------------ ------------
NET LOSS TO PARTNERS ACCUMULATED
DURING THE DEVELOPMENT STAGE $ (1,759,424) $ (1,415,385) $ (6,131,548) $ (6,211,339)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
TENASKA GEORGIA PARTNERS, L.P.
(A Development Stage Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
<TABLE>
<CAPTION>
Diamond Tenaska Tenaska
Georgia, LLC Georgia, Inc. Georgia I, L.P. Total
------------- -------------- ---------------- ------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1999 $ -- $ (77,788) $ (7,701,011) $ (7,778,799)
Net loss to partners accumulated
during the development stage (18,395) (42,921) (6,070,232) (6,131,548)
------------- -------------- ---------------- ------------
BALANCE, September 30, 2000 $ (18,395) $ (120,709) $ (13,771,243) $(13,910,347)
============= ============== ================ ============
</TABLE>
The accompanying notes are an integral part of this statement.
4
<PAGE>
TENASKA GEORGIA PARTNERS, L.P.
(A Development Stage Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------------
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss to partners accumulated during the development stage $(6,131,548) $(6,211,339)
Adjustments to reconcile net loss to partners accumulated during
the development stage to net cash from operating activities-
Decrease in short-term investments 42,053,768 --
Decrease in restricted cash and short-term investments 17,446,297 --
Increase in interest receivable (280,384) --
Decrease in prepaid insurance 178,330 --
Decrease in accounts payable (157,198) --
Increase in payable to affiliate 84,485 6,416,335
Increase in contract retainage payable 1,405,508 --
Increase in accrued interest payable 725,695 --
----------- -----------
Total adjustments 61,456,501 6,416,335
----------- -----------
Net cash from operating activities 55,324,953 204,996
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Development work in progress (63,770,087) --
Contract costs (2,700,812) (115,662)
Gas pipeline costs (2,757,357) --
Purchase of land -- (89,334)
----------- -----------
Net cash from investing activities (69,228,256) (204,996)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred finance charges (309,573) --
----------- -----------
Net cash from financing activities (309,573) --
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (14,212,876) --
CASH AND CASH EQUIVALENTS, beginning of period 40,225,109 --
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $26,012,233 $ --
=========== ===========
SUPPLEMENTAL DISCLOSURE:
------------------------
Cash paid for interest $18,940,625 $ --
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
------------------------------------------------
Excluded from decrease in accounts payable and development work in progress are
accrued costs of $6,324,862 capitalized as development work in progress as of
September 30, 2000.
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
TENASKA GEORGIA PARTNERS, L.P.
(A Development Stage Limited Partnership)
Notes to Financial Statements
September 30, 2000
(Unaudited)
1. GENERAL
The financial statements included herein as of September 30, 2000 and for the
three and nine months ended September 30, 2000 and 1999 have been prepared by
Tenaska Georgia Partners, L.P. (the Limited Partnership) without audit pursuant
to the rules and regulations of the Securities and Exchange Commission.
Accordingly, the financial statements reflect all adjustments which are, in the
opinion of management, necessary for a fair presentation 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. However, the Limited Partnership believes that the disclosures are
adequate to make the information presented not misleading. These financial
statements should be read in conjunction with the Limited Partnership's audited
financial statements and the notes thereto for the year ended December 31, 1999
included in the Limited Partnership's prospectus dated July 31, 2000.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make 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.
2. ORGANIZATION
The Limited Partnership was formed on April 16, 1998 to develop, finance,
construct, own or lease, operate and maintain a 936 megawatt, natural gas-fired
electric generation peaking facility (the Facility) located in Heard County,
Georgia. The Facility will generate electric power for sale and the Limited
Partnership expects to incur costs of approximately $310,500,000 to complete the
Facility. The Limited Partnership was inactive prior to calendar year 1999 and
commenced development activities during such year. The Limited Partnership is
scheduled to terminate December 31, 2050.
The following are the partners and their respective ownership interests and
their percentage share of net income or loss:
<TABLE>
<CAPTION>
Percentage Interest
Percentage Interest (For (For Allocation of Net
Partner Equity Contribution Purposes) Income or Loss)
-------------------------------- ---------------------------- -----------------------
<S> <C> <C>
Diamond Georgia, LLC (General) .30% .30%
Tenaska Georgia, Inc. (General) .70 .70
Tenaska Georgia I, L.P. (Limited) 99.00 99.00
------ ------
100.00% 100.00%
====== ======
</TABLE>
The partners have committed to fund up to $35,500,000 of equity and the Limited
Partnership has issued senior secured bonds for $275,000,000 to fund
construction of the Facility.
6
<PAGE>
The day-to-day management of the affairs of the Limited Partnership, including
preparation and maintenance of the financial and other records and books of
account of the Limited Partnership and supervision of the ongoing operations of
the facilities, loan administration and activities of the Limited Partnership,
are the responsibility of the managing partner (Tenaska Georgia, Inc.), subject
to the direction of the Executive Review Committee. Tenaska Georgia, Inc. does
not have the authority to incur any obligations or liabilities on behalf of the
Limited Partnership, except as approved by the Executive Review Committee.
On April 20, 2000, Diamond Georgia, LLC, an indirect, wholly owned subsidiary of
Mitsubishi Corporation (Mitsubishi), acquired 0.30 percent of Tenaska Georgia,
Inc.'s original 1.0 percent ownership interest in the Limited Partnership. In
addition, Mitsubishi acquired an indirect ownership interest of approximately 30
percent in Tenaska Georgia I, L.P., through subsidiaries of its U.S. affiliate,
Diamond Generating Corporation. These acquisitions were effective January 1,
2000. In connection with these acquisitions, on April 24, 2000, the letters of
credit issued on November 4, 1999 by The First National Bank of Omaha in the
amounts of $35,145,000 and $355,000 on behalf of Tenaska Georgia I, L.P. and
Tenaska Georgia, Inc., respectively, to support each partner's equity funding
commitments, were amended and reduced in amount to $1,322,500 and $248,500,
respectively. Mitsubishi issued a Guaranty in the amount of $33,929,000 to
replace the amount by which the letters of credit were reduced.
3. DEVELOPMENT WORK IN PROGRESS
In 1999, the Limited Partnership entered into an Engineering, Procurement and
Construction Agreement (EPC Agreement) with Zachry Construction Corporation
(Zachry) to design, engineer, procure, expedite and supply all labor, materials
(including the gas turbines), supervision and tools for the construction of the
Facility for a total guaranteed lump-sum price of $229,064,832. As of September
30, 2000, the Limited Partnership has incurred costs of $84,629,097 under the
terms of the EPC Agreement. This amount has been capitalized and is included on
the Balance Sheet as Development Work in Progress.
In 1999, the Limited Partnership entered into a separate agreement with Willbros
Engineers, Inc. to construct a natural gas pipeline from the Facility to an
interconnection point with a regional natural gas pipeline. As of September 30,
2000, the Limited Partnership has incurred costs of $2,757,357 under the terms
of this agreement. This amount has been capitalized and is included on the
Balance Sheet as Gas Pipeline Costs.
As of September 30, 2000, $3,633,141 of interest has been capitalized and
included on the Balance Sheet as Development Work in Progress.
4. NEW ACCOUNTING PRONOUNCEMENTS
The Limited Partnership continues to analyze the effects of the adoption of
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities", as amended by SFAS Nos. 137 and
138. Provisions of SFAS No. 133, as amended, must be applied to fiscal periods
beginning after June 15, 2000. The Limited Partnership intends to adopt the
provisions of SFAS No. 133, as amended, within the timeframe and in accordance
with the requirements provided by that statement. The Limited Partnership
believes that SFAS No. 133, as amended, will not have a material impact on its
financial condition or its results of operations.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE
ACCOMPANYING UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES THERETO
INCLUDED IN ITEM 1 OF THIS QUARTERLY REPORT, AND THE AUDITED CONSOLIDATED
FINANCIAL STATEMENTS AND THE NOTES THERETO AND MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTAINED IN OUR
REGISTRATION STATEMENT ON FORM S-4 (FILE NO. 333-96239) RELATING TO OUR SENIOR
SECURED BONDS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
"REGISTRATION STATEMENT"). UNLESS OTHERWISE INDICATED OR THE CONTEXT OTHERWISE
REQUIRES, ALL REFERENCES IN THIS QUARTERLY REPORT TO "WE," "US," "OUR" OR
SIMILAR TERMS REFER TO TENASKA GEORGIA PARTNERS, L.P.
GENERAL
We were formed on April 16, 1998 to develop, finance, construct, own or lease,
operate and maintain the Facility. Prior to calendar year 1999, we were
inactive. We are in the development stage and have no operating revenues. We
obtained $275,000,000 of project financing from the sale of the 9.50% Senior
Secured Bonds due 2030 ("Bonds"). Our partners have committed to fund up to
$35,500,000 in equity contributions. The total cost of the construction of the
Facility is estimated to be approximately $310,500,000, which will be financed
by the proceeds from the sale of the Bonds and the equity contributions. On
August 31, 2000, we completed the bond exchange whereby the holders of the Bonds
exchanged their Bonds for new Bonds registered under the Securities Act of 1933.
The Facility is under construction and is currently scheduled to be completed on
June 1, 2002, with three turbine-generators scheduled to be operational June 1,
2001 and the remaining three turbine generators scheduled to be operational June
2, 2002. As of September 30, 2000, construction of the Facility was on schedule
and within budget.
RESULTS OF OPERATIONS
The results of operations for the three and nine month periods ended September
30, 1999 and 2000 may not be comparable with results of operations for future
periods, especially when the Facility begins operations in 2001.
For the three and nine month periods ended September 30, 1999, we were primarily
in the start up phase without core contracts or bond financing and, as a result,
substantially all costs incurred for management fees, professional and
consulting fees, and other costs were expensed as start up costs. For the three
and nine month periods ended September 30, 1999, costs in the amounts of
$1,415,385 and $6,211,339, respectively, were expensed as start up costs. By the
end of August 1999, the power purchase agreement with PECO Energy Company
(the "Power Purchase Agreement") was signed. For the three and nine month
periods ended September 30, 1999, costs incurred for management fees,
professional and consulting fees and other costs, deemed to be direct costs
associated with the contract to supply power, in the amount of $115,662, were
capitalized as Contract Costs. By the end of November 1999, in addition to
the Power Purchase Agreement, core contracts associated with the construction
and financing of the Facility had been completed and, as a result, we moved
from the start up phase to the development phase. For the three and nine
month periods ended September 30, 2000, costs incurred for management fees,
professional and consulting fees and other costs, deemed to be direct costs
associated with the contract to supply power, in the amount of $1,065,279 and
$2,700,812, respectively, have been capitalized as Contract Costs.
For the three and nine month periods ended September 30, 2000, total costs in
the amount of $27,455.104 and $70,094,949, respectively, have been capitalized
as Development Work in Progress. For the three and nine month periods ended
September 30, 2000, interest capitalized as Development Work in Progress was
$1,684,897 and $3,414,082, respectively.
For the three and nine month periods ended September 30, 2000, costs in the
amount of $1,267,984 and $2,757,357, respectively, have been capitalized as Gas
Pipeline Costs.
A portion of the proceeds from the sale of the Bonds has not yet been expended
on construction and is invested in cash and cash equivalents and short-term
investments. The interest earned on these invested funds is included as interest
income. The interest expense incurred on the portion of the Bond proceeds
expended to construct the Facility and gas pipeline is capitalized as
Development Work in Progress. Interest expense incurred on the Bond proceeds not
spent on construction is included as interest expense. For the three and nine
month periods ended September 30, 2000, interest, net of amounts capitalized,
of $4,918,922 and $16,252,237, respectively, has been expensed. For the three
and nine month periods ended September 30, 2000, interest in the amount of
$3,159,498 and $10,120,689, respectively, has been recorded as income.
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
We believe that the net proceeds from the sale of the Bonds, interest income on
the unspent portion thereof during the construction period, anticipated revenues
from the operation of the initial units and proceeds from the equity
contributions will be sufficient to (1) fund the engineering, procurement,
construction, testing and commissioning of the Facility, (2) pay certain fees
and expenses in connection with the financing and development of our project,
and (3) pay the costs of developing, financing and initially operating our
project, including interest on the Bonds. After the Facility is placed in
commercial operation, we expect that our revenues under the Power Purchase
Agreement will be adequate to support our costs of operations.
In order to provide liquidity in the event of temporary cash flow shortfalls, we
are required to maintain an account that will contain an amount equal to the
principal and interest due on the Bonds on the next scheduled payment date. Our
obligation to fund this account begins on June 1, 2002. The maintenance of this
balance will be done through cash funding, the issuance of a letter of credit or
a combination of both.
BUSINESS STRATEGY AND OUTLOOK
Our overall business strategy is to perform as agreed under our 29-year Power
Purchase Agreement and to maximize our revenues under the Power Purchase
Agreement by earning incentive payments available through achieving certain
availability and efficiency levels. We intend to cause the Facility to be
managed, operated and maintained in compliance with all applicable documents
relating to our project and all applicable legal requirements.
FORWARD LOOKING STATEMENTS
Various statements contained in this quarterly report are forward-looking
statements as that term is defined in the Private Securities Litigation Reform
Act of 1995. These forward-looking statements, which speak only as of the date
hereof, can be identified by the use of forward-looking terminology such as
"believes," "expects," "may," "intends," "will," "should," or "anticipates," or
by the negative forms or other variations of these terms or comparable
terminology, or by the discussions of strategy. Although these statements are
based on assumptions that we believe are reasonable, no assurance can be given
that the future results covered by these statements will be achieved. These
statements are subject to risks, uncertainties and other factors, which could
cause actual results to differ materially from future results expressed or
implied by these statements. The most significant of these risks, uncertainties
and other factors are discussed under the heading "RISK FACTORS" in the
Registration Statement, and you are urged to read this section and carefully
consider these factors.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Bonds were issued at a 9.50% fixed rate of interest and as a result we are
not exposed to market risk associated with an increase in interest rates. The
unspent proceeds from the Bonds are invested in cash and cash equivalents and
short-term securities (collectively "short-term investments") with fixed rates
of interest for periods of up to six months. As these short-term investments
mature, the proceeds are either spent on construction of the Facility or
reinvested in other short-term investments. If short-term interest rates
decrease, the interest we earn on these short-term investments would decrease
accordingly. However, we would not expect any such decrease in the interest
earned on short-term investments to have a material adverse effect on our
results of operations.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
In July 2000, we received notice that two groups are considering filing a
lawsuit against us and another defendant claiming violations of the Clean Air
Act and local zoning requirements. These notices, one of which was sent on
behalf of the Coweta County Rural Preservation Society and the other of which
was sent on behalf of Coweta County, Georgia, are pursuant to a provision in the
Clean Air Act requiring 60 days' written notice prior to commencement of a
citizen suit with respect to certain environmental matters. The principal claims
in the notices are that the regulatory bodies responsible for issuing the air
permit and for re-zoning our project did not follow applicable law and
procedures.
The 60 day notice period has expired and no suit has yet been filed. We do not
expect legal proceedings that may be commenced by the claimants to have a
material adverse effect on us.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -- See Exhibit Index.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter.
10
<PAGE>
SIGNATURE
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.
November 9, 2000 Tenaska Georgia Partners, L.P.
By: /s/ Michael F. Lawler
------------------------
Name: Michael F. Lawler
Title: Vice President of Finance and
Treasurer
11
<PAGE>
EXHIBIT INDEX
EXHIBIT NO.
-----------
27 Financial Data Schedule
12
