<PAGE>
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 June 30, 1997
-------------
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 0-11431
New Energy Company of Indiana Limited Partnership
(formerly, New Energy Company of Indiana)
(Exact name of registrant as specified in its charter)
Indiana 52-1195762
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No)
3201 West Calvert Street, South Bend, Indiana 46613
(Address of principal executive offices)
(Zip Code)
219-233-3116
(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
___ ___
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FORWARD-LOOKING INFORMATION
This document and other materials filed or to be filed by the Company (as
hereinafter defined) with the Securities and Exchange Commission (the
"Commission"), as well as information included in oral statements or other
written statements made or to be made by the Company, contain or will contain
or include, disclosures which are forward-looking statements. These
forward-looking statements address, among other things, strategic initiatives
(including plans for capital expenditure requirements and financing sources).
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations," and "Legal Proceedings". These forward-looking statements are
based upon our current plans or expectations and are subject to a number of
uncertainties and risks that could significantly affect current plans,
anticipated actions and our future financial condition and results. These
uncertainties and risks include, but are not limited to, those relating to
conducting operations in a competitive environment; delays, difficulties and
technological changes associated with production of ethanol; changes in
government regulation and taxation that may affect costs of production and/or
the competitiveness of ethanol compared to other oxygenates; leverage and debt
service requirements; general economic conditions; and changes or volatility
in corn, ethanol and Distillers' dried grains and solubles ("DDGS") prices.
As a consequence, current plans, anticipated actions and future financial
condition and results may differ from those expressed in any forward-looking
statements made by or on behalf of the Company.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NEW ENERGY COMPANY OF INDIANA LIMITED PARTNERSHIP
_________________________________________________
BALANCE SHEETS
______________
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996
(UNAUDITED) (AUDITED)
-------------- -------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 7,677,789 $ 3,765,950
Accounts receivable 5,374,658 6,879,774
Other receivables 163,970 150,783
Inventories 2,693,805 4,822,450
Spare parts 2,555,601 2,419,626
Prepaid expenses and other 350,287 361,918
_____________ ______________
Total current assets 18,816,110 18,400,501
Property and equipment 160,282,517 159,520,406
Allowances for depreciation (137,678,907) (136,540,361)
_____________ ______________
22,603,610 22,980,045
_____________ ______________
Total assets $ 41,419,720 $ 41,380,546
_____________ ______________
_____________ ______________
Liabilities and Partners'
Capital Deficit
Current liabilities:
Accounts payable $ 3,669,012 $ 2,992,298
Interest payable 45,076 42,505
Taxes payable 1,770,021 1,794,614
Other accrued liabilities 2,171,998 1,440,799
Working capital loan --- 1,200,000
Current portion of long-term debt 4,845,088 740,893
_____________ ______________
Total current liabilities 12,501,195 8,211,109
Deferred management fees payable
to general partner 691,642 351,758
Long-term debt, less current portion 68,142,501 71,200,490
Partners' capital (deficit):
General partner (5,574,412) (5,421,131)
Limited partners (34,818,159) (33,438,633)
Special limited partner 5,000,000 5,000,000
Syndication costs (4,523,047) (4,523,047)
_____________ ______________
Total partners' capital deficit (39,915,618) (38,382,811)
_____________ ______________
Total liabilities and
partners' capital deficit $ 41,419,720 $ 41,380,546
_____________ ______________
_____________ ______________
</TABLE>
See notes to financial statements.
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<PAGE>
NEW ENERGY COMPANY OF INDIANA LIMITED PARTNERSHIP
__________________________________________________
STATEMENTS OF OPERATIONS
________________________
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
(UNAUDITED) (UNAUDITED)
___________ __________
1997 1996 1997 1996
__________________________________________________________
<S> <C> <C> <C> <C>
Net sales, ethanol $ 25,543,074 $23,795,188 $ 53,279,943 $ 48,656,519
By-product revenue 9,405,026 9,268,980 18,915,155 18,899,179
_____________ ___________ ____________ ____________
34,948,100 33,064,168 72,195,098 67,555,698
Cost of goods sold 34,064,340 34,490,727 68,048,811 70,092,413
_____________ ___________ ____________ ____________
Gross profit (loss) 883,760 (1,426,559) 4,146,287 (2,536,715)
Selling, general and
administrative expenses 1,925,512 2,079,604 3,821,652 4,085,580
_____________ ___________ ____________ ____________
Income (loss) from
operations (1,041,752) (3,506,163) 324,635 (6,622,295)
Interest income 87,500 108,448 154,734 237,791
Interest expense (1,003,015 (1,002,347) (2,012,176) (1,998,952)
_____________ ___________ ____________ ____________
Net loss $(1,957,267) $(4,400,062) $(1,532,807) $(8,383,456)
_____________ ___________ ____________ ____________
_____________ ___________ ____________ ____________
Net loss
allocable to limited
partners $(1,761,540) $(3,960,056) $(1,379,526) $(7,545,110)
_____________ ___________ ____________ ____________
_____________ ___________ ____________ ____________
Limited partner units
outstanding 6,399 6,400 6,399 6,400
_____________ ___________ ____________ ____________
_____________ ___________ ____________ ____________
Net loss per unit $ (275) (619) $ (216) $ (1,179)
_____________ ___________ ____________ ____________
_____________ ___________ ____________ ____________
</TABLE>
See notes to financial statements.
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NEW ENERGY COMPANY OF INDIANA LIMITED PARTNERSHIP
_________________________________________________
STATEMENTS OF CASH FLOWS
________________________
<TABLE>
<CAPTION>
SIX SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1996
(UNAUDITED) (UNAUDITED)
_______________ ______________
<S> <C> <C>
Operating activities
Net loss $ (1,532,807) $ (8,383,456)
Adjustments to reconcile net
loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 1,255,811 1,311,609
Increase (decrease) in deferred
management fees payable to
general partner 339,884 15,101
Increase (decrease) in
interest expense
deferred and added to
long term debt 1,529,050 1,978,648
Increase (decrease) due to changes
in operating assets and liabilities:
Accounts and other
receivables 1,491,929 2,212,678
Inventories 2,128,645 (192,586)
Spare parts (135,975) (28,795)
Prepaid expenses and other 11,631 (94,501)
Accounts payable 676,714 (1,354,241)
Interest payable 2,571 (290,740)
Taxes payable (24,593) 1,019,144
Other accrued liabilities 731,199 542,681
_____________ ___________
Net cash provided by (used in) operating
activities 6,474,059 (3,264,458)
Investing activities
Purchase of property and
equipment (879,376) ---
_____________ ___________
Net cash used in investing
activities (879,376) ---
_____________ ___________
Financing activities
Net change in working
capital loan (1,200,000) ---
Payments on long-term debt (482,844) (1,077,113)
_____________ ___________
Net cash used in financing
activities (1,682,844) (1,077,113)
_____________ ___________
Increase (decrease) in cash and cash
equivalents 3,911,839 (4,341,571)
Cash and cash equivalents,
beginning of period 3,765,950 11,460,672
_____________ ___________
Cash and cash equivalents,
end of period $ 7,677,789 $ 7,119,101
_____________ ___________
_____________ ___________
</TABLE>
See notes to financial statements.
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<PAGE>
New Energy Company of Indiana Limited Partnership
Notes to Financial Statements
For the Quarter Ended June 30, 1997 (Unaudited)
________________________________________________
1. Organization and Significant Accounting Policies
New Energy Company of Indiana Limited Partnership (the "Company"), the General
Partner of which is New Energy Corporation of Indiana (the "General Partner"),
operates an ethanol production facility in South Bend, Indiana. The Company
competes against several other ethanol producers some of which are larger and
operate out of flexibly integrated production facilities. The Company sells
ethanol to petroleum refiners, blenders and retailers on unsecured terms. To
a large extent, the Company's operations are dependent upon market factors
which are outside the Company's control. The Company's cost of production is
largely dependent upon the cost of corn, its principal raw material. In
addition, the Company's revenues are principally generated from the sale of
ethanol, the price of which can vary at times with the price of gasoline,
methyl tertiary butyl ether ("MTBE"), corn, and the value of state and federal
tax exemptions and credits; and from the sale of DDGS, the price of which
fluctuates with the agricultural by-product market. Because the Company is
unable to directly control the relationship of the corn, gasoline and
agricultural by-product markets, and is unable to assure the continuation of
state and federal tax exemptions and credits, changes in market conditions
could adversely affect the future operations of the Company.
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. For further information, refer to the
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1996.
On July 1, 1997, the Company entered into an agreement, subject to certain
conditions set forth therein, to sell all of its assets and business to Corn
Energy, Inc. ("Corn Energy"), an Indiana corporation organized by affiliates
of one of the shareholders of the General Partner.
2. Inventories
Inventories consist of raw materials (corn, coal, unleaded gasoline and
chemicals), work-in-process and finished goods (fuel grade ethanol and DDGS).
A summary of inventories by classification follows:
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<PAGE>
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
_____________ _________________
<S> <C> <C>
Raw materials $1,251,411 $2,429,888
Work-in-process 497,391 542,018
Finished goods 945,003 1,850,544
__________ ___________
$2,693,805 $4,822,450
__________ ___________
__________ ___________
The Company has executed a contract for the period through September 30, 1997,
with a grain supplier to provide its expected corn requirements at a price
which may fluctuate with the commodity prices or be fixed at the Company's
election. In connection with the contract, the Company has purchased for the
benefit of the grain supplier an irrevocable standby letter of credit of
$1,000,000, secured by cash and cash equivalents, which expires September 30,
1997. As of the date of this report, the Company has fixed the price for all
corn to be purchased through September 1997. As of August 1, 1997, the
Company's exclusive purchasing contract with Frick Services, Inc. was
terminated effective September 30, 1997. For periods subsequent to September
30, 1997, the Company has decided to self-originate from various suppliers its
supply of corn rather than contract exclusively with an outside supplier.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
_______________________________
The Company originally financed the construction and startup of the Plant with
bank financing guaranteed by the United States Department of Energy ("DOE").
On December 31, 1986, the Company defaulted on its construction loan and the
consortium of banks that provided the original financing seized certain cash
collateral and called the DOE guarantee. Since 1987, the DOE has held a
promissory note or notes collateralized by essentially all of the Company's
assets.
On October 14, 1982, the Company and the Business Development Corporation of
South Bend, Mishawaka & St. Joseph County, IN ("BDC"), a not-for-profit
corporation organized and existing under the laws of the State of Indiana,
entered into a loan agreement (the "BDC Loan") whereby the BDC, through a
grant the BDC received from the U.S. Department of Housing and Urban
Development, loaned $2,432,264 to the Company for the construction of the
plant.
On December 23, 1991, the Company restructured its loan with the DOE by the
execution of an Amended and Restated Loan Restructuring Agreement (the
"Restructuring Agreement") and two new promissory notes, Note A and Note B.
Note A, in the amount of $55,000,000, provides for 119 consecutive monthly
installments of interest and principal of $631,533 commencing April 30, 1992
and maturing on March 31, 2002. Note A provides for a fixed rate of interest
of 6.75% per annum. Note B, in the amount of $40,622,523, provides for a
fixed rate of interest of 4.00% per annum. Payments of Note B are based upon
monthly cash flow as defined by the Restructuring Agreement. Note B matures
on March 31, 2002. Accordingly, the fixed monthly payment required by the
Restructuring Agreement is $631,533.
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<PAGE>
On March 25, 1996, the Company and DOE entered into an agreement ("DOE Letter
Agreement") which allowed the Company to suspend payment of all Note A
principal and interest payments during the period January 1, 1996 through
September 30, 1996. As described above, Note A requires monthly principal and
interest payments totaling $631,533. Under the terms of the DOE Letter
Agreement, nine principal and interest payments totaling $5,683,797 were
suspended on Note A. Suspended payments on Note A have been added monthly to
the outstanding principal balance of Note B and accrues interest at the Note B
interest rate of 4% per annum. Note B payments continued to be calculated and
paid on a cash flow basis as defined in the DOE Letter Agreement.
On March 27, 1996, the Company and BDC entered into an agreement ("BDC Letter
Agreement") which allowed the Company to suspend payment of all principal and
interest payments under the BDC Loan during the period January 1, 1996,
through September 30, 1996. Principal and interest payments totaling $69,877
are due BDC on each of February 1, May 1, August 1 and November 1. Under
the terms of the BDC Letter Agreement, three payments (due in February, May
and August, 1996,) totaling $209,631 were suspended. Suspended payments were
evidenced by a new note that accrues interest at a rate of 6% per annum and is
payable in 38 equal monthly payments of $6,194 beginning October 1, 1996.
On August 23, 1996, the Company and Great American Insurance Company ("GAIC"),
an entity related to Chiquita Brands International, Inc., a shareholder of
the General Partner of the Company entered into a $10 million revolving
working capital loan facility (the "GAIC Loan") through December 31, 1997, or
such date that GAIC agrees to extend the maturity date, but, in no event later
than December 31, 1998, collateralized by a senior lien on the Company's
accounts receivable, inventory and certain other assets. The loan provides
for interest at three percent over the "prime rate" of interest as quoted
daily in The Wall Street Journal and includes other terms customary in the
commercial loan market. As of the date of this report, no amounts are
outstanding under the GAIC Loan.
Also, in connection with the GAIC Loan, the DOE and BDC agreed to further
suspend the Company's obligation to make debt service payments from October 1,
1996, through December 31, 1997, and under certain circumstances, through
December 31, 1998. The suspension shall be all or partially terminated for any
month the Company is able to generate earnings and cash flow sufficient to
repay the GAIC Loan and have cash in excess of $4.8 million on deposit in its
bank. In March and April, 1997, the Company made two (2) payments totaling
$890,085 to the DOE on Notes A and B and also made a payment of $29,886 to the
BDC.
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<PAGE>
In 1982, as part of the original financing package for the construction of the
Plant, the General Partner was required to pledge a certificate of deposit in
the amount of $4 million and a $1.5 million letter of credit posted on the
General Partner's behalf as partial security for the Company's loan. On
December 30, 1986, as a result of the Company's failure to pay interest due
under the terms of the loan, a default was declared and the certificate of
deposit together with accrued interest thereon and the proceeds of the letter
of credit totaling $5,780,583, was immediately paid to the bank consortium
that provided the financing. This amount has been classified as a loan by the
General Partner to the Company. The General Partner did not charge interest
on the loan to the Company through July 31, 1987. Effective August 1, 1987,
interest began accruing at an annual rate of 8.5%. Recently, the General
Partner's Board of Directors (the "Board") revisited the characterization of
this amount as a loan. The Board ratified the characterization of these
amounts as a loan and directed that the loan be evidenced by a demand
promissory note which contains a sixty (60) day notice period.
In December 1991, as a condition precedent to the DOE consenting to the
Partnership's Amended and Restated Loan Restructuring Agreement, the General
Partner was required to contribute $578,832 to the Company's working capital
reserves. This amount has also been classified as a loan by the General
Partner to the Company. Effective in 1996, the Board determined interest
should accrue on outstanding balances at prime plus 3% from the date of this
loan. Likewise, as part of the August 23, 1996, restructuring and the GAIC
Loan, the General Partner was required to loan $500,000 to the Company. This
loan accrues interest at prime plus 3%. Effective in 1996, at the direction
of the Board, management undertook a study of expenditures to determine the
appropriate allocation of expenses between the Company and the General
Partner. As a result of this study, amounts totaling $1,436,028 were invoiced
to the General Partner and credited against selling, general and
administrative expenses in 1996. This amount has been offset against amounts
owed to the General Partner.
During the six months ended June 30, 1997, the Company's average selling price
per gallon of ethanol was approximately 6% higher than the six months ended
June 30, 1996. For the first six months of 1997, the Company's average corn
prices have decreased by approximately 11% compared to the same period in
1996. In addition, DDGS selling prices have decreased approximately 11% for
the first six months of 1997 compared to the same period in 1996. The spread
between ethanol and corn prices improved significantly for the first six
months of 1997 as compared to the same period in 1996, resulting in an
operating gain for the six month period notwithstanding an operating loss for
the three months ended June 30, 1997. There can be no assurance that in the
future the spread will continue at the same rate or be more positive for the
Company.
As a result of the rise in corn prices in the first nine months of 1996, the
Company decreased production by approximately 30% during the period May
through September 1996. The Company is returning to production at prior
levels, but has not yet attained such levels because of technical difficulties
confronted in ramping up production. The Company presently is producing at
95% of prior May 1996 levels. There, however, can be no assurance that such
technical difficulties will be surmounted or that production will return to
historical levels.
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<PAGE>
Based on revenues during the first six months of 1997, as well as present and
contracted ethanol sales and corn costs through September 1997, the Company
expects 1997 to show significant improvement over 1996. However, based upon
the following variable factors, among others, affecting the ethanol industry
generally, and the Company specifically, including, but not limited to: (1)
availability and amount of federal and state tax incentives for ethanol
production and use; (2) environmental regulation; (3) gasoline prices
generally and the comparative prices of regular unleaded gasoline versus
alcohol/gasoline mixtures; (4) market prices of corn, the principal raw
material used in the production of ethanol; (5) the level of refiners' crude
oil and gasoline inventories; (6) competition among domestic ethanol
producers; (7) availability of low-cost foreign ethanol; (8) the familiarity
of jobbers and retailers with tax and octane benefits of ethanol blends; (9)
marketing support of retailers by major refinery/blenders, and (10)
competition with other oxygenates, such as MTBE, there can be no assurance
that the Company's 1997 expectations will be realized.
On a longer term basis, the Company is faced with significant hurdles to
profitability. Among them are corn supply issues, loss of federal and state
ethanol production incentives, and capital expenditures that may be required
by recently issued environmental regulations. The regional corn supplier
market has consolidated in the last few years to approximately three suppliers
with the capability to supply the Company's corn needs. As a result of a
joint venture in 1996, one of the largest regional corn suppliers is related
to or affiliated with one of the Company's competitors. In the past year, one
other regional supplier has declined a long term supply arrangement with the
Company. One other regional supplier with whom the Company presently has
contracted is in the process of selling its grain business to another
competitor. Consequently, further consolidation or shrinkage of the regional
corn supplier market could endanger existing supply relationships and result
in supply shortages or higher procurement costs. Such a result could
negatively impact the Company's operations and revenues. As a result, the
Company has decided to self-originate from various suppliers its supply of
corn rather than contract exclusively with an outside supplier. The Company's
estimated capital and working capital costs for self-origination of corn are
$3.2 million. As of August 1, 1997, the Company's exclusive purchasing
contract was terminated effective September 30, 1997.
Reduction or loss of federal and state ethanol production incentives also
could have a materially negative impact on the Company's revenue and continued
operations. In the present Congress, efforts to reduce the ethanol credit and
limit the amounts of production subject to it were curtailed. Likewise
efforts to extend the credit also were curtailed. The Company, through its
membership in ethanol industry organizations, continues its efforts to educate
state and federal policy makers respecting ethanol's benefits and to effect
pro-ethanol production policies. There can be no assurance that these
industry efforts will be successful and that future efforts to reduce,
terminate, or to extend the ethanol tax credits past the year 2000 will be
successful.
Also, on July 18, 1997, certain ambient air quality regulations proposed by
the EPA in December, 1996 were issued. These regulations could result in the
need for significant capital expenditures for monitoring and compliance
equipment. These expenditures, if required, could significantly impact the
Company's operations. Historically, environmental regulations have contained
reasonable periods of time in which to comply. The rules issued on July 18,
1997, do not set forth a specific implementation schedule. Currently, the
most definitive document outlining the implementation schedule is a
Presidential directive, dated July 16, 1997, which indicates that these
standards will be implemented in a flexible manner in an attempt to allow
business ample time to find cost-effective pollution controls. The EPA is
continuing to fully develop the implementation strategy. There can be no
assurance that the regulations will be implemented in a manner that will allow
the Company to find cost-effective pollution controls. These regulations,
when implemented, also may result in greater demand for ethanol. There can be
no assurance that greater demand will result, however.
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<PAGE>
Thus on a long term basis, the Company's ability to maintain sufficient
liquidity to meet its debt service and other obligations will depend on a
combination of factors which include, among others, further concessions by the
DOE and BDC, obtaining additional financing, and/or upon favorable market
price levels for corn and ethanol, factors over which the Company has little
control. However, through its corn purchasing agreement (ending September,
1997) and subsequently, its efforts to hedge corn costs, and its strategy to
execute multiple month ethanol sales contracts with fixed or floor prices, the
Company is attempting to minimize its exposure to fluctuations in the corn and
gasoline/MTBE markets. There can be no assurance, however, that any or all of
the foregoing factors will obtain so as to permit the Company to maintain
sufficient liquidity to meet its debt service and other obligations in the
longer term.
On July 1, 1997, the Company entered into an agreement, subject to certain
conditions outlined below, to sell all of its assets and business to Corn
Energy.
The purchase price for the Company is in excess of $70 million including the
assumption of certain liabilities. The transaction is subject to approval by
a majority in interest of the limited partners of the Company and to
compliance with certain regulatory and other conditions including the ability
of Corn Energy to negotiate new terms for the DOE indebtedness acceptable to
Corn Energy. Of the cash proceeds payable to the Company, $2.5 million will
be paid to the BDC in settlement of the Company's obligations to it. It is
estimated that those limited partners of the Company entitled to share in the
liquidation distribution will receive approximately $400 per limited partner
unit as a result of the transaction.
Corn Energy has indicated that it intends to continue to operate the business
in substantially its present form. No changes are anticipated in the
Company's current workforce of approximately 135 persons, all of whom are
employed at the South Bend facility.
RESULTS OF OPERATIONS
_____________________
For the three months ended June 30, 1997 the Company generated a loss of
$1,957,267 as compared to a loss of $4,400,062 for the three months ended June
30, 1996. The loss reduction from the same period in the prior year was
primarily due to an increase in the volume of ethanol and DDGS sold and a
significant decrease in the price of corn offset by a decrease in the selling
prices of ethanol and DDGS.
Revenue from the sale of ethanol increased during the three months ended June
30, 1997, to $25,543,074 from $23,795,188 during the three months ended June
30, 1996. This increase was primarily due to an increase in the volume of
ethanol produced and sold, offset by a decrease in the average selling price
per gallon.
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<PAGE>
Revenue from the sale of by-products increased during the three months ended
June 30, 1997, to $9,405,026 from $9,268,980 during the three months ended
June 30, 1996. The increase in by-product revenue was primarily due to an
increase in the volume of DDGS produced and sold, offset by a decrease in the
average selling price per ton.
Ethanol production totaled 21,223,670 gallons for the three months ended June
30, 1997, as compared to 18,104,135 gallons for the three months ended June
30, 1996. This increase is primarily due to an increase in production
beginning in October, 1996 as corn prices began to return closer to historical
levels. The plant also produced 68,305 tons of distillers dried grains and
39,234 tons of gaseous carbon dioxide for the three months ended June 30, 1997
as compared to 58,540 tons of distillers dried grains and 36,355 tons of
gaseous carbon dioxide for the three months ended June 30, 1996. Distillers
dried grains and gaseous carbon dioxide are by-products of the ethanol
production process.
Cost of goods sold decreased by $426,387 during the three months ended June
30, 1997, compared to the same period in 1996, primarily due to an approximate
20% decrease in the average price of corn per bushel offset by an increase in
the number of bushels of corn processed.
For the six months ended June 30, 1997, the Company generated a loss of
$1,532,807 as compared to a loss of $8,383,456 for the six months ended June
30, 1996. The loss reduction from the same period in the prior year was
primarily due to an increase in the volume of ethanol and DDGS sold and a
significant decrease in the price of corn offset by a decrease in the selling
prices of ethanol and DDGS.
Revenue from the sale of ethanol increased during the six months ended June
30, 1997, to $53,279,943 from $48,656,519 during the six months ended June 30,
1996. This increase was primarily due to an increase in the average selling
price and volume of ethanol produced and sold.
Revenue from the sale of by-products increased during the six months ended
June 30, 1997, to $18,915,155 from $18,899,179 during the six months ended
June 30, 1996. This increase in by-product revenue was primarily due to an
increase in the volume of DDGS produced and sold, offset by a decrease in the
average price per ton.
Ethanol production totaled 41,546,631 gallons for the six months ended June
30, 1997, as compared to 38,689,462 gallons for the six months ended June 30,
1996. This increase was primarily due to a return to normal production as
corn prices began to return closer to historical levels. The plant also
produced 131,861 tons of distillers dried grains and 77,015 tons of gaseous
carbon dioxide for the six months ended June 30, 1997, as compared to 123,007
of distillers dried grains and 76,368 tons of gaseous carbon dioxide for the
six months ended June 30, 1996.
Cost of goods sold decreased by $2,043,602 during the six months ended June
30, 1997, compared to the same period in 1996 primarily due to an approximate
11% decrease in the average price of corn per bushel offset by an increase in
the number of bushels of corn processed.
-12-
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
_________________
Except as reported in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 and the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997, copies of which are incorporated herein by
reference, the Company is not a party to any material legal proceedings other
than routine litigation incidental to its business.
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
________________________________
A.) Exhibits:
4.1 Restated and Amended Limited Partnership Agreement of the Company dated
October 26, 1982 (filed as Exhibit 12 to the Form 8-K amending the Company's
quarterly report on Form 10-Q for the nine months ended September 30, 1982,
and incorporated herein by reference).
4.2 Form of Assumption Agreement (filed as Exhibit B-3 to the Prospectus
dated April 28, 1982, contained in the Company's Registration Statement on
Form S-1, No. 2-74254, and incorporated herein by reference).
4.3 Form of Assumption Agreement (filed as Exhibit B-3 to the Prospectus
dated April 28, 1982, contained in the Company's Registration Statement on
Form S-1, No. 2-74254, and incorporated herein by reference).
-13-
<PAGE>
10.1 Credit Agreement, dated as of October 26, 1982, among the Company, the
First National Bank of Chicago, in its individual capacity and as agent (the
"Agent"), 1st Source Bank, in its individual capacity and as collateral
trustee (the "Collateral Trustee"), and the banks listed on the signature
pages thereof (the "Banks) (filed as Exhibit 2 to the Company's quarterly
report on Form 10-Q for the nine months ended September 30, 1982, and
incorporated herein by reference).
10.2 Guarantee Agreement, dated as of October 26, 1982, among the Company,
the United States of America, acting by and through the Secretary of Energy
(the "Secretary"), the Agent, and 1st Source Bank, as Collateral Trustee and
Servicer for the Secretary (filed as Exhibit 17 to Form 8-K amending the
Company's quarterly report on Form 10-Q for the nine months ended September
30, 1982, and incorporated herein by reference).
10.3 Security and Collateral Application Agreement, dated as of October 26,
1982, among the Company, the General Partner, the Agent, the Collateral
Trustee and the Secretary (filed as Exhibit 4 to the Company's quarterly
report on Form 10-Q for the nine months ended September 30, 1982, and
incorporated herein by reference).
10.4 General Partner Agreement, dated as of October 26, 1982, among the
General Partner, the Agent, the Collateral Trustee and the Secretary (filed as
Exhibit 5 to the Company's quarterly report on Form 10-Q for the nine months
ended September 30, 1982, and incorporated herein by reference).
10.5 Cash Pledge Escrow Agreement dated as of October 26, 1982, among the
Company, the General Partner, the Collateral Trustee and the Agent (filed as
Exhibit 6 to the Company's Quarterly report on Form 10-Q for the nine months
ended September 30, 1982, and incorporated herein by reference).
10.6 Loan Agreement, dated October 14, 1982, between the Company and South
Bend Development Corporation (filed as Exhibit 8 to the Company's quarterly
report on Form 10-Q for the nine months ended September 30, 1982, and
incorporated herein by reference).
10.7 Subordinated Security Agreement, dated as of October 26, 1982, between
the Company and South Bend Development Corporation (filed as Exhibit 10 to the
Company's quarterly report on Form 10-Q for the nine months ended September
30, 1982, and incorporated herein by reference).
10.8 Subordinated Real Estate Mortgage, dated as of October 26, 1982,
between the Company and South Bend Development Corporation (filed as Exhibit
11 to the Company's quarterly report on Form 10-Q for the nine months ended
September 30, 1982, and incorporated herein by reference).
-14-
<PAGE>
10.9 Mortgage, dated as of October 26, 1982, between the Company and 1st
Source Bank (filed as Exhibit 13 to Form 8-K amending the Company's quarterly
report on Form 10-Q for the nine months ended September 30, 1982, and
incorporated herein by reference).
10.10 Promissory Note, dated October 26, 1982, in the principal amount of
$1,769,057 executed by the Company and payable to the United States Department
of Energy (filed as Exhibit 14 to Form 8-K amending the Company's quarterly
report on Form 10-Q for the nine months ended September 30, 1982, and
incorporated herein by reference).
10.11 First Amended Agreement for Engineering, Procurement and Construction
Services, dated June 11, 1982, between the General Partner and Davy McKee
Corporation, as amended by letter agreements dated September 21, 1982 and
October 26, 1982 (filed as Exhibit 16 to Form 8-K amending the Company's
quarterly report on Form 10-Q for the nine months ended September 30, 1982,
and incorporated herein by reference).
10.12 Agreement for Sale of Carbon Dioxide, dated February 4, 1983, between
the General Partner and Airco Industrial Gases, a Division of Airco, Inc.
(filed under Confidential Treatment as Exhibit 10.16 to the Company's annual
report on Form 10-K for the year ended December 31, 1982, and incorporated
herein by reference).
10.13 Letter agreement dated August 17, 1982, between the General Partner and
Ethanol Services, Inc. (filed as Exhibit 10(cc) to the Company's Registration
Statement on Form S-1, No. 2-74254, and incorporated herein by reference).
10.14 Promissory Note, dated October 24, 1984, in the principal amount of
$2,272,903.31, executed by the Company and payable to Business Development
Corporation of South Bend (filed as Exhibit 10.17 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1985, and incorporated
herein by reference).
10.15 Promissory Note, dated October 24, 1985, in the principal amount of
$159,360.95, executed by the Company and payable to Business Development
Corporation of South Bend (filed as Exhibit 10.18 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1985, and incorporated
herein by reference).
10.16 Principal Assistance Agreement dated as of November 25, 1986, by and
among the United States of America, acting by and through the Secretary of
Energy, the Company and the General Partner (filed as Exhibit 10.20 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1985, and
incorporated herein by reference).
10.17 Loan Restructuring Agreement dated July 31, 1987, by and among the
United States of America, acting by and through the Secretary of Energy, the
Company and the General Partner (filed as Exhibit 19.1 to the Company's Form
10-Q for the quarter ended September 30, 1987, and incorporated herein by
reference).
-15-
<PAGE>
10.18 Loan Agreement dated July 20, 1987, by and between the Indiana Energy
Development Board and the Company (filed as Exhibit 19.2 to the Company's Form
10-Q for the quarter ended September 30, 1987, and incorporated herein by
reference).
10.19 Receivables and Inventory Loan and Security Agreement dated January 29,
1988, by and between First Interstate Commercial Corporation and the Company
(filed as Exhibit 10.19 to the Company's Form 10-K for the year ended December
31, 1989, and incorporated herein by reference).
10.20 Agreement dated December 20, 1989, by and between the Indiana Energy
Development Board and the Company (filed as Exhibit 10.20 to the Company's
Form 10-K for the year ended December 31, 1989, and incorporated herein by
reference).
10.21 Amendment to Loan and Security Agreement dated January 29, 1990, by and
between First Interstate Commercial Corporation and the Company (filed as
Exhibit 10.21 to the Company's Form 10-K for the year ended December 31, 1989,
and incorporated herein by reference).
10.22 Amended and Restated Loan Restructuring Agreement dated December 23,
1991, by and among the Company, the General Partner and the United States of
America, acting by and through the Secretary of Energy (filed as Exhibit 10.22
to the Company's Form 10-K for the year ended December 31, 1991, and
incorporated herein by reference).
10.23 Letter Agreement dated January 14, 1994, by and between Interamerican
Investments, Inc. and Ethanol Services, Inc. (filed as Exhibit 10.23 to the
Company's Form 10-K for the year ended December 31, 1994, and incorporated
herein by reference).
10.24 Agreement dated December 17, 1993, by and between the Company and
Countrymark Cooperative, Inc. (filed as Exhibit 10.24 to the Company's Form
10-K for the year ended December 31, 1993, and incorporated herein by
reference).
10.25 Agreement dated January 16, 1996, by and between the Company and Frick
Services, Inc. referenced in Part I, Item I, "Raw Materials", page 4 of the
Company's Form 10-K for the year ended December 31, 1995.
10.26 DOE Letter Agreement dated March 25, 1996, by and among the Company,
the General Partner and the United States of America, acting by and through
the Secretary of Energy, referenced in Part II, Item 7 "Liquidity and Capital
Resources", page 14 of the Company's Form 10-K for the year ended December 31,
1995.
10.27 BDC Letter Agreement dated March 27, 1996, by and among the Company,
the General Partner and the South Bend Development Corporation, referenced in
Part II, Item 7 "Liquidity and Capital Resources", page 15 of the Company's
Form 10-K for the year ended December 31, 1995.
-16-
<PAGE>
10.28 Letter Agreement dated August 23, 1995, by and between Interamerican
Investments, Inc. and Ethanol Services, Inc. (filed as Exhibit 10.28 to the
Company's Form 10-K for the year ended December 31, 1995, and incorporated
herein by reference.)
10.29 Loan and Security Agreement between New Energy and Great American
Insurance Company.
10.30 Amendment No. 1 to Amended and Restated Loan Restructuring Agreement
between New Energy and the DOE.
10.31 Endorsements to Note "A" and Note "B" to the DOE.
10.32 Third Amendment to Loan Agreement between New Energy and the BDC.
10.33 Note No. 4 to the BDC.
10.34 Promissory Note dated as of December 31, 1996, between the Company and
the General Partner
10.35 Asset Purchase Agreement, dated as of July 1, 1997, between Corn
Energy, Inc. and the Company, attached as Exhibit "A" to the Company's
Preliminary Schedule 14A filed on July 22, 1997, and incorporated herein by
reference.
10.36 Agreement dated May 30, 1997, between the Company and the BDC, attached
as Exhibit "C" to the Company's Preliminary Schedule 14A filed on July 22,
1997, and incorporated herein by reference.
10.37 Transaction Assurance Agreement dated June, 1997, between Corn Energy,
Inc. and Interamerican Investments, Inc., Ethanol Services, Inc. and Chiquita
Brands International, Inc., attached as Exhibit "D" to the Company's
Preliminary Schedule 14A filed on July 22, 1997, and incorporated herein by
reference.
27.1 Financial Data Schedule
B.) Reports on Form 8-K:
On July 1, 1997, the Company filed a Report on Form 8-K containing the press
release issued July 1, 1997, by the Company announcing the execution of the
Asset Purchase Agreement, dated July 1, 1997 and certain other related
transactions. A copy of that Report on Form 8-K is incorporated herein by
reference.
-17-
<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.
NEW ENERGY COMPANY OF INDIANA
LIMITED PARTNERSHIP
By: New Energy Corporation of Indiana,
General Partner
Dated: August 14, 1997 By: /S/ Larry W. Singleton
___________________________________
Larry W. Singleton,
President & Treasurer
-18-
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Statement and Consolidated Statement of Operations of New
Energy Company of Indiana Limited Partnership as of and for the quarter ended
June 30, 1997, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1996
<PERIOD-END> JUN-30-1997
<CASH> 7,677,789
<SECURITIES> 0
<RECEIVABLES> 5,374,658
<ALLOWANCES> 0
<INVENTORY> 2,693,805
<CURRENT-ASSETS> 18,816,110
<PP&E> 160,282,517
<DEPRECIATION> 137,678,907
<TOTAL-ASSETS> 41,419,720
<CURRENT-LIABILITIES> 12,501,195
<BONDS> 68,142,501
0
0
<COMMON> 0
<OTHER-SE> (39,915,618)
<TOTAL-LIABILITY-AND-EQUITY> 41,419,720
<SALES> 34,948,100
<TOTAL-REVENUES> 35,035,600
<CGS> 34,064,340
<TOTAL-COSTS> 34,064,340
<OTHER-EXPENSES> 1,925,512
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,003,015
<INCOME-PRETAX> (1,957,267)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,957,267)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,957,267)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
