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 June 30, 1998
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 corporation)
33-87902-01 North Jersey Energy Associates, 04-2955646
A Limited Partnership
(a New Jersey corporation)
------------------------------------------
c/o FPL Energy, Inc.
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 ___
----------------------------------
This combined Form 10-Q represents separate filings by ESI Tractebel Funding
Corp., Northeast Energy Associates, A Limited Partnership and North Jersey
Energy Associates, A Limited Partnership. 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
other 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. (the
Company) and Northeast Energy Associates, A Limited Partnership and North
Jersey Energy Associates, A Limited Partnership (collectively, the
Partnerships) are hereby filing cautionary statements identifying important
factors that could cause the Company and Partnerships' actual results to
differ materially from those projected in forward-looking statements (as such
term is defined in the Reform Act) of the Company and Partnerships made by or
on behalf of the Company and Partnerships which are made 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
that could cause actual results to differ materially from those expressed in
the forward-looking statements. Accordingly, any such statements are
qualified in their entirety by reference to, and are accompanied by, the
following important factors that could cause the Company and Partnerships'
actual results to differ materially from those contained in forward-looking
statements of the Company and Partnerships made by or on behalf of the
Company and Partnerships.
Any forward-looking statement speaks only as of the date on which such
statement is made, and the Company and Partnerships undertake no obligation
to update any forward-looking statement or statements 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 statements.
Some important factors that could cause actual results or outcomes to differ
materially from those discussed in the forward-looking statements include
prevailing governmental policies and regulatory actions with respect to
allowed rates of return, industry and rate structure, acquisition and
disposal 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 Company and Partnerships 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, pricing and
transportation of commodities, market demand for energy from plants or
facilities, changes in tax rates or policies or in rates of inflation,
unanticipated development project delays or changes in project costs,
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, and any unanticipated impact of the year 2000,
including delays or changes in costs of year 2000 compliance, or the failure
of major suppliers, customers and others with whom the Company and the
Partnerships do business to resolve their own year 2000 issues on a timely
basis.
All such factors are difficult to predict, contain uncertainties which may
materially affect actual results, and are beyond the control of the Company
and Partnerships.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ESI TRACTEBEL FUNDING CORP.
BALANCE SHEETS
(Thousands of Dollars)
<TABLE>
<CAPTION>
June 30,
1998 December 31,
(Unaudited) 1997
<S> <C> <C>
ASSETS
Current assets:
Cash ............................................................................... $ 1 $ 1
Current portion of notes receivable from the Partnerships .......................... 22,537 21,563
Total current assets ............................................................. 22,538 21,564
Notes receivable from the Partnerships ............................................... 456,968 468,724
TOTAL ASSETS ......................................................................... $ 479,506 $ 490,288
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of securities payable .............................................. $ 22,537 $ 21,563
Securities payable ................................................................... 456,968 468,724
Stockholders' equity:
Common stock, no par value, 10,000 shares authorized, issued and outstanding ....... 1 1
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........................................... $ 479,506 $ 490,288
</TABLE>
The accompanying notes are an integral part of these financial statements.
ESI TRACTEBEL FUNDING CORP.
STATEMENTS OF OPERATIONS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Interest income .............................................. $ 11,446 $ 11,952 $ 22,891 $ 23,905
Interest expense ............................................. (11,446) (11,952) (22,891) (23,905)
NET INCOME ................................................... $ - $ - $ - $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
ESI TRACTEBEL FUNDING CORP.
STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................ $ - $ -
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payment received from the Partnerships.................................... 10,782 12,038
Principal payment on debt .......................................................... (10,782) (12,038)
Net cash provided by financing activities ........................................ - -
Net increase in cash ................................................................. - -
Cash at beginning of period .......................................................... 1 1
Cash at end of period ................................................................ $ 1 $ 1
Supplemental disclosures of cash flow information:
Cash paid for interest ............................................................. $ 22,891 $ 23,905
</TABLE>
The accompanying notes are an integral part of these financial statements.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
COMBINED BALANCE SHEETS
(Thousands of Dollars)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
(Unaudited) (Prior Basis)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .......................................................... $ 24,675 $ 61,203
Accounts receivable ................................................................ 36,657 34,036
Due from related party ............................................................. - 114
Fuel inventories ................................................................... 3,413 4,752
Prepaid expenses and other current assets........................................... 802 3,052
Total current assets ............................................................. 65,547 103,157
Non-current assets:
Cogeneration facilities and carbon dioxide facility (net of accumulated
depreciation of $10,123 and $153,963, respectively) .............................. 502,928 349,365
Power purchase contracts (net of accumulated amortization of $23,394) .............. 865,362 -
Unamortized financing costs ........................................................ - 15,674
Other assets ....................................................................... 123 4,193
Restricted cash .................................................................... - 69,156
Total non-current assets ......................................................... 1,368,413 438,388
TOTAL ASSETS ......................................................................... $1,433,960 $ 541,545
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of notes payable - ESI Tractebel Funding Corp. ..................... $ 22,537 $ 21,563
Accounts payable ................................................................... 14,587 15,450
Due to related party ............................................................... 1,498 71
Other accrued expenses ............................................................. 5,846 2,358
Total current liabilities ........................................................ 44,468 39,442
Non-current liabilities:
Deferred credit - O&M and fuel contracts ........................................... 340,418 -
Notes payable - ESI Tractebel Funding Corp. ........................................ 456,968 468,724
Amounts due utilities for energy bank balances ..................................... 172,649 230,565
Total non-current liabilities .................................................... 970,035 699,289
Partners' equity (deficit):
General partner .................................................................... 4,194 (4,714)
Limited partners ................................................................... 415,263 (192,472)
Total partners' equity (deficit) ................................................. 419,457 (197,186)
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND PARTNERS' EQUITY ............................................... $1,433,960 $ 541,545
</TABLE>
The accompanying notes are an integral part of these financial statements.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
COMBINED STATEMENTS OF OPERATIONS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
Period from
Period from January 1,
Three Months Ended January 14, 1998 to
June 30, 1998 to January 13,
1997 June 30, 1998 1997
1998 (Prior Basis) 1998 (Prior Basis) (Prior Basis)
<S> <C> <C> <C> <C> <C>
REVENUES .................................. $66,458 $72,092 $141,197 $13,109 $154,428
COSTS AND EXPENSES:
Fuel .................................... 27,637 39,234 57,154 5,774 77,482
Operation and maintenance ............... 3,890 5,991 8,628 974 12,756
Depreciation and amortization ........... 18,024 6,253 33,532 894 12,503
General and administrative .............. 2,194 3,467 4,089 538 6,820
Total costs and expenses .............. 51,745 54,945 103,403 8,180 109,561
OPERATING INCOME .......................... 14,713 17,147 37,794 4,929 44,867
OTHER EXPENSE (INCOME):
Interest expense ........................ 15,952 16,936 29,664 2,422 33,793
Interest income ......................... (857) (2,403) (1,510) (402) (4,592)
Total other expense - net ............. 15,095 14,533 28,154 2,020 29,201
NET INCOME (LOSS) ......................... $ (382) $ 2,614 $ 9,640 $ 2,909 $ 15,666
</TABLE>
The accompanying notes are an integral part of these financial statements.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
COMBINED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
Period from
Period from January 1,
January 14, 1998 to
1998 to January 13,
June 30, 1998 1997
1998 (Prior Basis) (Prior Basis)
<S> <C> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES ............................ $ 39,624 $ 1,432 $ 40,240
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ............................................... - - (216)
Net cash used in investing activities .............................. - - (216)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payment on notes ......................................... (10,782) - (12,038)
Release of restricted cash collateral .............................. 69,156 - -
Distributions to partners .......................................... (135,958) - (32,636)
Net cash used in financing activities .............................. (77,584) - (44,674)
Net increase (decrease) in cash and cash equivalents ................. (37,960) 1,432 (4,650)
Cash and cash equivalents at beginning of period ..................... 62,635 61,203 49,861
Cash and cash equivalents at end of period ........................... $ 24,675 $ 62,635 $ 45,211
Supplemental disclosures of cash flow information:
Cash paid for interest ............................................. $ 23,315 $ - $ 24,703
Supplemental schedule of noncash investing and financing activities:
See Note 1 and Note 2 - Basis of Presentation concerning new
basis of accounting subsequent to January 13, 1998
</TABLE>
The accompanying notes are an integral part of these financial statements.
ESI TRACTEBEL FUNDING CORP. AND
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The accompanying financial statements should be read in conjunction with the
1997 Form 10-K (as amended) for the Company and the Partnerships. In the
opinion of management of the Company and Partnerships, all adjustments
(consisting of normal recurring accruals) considered necessary for fair
financial statement presentation have been made. Certain amounts included in
the prior period's financial statements have been reclassified to conform to
the current year's presentation. The results of operations for an interim
period may not give a true indication of results for the year.
1. The Acquisition
On January 14, 1998, pursuant to a purchase agreement dated November 21, 1997,
the Partnerships were acquired by Northeast Energy, LP (a Delaware limited
partnership) and Northeast Energy, LLC (a Delaware limited liability company)
(collectively, the Partners). The Partners purchased their interests from
Intercontinental Energy Corporation and from certain individuals. The Partners
are owned by direct subsidiaries of ESI Energy, Inc. and Tractebel Power, Inc.
ESI Energy, Inc. is wholly-owned by FPL Energy, Inc. which is an indirect
wholly-owned subsidiary of FPL Group, Inc., a New York Stock Exchange company.
Tractebel Power, Inc. is a direct wholly-owned subsidiary of Tractebel, Inc.
which is a direct wholly-owned subsidiary of Tractebel, S.A., a Belgian energy
and environmental services business. Each of the Partnerships was formed in
1986 to develop, construct, own, operate and manage a 300 megawatt gas-fired
combined-cycle cogeneration facility.
The Company is a Delaware special purpose funding corporation established in
1994 solely for the purpose of issuing debt securities in connection with the
financing of the Partnerships. On January 14, 1998, the Company was acquired by
a subsidiary of ESI Energy, Inc., Tractebel Power, Inc. and Broad Street
Contract Services, Inc. (Broad Street). Broad Street has no economic interest
in the partnership distributions and participates for the purpose of providing
an independent director. The entities own a 37.5%, 37.5% and 25.0% interest in
the Company, respectively. Concurrent with and related to the acquisition of
the Company and the Partnerships, the Company changed its name from IEC Funding
Corp. to its current name.
The acquisition of the Partnerships was accounted for using the purchase method
of accounting and is subject to the provisions of the Securities and Exchange
Commission's Staff Accounting Bulletin No. 54 and the rules of pushdown
accounting, which gave rise to the new basis of accounting. The net amount paid
to acquire the interests in the Partnerships of approximately $545 million
including approximately $10 million of acquisition costs, was allocated to the
assets and liabilities acquired based on their fair values.
2. Summary of Significant Accounting Policies
Basis of Presentation - The Partnerships' combined balance sheet as of June
30, 1998 and the combined statements of operations and cash flows for the
period from January 14, 1998 to June 30, 1998 and for the three months ended
June 30, 1998 are reported under the new basis of accounting described above.
The Partnerships' combined balance sheet as of December 31, 1997 and the
combined statements of operations and cash flows for the period from January
1, 1998 to January 13, 1998 and for the three and six months ended June 30,
1997 represent historical financial data of the Partnerships prior to the
acquisition.
The following is a summary of the Partnerships' assets acquired and liabilities
assumed in the acquisition (thousands of dollars):
Assets:
Current assets ......................................... $114,554
Restricted cash ........................................ $ 69,156
Cogeneration facilities and carbon dioxide facility .... $513,066
Power purchase contracts ............................... $888,756
Other assets ........................................... $ 126
Liabilities:
Current liabilities .................................... $ 47,338
Operation and maintenance (O&M) contracts .............. $ 18,749
Fuel contracts ......................................... $333,544
Energy bank balances ................................... $171,530
Notes payable .......................................... $468,723
Carrying values of current assets, restricted cash and current liabilities
were considered to closely approximate fair value and were not adjusted.
Power purchase contracts were assigned a value based on the estimated amount
to be received over the contract period in excess of an independent
appraiser's assessment of market rates for power, discounted to the date of
acquisition. The cogeneration facilities and carbon dioxide facility were
initially assigned value based on an assessment of current replacement cost
for similar capacity, without the acquired power purchase agreements. In
accordance with Accounting Principles Board Opinion No. 16, the values
assigned to these long-lived assets were reduced by the net excess of the
fair values of all assets acquired over the purchase price. O&M and fuel
contract obligations were determined based on expected cash flows during the
contract periods compared to estimated cash flows for similar services if
contracted for currently, discounted to the date of acquisition. Notes
payable include the previously-existing debt of the Partnerships that was
considered to approximate market value. Energy bank balances were assigned a
value representing the estimated present value of future payments to
utilities in connection with certain existing power purchase agreements.
The following unaudited pro forma information has been prepared assuming that
the acquisition had occurred at the beginning of the periods presented
(thousands of dollars).
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1998 1997
<S> <C> <C>
Revenues ...................................................................... $154,306 $154,428
Operating income .............................................................. $ 42,072 $ 37,064
Net income .................................................................... $ 11,711 $ 5,246
</TABLE>
Cogeneration Facilities and Carbon Dioxide Facility - Cogeneration facilities
and the carbon dioxide facility were carried at historical cost prior to
January 14, 1998. Effective January 14, 1998, all facilities were revalued as a
result of applying the purchase method of accounting mentioned above. Prior to
January 14, 1998, the facilities were being depreciated on a straight-line
method over the estimated life of each facility of 20 years. Subsequent to
January 13, 1998, the facilities are being depreciated over their revised
estimated lives of 34 years.
Power Purchase/O&M/Fuel Contracts - Effective January 14, 1998, power purchase
contracts, O&M contracts and fuel contracts which were determined to be in
excess of prevailing rates for similar contracts were adjusted as a result of
applying the purchase method of accounting mentioned above. These contracts are
amortized over the estimated lives of the power purchase contracts of 14 to 24
years, the O&M contracts of 4 years and the fuel contracts of 16 years.
Major Maintenance - Effective January 14, 1998, maintenance expenses are
accrued for certain identified major maintenance and repair items related to
the Partnerships' facilities. The expenses are accrued ratably over each major
maintenance cycle. The amounts accrued relate to maintenance costs required for
the equipment to operate over its depreciable life. The expense recognized for
this accrual was $1.1 million for the second quarter and $1.7 million year to
date.
3. Commitments and Contingencies
Subsequent to the acquisition on January 14, 1998, certain credit
arrangements were terminated and replaced with new letters of credit and a
guaranty to satisfy requirements in certain power purchase agreements.
Specifically, new energy bank letters of credit were issued in face amounts
of $12,656,000 and $54,000,000. The $12,656,000 letter of credit expires on
December 31, 1998 and can be drawn upon on one occasion in the event that a
certain power purchase agreement has terminated at a time when there was a
positive energy bank balance existing in favor of the power purchaser. The
$54,000,000 letter of credit expires on December 31, 1998 and can be drawn
upon in multiple drawings in the event that a certain power purchase
agreement has terminated at the time when there was a positive energy bank
balance existing in favor of the power purchaser. A guaranty was made by a
subsidiary of FPL Group, Inc. in favor of the Partnerships Trustee. The
guarantor unconditionally and irrevocably guarantees the payment of an amount
equal to 50% of the debt service reserve requirement with respect to the
Company's securities. The guaranty expires on December 31, 1998 but is
automatically extended for successive one-year periods unless the guarantor
gives notice that it will not renew. Once the new credit arrangements were in
place, cash of approximately $69.2 million (plus approximately $2.5 million
in accrued interest) was released and distributed to the Partners.
Additionally, new letters of credit were issued in substitution for cash on
deposit in Partnership trust accounts and approximately $33.2 million in cash
was released and distributed to the Partners.
4. Related Party Information
On February 12, 1998, Northeast Energy, LP received $220 million in proceeds
from the issuance of 7.99% Secured Bonds Due 2011 (the Securities). The
Securities were issued by an entity related to Northeast Energy, LP and the
proceeds were loaned to Northeast Energy, LP. The Securities are payable
solely from payments to be made by Northeast Energy, LP and are not
obligations of the Partnerships. Payments with respect to the Securities will
be effectively subordinated to payment of all indebtedness and other
liabilities and commitments of the Partnerships. Northeast Energy, LP has
guaranteed the payment of the Securities and has pledged its investment in
the Partnerships as security.
Administrative Services Agreement - Northeast Energy, LP and a related entity
have entered into an Administrative Services Agreement (the Agreement) that
provides for management and administrative services to the Partnerships. The
Agreement extends for a 20-year term, expires in 2018, pays a minimum of
$600,000 per year and pays costs and expenses of performing services. For the
period ended June 30, 1998, the Partnerships have incurred $368 thousand
dollars under the Agreement.
Operation and Maintenance Agreements - Northeast Energy, LP and a related
entity have entered into operation and maintenance agreements (the New O&M
Agreements) that provide for the operation and maintenance of the
Partnerships on the day following the expiration or early termination of the
current O&M provider. The New O&M Agreements extend for an initial term of 18
years until January 14, 2016, subject to extension by mutual agreement of the
parties before six months preceding expiration. The New O&M Agreements pay
costs and expenses of performing services and $750,000 per year, subject to
certain adjustments, for each Partnership. For the period ended June 30,
1998, the Partnerships have incurred $703 thousand dollars under the New O&M
Agreements.
Fuel Management Agreements - Northeast Energy, LP and a related entity have
entered into Fuel Management Agreements (the Fuel Agreements) that provide
for the management of all natural gas or fuel oil, transportation and storage
agreements, and the location and purchase of any additional required natural
gas or fuel oil for the Partnerships. The Fuel Agreements extend for 25 years
and expire in 2023. The Fuel Agreements pay a minimum of $450,000 per year
for each Partnership and pay all costs and expenses of performing services.
For the period ended June 30, 1998, the Partnerships have incurred $424
thousand dollars under the Fuel Agreements.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Company and the Partnerships
This discussion should be read in conjunction with the Notes to Financial
Statements contained herein and with the 1997 Form 10-K (as amended) for the
Company and the Partnerships. The results of operations for an interim period
may not give a true indication of results for the year.
RESULTS OF OPERATIONS
The Company - Semi-annual debt principal payments and debt interest payments
of $10.8 million and $22.9 million, respectively, were made by the Company in
June 1998.
The Partnerships for the three and six months ended June 30, 1997 -
Revenues for the second quarter and year to date totaled $72.1 million and
$154.4 million, respectively, and were comprised of $71.0 million and $152.0
million, respectively, of power sales to utilities and $1.1 million and $2.4
million, respectively, of steam sales. Power sales to utilities reflect
changes in utility energy bank balances which are determined in accordance
with scheduled or specified rates under certain power purchase contracts.
Fuel expense of $39.2 million and $77.5 million, respectively, includes fuel
purchased for the Partnerships and fixed and variable costs associated with
delivery and use of the fuel for operations.
O&M expenses of $6.0 million and $12.8 million, respectively, are comprised
of O&M provider fees and site utility expenses, as well as performance
bonuses and heat rate bonuses payable under the O&M agreements.
Depreciation and amortization of $6.3 million and $12.5 million,
respectively, is comprised of depreciation for the cogeneration and carbon
dioxide facilities.
General and administrative expenses of $3.5 million and $6.8 million,
respectively, are comprised primarily of management and professional fees.
Interest expense is comprised primarily of interest on notes payable to IEC
Funding Corp. ($12.1 million and $24.1 million, respectively) and interest on
energy bank balances ($4.3 million and $8.6 million, respectively).
Interest income of $2.4 million and $4.6 million, respectively, reflects cash
balances earning investment income.
The Partnerships for the period from January 1, 1998 to January 13, 1998
(pre-acquisition) - Revenues for the thirteen-day period totaled $13.1
million and were comprised of $12.9 million of power sales to utilities and
$200 thousand of steam sales. Power sales to utilities reflect changes in
utility energy bank balances which are determined in accordance with
scheduled or specified rates under certain power purchase contracts.
Fuel expense of $5.8 million includes fuel purchased for the Partnerships and
the fixed and variable costs associated with the delivery and use of the fuel
for operations.
O&M expenses of $974 thousand are comprised of O&M provider fees and site
utility expenses.
Depreciation and amortization of $894 thousand is comprised of depreciation
for the cogeneration and carbon dioxide facilities.
General and administrative expenses of $538 thousand are comprised primarily
of management fees.
Interest expense is comprised primarily of interest on notes payable to IEC
Funding Corp. ($1.7 million) and interest on energy bank balances ($630
thousand).
Interest income reflects cash balances earning investment income.
The Partnerships for the three month period ended June 30, 1998 and for
the period from January 14, 1998 to June 30, 1998 (post-acquisition) -
Subsequent to January 13, 1998 the basis of presentation of the results of
operations for the Partnerships on a going forward basis was changed to
reflect the new basis of accounting discussed in Note 1 and Note 2.
Revenues for the second quarter and period to date totaled $66.5 million and
$141.2 million, respectively, and were comprised of $65.5 million and $139.0
million, respectively, of power sales to utilities and $1.0 million and $2.2
million, respectively, of steam sales. Power sales to utilities reflect
changes in utility energy bank balances of $3.3 million and $7.3 million,
respectively, which are determined in accordance with scheduled or specified
rates under certain power purchase contracts. Revenues for the second quarter
and period to date reflect lower generation and availability resulting from a
scheduled inspection and maintenance outage at the Bellingham, MA facility.
Fuel expense of $27.6 million and $57.2 million, respectively, is comprised
of $32.8 million and $66.9 million, respectively, of fuel purchased for the
Partnerships and the fixed and variable costs associated with the delivery
and use of the fuel for operations. These fuel costs are offset by $5.2
million and $9.7 million, respectively, of deferred credit amortization for
fuel contracts as a result of the purchase price allocation of the
acquisitions. Fuel expense for the second quarter and period to date reflects
decreased fuel consumption as a result of the scheduled inspection and
maintenance outage mentioned above.
O&M expenses of $3.9 million and $8.6 million, respectively, are comprised of
O&M provider fees and site expenses of $5.1 million and $10.8 million,
respectively, offset by $1.2 million and $2.2 million, respectively, of
deferred credit amortization for O&M contracts as a result of the purchase
price allocation of the acquisitions. Included in O&M expenses is the major
maintenance accrual described in Note 2.
Depreciation and amortization of $18.0 million and $33.5 million,
respectively, is comprised of depreciation for the cogeneration and carbon
dioxide facilities of $5.4 million and $10.1 million, respectively, and $12.6
million and $23.4 million, respectively, of amortization of the power
purchase contracts as a result of the purchase price allocation of the
acquisitions.
General and administrative expenses of $2.2 million and $4.1 million,
respectively, are comprised primarily of management and professional fees and
site expenses.
Interest expense of $16.0 million and $29.7 million, respectively, is
comprised primarily of interest on notes payable to ESI Tractebel Funding
Corp. ($11.5 million and $21.3 million, respectively) and interest on energy
bank balances ($4.5 million and $8.4 million, respectively).
Interest income reflects cash balances earning investment income and reflects
the impact of the release and distribution of debt service reserve cash on
January 21, 1998 and energy bank collateral restricted cash on February 3,
1998.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow generated by the Partnerships during the six month period ended June
30, 1998 was sufficient to fund operating expenses as well as fund the debt
service requirements of the Company. For the period ended June 30, 1998, there
have been $136.0 million in distributions to partners which includes a $31.0
million distribution in the second quarter of 1998 - see Note 3.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
(a) Exhibits
Exhibit
Number Description
<S> <C>
27.1 Financial Data Schedule for the six months ended June 30, 1998 -
ESI Tractebel Funding Corp.
27.2 Financial Data Schedule for the period January 1, 1998 to January 13, 1998 -
Northeast Energy Associates, A Limited Partnership
27.3 Financial Data Schedule for the period January 1, 1998 to January 13, 1998 -
North Jersey Energy Associates, A Limited Partnership
27.4 Financial Data Schedule for the period January 14, 1998 to June 30, 1998 -
Northeast Energy Associates, A Limited Partnership
27.5 Financial Data Schedule for the period January 14, 1998 to June 30, 1998 -
North Jersey Energy Associates, A Limited Partnership
(b) Reports on Form 8-K
None
</TABLE>
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.
ESI TRACTEBEL FUNDING CORP.
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)
(Registrants)
Date: August 13, 1998
PETER D. BOYLAN
Peter D. Boylan
Treasurer
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from ESI
Tractebel Funding Corp.'s balance sheet as of June 30, 1998 and statement
of operations for the six months ended June 30, 1998 and is qualified in
its entirety by reference to such financial statements.
<CIK> 0000934665
<NAME> ESI Tractebel Funding Corp.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<PERIOD-START> JAN-1-1998
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> $1
<SECURITIES> $0
<RECEIVABLES> $22,537
<ALLOWANCES> $0
<INVENTORY> $0
<CURRENT-ASSETS> $22,538
<PP&E> $0
<DEPRECIATION> $0
<TOTAL-ASSETS> $479,506
<CURRENT-LIABILITIES> $22,537
<BONDS> $456,968
$0
$0
<COMMON> $0
<OTHER-SE> $1
<TOTAL-LIABILITY-AND-EQUITY> $479,506
<SALES> $0
<TOTAL-REVENUES> $22,891
<CGS> $0
<TOTAL-COSTS> $0
<OTHER-EXPENSES> $0
<LOSS-PROVISION> $0
<INTEREST-EXPENSE> $22,891
<INCOME-PRETAX> $0
<INCOME-TAX> $0
<INCOME-CONTINUING> $0
<DISCONTINUED> $0
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $0
<EPS-PRIMARY> $0
<EPS-DILUTED> $0
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
combined statements of operations for the period January 1, 1998 to
January 13, 1998 of Northeast Energy Associates, A Limited Partnership
and North Jersey Energy Associates, A Limited Partnership and is
qualified in its entirety by reference to such financial statements.
<CIK> 0000934667
<NAME> Northeast Energy Associates,
A Limited Partnership
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<PERIOD-START> JAN-01-1998
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JAN-13-1998
<EXCHANGE-RATE> 1
<CASH> $0
<SECURITIES> $0
<RECEIVABLES> $0
<ALLOWANCES> $0
<INVENTORY> $0
<CURRENT-ASSETS> $0
<PP&E> $0
<DEPRECIATION> $0
<TOTAL-ASSETS> $0
<CURRENT-LIABILITIES> $0
<BONDS> $0
$0
$0
<COMMON> $0
<OTHER-SE> $0
<TOTAL-LIABILITY-AND-EQUITY> $0
<SALES> $13,109
<TOTAL-REVENUES> $13,109
<CGS> $0
<TOTAL-COSTS> $7,642
<OTHER-EXPENSES> $538
<LOSS-PROVISION> $0
<INTEREST-EXPENSE> $2,422
<INCOME-PRETAX> $2,909
<INCOME-TAX> $0
<INCOME-CONTINUING> $2,909
<DISCONTINUED> $0
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $2,909
<EPS-PRIMARY> $0
<EPS-DILUTED> $0
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
combined statements of operations for the period January 1, 1998 to
January 13, 1998 of Northeast Energy Associates, A Limited Partnership
and North Jersey Energy Associates, A Limited Partnership and is qualified
in its entirety by reference to such financial statements.
<CIK> 0000934666
<NAME> North Jersey Energy Associates
A Limited Partnership
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<PERIOD-START> JAN-01-1998
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JAN-13-1998
<EXCHANGE-RATE> 1
<CASH> $0
<SECURITIES> $0
<RECEIVABLES> $0
<ALLOWANCES> $0
<INVENTORY> $0
<CURRENT-ASSETS> $0
<PP&E> $0
<DEPRECIATION> $0
<TOTAL-ASSETS> $0
<CURRENT-LIABILITIES> $0
<BONDS> $0
$0
$0
<COMMON> $0
<OTHER-SE> $0
<TOTAL-LIABILITY-AND-EQUITY> $0
<SALES> $13,109
<TOTAL-REVENUES> $13,109
<CGS> $0
<TOTAL-COSTS> $7,642
<OTHER-EXPENSES> $538
<LOSS-PROVISION> $0
<INTEREST-EXPENSE> $2,422
<INCOME-PRETAX> $2,909
<INCOME-TAX> $0
<INCOME-CONTINUING> $2,909
<DISCONTINUED> $0
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $2,909
<EPS-PRIMARY> $0
<EPS-DILUTED> $0
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
combined balance sheet as of June 30, 1998 and the combined statements of
operations for the period January 14, 1998 to June 30, 1998 of Northeast
Energy Associates, A Limited Partnership and North Jersey Energy Associates,
A Limited Partnership and is qualified in its entirety by reference to
such financial statements.
<CIK> 0000934667
<NAME> Northeast Energy Associates,
A Limited Partnership
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<PERIOD-START> JAN-14-1998
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> $24,675
<SECURITIES> $0
<RECEIVABLES> $36,657
<ALLOWANCES> $0
<INVENTORY> $3,413
<CURRENT-ASSETS> $65,547
<PP&E> $513,051
<DEPRECIATION> $10,123
<TOTAL-ASSETS> $1,433,960
<CURRENT-LIABILITIES> $44,468
<BONDS> $456,968
$0
$0
<COMMON> $0
<OTHER-SE> $419,457
<TOTAL-LIABILITY-AND-EQUITY> $1,433,960
<SALES> $141,197
<TOTAL-REVENUES> $141,197
<CGS> $0
<TOTAL-COSTS> $99,314
<OTHER-EXPENSES> $4,089
<LOSS-PROVISION> $0
<INTEREST-EXPENSE> $29,664
<INCOME-PRETAX> $9,640
<INCOME-TAX> $0
<INCOME-CONTINUING> $9,640
<DISCONTINUED> $0
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $9,640
<EPS-PRIMARY> $0
<EPS-DILUTED> $0
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
combined balance sheet as of June 30, 1998 and the combined statements of
operations for the period January 14, 1998 to June 30, 1998 of Northeast
Energy Associates, A Limited Partnership and North Jersey Energy Associates,
A Limited Partnership and is qualified in its entirety by reference to
such financial statements.
<CIK> 0000934666
<NAME> North Jersey Energy Associates,
A Limited Partnership
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<PERIOD-START> JAN-14-1998
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> $24,675
<SECURITIES> $0
<RECEIVABLES> $36,657
<ALLOWANCES> $0
<INVENTORY> $3,413
<CURRENT-ASSETS> $65,547
<PP&E> $513,051
<DEPRECIATION> $10,123
<TOTAL-ASSETS> $1,433,960
<CURRENT-LIABILITIES> $44,468
<BONDS> $456,968
$0
$0
<COMMON> $0
<OTHER-SE> $419,457
<TOTAL-LIABILITY-AND-EQUITY> $1,433,960
<SALES> $141,197
<TOTAL-REVENUES> $141,197
<CGS> $0
<TOTAL-COSTS> $99,314
<OTHER-EXPENSES> $4,089
<LOSS-PROVISION> $0
<INTEREST-EXPENSE> $29,664
<INCOME-PRETAX> $9,640
<INCOME-TAX> $0
<INCOME-CONTINUING> $9,640
<DISCONTINUED> $0
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $9,640
<EPS-PRIMARY> $0
<EPS-DILUTED> $0
</TABLE>
