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 March 31, 1999
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 limited partnership)
33-87902-01 North Jersey Energy Associates, 04-2955646
A Limited Partnership
(a New Jersey limited partnership)
333-52397 ESI Tractebel Acquisition Corp. 65-0827005
(a Delaware corporation)
333-52397-01 Northeast Energy, LP 65-0811248
(a Delaware limited partnership)
------------------------------------------
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, North Jersey
Energy Associates, A Limited Partnership, ESI Tractebel Acquisition Corp. and
Northeast Energy, LP. 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.
(Funding Corp.), Northeast Energy Associates, A Limited Partnership (NEA) and
North Jersey Energy Associates, A Limited Partnership (NJEA) (collectively,
the Partnerships), ESI Tractebel Acquisition Corp. (Acquisition Corp.) and
Northeast Energy, LP (NE LP) (all five entities collectively, the
Registrants) are hereby filing cautionary statements identifying important
factors that could cause the Registrants' actual results to differ materially
from those projected in forward-looking statements (as such term is defined
in the Reform Act) of the Registrants made by or on behalf of the Registrants
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 Registrants' actual results to differ materially from those contained in
forward-looking statements made by or on behalf of the Registrants.
Any forward-looking statement speaks only as of the date on which such
statement is made, and the Registrants undertake no obligation to update any
forward-looking statement 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 statement.
Some important factors that could cause actual results or outcomes to differ
materially from those discussed in the forward-looking statements include
changing governmental policies and regulatory actions with respect to the
Public Utility Regulatory Policies Act of 1978, as amended, 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 Registrants 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, 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 Registrants 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
Registrants.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NORTHEAST ENERGY, LP
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................................................ $ 61,058 $ 36,038
Accounts receivable .............................................................. 42,820 29,746
Spare parts inventories .......................................................... 15,653 194
Fuel inventories ................................................................. 1,210 4,935
Prepaid expenses and other current assets ........................................ 957 212
Total current assets ........................................................... 121,698 71,125
Non-current assets:
Deferred debt issuance costs (net of accumulated
amortization of $705 and $548, respectively) ................................... 6,255 6,412
Cogeneration facilities and carbon dioxide facility (net of accumulated
depreciation of $26,434 and $20,987, respectively) ............................. 487,120 492,566
Power purchase contracts (net of accumulated
amortization of $61,362 and $48,545, respectively) ............................. 827,394 840,211
Other assets ..................................................................... 27 29
Total non-current assets ....................................................... 1,320,796 1,339,218
TOTAL ASSETS ....................................................................... $1,442,494 $ 1,410,343
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Current portion of notes payable - the Funding Corp. ............................. $ 23,511 $ 23,511
Accounts payable ................................................................. 23,677 12,338
Accrued interest payable ......................................................... 15,483 -
Due to related parties ........................................................... 1,422 800
Other accrued expenses ........................................................... 9,992 9,384
Total current liabilities ...................................................... 74,085 46,033
Non-current liabilities:
Deferred credit - fuel contracts ................................................. 308,215 313,427
Notes payable - the Funding Corp. ................................................ 445,213 445,213
Note payable - the Acquisition Corp. ............................................. 220,000 220,000
Amounts due utilities for energy bank balances ................................... 171,878 173,356
Total non-current liabilities .................................................. 1,145,306 1,151,996
Partners' equity:
General partners ................................................................. 4,462 4,246
Limited partners ................................................................. 218,641 208,068
Total partners' equity ......................................................... 223,103 212,314
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND PARTNERS' EQUITY ............................................. $1,442,494 $ 1,410,343
</TABLE>
This report should be read in conjunction with the Notes to Consolidated
Financial Statements on page 11 herein and the Notes to Consolidated and
Combined Financial Statements appearing in the 1998 Form 10-K for NE LP.
NORTHEAST ENERGY, LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
<S> <C> <C>
REVENUES ............................................................................. $ 90,332 $ 74,739
COSTS AND EXPENSES:
Fuel ............................................................................... 35,540 29,517
Operations and maintenance ......................................................... 3,928 4,738
Depreciation and amortization ...................................................... 18,272 15,508
General and administrative ......................................................... 2,335 2,168
Total costs and expenses ......................................................... 60,075 51,931
OPERATING INCOME ..................................................................... 30,257 22,808
OTHER EXPENSE (INCOME):
Amortization of debt issuance costs ................................................ 157 72
Interest expense ................................................................... 19,775 15,763
Interest income .................................................................... (464) (653)
Total other expense .............................................................. 19,468 15,182
NET INCOME............................................................................ $ 10,789 $ 7,626
</TABLE>
This report should be read in conjunction with the Notes to Consolidated
Financial Statements on page 11 herein and the Notes to Consolidated and
Combined Financial Statements appearing in the 1998 Form 10-K for NE LP.
NORTHEAST ENERGY, LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $ 25,020 $ 32,602
CASH FLOWS FROM INVESTING ACTIVITIES:
Release of restricted cash collateral ............................................... - 69,156
Acquisition purchase price, net of $62,635 cash acquired ............................ - (483,140)
Net cash used in investing activities ............................................. - (413,984)
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from partners ......................................................... - 535,412
Net proceeds from loan by the Acquisition Corp. ..................................... - 215,202
Distributions to partners ........................................................... - (307,621)
Net cash provided by financing activities ......................................... - 442,993
Net increase in cash and cash equivalents ............................................. 25,020 61,611
Cash and cash equivalents at beginning of period ...................................... 36,038 -
Cash and cash equivalents at end of period ............................................ $ 61,058 $ 61,611
Supplemental disclosure of cash flow information:
Cash paid for interest .............................................................. $ - $ -
</TABLE>
This report should be read in conjunction with the Notes to Consolidated
Financial Statements on page 11 herein and the Notes to Consolidated and
Combined Financial Statements appearing in the 1998 Form 10-K for NE LP.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
COMBINED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ......................................................... $ 60,135 $ 35,152
Accounts receivable ............................................................... 42,820 29,746
Spare parts inventories ........................................................... 15,653 194
Fuel inventories .................................................................. 1,210 4,935
Prepaid expenses and other current assets ......................................... 957 212
Total current assets ............................................................ 120,775 70,239
Non-current assets:
Cogeneration facilities and carbon dioxide facility (net of accumulated
depreciation of $26,434 and $20,987, respectively) .............................. 487,120 492,566
Power purchase contracts (net of accumulated
amortization of $61,362 and $48,545, respectively) .............................. 827,394 840,211
Other assets ...................................................................... 27 29
Total non-current assets ........................................................ 1,314,541 1,332,806
TOTAL ASSETS ........................................................................ $1,435,316 $1,403,045
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Current portion of notes payable - the Funding Corp. .............................. $ 23,511 $ 23,511
Accounts payable .................................................................. 23,677 12,338
Accrued interest payable .......................................................... 11,087 -
Due to related parties ............................................................ 1,283 663
Other accrued expenses ............................................................ 9,992 9,384
Total current liabilities ....................................................... 69,550 45,896
Non-current liabilities:
Deferred credit - fuel contracts .................................................. 308,215 313,427
Notes payable - the Funding Corp. ................................................. 445,213 445,213
Amounts due utilities for energy bank balances .................................... 171,878 173,356
Total non-current liabilities ................................................... 925,306 931,996
Partners' equity:
General partner ................................................................... 4,405 4,252
Limited partners .................................................................. 436,055 420,901
Total partners' equity .......................................................... 440,460 425,153
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND PARTNERS' EQUITY .............................................. $1,435,316 $1,403,045
</TABLE>
This report should be read in conjunction with the Notes to Combined
Financial Statements on page 11 herein and the Notes to Consolidated and
Combined Financial Statements appearing in the 1998 Form 10-K for NEA and
NJEA.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
COMBINED STATEMENTS OF OPERATIONS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Period From
Period From January 1,
Three Months January 14, 1998 to
Ended 1998 to January 13,
March 31, March 31, 1998
1999 1998 (Prior Basis)
<S> <C> <C> <C>
REVENUES ................................................... $ 90,332 $ 74,739 $ 13,109
COSTS AND EXPENSES:
Fuel ..................................................... 35,540 29,517 5,774
Operations and maintenance ............................... 3,928 4,738 974
Depreciation and amortization ............................ 18,272 15,508 894
General and administrative ............................... 2,335 1,895 538
Total costs and expenses ............................... 60,075 51,658 8,180
OPERATING INCOME ........................................... 30,257 23,081 4,929
OTHER EXPENSE (INCOME):
Interest expense ......................................... 15,379 13,712 2,422
Interest income .......................................... (428) (653) (402)
Total other expense .................................... 14,951 13,059 2,020
NET INCOME ................................................. $ 15,306 $ 10,022 $ 2,909
</TABLE>
This report should be read in conjunction with the Notes to Combined
Financial Statements on page 11 herein and the Notes to Consolidated and
Combined Financial Statements appearing in the 1998 Form 10-K for NEA and
NJEA.
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>
Period From
Period From January 1,
Three Months January 14, 1998 to
Ended 1998 to January 13,
March 31, March 31, 1998
1999 1998 (Prior Basis)
<S> <C> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES ................... $ 24,983 $ 33,673 $ 1,432
CASH FLOWS FROM INVESTING ACTIVITIES
Release of restricted cash collateral ..................... - 69,156 -
Net cash provided by investing activities ............... - 69,156 -
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners ................................. - (104,920) -
Net cash used in financing activities ................... - (104,920) -
Net increase (decrease) in cash and cash equivalents ........ 24,983 (2,091) 1,432
Cash and cash equivalents at beginning of period ............ 35,152 62,635 61,203
Cash and cash equivalents at end of period .................. $ 60,135 $ 60,544 $ 62,635
Supplemental disclosure of cash flow information:
Cash paid for interest .................................... $ - $ - $ -
Supplemental disclosure of noncash investing and
financing activities:
See Notes to Combined Financial Statements -
Basis of Presentation concerning new basis of
accounting subsequent to January 13, 1998
</TABLE>
This report should be read in conjunction with the Notes to Combined
Financial Statements on page 11 herein and the Notes to Consolidated and
Combined Financial Statements appearing in the 1998 Form 10-K for NEA and
NJEA.
ESI TRACTEBEL FUNDING CORP.
BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
<S> <C> <C>
ASSETS
Current assets:
Cash .............................................................................. $ 1 $ 1
Interest receivable from the Partnerships ......................................... 10,991 -
Current portion of notes receivable from the Partnerships ......................... 23,511 23,511
Total current assets ............................................................ 34,503 23,512
Notes receivable from the Partnerships .............................................. 445,213 445,213
TOTAL ASSETS ........................................................................ $ 479,716 $ 468,725
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of securities payable ............................................. $ 23,511 $ 23,511
Accrued interest .................................................................. 10,991 -
Total current liabilities ....................................................... 34,502 23,511
Securities payable .................................................................. 445,213 445,213
Stockholders' equity:
Common stock, no par value, 10,000 shares authorized, issued and outstanding ...... 1 1
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......................................... $ 479,716 $ 468,725
</TABLE>
STATEMENTS OF OPERATIONS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
<S> <C> <C>
Interest income ..................................................................... $ 10,991 $ 11,445
Interest expense .................................................................... (10,991) (11,445)
NET INCOME .......................................................................... $ - $ -
</TABLE>
These reports should be read in conjunction with the Notes to Financial
Statements on page 11 herein and the Notes to Financial Statements appearing
in the 1998 Form 10-K for the Funding Corp.
ESI TRACTEBEL ACQUISITION CORP.
BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
<S> <C> <C>
ASSETS
Current assets:
Interest receivable from NE LP...................................................... $ 4,396 $ -
Due from NE LP ....................................................................... 152 152
Note receivable from NE LP ........................................................... 220,000 220,000
TOTAL ASSETS ......................................................................... $224,548 $220,152
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Income taxes payable ............................................................... $ 5 $ 4
Accrued interest ................................................................... 4,396 -
Total current liabilities ........................................................ 4,401 4
Deferred credit - interest rate hedge ................................................ 137 140
Securities payable ................................................................... 220,000 220,000
Stockholders' equity:
Common stock, $.01 par value, 100 shares authorized, 20 shares issued .............. - -
Subscriptions receivable ........................................................... - -
Retained earnings .................................................................. 10 8
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........................................... $224,548 $220,152
</TABLE>
STATEMENTS OF OPERATIONS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Period From
January 12,
1998 (Date of
Formation) to
March 31, March 31,
1999 1998
<S> <C> <C>
Interest income ...................................................................... $ 4,396 $ 2,054
Interest expense ..................................................................... (4,393) (2,051)
Income before income taxes ........................................................... 3 3
Income tax expense ................................................................... (1) (2)
NET INCOME ........................................................................... $ 2 $ 1
</TABLE>
These reports should be read in conjunction with the Notes to Financial
Statements on page 11 herein and the Notes to Financial Statements appearing
in the 1998 Form 10-K for the Acquisition Corp.
NORTHEAST ENERGY, LP
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
ESI TRACTEBEL FUNDING CORP.
ESI TRACTEBEL ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO COMBINED FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The accompanying consolidated financial statements, combined financial
statements and financial statements should be read in conjunction with the
1998 Form 10-K for ESI Tractebel Funding Corp. (Funding Corp.), Northeast
Energy Associates, A Limited Partnership and North Jersey Energy Associates,
A Limited Partnership (collectively, the Partnerships), ESI Tractebel
Acquisition Corp. (Acquisition Corp.) and Northeast Energy, LP (NE LP) (all
five entities collectively, the Registrants). In the opinion of the
Registrants' management, all adjustments (consisting of normal recurring
accruals) considered necessary for fair financial statement presentation have
been made. Certain amounts included in the prior year's financial statements
have been reclassified to conform to the current year's presentation. The
Funding Corp. and the Acquisition Corp. had no cash transactions for the
three months ended March 31, 1999 and 1998 and therefore have not presented a
statement of cash flows. The results of operations for an interim period may
not give a true indication of results for the year.
1. Summary of Significant Accounting Policies (NE LP and the Partnerships)
Basis of Presentation - On January 14, 1998 NE LP acquired the Partnerships.
The acquisitions were accounted for using the purchase method of accounting and
were subject to pushdown accounting, which gave rise to a new basis of
accounting by the Partnerships. Consequently, the Partnerships' combined
balance sheets and the combined statements of operations and cash flows for
the period from January 14, 1998 to March 31, 1998 and for the three months
ended March 31, 1999 are reported under the new basis of accounting described
above. The Partnerships' combined statements of operations and cash flows for
the period from January 1, 1998 to January 13, 1998 represent historical
financial data of the Partnerships prior to the acquisitions.
Inventories - During the first quarter of 1999, the Partnerships purchased
spare parts from the former operations and maintenance (O&M) provider. Spare
parts inventories are stated at cost and are determined by specific
identification.
2. Commitments and Contingencies
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting
and reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in
the balance sheet as either an asset or liability measured at its fair value.
The statement requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria
are met. The Registrants are currently assessing the effect, if any, on their
financial statements of implementing FAS 133. The Registrants will be
required to adopt the standard in 2000.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This discussion should be read in conjunction with the Notes to Consolidated
Financial Statements, Notes to Combined Financial Statements and Notes to
Financial Statements contained herein and Management's Discussion and
Analysis of Financial Condition and Results of Operations appearing in the
1998 Form 10-K for the Registrants. The results of operations for an interim
period may not give a true indication of results for the year.
Results of Operations
NE LP and the Partnerships - In the following discussion, comparisons for NE
LP are with the corresponding items in the prior year. Comparisons for the
Partnerships are with the corresponding items for the prior period beginning
January 14, 1998.
Revenues increased $15.6 million primarily as a result of recognizing power
sales for a full quarter in 1999 versus 1998 when power sales were recognized
subsequent to the acquisition of the Partnerships on January 14, 1998. The
remainder of the increase is the result of increased production at the
Bellingham and Sayreville facilities and increased power sales to utilities.
Power sales to utilities reflect changes in utility energy bank balances
(which increased reported revenues) that are determined in accordance with
scheduled or specified rates under certain power purchase agreements.
Fuel expense, excluding $5.2 million and $4.5 million of deferred credit
amortization for fuel contracts for the periods ended March 31, 1999 and
1998, respectively, increased $6.7 million. The increase is primarily the
result of recognizing fuel expense for a full quarter in 1999 versus 1998
when fuel expense was recognized subsequent to the acquisition of the
Partnerships on January 14, 1998. The remainder of the increase is for fuel
purchased for the facilities as a result of the increased production
mentioned above.
O&M expense, excluding $1 million of deferred credit amortization for O&M
contracts for the period ended March 31, 1998, decreased $1.8 million. The
decrease is primarily the result of reduced O&M costs incurred by the new
operator of the facilities and the elimination of the performance bonus paid
to the previous operator, partially offset by recognizing O&M costs for a
full quarter in 1999 versus 1998 when O&M costs were recognized subsequent to
the acquisition of the Partnerships on January 14, 1998.
Depreciation and amortization increased $2.8 million. The increase is
primarily the result of recognizing depreciation and amortization on the
facilities and power purchase agreements, respectively, for a full quarter in
1999 versus 1998 when depreciation and amortization was recognized subsequent
to the acquisition of the Partnerships on January 14, 1998.
Interest expense of NE LP and the Partnerships increased $4 million and $1.7
million, respectively. The increase is primarily the result of recognizing
interest expense on notes payable to the Funding Corp. for a full quarter in
1999 versus 1998 when interest expense was recognized subsequent to the
acquisition of the Partnerships on January 14, 1998 partially offset by
decreasing principal balances on the notes payable. Additionally, NE LP
recognized interest expense on the note payable to the Acquisition Corp. for
a full quarter in 1999 versus 1998 when interest expense was recognized
subsequent to the issuance of $220 million of debt in February 1998.
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 agreements.
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 $974,000 are comprised of O&M provider fees and site utility
expenses.
Depreciation and amortization of $894,000 is comprised of depreciation for
the cogeneration and carbon dioxide facilities.
General and administrative expenses of $538,000 are comprised primarily of
management fees.
Interest expense is comprised primarily of interest on notes payable to the
Funding Corp. ($1.7 million) and interest on energy bank balances ($630,000).
Interest income reflects cash balances earning investment income.
The Funding Corp. and the Acquisition Corp. - Both the Funding Corp. and the
Acquisition Corp. are scheduled to make semi-annual debt and/or interest
payments on June 30 and December 30, 1999. Interest expense for the Funding
Corp. decreased $454,000 due to decreasing principal balances on the
securities payable. Interest expense for the Acquisition Corp. increased
$2.3 million. The increase is primarily the result of recognizing interest
expense on the Acquisition Corp. securities payable for a full quarter in
1999 versus 1998 when interest expense was recognized subsequent to the
issuance of $220 million of debt in February 1998.
The Registrants are continuing to work to resolve the potential impact of the
year 2000 on the processing of information by their computer systems. A
multi-phase plan has been developed consisting of inventorying potential
problems, assessing what will be required to address each potential problem,
taking the necessary action to fix each problem, testing to see that the
action taken did result in year 2000 readiness and implementing the required
solution. The inventory and assessment of the information technology
infrastructure, computer applications and computerized processes embedded in
operating equipment has been completed. The Registrants' efforts to assess
the year 2000 readiness of third parties include surveying important
suppliers. Meetings are being conducted with these suppliers. Results of our
supplier readiness assessment are being considered in the development of our
contingency plans to help ensure that critical supplies are not interrupted,
that large power purchasers are able to receive power and that transactions
with or processed by financial institutions will occur as intended. The
Registrants are on schedule with their multi-phase plan and all phases are
expected to be completed by mid-1999, except for work at NJEA which will be
completed during a scheduled outage in October 1999. The cost of addressing
year 2000 issues is estimated to be approximately $500,000, of which
approximately 20% had been spent through March 31, 1999.
At this time, the Registrants believe that the most reasonably likely worst
case scenarios relating to the year 2000 could include a temporary disruption
of service to customers, caused by a potential disruption in fuel supply,
water supply and telecommunications. The Registrants' year 2000 contingency
planning is currently underway to address risk scenarios at the operating
level (such as generation, transmission and distribution), as well as at the
business level (such as procurement and accounting). These plans are intended
to mitigate both internal risks and potential risks in the Registrants'
supply chain. Contingency plans are expected to be completed by mid-1999,
allowing the second half of 1999 for communication and training.
Liquidity and Capital Resources
The Registrants - Cash flow generated by the Partnerships year to date has
been and is expected to remain sufficient to fund operating expenses of the
Registrants as well as fund the debt service requirements of the Funding
Corp. and the Acquisition Corp.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
27.1 Financial Data Schedule - ESI Tractebel Funding Corp.
27.2 Financial Data Schedule - Northeast Energy Associates, A
Limited Partnership
27.3 Financial Data Schedule - North Jersey Energy
Associates, A Limited Partnership
27.4 Financial Data Schedule - ESI Tractebel Acquisition
Corp.
27.5 Financial Data Schedule - Northeast Energy, LP
(b) Reports On Form 8-K
None.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
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)
NORTHEAST ENERGY, LP
(ESI Northeast Energy GP, Inc. as Administrative General Partner)
ESI TRACTEBEL FUNDING CORP.
ESI TRACTEBEL ACQUISITION CORP.
(Registrants)
Date: May 10, 1999
PETER D. BOYLAN
Treasurer of ESI Northeast Energy GP, Inc.
Treasurer of ESI Tractebel Funding Corp.
Treasurer of ESI Tractebel Acquisition Corp.
(Principal Financial and Principal Accounting Officer of the Registrants)
<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 March 31, 1999 and statement
of operations for the period ended March 31, 1999 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-1-1999
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> $1
<SECURITIES> $0
<RECEIVABLES> $34,502
<ALLOWANCES> $0
<INVENTORY> $0
<CURRENT-ASSETS> $34,503
<PP&E> $0
<DEPRECIATION> $0
<TOTAL-ASSETS> $479,716
<CURRENT-LIABILITIES> $34,502
<BONDS> $445,213
$0
$0
<COMMON> $1
<OTHER-SE> $0
<TOTAL-LIABILITY-AND-EQUITY> $479,716
<SALES> $0
<TOTAL-REVENUES> $10,991
<CGS> $0
<TOTAL-COSTS> $0
<OTHER-EXPENSES> $0
<LOSS-PROVISION> $0
<INTEREST-EXPENSE> $10,991
<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
Northeast Energy Associates, A Limited Partnership and North Jersey Energy
Associates, A Limited Partnership combined balance sheet as of March 31, 1999
and combined statement of operations for the period ended March 31, 1999 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-01-1999
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> $60,135
<SECURITIES> $0
<RECEIVABLES> $42,820
<ALLOWANCES> $0
<INVENTORY> $16,863
<CURRENT-ASSETS> $120,775
<PP&E> $513,554
<DEPRECIATION> $26,434
<TOTAL-ASSETS> $1,435,316
<CURRENT-LIABILITIES> $69,550
<BONDS> $445,213
$0
$0
<COMMON> $0
<OTHER-SE> $440,460
<TOTAL-LIABILITY-AND-EQUITY>$1,435,316
<SALES> $90,332
<TOTAL-REVENUES> $90,332
<CGS> $0
<TOTAL-COSTS> $57,740
<OTHER-EXPENSES> $1,907
<LOSS-PROVISION> $0
<INTEREST-EXPENSE> $15,379
<INCOME-PRETAX> $15,306
<INCOME-TAX> $0
<INCOME-CONTINUING> $15,306
<DISCONTINUED> $0
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $15,306
<EPS-PRIMARY> $0
<EPS-DILUTED> $0
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Northeast Energy Associates, A Limited Partnership and North Jersey Energy
Associates, A Limited Partnership combined balance sheet as of March 31, 1999
and combined statement of operations for the period ended March 31, 1999 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-01-1999
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> $60,135
<SECURITIES> $0
<RECEIVABLES> $42,820
<ALLOWANCES> $0
<INVENTORY> $16,863
<CURRENT-ASSETS> $120,775
<PP&E> $513,554
<DEPRECIATION> $26,434
<TOTAL-ASSETS> $1,435,316
<CURRENT-LIABILITIES> $69,550
<BONDS> $445,213
$0
$0
<COMMON> $0
<OTHER-SE> $440,460
<TOTAL-LIABILITY-AND-EQUITY>$1,435,316
<SALES> $90,332
<TOTAL-REVENUES> $90,332
<CGS> $0
<TOTAL-COSTS> $57,740
<OTHER-EXPENSES> $1,907
<LOSS-PROVISION> $0
<INTEREST-EXPENSE> $15,379
<INCOME-PRETAX> $15,306
<INCOME-TAX> $0
<INCOME-CONTINUING> $15,306
<DISCONTINUED> $0
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $15,306
<EPS-PRIMARY> $0
<EPS-DILUTED> $0
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from ESI
Tractebel Acquisition Corp.'s balance sheet as of March 31, 1999 and
statement of operations for the period ended March 31, 1999 and is qualified
in its entirety by reference to such financial statements.
<CIK> 0001059027
<NAME> ESI Tractebel Acquisition Corp.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<PERIOD-START> JAN-01-1999
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> $0
<SECURITIES> $0
<RECEIVABLES> $4,396
<ALLOWANCES> $0
<INVENTORY> $0
<CURRENT-ASSETS> $4,396
<PP&E> $0
<DEPRECIATION> $0
<TOTAL-ASSETS> $224,548
<CURRENT-LIABILITIES> $4,401
<BONDS> $220,000
$0
$0
<COMMON> $0
<OTHER-SE> $10
<TOTAL-LIABILITY-AND-EQUITY> $224,548
<SALES> $0
<TOTAL-REVENUES> $4,396
<CGS> $0
<TOTAL-COSTS> $0
<OTHER-EXPENSES> $0
<LOSS-PROVISION> $0
<INTEREST-EXPENSE> $4,393
<INCOME-PRETAX> $3
<INCOME-TAX> $1
<INCOME-CONTINUING> $2
<DISCONTINUED> $0
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $2
<EPS-PRIMARY> $0
<EPS-DILUTED> $0
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of March 31, 1999 and the consolidated
statement of operations for the period ended March 31, 1999 of Northeast
Energy, LP and is qualified in its entirety by reference to such financial
statements.
<CIK> 0001059025
<NAME> Northeast Energy, LP
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<PERIOD-START> JAN-01-1999
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> $61,058
<SECURITIES> $0
<RECEIVABLES> $42,820
<ALLOWANCES> $0
<INVENTORY> $16,863
<CURRENT-ASSETS> $121,698
<PP&E> $513,554
<DEPRECIATION> $26,434
<TOTAL-ASSETS> $1,442,494
<CURRENT-LIABILITIES> $74,085
<BONDS> $665,213
$0
$0
<COMMON> $0
<OTHER-SE> $223,103
<TOTAL-LIABILITY-AND-EQUITY> $1,442,494
<SALES> $90,332
<TOTAL-REVENUES> $90,332
<CGS> $0
<TOTAL-COSTS> $57,740
<OTHER-EXPENSES> $2,029
<LOSS-PROVISION> $0
<INTEREST-EXPENSE> $19,774
<INCOME-PRETAX> $10,789
<INCOME-TAX> $0
<INCOME-CONTINUING> $10,789
<DISCONTINUED> $0
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $10,789
<EPS-PRIMARY> $0
<EPS-DILUTED> $0
</TABLE>
