10-Q 1 tstii10q.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 Commission File Number 1-3423-01 ENRON CAPITAL TRUST II (Exact name of registrant as specified in its charter) Delaware 76-6122939 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) Enron Building 1400 Smith Street Houston, Texas 77002 (Address of principal executive (Zip Code) offices) (713) 853-6161 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of March 31, 2001, the Registrant had an aggregate of 6,000,000 8.125% Trust Preferred Securities and 186,000 8.125% Trust Common Securities outstanding. 1 of 10 ENRON CAPITAL TRUST II TABLE OF CONTENTS Page No. PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements 3 Income Statement - Three Months Ended March 31, 2001 and 2000 3 Balance Sheet - March 31, 2001 and December 31, 2000 4 Statement of Cash Flows - Three Months Ended March 31, 2001 and 2000 5 Notes to Financial Statements 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 9 ITEM 2. Changes in Securities 9 ITEM 3. Defaults upon Senior Securities 9 ITEM 4. Submission of Matters to a Vote of Security Holders 9 ITEM 6. Exhibits and Reports on Form 8-K 9 SIGNATURES 10 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ENRON CAPITAL TRUST II INCOME STATEMENT (In Thousands) (Unaudited)

PART I. FINANCIAL INFORMATION - (Continued) ITEM 1. FINANCIAL STATEMENTS - (Continued) ENRON CAPITAL TRUST II BALANCE SHEET (In Thousands) (Unaudited)

PART I. FINANCIAL INFORMATION - (Continued) ITEM 1. FINANCIAL STATEMENTS - (Continued) ENRON CAPITAL TRUST II STATEMENT OF CASH FLOWS (In Thousands) (Unaudited)

PART I. FINANCIAL INFORMATION - (Continued) ITEM 1. FINANCIAL STATEMENTS - (Continued) ENRON CAPITAL TRUST II NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION The condensed financial statements included herein have been prepared by management without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, these statements reflect all adjustments (consisting only of normal recurring entries) which are, in the opinion of management, necessary for a fair statement of the financial results for the interim periods. Certain information and notes normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although management believes the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in Enron Capital Trust II Form 10-K for the year ended December 31, 2000. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Enron Capital Trust II (the "Trust") is a statutory business trust created under the Delaware Business Trust Act. Ownership of the assets of the Trust is evidenced by an aggregate of 6,000,000 8.125% Trust Preferred Securities (the "Trust Preferred Securities"), which are listed and traded on the New York Stock Exchange under the symbol "ENE PrR", and 186,000 8.125% Trust Common Securities (the "Trust Common Securities" and, together with the Trust Preferred Securities, the "Trust Securities"), all of which are owned by Enron Corp. ("Enron"). The Trust's sole assets are 6,186,000 8.125% Partnership Preferred Securities ($25 liquidation amount per security) representing an 85% limited partnership interest in Enron Preferred Funding II, L.P. (the "Partnership"). The Trust and the Partnership are consolidated subsidiaries of Enron for financial accounting purposes. 2. DESCRIPTION OF THE PARTNERSHIP The general partner of the Partnership is Enron, which owns a 15% general partnership interest in the Partnership. Since completion of the offering of the Trust Preferred Securities on January 16, 1997, the assets of the Partnership have been invested primarily in a $136,450,000 principal amount 7.75% Subordinated Debenture, Series II, due 2016 of Enron (the "Enron Debenture") and $21,836,000 principal amount 7.75% Debentures, Series II, due 2016 (the "Subsidiary Debentures" and, together with the Enron Debenture, the "Debentures"), of each of Enron North America Corp. and Enron Transportation Services Company, each of which is a wholly-owned subsidiary of Enron. The obligations under the Subsidiary Debentures are guaranteed by Enron. In addition to the Debentures, the Partnership owns an aggregate of approximately $1,900,000 in short-term, investment grade debt securities (the "Eligible Debt Securities") as of March 31, 2001 and December 31, 2000. 3. SUMMARIZED FINANCIAL INFORMATION OF THE PARTNERSHIP Summarized financial information for the Partnership, accounted for by the equity method, is as follows (in thousands):

PART I. FINANCIAL INFORMATION - (Concluded) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. ENRON CAPITAL TRUST II Results of Operations and Changes in Cash Flows First Quarter 2001 vs. First Quarter 2000 For the quarter ended March 31, 2001, distributions totaling $3.0 million and $0.1 million, respectively, were declared to the holders of the 6,000,000 Trust Preferred Securities and to the holder of the 186,000 Trust Common Securities. These distributions were paid on April 2, 2001. On March 31, 2000, the holders of the 6,000,000 Trust Preferred Securities were paid quarterly cash distributions totaling $3.0 million. On the same date, the holder of the 186,000 Trust Common Securities was paid quarterly cash distributions totaling $0.1 million. On April 2, 2001 and March 30, 2000, the Trust received quarterly distributions from the Partnership of $3.1 million related to the Trust's limited partnership interest. PART II. OTHER INFORMATION ENRON CAPITAL TRUST II ITEM 1. Legal Proceedings None. ITEM 2. Changes in Securities None. ITEM 3. Defaults upon Senior Securities None. ITEM 4. Submission of Matters to a Vote of Security Holders None. ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits None. (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ENRON CAPITAL TRUST II (Registrant) Date: May 11, 2001 By: BEN GLISAN, JR. Name: Ben Glisan, Jr. Title: Regular Trustee

ENRON CAPITAL TRUST II 10-Q