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Rosebud Energy Corp – ‘U-3A-2’ for 2/28/05

On: Monday, 2/28/05, at 4:08pm ET · Effective: 2/28/05 · For: 2/28/05 · Accession #: 950172-5-627 · File #: 69-00370

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/28/05  Rosebud Energy Corp               U-3A-2      2/28/05    1:42K                                    Skadden Arps Sla… LLP/FA

Statement by a Holding Company Claiming Exemption — Form U-3A-2
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: U-3A-2      Statement by a Holding Company Claiming Exemption     24     82K 

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                                                    File No. 069-00370

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

 Form U-3A-2

 Statement by Holding Company Claiming Exemption Under
 Rule U-2 from the
 Provisions of the Public Utility Holding Company Act of
1935

ROSEBUD ENERGY CORP.
--------------------

hereby files with the Securities and Exchange Commission, pursuant to Rule U-2, 
its statement claiming exemption as a holding company from the provisions of the
Public Utility Holding Company Act of 1935. In support of such claim for        
exemption the following information is submitted:                               

1. Name, State of organization, locations and nature of business of   
claimant and every subsidiary thereof.                                          

    Rosebud Energy Corp. ("Rosebud") is a corporation incorporated in Montana.
Rosebud's address is Diamond Block Building, Suite 210, 44 West 6th Avenue,     
Helena, Montana 59624, c/o Doney, Crowley, Bloomquist & Uda, PC. Rosebud was    
formed to own a general partnership interest in and be the sole general partner 
of Colstrip Energy Limited Partnership ("Colstrip"). Colstrip is a Montana      

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limited partnership, with the same address as Rosebud, and was formed to own and
operate a 35 megawatt electric generation facility ("Facility") located near    
Colstrip, Montana.                                                              

2. A brief description of the properties of claimant and each of its  
subsidiary public utility companies used for the generation, transmission, and  
distribution of electric energy for sale, or for the production, transmission,  
and distribution of natural or manufactured gas, indicating the location of     
principal generating plants, transmission lines, producing fields, gas          
manufacturing plants, and electric and gas distribution facilities, including   
all such properties which are outside the State in which claimant and its       
subsidiaries are organized and all transmission or pipelines which deliver or   
receive electric energy or gas at the borders of such State.                    

Rosebud owns no property used for the generation, transmission and    
distribution of electricity for sale, or for the production, transmission, and  
distribution of natural or manufactured gas. The only property owned by Colstrip
is the Facility, which is located near Colstrip, Montana, and which sells all of
its output at wholesale.                                                        

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 3. The following information for the last calendar year with respect to
claimant and each of its subsidiary public utility companies:                   

       (a) Number of kwh of electric energy sold (at retail or wholesale),
and Mcf. of natural or manufactured gas distributed at retail.                  

The total number of kwh sold in calendar year 2004 was 299,017,154.   

(b) Number of kwh of electric energy and Mcf, of natural or 
manufactured gas distributed at retail outside the State in which each such     
company is organized.                                                           

None.                                                                 

(c) Number of kwh. of electric energy and Mcf. of natural or
manufactured gas sold at wholesale outside the State in which each such company 
is organized, or at the State line.                                             

None.                                                                 

(d) Number of kwh of electric energy and Mcf. of natural or 
manufactured gas purchased outside the State in which each such company is      
organized or at the State line.                                                 

None.                                                                 

4. The following information for the reporting period with respect to 
claimant and each interest it holds directly or indirectly in an EWG or a       
foreign utility company, stating monetary amounts in United States dollars:     

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          (a) Name, location, business address and description of the facilities
used by the EWG or foreign utility company for the generation, transmission and 
distribution of electric energy for sale or for the distribution at retail of   
natural or manufactured gas.                                                    

Rosebud owns no interest in an EWG.                                   

         (b) Name of each system company that holds an interest in such EWG or
foreign utility company; and description of the interest held.                  

None.                                                                 

       (c) Type and amount of capital invested, directly or indirectly, by
the holding company claiming exemption; any direct or indirect guarantee of the 
security of the EWG or foreign utility company by the holding company claiming  
exemptions; and any debt or other financial obligation for which there is       
recourse, directly or indirectly, to the holding company claiming exemption or  
another system company, other than the EWG or foreign utility company.          

None.                                                                 

         (d) Capitalization and earnings of the EWG or foreign utility company
during the reporting period.                                                    

None.                                                                 

       (e) Identify any service, sales or construction contract(s) between
the EWG or foreign utility company and a system company, and describe the       

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services to be rendered or goods sold and fees or revenues under such           
agreement(s).                                                                   

None.                                                                 

   The above-named claimant has caused this statement to be duly executed on
its behalf by its authorized officer on this 25th day of February, 2005.        

                                    ROSEBUD ENERGY CORP.

                   By:
                                              /s/ Owen H. Orndorff
                                                   -------------------------
                                          Owen H. Orndorff
                                        Vice President
CORPORATE SEAL                                                                  

Attest:  Subscribed and Sworn to before me this 25th                            
of February, 2005.                                                              

                          /s/ Shannon Morgan
                                      ------------------------------
                                      Residing at       Boise, Idaho
                                                        ------------
                                     Expiration Date     6/10/2006
                                                        ------------

Name, title, and address of Officer of whom notices and correspondence          
concerning this statement would be addressed:                                   

Owen H. Orndorff                                  Vice President              
------------------------------------------------------------------------------- 
(Name)                                       (Title)          

Diamond Block Bldg. Ste. 210 44 W 6th Ave. Helena, Montana 59624              
------------------------------------------------------------------------------- 
(Address)       

Please send additional copy to:                                                 

Mr. Matthew W. S. Estes, Esq.                                           
Skadden, Arps, Slate, Meagher & Flom                                    

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1440 New York Avenue, N.W.                                              
Washington, D.C. 20005                                                  

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 EXHIBIT A

Claimant has no subsidiary companies. The claimant's Balance Sheet and
Statement of Operations as of December 31, 2003 are attached. In addition,      
inasmuch as claimant is general partner of Colstrip, Colstrip's Balance Sheet,  
Statement of Operations, Statement of Cash Flows, and Statement of Partners'    
Capital as of December 31, 2004 are attached.                                   

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                                                                           DRAFT

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                              Rosebud Energy Corp.                                    
                                  Balance Sheet                                       
                                 As of 12/31/04                                       

                                                                                      
CURRENT CASH ASSETS:                                                                  
Rosebud Fee Acct. - US Bank                        $        728.70                    
Rosebud Operating Acct. - US Bank                         2,443.22                    
Rosebud FBO Ladenburg - US Bank                             107.36                    
Rosebud FBO JPS Estate - US Bank                             83.24                    
                                                   ----------------                   

TOTAL CASH                                                           $      3,362.52  

TOTAL CURRENT ASSETS                                                 $      3,362.52  

PROPERTY, PLANT AND EQUIPMENT:                                                        
Land                                                      1,000.00                    
Office Furniture and Fixtures                             9,610.58                    
Computer Equipment and Software                          10,424.94                    
Accumulated Depreciation                                (20,035.52)                   
                                                   ----------------                   

TOTAL PROPERTY, PLANT AND EQUIPMENT                                  $      1,000.00  

OTHER ASSETS:                                                                         
Other Investments                                  $(15,972,058.38)                   
Receivable from BGI for RDO Loans                     2,573,199.72                    
                                                   ----------------                   
TOTAL OTHER ASSETS                                                   $(13,398,858.66) 

                                                                     -----------------

TOTAL ASSETS                                                         $(13,394,496.14) 
                                                                     ================ 

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                                                                           DRAFT

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                              Rosebud Energy Corp.                                  
                                  Balance Sheet                                     
                                 As of 12/31/04                                     

                                                                                    
LIABILITIES AND SHAREHOLDERS' EQUITY                                                

CURRENT LIABILITIES:                                                                

Other Payable                                      $ 2,642,807.75                   
                                                   ---------------                  

TOTAL CURRENT LIABILITIES                                           $  2,642,807.75 
                                                                    ----------------

TOTAL LIABILITIES                                                   $  2,642,807.75 

SHAREHOLDERS' EQUITY:                                                               
Shareholders' Equity                               $(9,084,292.60)                  
Retained Earnings                                   (5,746,252.49)                  
YTD Net Income                                      (1,206,758.80)                  

                                                   ---------------                  

TOTAL SHAREHOLDERS' EQUITY                                          $(16,037,303.89)

                                                                    ----------------

TOTAL LIABILITIES/SHAREHOLDERS' EQUITY                              $(13,394,496.14)
                                                                    ================

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                                                                           DRAFT

Rosebud Energy Corp.
 STATEMENT OF OPERATIONS
 For the Period Ended 12/31/04

REVENUES:                                                                       
Professional Fees                                  $      2,695.00              
Interest Income                                          23,838.54              
TOTAL REVENUES                                     $     26,533.54              

OPERATING EXPENSES:                                                             
Accounting and Auditing Fees                              2,645.00              
Bank Charges                                                  1.00              
Fees & Licenses                                              30.00              
Outside Services - Fin.                               1,475,896.09              
Outside Director's Fees                                  18,750.00              
Miscellaneous                                               567.07              
Taxes                                                        20.00              
                                      ----------------

TOTAL OPERATING EXPENSES                           $ 1,497,909.16               
                                      ----------------

TOTAL OPERATING INCOME                               (1,471,375.62)             
Gain(Loss) - Other Invest. - CELP                       265,654.92              

Interest Expense                                          1,038.10              

                                      ----------------

NET INCOME                                         $ (1,206,758.80)             
                                      ================

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Colstrip Energy Limited Partnership                                                                     DRAFT 
Balance Sheets                                                                                                
As of December 31,                                                                                            
------------------------------------------------------------------------------------------------------------- 

                                                                                                              
                                                                                     2004             2003    
Assets                                                                                                        
   Current assets                                                                                             
     Designated cash and cash equivalents                                       $ 3,392,195       $ 1,643,283 
     Restricted cash and cash equivalents                                         1,081,192         1,324,155 
     Investments                                                                  1,991,260         3,033,750 
     Receivable from NorthWestern Energy, net allowance of $0                     2,168,692         5,043,156 
     Prepaid expenses                                                               211,939           210,679 
     Other                                                                           30,551            47,854 
                                                                                ------------      ------------

       Total current assets                                                       8,875,829        11,302,877 

   Property, plant and equipment, net                                            61,830,855        63,574,789 
   Bond reserve fund investments                                                  6,121,673         6,110,947 
   Deferred charges, net                                                          1,004,175         1,264,573 
   Limestone inventory                                                              425,160           443,097 
                                                                                ------------      ------------

       Total assets                                                             $78,257,692       $82,696,283 
                                                                                ============      ============

Liabilities and Partners' Capital                                                                             
   Current liabilities                                                                                        
     Current portion of bonds payable                                           $ 2,400,000       $55,300,000 
     Accounts payable                                                               899,756           724,334 
     Accrued expenses                                                               523,489           658,904 
     Accrued interest                                                                56,219            58,709 
                                                                                ------------      ------------

       Total current liabilities                                                  3,879,464        56,741,947 

   Bonds payable                                                                 50,700,000                 - 
                                                                                ------------      ------------

       Total liabilities                                                         54,579,464        56,741,947 
                                                                                ------------      ------------

   Commitments (Note 14) and contingencies (Note 16)                                                          

   Partners' capital (deficit)                                                                                
     General partner                                                            (15,972,058)      (12,770,565)
     Limited partner                                                             39,664,719        38,678,599 
     Accumulated other comprehensive income (loss)                                  (14,433)           46,302 
                                                                                ------------      ------------

       Total partners' capital                                                   23,678,228        25,954,336 
                                                                                ------------      ------------

       Total liabilities and partners' capital                                  $78,257,692       $82,696,283 
                                                                                ============      ============


The accompanying notes are an integral part of the financial statements.        

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Colstrip Energy Limited Partnership                                                                     DRAFT
Statements of Operations                                                                                     
For the years ended December 31,                                                                             
-------------------------------------------------------------------------------------------------------------

                                                                                                             

                                                                                    2004             2003    
Revenues                                                                                                     
   Energy                                                                      $ 18,711,044     $ 18,410,794 
   Capacity                                                                       4,331,360        3,582,508 
   Interest income                                                                   98,283          289,348 
   Other                                                                             46,540                - 
                                                                               -------------    -------------

                                                                                 23,187,227       22,282,650 
                                                                               -------------    -------------
Raw materials                                                                                                
   Coal                                                                           2,484,537        2,502,358 
   Coal transport                                                                   773,168          708,428 
   Coal royalty                                                                     378,656          391,737 
   Limestone processing charges                                                     167,443          182,162 
   Limestone transport                                                              607,858          593,440 
   Limestone usage                                                                   34,816           39,515 
   Fuel oil                                                                         102,768           44,919 

Operating expenses                                                                                           
   Operations and maintenance (O & M) contract labor                              2,596,029        2,472,236 
   O & M non-labor                                                                1,743,348          697,574 
   Professional fees                                                              2,812,449        1,983,848 
   Property, license and other taxes                                                211,067          236,956 
   Insurance                                                                        413,995          377,279 
   Management fee to operator                                                       112,486          108,160 
   Other                                                                            262,060          162,337 
                                                                               -------------    -------------

     Total raw materials and operating expenses                                  12,700,680       10,500,949 
                                                                               -------------    -------------

Operating revenues available for debt service                                                                
   and other expenses                                                            10,486,547       11,781,701 
                                                                               -------------    -------------

Debt service expenses                                                                                        
   Interest                                                                         740,423          770,615 
   Loan fees and expenses                                                           900,232          933,731 

Expenses subordinate to debt service                                                                         
   Bonus to operator                                                                 82,742           40,560 

Depreciation and amortization                                                     2,174,104        2,151,848 
                                                                               -------------    -------------

     Total debt service and other expenses                                        3,897,501        3,896,754 
                                                                               -------------    -------------

Operating income                                                                  6,589,046        7,884,947 

Business interruption insurance proceeds                                                  -          283,258 
Gain on sale of investments                                                          52,327                - 
                                                                               -------------    -------------

     Net income                                                                  $6,641,373       $8,168,205 
                                                                               -------------    -------------

    The accompanying notes are an integral part of the financial statements.                                 


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Colstrip Energy Limited Partnership                                        DRAFT
Statements of Comprehensive Income                                              
For the years ended December 31,                                                
--------------------------------------------------------------------------------

                                                     2004             2003

Net income                                           $6,641,373      $8,168,205 
                                                     -----------     -----------

Other comprehensive income (loss)                                               
Unrealized losses on investments:                                               
   Unrealized holding losses arising during period      (25,301)        (77,448)
Less: reclassification adjustment for gains                               
  included in net income                               (35,434)              -
                                                     -----------     -----------
                                                        (60,735)        (77,448)
                                                     -----------     -----------
Comprehensive income                                 $6,580,638      $8,090,757 
                                                     -----------     -----------

The accompanying notes are an integral part of the financial statements.

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Colstrip Energy Limited Partnership                                                                           DRAFT
Statement of Partners' Capital (Deficit)                                                                           
For the years ended December 31, 2004 and 2003                                                                     
-------------------------------------------------------------------------------------------------------------------

                                                                                                                   
                                                                            Accumulated                            
                                                                                Other                              
                                        General             Limited         Comprehensive                          
                                        Partner             Partner         Income (Loss)          Total           

Balance at December 31, 2002        $ (12,616,184)     $    31,358,099    $     123,750      $    18,865,665       

   Net income                             326,727            7,841,478                -            8,168,205       
   Capital withdrawn                     (481,108)            (520,978)               -           (1,002,086)      
   Other comprehensive loss                     -                    -          (77,448)             (77,448)      
                                    --------------     ----------------   --------------     ----------------      

Balance at December 31, 2003          (12,770,565)          38,678,599           46,302           25,954,336       

   Net income                             265,655            6,375,718                -            6,641,373       
   Capital withdrawn                   (3,467,148)          (5,389,598)               -           (8,856,746)      
   Other comprehensive loss                        -                 -          (60,735)             (60,735)      
                                    -----------------  ----------------   --------------     ----------------      

Balance at December 31, 2004        $ (15,972,058)     $    39,664,719    $     (14,433)     $    23,678,228       
                                    -----------------  ----------------   --------------     ----------------      

     The accompanying notes are an integral part of the financial statements.                                      


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Colstrip Energy Limited Partnership                                                                           DRAFT
Statements of Cash Flows                                                                                           
For the years ended December 31,                                                                                   
-------------------------------------------------------------------------------------------------------------------

                                                                                                                   
                                                                                    2004             2003          
Cash flows from operating activities                                                                               
   Net income                                                                    $6,641,373      $ 8,168,205       
   Adjustments to reconcile net income to net cash                                                                 
     provided by operating activities                                                                              
       Depreciation and amortization                                              2,174,104        2,151,848       
       Amortization of investment premium (discount)                                (41,655)             365       
       Gain on sale of investments                                                  (52,327)               -       
       Effect of changes in assets and liabilities                                                                 
         Receivable from NorthWestern Energy                                      2,874,464       (3,459,785)      
         Receivable from insurance claim                                                  -          855,414       
         Prepaid expenses and other assets                                             (836)          10,531       
         Limestone inventory                                                         34,816           39,515       
         Accounts payable and accrued expenses                                       51,592         (985,935)      
         Accrued interest                                                            (2,490)         (23,709)      
                                                                                ------------     ------------      

           Net cash provided by operating activities                             11,679,041        6,756,449       
                                                                                ------------     ------------      

Cash flows from investing activities                                                                               
   Proceeds from sales and maturities of available-for-sale                                                        
     investments                                                                 13,072,235        6,501,123       
   Purchase of available-for-sale investments                                   (12,007,224)      (9,017,813)      
   Expenditures for property, plant and equipment                                  (181,357)         (62,491)      
                                                                                ------------     ------------      

           Net cash provided by (used in) investing activities                      883,654       (2,579,181)      
                                                                                ------------     ------------      

Cash flows from financing activities                                                                               
   Partner capital withdrawn                                                     (8,856,746)      (1,002,086)      
   Principal payments on bonds                                                   (2,200,000)      (2,000,000)      
                                                                                ------------     ------------      

           Net cash used in financing activities                                (11,056,746)      (3,002,086)      
                                                                                ------------     ------------      

Net increase in designated and restricted                                                                          
   cash and equivalents                                                           1,505,949        1,175,182       

Designated and restricted cash and equivalents, beginning of year                 2,967,438        1,792,256       
                                                                                ------------     ------------      

Designated and restricted cash and equivalents, end of year                     $ 4,473,387       $2,967,438       
                                                                                ============     ============      

Supplemental Disclosures                                                                                           
Cash paid for interest                                                          $   742,913      $   794,324       
                                                                                ============     ============      

Noncash investing activity                                                                                         
Transfer from other assets to property, plant and equipment                     $         -      $   583,040       
                                                                                ============     ============      
Property, plant and equipment purchase price adjustment                                                            
  through reduction of accounts payable                                         $    11,585      $         -       
                                                                                ============     ============      


  The accompanying notes are an integral part of the financial statements.

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Colstrip Energy Limited Partnership                                        DRAFT
Notes to Financial Statements                                                   
December 31, 2004 and 2003                                                      
------------------------------------------------------------------------------- 

1.     Organization and operations                                              

       Colstrip Energy Limited Partnership (the Partnership) owns and operates a
   35-megawatt electric generation facility (the Project) near Colstrip,
     Montana. Commercial operations of the Project commenced on May 3, 1990.

     At December 31, 2004, the Partnership consisted of Rosebud Energy Corp.
     (Rosebud), the general partner, and two limited partners: Harrier Power
       Corporation and Spruce Limited Partnership. The general partner of Spruce
    Limited Partnership is Spruce Power Corporation (which PG&E Generating
      Company purchased from Bechtel Enterprises, Inc. effective September 19,
 1997 and is now indirectly wholly-owned by NEGT Energy Company, LLC
   (formerly PG&E Generating Company)) and the limited partner is Pitney
 Bowes Credit Corp. In January 2000, Enron Bighorn Acquisition Corp.
   purchased the stock of Harrier Power Corporation which had previously
been owned by PG&E Generating Company. The original life of the   
Partnership is 40 years expiring in 2028.                         

    The Project is a Federal Energy Regulatory Commission (FERC) certified
       Small Power Production Facility consisting of a circulating fluidized bed
      combustion boiler, an extraction/condensing steam turbine generator unit
     and related auxiliary equipment. The unit is fired by waste coal in the
form of sub-bituminous coal refuse. NorthWestern Energy, L.L.C.   
(NorthWestern Energy) has contracted to purchase electricity to be
generated by the Project through June 2025 (Note 6).              

2.     Summary of Significant Accounting Policies                               

      Use of estimates - The preparation of financial statements in conformity
----------------                                                  
   with accounting principles generally accepted in the United States of
       America 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.         

 Cash and cash equivalents - Designated and restricted cash and cash
-------------------------                                         
       equivalents include highly liquid investments with original maturities of
     three months or less, which are readily convertible to known amounts of
cash.                                                             

   Limestone inventory - Limestone inventory consists of limestone to be
-------------------                                               
     used in the power generation process and is stated at the lower of cost
     or market, with cost being determined by the first-in first-out method.

   Investments - The Partnership classifies investments, special reserve
-----------                                                       
account investments and bond reserve fund investments as          
     available-for-sale securities which are stated at estimated fair value.

     Property, plant and equipment - Property, plant and equipment is stated
-----------------------------                                     
      at historical cost net of accumulated depreciation. When property, plant
  and equipment is disposed of, the asset cost and related accumulated
       depreciation are removed from the Partnership's books and the net gain or
loss is included in operations. Depreciation is provided using the
 straight-line method over estimated useful lives of fifty years for
      plant, equipment and systems, seven years for heavy operating equipment,
   and five years for land improvements, office furniture and equipment,
small tools and equipment and vehicles.                           

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Colstrip Energy Limited Partnership                                        DRAFT
Notes to Financial Statements                                                   
December 31, 2004 and 2003                                                      
--------------------------------------------------------------------------------

The Partnership reviews the carrying value of property, plant and 
      equipment for impairment whenever events and circumstances indicate that
      the carrying value of an asset may not be recoverable from the estimated
future net cash flows expected to result from its use and eventual
      disposition. In cases where the estimated future net cash flows are less
    than the carrying value, an impairment loss is recognized equal to the
     amount by which the carrying value exceeds the fair value of assets. No
assets were considered impaired as of December 31, 2004 or 2003.  

       Allocation of Partnership income - Pursuant to the Partnership agreement,
--------------------------------                                  
       net income and net losses for 2004 and 2003 were allocated 4% to Rosebud,
     48% to Harrier Power Corporation and 48% to Spruce Limited partnership.
The allocation percentages vary from year to year pursuant to the 
Partnership agreement.                                            

  Allocation of gains and losses from capital transactions - Gains are
--------------------------------------------------------          
 first allocated to partners with negative balances in their capital
 accounts in proportion to all negative balances. After all negative
    balances are restored, 50% of remaining gains are allocated to Rosebud
  with the remainder to be divided equally among the limited partners.
Losses are first allocated to partners with positive balances in  
     proportion to all positive capital balances. After all positive capital
       balances are eliminated, 50% of remaining losses are allocated to Rosebud
  with the remainder to be divided equally among the limited partners.

     Deferred charges - Costs of issuing bonds and notes are amortized using
----------------                                                  
the effective interest rate method over the term of the related   
financing.                                                        

     Income taxes - The Partnership is subject to the partnership provisions
------------                                                      
       of the Internal Revenue Code and, accordingly, incurs no federal or state
    income taxes. Individual partners report their respective share of the
Partnership's taxable income or loss, deductions and credits.     

  Revenue recognition - NorthWestern Energy has contracted to purchase
-------------------                                               
electricity generated by the Project through June 2025. Revenue is
     recorded based on capacity and power generation at rates established by
the Power Purchase Agreement (PPA).                               

3.     Basis of Presentation                                                    

   The accompanying financial statements have been prepared on the basis
      that the Partnership will continue as a going concern and do not include
any adjustments to reflect the possible future effects on the     
     recoverability of assets and liquidation of liabilities that may result
from this uncertainty.                                            

     As of December 31, 2003, the Partnership was in default under the terms
  of its Credit Agreement due to NorthWestern Energy filing Chapter 11
   Bankruptcy. The Partnership received a waiver of the default from the
    creditors; however, the waiver terminated on July 15, 2004. The matter
       raised substantial doubt about the Partnership's ability to continue as a
going concern.                                                    

    On November 1, 2004, NorthWestern Energy's Second Amended and Restated
      Plan of Reorganization became effective. The Partnership was, therefore,
       no longer in default under the terms of its credit agreement. There is no
     longer any doubt about the Partnership's ability to continue as a going
concern.                                                          

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Colstrip Energy Limited Partnership                                        DRAFT
Notes to Financial Statements                                                   
December 31, 2004 and 2003                                                      
--------------------------------------------------------------------------------

4.     Designated and Restricted Cash and Cash Equivalents                      

       Partnership revenues are deposited with an agent bank for disbursement in
 accordance with the terms of the Partnership and credit agreements.
Designated and restricted funds are as follows:                   

                                                        [Enlarge/Download Table]



                                                                                                       
                                                                             December 31,              
                                                                       2004                     2003   
Designated cash and cash equivalents                                                                   
   Cash available for operations                                                                       
     First Interstate O&M non-labor                                 $  26,132                $ 161,952 
     US Bank accounts                                               3,297,274                1,480,265 
     Raymond James account                                             68,789                    1,066 
                                                                  ------------             ------------
                                                                    3,392,195                1,643,283 
                                                                  ------------             ------------
Restricted cash and cash equivalents                                                                   
   Credit Suisse debt service account                                 112,433                  212,379 
   Credit Suisse maintenance reserve account                          425,572                  347,756 
   Credit Suisse special reserve account                              500,937                  502,433 
   Credit Suisse cash collateral                                            -                  221,027 
   Credit Suisse O&M bonus and sub fee account                         42,250                   40,560 
                                                                  ------------             ------------
                                                                    1,081,192                1,324,155 
                                                                  ------------             ------------

       Total designated and restricted cash and cash equivalents   $4,473,387               $2,967,438 
                                                                  ============             ============


5.     Investments                                                              

      Investments, which are considered available-for-sale securities, consist
of the following:                                                 

                                                        [Enlarge/Download Table]


                                                                           December 31,                              

                                                                                                                     
                                                          2004                                     2003              
                                             -------------------------------           ------------------------------
                                                 Fair Value      Cost Basis               Fair Value      Cost Basis 

Short-term investments                                                                                               
     Federal Home Loan Bank                                                                                          
      debenture (maturity 2005)                 $ 1,991,260     $ 2,005,728              $ 3,033,750     $ 3,017,448 
                                                ------------    ------------             ------------    ------------

Long-term investments:                                                                                               
   Bond reserve fund                                                                                                 
     Federal National Mortgage                                                                                       
      Association note (maturity 2005)                    -               -                6,030,000       6,000,000 
     Federal discount notes (maturity 2005)      (6,121,673)      6,121,638                        -               - 
     Money market accounts                                -               -                   80,947          80,947 
                                                ------------    ------------             ------------    ------------

                                                $(6,121,673)    $ 6,121,638              $ 6,110,947     $ 6,080,947 
                                                ============    ============             ============    ============


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Colstrip Energy Limited Partnership                                        DRAFT
Notes to Financial Statements                                                   
December 31, 2004 and 2003                                                      
--------------------------------------------------------------------------------

6.     NorthWestern Corporation Chapter 11 Bankruptcy                           

    On September 14, 2003, NorthWestern Corporation, the parent company of
      NorthWestern Energy, to whom the Partnership sells substantially all its
power generation, filed for Chapter 11 bankruptcy. NorthWestern   
      Corporation, with approval from the bankruptcy court, agreed to continue
 to perform according to the terms of the PPA from the petition date
(September 14, 2003) forward.                                     

      At the petition date, the Partnership had an outstanding receivable from
     NorthWestern Energy associated with energy and capacity revenues earned
       primarily in August and September of 2003, of $2,608,690. This amount was
outstanding at December 31, 2003, but was received in 2004.       

7.     NorthWestern Energy Capacity Revenue Dispute                             

   In 2002, the Project experienced a shutdown due to a lightning strike
      (Note 8). While the PPA allows for force majeure in determining capacity
    revenue, NorthWestern Energy has taken the position that the lightning
strike does not qualify as an event of force majeure. During 2003,
  NorthWestern Energy withheld capacity revenue payments earned during
     contract years ending June 30, 2003 and 2004. The Partnership has filed
  suit against NorthWestern Energy to collect unpaid capacity revenue.

    NorthWestern Energy withheld payments totaling $493,640 related to the
    contract year ended June 30, 2003 and described the amount withheld as
       the contract year annual capacity payment adjustment. The PPA defines the
     annual capacity payment adjustment as the difference between the sum of
  monthly capacity payments made and the actual capacity value for the
    contract year. If the annual capacity payment adjustment reflected the
  force majeure event, the annual capacity payment adjustment would be
       zero. At December 31, 2003, the amount related to the contract year ended
       June 30, 2003 annual capacity payment adjustment of $493,640 had not been
 recorded as a receivable or revenue in the financial statements. At
    December 31, 2004, $104,593 of the withheld payments had been received
 and the remaining $389,047 had not been recorded as a receivable or
       revenue in the financial statements. The amount ultimately collected will
depend on the resolution of the suit against NorthWestern Energy. 

   NorthWestern Energy calculated the capacity payments for the contract
    year ending June 30, 2004 (beginning July 1, 2003), without reflecting
   the force majeure event which occurred during the contract year ended
      June 30, 2003. Capacity revenue was recorded in the financial statements
    at the maximum contract capacity amounts calculated in accordance with
the PPA. At December 31, 2003, a receivable of $834,552 (excluding
capacity revenue earned prior to the bankruptcy petition date) was
       recorded related to the capacity payment adjustment for the contract year
       ending June 30, 2004. The Partnership collected the entire balance during
the year ended December 31, 2004.                                 

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Colstrip Energy Limited Partnership                                        DRAFT
Notes to Financial Statements                                                   
December 31, 2004 and 2003                                                      
--------------------------------------------------------------------------------

8.     Insurance Proceeds                                                       

    On June 17, 2002, the project experienced a black-plant trip. The trip
       was caused by a lightning strike on the Northwest Power grid and caused a
     series of automatic shutdowns of the plant equipment. During the course
      of the equipment shutdowns, the steam turbine suffered damage due to the
     steam control valves failing to operate correctly. The Project was shut
    down from June 17, 2002 through December 6, 2002. The plant functioned
     briefly between December 7, 2002 and February 27, 2003; however, it was
      discovered that additional items required repair due to damage caused by
      the lightning strike. As a result, the plant was shut down shortly after
each start-up. At the time of the incident, the Partnership held  
    insurance policies for both property damage and business interruption.
   The property damage insurance had a deductible of $250,000, while the
    business interruption insurance had a deductible of forty-five days of
lost profits.                                                     

   Through December 31, 2003, costs to repair property damage associated
with the lightning strike totaled $2,561,924, net of the $250,000 
 deductible; of total costs incurred, $2,355,414 net of the $250,000
deductible, was incurred during 2002 and $206,510 during 2003. The
      Partnership received insurance proceeds of $0 and $1,021,828 during 2004
      and 2003, respectively, related to this claim. There was no gain or loss
associated with the insurance proceeds, as the assets damaged were
repaired, not replaced.                                           

    The Partnership's business interruption insurance claims reflect total
     lost profits associated with the lightning strike of $7,861,949, net of
    the forty-five day deductible, through December 31, 2003; of the total
  lost profits, $6,995,853, net of the forty-five day deductible, were
    incurred during 2002 with an additional $866,096 incurred during 2003.
The Partnership received business interruption proceeds of $0 and 
    $283,258 during 2004 and 2003, respectively. The business interruption
 proceeds received are reflected as other income on the statement of
operations.                                                       

At December 31, 2003, the Partnership has outstanding business    
      interruption claims against the insurance company totaling approximately
       $3.81 million, specifically concerning the number of insurable incidents.
 While the Partnership maintains that each of the shutdowns required
      between December 7, 2002 and February 27, 2003 to repair equipment was a
   direct result of damage caused by the lightning strike, the insurance
    company insists each shutdown was a separate incident. The Partnership
      has filed suit against the insurance company to collect these claims and
is currently in the process of discovery. At December 31, 2004, no
receivable or income associated with the remaining claims has been
recorded in the financial statements.                             

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Colstrip Energy Limited Partnership                                        DRAFT
Notes to Financial Statements                                                   
December 31, 2004 and 2003                                                      
--------------------------------------------------------------------------------

9.     Property, Plant and Equipment                                            

Property, plant and equipment, net are as follows:                              

                                                      December 31,
                                                       2004             2003

Land improvements                                  $   196,334     $    196,334 
Land                                                   496,240          496,240 
Plant, equipment and systems                        87,526,994       87,515,273 
Heavy operating equipment                            1,483,505        1,367,851 
Small tools and equipment                              158,361          158,361 
Office furniture and equipment                         173,048          173,640 
Vehicles                                                77,260           77,260 
                                                  ------------     -------------
                                                   90,111,742       89,984,959

   Less accumulated depreciation                   (28,280,887)     (26,410,170)
                                                  -------------    -------------

  Property, plant and equipment, net             $ 61,830,855     $ 63,574,789
                                                  =============    =============

Depreciation of property, plant and equipment was $1,913,706 for 2004 and       
$1,887,583 for 2003.                                                            

10.    Deferred Charges                                                         

Deferred charges, net are as follows:                                           
                                                  December 31,
                                                 2004             2003

Bond financing                                   $ 2,474,836      $ 2,474,836   
Loan financing                                     1,890,473        1,890,473   
                                               ------------    -------------

                                                4,365,309        4,365,309

 Less accumulated amortization                  (3,361,134)      (3,100,736)
                                               ------------    -------------

Deferred charges, net                         $ 1,004,175      $ 1,264,573
                                               ============    =============

11.    Bonds Payable                                                            

 The 1989 Series tax-exempt bonds were issued in October 1989 in the
amount of $60,800,000. The bonds bear interest at weekly, monthly,
       semiannual, annual or term rates set at the option of the Partnership or,
    upon termination of a letter of credit, at a fixed interest rate until
       maturity. The weighted average interest rate for the tax-exempt bonds was
1.25% and 1.33% for 2004 and 2003, respectively.                  

The bonds mature in December 2015 and are subject to mandatory and
     optional redemption prior to maturity. Optional redemption, in whole or
     in part, may be made at the election of the Partnership at a redemption
   price of up to 102% of face value. The bonds are subject to mandatory
redemption through a sinking fund requiring annual payments by the
       Partnership beginning in 2001. The bonds are payable from revenues of the
Partnership or from a letter of credit.                           

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Colstrip Energy Limited Partnership                                        DRAFT
Notes to Financial Statements                                                   
December 31, 2004 and 2003                                                      
--------------------------------------------------------------------------------

Scheduled annual bond maturities and sinking fund requirements are as follows:  

                                        Amount Due
Year Ending                                                                   
2005                                             $ 2,400,000          
2006                                               2,600,000          
2007                                               2,800,000          
2008                                               3,000,000          
2009                                               3,200,000          
Thereafter                                        39,100,000          
                                        ------------
                                       $53,100,000
                                        ============

       The bond agreement covenants require the Partnership to maintain a letter
      of credit collateralizing the tax-exempt bonds and bond interest payable
     (Note 12), and among other requirements, to maintain specific insurance
 coverage. The Partnership was in compliance with these covenants at
December 31, 2004 and 2003, respectively.                         

12.    Letter of Credit and Term Notes Payable                                  

The Partnership has a Credit and Reimbursement Agreement (Credit  
       Agreement) providing for a Letter of Credit (LOC) of $60,800,000 for bond
      principal payments and $2,400,000 for bond interest payments, term loans
      of $12,000,000 and additional credit facilities in the form of revolving
    credit loans of $1,000,000 and capacity expansion loans of $2,000,000.
       The LOC is reduced by bond principal payments made during the year. As of
    December 31, 2004, the LOC provided for $55,100,000 for bond principal
payments and $2,077,447 for bond interest payments.               

 The LOC covering bond principal payments and bond interest payments
    expires in June 2006. The additional credit facilities expired in June
     1999. Aggregate annual fees on the LOC were approximately 1.17% through
    June 2001 and are approximately 1.29% thereafter. The Partnership paid
LOC fees of $756,644 and $782,174 in 2004 and 2003, respectively. 

       Substantially all of the Partnership assets are pledged as collateral for
    the letter of credit and the term notes payable. The credit agreements
     provide for no other recourse by the lenders against the Partnership or
any partner.                                                      

 The Credit Agreement covenants require the Partnership, among other
 requirements, to maintain specific debt service coverage ratios and
insurance coverages. The term notes payable are subject to an     
       acceleration clause upon default of the covenants. The Partnership was in
       compliance with these covenants at December 31, 2004. The Partnership was
      also in compliance with these covenants at December 31, 2003, based on a
waiver dated December 30, 2003.                                   

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Colstrip Energy Limited Partnership                                        DRAFT
Notes to Financial Statements                                                   
December 31, 2004 and 2003                                                      
--------------------------------------------------------------------------------

13.    Related Party Transactions                                               

  Rosebud Operating Services, Inc. (ROSI) provides certain management,
operation and maintenance services, including coal and limestone  
    transportation services, to the Partnership for which it is reimbursed
      for expenses incurred on behalf of the Partnership. ROSI is an affiliate
      of the general partner. The operation and maintenance services agreement
     (O&M Agreement) commenced on December 1, 2000 and runs through November
       2005. The O&M Agreement is renewable at the option of the Partnership for
       an additional 5-year period. Fees, reimbursable costs and payroll expense
 billed by ROSI during 2004 and 2003 were $4,464,532 and $4,004,634,
       respectively, of which $136,615 and $130,445 were payable at December 31,
2004 and 2003, respectively.                                      

       Pursuant to the Partnership agreement, the general partner is entitled to
    receive an annual Incentive Operating Performance Distribution (IOPD),
       which is subordinate to certain other minimum cash distributions starting
in 2003. An estimate of the total IOPD distribution is calculated 
subsequent to each quarter. An amount equal to one-fourth of the  
   estimate, net of prior quarters' distributions, is distributed to the
     general partner. At year-end, should the quarterly distributions exceed
  the actual distributable amount, the excess distributions are netted
 against the subsequent year's distributions. Undistributed (excess)
    distributions at December 31, 2004 and 2003 were $255,010 and $18,453,
    respectively. IOPD amounts not distributed bear interest at prime plus
1%.                                                               

      Legal fees, including expenses incurred on behalf of the Partnership, in
       the amount of $859,899 and $742,662, were earned by the law firms of Owen
H. Orndorff Law Offices and R. Lee Roberts in 2004 and 2003,      
     respectively. Consulting fees, including expenses incurred on behalf of
     the Partnership, in the amount of $193,883 and $256,860, were earned by
    Jeffrey L. Smith in 2004 and 2003, respectively. Certain principals of
     these firms and Jeffrey L. Smith serve as officers and are shareholders
   of Rosebud. Amounts payable to these related parties were $39,205 and
$52,200 at December 31, 2004 and 2003, respectively.              

14.    Commitments                                                              

The Partnership has entered into the following long-term operating
commitments:                                                      

   o    A cogeneration and long-term power purchase agreement with
         NorthWestern Energy to sell and deliver capacity and energy
          through June 2025. Charges include a fixed fee portion which
             escalates annually and a variable portion that is determined by
the Montana Public Service Commission;            

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                                                                           DRAFT

          o    Refuse coal supply and backup coal supply agreements with Western
             Energy Company (WECo) to purchase all of the Partnership's coal
               requirements until 2025. Charges are modified in January and July
    of each year and are based on various complex indices;

         o    A 1988 limestone supply agreement, amended in 1992, with Montana
              Limestone Company with an initial term ending in 2005, renewable
               for up to five additional five-year terms. A processing charge is
               paid by the Partnership in the amount of $3.00 per ton, increased
            by a 4% compounded annual escalation beginning January 1, 1993
($4.79 per ton at December 31, 2004);             

         o    A 1991 limestone supply agreement with Montana Limestone Company
              with an initial term ending in 2021. A processing charge is paid
               by the Partnership in the amount of $3.00 per ton, increased by a
              4% compounded annual escalation beginning September 1, 1990. The
         processing charge may be renegotiated in 2006. There was no
    limestone processed under this agreement through 2004;

         o    A coal transport agreement with WECo, whereby WECo leases trucks
            from the Partnership for coal delivery. The agreement provides
          for WECo to operate and maintain the trucks and deliver coal
              through 2023. The charges to the Partnership are based on WECo's
              costs incurred plus additional markup. ROSI performs maintenance
on the trucks.                                    

15.    Concentrations of Risk                                                   

The Partnership's cash and investment balances held in financial  
     institutions exceed federally insured amounts. The Partnership deposits
cash in high-credit-quality financial institutions and limits the 
  concentration of credit exposure by restricting investments with any
single obligor.                                                   

16.    Contingencies                                                            

    The Partnership's 1989 series tax-exempt bonds are subject to Internal
     Revenue Code ss.148 regarding arbitrage rebate requirements. The rebate
      was calculated based on earnings on non-purpose investments in excess of
    interest incurred on the tax-exempt bonds for the 5-year period ending
    October 2004. As of December 31, 2004, management believes a rebate of
     approximately $162,189 will be due for such period, and has accrued the
       amount on the financial statements. Rebate amounts, if any, are due after
each 5-year period the tax-exempt bonds are outstanding.          

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Dates Referenced Herein and Documents Incorporated by Reference

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Filed on / Effective on / For Period End:	2/28/05
	12/31/04	7	24
	11/1/04	17
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	12/31/03	7	23
	12/30/03	22
	9/14/03	19
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	2/27/03	20
	12/31/02	14		U-3A-2
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	12/6/02	20
	6/17/02	20
	12/1/00	23
	9/19/97	16
	1/1/93	24
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Filing Submission 0000950172-05-000627 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Rosebud Energy Corp – ‘U-3A-2’ for 2/28/05

On: Monday, 2/28/05, at 4:08pm ET · Effective: 2/28/05 · For: 2/28/05 · Accession #: 950172-5-627 · File #: 69-00370

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Statement by a Holding Company Claiming Exemption — Form U-3A-2Filing Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Statement by a Holding Company Claiming Exemption — Form U-3A-2
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