-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AmfDpxoAt0Bg8LSEALpOLuvAa5l3VU5RUsWbQrjjLzopUNGdDLn6KJg3f9nFnkBU muBNuoT0Za/WnLlwjQBFbg== 0001047469-98-033662.txt : 19980904 0001047469-98-033662.hdr.sgml : 19980904 ACCESSION NUMBER: 0001047469-98-033662 CONFORMED SUBMISSION TYPE: U-3A-2/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980226 FILED AS OF DATE: 19980903 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL PAPER CO /NEW/ CENTRAL INDEX KEY: 0000051434 STANDARD INDUSTRIAL CLASSIFICATION: PAPER MILLS [2621] IRS NUMBER: 130872805 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-3A-2/A SEC ACT: SEC FILE NUMBER: 069-00308 FILM NUMBER: 98704048 BUSINESS ADDRESS: STREET 1: TWO MANHATTANVILLE RD CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9143971500 MAIL ADDRESS: STREET 1: TWO MANHATTANVILLE ROAD CITY: PURCHASE STATE: NY ZIP: 10577 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL PAPER & POWER CORP DATE OF NAME CHANGE: 19710527 U-3A-2/A 1 U-3A-2/A File No. 69-308 Amendment No.1 on Form U-3A-2 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. Amendment to Statement by Holding Company Claiming Exemption Under Rule 2 from the Provisions of the Public Utility Holding Company Act of 1935 INTERNATIONAL PAPER COMPANY --------------------------- (Name of Company) (Filing Amendment) International Paper Company (claimant) hereby amends its statement dated February 26, 1998 and filed with the Securities and Exchange Commission on March 19, 1998, claiming exemption from the provisions of the Public Utility Holding Company Act of 1935 as follows: 1. As Exhibit A (1) International Paper Company's annual report to shareholders for 1997, as filed with the Commission on March 30, 1998 in claimant's 10-K Report (SEC File Number 001-03157) is herein incorporated by reference. The annual report contains the consolidated statments of earnings, cash flows and common shareholders' equity of the claimant and its subsidiary companies as of the close of such calendar year. 2. As Exhibit A (3) a copy of the Statements of Income and Balance Sheets as of December 31, 1997 and December 31, 1996 of Curtis/Palmer Hydroelectric Company L.P. is attached hereto. Signature --------- The above-mentioned claimant has caused this amendment to be duly signed on its behalf by its authorized officer on the 2nd day of September, 1998. INTERNATIONAL PAPER COMPANY --------------------------- Name of Claimant [Corporate Seal] Attest: By: /s/ Andrew R. Lessin ----------------------- Vice President, Controller and Chief Accounting Officer /s/ Carol M. Samalin - -------------------- Assistant Secretary Name, title and address of official to who notices and correspondence concerning this amendment should be addressed: Michael K. Chapman Senior Counsel, Energy & Logistics International Paper Company 6400 Poplar Memphis, Tennessee 38197 EX-99.A(3) 2 EXHIBIT 99A(3) ARTHUR ANDERSEN LLP Exhibit 99 A (3) Report of Independent Public Accountants To the Partners of Curtis/Palmer Hydroelectric Company L.P.: We have audited the accompanying balance sheets of Curtis/Palmer Hydroelectric Company L.P. (a New York limited partnership, the "Partnership") as of December 31, 1997 and 1996, and the related statements of income, cash flows and changes in partners' capital for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Curtis/Palmer Hydroelectric Company L.P. as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Arthur Andersen LLP Memphis, Tennessee, April 3, 1998. CURTIS/PALMER HYDROELECTRIC COMPANY L.P. ---------------------------------------- BALANCE SHEETS -------------- AS OF DECEMBER 31 -----------------
ASSETS 1997 1996 ------ ---- ---- CURRENT ASSETS: Cash and temporary investments $ 6,944,845 $ 8,790,469 Accounts receivable 2,422,713 3,947,407 Prepaid expenses and other 1,227,115 1,116,921 ------------ ----------- Total current assets 10,594,673 13,854,797 PROPERTY, PLANT AND EQUIPMENT, net 73,702,594 75,574,510 LICENSE AND OTHER CONTRACTS, net 2,527,744 3,612,614 ----------- ----------- Total assets $86,825,011 $93,041,921 ----------- ----------- ----------- ----------- LIABILITIES AND PARTNERS' CAPITAL --------------------------------- CURRENT LIABILITIES: Due to International Paper $ 6,458,918 $ 9,230,121 Accounts payable 40,070 53,670 Current maturities of long-term debt 8,218,320 6,995,760 ----------- ----------- Total current liabilities 14,717,308 16,279,551 LONG-TERM DEBT 15,893,280 24,111,600 PARTNERS' CAPITAL 56,214,423 52,650,770 ------------ ----------- Total liabilities and partners' capital $86,825,011 $93,041,921 ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these balance sheets. CURTIS/PALMER HYDROELECTRIC COMPANY L.P. ---------------------------------------- STATEMENTS OF INCOME -------------------- FOR THE YEARS ENDED DECEMBER 31 -------------------------------
1997 1996 ---- ---- REVENUES $33,272,794 $33,153,682 ----------- ----------- COSTS AND EXPENSES: Operating and management fees 8,317,051 11,049,780 Depreciation and amortization 2,992,479 2,992,479 Property taxes 2,654,232 2,542,073 Insurance 304,448 320,497 Other 754,921 669,796 ----------- ----------- Total costs and expenses 15,023,131 17,574,625 ----------- ----------- OPERATING INCOME 18,249,663 15,579,057 INTEREST INCOME (EXPENSE): Interest income 412,033 487,549 Interest expense (2,098,043) (3,100,502) ----------- ----------- NET INCOME $16,563,653 $12,966,104 ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these statements. CURTIS/PALMER HYDROELECTRIC COMPANY L.P. ---------------------------------------- STATEMENTS OF CASH FLOWS ------------------------ FOR THE YEARS ENDED DECEMBER 31 -------------------------------
1997 1996 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $16,563,653 $12,966,104 Depreciation and amortization 2,992,479 2,992,479 Changes in current assets and liabilities- Accounts receivable 1,524,694 (945,442) Prepaid expenses and other (110,194) (16,741) Due to International Paper (2,771,203) 7,943,029 Accounts payable (13,600) 53,670 ------------ ----------- Net cash provided by operating activities 18,185,829 22,993,099 ------------ ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (35,693) - ------------ ----------- Net cash used in investing activities (35,693) - ------------ ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to partners (13,000,000) (11,000,000) Principal payments on long-term debt (6,995,760) (6,316,560) ------------ ----------- Net cash used in financing activities (19,995,760) (17,316,560) ------------ ----------- NET CHANGE IN CASH AND TEMPORARY INVESTMENTS (1,845,624) 5,676,539 CASH AND TEMPORARY INVESTMENTS: Beginning of year 8,790,469 3,113,930 ------------ ----------- End of year $ 6,944,845 $ 8,790,469 ------------ ----------- ------------ -----------
The accompanying notes are an integral part of these statements. CURTIS/PALMER HYDROELECTRIC COMPANY L.P. ---------------------------------------- STATEMENTS OF CHANGES IN PARTNERS' CAPITAL ------------------------------------------ FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 ----------------------------------------------
General Partners Limited Partners ------------------------- ----------------------- Saratoga HCE- ENI Curtis John Development Hudson, Inc. Falls Hancock Total ----------- ------------ ---------- ------------ ----------- BALANCE, December 31, 1995 $25,342,335 $6,335,582 $6,335,582 $12,671,167 $50,684,666 Allocation of net income 6,483,052 1,620,763 1,620,763 3,241,526 12,966,104 Distributions to partners (5,500,000) (1,375,000) (1,375,000) (2,750,000) (11,000,000) ----------- ---------- ---------- ----------- ----------- BALANCE, December 31, 1996 26,325,387 6,581,345 6,581,345 13,162,693 52,650,770 Allocation of net income 8,281,827 2,070,456 2,070,456 4,140,914 16,563,653 Distributions to partners (6,500,000) (1,625,000) (1,625,000) (3,250,000) (13,000,000) ----------- ---------- ---------- ----------- ----------- BALANCE, December 31, 1997 $28,107,214 $7,026,801 $7,026,801 $14,053,607 $56,214,423 ----------- ---------- ---------- ----------- ----------- ----------- ---------- ---------- ----------- -----------
The accompanying notes are an integral part of these statements. CURTIS/PALMER HYDROELECTRIC COMPANY L.P. - ---------------------------------------- NOTES TO FINANCIAL STATEMENTS - ----------------------------- DECEMBER 31, 1997 AND 1996 - -------------------------- 1. ORGANIZATION AND NATURE OF OPERATIONS: -------------------------------------- Curtis/Palmer Hydroelectric Company L.P. (the "Partnership") was organized in 1985 under the New York Uniform Limited Partnership Act. The general partners are Saratoga Development Corporation ("SDC"), a wholly-owned subsidiary of International Paper Company ("International Paper"), and HCE-Hudson, Inc., a subsidiary of CMS Generation. The voting interests of general partners are 98% to SDC and 2% to HCE-Hudson, Inc. ENI Curtis Falls, Ltd.("ENI"), a subsidiary of Pacific Generation Resource Company, and John Hancock Mutual Life Insurance Co. ("Hancock") are the limited partners. The general and limited partners are collectively referred to as the "Partners." The Partnership operates the Curtis and Palmer hydroelectric generating facilities located on the Hudson River in the state of New York. Niagra Mohawk Power Corporation ("NMPC") is required to purchase all available electricity generated by the Partnership at contractually predetermined rates (Note 6). The NMPC Power Purchase Agreement permits International Paper to purchase electricity directly from the Partnership at the same rate charged to NMPC. As of December 31, 1997, International Paper had not exercised this option. All net profits or losses and cash distributions are allocated to the Partners according to their respective ownership interests as follows: 50% to SDC; 25% to Hancock; 12.5% to HCE-Hudson, Inc. and 12.5 % to ENI. Cash distributions are made at the discretion of the Partnership's management committee. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ------------------------------------------- Basis of Accounting - ------------------- The accompanying financial statements have been prepared in accordance with generally accepted accounting principles, which is not the basis for reporting taxable income to the Partners. 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 costs and expenses during the reporting period. Actual results could differ from those estimates. 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED): --------------------------------------------------------- Temporary Investments - --------------------- Temporary investments with original maturities of three months or less are considered cash equivalents and are stated at cost. Property, Plant and Equipment - ----------------------------- Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method and recorded over the facilities' estimated 50-year useful lives. License and Other Contracts - --------------------------- Amortization of the cost of the Federal Energy Regulatory Commission ("FERC") license, NMPC Power Purchase Agreement and leasehold estate is computed using the straight-line method over the estimated useful lives of these intangible assets, commencing with the in-service dates of each phase, through April 30, 2000. Accumulated amortization was approximately $12,372,000 and $11,287,000 at December 31, 1997 and 1996, respectively. Income Taxes - ------------ The Partnership is not a taxable entity for Federal, state or local income tax purposes. No provision for income taxes has been recorded in the financial statements of the Partnership as all earnings or losses are allocated directly to the individual Partners. 3. PROPERTY, PLANT AND EQUIPMENT: - --------------------------------- A summary of property, plant and equipment at December 31 is as follows:
1997 1996 ----------- ----------- Hydroelectric dams $ 5,100,000 $ 5,100,000 Hydroelectric plant and equipment 90,316,230 90,280,537 ------------ ------------ 95,416,230 95,380,537 Less-Accumulated depreciation (21,713,636) (19,806,027) ------------ ------------ Property, plant and equipment, net $ 73,702,594 $ 75,574,510 ------------ ------------ ------------ ------------
4. LONG-TERM DEBT -------------- The Partnership entered into a loan agreement with Toronto-Dominion Bank ("Toronto-Dominion") on December 1, 1985 secured by, among other things, the assignment by the general partners and ENI of their respective partnership interests, the assignment of gross revenues from the Partnership's Power Purchase Agreement with NMPC and the assignment of the management agreement. The debt outstanding under the term loan is payable in increasing annual installments through March 31, 2000. Scheduled maturities are as follows: 1998-$8,218,320, 1999-$9,508,800 and 2000-$6,384,480. Among other restrictions and requirements, the loan agreement restricts future liens and indebtedness, sales of assets and distributions to the Partners. Additionally, the Partnership must maintain a positive working capital, excluding current maturities of long-term debt, for the term of the agreement. Interest on the term loan is based on the options selected by the Partnership as provided for in the loan agreement. The interest rate is variable, based on the prime lending rate, and is adjusted bi-annually. The Partnership previously entered into interest rate swap agreements to effectively hedge its variable interest rate exposure (Note 5). The weighted average interest rates for 1997 and 1996, including the effect of the interest rate swap agreements, were 10.5% and 9.0%, respectively. Interest payments made during 1997 and 1996 were approximately $2,098,000 and $3,101,000, respectively. The loan agreement also provides for a working capital commitment of $3,000,000. A commitment fee of 0.25% on the unused portion of the working capital commitment is payable quarterly. The entire commitment was available at December 31, 1997 and 1996. 5. FINANCIAL INSTRUMENTS: ---------------------- The Partnership has only limited involvement in derivative financial instruments and does not use them for trading purposes. The Partnership previously entered into interest rate swap agreements with Toronto-Dominion which effectively hedged its variable interest rate exposure. Under these agreements, the Partnership paid to Toronto-Dominion fixed rates ranging from 8.32% to 9.26% and, in turn, received payments at variable rates. Net gains or losses from the exchange of interest rate payments were included in interest expense. Two of these agreements expired June 30, 1996, and the remaining agreement expired June 30,1997. 6. POWER PURCHASE AGREEMENT: ------------------------- The Partnership has a Power Purchase Agreement with NMPC to sell the entire net output from the facilities to NMPC. In January 1995, this Power Purchase Agreement was amended and restated which, among other things, provided NMPC with short-term rate relief in exchange for an extension of the term to December 31, 2027. The agreement may be terminated under certain conditions as provided by the Power Purchase Agreement. The FERC approved the amended and restated Power Purchase Agreement in early 1995. The average purchase price paid by NMPC for 1997 and 1996 was $110.38 and $98.14, respectively. The price is adjusted as set forth in the Power Purchase Agreement. 6. POWER PURCHASE AGREEMENT (Continued): ------------------------------------- NMPC has asserted that the amended and restated Power Purchase Agreement and other power purchase agreements with unrelated power suppliers are uneconomical and wants to be relieved of its obligations thereunder. To date, NMPC has continued to acquire the facilities' entire net output and pay the Partnership under the terms provided in the agreement. There are currently no negotiations between NMPC and the Partnership underway. The Partnership's license from the FERC to own and operate its hydroelectric stations and dams on the Hudson River will expire on April 30, 2000. The Partnership has initiated a relicensing program and has made all necessary filings on a timely basis with the FERC to obtain a new license. 7. RELATED PARTY TRANSACTIONS: --------------------------- The Partnership is a party to a management agreement entitling International Paper to the following: a. An annual operating and maintenance fee of $900,000 in 1987, with future escalation based on the percentage change in the producer price index. The maintenance fees for 1997 and 1996 were approximately $1,155,000 and $1,123,000, respectively. This fee is for services, such as repairs, maintenance of books and records, and other operating and miscellaneous items. International Paper is also responsible for funding capital expenditures, as defined, up to a cumulative amount of $3,000,000 over the term of the management agreement. Through December 31, 1997, International Paper had funded over 70% of this obligation. The Partnership is responsible for capital expenditures above a cumulative amount of $3,000,000. b. A performance fee for meeting minimum output standards, not to exceed 5% of the base amount, as defined in the agreement. Performance fees of approximately $1,669,000 and $1,575,000 were earned in 1997 and 1996, respectively. c. An incentive fee of 20% of incremental gross revenues, provided certain revenue levels are achieved, as outlined in the agreement. No incentive fees were earned in 1997 or 1996. In addition, the Partnership is a party to a ground lease agreement under which the Partnership pays International Paper 2.5% of power sales to lease the land and water rights. If certain operating levels are achieved, International Paper receives additional rents as stipulated in the lease. Total rent expense for 1997 and 1996 was approximately $5,492,000 and $8,352,000, respectively, including approximately $4,634,000 and $7,448,000 of additional rent earned during 1997 and 1996. -----END PRIVACY-ENHANCED MESSAGE-----