-----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, WYHqTnvt/6UB99o8qF+fQJ60uGCDlg8wHQhwE8aB7zO66BkapgwPlPoRMeJGOYLG wT6qiSKlBALtilCWp/Hv8A== 0000891554-96-000810.txt : 19961118 0000891554-96-000810.hdr.sgml : 19961118 ACCESSION NUMBER: 0000891554-96-000810 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SITHE INDEPENDENCE FUNDING CORP CENTRAL INDEX KEY: 0000899281 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 133677475 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-59960 FILM NUMBER: 96663082 BUSINESS ADDRESS: STREET 1: 450 LEXINGTON AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2124509000 MAIL ADDRESS: STREET 1: 450 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SITHE INDEPENDENCE POWER PARTNERS LP CENTRAL INDEX KEY: 0000899322 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 330468704 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-59960-01 FILM NUMBER: 96663083 BUSINESS ADDRESS: STREET 1: 450 LEXINGTON AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2124509000 MAIL ADDRESS: STREET 2: 450 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended September 30, 1996 Commission File Number 33-59960 SITHE/INDEPENDENCE FUNDING CORPORATION (Exact name of registrant as specified in its charter) Delaware 13-3677475 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 450 Lexington Avenue, New York, NY 10017 (Address of principal executive offices) (Zip code) (212)-450-9000 (Registrant's telephone number, including area code) SITHE/INDEPENDENCE POWER PARTNERS, L.P. (Exact name of registrant as specified in its charter) Delaware 33-0468704 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 450 Lexington Avenue, New York, NY 10017 (Address of principal executive offices) (Zip code) (212)-450-9000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [ X ] Yes [ ] No SITHE/INDEPENDENCE POWER PARTNERS, L.P. SITHE/INDEPENDENCE FUNDING CORPORATION Page No. Part I Financial Information SITHE/INDEPENDENCE POWER PARTNERS, L.P. (a Delaware Limited Partnership) Financial Statements: Consolidated Balance Sheets at September 30, 1996 and December 31, 1995 (Unaudited)........................................ 3 Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 1996 and 1995 (Unaudited)............ 4 Consolidated Statement of Partners' Capital for the Nine Months Ended September 30, 1996 (Unaudited).......................... 5 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1996 and 1995 (Unaudited)........................ 6 Notes to Consolidated Financial Statements (Unaudited)................. 7 Management's Discussion and Analysis of Financial Condition and Results of Operations............................................. 8 Part II Other Information Item 6. Exhibits and Reports on Form 8-K.............................. 10 Signatures ........................................................ 11 -2- SITHE/INDEPENDENCE POWER PARTNERS, L.P. (a Delaware Limited Partnership) CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)
September 30, December 31, 1996 1995 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 121 $ 942 Restricted funds 96,334 56,036 Accounts receivable - trade 32,902 35,321 Fuel inventory and other current assets 2,466 2,862 ---------- ----------- Total current assets 131,823 95,161 Property, plant and equipment, at cost: Land 5,875 5,875 Electric and steam generating facilities 752,906 750,769 ---------- ----------- 758,781 756,644 Accumulated depreciation (33,012) (18,928) ---------- ----------- 725,769 737,716 Debt issuance costs 10,536 11,350 Other assets 620 1,661 ---------- ----------- Total assets $ 868,748 $ 845,888 ========== =========== LIABILITIES AND PARTNERS' CAPITAL Current liabilities: Trade payables $ 22,260 $ 20,190 Accrued interest 15,201 30,910 Current portion of long-term debt 7,066 11,382 Accrued construction costs and retentions 9,249 16,587 ---------- ----------- Total current liabilities 53,776 79,069 Long-term debt: 7.90% secured notes due 2002 133,854 138,957 8.50% secured bonds due 2007 150,839 150,839 9.00% secured bonds due 2013 408,609 408,609 ---------- ----------- 693,302 698,405 Other liabilities 10,249 5,680 Commitments and contingencies Partners' capital 111,421 62,734 ---------- ----------- Total liabilities and partners' capital $ 868,748 $ 845,888 ========== ===========
See notes to consolidated financial statements. - 3 - SITHE/INDEPENDENCE POWER PARTNERS, L.P. (a Delaware Limited Partnership) CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands)
Three Months Nine Months Ended September 30, Ended September 30, ------------------------------- ------------------------------- 1996 1995 1996 1995 ------------ ------------ ------------ ------------ Revenue $ 91,212 $ 82,904 $ 286,794 $ 252,459 ------------ ------------ ------------ ------------ Cost of sales: Fuel 50,567 48,084 148,747 142,860 Operations and maintenance 9,651 9,691 29,969 29,216 Depreciation 4,695 4,705 14,084 14,115 ------------ ------------ ------------ ------------ 64,913 62,480 192,800 186,191 ------------ ------------ ------------ ------------ Operating income 26,299 20,424 93,994 66,268 Non-operating income (expenses): Interest expense (15,799) (16,002) (47,488) (48,262) Other income, net 743 398 2,173 3,809 ------------ ------------ ------------ ------------ Net income $ 11,243 $ 4,820 $ 48,679 $ 21,815 ============ ============ ============ ============
See notes to consolidated financial statements. -4- SITHE/INDEPENDENCE POWER PARTNERS, L.P. (a Delaware Limited Partnership) CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (Unaudited) (In thousands)
Unrealized Loss on Total General Limited Marketable Partners' Partner Partners Securities Capital ------------ ----------- -------------- --------------- Balance, January 1, 1996 $ 702 $ 62,040 $ (8) $ 62,734 Net income 487 48,192 - 48,679 Change in unrealized loss on marketable securities - - 8 8 ---------- ------------- ------------ -------------- Balance, September 30, 1996 $ 1,189 $ 110,232 $ - $ 111,421 ========== ============= ============ ==============
See notes to consolidated financial statements. -5- SITHE/INDEPENDENCE POWER PARTNERS, L.P. (a Delaware Limited Partnership) CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Nine Months Ended September 30, --------------------- 1996 1995 -------- -------- Cash flows from operating activities: Net income $ 48,679 $ 21,815 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 14,084 14,115 Amortization of deferred financing costs 814 824 Changes in operating assets and liabilities: Accounts receivable - trade 2,419 (18,579) Fuel inventory and other current assets 396 (2,355) Other assets 1,041 -- Trade payables 2,070 17,272 Accrued interest payable (15,709) 15,369 Other liabilities 4,569 4,275 -------- -------- Net cash provided by operating activities 58,363 52,736 -------- -------- Cash flows from investing activities: Construction costs (9,475) (63,580) Restricted funds (40,290) 393 Investment of funds designated for construction -- (21,981) -------- -------- Net cash used in investing activities (49,765) (85,168) -------- -------- Cash flows from financing activities: Principal payments of long-term debt (9,419) (7,454) Capital contribution -- 40,000 -------- -------- Net cash provided by (used in) financing activities (9,419) 32,546 -------- -------- Net increase (decrease) in cash and cash equivalents (821) 114 Cash and cash equivalents at beginning of period 942 4 -------- -------- Cash and cash equivalents at end of period $ 121 118 ======== ======== Supplement cash flow information Cash payments: Interest (net of amounts capitalized) $ 61,179 31,031
See notes to consolidated financial statements. - 6 - SITHE/INDEPENDENCE POWER PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. The Partnership Sithe/Independence Power Partners, L.P. (the "Partnership"), in which Sithe Energies, Inc. and certain of its direct and indirect wholly owned subsidiaries (the "Partners") hold all the partnership interests, is a Delaware limited partnership that was formed in November 1990 for a term of 50 years to develop, construct and own a gas-fired cogeneration facility with a design capacity of approximately 1,000 megawatts (the "Project") located in the Town of Scriba, County of Oswego, New York. The Partnership commenced commercial operation for financial reporting purposes on December 29, 1994. The majority of the capacity and electric energy generated by the Project is sold to Consolidated Edison Company of New York, Inc. ("Con Edison") and Alcan Aluminum Corporation with the remainder of the electric energy being sold to Niagara Mohawk Power Corporation ("Niagara Mohawk"). 2. Basis of Presentation The accompanying consolidated balance sheets at September 30, 1996 and December 31, 1995 and the consolidated statements of operations for the three and nine months ended September 30, 1996 and 1995 and cash flows for the nine months ended September 30, 1996 and 1995 should be read in conjunction with the audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 1995 for the Partnership and its wholly-owned subsidiary, Sithe/Independence Funding Corporation. The results of operations for the three and nine months ended September 30, 1996 are not necessarily indicative of the results to be expected for the full year. The unaudited financial information at September 30, 1996 and for the three and nine months ended September 30, 1996 and 1995 contains all adjustments, consisting only of normal recurring adjustments, which management considers necessary for a fair presentation of the operating results for such periods. 3. Litigation and Claims On March 30, 1995, the Partnership filed a petition with the Federal Energy Regulatory Commission ("FERC") alleging Niagara Mohawk has been overcharging for the transmission of electricity in violation of FERC policy by calculating transmission losses on an incremental basis. The Partnership believes that transmission losses should be calculated on an average basis. As of September 30, 1996, the Partnership estimates it was owed approximately $5.0 million for transmission overcharges. The Partnership has been recording its transmission expense at the disputed, higher rate. The Partnership requested that FERC order Niagara Mohawk to recalculate the transmission losses beginning in October 1994, when it began wheeling power from the Project. On September 16, 1996, FERC issued its Order Dismissing Complaint and Directing Provision of Additional Information. On October 16, 1996, the Partnership filed a Request for Rehearing which is pending. -7- SITHE/INDEPENDENCE POWER PARTNERS, L.P. (a Delaware Limited Partnership) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Revenue and cost of sales for the third quarter of 1996 increased by $8.3 million (10%) and $2.4 million (4%), respectively, over the corresponding quarter of last year. Revenue increased as a result of higher avoided cost based tariff prices on energy deliveries to Con Edison, overall higher plant availability and incremental revenue from selling gas instead of generating electricity at certain times during the third quarter of 1996. The increase in cost of sales was attributable to higher fuel costs largely reflecting the scheduled increase in the price of gas associated with energy deliveries to Con Edison. As a result of these factors, operating income for the third quarter increased by $5.9 million (29%) over the corresponding quarter of last year. Revenue, cost of sales and operating income for the first nine months of 1996 increased by $34.3 million (14%), $6.6 million (4%), and $27.7 million (42%), respectively, over the corresponding period of last year. Revenue increased as a result of higher avoided cost based tariff prices on energy deliveries to Con Edison, a 1995 tariff adjustment payment from Con Edison, overall higher plant availability and incremental revenue from selling gas instead of generating electricity at certain times during the first and third quarters of 1996. The increase in cost of sales was primarily attributable to higher fuel costs reflecting higher quantities and the scheduled increase in the price of gas associated with energy deliveries to Con Edison. Interest expense for the third quarter of 1996 decreased by $.2 million (1%) from the corresponding quarter of last year as a result of lower outstanding amounts of long-term debt. Other income, net, for the third quarter of 1996 and 1995 consisted of interest income. Interest expense for the first nine months of 1996 decreased by $.8 million (2%) from the corresponding period of last year as a result of lower outstanding amounts of long-term debt. Other income, net, for the first nine months of 1996 consisted of interest income. Other income, net, for the first nine months of 1995 consisted of $1.9 million of interest income, $2.1 million of income from a natural gas arbitrage transaction and $.2 million of realized losses on short-term investments designated for construction. Liquidity and Capital Resources The Partners have obtained a credit facility under which one or more letters of credit may be issued in connection with their obligations pursuant to certain Project contracts, and, as of September 30, 1996, letters of credit aggregating $16.0 million were outstanding in connection with such obligations. -8- The Partnership secured the Project's debt service obligations with a letter of credit in the amount of $50 million. To secure the Partnership's obligation to pay any amounts drawn under the debt service letter of credit, the letter of credit provider has been assigned a security interest and lien on all of the collateral in which the holders of the Partnership's long-term debt issued to finance the development and construction of the Project have been assigned a security interest and lien. The Partnership presently believes that funds available from cash on hand, restricted funds, operations and the debt service letter of credit will be more than sufficient to liquidate Partnership obligations as they come due and to pay 1996 Project debt service. The Partnership is required to fund reserves for debt service and major overhauls from available cash flow after debt service as follows: $32.3 million in 1996, $16.4 million in 1997 and approximately $6 million annually thereafter. Changes in the avoided-cost-based energy component of billings by the Partnership to Con Edison will impact the Partnership's profitability, particularly through December 1999 when the price for gas associated with energy deliveries to Con Edison is fixed. -9- PART II -- OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit No. Description of Exhibit 27 ---- Article 5 Financial Data Schedule of Sithe/ Independence Power Partners, L.P. for the quarter ended September 30, 1996. (b) Reports on Form 8-K: No report on Form 8-K was filed during the quarter covered by this report. -10- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Sithe/Independence Funding Corporation (Registrant) November 14, 1996 /s/ Richard J. Cronin III ----------------------------- Richard J. Cronin III Chief Financial Officer and Vice President (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, the co-registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Sithe/Independence Power Partners, L.P. (Registrant) By: Sithe/Independence, Inc. General Partner November 14, 1996 /s/ Richard J. Cronin III ------------------------- Richard J. Cronin III Chief Financial Officer and Vice President (Principal Financial and Accounting Officer) -11- EX-27 2 FDS --
5 This schedule contains summary financial information extracted from the consolidated balance sheets and consolidated statements of operations found on page 3 and 4 of the Partnership's Form 10Q for the year-to-date, and is qualified in its entirety by reference to such financial statements. 0000899281 Quarterly Report 9-MOS Dec-31-1996 Sep-30-1996 121 0 32,902 0 2,466 131,823 758,781 33,012 868,748 53,776 693,302 0 0 0 111,421 868,748 286,794 286,794 192,800 192,800 0 0 47,488 48,679 0 48,679 0 0 0 48,679 0 0
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