-----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, KA/2BEoTpLuRE0jNUx4u+Qx4kBqYGYpxqxEwOPA6LCcD4ojUwU4KJjCJG8rm2vjZ +41a26TJaXRDFBLZqolY9A== 0001005477-98-001596.txt : 19980515 0001005477-98-001596.hdr.sgml : 19980515 ACCESSION NUMBER: 0001005477-98-001596 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 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: SEC FILE NUMBER: 033-59960 FILM NUMBER: 98621274 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: SEC FILE NUMBER: 033-59960-01 FILM NUMBER: 98621275 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 FORM 10-Q 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 March 31, 1998 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 Number) incorporation or organization) 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 Number) incorporation or organization) 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 March 31, 1998 and December 31, 1997 (Unaudited)..................................... 3 Consolidated Statements of Operations for the Three Months Ended March 31, 1998 and 1997 (Unaudited).................. 4 Consolidated Statement of Partners' Capital for the Three Months Ended March 31, 1998 (Unaudited)........................... 5 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1997 (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............................. 9 Signatures ............................................................. 10 - 2 - SITHE/INDEPENDENCE POWER PARTNERS, L.P. (a Delaware Limited Partnership) CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) March 31, December 31, 1998 1997 --------- ------------ ASSETS Current assets: Cash and cash equivalents $ 712 $ 3 Restricted cash and cash equivalents 68,019 40,643 Restricted investments 36,134 34,674 Accounts receivable - trade 34,450 33,384 Fuel inventory and other current assets 6,672 1,872 --------- --------- Total current assets 145,987 110,576 Property, plant and equipment, at cost: Land 5,010 5,010 Electric and steam generating facilities 765,241 765,239 --------- --------- 770,251 770,249 Accumulated depreciation (62,314) (56,975) --------- --------- 707,937 713,274 Debt issuance costs 8,974 9,212 Other assets 4,637 4,985 --------- --------- Total assets $ 867,535 $ 838,047 ========= ========= LIABILITIES AND PARTNERS' CAPITAL Current liabilities: Trade payables $ 20,992 $ 20,823 Accrued interest 14,378 174 Current portion of long-term debt 18,856 18,856 Accrued construction costs and retentions 161 443 --------- --------- Total current liabilities 54,387 40,296 Long-term debt: 7.90% secured notes due 2002 109,897 109,897 8.50% secured bonds due 2007 150,839 150,839 9.00% secured bonds due 2013 408,609 408,609 --------- --------- 669,345 669,345 Other liabilities 5,185 7,842 Commitments and contingencies Partners' capital 138,618 120,564 --------- --------- Total liabilities and partners' capital $ 867,535 $ 838,047 ========= ========= 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 Ended March 31, -------------------------- 1998 1997 --------- --------- Revenue $ 103,027 $ 105,467 --------- --------- Cost of sales: Fuel 55,810 53,379 Operations and maintenance 10,480 2,006 Depreciation 5,339 4,917 --------- --------- 71,629 60,302 --------- --------- Operating income 31,398 45,165 Non-operating income (expense): Interest expense (14,607) (15,697) Other income, net 1,263 1,659 --------- --------- Net income $ 18,054 $ 31,127 ========= ========= 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) Total General Limited Partners' Partner Partners Capital -------- -------- -------- Balance, January 1, 1998 $ 1,280 $119,284 $120,564 Net income 181 17,873 18,054 -------- -------- -------- Balance, March 31, 1998 $ 1,461 $137,157 $138,618 ======== ======== ======== 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) Three Months Ended March 31, --------------------- 1998 1997 -------- -------- Cash flows from operating activities: Net income $ 18,054 $ 31,127 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 5,339 4,917 Amortization of deferred financing costs 238 271 Changes in operating assets and liabilities: Accounts receivable - trade (1,066) 4,763 Fuel inventory and other current assets (4,800) (1,972) Other assets 348 348 Trade payables 169 (70) Accrued interest payable 14,204 15,143 Other liabilities (2,657) (8,020) -------- -------- Net cash provided by operating activities 29,829 46,507 -------- -------- Cash flows from investing activities: Capital expenditures (284) (12,694) Restricted funds (28,836) (33,108) -------- -------- Net cash used in investing activities (29,120) (45,802) -------- -------- Net increase in cash and cash equivalents 709 705 Cash and cash equivalents at beginning of period 3 4 -------- -------- Cash and cash equivalents at end of period $ 712 $ 709 ======== ======== Supplemental cash flow information Cash payments: Interest $ -- $ -- See notes to consolidated financial statements. - 6 - SITHE/INDEPENDENCE POWER PARTNERS, L.P. (a Delaware Limited Partnership) 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 Project 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. 2. Basis of Presentation The accompanying consolidated balance sheets at March 31, 1998 and December 31, 1997 and the consolidated statements of operations and cash flows for the three months ended March 31, 1998 and 1997 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, 1997 for the Partnership and its wholly-owned subsidiary, Sithe/Independence Funding Corporation. The results of operations for the three months ended March 31, 1998 are not necessarily indicative of the results to be expected for the full year. The unaudited financial information at March 31, 1998 and for the three months ended March 31, 1998 and 1997 contains all adjustments, consisting only of normal recurring adjustments, which management considers necessary for a fair presentation of the operating results for such periods. Operations and maintenance expense for the first quarter of 1997 reflects an $8.2 million credit as a result of the Partnership's discontinuance of its major overhaul cost normalization policy for its gas turbines, steam turbines and generators (the "covered units"). This policy was discontinued effective January 1, 1997, when the Partnership entered into a twelve-year service agreement with General Electric Company ("GE"), under which GE performs all scheduled major overhauls of the covered units. - 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 for the first quarter of 1998 of $103.0 million was $2.4 million (2%) lower than in the first quarter of 1997 principally reflecting lower Con Edison tariffs in the first quarter of 1998 compared to the same period of last year. Cost of sales for the first quarter of 1998 of $71.6 million was $11.3 million (19%) higher than in the first quarter of 1997 principally reflecting higher fuel costs due to a contractual price increase under the Partnership's long-term gas supply contract and the fact that the first quarter of 1997 included an $8.2 million credit to maintenance expense associated with the discontinuance of the Partnership's major overhaul cost normalization policy for the covered units. Interest expense for the first quarter of 1998 decreased by $1.1 million from the corresponding quarter of last year due to the lower outstanding amounts of long-term debt. Other income, net, consisted of interest income for both periods, and for the first quarter of 1998 decreased by $.4 million from the corresponding quarter of last year due to lower average balances of restricted cash and investments. Liquidity and Capital Resources Under a credit facility obtained by the Partners, one or more letters of credit may be issued in connection with their obligations pursuant to certain Project contracts, and, as of March 31, 1998, letters of credit aggregating $14.1 million were outstanding in connection with such obligations. Also, the Partnership secured the Project's debt service obligations with a letter of credit in the amount of $50 million and as of March 31, 1998, the Project's cumulative additional debt service reserve and major overhaul reserve requirements of $33.0 million and $5.6 million, respectively, were fully funded. Although the Partnership's net income could decline through the fourth quarter of 1999 due largely to Tier I gas pricing increasing at a greater rate than increases in the energy component of billings to Con Edison, the Partnership 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 pay scheduled debt service. - 8 - 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 March 31, 1998. (b) Reports on Form 8-K: No report on Form 8-K was filed during the quarter covered by this report. - 9 - 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) May 14, 1998 /s/ Richard J. Cronin III -------------------------------------- Richard J. Cronin III Chief Financial Officer and Senior 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 May 14, 1998 /s/ Richard J. Cronin III ---------------------------------- Richard J. Cronin III Chief Financial Officer and Senior Vice President (Principal Financial and Accounting Officer) - 10 - EX-27 2 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON PAGES 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 SITHE/INDEPENDENCE FUNDING CORP. 3-MOS DEC-31-1998 MAR-31-1998 712 0 34,450 0 6,672 145,987 770,251 (62,314) 867,535 54,387 669,345 0 0 0 138,618 867,535 103,027 103,027 71,629 71,629 0 0 14,607 18,054 0 18,054 0 0 0 18,054 0 0
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