-----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, EbdRmpTchA+nXr4nN8LIupjsW6TNRJ6Ce7M7GRqyfcSP5REUCBcjYtNLjPsoNZau UfHWYXw+iXhiiwPZO7F+tQ== 0001005477-97-001492.txt : 19970520 0001005477-97-001492.hdr.sgml : 19970520 ACCESSION NUMBER: 0001005477-97-001492 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 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: 97609387 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: 97609388 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, 1997 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, 1997 and December 31, 1996 (Unaudited)..................................... 3 Consolidated Statements of Operations for the Three Months Ended March 31, 1997 and 1996 (Unaudited).................. 4 Consolidated Statement of Partners' Capital for the Three Months Ended March 31, 1997 (Unaudited)........................... 5 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1997 and 1996 (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) March 31, December 31, 1997 1996 --------- --------- ASSETS Current assets: Cash and cash equivalents $ 709 $ 4 Restricted cash and cash equivalents 104,350 73,412 Restricted investments 16,780 14,610 Accounts receivable - trade 35,019 39,782 Fuel inventory and other current assets 4,859 2,887 --------- --------- Total current assets 161,717 130,695 Property, plant and equipment, at cost: Land 5,875 5,875 Electric and steam generating facilities 764,088 755,020 --------- --------- 769,963 760,895 Accumulated depreciation (42,624) (37,707) --------- --------- 727,339 723,188 Debt issuance costs 9,994 10,265 Other assets 2,975 3,323 --------- --------- Total assets $ 902,025 $ 867,471 ========= ========= LIABILITIES AND PARTNERS' CAPITAL Current liabilities: Trade payables $ 24,194 $ 24,264 Accrued interest 15,317 174 Current portion of long-term debt 10,202 10,202 Accrued construction costs and retentions 5,623 9,249 --------- --------- Total current liabilities 55,336 43,889 Long-term debt: 7.90% secured notes due 2002 128,753 128,753 8.50% secured bonds due 2007 150,839 150,839 9.00% secured bonds due 2013 408,609 408,609 --------- --------- 688,201 688,201 Other liabilities 3,662 11,682 Commitments and contingencies Partners' capital 154,826 123,699 --------- --------- Total liabilities and partners' capital $ 902,025 $ 867,471 ========= ========= 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, -------------------------- 1997 1996 --------- --------- Revenue $ 105,467 $ 113,410 --------- --------- Cost of sales: Fuel 53,379 53,227 Operations and maintenance 2,006 10,333 Depreciation 4,917 4,695 --------- --------- 60,302 68,255 --------- --------- Operating income 45,165 45,155 Non-operating income (expense): Interest expense (15,697) (15,802) Other income, net 1,659 464 --------- --------- Net income $ 31,127 $ 29,817 ========= ========= 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, 1997 $1,312 $122,387 $123,699 Net income 311 30,816 31,127 ------ -------- -------- Balance, March 31, 1997 $1,623 $153,203 $154,826 ====== ======== ======== 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, ------------------- 1997 1996 -------- -------- Cash flows from operating activities: Net income $ 31,127 $ 29,817 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 4,917 4,695 Amortization of deferred financing costs 271 273 Changes in operating assets and liabilities: Accounts receivable - trade 4,763 (13,857) Fuel inventory and other current assets (1,972) (3,135) Other assets 348 347 Trade payables (70) 9,715 Accrued interest payable 15,143 (15,515) Other liabilities (8,020) 1,652 -------- -------- Net cash provided by operating activities 46,507 13,992 -------- -------- Cash flows from investing activities: Capital expenditures (12,694) (16,092) Restricted funds (33,108) 8,799 -------- -------- Net cash used in investing activities (45,802) (7,293) -------- -------- Cash flows from financing activities: Principal payments of long-term debt -- (7,455) -------- -------- Net cash used in financing activities -- (7,455) -------- -------- Net increase (decrease) in cash and cash equivalents 705 (756) Cash and cash equivalents at beginning of period 4 942 -------- -------- Cash and cash equivalents at end of period $ 709 $ 186 ======== ======== Supplemental cash flow information Cash payments: Interest (net of amounts capitalized) $ -- $ 30,736 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 ("Niagara Mohawk"). 2. Basis of Presentation The accompanying consolidated balance sheets at March 31, 1997 and December 31, 1996 and the consolidated statements of operations and cash flows for the three months ended March 31, 1997 and 1996 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, 1996 for the Partnership and its wholly-owned subsidiary, Sithe/Independence Funding Corporation. The results of operations for the three months ended March 31, 1997 are not necessarily indicative of the results to be expected for the full year. The unaudited financial information at March 31, 1997 and for the three months ended March 31, 1997 and 1996 contains all adjustments, consisting only of normal recurring adjustments, which management considers necessary for a fair presentation of the operating results for such periods. Effective January 1, 1997, the Partnership entered into a twelve-year service agreement with General Electric Company ("GE") under which the Partnership will pay GE specified amounts per megawatt-hour of net generation to perform all scheduled major equipment overhauls for the Project's gas turbines, steam turbines and generators (the "covered units") during such period. As a result of such agreement, which, among other things, was entered into to lock in the cost of future major overhauls for the covered units, the Partnership discontinued the application of its major overhaul cost normalization policy for the covered units as of the beginning of the first quarter of 1997. In that connection, in the first quarter of 1997, the Partnership was required to reverse to income as a credit to maintenance expense the $8.2 million of major overhaul reserves for the covered units that had been established in prior years under that policy. -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 1997 of $105.4 million was $7.9 million (7%) lower than in the first quarter of 1996 reflecting lower incremental revenue from selling gas instead of electricity as the mild 1997 winter and resultant low gas prices afforded fewer arbitrage opportunities than in the first quarter of 1996; one less day of generation than in the first quarter of 1996 which was a leap year; a change in the mix of sales due to certain curtailments on transmission of energy deliveries to Con Edison; and lower Niagara Mohawk tariffs. Cost of sales for the first quarter of 1997 of $60.3 million declined by $8.0 million from the corresponding quarter of last year reflecting an $8.2 million credit to maintenance expense that the Partnership was required to record in connection with the discontinuance of its major overhaul cost normalization policy for its gas turbines, steam turbines and generators as discussed in Note 2 to the unaudited financial statements included in this Quarterly Report on Form 10-Q. Interest expense for the first quarter of 1997 decreased by $.1 million from the corresponding quarter of last year due to the lower outstanding amount of long-term debt. Other income, net, which consisted of interest income for both periods, increased by $1.2 million over the comparable quarter of last year due to the higher average balances of restricted funds. 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, 1997, letters of credit aggregating $16.0 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, 1997 had sufficient restricted cash on hand to meet its cumulative additional debt service reserve and major overhaul reserve funding requirements pursuant to the Securities Indenture as of such date of $33.0 million and $5.4 million, respectively. 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 Securities have been assigned a security interest and lien. -8- 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, pay future Project debt service and make future required contributions to project reserve accounts. Although the Partnership's net income could decline over the next three years 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 cash flow will be more than sufficient to pay scheduled debt service. -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 March 31, 1997. (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) May 14, 1997 /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, 1997 /s/ Richard J. Cronin III -------------------------------- Richard J. Cronin III Chief Financial Officer and Senior Vice President (Principal Financial and Accounting Officer) -11- EX-27 2 FINANCIAL DATA SCHEDULE
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 10-Q for the year-to-date, and is qualified in its entirety by reference to such financial statements. 0000899281 SITHE/INDEPENDENCE FUNDING CORP. 1,000 3-MOS DEC-31-1997 MAR-31-1997 709 121,130 35,019 0 4,859 161,717 769,963 42,624 902,025 55,336 688,201 0 0 0 154,826 902,025 105,467 105,467 60,302 60,302 0 0 15,697 31,127 0 31,127 0 0 0 31,127 0 0
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