-----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, L3gFFIeUKrD4bm3ahLAMl9nU6qe+8MGApYcjpgQqF9R6Qdc8kQmmailiHDc8fS0i s8FwDMMALbp17+q/zDlFQg== 0000925655-00-000007.txt : 20000323 0000925655-00-000007.hdr.sgml : 20000323 ACCESSION NUMBER: 0000925655-00-000007 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 20000322 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIGEN ENERGY CORP CENTRAL INDEX KEY: 0000925655 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 133378939 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-13264 FILM NUMBER: 575046 BUSINESS ADDRESS: STREET 1: ONE WATER ST CITY: WHITE PLAINS STATE: NY ZIP: 10601 BUSINESS PHONE: 9142866600 MAIL ADDRESS: STREET 1: ONE WATER ST CITY: WHITE PLAINS STATE: NY ZIP: 10601 10-Q/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________ FORM 10-Q/A AMENDMENT NO. 1 [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 1-13264 TRIGEN ENERGY CORPORATION (Exact name of Registrant as specified in its charter) Delaware 13-3378939 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) One Water Street White Plains, New York 10601-1009 (Address of principal executive offices) (Zip Code) (914) 286-6600 (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 such 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. Yes X No ----- ----- There were 12,407,102 shares of the Registrant's Common Stock outstanding as of November 5, 1999. TRIGEN ENERGY CORPORATION AND SUBSIDIARIES INDEX TO FORM 10-Q/A Quarter Ended September 30, 1999 Page Part I - Financial Information: Item 1. Financial Statements 4 Note 6. Legal Proceedings 8 Signatures: 16 Disclosure Regarding Forward-Looking Statements This report includes historical information as well as statements regarding our future expectations. The statements regarding the future (referred to as "forward-looking statements") include among other things, statements about future energy markets, cost reduction targets, return on capital goals, development, production and acceptance of new products and process technologies, ongoing and planned capacity additions and expansions and joint ventures. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include: supply/demand for our products, competitive pricing pressures, weather patterns, changes in industry laws and regulations, competitive technology, failure to achieve our cost reduction targets or complete construction projects on schedule and Year 2000 computer related difficulties. We believe in good faith that the forward- looking statements in this report have a reasonable basis, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties, but such forward-looking statements are not guarantees of future performance and actual results may differ materially from any results expressed or implied by such forward-looking statements. EXPLANATORY NOTE We are filing this amended report on Form 10-Q/A to amend Note 6 Legal Proceedings of Trigen Energy Corporation and Subsidiaries Notes to Consolidated Financial Statements (unaudited) included in Part I- Financial Information, Item 1, Financial Information of our Quarterly Report on Form 10- Q dated November 12, 1999. Part I - Financial Information Item 1. Financial Statements
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months and Nine Months Ended September 30, 1999 and 1998 Unaudited (In thousands, except per share data) Three Months Nine Months ------------ ----------- 1999 1998 1999 1998 ---- ---- ---- ---- Revenues Thermal energy.................... $40,724 $35,300 $153,700 $132,578 Electric energy.................. 11,065 11,001 32,704 31,210 Equity in earnings of non-consolidated partnerships 2,725 1,598 6,749 3,624 Fees earned and other revenues 3,223 2,940 10,899 9,133 ------ ------- ------- ------- Total revenues 57,737 50,839 204,052 176,545 ------ ------- ------- ------- Operating Expenses Fuel and consumables 23,279 21,316 84,860 74,012 Production and operating costs 12,476 12,017 39,783 36,068 Depreciation and amortization 5,863 5,839 18,312 17,401 General and administrative 10,123 8,466 30,588 27,785 ------- ------ ------- ------- Total operating expenses 51,741 47,638 173,543 155,266 ------- ------ ------- ------- Operating income 5,996 3,201 30,509 21,279 Other income (expense) Interest expense (6,423) (6,046) (18,829) (17,613) Other income, net 50 332 15,397 4,931 ------ ------ ------- ------- Earnings (losses) before minority interests, income taxes, extraordinary item, and cumulative effect of a change in an accounting principle (377) (2,513) 27,077 8,597 Minority interests in earnings of subsidiaries 1,350 799 2,390 2,374 ------ ------ ------- ------ Earnings (losses) before income taxes, extraordinary item and cumulative effect of a change in an accounting principle (1,727) (3,312) 24,687 6,223 Income taxes ( 715) (1,424) 10,220 2,676 ------ ------ ------- ------ Earnings (losses) before extraordinary item and cumulative effect of a change in an accounting principle (1,012) (1,888) 14,467 3,547 Extraordinary loss from extinguishment of debt, net of tax benefit - - - - - - (299) Cumulative effect of change in an accounting principle, net of tax benefit - - - - (4,903) - - ------- ------ Net earnings (losses) $ (1,012) $(1,888) $ 9,564 $ 3,248 ======== ======== ======== ======= Basic earnings per common share Before extraordinary item and cumulative effect of a change in an accounting principle $ (.09) $ (.15) $ 1.20 $ .30 Extraordinary loss - - - - - - (.03) Cumulative effect of change in an accounting principle - - - - (.41) - - --------- ------- ---------- -------- Net earnings (losses) $ (.09) $ (.15) $ .79 $ .27 ========= ======= ========== ======== Diluted earnings per common share Before extraordinary item and cumulative effect of a change in an accounting principle $ (.09) $ (.15) $ 1.20 $ .30 Extraordinary loss - - - - - - (.03) Cumulative effect of change in an accounting principle _ - - - - (.41) - - --------- ------- --------- ------- Net earnings (losses) $ (.09) $ (.15) $ .79 $ .27 ========= ======= ========= ======= Average shares outstanding - basic 12,051 11,999 12,038 12,010 --------- ------- --------- -------- Average shares outstanding - diluted 12,219 11,999 12,087 12,011 -------- ------- --------- -------- See accompanying notes to consolidated financial statements.
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Unaudited (In thousands, except share data) September 30, December 31, 1999 1998 ------------- ------------ Assets Current assets Cash and cash equivalents $ 21,544 $ 10,074 Accounts receivable Trade (less allowance for doubtful accounts of $1,460 in 1999 and $1,278 in 1998) 34,791 35,236 Other 9,593 5,686 ------- ------- Total accounts receivable 44,384 40,922 Inventories 7,613 7,074 Prepaid expenses and other current assets 8,350 8,016 Total current assets 81,891 66,086 Restricted cash and cash equivalents 4,552 4,623 Property, plant and equipment, net 484,768 442,755 Investment in non-consolidated partnerships 47,550 30,319 Intangible assets, net 46,749 49,968 Deferred costs and other assets, net 29,847 24,405 ------- ------- Total assets $695,357 $618,156 ======= ======= Liabilities and Stockholders' Equity Current liabilities Short-term debt $ 11,700 $ 15,000 Current portion of long-term debt 17,054 16,398 Accounts payable 8,067 4,756 Accrued income taxes 4,581 5,728 Accrued fuel 9,495 14,121 Accrued expenses and other current liabilities 26,758 19,626 -------- ------- Total current liabilities 77,655 75,629 Long-term debt 396,614 343,685 Other liabilities 4,132 4,254 Deferred income taxes 43,701 39,422 -------- -------- Total liabilities 522,102 462,990 Minority interests in subsidiaries 14,685 7,238 Stockholders' equity Preferred stock-$.01 par value, authorized and unissued 15,000,000 shares - - Common stock-$.01 par value, authorized 60,000,000 shares, issued 12,417,934 shares in 1999 and 1998 124 124 Additional paid-in capital 120,242 120,595 Retained earnings 44,683 36,417 Unearned compensation - restricted stock (4,592) (4,967) Accumulated other comprehensive loss (1,254) (2,002) Treasury stock, at cost, 41,285 shares in 1999 and 145,842 shares in 1998 (633) (2,239) -------- -------- Total stockholders' equity 158,570 147,928 -------- -------- Total liabilities and stockholders' equity $695,357 $618,156 ======== ======== See accompanying notes to consolidated financial statements.
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1999 and 1998 Unaudited (In thousands) 1999 1998 ---- ---- Cash flows from operating activities Net earnings $ 9,564 $ 3,248 Reconciliation of net earnings to cash provided by operating activities Non-cash after-tax gain on litigation settlement ( 8,518) - - Extraordinary item - - 299 Cumulative effect of a change in an accounting principle 4,903 - - Depreciation and amortization 18,312 17,401 Deferred income taxes 4,279 199 Provision for doubtful accounts 379 339 Minority interests in subsidiaries 2,390 2,374 Changes in assets and liabilities Accounts receivable (3,290) 13,257 Inventories and other current assets (873) 187 Accounts payable and other current liabilities 2,671 ( 6,170) Non-current assets and liabilities (2,874) ( 2,171) ------- -------- Net cash provided by operating activities 26,943 28,963 -------- -------- Cash flows from investing activities Acquisition of energy facilities (5,903) (65,350) Investments in non-consolidated partnerships (278) (979) Purchase of marketable securities (1,013) -- Capital expenditures (56,530) (28,709) -------- -------- Net cash used in investing activities (63,724) (95,038) -------- -------- Cash flows from financing activities Short-term debt, net (3,300) (3,850) Proceeds of long-term debt 67,950 110,100 Payments of long-term debt (15,136) (32,123) Dividends paid (1,297) (1,293) Purchase of treasury stock (38) (608) Distribution to minority interests - - (2,089) -------- -------- Net cash provided by financing activities 48,179 70,137 ------- -------- Cash and cash equivalents Increase 11,398 4,062 At beginning of period 14,698 13,693 ------- ------- At end of period $26,096 $17,755 ======== ======= Current $21,544 $13,108 Restricted 4,552 4,647 ------- ------- At end of period $26,096 $17,755 ======= ======= Supplemental disclosure of cash flow information Cash paid during the period for Interest $17,543 $10,606 ------- ------- Income taxes 5,708 1,629 ------- ------- See accompanying notes to consolidated financial statements
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation Trigen Energy Corporation and its subsidiaries ("we"), develop, own and operate commercial and industrial energy systems in the United States, Canada and Mexico. We use our expertise in thermal engineering and proprietary cogeneration processes to convert fuel to various forms of thermal energy and electricity. We combine heat and power generation, producing electricity as a by-product, for use in our facilities and for sale to customers. The consolidated financial statements of Trigen Energy Corporation and its subsidiaries presented herein are unaudited. However, such information reflects all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary to present fairly the financial position as of September 30, 1999 and December 31, 1998, and the results of operations for the three and nine months ended September 30, 1999 and 1998 and the cash flows for the nine months ended September 30, 1999 and 1998. The results of operations for the three and nine month periods ended September 30, 1999 and cash flows for the nine month period ended September 30, 1999 are not indicative of those to be expected for the year ending December 31, 1999. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 1998 included in our Annual Report on Form 10-K for the year ended December 31, 1998. Certain reclassifications have been made to the 1998 financial statements to conform to the 1999 presentation. 2. Recent Accounting Pronouncements In September 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. In July 1999, SFAS No. 137 was issued, which deferred the effective date of SFAS No. 133. We will adopt SFAS No. 133 effective January 1, 2001. Based on preliminary analysis, we do not expect the future adoption of SFAS No. 133 to have a material effect on results of operations and financial condition. TRIGEN ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 3. Supplementary Income Information Included in other income, net for the nine months ended September 30, 1999 is a pre-tax gain of $14.5 million related to the Grays Ferry Cogeneration Partnership litigation settlement agreement. The gain represents the market value of the share of the Partnership that we received as part of this settlement. (See Note 6- Legal Proceedings). Included in other income, net for the nine months ended September 30, 1998 were gains of $2.1 million from the sale of nitrogen oxide emission allowances and $1.7 million from an insurance settlement. 4. Cumulative Effect of a Change in an Accounting Principle Effective January 1, 1999, we adopted the American Institute of Certified Public Accountants Statement of Position No. 98-5, "Reporting on the Costs of Start-Up Activities" ("SOP 98-5"). SOP 98-5 requires that costs associated with start-up activities and organizational costs be expensed as incurred. The effect of the adoption was an after-tax charge of $4.9 million, net of a tax benefit of $3.5 million, to expense deferred organizational and start-up costs as a cumulative effect of a change in an accounting principle. 5. Extraordinary Item We incurred an extraordinary charge of $.3 million, net of a tax benefit of $.2 million, in the nine months ended September 30, 1998 in connection with the early retirement of debt. 6. Legal Proceedings Oklahoma Litigation In September 1996, our subsidiary, Trigen-Oklahoma City Energy Corporation ("Trigen-Oklahoma City"), commenced an antitrust action in Federal District Court in Oklahoma City seeking injunctions and actual, treble and punitive damages from a local utility, Oklahoma Gas and Electric Company ("OG&E"), based on alleged anti-competitive actions against Trigen-Oklahoma City Energy Corporation by OG&E. Trigen-Oklahoma City's antitrust action went TRIGEN ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) to trial in 1998 and on December 21, 1998, the jury returned a verdict in favor of Trigen. On January 19, 1999, the Court entered a judgment in favor of Trigen in the amount of $27.8 million. On January 25, 2000 the court decided post- trial motions to vacate or modify the judgment reducing the judgment to $20.6 million. OG&E has filed an appeal to the Tenth Circuit Court of Appeals and has posted a bond in order to stay enforcement of the judgment pending appeal. Trigen has filed a cross-appeal. Trigen's separate motion for attorney's fees (seeking approximately $3 million) is pending but OG&E has requested that the court postpone a hearing on that motion until the appeals are decided by the Circuit Court. We have not recognized any gain with respect to this matter because we cannot predict the final outcome. Kinetic Energy Litigation On May 2, 1997, a judgment was entered against us in the amount of $4.3 million following a jury trial in a law suit by Kinetic Energy Development Corporation against Trigen in the Circuit Court of Jackson County, Missouri, in connection with our acquisition of the Kansas City steam system. Kinetic claimed for compensation alleged to be owed to it by Trigen in connection with that acquisition. On August 6, 1997, the Court set aside the jury verdict and granted judgment for Trigen. Kinetic Energy Development Corporation appealed that order and on December 8, 1998, the Missouri Court of Appeals set aside the lower court decision and ordered a new trial. On December 22, 1998, we filed a motion for rehearing with the Missouri Court of Appeals and/or a review by the Missouri Supreme Court. The Court of Appeals granted our motion for rehearing. On September 7, 1999, the Court of Appeals held that Kinetic had proven only nominal damages at trial and returned the case to Circuit Court for retrial. The retrial will allow Kinetic to attempt to establish that it is entitled to some award for the reasonable value of its services, if any, in connection with the Trigen acquisition of the Kansas City steam system. The case presently awaits rescheduling for trial. We believe we have good defenses to these claims. Accordingly, we have not recognized any loss or expense (other than defense costs) with respect to this matter, although we cannot predict the final outcome. Grays Ferry Litigation On April 23, 1999, the Pennsylvania Court of Common Pleas of Philadelphia County approved a settlement agreement which ended the lawsuit brought by Grays Ferry Cogeneration Partnership (the "Partnership"), Trigen-Schuylkill Cogeneration, Inc. and CogenAmerica Schuylkill Inc. against PECO Energy Company and Adwin (Schuylkill) Cogeneration, Inc. The Partnership is TRIGEN ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) the owner of the Grays Ferry Cogeneration Facility located in Philadelphia, Pennsylvania. The Partnership, Trigen-Schuylkill and CogenAmerica commenced this lawsuit in reaction to the alleged termination by PECO on March 3, 1998, of the electric power purchase agreements between the Partnership and PECO (the "Power Purchase Agreements"). Prior to the settlement, we owned a one-third interest in the Partnership through our wholly owned subsidiary, Trigen-Schuylkill. CogenAmerica and Adwin owned the other two-thirds interests in the Partnership. Adwin is an indirect wholly owned subsidiary of PECO. Under the settlement agreement PECO's subsidiary, Adwin, surrendered its rights to its one-third partnership interest in the Partnership to the two remaining partners, Trigen-Schuylkill and CogenAmerica. As a result, we own one half of the Partnership and CogenAmerica owns the other half. During 1999, we recognized an after tax gain of $8.5 million ($.70 per diluted share) which represents the market value of our share of Adwin's interest. In the year 2001, the energy price under the Power Purchase Agreements will be based upon a percentage of a market based index, which we expect to produce substantially lower revenues from sales to PECO than the more favorable rates of the early contract years. Under the Settlement the Partnership gained the right to sell to third parties electric energy and capacity from the facility in excess of the 150 megawatts which PECO is required to purchase under the Power Purchase Agreements, subject to a right of first refusal for PECO. We expect that the ability to sell to third parties electric energy and capacity above the 150 megawatts under contract to PECO, will result in an opportunity to improve the financial performance of the Partnership. The Partnership will now have the ability to institute capital modifications to the combustion turbine to increase electric capacity during the summer months when the price of electric capacity and energy are historically the highest. Separately, The Chase Manhattan Bank, as agent for several commercial banks (collectively "Chase"), and Westinghouse Power Generation, which collectively financed the construction of the Gray's Ferry Cogeneration Facility, agreed to dismiss their lawsuits against PECO. Chase and Westinghouse also agreed that they will not charge the Partnership for any default interest up to April 16, 1999, although they have reserved the right to do so with respect to the period after April 16, 1999. TRIGEN ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The Partnership is in default under its separate credit agreements with Westinghouse and Chase for the following reasons. The Partnership did not convert on time its short-term construction loan from Chase to a longer term loan. The Partnership could not complete that conversion because of a dispute with the construction contractor, which has now been resolved. The Partnership also did not make principal payments to Westinghouse because the Chase loan agreement prohibits such payments to subordinate parties while the Partnership is in default. Westinghouse is a subordinate party. The Partnership owes a total principal amount of approximately $79.4 million to Chase. Chase has not accelerated the debt owing under the Credit Agreement. Chase has required to date, and may require in the future, the Partnership to apply available cash held by Partnership (net of operating expenses) toward repayment of the principal amount of the loans outstanding to Chase. The Partnership owes a total principal amount of approximately $15 million to Westinghouse. On March 1, 2000, Westinghouse demanded full payment of the amount owing to Westinghouse under its credit agreement. Only the Partnership assets and the Partners' ownership interests in the Partnership secure the Partnership's debt under the Chase and Westinghouse loans. To resolve these matters we have negotiated an amendment to the credit agreement with Chase and we are negotiating with Westinghouse and other subordinate parties. The Partnership has accrued $3.0 million in default interest since April 16, 1999. Nassau Litigation On May 29, 1998, the County of Nassau, New York commenced an action against Trigen Energy Corporation and Trigen-Nassau Energy Corporation in New York State Supreme Court. Trigen-Nassau provides energy services to Nassau County under various agreements. Nassau County alleges that Trigen-Nassau breached those agreements by, among other means, charging the County for certain real estate taxes that the County contends are Trigen-Nassau's responsibility. On October 8, 1998, the Court dismissed the claims against Trigen Energy Corporation. On November 9, 1998, Trigen-Nassau filed counterclaims against Nassau County, seeking $1.6 million in damages. Trigen-Nassau alleges that Nassau County breached the parties' agreements by, among other things, failing to operate and maintain certain facilities and equipment. On January 21, 1999, the County requested that the Court dismiss Trigen-Nassau's TRIGEN ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) counterclaims. On April 5, 1999, the Court dismissed some but not all of Trigen-Nassau's counterclaims. The Court declined to dismiss Trigen-Nassau's counterclaims that seek approximately $1.5 million in damages. The County is seeking approximately $10 million in damages. We believe we have good defenses to the County's claims. Accordingly, we have not recognized any loss or expense (other than defense costs) with respect to this matter, although we cannot predict the final outcome. ESI Litigation In 1996 ESI, Inc. commenced an action against, among others, Coastal Power Company, Latin American Energy Development, Inc. and La Casa Castro S.A. de N.V. in the United States District Court for the Southern District of New York. On September 17, 1998, ESI, Inc. amended its complaint naming Trigen as an additional defendant. This action arises out of the development by Trigen, Latin American Energy, La Casa Castro and others, of an independent power project in El Salvador between 1993 and 1994. Trigen transferred its interest in the project to Tenneco Gas International in May 1994. In July 1994, Tenneco transferred its interest in the project to Coastal Power Company, which currently owns and operates the project. ESI claimed that ESI was entitled to a 2.5% interest in the project and that Coastal had wrongfully withheld or denied ESI's interest. ESI further claimed that Trigen had failed to disclose ESI's interest to Tenneco and so was responsible, in whole or in part, for ESI's failure to receive a 2.5% interest in the project from Coastal. On October 8, 1998, Latin American Energy asserted cross-claims against Trigen, Coastal and Tenneco claiming that it too had been denied its carried interest in the Project. On October 28, 1998, La Casa Castro asserted cross- claims against Trigen and on November 6, 1998, Coastal asserted cross-claims against Trigen for indemnification, each alleged that Trigen failed to disclose ESI's claimed interest to Tenneco and that Trigen was responsible for any damages that each may be required to pay to ESI and Latin American. On December 15, 1998, Trigen filed an amended answer denying liability for these claims and cross-claimed against Latin American Energy, Tenneco, Coastal and La Casa Castro, asserting that these parties were responsible for any damages owed to ESI and Latin American. On December 23, 1998, ESI and Latin American dismissed without prejudice their claims against Trigen. TRIGEN ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Coastal and La Casa Castro are continuing to assert their claims against Trigen for any damages they may be required to pay to ESI or Latin American. At this time, the case is in the early stages of discovery and as such we are not able to estimate the amount of damages that ESI and Latin American are seeking. We believe we have good defenses to Coastal's claims and La Casa Castro's claims. Accordingly, we have not recognized any loss or expense (other than defense costs) with respect to this matter, although we cannot predict the final outcome. Shareholder Class Actions against Trigen Complaints of Fothergill, Cortez, and Berkowitz. On September 23, 1999, three complaints were filed in the Court of Chancery of the State of Delaware against: Trigen Energy Corporation, Suez Lyonnaise Des Eaux SA, Patrick Buffet, George F. Keane, Thomas R. Casten, Philippe Brongniart, Olivier Degos, Patrick Desnos, Richard E. Kessel, Charles E. Bayless, Michel Bleitrach, Dominique Mangin D'Ouince and Michel Cassou. The individual defendants were sued in their capacity as Trigen directors and/or former Trigen directors. The complaints were filed, respectively, by Michael Fothergill, Rosa Cortez and Sarah Berkowitz. Each complaint was filed purportedly as a class action on behalf of the Company's shareholders. The complaints raised substantially identical allegations: that Trigen received a proposal from Suez to take Trigen private for $22.00 per share in cash. The plaintiffs alleged that this price does not represent the true value of Trigen and is unfair to the minority shareholders. Plaintiffs further alleged that because Suez owns approximately 52% of Trigen's outstanding shares, Suez has the power to effectuate the transaction without regard to the minority shareholders. Plaintiffs sought class certification, declaratory and injunctive relief (or money damages if the transaction is consummated), and an accounting. By agreement of the parties, an order has been entered consolidating all three actions under the Fothergill caption. On February 22, 2000, counsel for ELYO and the plaintiffs reached an agreement to settle this lawsuit, subject to court approval. The settlement does not require any payment to the plaintiffs from the Company or its directors. Accordingly, we have not recognized any loss or expense (other than defense costs and certain costs of providing Notice of settlement to the Class members) with respect to this matter, although we cannot predict the final outcome. The TRIGEN ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) parties are in the process of submitting this settlement to the Court of Chancery of the State of Delaware for approval. Complaint of Rice. On March 16, 2000, Adam Rice filed a complaint in the Supreme Court of the State of New York, County of Westchester against Trigen Energy Corporation, Suez Lyonnaise Des Eaux S.A., Elyo, S.A., T Acquisition Corporation, Christine Morin- Postel, Richard E. Kessel, George Keane, Patrick Buffet, Olivier Degos, Philippe Brongniart, Michel Bleitrach, Dominique Mangin D'Ouince and Charles Bayless. The complaint was filed purportedly as a class action on behalf of the Company's shareholders. The individual defendants were sued in their capacity as Trigen directors. The plaintiff alleged that the defendants have breached their fiduciary duties to plaintiff and our public shareholders by not renegotiating and/or reformulating the terms of the tender offer by which T Acquisition Corporation has offered to purchase all of our outstanding shares at a price of $23.50 per share. Plaintiff seeks class certification and money damages as well as other unspecified relief. We believe we have good defenses to these claims. Accordingly, we have not recognized any loss or expense (other than defense costs) with respect to this matter, although we cannot predict the final outcome. Other Litigation We are subject from time to time to various other claims that arise in the normal course of business, and we believe that the outcome of these matters (either individually or in the aggregate) will not have a material adverse effect on our business results of operation or financial condition. TRIGEN ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 7. Comprehensive Income Effective January 1, 1998, we adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income". This statement requires disclosure of all items recognized under accounting standards as components of comprehensive income. Following are the components of comprehensive income for the three months and nine months ended September 30, 1999 and 1998 (in thousands). Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------ 1999 1998 1999 1998 Net earnings (losses) $ (1,012) (1,888) $ 9,564 $3,248 Other comprehensive income Cumulative foreign currency translation adjustment 315 36 748 55 -------- -------- --------- ------- Comprehensive income (loss) $ (697) $ (1,852) $10,312 $3,303 ===== ====== ====== ===== 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. TRIGEN ENERGY CORPORATION By: /s/ Martin S. Stone ----------------------------- Martin S. Stone Vice President Finance & Chief Financial Officer Date: March 21, 2000 -----END PRIVACY-ENHANCED MESSAGE-----