<PAGE>
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
<PAGE>
International Paper Company (claimant) hereby amends its statement dated
February 28, 2000 and filed with the Securities and Exchange Commission
February 28, 2000, 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
shareholder's for 1998, as filed with the Commission on March 27,
2000 in claimant's 10-K Report (SEC File Number 001-03157) is
herein incorporated by reference. The annual report contains the
consolidated statements 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, 1999 and December 31, 1998 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 21st day of December, 2000.
INTERNATIONAL PAPER COMPANY
NAME OF CLAIMANT
[CORPORATE SEAL]
ATTEST: By: /s/ ANDREW R. LESSIN
-----------------------------
VICE PRESIDENT-FINANCE
& CONTROLLER
/s/ CAROL M. SAMALIN
-----------------------
ASSISTANT SECRETARY
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Name, title and address of official to whom notices correspondence concerning
this amendment should be addressed:
MICHAEL K. CHAPMAN
SENIOR COUNSEL, ENERGY & LOGISTICS
INTERNATIONAL PAPER COMPANY
6400 POPLAR AVE.
MEMPHIS, TENNESSEE 38197
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CURTIS/PALMER HYDROELECTRIC COMPANY L.P.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998
TOGETHER WITH AUDITORS' REPORT
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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, 1999 and 1998, 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 auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Memphis, Tennessee,
March 17, 2000.
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CURTIS/PALMER HYDROELECTRIC COMPANY L.P.
BALANCE SHEETS
AS OF DECEMBER 31
<TABLE>
<CAPTION>
ASSETS 1999 1998
------ --------------- ----------------
<S> <C> <C>
CURRENT ASSETS:
Cash and temporary investments ..................... $ 6,527,902 $12,024,134
Accounts receivable ................................ 2,511,326 1,952,248
Prepaid expenses and other ......................... 1,291,746 1,272,978
----------- -----------
Total current assets .................. 10,330,974 15,249,360
PROPERTY, PLANT AND EQUIPMENT, net ..................... 69,929,333 71,794,984
LICENSE AND OTHER CONTRACTS, net ....................... 358,006 1,442,875
----------- -----------
Total assets .......................... $80,618,313 $88,487,219
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Due to International Paper ......................... $ 1,355,026 $ 7,120,997
Accounts payable ................................... 86,351 211,259
Current maturities of long-term debt ............... 6,384,480 9,508,800
----------- -----------
Total current liabilities ............. 7,825,857 16,841,056
LONG-TERM DEBT ......................................... -- 6,384,480
PARTNERS' CAPITAL ...................................... 72,792,456 65,261,683
----------- -----------
Total liabilities and partners' capital $80,618,313 $88,487,219
=========== ===========
</TABLE>
The accompanying notes are an integral
part of these balance sheets.
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CURTIS/PALMER HYDROELECTRIC COMPANY L.P.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31
1999 1998
--------------- ---------------
REVENUES ...................................... $ 29,863,597 $ 33,467,299
------------ ------------
COSTS AND EXPENSES:
Operating and management fees .............. 2,902,085 8,744,079
Maintenance and repair ..................... 576,175 287,345
Depreciation and amortization .............. 2,992,479 2,992,479
Property taxes ............................. 2,849,804 2,800,184
Insurance .................................. 353,476 358,394
Other ...................................... 227,784 381,210
------------ ------------
Total costs and expenses ........ 9,901,803 15,563,691
------------ ------------
OPERATING INCOME .............................. 19,961,794 17,903,608
INTEREST INCOME (EXPENSE):
Interest income ........................... 273,556 525,796
Interest expense .......................... (704,577) (1,382,144)
------------ ------------
NET INCOME .................................... $ 19,530,773 $ 17,047,260
============ ============
The accompanying notes are an integral
part of these statements.
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CURTIS/PALMER HYDROELECTRIC COMPANY L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
---------------------------- -----------------------------
Saratoga HCE- NRG John
DEVELOPMENT HUDSON, INC. PACGEN, INC. HANCOCK TOTAL
----------- --------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1997 ............... $ 28,107,214 $ 7,026,801 $ 7,026,801 $ 14,053,607 $ 56,214,423
Net income ........................... 8,523,631 2,130,907 2,130,907 4,261,815 17,047,260
Distributions to partners ............ (4,000,000) (1,000,000) (1,000,000) (2,000,000) (8,000,000)
------------ ------------ ------------ ------------ ------------
BALANCE, December 31, 1998 ............... 32,630,845 8,157,708 8,157,708 16,315,422 65,261,683
Net income ........................... 9,765,386 2,441,347 2,441,347 4,882,693 19,530,773
Distribution to partners ............. (6,000,000) (1,500,000) (1,500,000) (3,000,000) (12,000,000)
------------ ------------ ------------ ------------ ------------
BALANCE, December 31, 1999 ............... $ 36,396,231 $ 9,099,055 $ 9,099,055 $ 18,198,115 $ 72,792,456
============ ============ ============ ============ ============
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
CURTIS/PALMER HYDROELECTRIC COMPANY L.P.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................... $ 19,530,773 $ 17,047,260
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization .................. 2,992,479 2,992,479
Changes in current assets and liabilities-
Accounts receivable ........................ (559,078) 470,465
Prepaid expenses and other ................. (18,768) (45,863)
Due to International Paper ................. (5,478,626) 662,079
Accounts payable ........................... (412,253) 171,189
------------ ------------
Net cash provided by operating activities 16,054,527 21,297,609
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................. (41,959) --
------------ ------------
Net cash used in investing activities ... (41,959) --
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners ............................ (12,000,000) (8,000,000)
Principal payments on long-term debt ................. (9,508,800) (8,218,320)
------------ ------------
Net cash used in financing activities ... (21,508,800) (16,218,320)
------------ ------------
NET CHANGE IN CASH AND TEMPORARY INVESTMENTS ............. (5,496,232) 5,079,289
CASH AND TEMPORARY INVESTMENTS:
Beginning of year .................................... 12,024,134 6,944,845
------------ ------------
End of year .......................................... $ 6,527,902 $ 12,024,134
============ ============
</TABLE>
The accompanying notes are an integral
part of these statements.
<PAGE>
CURTIS/PALMER HYDROELECTRIC COMPANY L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
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 the general partners are
98% to SDC and 2% to HCE-Hudson, Inc. As of December 31, 1999, the limited
partners include NRG PacGen, Inc. ("NRG"), a subsidiary of Northern States
Power, and John Hancock Mutual Life Insurance Co. ("Hancock"). 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.
Niagara Mohawk Power Corporation ("NMPC") is required to purchase all available
electricity generated by the Partnership at contractually predetermined rates
(Note 5). 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, 1999, International Paper had not exercised this
option.
The Partnership's license from the Federal Energy Regulatory Commission ("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. Management believes the relicensing process will be successfully
completed prior to April 30, 2000.
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 NRG. Cash distributions are made
at the discretion of the Partnership's management committee.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
TEMPORARY INVESTMENTS
Temporary investments with an original maturity of three months or less are
treated as cash equivalents and are stated at cost, which approximates market.
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.
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-2-
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
------------------------------------------------------
LICENSE AND OTHER CONTRACTS
Amortization of the cost of the 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
$14,542,000 and $13,457,000 at December 31, 1999 and 1998, respectively.
Costs incurred with respect to the relicensing program with the FERC have been
expensed as incurred. These costs were incurred in 1996 through 1999, and
included approximately $12,000 and $156,000 in 1999 and 1998, 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.
USE OF ESTIMATES
The 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.
3. PROPERTY, PLANT AND EQUIPMENT:
-----------------------------
A summary of property, plant and equipment at December 31 is as follows:
1999 1998
------------ ------------
Hydroelectric dams ............... $ 5,100,000 $ 5,100,000
Hydroelectric plant and equipment 90,358,190 90,316,231
------------ ------------
95,458,190 95,416,231
Less-Accumulated depreciation .... (25,528,857) (23,621,247)
------------ ------------
Property, plant and equipment, net $ 69,929,333 $ 71,794,984
============ ============
<PAGE>
-3-
4. LONG-TERM DEBT:
--------------
The Partnership entered into a loan agreement with Toronto-Dominion Bank
("Toronto-Dominion") in 1985 secured by, among other things, the assignment by
the Partners, excluding Hancock, of their respective partnership interests, the
assignment of gross revenues from the Partnership's Power Purchase Agreement
with NMPC and the assignment of the rights under the Partnership's management
agreement with International Paper. The remaining obligation under the term loan
is payable in 2000.
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 weighted average interest
rates for 1999 and 1998 were 6.3% and 6.4%, respectively. Interest payments made
during 1999 and 1998 were approximately $705,000 and $1,382,000, 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, 1999 and 1998.
5. 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 average purchase price paid by NMPC per
thousand kilowatt hours for 1999 and 1998 was $122.47 and $111.00, respectively.
The price is adjusted as set forth in the Power Purchase Agreement.
NMPC has previously 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 underway between NMPC and the Partnership.
<PAGE>
-4-
6. 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 1999 and 1998 were
approximately $1,144,000 and $1,144,000, respectively. This fee is
for services, 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. As of December 31, 1999, International Paper has funded
all 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 $980,000 and $1,769,000 were
earned in 1999 and 1998, 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 1999 or 1998.
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
1999 and 1998 was approximately $778,000 and $5,831,000, respectively, and
included approximately $0 and $4,920,000 of additional rent earned during 1999
and 1998.
<PAGE>
[INTERNATIONAL PAPER LOGO]
MICHAEL K. CHAPMAN
SENIOR COUNSEL - ENERGY & LOGISTICS INTERNATIONAL PLACE II
DIRECT (901) 763-5888 6400 POPLAR AVENUE
FACSIMILE (901) 763-6029 MEMPHIS, TN 38197
[email protected]
December 22, 2000
Securities and Exchange Commission
450 Fifth Avenue N.W.
Washington, D.C. 20549
RE: International Paper Company
Amendment to Form U-3A-2
Dear Sir/Madam:
On behalf of International Paper Company there is transmitted for
filing Amendment No. 1 to Statement dated and filed with the Commission on
February 28, 2000 claiming exemption under Rule 2 from the provisions of the
Public Utility Holding Company Act of 1935. Pursuant to Regulation S-T of the
Securities and Exchange Commission, this Amendment to Form U-3A-2 is being
electronically submitted to the Commission.
Very truly yours,
/s/ Michael K. Chapman
Michael K. Chapman
Enclosure
