<PAGE>
File No. 69-00443
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM U-3A-2
Statement by Holding Company Claiming Exemption Under Rule U-3A-2 from
the Provisions of the Public Utility Holding Company Act of 1935
To Be Filed Annually Prior to March 1
CATALYST VIDALIA CORPORATION
----------------------------
(Name of Company)
hereby files with the Securities Exchange Commission, pursuant to Rule 2, its
statement claiming exemption as a holding company from the provisions of the
Public Utility Holding Company Act of 1935, and submits the following
information:
1. Name, State of organization, location and nature of business of
claimant and every subsidiary thereof, other than any exempt wholesale generator
(EWG) or foreign utility company in which claimant directly or indirectly holds
an interest.
See Attachment A
2. A brief description of the properties of claimant and each of its
subsidiary public utility companies used for the generation, transmission, and
distribution of electric energy for sale, or for the production, transmission,
and distribution of natural or manufactured gas, indicating the location of
principal generating plants, transmission lines, producing fields, gas
manufacturing plants, and electric and gas distribution facilities, including
all such properties which are outside the State in which claimant and its
subsidiaries are organized and all transmission or pipelines which deliver or
receive electric energy or gas at the borders of such State.
See Attachment A
3. The following information for the last calendar year with respect to
claimant and each of its subsidiary public utility companies:
(a) Number of kwh. of electric energy sold (at retail or wholesale),
and MCF. of natural or manufactured gas distributed at retail.
Sold 779,641,000 kwh. of electric energy at wholesale.
(b) Number of kwh. of electric energy and Mcf. of natural or
manufactured gas distributed at retail outside the State in which each such
company is organized.
Sold no kwh. of electric energy or Mcf. of natural or manufactured gas
distributed at retail outside Louisiana.
Page 1 of 24
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(c) Number of kwh. of electric energy and Mcf. of natural or
manufactured gas sold at wholesale outside the State in which each such company
is organized, or at the State line.
Sold no kwh. of electric energy of Mcf. of natural or manufactured gas
at wholesale outside Louisiana, or at the Louisiana State line.
(d) Number of kwh. of electric energy and Mcf. of natural or
manufactured gas purchased gas purchased outside the State in which each such
company is organized or at the State line. See attachment A.
Purchased no kwh. of electric energy or Mcf. of natural or manufactured
gas outside Louisiana, or at the Louisiana State line.
4. The following information for the reporting period with respect to
claimant and each interest it holds directly or indirectly in an EWG or a
foreign utility company, stating monetary amounts in United States dollars:
(a) Name, location, business address and description of the facilities
used by the EWG or foreign utility company for the generation, transmission and
distribution of electric energy for sale or for the distribution at retail of
natural or manufactured gas.
None
(b) Name of each system company that holds an interest in such EWG or
foreign utility company; and description of the interest held.
None
(c) Type and amount of capital invested, directly or indirectly, by the
holding company claiming exemption; any direct or indirect guarantee of the
security of the EWG or foreign utility company by the holding company claiming
exemption; and any debt or other financial obligation for which there is
recourse, directly or indirectly, to the holding company claiming exemption or
another system company, other than the EWG or foreign utility company.
Not applicable
(d) Capitalization and earnings of the EWG or foreign utility company
during the reporting period.
None
(e) Identify any service, sales or construction contract(s) between the
EWG or foreign utility company and a system company, and describe the services
to be rendered or goods sold and fees or revenues under such agreement(s).
Not applicable
EXHIBIT A
A consolidating statement of income and surplus of the claimant and its
subsidiary companies for the last calendar year, together with a consolidating
balance sheet of claimant and its subsidiary companies as of the close of such
calendar year.
See attached Exhibit A.
Page 2 of 24
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The above-named claimant has caused this statement to be duly executed
on its behalf by its authorized officer on this 23rd day of February, 2000.
Catalyst Vidalia Corporation
----------------------------
(Name of claimant)
By /S/ Jack R. Sauer
----------------------------
Jack R. Sauer
Vice President
CORPORATE SEAL
Attest:
/S/ Elsie Sugiharto
-------------------
Elsie Sugiharto
Accountant
Name, title, and address of officer to whom notices and correspondence
concerning this statement should be addressed:
Jack R. Sauer Vice President
-------------------------------------------
(Name) (Title)
c/o Century Power, LLC
3900 Park Avenue, Suite 102
Edison, NJ 08820
-------------------------------------------
(Address)
EXHIBIT B Financial Data Schedule
If, at the time a report on this form is filed, the registrant is
required to submit this report and any amendments thereto electronically via
EDGAR, the registrant shall furnish a Financial Data Schedule. The Schedule
shall set forth the financial and other data specified below that are applicable
to the registrant on a consolidated basis.
Item No. Caption Heading
1 Total Assets
2 Total Operating Revenues
3 Net Income
See attached Exhibit B
EXHIBIT C
An organizational chart showing the relationship of each EWG or foreign
utility company to associate companies in the holding company system.
See attached Exhibit C
Page 3 of 24
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Attachment A
------------
CATALYST VIDALIA CORPORATION
Statement by Claimant
1. Catalyst Vidalia Corporation (the "Claimant") is a Louisiana
corporation. The Claimant's location is 409 Texas Street, Vidalia,
Louisiana 71373. The nature of its business is the ownership of a 50%
undivided interest in, and 100% of the voting securities of, Catalyst
Old River Hydroelectric Limited Partnership (the "Partnership"), a
Louisiana limited partnership in commendam. The Partnership is located
at Old River Control Complex, North Highway 15, Lettsworth, Louisiana
70753, and the nature of its business is ownership of a lessee interest
in, and the operation of, a 192 megawatt hydroelectric facility.
Further information regarding the business of the Partnership is
contained in Note 2 below.
2. The Claimant is the sole general partner of the Partnership. The
Claimant owns a 50% undivided interest in the Partnership and, as sole
general partner, 100% of the voting securities of the Partnership.
The Partnership's assets consist of a leasehold interest in a 192
megawatt run-of-river hydroelectric facility located in Concordia
Parish (near Vidalia), Louisiana, approximately one mile north of the
Army Corps of Engineers Old River Control Complex between the
Mississippi River and the Red/Atchafalaya Rivers. The Project consists
of an intake channel 4,500 feet in length, a power plant containing
eight bulb turbines with a total installed capacity of 192 megawatts,
and a power discharge channel 10,000 feet in length discharging into
the Old River Outflow Channel. The Project discharges the flows that
otherwise would be passed through the Low Sill Structure of the Old
River Control Structure. A single 40-mile, 115-KV transmission line
connects the Project with Entergy Services Inc.'s existing substation,
just west of Vidalia.
In August 1990, the Partnership sold and leased back its interest in
the Project to and from a group of financial institutions. The original
term of the lease is 30 years, subject to certain renewal options.
Under the lease and related agreements, the Partnership was granted
certain options to purchase the Project from the lessors. These
agreements also impose certain restrictions on the operation of the
Project by the Partnership, and generally require that revenues form
Project operations be used to pay operating and maintenance expenses,
rent, royalty and related obligations before they may be distributed to
the partners of the Partnership.
Page 4 of 24
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Exhibit A
CATALYST VIDALIA CORPORATION
FORM U-3A-2
Index to Exhibit A
Exhibit A1 - Catalyst Old River Hydroelectric Limited Partnership audited
1999 financial statements
Exhibit A2 - Catalyst Vidalia Corporation unaudited 1999 financial statements
Page 5 of 24
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Exhibit A1
----------
FINANCIAL STATEMENTS
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
December 31, 1999 and 1998
Report of Independent Auditors
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Exhibit A1
----------
Financial Statements
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
December 31, 1999 and 1998
Report of Independent Auditors............................... 1
Balance Sheets............................................... 2
Statements of Income......................................... 3
Statements of Cash Flows..................................... 4
Statements of Partners' Capital.............................. 5
Notes to Financial Statements................................ 6
Page 7 of 24
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Exhibit A1
----------
REPORT OF INDEPENDENT AUDITORS
The Partners
Catalyst Old River Hydroelectric Limited Partnership
We have audited the accompanying balance sheets of Catalyst Old River
Hydroelectric Limited Partnership (the "Partnership") as of December 31, 1999
and 1998 and the related statements of income, cash flows and 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 the Partnership at December 31,
1999 and 1998, and the results of its operations, its cash flows and its
partners' capital for the years then ended in conformity with accounting
principles generally accepted in the United States.
/S/ Ernst & Young
January 24, 2000
1
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Exhibit A1
----------
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
BALANCE SHEETS
AS OF DECEMBER 31
(In thousands)
ASSETS
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 286 $ 137
Cash escrowed for current liabilities 15,923 11,020
Accounts receivable 3,327 1,586
Prepaid expenses and other current assets 380 388
-------------- --------------
Total current assets 19,916 13,131
Plant, property and equipment, net 432,642 445,333
Cash held in escrow including accrued interest 53,015 67,004
Deferred financing costs, net 23,167 24,262
Other noncurrent assets, net 408 548
Accrued levelized revenue 434,144 392,704
-------------- --------------
$ 963,292 $ 942,982
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accrued interest payable $ 13,434 $ 13,098
Accounts payable and other current liabilities 1,915 2,046
-------------- --------------
Total current liabilities 15,349 15,144
Finance debt obligation 776,861 760,228
Accrued levelized royalty expense 49,638 44,242
Accrued property taxes 15,050 13,377
-------------- --------------
Total liabilities 856,898 832,991
Partners' capital 106,394 109,991
-------------- --------------
$ 963,292 $ 942,982
============== ==============
See accompanying notes to financial statements.
</TABLE>
2
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Exhibit A1
----------
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31
(In thousands)
1999 1998
------------ ------------
Revenues $ 119,405 $ 139,637
Operating expenses
Depreciation 13,788 13,709
Operations and maintenance 7,676 7,096
Property taxes 1,687 1,686
Royalties 9,879 11,080
General and administrative 2,311 1,830
------------ ------------
Total operating expenses 35,341 35,401
------------ ------------
Operating income 84,064 104,236
Interest expense (79,921) (77,661)
Investment income 4,505 4,873
------------ ------------
Net income $ 8,648 $ 31,448
============ ============
See accompanying notes to financial statements.
3
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<PAGE>
Exhibit A1
----------
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
(In thousands)
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
Cash flows (used in) provided by operations:
Net income $ 8,648 $ 31,448
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation 13,788 13,709
Amortization of deferred financing costs 1,095 1,061
Changes in operating assets and liabilities:
Accounts receivable (1,741) 137
Prepaid expenses and other current assets 8 (50)
Accrued levelized revenue (41,440) (60,013)
Accounts payable and other current liabilities (131) (5,473)
Accrued levelized royalty expense 5,396 6,701
Finance debt obligation 16,633 23,755
Other operating assets and liabilities (3,021) (16,539)
------------- -------------
Net cash used in operating activities (765) (5,264)
------------- -------------
Cash flow used in investing activities
relating to plant, property, and equipment (1,097) (1,425)
------------- -------------
Cash flows provided by (used in) financing activities:
Sale and leaseback escrowed proceeds released 14,256 29,848
Partner contributions 700 -
Partner distributions (12,945) (27,140)
-------------- -------------
Net cash provided by financing activities 2,011 2,708
------------- -------------
Net increase (decrease) in cash and cash equivalents 149 (3,981)
Cash and cash equivalents at beginning of the year 137 4,118
------------- -------------
Cash and cash equivalents at end of the year $ 286 $ 137
============= =============
</TABLE>
See accompanying notes to financial statements.
4
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<PAGE>
Exhibit A1
----------
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
(In thousands)
Balances, December 31, 1997 $ 105,683
Net income 31,448
Partner distributions (27,140)
--------------
Balances, December 31, 1998 109,991
Net income 8,648
Partner contributions 700
Partner distributions (12,945)
--------------
Balances, December 31, 1999 $ 106,394
==============
See accompanying notes to financial statements.
5
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<PAGE>
Exhibit A1
----------
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
1. Organization
------------
Catalyst Old River Hydroelectric Limited Partnership (the "Partnership") is a
Louisiana limited partnership. The Partnership was formed to develop, construct
and operate a 192 megawatt hydroelectric generating facility (the "Project") on
a site of approximately 1,100 acres on the Mississippi River near the Town of
Vidalia, Louisiana ("Vidalia"). The Partnership originally had two partners,
Catalyst Vidalia Corporation ("CVC"), as the general partner, and Dominion
Capital, Inc. ("DCI"), as the limited partner, (collectively the "Partners")
with each having an undivided 50% interest in the Partnership. On July 15, 1999,
Vidalia Holding, LLC, a sister company to CVC, purchased 50% of DCI's limited
partnership interest.
On August 25, 1990, the Partnership sold its interests in the Project to certain
institutional investors and concurrently leased back such property from the
investors. In connection with the sale and leaseback transaction, certain sales
proceeds were deposited with an independent collateral agent for the purposes of
providing for, among other things, future lease payments, construction
completion, dredging costs and construction contractor bonus.
The sale and leaseback is being accounted for using the financing method in
accordance with Statement of Financial Accounting Standards No. 66 "Accounting
for Sales of Real Estate" and Statement of Financial Accounting Standards No. 98
"Accounting for Leases".
2. Summary of Significant Accounting Policies
------------------------------------------
Revenue and Royalty Expense Recognition
---------------------------------------
The Partnership records revenue from the sale of electric power using a method
of accounting which produces a levelized rate per kilowatt hour ("Kwh"). This
levelized rate is applied to actual net annual energy output over the life of
the power sales contracts, with an adjustment for the time value of money at
9.25%. Revenue in the accompanying statements of income for 1999 and 1998
includes approximately $36.8 million and $33.2 million, respectively, of
interest income derived on an annual basis to reflect the time value of money.
The power sales contracts provide for predetermined fixed rates and as such, the
levelized basis results in a difference between revenue recognized and revenue
collected. This difference is recorded as accrued levelized revenue and will
accumulate until such time as the contract rate exceeds the levelized rate. At
that point, the accrued levelized revenue will be reduced by the excess of
revenue collected over levelized revenue recognized (See Note 5).
6
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Exhibit A1
----------
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies (continued)
-----------------------------------------------------
Revenue and Royalty Expense Recognition (continued)
--------------------------------------------------
Pursuant to the Amended and Restated Project Development Agreement (the "PDA")
with Vidalia, the Partnership is required to make royalty payments to Vidalia at
predetermined fixed percentages of net power sales over the term of the power
sales contracts. As with revenue recognition, the Partnership records royalty
expense using a method of accounting which produces a levelized rate. This
levelized rate is applied to levelized revenue, with an adjustment for the time
value of money at 9.25%. Royalty expense in the accompanying statements of
income for 1999 and 1998 includes approximately $4.2 million and $3.7 million,
respectively, of interest expense derived on an annual basis to reflect the time
value of money. The levelized basis results in a difference between the
royalties due pursuant to the PDA and royalty expense recognized. This
difference is recorded as accrued levelized royalty expense and will accumulate
until royalties due pursuant to the PDA exceed levelized royalty expense. At
that point, the accrued levelized royalty expense will be reduced by the excess
of amounts paid over levelized royalty expense recognized (See Note 5).
Cash and Cash Equivalents
-------------------------
Included in cash and cash equivalents are temporary cash investments which
represent short-term, highly liquid investments with maturities of 90 days or
less, when purchased. The carrying amount on the accompanying balance sheets
approximates its fair value.
Plant, Property and Equipment
-----------------------------
Plant, property and equipment is carried at cost net of accumulated
depreciation. Depreciation is computed using the straight-line method based upon
useful lives ranging from 5 to 41 years.
All renewals and betterments are capitalized. Maintenance and repair costs are
expensed as incurred.
Deferred Financing Costs
------------------------
Deferred financing costs are carried at cost net of accumulated amortization.
Deferred financing costs are being amortized using the interest method, over the
total lease term of 41 years.
7
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Exhibit A1
----------
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies (continued)
Income Taxes
------------
Income or loss of the Partnership for income tax purposes is includable in the
tax returns of the Partners. Accordingly, no recognition has been given to
income taxes in the accompanying financial statements.
FERC Regulation
---------------
The Project is operated pursuant to a license issued by the Federal Energy
Regulatory Commission ("FERC"), and is subject to regulation by the FERC.
However, the rates contained in the power sales contracts, have been previously
established by contract and approved by the FERC. In addition, the FERC license
includes a provision, effective after 20 years of operations under the license,
that may result in a restriction of dividend distributions from retained
earnings. The restriction is calculated as one-half of earnings in excess of a
specified rate of return based upon the net investment in the Project. For the
purpose of this provision, the specified rate of return is equivalent to the
average annual interest rate on U.S. Treasury obligations adjusted to a 10 year
constant maturity plus 4%. Management's intention is to seek a waiver from this
provision, on the basis that this provision only applies to suppliers of energy
that are subject to rate making procedures based on cost of service.
Use of Estimates
----------------
The preparation of the 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 balance sheet dates and
the reported amounts of contract revenue and expenses during the reporting
periods. However, due to uncertainties in the estimation process, actual results
could differ from those estimates.
3. Sale and Leaseback of the Project
---------------------------------
Under the terms of the sale and leaseback transaction, the initial lease term is
30 years, however, the lease agreement includes two renewal options; a fixed
rate renewal option, and periodic fair market renewal options. The lease also
includes periodic purchase options which are based upon the Project's fair
market value. Minimum lease payments vary over the initial lease term in
accordance with the cash flows associated with the power sales contracts. It is
management's current opinion that the fixed rate renewal option will be
exercised through the end of the power sales contracts, and that the other
8
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Exhibit A1
----------
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
3. Sale and Leaseback of the Project (continued)
--------------------------------------------
options will not be exercised. Such fixed rate renewal option payments are
approximately $49.5 million annually.
The initial finance debt obligation represented the proceeds from the sale and
leaseback transaction. The finance debt obligation will be repaid over the term
of the lease and the fixed rate renewal periods. The annual lease payments are
made on a semi-annual basis and will range from approximately $49.0 million to
$116.0 million. During 1999 and 1998, the lease payments totaled approximately
$61.7 million and $52.1 million, respectively. The imputed interest rate on the
finance debt obligation is approximately 10.3%. Due to the unequal lease payment
amounts, the finance debt obligation, on the accompanying balance sheets,
increases through the year 2005 as the annual payments are less than the annual
accrued interest. The excess of the interest expense over the annual lease
payments is recorded as an addition to the finance debt obligation. It is
management's opinion that it is impracticable to fair value this financial
instrument due to the Project's power sales contracts, royalty agreement, and
the Project's overall uniqueness. However, since the Project's inception,
long-term interest rates have declined.
All revenues from the Project are contractually required to be deposited into a
series of trust accounts administered by an independent collateral agent
pursuant to the disbursement agreement which provides for, among other things,
the disbursement of funds for Project operations and maintenance costs, lease
and royalty payments. Under the terms of the disbursement agreement, on the
first business day of each May (Partners' distribution date), cash in the
Partners' lessee account will be distributed to the Partners when there is no
outstanding Trigger Event or Special Trigger Event (the "Events"), as those
terms are defined in the sale and leaseback documents. The occurrence of an
Event traps all or part of the available Partnership lessee account cash in
escrow accounts until the applicable Event is cured. The Events include, among
other things, not meeting the required lease coverage ratio, and drawing the
lease reserve accounts below specified levels in order to pay the semi-annual
lease payment. The lease coverage ratio, which is calculated as the ratio of
cumulative net cash generated by the Project to the cumulative lease payments
reduced by scheduled releases from the coverage lease reserve account, for
specified prior and future periods, must be at least 1.2 to 1 through December
31, 2000 and 1.25 to 1 thereafter.
As of the first business day in May 1999 and 1998, the Project was in compliance
with its lease coverage ratio requirements and there were no outstanding Events.
As such, and in accordance with the terms of the sale and leaseback documents,
during May of 1999 and 1998 the total balance in the Partner's lessee account as
of the first business day of May of each respective year ($14.3 million - May
1999 and $28.6 million - May 1998) was distributed to the Partnership. During
those same time periods the Partnership made Partnership distributions totaling
$12.9 million in May 1999 and $27.1 million in May 1998, to the Partners.
9
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Exhibit A1
----------
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
3. Sale and Leaseback of the Project (continued)
--------------------------------------------
As of December 31, 1999, there are no outstanding Events. Unless an Event occurs
prior to May 1, 2000, a distribution is expected to be made to the Partners on
that date.
The cash reserves are included in both cash escrowed for current liabilities and
cash held in escrow including accrued interest on the accompanying balance
sheets. Investment income earned on these funds also remains in escrow until
released under specified provisions of the sale and leaseback documents.
The following is a schedule of future minimum lease payments due under the above
lease at December 31, 1999 (in thousands):
2000 $ 68,274
2001 71,639
2002 74,912
2003 76,456
2004 80,114
Thereafter (2005-2031) 2,061,774
---------------
2,433,169
Less portion representing
interest 1,656,308
Present value of future
minimum lease payments $ 776,861
===============
In connection with the sale and leaseback transaction, the Partnership has
agreed to indemnify the lessors, under certain circumstances, in the event of
the lessors' loss of certain tax benefits associated with the Project (See Note
7).
4. Plant, Property and Equipment
-----------------------------
Plant, property and equipment is summarized as follows (in thousands):
<TABLE>
<CAPTION>
Estimated Useful
1999 1998 Life
------------ ------------ ---------------------
<S> <C> <C> <C>
Land and land improvements $ 131,252 $ 131,252 41 years
Power plant structure 257,967 257,967 41 years
Machinery, equipment, and furniture 164,629 163,532 5-41 years
------------ -------------
553,848 552,751
Less accumulated depreciation 121,206 107,418
------------ -------------
$ 432,642 $ 445,333
============ =============
</TABLE>
10
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Exhibit A1
----------
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
5. Power Sales Contracts and Royalty Agreement
-------------------------------------------
The Project's electrical power output is sold to Entergy Services, Inc.
("Entergy"), and Vidalia at fixed annual rates, pursuant to contracts (the
"Contracts") approved by the FERC and the Louisiana Public Service Commission
(the "LPSC"). The Contracts expire on December 31, 2031, simultaneously with the
expiration of the FERC license. During 1999 and 1998, 94% of the Project's
electrical power was sold to Entergy and the remaining 6% was sold to Vidalia.
The Contract rates are fixed and increase incrementally. For 1999 and 1998 the
rates were $0.10 per Kwh and $0.085 per Kwh, respectively. The rate increases
incrementally to $0.205 per Kwh in 2010 through 2013 and subsequently decreases
to $0.175 per Kwh in 2014 through 2016 and then to $0.150 per Kwh in 2017
through 2031.
During 1999, the LPSC opened a proceeding (the "Proceeding"), to which the
Partnership is not a Party, to examine, among other things, the Contract between
Entergy and the Partnership. Although the outcome of the Proceeding cannot be
determined at this time, the Partnership believes that any action taken by the
LPSC, including actions that would adversely impact Entergy's ability to pass
through to its ratepayers its costs under the Contract, would not impact
Entergy's contractual obligations to the Partnership under the Contract. In
addition, the Partnership does not believe the LPSC has jurisdiction to take
such action with respect to the Contract.
Pursuant to the PDA, royalties are due to Vidalia based upon net power sales.
The royalty rate was 5.75% of power sales for 1999 and 5.50% for 1998. The rate
increases incrementally to 11.60% in 2021, and to 20.0% in 2022 through 2031.
In connection with the PDA, the Partnership guaranteed the timely payment of
royalties to Vidalia through August 24, 1999 (the "Guaranty") and agreed to make
$7.5 million available to Vidalia for this purpose.
The total payments made to Vidalia under the Guaranty were $4.5 million of which
$.6 million is owing to the Partnership at the Guaranty termination date, August
24, 1998. The $.6 million is to be repaid to the Partnership with interest, (the
"Guaranty Amount Receivable") over the first twenty quarters commencing
September 30, 1998 as an offset to the quarterly royalty payment owed Vidalia.
Through December 31, 1999, approximately $.3 million was offset against the
Vidalia quarterly royalty as payment against the Guaranty Amount Receivable.
11
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Exhibit A1
----------
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
6. Low Water Flow Revolving Credit Facility
----------------------------------------
The Partnership has a $24.0 million Low Water Flow Revolving Credit Facility
(the "Facility") with a bank (the "Low Flow Lender") that expires on November 1,
2004. This Facility can only be used when certain low water flow conditions
exist and can only be used to supplement cash flows needed to pay amounts due
under the lease agreement. The Facility bears interest at one of three options,
and there is an annual commitment fee on the unused Facility amount of 0.6%
through November 1, 1999 and then 0.9% thereafter.
During 1996, when the previous Facility expired and before the new Facility was
obtained, excess cash of approximately $1.2 million was funded to the low flow
reserve account in accordance with the terms of the sale and leaseback
documents. With the new facility in place and all necessary conditions met under
the terms of the sale and leaseback documents, the balance ($1.3 million) in the
low flow reserve account was transferred to the Partnership on May 1, 1998.
7. Tax Indemnification Provisions
------------------------------
The sale and leaseback documents contain various tax indemnification provisions
which could subject the Project to significant financial liability. As of
December 31, 1999, there are no outstanding claims under the various tax
indemnification provisions.
8. Related Party Transactions
--------------------------
During 1999 and 1998, CVC received approximately $1.1 million and $5.5 million,
and DCI received $.3 million and $1.1 million, respectively, as partial
reimbursements of their direct and indirect costs incurred in connection with
their Partnership duties and responsibilities. As of December 31, 1999, the
Partnership had a $1.1 million and $.3 million accrued liability to CVC and DCI,
respectively, for unpaid costs.
Louisiana Hydro Electric Capital Corporation, a wholly-owned subsidiary of DCI,
owns a 9.93% undivided interest in the Project which it purchased in 1990 for
$62.9 million as a lessor in connection with the sale and leaseback transaction
discussed in Note 1.
12
Page 19 of 24
<PAGE>
EXHIBIT A2
----------
CATALYST VIDALIA CORPORATION
BALANCE SHEETS
(IN THOUSANDS)
UNAUDITED
ASSETS
<TABLE>
<CAPTION>
December 31, December 31,
1998 1999
---------------- ----------------
<S> <C> <C>
Cash and cash equivalents $ 113 $ 215
Investment in CORHLP 48,973 47,350
Management fee receivable 1,195 1,157
Other assets - 30
---------------- ----------------
Total assets $ 50,281 $ 48,752
================ ================
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Intercompany payable to TCG $ 731 $ 500
Intercompany payable to CVHC 395 41
Accounts payable and acrued expenses 2 8
Management fee payable to GLP - 400
Income taxes payable parent company 33,209 34,585
---------------- ----------------
Total liabilities 34,337 35,534
---------------- ----------------
Stockholder's equity:
Common stock - -
Additional paid-in capital - -
Retained earnings 15,944 13,218
Total stockholder's equity 15,944 13,218
Total liabilities and stockholders equity $ 50,281 $ 48,752
================ ================
</TABLE>
Page 20 of 24
<PAGE>
EXHIBIT A2
CATALYST VIDALIA CORPORATION
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
UNAUDITED
Year Ended
December 31,
-----------------------------
1998 1999
------------ -----------
Revenues:
Equity interest in operating
results of CORHLP $ 15,724 $ 4,325
Management fee from CORHLP 1,616 1,891
Other income 72 29
------------ -----------
17,412 6,245
------------ -----------
Expenses:
General and administrative 81 92
Management fees 1,616 750
------------ -----------
1,697 842
Pre tax income 15,715 5,403
Tax provision (6,094) (2,161)
------------ -----------
Net income $ 9,621 $ 3,242
============ ===========
Page 21 of 24
<PAGE>
EXHIBIT A2
CATALYST VIDALIA CORPORATION
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
Year Ended
December 31,
-----------------------------------
1998 1999
------------- --------------
<S> <C> <C>
Cash flows provided by (used in) operations:
Net income $ 9,621 $ 3,242
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Equity interest in operating results of CORHLP (15,724) (4,325)
Distribution from (contribution to) CORHLP, net 13,570 5,947
Dividend payout to CVHC (16,491) (5,968)
Changes in operating assets and liabilities:
Management fee receivable from CORHLP 3,801 38
Management fee payable to parent company (11,483) -
Intercompany payable to CVHC 10,508 (354)
Intercompany payable to TCG - (231)
Other operating assets and liabilities, net 130 377
Income taxes parent company 6,094 1,376
------------- --------------
Net cash provided by operating activities 26 102
------------- --------------
Net increase in cash and cash equivalents 26 102
Cash and cash equivalents beginning of the period 87 113
------------- --------------
Cash and cash equivalents at end of period $ 113 $ 215
============== ==============
</TABLE>
Page 22 of 24
<PAGE>
EXHIBIT A2
CATALYST VIDALIA CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(in thousands)
Unaudited
<TABLE>
<CAPTION>
Additional
Shares Paid
of Common Common In Retained
Stock Stock Capital Earnings Total
------------- --------- ------------ --------- --------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1997 10 $ - $ 77,350 $22,914 $100,264
Dividend (see Note) (77,350) (100) (77,450)
Dividend (16,491) (16,491)
Net income 9,621 9,621
----------- -------- -------- ------- -------
Balance December 31, 1998 10 - - 15,944 15,944
Dividend (5,968) (5,968)
Net income 3,342 3,342
----------- -------- -------- ------- -------
Balance December 31, 1999 10 $ - $ - $13,318 $13,318
=========== ======== ======== ======= =======
</TABLE>
Note: The 1998 dividend represents a prior period adjustment to R/E for cash
distributions from CVC to CVHC which were improperly recorded as loans in the
G/L.
Page 23 of 24
<PAGE>
Exhibit C
---------
<TABLE>
<CAPTION>
The Catalyst Group, Inc.
Organization as of December 31, 1999
State of
Name Incorporation Location of Business Nature of Business
- ---- ------------- -------------------- ------------------
<S> <C> <C> <C>
Ronald W. Cantwell N/A N/A 100% ownership of The Catalyst
(Individual) Group, Inc.
The Catalyst Group, Inc. Louisiana Vidalia, LA 100% ownership of Catalyst Vidalia
Acquisition Corporation.
Catalyst Vidalia Acquisition Louisiana Edison, NJ 100% ownership of Catalyst
Corporation ("CVHC") Vidalia Holding Corporation and the
sole member of Century
Power, LLC.
Century Power, LLC Louisiana Edison, NJ Owns 100% of the CVHC Participating
Preferred Stock
Catalyst Vidalia Holding Louisiana Vidalia, LA 100% ownership of Catalyst
Corporation ("CVHC") Vidalia Corporation and the sole
member of Vidalia Holding, LLC.
Vidalia Holding, LLC A Louisiana Vidalia, LA Limited Partner of Catalyst Old
Limited Liability River Hydroelectric Limited
Company Partnership with a 25% undivided
interest.
Catalyst Vidalia Corporation Louisiana Vidalia, LA General Partner of Catalyst Old
River Hydroelectric Limited
Partnership with 50% undivided
interest in and 100% voting
interest in such partnership.
Catalyst Old River Hydroelectric A Louisiana Limited Vidalia, LA Lessee of a 192 megawatt
Limited Partnership Partnership hydroelectric facility in Concordia
Parish, Louisiana.
Catalyst Construction Corporation Delaware -- Inactive, owned 100% by CVAC
of Connecticut
Catalyst Energy Construction Delaware -- Inactive, owned 100% by CVAC
Corporation
Catalyst Waste-to-Energy Corporation Delaware -- Inactive, owned 100% by CVAC
Obermeyer Hydraulic Turbines Connecticut -- Inactive, owned 100% by CVAC
Catalyst Energy Systems Corporation Delaware -- Inactive, owned 100% by CVAC
</TABLE>
Page 24 of 24
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 215
<SECURITIES> 0
<RECEIVABLES> 1,157
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 30
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 48,752
<CURRENT-LIABILITIES> 408
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 13,218
<TOTAL-LIABILITY-AND-EQUITY> 48,752
<SALES> 0
<TOTAL-REVENUES> 6,245
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 842
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,403
<INCOME-TAX> 2,161
<INCOME-CONTINUING> 3,242
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,242
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
