EXHIBIT A TO FORM U-3A-2
Catalyst Old River Hydroelectric Limited Partnership
December 31, 1997 and 1996 Financial Statements
with Report of Independent Auditors
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
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, 1997 and 1996 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 generally accepted
auditing standards. 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, 1997 and 1996, and the results
of its operations, its cash flows and its partners' capital for
the years then ended in conformity with generally accepted
accounting principles.
February 13, 1998
<TABLE>
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
BALANCE SHEETS
AS OF DECEMBER 31
(In thousands)
<CAPTION>
1997 1996
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 4,118 $ 4,004
Cash escrowed for current liabilities 9,352 9,173
Accounts receivable 1,723 6,755
Prepaid expenses and other current
assets 338 259
Total current assets 15,531 20,191
Plant, property and equipment, net 457,862 469,905
Cash held in escrow including accrued
interest thereon 79,630 61,395
Deferred financing costs, net 25,323 26,349
Other noncurrent assets, net 600 600
Accrued levelized revenue 332,691 273,176
-------- -------
Total Assets $911,637 $851,616
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accrued interest payable $ 8,752 8,189
Accounts payable and other current liabilitie 7,519 5,395
Total current liabilities 16,271 13,584
Finance debt obligation 740,437 716,217
Accrued levelized royalty expense 37,541 31,047
Accrued property taxes 11,705 10,032
Total liabilities 805,954 770,880
Partners' capital 105,683 80,736
--------- --------
Total liabilities and capital $ 911,637 $851,616
</TABLE>
See accompanying notes to the financial statements
<TABLE>
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31
(In thousands)
<CAPTION>
1997 1996
<S> <C> <C>
Revenues $ 128,322 $ 121,291
Operating expenses
Depreciation 13,633 13,660
Operations and maintenance 6,204 6,309
Property taxes 1,686 1,686
Royalties 10,107 9,420
General and administrative 1,757 1,596
Total operating expenses 33,387 32,671
Operating income 94,935 88,620
Interest expense (75,307) (72,907)
Investment income 5,319 4,248
-------- --------
Net income $ 24,947 $ 19,961
</TABLE>
<TABLE>
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31
(In thousands)
<CAPTION>
1997 1996
<S> <C> <C>
Cash flows provided by (used in)
operations:
Net income $ 24,947 $ 19,961
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 13,633 13,660
Amortization of deferred financing
costs 1,026 1,366
Changes in operating assets and
liabilities:
Accounts receivable 5,032 (3,713)
Prepaid expenses and other current
assets (79) (26)
Accrued levelized revenue (59,515) (61,414)
Accounts payable and other current
liabilities 2,124 1,817
Accrued levelized royalty expense 6,494 6,427
Finance debt obligation 24,220 22,422
Other noncurrent operating assets
and liabilities (16,956) 4,199
------- ------
Net cash provided by operating activities 926 4,699
Cash flow used in investing activities
relating to plant, property, and
equipment (1,590) (1,164)
Cash flows provided by (used in) financing
activities:
Sale and leaseback escrowed proceedsreleased 778 6,956
Funding of escrow reserves - (10,791)
Net cash provided by (used in) financing ------- --------
activities 778 (3,835)
Net increase (decrease) in cash and cash
equivalents 114 (300)
Cash and cash equivalents at beginning
of the period 4,004 4,304
Cash and cash equivalents at end of
period $4,118 $4,004
</TABLE>
See accompanying notes to the financial statements
<TABLE>
CATALYST OLD RIVER HYDROELECTRIC LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
(In thousands)
<CAPTION>
<S> <C>
Balances, December 31, 1995 $ 60,775
Net income 19,961
Balances, December 31, 1996 80,736
Net income 24,947
Balances, December 31, 1997 $ 105,683
</TABLE>
See accompanying notes to the 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 has
two partners, Catalyst Vidalia Corporation ("CVC"), as the
general partner, and Dominion Capital, Inc. ("DCI"), as the
limited partner, (collectively the "Partners") and each have an
undivided 50% interest in the Partnership.
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 operations for
1997 and 1996 includes approximately $28.2 million and $23.1
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).
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 operations for
1997 and 1996 includes approximately $3.2 million and $2.6
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.
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 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 both 1997 and 1996, the lease payments
totaled approximately $49.0 million. 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 each May 1 (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 a result of outstanding Events as of May 1, 1997 and 1996, no
distributions were made to the Partners on those dates. As of
December 31, 1997, there are no outstanding Events. Unless an
Event occurs prior to May 1, 1998, 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
thereon 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, 1997 (in thousands):
1998 52,103
1999 61,674
2000 68,274
2001 71,639
2002 74,912
Thereafter (2002-2031) 2,218,344
---------
Subtotal 2,546,946
Less portion representing
interest 1,806,509
Present value of future ---------
minimum lease payments $ 740,437
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):
Estimated Useful
1997 1996 Lif
Land and land improvements $ 131,252 $ 131,252 41 years
Power plant structure 257,967 257,967 41 years
Machinery, equipment,
and furniture 162,490 160,906 5-41 years
------- -------
551,709 550,125
Less accumulated
depreciation 93,847 80,220
------- -------
$ 457,862 $ 469,905
======= =======
5. Power Sales Contracts and Royalty Agreement
The Project's electrical power output is sold to Entergy
("Entergy"), formerly known as Louisiana Power and Light Company,
and Vidalia at fixed annual rates, pursuant to contracts (the
"Contracts") approved by the FERC and the Louisiana Public
Service Commission. The Contracts expire on December 31, 2031,
simultaneously with the expiration of the FERC license. During
1997 and 1996, 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
commencing in 1997. For 1997 and 1996 the rates were $0.075 per
Kwh and $0.065 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.
Pursuant to the PDA, royalties are due to Vidalia based upon net
power sales. The royalty rate was 5.25% of power sales for 1997
and was 5% for 1996. The rate increases incrementally to 11.60%
in 2021, and to 20.0% in 2022 through 2031.
In connection with the PDA, the Partnership has effectively
guaranteed the timely payment of royalties through August 24,
1998 (the "Guaranty"). Under this guaranty, the Partnership has
agreed to make $7.5 million available to Vidalia in the form of
"Accelerated Royalties".
As of December 31, 1997 , the Partnership has paid to Vidalia
$4.5 million in Accelerated Royalties, comprised of $.6 million
in Supplemental Royalties and $3.9 million in Advance Royalties
(as those terms are defined in the sale and leaseback documents).
Pursuant to the Guaranty, the Partnership can be required to
provide up to an additional $3.0 million in Accelerated Royalties
through August 24, 1998.
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, 2002. 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 of 0.6% on
the unused Facility amount.
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 transaction. With the
new Facility in place the $1.2 million in the low flow reserve
account will be transferred to the Partnership once certain
conditions are met under the terms of the sale and leaseback
documents.
7. Potential Tax Indemnification
During September 1994 one of the Project's four Owner
Participants ("the OP") notified the Partnership that it had
received a Notice of Proposed Adjustment ("NOPA") from the
Internal Revenue Service ("IRS"). The NOPA asserts that the
difference between the Partnership's tax basis in the Project
prior to the 1990 sale and leaseback transaction and the purchase
price paid by the OP as part of that transaction is not five year
ACRS property and this difference (approximately $98 million for
all four OP's) should be depreciated over 20 years instead of 5
years. Under terms of a Tax Indemnification Agreement, the
Partnership would be liable to compensate the OP for its total
after-tax cash flow loss that would result from the loss of the
five year ACRS depreciation, including interest and penalties
attributable to any assessment, as well as all reasonable costs
incurred by the OP in contesting the NOPA.
Receipt of the NOPA notification from the OP is a Trigger Event
and would reduce future Partner Distributions by the potential
indemnity payment that would be paid by the Partnership if the
NOPA was upheld.
On August 20, 1997, the OP that received the NOPA notified the
Partnership that, in a letter they received from the IRS dated
July 22, 1997, the IRS conceded the above discussed tax
depreciation issue in favor of the OP. As a result, the above
described Trigger Event was effectively cured as of July 22,
1997.
8. Related Party Transactions
During 1997 and 1996, CVC received approximately $355,000 and
$339,000, and DCI received $45,000 and $44,000 respectively, as
partial reimbursements of their direct and indirect costs
incurred in connection with their Partnership duties and
responsibilities. As of December 31, 1997, the Partnership had a
$5.0 million and $1.1 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.
<TABLE>
CATALYST VIDALIA CORPORATION
BALANCE SHEETS
(In thousands)
Unaudited
<CAPTION>
December 31, December 31
1997 1996
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 87 $ 183
Prepaid franchise taxes and other
current assets - 67
Investment in CORHLP 48,819 34,345
Management fee receivable, including
accrued interest - CORHLP 4,996 3,656
Note receivable-parent company 9,801 9,801
Advances to parent company 77,762 77,308
------- -------
Total assets $ 139,465 $ 125,360
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Accounts payable and accrued expenses $ - $ 11
Intercompany payable to TCG, Inc. 603 536
Management fee payable, including
accrued interest - parent company 11,483 4,791
Income taxes payable-parent company 27,115 24,182
Total liabilities 39,201 29,520
Stockholder's equity:
Common stock - -
Additional paid-in capital 77,350 77,350
Retained earnings 22,914 18,490
Total stockholder's equity 100,264 95,840
Total liabilities and stockholders ------- -------
equity $ 139,465 $ 125,360
</TABLE>
<TABLE>
CATALYST VIDALIA CORPORATION
STATEMENTS OF OPERATIONS
(In thousands)
Unaudited
<CAPTION>
Year Ended
December 31
1997 1996
<S> <C> <C>
Revenues:
Equity interest in operating results
of CORHLP $ 12,474 $ 9,980
Management fee including accrued
interest - CORHLP 1,696 1,525
Other income - tax refunds 112 98
Total Revenues 14,282 11,603
Expenses:
General and administrative 217 267
Management fee including accrued
interest - parent company 6,692 1,525
6,909 1,792
Pre tax income 7,373 9,811
Tax provision (2,949) (3,924)
-------- --------
Net income $ 4,424 $ 5,887
</TABLE>
<TABLE>
CATALYST VIDALIA CORPORATION
STATEMENTS OF CASH FLOWS
(In thousands)
Unaudited
<CAPTION>
Year Ended
December 31
1997 1996
<S> <C> <C>
Cash flows provided by (used in)
operations:
Net income $ 4,424 $ 5,887
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Equity interest in operating
results of CORHLP (12,474) (9,980)
Changes in operating assets and
liabilities:
Management fee receivable
from CORHLP (1,340) (1,182)
Management fee payable to
parent company 6,692 1,526
Advances to parent company (454) (80)
Other operating assets and
liabilities, net 12 46
Income taxes - parent company 2,933 3,878
Net cash provided by (used in) ----- -----
operating activities (96) 95
Net increase (decrease) in cash and
cash equivalents (96) 95
Cash and cash equivalents beginning
of the period 183 88
Cash and cash equivalents at end
of period $ 87 $ 183
</TABLE>
<TABLE>
CATALYST VIDALIA CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(In thousands)
Unaudited
<CAPTION>
Additional
Shares Paid
of Common Common in Retained
Stock Stock Capital Earnings Total
<S> <C> <C> <C> <C> <C>
Balance December 31, 1995 10 $ - $ 77,350 $12,603 $89,953
Net income 5,887 5,887
Balance December 31, 1996 10 - 77,350 18,490 95,840
Net income 4,424 4,424
Balance December 31, 1997 10 $ - $ 77,350 $22,914 $100,264
</TABLE>
<TABLE>
CATALYST VIDALIA HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands)
Unaudited
<CAPTION>
December 31, December 31
1997 1996
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 94 $ 230
Prepaid franchise taxes and other
current assets 18 1,131
Note Receivable 721 656
Investment in CORHLP 148,523 136,049
Management fee receivable - CORHLP 4,996 3,656
------- -------
Total assets $ 154,352 $ 141,722
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Accounts payable and accrued expenses $ 44 $ 29
Management fee payable 1,600 1,250
Deferred income tax liability 11,493 3,839
Total liabilities 13,137 5,118
Stockholder's equity:
Common stock - -
Participating preferred stock 134 134
Additional paid-in capital 132,894 132,894
Retained earnings 8,187 3,576
Total stockholder's equity 141,215 136,604
Total liabilities and stockholders ------- -------
equity $ 154,352 $ 141,722
</TABLE>
<TABLE>
CATALYST VIDALIA HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
Unaudited
<CAPTION>
Year Ended
December 31
<S> <C> <C>
1997 1996
Revenues:
Equity interest in operating
results of CORHLP $ 12,474 $ 9,980
Management fee including accrued
interest - CORHLP 1,696 1,525
Management fee - Lincorp/VCH(1996) 35 315
Investment income 65 167
Other income - tax refunds 112 -
Total Revenue 14,382 11,987
Expenses:
General and administrative 1,686 1,164
Writedown of investment in CORHLP - 10,238
Deferred tax consolidation reversal
expense 4,660 -
Management consulting fees 350 340
Total Expenses 6,696 11,742
Pre tax income 7,686 245
Tax provision (3,075) (98)
------- -------
Net income $ 4,611 $ 147
======= =======
</TABLE>
<TABLE>
CATALYST VIDALIA HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Unaudited
<CAPTION>
Year Ended
December 31
1997 1996
<S> <C> <C>
Cash flows provided by (used in)
operations:
Net income $ 4,611 $ 147
Deferred income taxes 7,654 (533)
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Equity interest in operating
results of CORHLP (12,474) (9,980)
Changes in operating assets
and liabilities:
Prepaid franchise taxes and
other current assets 1,113 10,238
Interest receivable (65) -
Management fee receivable
Payable to related party (1,340) (759)
Investment write-down - (1,182)
Operating liabilities - (2,221)
------- -------
Net cash used in operating activities 365 359
Net decrease in cash and cash equivalents (136) (3,931)
Cash and cash equivalents beginning
of the period 230 4,161
Cash and cash equivalents at end of
period $ 94 $ 230
</TABLE>
<TABLE>
CATALYST VIDALIA HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(In thousands, except share data)
Unaudited
<CAPTION>
Shares Shares of
of Participating Additional
Common Common Preferred Preferred Paid
Stock Stock Stock Stock In Capital
<S> <C> <C> <C> <C> <C>
Balance December 31, 1995 1,000 $ - 133,593 $ 134 $ 132,894
Net income
Balance December 31, 1996 1,000 - 133,593 134 132,894
Net income
Balance December 31, 1997 1,000 $ - 133,593 134 132,894
CATALYST VIDALIA HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (continued)
(In thousands, except share data)
Unaudited
Retained
Earnings Total
<S> <C> <C>
Balance December 31, 1995 $ 3,429 $ 136,457
Net income 147 147
Balance December 31, 1996 3,576 136,604
Net income 4,611 4,611
Balance December 31, 1997 $ 8,187 $ 141,215
</TABLE>
<TABLE>
CATALYST VIDALIA HOLDING CORPORATION
CATALYST VIDALIA CORPORATION
CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 1997
(Dollars in Thousands)
<CAPTION>
CVC CVHC
<S> <C> <C>
Cash 87 7
Accounts receivable:
Management fee, including
accrued interest 4,996 6,487
Other receivable - 18
Note Receivable - 721
Receivable from TCG, Inc. - 387
CVC accrued management
fee receivable - 4,996
Investment:
CORHLP 46,819 -
CVC - 139,859
Deferred income tax benefits:
Federal
State
Intercompany note 9,801 (9,801)
Intercompany account 77,762 (13,758)
------- -------
Total Assets 139,465 128,916
======= =======
CATALYST VIDALIA HOLDING CORPORATION
CATALYST VIDALIA CORPORATION
CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 1997 (continued)
(Dollars in Thousands)
Consolidated entries Consol-
Debit Credit idated
<S> <C> <C> <C>
Cash 94
Accounts receivable:
Management fee, including
accrued interest 6,487 4,996
Other receivable 18
Note Receivable 721
Receivable from TCG, Inc. 387 -
CVC accrued management
fee receivable 4,996 -
Investment:
CORHLP 111,942 10,238 148,523
CVC 19,516 159,375 -
Deferred income tax benefits:
Federal 4,809 4,809 -
State 1,182 1,182 -
Intercompany note -
Intercompany account 64,004 -
------- ------- -------
Total Assets 137,449 251,478 154,352
======= ======= =======
CATALYST VIDALIA HOLDING CORPORATION
CATALYST VIDALIA CORPORATION
CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 1997 (continued)
(Dollars in Thousands)
CVC CVHC
<S> <C> <C>
Related party payable -
TCG, Inc. 603 (172)
CVHC accrued management
fee payable 4,996 -
Accounts payable and
management fees 6,487 1,600
Federal and state income
taxes payable - I/C 100 4,187
Deferred income taxes
payable:
Federal and State 27,015 4,236
------- -------
Total liabilities 39,201 9,851
Common stock
Participating preferred
stock - 134
Additional paid-in capital 77,350 132,894
Retained earnings -pre
November 5, 1991 1,431 -
Retained earnings - post
November 5, 1991 21,483 (13,963)
------- -------
100,264 119,065
Total liabilities and ------- -------
stockholders equity 139,465 128,916
======= =======
CATALYST VIDALIA HOLDING CORPORATION
CATALYST VIDALIA CORPORATION
CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 1997 (continued)
(Dollars in Thousands)
Consolidated entries Consol-
Debit Credit idated
<S> <C> <C> <C>
Related party payable -
TCG, Inc. 387 44
CVHC accrued management
fee payable 4,996 -
Accounts payable and
management fees 6,487 1,600
Federal and state income
taxes payable - I/C 18,614 14,327 -
Deferred income taxes
payable:
Federal and State 22,931 3,173 11,493
------- ------- -------
Total liabilities 53,415 17,500 13,137
Common stock -
Participating preferred
stock 134
Additional paid-in capital 77,350 132,894
Retained earnings -pre
November 5, 1991 1,431 -
Retained earnings - post
November 5, 1991 33,215 33,882 8,187
------- ------- -------
111,996 33,882 141,215
------- ------- -------
Total liabilities and
stockholders equity 165,411 51,382 154,352
======= ======= ========
</TABLE>
<TABLE>
CATALYST VIDALIA HOLDING CORPORATION
CATALYST VIDALIA CORPORATION
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED DECEMBER 31, 1997
(Dollars in Thousands)
CVC CVHC
<S> <C> <C>
Revenue
Equity interest in operating
results-
Catalyst Old River
Hydroelectric Ltd. Ptr. 12,474 -
Catalyst Vidalia Corporation - 4,424
Management fee, incl. int.-
CORHLP 1,696 -
Management fee - CVC - 1,696
Management fee - Lincorp - 35
Interest income - other - 65
Other 112
Accrued management fee - CVC - 4,996
------- -------
Total Revenue 14,282 11,216
Expenses
General and administrative 217 1,017
Management consulting fees 1,696 350
Deferred tax consolidation
true-up exp. - 4,660
Accrued management fee - CVHC 4,996 -
Deferred compensation expense - 452
------- -------
Total Expenses 6,909 6,479
Pretax income (loss) 7,373 4,737
Tax (provision) benefit (2,949) -
------- ------
Net income (loss) 4,424 4,737
======= ======
CATALYST VIDALIA HOLDING CORPORATION
CATALYST VIDALIA CORPORATION
CONSOLIDATING STATEMENT OF OPERATIONS (continued)
FOR THE QUARTER ENDED DECEMBER 31, 1997
(Dollars in Thousands)
Consolidated entries Consol-
Debit Credit idated
<S> <C> <C> <C>
Revenue
Equity interest in operating
results-
Catalyst Old River
Hydroelectric Ltd. Ptr. 12,474
Catalyst Vidalia Corporation 4,424 -
Management fee, incl. int.-
CORHLP 1,696
Management fee - CVC 1,696 -
Management fee - Lincorp 35
Interest income - other 65
Other 112
Accrued management fee - CVC 4,996 -
------- ------ -------
Total Revenue 11,116 - 14,382
Expenses
General and administrative 1,234
Management consulting fees 1,696 350
Deferred tax consolidation
true-up exp. 4,660
Accrued management fee - CVHC 4,996 -
Deferred compensation expense 452
------- ------- -------
Total expenses - 6,692 6,696
Pretax income (loss) 11,116 6,692 7,686
Tax (provision) benefit 3,075 2,949 (3,075)
------- ------- -------
Net income (loss) 14,191 9,641 4,611
======= ======= =======
</TABLE>
<TABLE>
CVHC
Consolidating Journal Entries
(000's)
12/31/97
<CAPTION>
DEBIT CREDIT
<S> <C> <C>
1.* Retained Earnings 18,006
Investment in CVC 18,006
Reverse CVHC's equity pick-up of CVC
11/5/91 - 12/31/96
1a. Equity pick-up of CVC 4,424
Investment in CVC 4,424
Reverse CVHC's equity pick-up
of CVC 1/1 - 12/31/97
2. Management fee income-CVHC 1,696
Management fee expense - CVC 1,696
Offset CVC management fee expense
against CVHC management fee income
1/1 - 12/31/97
3.Provision for Taxes 3,075
Retained Earnings 98
Deferred Taxes Payable 3,173
Record Top Side Tax Provision for
1/1 to 12/31/97
* Historical
4. Management fee payable 6,487
Management fee receivable 6,487
Reverse CVC's management fee payable
to CVHC against CVHC's management fee
receivable from CVC
5* Investment in CORHLP 111,942
Federal income taxes payable-
I/C account 10,338
Additional paid in capital 77,350
Retained earnings pre 11/15/91 1,431
Deferred FIT receivable 112
I/C account 64,004
Investment in CVC 136,945
Record original investment elimination
and purchase price accounting as of
11/5/91
6. Retained earnings post 11/5/91 4,550
1997 consolidating P/L entries 4,550
Record 1997 P/L consolidating
entries against retained earnings
* Historical
7. Deferred Taxes Payable-Current 2,949
Tax Provision 2,949
Eliminate Effect of CVC Taxes Payable
8. Intercompany Payable-TCG 387
Receivable from TCG, Inc. 387
To offset the receivable against
the payable
9. Retained Earnings 10,238
Investment in CORHLP 10,238
To lower investment basis in
CORHLP to correct amount
10. Investment in CVC 19,516
Retained Earnings 19,516
To reverse book entry for
consolidation
11. FIT Payable - I/C account 7,316
Retained Earnings 7,019
Deferred FIT receivable 241
Deferred State tax receivable 56
DIT payable-Federal I/C acct 3,101
DIT payable - State I/C account 322
Retained Earnings 3,423
Federal income taxes payable -
I/C account 775
State income taxes payable -
I/C account 185
Deferred FIT receivable 775
Deferred State receivable 185
Deferred tax asset - FIT 4,809
Deferred tax asset - State 1,182
Deferred tax liability - FIT 629
Deferred tax liability - State 161
Retained earnings post 11/5/91 323
Income taxes payable - I/C 7,104
Deferred Tax Provision - 1996 3,924
Retained Earnings 3,924
Deferred income Tax Payable 4,622
Deferred income Tax Receiv- Fed. 3,681
Deferred income Tax Receiv- State 941
To consolidate prior consolidation
entries 3,4,7,8,10,11
12. Deferred income Taxes 7,223
Income Taxes Payable 7,223
To Zero Out income tax payable
12a. Accrued management fee - CVC 4,996
CVHC accrued management fee
payable 4,996
CVC accrued management fee
receivable 4,996
Accrued management fee - CVHC 4,996
To eliminate intercompany
management fee accrual
</TABLE>
