<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-13264
TRIGEN ENERGY CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 13-3378939
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
One Water Street
White Plains, New York 10601
(Address of principal executive offices) (Zip Code)
(914) 286-6600
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
There were 11,507,680 shares of the Registrant's Common Stock
outstanding as of August 12, 1996.
<PAGE>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-Q
Quarter Ended June 30, 1996
Part I - Financial Information: Page
Item 1. Financial Statements
Condensed Consolidated Statements of Operations for the Three and
Six Months Ended June 30, 1996 and 1995 (Unaudited) 2
Condensed Consolidated Balance Sheets as of June 30, 1996 (Unaudited)
and December 31, 1995 3
Condensed Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1996 and 1995 (Unaudited) 4
Notes to Condensed Consolidated Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5-8
Part II - Other Information:
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 6. Exhibits and Reports on Form 8-K 9
Signature 10
<PAGE>
<TABLE>
<CAPTION>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 1996 and 1995
Unaudited
(All amounts in thousands, except share and per share data)
Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
<C> <S> <S> <S> <S>
Revenues
Energy revenues $46,674 $34,251 $129,033 $97,874
Fees earned and other 2,011 1,524 5,871 3,077
------- ------- ------- -------
Total revenues 48,685 35,775 134,904 $100,951
Operating expenses
Fuel and consumables 20,412 11,544 68,220 44,048
Production and
operating costs 8,715 8,490 21,876 20,590
Depreciation 3,157 2,606 7,350 6,649
General and
administrative 7,079 5,160 15,993 11,687
------- ------- ------- -------
Total operating
expenses 39,363 27,800 113,439 82,974
Operating income 9,322 7,975 21,465 17,977
Other income (expense):
Interest expense (4,796) (4,913) (9,465) (9,902)
Other income, net 416 477 835 1,014
------- ------- ------- -------
Income before minority
interests and income
tax expense 4,942 3,539 12,835 9,089
Minority interests in
earnings of
consolidated entities (700) 1 (1,501) (36)
------- ------- ------- -------
Income before income
tax expense 4,242 3,540 11,334 9,053
Income tax expense 1,744 1,400 4,655 3,655
------- ------- ------- -------
Net income $ 2,498 $ 2,140 $ 6,679 $ 5,398
======= ======= ======= =======
Net income per share $.22 $.19 $.58 $.47
===== ==== ==== ====
Average shares
outstanding 11,506,844 11,386,362 11,488,251 11,379,581
Dividends per share $.035 $.035 $.07 $.07
===== ===== ==== ====
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share data)
June 30, December 31,
1996 1995
(Unaudited)
<C>
Assets <S> <S>
Current assets:
Cash and cash equivalents $ 6,635 $ 9,984
Accounts receivable:
Trade (less allowance for doubtful
accounts of $859 in 1996 and $697 in 1995) 22,142 36,275
Other 3,303 1,922
Inventories 6,481 6,239
Prepaid costs and other 7,454 6,890
------- -------
Total current assets 46,015 61,310
Non-current cash and cash equivalents 10,813 10,191
Property, plant and equipment, net 345,966 341,188
Investment in non-consolidated partnerships 8,623 6,548
Intangible assets, net 15,260 15,088
Deferred costs and other assets, net 18,934 20,581
------- -------
Total assets $445,611 $454,906
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 4,980 $ 5,924
Accrued fuel 10,291 16,806
Accrued expenses and other 18,836 16,718
Short-term debt --- 14,165
Current portion of long-term debt 12,645 7,415
-------- --------
Total current liabilities 46,752 61,028
Long-term debt 218,740 223,371
Other liabilities 8,831 9,229
Deferred income tax liabilities 28,114 25,222
-------- --------
Total liabilities 302,437 318,850
Minority interests in consolidated entities 17,021 17,226
Stockholders' equity:
Preferred stock-$.01 par value
(authorized and unissued 15,000,000 shares) ---- ----
Common stock-$.01 par value (authorized
60,000,000 shares; issued 11,533,219
shares in 1996, 11,416,418 shares in 1995) 115 114
Additional paid-in capital 102,684 100,788
Retained earnings 23,941 18,070
Treasury stock, at cost (28,996 shares in
1996, 7,268 shares in 1995) (587) (142)
-------- --------
Total stockholders' equity 126,153 118,830
-------- --------
Total liabilities and stockholders' equity $445,611 $454,906
======== ========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIGEN ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
Unaudited
(All amounts in thousands)
1996 1995
<S> <C> <C>
Increase (decrease) in cash and cash equivalents:
Net cash provided by operating activities $ 25,911 $ 15,170
-------- --------
Cash flows from investing activities:
Sale of marketable securities ---- 16,361
Capital expenditures (12,073) (7,536)
Investment in non-consolidated partnerships,net (2,075) (1,022)
------- -------
Net cash (used in) provided by investing
activities (14,148) 7,803
------- -------
Cash flows from financing activities:
Short-term debt, net (14,165) (14,600)
Proceeds of long-term borrowings 8,000 ----
Payments of long-term borrowings (7,401) (1,810)
Dividends (808) (797)
Issuance of common stock 860 262
Repurchase of common stock (445) ----
Sale of interest rate caps 1,003 ----
Distribution to minority interests (1,534) ----
------- -------
Net cash used in financing activities (14,490) (16,945)
Net (decrease) increase in cash and cash equivalents (2,727) 6,028
Cash and cash equivalents at January 1 20,175 19,837
------- -------
Cash and cash equivalents at June 30 $17,448 $25,865
======= =======
Cash and cash equivalents at June 30:
Current cash and cash equivalents $ 6,635 $16,158
Non-current cash and cash equivalents 10,813 9,707
------- -------
Cash and cash equivalents at June 30 $17,448 $25,865
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest (net of amounts capitalized) $ 9,577 $ 9,123
======= =======
Income taxes $ 1,472 $ 3,284
======= =======
Non-cash investing activity:
Acquisition of subsidiary $ 1,037 $ ----
======= =======
Non-cash financing activity:
Issuance of common stock for
acquisition of subsidiary $ 1,037 $ ----
======= =======
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Trigen Energy Corporation (the "Company") develops, owns and
operates community energy systems and cogeneration facilities at 13
locations in the United States and Canada. The Company believes that it
is the leading commercial owner and operator of community energy systems
in North America. A community energy system consists of a central
production plant that distributes steam, hot water and/or chilled water
to customer buildings through underground distribution pipelines.
Steam, hot water and/or chilled water are sold by the Company to over
1,500 customers, including colleges and universities, office buildings,
hotels, civic and cultural landmarks, housing complexes, industrial
plants and hospitals. Cogenerated electricity produced by the Company
is used by the Company in eight of its systems and is sold to one steam
customer and to local utilities in three communities.
The consolidated financial statements of Trigen Energy Corporation
and its subsidiaries presented herein are unaudited. However, such
information reflects all adjustments, consisting of normal recurring
adjustments, which are, in the opinion of management, necessary to
present fairly the financial position as of June 30, 1996, and the
results of operations for the three and six months
ended June 30, 1996 and 1995 and the cash flows for the six months ended
June 30, 1996 and 1995. The results of operations
for the three and six month periods ended June 30, 1996 and cash flows for
the six month period ended June 30, 1996 are not
indicative of those to be expected for the year ending December 31,
1996. These financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto for the year
ended December 31, 1995 included in the Company's Annual Report on Form
10-K for the year ended December 31, 1995.
2. Subsequent Event
On July 29, 1996, the Company was granted an additional condemnation award
of $6.8 million related to one of its facilities in Boston, Massachusetts.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The Company's operations are primarily the production and
distribution of steam, hot water, electricity and chilled water.
Approximately 60% of total revenue is derived from long-term contracts.
The Company's heating and cooling revenues and consequently its
operating profits are subject to seasonal fluctuation due to
heating demand in the winter and cooling demand in the summer.
For the quarter ended June 30, 1996, the Company reported net
income of $2.5 million or $0.22 per share compared to $2.1 million or
$0.19 per share for the comparable 1995 period. For the six months
ended June 30, 1996, the Company reported net income of $6.7 million or
$0.58 per share compared to $5.4 million or $0.47 per share for the
comparable 1995 period.
Results of Operations
Three Months Ended June 30, 1996 Compared to Three Months Ended June 30,
1995
Revenues
Revenues were $48.7 million for the three months ended June 30,
1996, an increase of $12.9 million, from $35.8 million in the
corresponding quarter in 1995, due principally to two acquisitions
consummated in September 1995, which contributed approximately 68% ($8.8
million) of the increase, and the increased price of fuel.
Operating Expenses
The Company's cost of sales includes fuel and consumables,
production and operating costs and depreciation expense and is affected
primarily by its costs for fuel, chemicals, water and other commodities.
Because the Company's rates typically enable it to pass changes in its fuel and
most commodity costs to the customer, such changes have little impact on
operating income. The Company's cost of sales and its operating income
are affected by its efficiency in converting fuel to steam, hot
water, electricity and chilled water and its ability to minimize costs
through automation and enhanced process control. Cost of sales
as a percentage of revenues increased from 63.3% of revenues in the
second quarter of 1995 to 66.3% of revenues in the second quarter of
1996, principally resulting from the increased cost of fuel.
Fuel and consumable costs were $20.4 million, or 41.9% of revenues
in the second quarter of 1996, compared to $11.5 million, or 32.3% of
revenues in the same period of 1995, an increase of $8.9 million. This
increase is due to the impact of the two acquisitions ($4.6 million) and
the increased price of fuel.
Production and operating costs are those costs of operating the
Company's facilities other than fuel and consumables, and include labor
and supervisory personnel, repair and maintenance costs and plant
operating costs. The increase resulting from the two acquisitions of $1.8
million was offset by cost savings, labor productivity improvements and an
arbitration award. Production and operating costs increased to $8.7 million
in the 1996 period from $8.5 million in the 1995 period, and as a percentage
of revenues decreased to 17.9% in the 1996 period compared to 23.7% in the
1995 period.
Depreciation expense was $3.2 million in the second quarter of 1996
compared to $2.6 million in the second quarter of 1995, an increase of
$0.6 million due predominately to the two acquisitions ($0.3 million).
General and administrative expenses represent on-site management
and other overhead costs incurred for existing operations, as well as
the Company's marketing, development and corporate management costs. General
and administrative costs increased to $7.1 million, or 14.5% of revenues in
the 1996 period from $5.2 million, or 14.4% of revenues in the 1995 period.
This is primarily due to additional development staff and related costs and
the impact of the two acquisitions ($0.5 million).
Operating Income
Operating income was $9.3 million, or 19.1% of revenues, in the
second quarter of 1996 compared to $8.0 million, or 22.3% of revenues,
in the same 1995 period. Increased general and administrative expenses
were partially offset by cost savings, primarily from efficiency and labor
productivity, higher revenues, and the impact of the two acquisitions ($1.5
million).
Interest Expense; Other Income
Interest expense decreased to $4.8 million in the second quarter of
1996 from $4.9 million in the same 1995 period, primarily due to lower
average interest rates on indebtedness.
Income Tax Expense
The Company's effective tax rate is determined primarily by the
federal statutory rate of 35%, and state and local income taxes. The
effective income tax rate of 41.1% is consistent with the rate in the
second quarter of 1995.
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30,
1995
Revenues
Revenues were $134.9 million for the six months ended June 30,
1996, an increase of $33.9 million, from $101.0 million in the
corresponding period in 1995, due principally to two acquisitions
consummated in September 1995, which contributed approximately 54%
($18.4 million) of the increase, a colder winter in 1996 compared to
1995 and the increased price of fuel.
Operating Expenses
Cost of sales as a percentage of revenues increased from 70.6% of
revenues in 1995 to 72.2% of revenues in 1996.
Fuel and consumable costs were $68.2 million, or 50.6% of revenues,
in 1996, compared to $44.0 million, or 43.6% of revenues, in 1995, an
increase of $24.2 million. This increase is due to the impact of the
two acquisitions ($9.9 million) and the increased price of fuel.
Production and operating costs increased to $21.9 million in 1996
from $20.6 million in 1995, and as a percentage of revenues decreased
to 16.2% in 1996 compared to 20.4% in 1995. The increase of $3.6 million
resulting from the two acquisitions was offset by cost savings, labor
productivity improvements and an arbitration award.
Depreciation expense was $7.4 million in 1996 compared to $6.6
million in 1995, an increase of $0.8 million due predominately to the
two acquisitions ($0.5 million).
General and administrative costs increased to $16.0 million, or
11.9% of revenues, in 1996, from $11.7 million, or 11.6% of revenues, in
1995. This is primarily due to additional staff and development costs
and the impact of the two acquisitions ($1.1 million).
Operating Income
Operating income was $21.5 million, or 15.9% of revenues, in 1996
compared to $18.0 million, or 17.8% of revenues, in 1995. Increased
general and administrative expenses offset by cost savings, primarily
from efficiency and labor productivity, higher revenues, and the impact
of the two acquisitions ($3.3 million), resulted in improved operating
income of $3.5 million.
Interest Expense; Other Income
Interest expense decreased to $9.5 million in 1996 from $9.9
million in 1995, primarily due to lower average interest rates on
indebtedness.
Income Tax Expense
The Company's effective tax rate is determined primarily by the
federal statutory rate of 35%, and state and local income taxes. The
effective income tax rate of 41.1% is consistent with the rate in 1995.
Liquidity and Capital Resources
Liquidity
The Company had cash and cash equivalents of $17.4 million at June
30, 1996 and $20.2 million at December 31, 1995, a decrease of $2.8
million. The Company had no short-term indebtedness outstanding at June
30, 1996 compared to $14.2 million at December 31, 1995, a reduction of
$14.2 million. These changes were primarily due to the use of cash on
hand at December 31, 1995 and cash generated from operations during the
year.
Certain of the Company's debt agreements restrict payments by its
subsidiaries, which are the primary obligors, to the Company unless the
payments are for specified purposes or the subsidiary meets certain
financial covenants. Restricted cash and cash equivalents of $14.0
million at June 30, 1996 included $5.9 million for debt service and reserve
funds, $2.8 million for operations and maintenance reserves, $2.0
million available for subsidiary operating purposes and $3.3 million for
certain construction projects. Restricted funds may be invested only in
certain securities. At June 30, 1996, the Company had unused lines of
credit available consisting of $14.2 million under a United Thermal
Corporation ("UTC") revolving credit facility and $42.5 million under a
corporate revolving credit facility.
On May 10, 1996, the Company declared a dividend of $.035 per share
of common stock to holders of record as of June 28, 1996, payable July
15, 1996.
Cash Flow
During the six months ended June 30, 1996, cash provided by
operating activities was $25.9 million compared to $15.2 million for the
comparable period in 1995. Net cash used in investing activities was
$14.1 million for the six months ended June 30, 1996 primarily due to
capital expenditures of $12.1 million and the initial equity investment
of $2.0 million in the Grays Ferry Cogeneration Facility. Net cash used
in financing activities was $14.5 million in 1996 principally reflecting
debt repayments.
Debt
At June 30, 1996, the Company's long-term debt (including the
current portion) was $231.4 million or 61.8% of total capital, at a
weighted average annual interest rate of approximately 7.11% (based on 6
month LIBOR of 5.59% per year) and an average remaining maturity of 6.7
years.
Certain of the Company's debt is variable rate or rate capped.
Based upon the debt balances at June 30, 1996, a change in the LIBOR
rate of .25% would have a corresponding change in interest expense of
approximately $300,000 per year when three month LIBOR is under 6.25%
ranging to approximately $100,000 per year when three month LIBOR is
over 7.25%.
Future Capital Expenditures
The Company's planned capital expenditures for upgrades,
expansions, environmental matters and other improvements are material.
The Company believes that cash provided by operations, net of debt
service, cash balances at June 30, 1996 and available credit facilities
will be sufficient to finance its capital program and several new
development projects.
On March 11, 1996, a wholly-owned subsidiary of the Company became
a one-third partner in the Grays Ferry Cogeneration Facility. Under the
terms of the Partnership Agreement, in addition to its initial equity
investment, the Company is required to contribute $10 million when
construction is completed, which is expected in the last quarter of
1997.
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of security holders was held in Boston on May 10, 1996.
The security holders voted, as recommended by management, for the election to
the Board of Directors of Messrs. George F. Keane, Thomas R. Casten and
Patrick Desnos (11,121,605 votes for and 25,319 votes withheld) and for
ratification of the selection of KPMG Peat Marwick LLP as the Company's
independent certified public accountants (11,146,636 votes for and 288
abstained).
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
11 - Computation of Earnings Per Share
27 - Financial Data Schedule
(b) No reports on Form 8-K were filed for the three months
ended June 30, 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
TRIGEN ENERGY CORPORATION
/s/ David H. Kelly
David H. Kelly
Chief Financial Officer
/s/ Daniel J. Samela
Daniel J. Samela
Controller
Date: August 14, 1996
<TABLE>
<CAPTION>
EXHIBIT 11
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
Computation of Earnings Per Share
(All amounts in thousands, except share and per share data)
Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Earnings Per Share
-Primary
Net income $2,498 $2,140 $6,679 $5,398
====== ====== ====== ======
Weighted average number
of common and common
equivalent shares
applicable to primary
earnings per share
calculation 11,506,844 11,386,362 11,488,251 11,379,581
Dilutive effect of
stock options 59,500 64,888 61,902 79,765
---------- ---------- ---------- ----------
Weighted average number
of shares outstanding 11,566,344 11,451,250 11,550,153 11,459,346
========== ========== ========== ==========
Net income per share -
primary $ 0.22 $ 0.19 $ 0.58 $0.47
======= ======= ======= ======
Earnings Per Share -
Assuming Full Dilution
Net income $ 2,498 $ 2,140 $ 6,679 $ 5,398
Plus: Interest on
convertible subordinated
debt (net of taxes) 152 109 304 218
------- ------- ------- -------
Net income for fully
diluted earnings per
share calculation $ 2,650 $ 2,249 $ 6,983 $ 5,616
======= ======= ======= =======
Weighted average number of
common and common
equivalent shares
applicable to fully
diluted earnings
per share calculation
Weighted average number
of shares outstanding 11,506,844 11,386,362 11,488,251 11,379,581
Shares issuable upon
conversion of
subordinated debt 264,901 283,688 264,901 283,688
Dilutive effect of stock
options 59,500 64,888 61,902 79,765
---------- ---------- ---------- ----------
11,831,245 11,734,938 11,815,054 11,743,034
========== ========== ========== ==========
Net income per share
assuming full dilution $ 0.22 $ 0.19 $ 0.59 $ 0.48
====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q for quarter ending June 30, 1996 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> $17,448
<SECURITIES> 0
<RECEIVABLES> $23,001
<ALLOWANCES> $859
<INVENTORY> $6,481
<CURRENT-ASSETS> $46,015
<PP&E> $400,595
<DEPRECIATION> $54,629
<TOTAL-ASSETS> $445,611
<CURRENT-LIABILITIES> $46,752
<BONDS> $218,740
0
0
<COMMON> $115
<OTHER-SE> $126,038
<TOTAL-LIABILITY-AND-EQUITY> $445,611
<SALES> 0
<TOTAL-REVENUES> $134,904
<CGS> 0
<TOTAL-COSTS> $113,439
<OTHER-EXPENSES> $504
<LOSS-PROVISION> $162
<INTEREST-EXPENSE> $9,465
<INCOME-PRETAX> $11,334
<INCOME-TAX> $4,655
<INCOME-CONTINUING> $6,679
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $6,679
<EPS-PRIMARY> .58
<EPS-DILUTED> .59
</TABLE>
