<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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 12,016,492 shares of the Registrant's Common Stock outstanding
as of May 12, 1997.
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TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-Q
Quarter Ended March 31, 1997
Part I - Financial Information: Page
Item 1. Financial Statements
Consolidated Statements of Operations for the Three Months
Ended March 31, 1997 and 1996 (Unaudited) 2
Colidated Balance Sheets as of March 31, 1997 (Unaudited)
and December 31, 1996 3
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1997 and 1996 (Unaudited) 4
Notes to Consolidated Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II - Other Information: 8
Signature 9
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Part I - Financial Information
Item 1. Financial Statements
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1997 and 1996
Unaudited
(In thousands, except per share data)
<S> <C> <C>
1997 1996
Revenues
Thermal energy $66,324 $69,605
Electric energy 14,088 12,754
Fees earned and other 3,109 3,860
------ ------
Total revenues 83,521 86,219
Operating expenses
Fuel and consumables 46,503 47,808
Production and operating costs 14,182 13,161
Depreciation 4,764 4,193
General and administrative 9,495 8,914
Total operating expenses 74,944 74,076
------ ------
Operating income 8,577 12,143
Interest expense, net 4,056 4,250
------ ------
Income before minority interests and income taxes 4,521 7,893
Minority interests in earnings of subsidiaries 734 801
------ ------
Income before income taxes 3,787 7,092
Income taxes 1,553 2,911
------ ------
Net income $2,234 $4,181
====== ======
Net income per share $ .19 $ .36
====== ======
Average shares outstanding 11,982 11,469
====== ======
Dividends per share $ .035 $ .035
====== ======
See accompanying notes to consolidated financial statements.
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<TABLE>
<CAPTION>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31, December 31,
1997 1996
(Unaudited)
<STUB> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 19,321 $ 14,598
Accounts receivable
Trade (less allowance for doubtful accounts
of $1,370 in 1997 and $1,128 in 1996) 34,204 35,436
Other 3,633 3,479
------- -------
Total accounts receivable 37,837 38,915
Inventories 6,371 6,900
Other current assets 6,248 7,346
------- -------
Total current assets 69,777 67,759
Non-current cash and cash equivalents 12,135 10,678
Property, plant and equipment, net 376,571 374,549
Investment in non-consolidated partnerships 8,863 8,781
Intangible assets 14,273 14,390
Other assets 19,854 18,279
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Total assets $501,473 $494,436
======== ========
Liabilities and Stockholders' Equity
Current liabilities
Short-term debt $ 17,200 $ 18,500
Current portion of long-term debt 13,780 13,499
Accounts payable 5,105 7,800
Accrued fuel 14,461 14,394
Accrued expenses and other current liabilities 28,936 19,102
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Total current liabilities 79,482 73,295
Long-term debt 224,848 226,487
Other liabilities 7,818 7,755
Deferred income taxes 28,946 29,597
------- -------
Total liabilities 341,094 337,134
Minority interests in subsidiaries 17,101 16,768
Stockholders' equity
Preferred stock-$.01 par value, authorized and
unissued 15,000,000 shares - -
Common stock-$.01 par value, authorized 60,000,000
shares, issued 12,038,057 shares in
1997 and 12,010,597 shares in 1996 120 120
Additional paid-in capital 113,602 112,836
Retained earnings 30,352 28,538
Treasury stock, at cost, 38,267 shares in 1997
and 46,140 shares in 1996 (796) (960)
--------- --------
Total stockholders' equity 143,278 140,534
--------- --------
Total liabilities and stockholders' equity $501,473 $494,436
========= ========
See accompanying notes to consolidated financial statements.
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<CAPTION>
TRIGEN ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1997 and 1996
Unaudited
(In thousands)
1997 1996
<S> <C> <C>
Cash flows from operating activities
Net income $2,234 $4,181
Reconciliation of net income to cash
provided by operating activities
Depreciation and amortization 5,647 4,811
Deferred income taxes (651) 2,832
Provision for doubtful accounts 146 66
Minority interests in subsidiaries 734 801
Changes in assets and liabilities
Accounts receivable 932 (1,535)
Inventories and other current assets 1,627 2,749
Accounts payable and other current
liabilities 7,207 3,489
Noncurrent assets and liabilities (2,361) (699)
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Net cash provided by operating
activities 15,515 16,695
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Cash flows from investing activities
Capital expenditures (6,786) (6,385)
Investment in non-consolidated partnerships,
net - (2,153)
------- -------
Net cash used in investing activities (6,786) (8,538)
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Cash flows from financing activities
Decrease in short-term debt (1,300) (10,065)
Proceeds of long-term debt 1,601 7,000
Payments of long-term debt (2,959) (1,605)
Dividends paid (420) (403)
Issuance of common stock, net 930 729
Proceeds from sale of interest rate caps - 1,003
Distribution to minority interests (401) (884)
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Net cash used in financing activities (2,549) (4,225)
------- -------
Cash and cash equivalents
Increase 6,180 3,932
At beginning of period 25,276 20,175
------- -------
At end of period $31,456 $24,107
======= =======
Current $19,321 $14,091
Non-current 12,135 10,016
------- -------
At end of period $31,456 $24,107
======= =======
Supplemental disclosure of cash flow information
Cash paid during the period for
Interest $ 4,078 $ 4,325
======= =======
Income taxes 661 1,054
======= =======
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 consolidated financial statements.
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[CAPTION]
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Trigen Energy Corporation (the "Company"), develops, owns and operates
commercial district energy cogeneration systems. Trigen uses its expertise in
thermal engineering and proprietary cogeneration processes to convert fuel to
various forms of thermal energy and electricity at more efficient conversion
rates than conventional processes. Trigen combines heat and power generation,
producing electricity as a by-product, for use in its facilities and for sale to
customers. The Company serves more than 1,500 customers with energy produced
at 24 plants in 14 locations, including industrial plants, electric
utilities, commercial and office buildings, government buildings, colleges and
universities, hospitals, residential complexes and hotels.
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
March 31, 1997, and the results of operations and the cash flows for the three
months ended March 31, 1997 and 1996. The results of operations and cash flows
for the three month period ended March 31, 1997 are not indicative of those to
be expected for the year ending December 31, 1997. These financial statements
should be read in conjunction with the audited consolidated financial
statements and notes thereto for the year ended December 31, 1996 included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1996.
Certain reclassifications have been made to the 1996 financial statements to
conform to the 1997 presentation.
2. Use of Estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions.
Revenues and operating income are subject to seasonal fluctuation due to peak
heating demand in the winter and peak cooling demand in the summer. Due to the
seasonality of the Company's business, cost of energy sold for interim periods
within a calendar year is based on average costs to produce and deliver energy.
Effective January 1, 1997, the Company changed its estimate of the average costs
to produce and deliver energy. The first quarter's net income reflects an
increase of $.6 million ($.05 per share) relating to this change. The Company
expects the change to negatively impact the second and third quarters' operating
results and to positively impact the first and fourth quarter results.
3. Subsequent Event
In March, 1990 a suit was filed by Kinetic Energy Development Corporation
against the Company in the Circuit Court of Jackson County, Missouri, in
connection with the Company's acquisition of the Kansas City steam system. On
May 2, 1997, a judgment was entered against the Company in the amount of
$4,271,000. The Company believes that the judgment was unwarranted. It will
take all appropriate legal steps including an appeal, if necessary.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Three Months ended March 31, 1997 Compared with Three Months ended March 31,
1996
Overview
For the quarter ended March 31, 1997, the Company reported net income of $2.2
million, or $.19 per common share. First quarter earnings in 1996 were $4.2
million, equal to $.36 per common share. Revenues were $83.5 million in the
first quarter compared with $86.2 million last year. The unusually mild weather
in the Northeast, especially compared with last year's severe winter, was a main
factor contributing to the lower level of revenues and profits. The Company's
revenues and profits are subject to seasonal fluctuation due to peak heating
demand in the winter and peak cooling demand in the summer.
Operating income for the first quarter was $8.6 million compared with $12.1
million a year ago. Last year's earnings included $1.9 million of income
related to the completion of the financing of the Greys Ferry Cogeneration
Project in Philadelphia. Also contributing to the first quarter earnings
decline were higher legal fees.
Effective January 1, 1997, the Company changed its estimate of the average
cost to produce and deliver energy. See Note 2 of the Notes to Consolidated
Financial Statements.
Revenues
Revenues of $83.5 million were down $2.7 million, or 3% from the first
quarter of 1996, as a result of the mild weather this year compared with the
severe winter last year. Thermal energy sales were down $3.3 million to
$66.3 million, while electric energy sales of $14.1 million were higher by
$1.3 million or 10%. Units of energy sold were down approximately 10% in the
first quarter. Energy systems in Baltimore, Boston and Philadelphia were
particularly affected by the milder winter weather. Offsetting in part the
revenue decline due to the weather were higher fuel prices, which were largely
passed through to customers. Fees earned and other revenue last year
included income resulting from completion of financing for the Grays Ferry
Cogeneration Project.
Operating Expenses
Fuel and consumables' costs were $46.5 million in the first quarter compared
with $47.8 million last year. This decrease reflected the lower level of
revenues. However, as a percent of revenues, fuel and consumables' costs
increased to 55.7% from 55.4% in the first quarter of 1996 due primarily to
higher fuel prices.
Production and operating costs increased 8% to $14.2 million in the first
quarter from $13.2 million in the like quarter last year; and as a percent of
revenues increased to 17.0% from 15.3% in 1996. Contributing to this
increase was the expansion of the Ewing Power Systems operation, which was
acquired in the first quarter of 1996.
Depreciation expense was $4.8 million compared with $4.2 million last year.
The increase reflects the high level of capital expenditures during 1996.
General and administrative expenses increased 7% in the first quarter to $9.5
million. This increase was due to higher legal fees, including litigation costs
for the antitrust suit brought by the Company against OG&E in Oklahoma City.
Interest Expense, Net
Net interest expense declined 5% to $4.1 million due primarily to the
substitution of debt with high interest rates with debt at lower interest rates.
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Income Taxes
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 for both the first quarter of 1997 and 1996 was 41.0%.
Liquidity and Financial Position
Cash and cash equivalents were $31.5 million at March 31, 1997, an increase
of $6.2 million. Working capital was a negative $9.7 million at the end of
the first quarter compared with a negative $5.5 million at December 31, 1996.
This negative working capital will be funded through cash from operations and
borrowings under the Company's revolving credit agreement. At March 31,
1997, receivables decreased 3% to $37.8 million and inventories were down 8%
to $6.4 million from the balances at the end of 1996. Accounts payable were
down $2.7 million to $5.1 million, and accrued expenses and other current
liabilities were up $9.8 million to $28.9 million at March 31, 1997.
The Company's primary source of funds for its business activities and
repaying its debt has been from operations. Cash generated from operating
activities was $15.5 million for the first three months of 1997 compared with
$16.7 million in the like period last year. The lower cash from operations
in 1997 was due primarily to the earnings decline. The $15.5 million of cash
generated during the first three months of 1997 was used to invest $6.8
million in capital expenditures, repay $2.7 million of debt, and pay $.4
million in dividends to shareholders and $.4 million to minority interests.
The remaining $5.2 million of cash generated from operations was added to
cash and cash equivalents at March 31, 1997.
At March 31, 1997, total debt was $255.8 million compared with $258.5 million
at year end 1996. On April 4, 1997, the Company entered into a $160 million
revolving credit agreement with several banks. This facility is for an
initial period of three years and may be extended by a total of two one-year
extensions. Borrowings under the facility bear interest, at the Company's
option, at an annual rate equal to the base rate or the Eurodollar rate plus
3/4%. The base rate is the higher of the prime lending rate or the Federal
Reserve reported Federal funds rate plus 1/2%. On April 7, an initial borrowing
of $38.0 million was made under the new facility, of which $36.0 million was
used to repay the prior revolving credit facility.
During the first three months of 1997, stockholders' equity increased $2.7
million to $143.3 million at March 31, 1997. This increase reflects $2.2
million of net income, $.8 million from the issuance of common stock and $.1
million of proceeds from the exercise of stock options; offset by $.4 million
dividend payment to shareholders.
The Company's planned capital expenditures for upgrades, expansions,
environmental matters and other improvements are material. The Company believes
that cash provided by operations, cash on hand and available credit
facilities will be sufficient to finance its capital program and several new
development projects.
In March, 1990 a suit was filed by Kinetic Energy Development Corporation
against the Company in the Circuit Court of Jackson County, Missouri, in
connection with the Company's acquisition of the Kansas City steam system.
On May 2, 1997, a judgment was entered against the Company in the amount of
$4,271,000. The Company believes that the judgment was unwarranted. It will
take all appropriate legal steps including an appeal, if necessary.
Impact of New Accounting Standard
Statement of Financial Accounting Standard No. 128, "Earnings per Share"
(SFAS No. 128), will require presentation of "basic" and "diluted" earnings per
share for periods ending after December 15, 1997. Based on preliminary
analysis, the Company does not expect the adoption of SFAS No. 128 to
significantly impact earnings per share for periods previously presented.
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings
In March, 1990 a suit was filed by Kinetic Energy Development Corporation
against the Company in the Circuit Court of Jackson County, Missouri, in
connection with the Company's acquisition of the Kansas City steam system.
On May 2, 1997, a judgment was entered against the Company in the amount of
$4,271,000. The Company believes that the judgment was unwarranted. It will
take all appropriate legal steps including an appeal, if necessary.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibit is filed as part of this report:
27 Financial Data Schedule
(b) No reports on Form 8-K were filed for the three months ended March
31, 1997.
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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
Vice President, Finance and
Chief Financial Officer
/s/ Daniel J. Samela
Daniel J. Samela
Controller
Date: May 12, 1997
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q for quarter ending March 31, 1997 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 19,321
<SECURITIES> 0
<RECEIVABLES> 39,207
<ALLOWANCES> 1,370
<INVENTORY> 6,371
<CURRENT-ASSETS> 69,777
<PP&E> 442,506
<DEPRECIATION> 65,935
<TOTAL-ASSETS> 501,473
<CURRENT-LIABILITIES> 79,482
<BONDS> 224,848
0
0
<COMMON> 120
<OTHER-SE> 143,158
<TOTAL-LIABILITY-AND-EQUITY> 501,473
<SALES> 83,521
<TOTAL-REVENUES> 83,521
<CGS> 65,449
<TOTAL-COSTS> 74,944
<OTHER-EXPENSES> 734
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,056
<INCOME-PRETAX> 3,787
<INCOME-TAX> 1,553
<INCOME-CONTINUING> 2,234
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,234
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
