SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-Q/A
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
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 10601-1009
(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 12,347,227 shares of the Registrant's Common Stock outstanding
as of July 30, 1998.
<PAGE>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-Q
Quarter Ended June 30, 1998
Page
Explanatory Note..............................................................3
Part I - Financial Information:
Item 1. Financial Statements
Consolidated Statements of Operations for the Three and
Six Months Ended June 30, 1998 and 1997 (Unaudited).................4
Consolidated Balance Sheets as of June 30 1998 (Unaudited)
and December 31, 1997...............................................5
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1998 and 1997 (Unaudited)............................6
Notes to Consolidated Financial Statements (Unaudited)...................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................11
Item 3.Quantitative and Qualitative Disclosures About Market Risk.......14
Part II - Other Information:.................................................15
Signatures: .................................................................16
Disclosure Regarding Forward-Looking Statements
This quarterly report includes historical information as well as statements
regarding the future expectations (referred to as "forward-looking statements")
of Trigen Energy Corporation and its wholly owned subsidiaries (collectively
"Trigen"). Important factors that could cause actual results to differ
materially from those discussed in such forward-looking statements include:
supply/demand balance for Trigen's products, competitive pricing pressures,
weather patterns, changes in industry laws and regulations, competitive
technology positions and any failure to achieve Trigen's cost reduction targets
or complete construction projects on schedule. Trigen believes in good faith
that the forward-looking statements in this quarterly report have a reasonable
basis, including without limitation, management's examination of historical
operating trends, data contained in the records of Trigen and other data
available from third parties, but there can be no guarantee that the
expectations described in these forward looking statements will be fulfilled or
accomplished.
<PAGE>
EXPLANATORY NOTE
As of January 1, 1998, the Company has changed its accounting policy for
interim reporting for certain operating costs from an average costing method to
an actual costing method. This amended report consisting of revised Items 1 and
2 of Part I of the quarterly report on Form 10-Q reflects the effects of that
change in accounting policy. Information not affected by that change n
accounting policy is repeated herein without amendment. Information contained
in this amendment should be read in conjunction with the Company's Annual Report
on Form 10-K for the year ended December 31, 1998. The Company believes that
the use of an actual costing methodology better reflects the results of its
operations and conforms internal and external reporting of such results. This
change affects interim quarterly reporting only and has no effect on an annual
basis for the years ended December 31, 1998 and 1997 or any prior years.
<PAGE>
<TABLE>
<CAPTION>
Part I - Financial Information
Item 1. Financial Statements
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 1998 and 1997
Unaudited
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Three Months Six Months
-------------- --------------
1998 1997 1998 1997
---- ---- ---- ----
Revenues
Thermal energy $37,068 $34,129 $97,278 $100,453
Electric energy 8,880 11,474 20,209 25,562
Equity in earnings/(losses) of
non-consolidated partnerships 1,323 (803) 2,026 (693)
Fees earned and other revenues 3,523 3,307 6,193 6,306
------- ------- ------- -------
Total revenues 50,794 48,107 125,706 131,628
------- ------- ------- -------
Operating expenses
Fuel and consumables 18,800 22,588 50,239 63,851
Production and operating costs 13,210 11,967 26,508 24,011
Depreciation 4,917 3,954 9,663 7,870
General and administrative 11,595 7,542 21,218 17,037
------- ------- ------- -------
Total operating expenses 48,522 46,051 107,628 112,769
------- ------- ------- -------
Operating income 2,272 2,056 18,078 18,859
Other income (expense)
Interest expense (5,826) (4,647) (11,567) (9,126)
Other income, net 4,313 442 4,599 865
------- ------- ------- -------
Earnings (losses) before minority interests,
income taxes and extraordinary item 759 (2,149) 11,110 10,598
Minority interests in earnings of
subsidiaries 782 795 1,575 1,529
------- ------- ------- -------
Earnings (losses) before income taxes
and extraordinary item (23) (2,944) 9,535 9,069
Income taxes (10) (1,208) 4,100 3,718
------- ------- ------- -------
Earnings (losses) before extraordinary item (13) (1,736) 5,435 5,351
Extraordinary loss from extinguishment of
debt, net of tax benefit - - (299) -
------- ------- ------- -------
Net earnings (losses) $ (13) $(1,736) $ 5,136 $ 5,351
------- ------- ------- -------
Basic earnings per common share
Before extraordinary item $ - $ (.14) $ .45 $ .45
Extraordinary loss - - (.03) -
------- ------- ------- -------
Net earnings $ - $ (.14) $ .42 $ .45
------- ------- ------- -------
Diluted earnings per common share
Before extraordinary item $ - $ (.15) $ .45 $ .44
Extraordinary loss - - (.03) -
------- ------- ------- -------
Net earnings (losses) $ - $ (.15) $ .42 $ .44
------- ------- ------- -------
Average shares outstanding - basic 12,031 12,012 12,017 11,998
------- ------- ------- -------
Average shares outstanding - diluted 12,031 12,117 12,019 12,173
------- ------- ------- -------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<S> <C> <C>
June 30, December 31,
1998 1997
--------- ----------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 12,431 $ 8,967
Accounts receivable
Trade (less allowance for doubtful accounts
of $1,371 in 1998 and $1,074 in 1997) 23,775 34,866
Other 11,461 10,815
-------- --------
Total accounts receivable 35,236 45,681
Inventories 6,641 7,054
Prepaid expenses and other current assets 8,901 7,985
-------- --------
Total current assets 63,209 69,687
Non-current cash and cash equivalents 4,671 4,726
Property, plant and equipment, net 431,766 388,448
Investment in non-consolidated partnerships 22,515 19,560
Intangible assets, net 42,054 21,454
Deferred costs and other assets, net 23,789 22,094
-------- --------
Total assets $588,004 $525,969
-------- --------
Liabilities and Stockholders' Equity
Current liabilities
Short-term debt $ - $ 14,200
Current portion of long-term debt 15,471 14,499
Accounts payable 3,778 10,053
Accrued fuel 10,606 11,545
Accrued expenses and other current liabilities 28,098 21,485
-------- --------
Total current liabilities 57,953 71,782
Long-term debt 320,173 256,361
Other liabilities 5,062 4,786
Deferred income taxes 38,207 31,237
-------- --------
Total liabilities 421,395 364,166
-------- --------
Minority interests in subsidiaries 16,348 16,321
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 12,417,934 shares in 1998 and
12,070,162 shares in 1997 124 121
Additional paid-in capital 120,857 114,157
Retained earnings 36,154 31,881
Unearned compensation - restricted stock (5,557) -
Cumulative translation adjustment 315 296
Treasury stock, at cost, 88,965 shares in 1998
and 45,500 shares in 1997 (1,632) (973)
-------- --------
Total stockholders' equity 150,261 145,482
-------- --------
Total liabilities and stockholders' equity $588,004 $525,969
-------- --------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1998 and 1997
Unaudited
(In thousands)
<S> <C> <C>
1998 1997
---- ----
Cash flows from operating activities
Net earnings $ 5,136 $ 5,351
Reconciliation of net earnings to cash provided
by operating activities
Extraordinary item 299 -
Depreciation and amortization 12,361 9,618
Deferred income taxes 202 433
Provision for doubtful accounts 269 317
Minority interests in subsidiaries 1,575 1,529
Changes in assets and liabilities
Accounts receivable 10,181 11,931
Inventories and other current assets 417 (973)
Accounts payable and other current liabilities (2,347) (4,326)
Noncurrent assets and liabilities (3,457) (1,334)
------- -------
Net cash provided by operating activities 24,636 22,546
------- -------
Cash flows from investing activities
Acquisition of Power Sources, Inc. (44,100) -
Capital expenditures (20,133) (13,947)
Investment in non-consolidated partnerships (990) (1,100)
------- -------
Net cash used in investing activities (65,223) (15,047)
------- -------
Cash flows from financing activities
Short-term debt, net (14,200) (18,500)
Proceeds of long-term debt 84,850 43,978
Payments of long-term debt (24,356) (34,919)
Dividends paid (863) (841)
Issuance of common stock, net 115 1,292
Distribution to minority interests (1,550) (900)
------- -------
Net cash provided by (used in) financing activities 43,996 (9,890)
------- -------
Cash and cash equivalents
Increase (decrease) 3,409 (2,391)
At beginning of period 13,693 25,276
------- -------
At end of period $17,102 $22,885
------- -------
Current $12,431 $14,053
Non current 4,671 8,832
------- -------
At end of period $17,102 $22,885
------- -------
Supplemental disclosure of cash flow information
Cash paid during the period for
Interest $10,606 $ 8,320
------- -------
Income taxes 1,421 2,264
------- -------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
1. Basis of Presentation
Trigen Energy Corporation (the "Company"), develops, owns and operates
commercial and industrial energy systems in the United States and Canada. The
Company uses its expertise in thermal engineering and proprietary cogeneration
processes to convert fuel to various forms of thermal energy and electricity.
The Company combines heat and power generation, producing electricity as a by-
product, for use in its facilities and for sale to customers.
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, 1998, and the results of operations for the three and six months ended
June 30, 1998 and 1997 and the cash flows for the six months ended June 30, 1998
and 1997. The results of operations for the three and six month periods ended
June 30, 1998 and cash flows for the six month period ended June 30, 1998 are
not indicative of those to be expected for the year ending December 31, 1998.
These financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto for the year ended December
31, 1997 included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997. Certain reclassifications have been made to the 1997
financial statements to conform to the 1998 presentation.
2. Change in Accounting Policy
As of January 1, 1998, the Company has changed its accounting policy for
interim reporting for certain operating costs from an average costing method to
an actual costing method. The Company believes that use of an actual costing
methodology better reflects the results of its operations and conforms internal
and external reporting of such results. This change affects interim quarterly
reporting only and has no effect on an annual basis for the years ended December
31, 1998 and 1997 or on any prior years. The accompanying financial statements
reflect the use of the actual costing method for all periods presented.
3. Recent Accounting Pronouncement
In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" ("SOP 98-5"). SOP 98-5 requires
costs of start-up activities and organizational costs to be expensed as
incurred. SOP 98-5 is effective for financial statements for fiscal years
beginning after December 15, 1998. Earlier application of SOP 98-5 is
encouraged in fiscal years for which annual financial statements have not yet
been issued.
The Company is in process of evaluating the impact SOP 98-5 will have on
the Company's results of operations and financial condition.
4. Supplementary Income Information
Included in other income, net for the three months and six months ended
June 30, 1998 were gains of $2,102,000 from the sale of nitrogen oxide emission
allowances and $1,678,000 from an insurance settlement.
4. Extraordinary Item
The Company incurred an extraordinary charge of $299,000, net of a tax
benefit of $161,000, in the six months ended June 30, 1998 in connection with
the early retirement of debt.
<PAGE>
5. Acquisition
On January 22, 1998, the Company acquired all of the capital stock of Power
Sources, Inc. (renamed Trigen-BioPower, Inc.), a biomass-to-energy power plant
developer and operator, for a total cash investment of $44,100,000, funded from
the Company's existing credit facility. Trigen-BioPower had revenues of
$18,967,000 and net earnings of $2,441,000 for the twelve-month period ended
December 31, 1997. Results for Trigen-Bio-Power are included with those of the
Company since the date of acquisition.
The acquisition was accounted for under the purchase method of accounting.
The purchase price has been allocated to the assets acquired and liabilities
assumed based on fair market value at the date of acquisition. The excess of
the purchase price over the net assets acquired was $10,398,000 and is being
amortized over a period not exceeding 30 years. The fair value of the assets
acquired and liabilities assumed is as follows (in thousands):
Current assets $ 3,325
Property, plant and equipment 32,265
Intangibles 11,687
Costs in excess of net assets acquired 10,398
Current liabilities (2,147)
Long-term debt (4,290)
Other liabilities (7,138)
Total purchase price $44,100
The following pro forma summary presents the consolidated results of
operations for the three and six months ended June 30, 1997 and the six months
ended June 30, 1998 as if the acquisition had occurred at the beginning of the
years presented (in thousands, except per share data):
Three
Months
Ended Six Months Ended
June 30, June 30,
-------- ----------------
1997 1998 1997
---- ---- ----
Revenues $52,625 $126,843 $141,064
Earnings (losses) before extraordinary item (1,705) 5,505 5,677
Diluted earnings (losses) per common share --
before extraordinary item (.15) .46 .47
The pro forma results included certain adjustments for depreciation expense
as a result of a step up in the basis of property, plant and equipment and an
increase in the remaining lives, amortization expense as a result of goodwill
and other intangible assets and interest expense on borrowings to finance the
acquisition. The pro forma results do not purport to be indicative of the
results of operations which actually would have resulted had the acquisition
been made at the beginning of the years presented, or of results which may occur
in the future.
<PAGE>
7. Legal Proceeding
On April 9, 1998, Grays Ferry Cogeneration Partnership, Trigen-Schuylkill
Cogeneration, Inc., Cogen America Schuykill Inc. (formerly NRGG Schuylkill
Cogeneration Inc.) and Trigen-Philadelphia Energy Corporation commenced an
action against PECO Energy Company ("PECO") and Adwin (Schuylkill) Cogeneration,
Inc. in the Pennsylvania Court of Common Pleas of Philadelphia County (the
"Court"). Grays Ferry Cogeneration Partnership (the "Partnership") is the owner
of the Grays Ferry Cogeneration Facility located in Philadelphia, Pennsylvania.
At June 30, 1998, the Company had an investment of $14,705,000 in the
Partnership, representing a one third interest in the Partnership through its
wholly owned subsidiary, Trigen-Schuylkill Cogeneration, Inc. Cogen America
Schuylkill, Inc. and Adwin (Schuylkill) Cogeneration, Inc. own the other two
thirds interests in the Partnership. Adwin (Schuylkill) Cogeneration, Inc. is an
indirect wholly owned subsidiary of PECO. In addition, at June 30, 1998 the
Company had a receivable of $4,437,000 due from the Partnership. Included in the
Company's earnings before income taxes for the three months and six months ended
June 30, 1998 were the Company's share of Partnership earnings of $1,719,000 and
$2,705,000, respectively, and fees earned from the Partnership of $1,024,000 and
$1,452,000, respectively. This compared to fees earned from the Partnership of
$175,000 and $325,000 in the three months and six months ended June 30, 1997.
The Partnership commenced this action in reaction to the wrongful
termination by PECO on March 3, 1998, of the electric power purchase agreement
between the Partnership and PECO (the "Power Purchase Agreement"). The
Partnership is seeking a declaratory judgement to require PECO to comply with
the electric power purchase agreement and for damages to be proven at trial in
an amount in excess of $200 million.
On May 6, 1998, the Court issued a preliminary injunction against PECO
which requires PECO to pay the Partnership for its electric energy and capacity
at the rates set forth in the Power Purchase Agreement and otherwise to
specifically perform the Power Purchase Agreement. The preliminary injunction
will remain in effect until the Court renders its decision after the final
hearing of this matter. The final hearing is currently scheduled to occur in
March of 1999. On July 7, 1998, PECO withdrew its appeal of the preliminary
injunction.
The Chase Manhattan Bank has issued notices of default to the Partnership
related to defaults caused by PECO's actions under the terms of the Credit
Agreement, dated as of March 1, 1996, between the Partnership, The Chase
Manhattan Bank, as agent and certain other commercial banks (collectively the
"Banks"). The debt under the Credit Agreement is secured only by the
Partnership assets and the partners' ownership interests in the Partnership.
While it is possible that the Company's investment and receivable could become
impaired, at this time the Company does not believe that is likely. The Company
believes that PECO's termination of the Power Purchase Agreement was wrongful
and the Company intends to aggressively pursue the remedies available to it.
Although the Banks have not accelerated the debt owing under the Credit
Agreement, the Banks have required the Partnership to prepay approximately
$6,000,000 of the loans outstanding from earnings of the Partnership which
otherwise would have been distributable to its partners and/or payable as fees
to the Company. The remaining balance of the loans outstanding was $106,929,000
as of July 31, 1998.
In the event the Company is not successful and PECO's actions are upheld,
PECO would be required under PURPA to continue to purchase power from the Grays
Ferry Cogeneration Facility at PECO's avoided cost. This would generate
significantly lower earnings per share for the Company than the 1998 annual
earnings per share of $.40 to $.52 that the Company previously forecast it would
earn from its investment in the Partnership, based on the contracted power
purchase price.
<PAGE>
8. Comprehensive Income
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income". This statement
requires disclosure of all items recognized under accounting standards as
components of comprehensive income. Following are the Company's components of
comprehensive income for the three and six months ended June 30, 1998 and 1997
(in thousands).
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1998 1997 1998 1997
---- ---- ---- ----
Net earnings (losses) $(13) $(1,736) $5,136 $5,351
Other comprehensive income
Cumulative translation adjustment 22 - 19 39
---- ------- ------ ------
Comprehensive income (loss) $ 9 $(1,736) $5,155 $5,390
---- ------- ------ ------
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Three Months ended June 30, 1998 compared with Three Months ended June 30, 1997.
Overview
- --------
For the quarter ended June 30, 1998, the Company reported losses before
extraordinary item of ($13) thousand or $0 per diluted share. This compared
with losses of ($1.7) million and ($.15) of diluted earnings per share in the
second quarter of 1997. Revenues were $50.8 million in the second quarter
compared with $48.1 million last year. Operating income was $2.3 million and
the operating margin was 4.5% in the second quarter of 1998 compared with
operating income of $2.1 million and an operating margin of 4.3% in the like
quarter last year. Operating results for 1998 include those of the newly
acquired Trigen-BioPower from January 22, 1998, the date of acquisition. Trigen-
BioPower contributed $4.6 million in revenues and $1.0 million in operating
income to second quarter operating results. A significant portion of 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.
Revenues
Revenues of $50.8 million were up $2.7 million from the second quarter of
1997. Thermal energy sales increased $2.9 million reflecting the $4.6 million
revenue contribution by Trigen-BioPower. A decline in units of thermal energy
sold at systems in Baltimore, Philadelphia and St. Louis offset in part the
higher thermal energy sales. Electric energy sales were $8.9 million, down $2.6
million from the like quarter in 1997. This decline was due to the
trigeneration plant in Nassau County, New York being taken off line for 22 days
during the second quarter for major overhaul work. The increase in
earnings/(losses) of non-consolidated partnerships results from recognition of
$1.7 million of earnings from the Grays Ferry Cogeneration Partnership.
Operating Expenses
Fuel and consumables' costs were $18.8 million in the second quarter
compared with $22.6 million last year. This decrease was due to the lower level
of thermal energy revenues at systems principally located in the Northeast, the
outage at the Nassau plant and savings realized from the purchase of a fuel
management contract in 1997.
Production and operating costs increased 10.4% to $13.2 million in the
second quarter due mainly to the inclusion of production and operating costs for
Trigen-BioPower.
Depreciation expense was $4.9 million compared with $4.0 million in 1997.
The increase reflects the higher level of capital expenditures and depreciation
expense of Trigen-BioPower.
General and administrative expenses were up $4.1 million in the quarter due
primarily to a $2.0 million increase in insurance and employee-related costs and
to the inclusion of general and administrative expenses for Trigen-BioPower.
Interest Expense
Interest expense increased $1.2 million to $5.8 million in the second
quarter reflecting the increased level of borrowing, primarily the $44.1 million
of borrowings under the Company's credit facility to finance the Trigen-BioPower
acquisition.
<PAGE>
Other Income, Net
The $3.9 million increase in other income, net in the second quarter
results from gains of $2.1 million from the sale of nitrogen oxide emission
allowances and $1.7 million from an insurance settlement.
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 the second quarter of 1998 and 1997 was 43.0% and 41.0%,
respectively.
Six months ended June 30, 1998 compared with six months ended June 30,
1997.
Overview
- --------
For the six months ended June 30, 1998, the Company reported earnings
before extraordinary item of $5.4 million or $.45 per diluted share. This
compared with $5.4 million and $.44 per diluted earnings per share last year.
Operating income was $18.1 million on revenues of $125.7 million in the first
six months of 1998 compared with operating income of $18.9 million on revenues
of $131.6 million in 1997. The operating margin was 14.4% in 1998 compared with
14.3% in 1997. Trigen-BioPower contributed $8.3 million in revenues and $1.9
million in operating income to operating results for the six months ended June
30, 1998.
Revenues
Revenues of $125.7 million were down $5.9 million or 4% from 1997. Thermal
energy sales were down $3.2 million to $97.3 million and electric energy sales
were down $5.4 million to $20.2 million. The decline in thermal energy sales
was due principally to the mild winter weather, particularly in the Northeast,
that adversely impacted our energy systems in Baltimore, Boston, Philadelphia
and St. Louis. The decline in thermal energy sales was partially offset by the
$8.3 million revenue contribution of Trigen-BioPower. Electric energy sales
were down as a result of the Nassau plant being taken off line by the local
utility, as permitted under the contract, for a longer period of time in 1998
than in 1997. Also in 1998, this facility was taken off line for 22 days for
major overhaul work. The increase in earnings /(losses) of non-consolidated
partnerships results from recognition of $2.7 million of earnings from the Grays
Ferry Cogeneration Partnership.
Operating Expenses
Fuel and consumables' costs were $50.2 million in 1998 compared with $63.9
million last year. This decrease reflects the lower level of energy revenues at
systems primarily located in the Northeast, the outages at the Nassau plant and
savings realized from the purchase of a fuel management contract in 1997.
Production and operating costs increased 10.4% to $26.5 million due mainly
to the inclusion of production and operating costs for Trigen-BioPower.
Depreciation expense was $9.7 million compared with $7.9 million last year.
The increase reflects the higher level of capital expenditures and depreciation
expense of Trigen-BioPower.
General and administrative expenses increased $4.2 million in the first six
months of 1998 due primarily to a $2.0 million increase in insurance and
employee-related costs and to the inclusion of general and administrative
expenses for Trigen-BioPower.
<PAGE>
Interest Expense
Interest expense increased $2.4 million to $11.6 million in 1998 due to the
increased level of borrowing, primarily the $44.1 million of borrowings to
finance the Trigen-BioPower acquisition.
Other Income, Net
The $3.7 million increase in other income, net results from gains of $2.1
million from the sale of nitrogen oxide emission allowances and $1.7 million
from an insurance settlement.
Income Taxes
The Company's effective tax rate was 43% for the first six months of 1998
compared with 41% last year.
Extraordinary Item
The Company incurred an extraordinary charge of $.3 million, net of a $.2
million income tax benefit, in the first quarter of 1998 in connection with the
early retirement of debt.
Liquidity and Financial Position
Cash and cash equivalents were $17.1 million at June 30, 1998, an increase
of $3.4 million from year-end 1997. Working capital was $5.2 million compared
with a negative $2.1 million at December 31, 1997. At June 30, 1998,
receivables were down 23% to $35.2 million and inventories decreased 6% to $6.6
million from the balances at the end of 1997. Accounts payable was down $6.3
million to $3.8 million, and accrued expenses and other current liabilities were
up $6.6 million to $28.1 million at June 30, 1998. The Company's working
capital requirements vary in line with the peak heating demand in the winter and
peak cooling demand in the summer.
During the first six months of 1998, the Company generated $24.6 million of
cash from operating activities compared with $22.5 million last year. The
improvement was due to the cash generated by Trigen-BioPower. During the first
six months of 1998, the Company acquired Trigen-BioPower for $44.1 million,
invested $20.1 million in capital expenditures and $1.0 million in partnership
investments, and paid dividends of $.9 million to shareholders and $1.6 million
to minority interests. These expenditures were financed by the cash generated
from operating activities and by $46.3 million of net new borrowings.
Total debt was $335.7 million at June 30, 1998 compared with $285.1 million
at the end of 1997. The $50.6 million increase in debt includes $4.3 million of
Trigen-BioPower debt assumed in the acquisition. In February 1998, $14.4
million of Trigen-Nassau bonds, with a fixed tax-exempt rate of 7.75%, were
refinanced by a new issue of variable rate demand tax-exempt bonds. This
refinancing resulted in an extraordinary charge of $.3 million, net of a $.2
million income tax benefit.
During the first six months of 1998, stockholders' equity increased $4.8
million to $150.2 million at June 30, 1998. This increase reflects $5.1 million
of net earnings, $.4 million of amortization of unearned compensation related to
restricted shares and $.1 million from the issuance of common stock, net of
stock purchases, offset by $.9 million of dividend payments to shareholders. For
the six month period ended June 30, 1998, 47,000 shares of common stock were
purchased for the treasury at a cost of $.8 million.
Reference is made to Note 6 of the Notes to Consolidated Financial
Statements with respect to legal proceedings involving the Company.
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
<PAGE>
Part II - Other Information
Item 6. Exhibits
(a) The following exhibits are filed as part of this amendment:
18 Letter re change in accounting policy
27 Financial Data Schedule
<PAGE
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
TRIGEN ENERGY CORPORATION
/s/ Martin S. Stone
-------------------------
Martin S. Stone
Vice President Finance &
Chief Financial Officer
/s/ Daniel J. Samela
-------------------------
Daniel J. Samela Controller
Date: March 29, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q/A for quarter ending June 30, 1998 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 12,431
<SECURITIES> 0
<RECEIVABLES> 36,607
<ALLOWANCES> 1,371
<INVENTORY> 6,641
<CURRENT-ASSETS> 63,209
<PP&E> 517,889
<DEPRECIATION> 85,867
<TOTAL-ASSETS> 588,004
<CURRENT-LIABILITIES> 57,953
<BONDS> 320,173
0
0
<COMMON> 124
<OTHER-SE> 150,137
<TOTAL-LIABILITY-AND-EQUITY> 588,004
<SALES> 125,706
<TOTAL-REVENUES> 125,706
<CGS> 86,410
<TOTAL-COSTS> 107,628
<OTHER-EXPENSES> 1,575
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,968
<INCOME-PRETAX> 9,535
<INCOME-TAX> 4,100
<INCOME-CONTINUING> 5,435
<DISCONTINUED> 0
<EXTRAORDINARY> (299)
<CHANGES> 0
<NET-INCOME> 5,136
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
