<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, 1999
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 12,356,225 shares of the Registrant's Common Stock
outstanding as of May 12, 1999.
<PAGE>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-Q
Quarter Ended March 31, 1999
Page
Part I - Financial Information:
Item 1. Financial Statements
Consolidated Statements of Operations for the Three Months
Ended March 31, 1999 and 1998 (Unaudited) 3
Consolidated Balance Sheets as of March 31, 1999 (Unaudited)
and December 31, 1998 4
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1999 and 1998 (Unaudited) 5
Notes to Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3.Quantitative and Qualitative Disclosures About
Market Risk 12
Part II - Other Information: 13
Signatures: 14
Disclosure Regarding Forward-Looking Statements
This report includes historical information as well as
statements regarding our future expectations. The statements
regarding the future (referred to as "forward-looking statements")
include among other things statements about energy markets in 1999,
cost reduction targets, return on capital goals, development,
production and acceptance of new products and process technologies,
ongoing and planned capacity additions and expansions and joint
ventures. Important factors that could cause actual results to
differ materially from those discussed in such forward-looking
statements include: supply/demand for our products, competitive
pricing pressures, weather patterns, changes in industry laws and
regulations, competitive technology, failure to achieve our cost
reduction targets or complete construction projects on schedule and
year 2000 computer related difficulties. We believe in good faith
that the forward-looking statements in this report have a reasonable
basis, including without limitation, management's examination of
historical operating trends, data contained in our records and other
data available from third parties, but such forward looking
statements are not guarantees of future performance and actual
results may differ materially from any results expressed or implied
by such forward looking statements.
<PAGE>
Part I - Financial Information
Item 1. Financial Statements
<TABLE>
<CAPTION>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1999 and 1998
Unaudited
(In thousands, except per share data)
1999 1998
<S> <C> <C>
Revenues
Thermal energy $70,685 $60,210
Electric energy 10,793 11,329
Equity in earnings of non-consolidated
partnerships 146 703
Fees earned and other revenues 3,805 2,670
------ ------
Total revenues 85,429 74,912
------- ------
Operating expenses
Fuel and consumables 38,291 32,401
Production and operating costs 13,534 12,336
Depreciation and amortization 6,500 6,050
General and administrative 10,219 8,319
------- ------
Total operating expenses 68,544 59,106
------- ------
Operating income 16,885 15,806
Other income (expense)
Interest expense ( 6,280) (5,741)
Other income, net 358 286
------- -------
Earnings before minority interests, income taxes,
extraordinary item, and a cumulative effect
of a change in an accounting principle 10,963 10,351
Minority interests in earnings of subsidiaries 504 793
------- ------
Earnings before income taxes, extraordinary
item and a cumulative effect of a change in
an accounting principle 10,459 9,558
Income taxes 4,330 4,110
------- ------
Earnings before extraordinary item and a
cumulative effect of a change in an accounting
principle 6,129 5,448
Extraordinary loss from extinguishment of debt,
net of tax benefit - ( 299)
Cumulative effect of a change in an accounting
principle, net of tax benefit (4,903) -
------- ------
Net earnings $ 1,226 $ 5,149
======== =======
Basic earnings per common share
Before extraordinary item and a cumulative
effect of a change in an accounting principle $ .51 $ .45
Extraordinary loss - (.03)
Cumulative effect of a change in an accounting
principle (.41) -
--------- -------
Net earnings $ .10 $ .42
======== ========
Diluted earnings per common share
Before extraordinary item and a cumulative
effect of a change in an accounting principle $ .51 $ .45
Extraordinary loss - (.03)
Cumulative effect of a change in an accounting
principle (.41) -
--------- --------
Net earnings $ .10 $ .42
========= ========
Average shares outstanding - basic 12,004 12,002
-------- --------
Average shares outstanding - diluted 12,005 12,029
-------- --------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands, except share data)
March 31, December 31,
1999 1998
---------- ------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 12,186 $ 10,074
Accounts receivable
Trade (less allowance for doubtful accounts
of $1,103 in 1999 and $1,202 in 1998) 42,961 35,236
Other 8,020 5,686
--------- ----------
Total accounts receivable 50,981 40,922
Inventories 7,250 7,074
Prepaid expenses and other current assets 6,608 8,016
--------- ----------
Total current assets 77,025 66,086
Restricted cash and cash equivalents 4,599 4,623
Property, plant and equipment, net 454,197 442,755
Investment in non-consolidated partnerships 28,577 30,319
Intangible assets, net 48,042 49,968
Deferred costs and other assets, net 21,402 24,405
-------- ---------
Total assets $633,842 $618,156
======== =========
Liabilities and Stockholders' Equity
Current liabilities
Short-term debt $ 11,700 $ 15,000
Current portion of long-term debt 16,650 16,398
Accounts payable 8,472 4,756
Accrued income taxes 6,515 5,728
Accrued fuel 10,136 14,121
Accrued expenses and other current
liabilities 25,956 19,626
--------- ---------
Total current liabilities 79,429 75,629
Long-term debt 352,643 343,685
Other liabilities 4,492 4,254
Deferred income taxes 39,126 39,422
--------- ---------
Total liabilities 475,690 462,990
Minority interests in subsidiaries 8,692 7,238
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 1999 and 1998 124 124
Additional paid-in capital 120,386 120,595
Retained earnings 37,212 36,417
Unearned compensation - restricted stock ( 4,840) ( 4,967)
Accumulated other comprehensive loss ( 1,936) ( 2,002)
Treasury stock, at cost, 97,852 shares in
1999 and 145,842 shares in 1998 ( 1,486) ( 2,239)
-------- ---------
Total stockholders' equity 149,460 147,928
-------- --------
Total liabilities and stockholders' equity $633,842 $618,156
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1999 and 1998
Unaudited
(In thousands)
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities
Net earnings $ 1,226 $ 5,149
Reconciliation of net earnings to cash
provided by operating activities
Extraordinary item - 299
Cumulative effect of a change in an accounting
principle 4,903 -
Depreciation and amortization 6,500 6,050
Deferred income taxes (296) ( 497)
Provision for doubtful accounts 122 144
Minority interests in subsidiaries 496 793
Changes in assets and liabilities
Accounts receivable (9,631) 3,429
Inventories and other current assets 1,232 1,313
Accounts payable and other current liabilities 10,350 3,167
Noncurrent assets and liabilities ( 756) (2,626)
-------- ---------
Net cash provided by operating activities 14,146 17,221
-------- ---------
Cash flows from investing activities
Acquisition of energy facilities (354) (44,100)
Investments in non-consolidated partnerships (310) -
Capital expenditures (16,579) (11,437)
-------- ---------
Net cash used in investing activities (17,243) (55,537)
-------- ---------
Cash flows from financing activities
Short-term debt, net (3,300) (7,500)
Proceeds of long-term debt 13,970 73,350
Payments of long-term debt (5,017) (17,692)
Dividends paid (431) (431)
Purchase of treasury stock (38) (527)
Distribution to minority interests - (650)
-------- ---------
Net cash provided by (used in) financing
activities 5,184 46,550
-------- ---------
Cash and cash equivalents
Increase 2,087 8,234
At beginning of period 14,698 13,693
-------- ---------
At end of period $16,785 $21,927
======== =========
Current $12,186 $17,229
Restricted 4,599 4,698
-------- ---------
At end of period $16,785 $21,927
======== =========
Supplemental disclosure of cash flow information
Cash paid during the period for
Interest $ 5,229 $ 5,261
-------- ---------
Income taxes 454 870
-------- ---------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Trigen Energy Corporation and its subsidiaries ("we"), develop,
own and operate commercial and industrial energy systems in the
United States and Canada. We use our expertise in thermal
engineering and proprietary cogeneration processes to convert fuel to
various forms of thermal energy and electricity. We combine heat and
power generation, producing electricity as a by-product, for use in
our 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
March 31, 1999, and the results of operations and the cash flows for
the three months ended March 31, 1999 and 1998. The results of
operations and cash flows for the three month period ended March 31,
1999 are not indicative of those to be expected for the year ending
December 31, 1999. These financial statements should be read in
conjunction with the audited consolidated financial statements and
notes thereto for the year ended December 31, 1998 included in our
Annual Report on Form 10-K for the year ended December 31, 1998.
Certain reclassifications have been made to the 1998 financial
statements to conform to the 1999 presentation.
2. Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS No. 133").
SFAS No. 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. We are
required to adopt SFAS No. 133 in the first quarter 2000. Based on
preliminary analyses, we do not expect the future adoption of SFAS
No. 133 will have a material effect on results of operations and
financial condition.
3. Cumulative Effect of a Change in an Accounting Principle
Effective January 1, 1999, we adopted the American Institute of
Certified Public Accountants Statement of Position No. 98-5,
"Reporting on the Costs of Start-Up Activities" ("SOP 98-5"). SOP
98-5 requires that costs associated with start-up activities and
organizational costs be expensed as incurred. The effect of the
adoption was an after-tax charge of $4.9 million, net of a tax
benefit of $3.5 million, to expense deferred organizational and
start-up costs as a cumulative effect of a change in an accounting
principle.
4. Extraordinary Item
We incurred an extraordinary charge of $.3 million, net of a tax
benefit of $.2 million, in the three months ended March 31, 1998 in
connection with the early retirement of debt.
<PAGE>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5. Legal Proceedings
Grays Ferry Settlement
On April 23, 1999, the Pennsylvania Court of Common Pleas of
Philadelphia County approved a settlement agreement which ended the
lawsuit brought by Grays Ferry Cogeneration Partnership (the
"Partnership"), Trigen-Schuylkill Cogeneration, Inc. and Cogen
America Schuylkill Inc. against PECO Energy Company and Adwin
(Schuylkill) Cogeneration, Inc. The Partnership is the owner of the
Grays Ferry Cogeneration Facility located in Philadelphia,
Pennsylvania. The Partnership, Trigen-Schuylkill and Cogen America
commenced this lawsuit in reaction to the alleged termination by
PECO on March 3, 1998, of the electric power purchase agreements
between the Partnership and PECO (the "Power Purchase Agreements").
At March 31, 1999, we had an investment of $17.4 million in the
Partnership, representing a one third interest in the Partnership
through our wholly owned subsidiary, Trigen-Schuylkill. Cogen America
and Adwin owned the other two-thirds interests in the Partnership.
Adwin is an indirect wholly owned subsidiary of PECO.
Under the settlement agreement PECO's subsidiary, Adwin,
surrendered its rights to its one-third partnership interest in the
Partnership to the two remaining partners, Trigen-Schuylkill and
Cogen America. As a result, we own one half of the Partnership and
Cogen America owns the other half.
We will recognize a gain in 1999 based upon the market value,
yet to be determined, of the portion of Adwin's interest in the
Partnership that we received. The book value of the additional
interest in the Partnership we received is approximately $9.2
million. If the book value approximated market value, the after tax
gain would be $0.41 per diluted share. Our forecast that we will
earn $1.07 per diluted share from the Partnership in 1999 includes
this $0.41 of non-recurring income.
Based on the settlement agreement, we estimate that we will
recognize after tax income in 1999 from the Partnership of
approximately $12.8 million or $1.07 per diluted share. If this
settlement had not occurred, we expected to recognize after tax
income in 1999 of approximately $5.1 million, or $0.42 per diluted
share, from our interest in the Partnership.
Separately, The Chase Manhattan Bank and Westinghouse Power
Generation, which financed the construction of the Gray's Ferry
Cogeneration Facility, agreed to dismiss their lawsuits against
PECO. The Chase Manhattan Bank also agreed that they will not
charge the Partnership for any default interest up to April 16,
1999. This will result in an additional $.8 million after tax
earnings gain to Trigen or $0.07 per diluted share in 1999 as a
result of the reversal of default interest charges. This $0.07
includes a non-recurring reversal of 1998 default interest expense
of $.5 million after tax or $.04 per diluted share. Our forecast
that we will earn $1.07 per diluted share from the Partnership in
1999 includes this $0.07 of income.
In the year 2001, the energy price under the Power Purchase
Agreements will begin to be based upon a percentage of a market
based index, which we expect to produce substantially lower revenues
from sales to PECO than the more favorable rates of the early
contract years. Under the settlement agreement, the Partnership
gained the right to sell to third parties electric energy and
capacity from the facility in excess of the 150 megawatts which PECO
is required to purchase under the Power Purchase Agreements, subject
to a right of first refusal for PECO. We expect that the ability to
sell to third parties electric energy and capacity above the 150
megawatts under contract to PECO, will result in an opportunity to
improve the financial performance
<PAGE>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
of the Partnership. The Partnership will now have the ability to
institute capital modifications to the combustion turbine to
increase electric capacity during the summer months when the price
of electric capacity and energy are historically the highest.
Nassau Litigation
On May 29, 1998, the County of Nassau, New York commenced an
action against Trigen Energy Corporation and Trigen-Nassau Energy
Corporation in New York State Supreme Court. Trigen-Nassau provides
energy services to Nassau County under various agreements. Nassau
County alleges that Trigen-Nassau breached those agreements by,
among other means, charging the County for certain real estate taxes
that the County contends are Trigen-Nassau's responsibility. On
October 8, 1998, the Court dismissed the claims against Trigen
Energy Corporation. On November 9, 1998, Trigen-Nassau filed
counterclaims against Nassau County, seeking $1.6 million in
damages. Trigen-Nassau alleges that Nassau County breached the
parties' agreements by, among other things, failing to operate and
maintain certain facilities and equipment. On January 21, 1999, the
County requested that the Court dismiss Trigen-Nassau's
counterclaims. On April 5, 1999, the Court dismissed some but not
all of Trigen-Nassau's counterclaims. The Court declined to dismiss
Trigen-Nassau's most important counterclaims which seek
approximately $1.5 million in damages. The County is seeking
approximately $10 million in damages. We believe we have good
defenses to the County's claims, although we cannot predict the
outcome of this matter.
6. Comprehensive Income
Effective January 1, 1998, we 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 components of comprehensive income for the three
months ended March 31, 1999 and 1998 (in thousands).
1999 1998
------ -----
Net earnings $1,226 $5,149
Other comprehensive income
Cumulative foreign currency translation
adjustment 66 (3)
------ -------
Comprehensive income $1,292 $5,146
------ -------
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Three Months ended March 31, 1999 compared with Three Months ended
March 31, 1998.
Overview
For the quarter ended March 31, 1999, we reported earnings
before a cumulative effect of a change in an accounting principle of
$6.1 million or $.51 per diluted share. This compared with $5.4
million and $.45 of diluted earnings per share before extraordinary
item in the first quarter of 1998. Net earnings for the quarter
ended March 31, 1999, amounted to $1.2 million or $.10 per diluted
share after the effect of adoption of the change in accounting
principle. Revenues were $85.4 million in the first quarter compared
with $74.9 million last year. First quarter operating income of
$16.9 million increased 6.8%, or $1.1 million, over the $15.8 million
in the like quarter last year, reflecting increased sales volume and
positive contributions from three new industrial accounts which
became operational during the quarter. A significant portion of our
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 $85.4 million were up $10.5 million or 14% from the
first quarter of 1998, due to increased sales volume reflecting a
colder winter and from positive contributions from three new
industrial accounts which became operational in 1999. Thermal energy
sales were up $10.5 million to $70.7 million while electric energy
sales declined by $.5 million to $10.8 million. Equity earnings from
unconsolidated subsidiaries were down $.6 million from the first
quarter 1998, primarily due to increased legal and interest costs
incurred by the Grays Ferry Cogeneration Partnership in connection
with the PECO lawsuit. Fees earned and other revenues increased $1.1
million primarily due to increased equipment sales and to new
industrial accounts.
Operating Expenses
Fuel and consumables costs were $38.3 million in the first
quarter of 1999 compared with $32.4 million in 1998. This increase
was due to the higher level of energy revenues and the addition of
fuel and consumables costs associated with new industrial accounts.
Production and operating costs increased $1.2 million to $13.5
million in the first quarter due to the increase in revenues and the
inclusion of production and operating costs associated with new
industrial accounts.
Depreciation and amortization expense was $6.5 million compared
with $6.1 million in 1998. The increase reflects the higher level of
capital expenditures.
General and administrative expenses were up $1.9 million from
the first quarter 1998 primarily due to legal expenses incurred in
pursuing the Oklahoma City antitrust lawsuit against OG&E and from
overhead related to new industrial accounts.
Interest Expense, Net
Interest expense increased $.5 million to $6.3 million in the
first quarter due to higher debt levels.
<PAGE>
Income Taxes
Our 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 first quarter of 1999 and 1998 was
41.4% and 43.0%, respectively.
Cumulative Effect of a Change in an Accounting Principle
We incurred an after-tax charge of $4.9 million, net of a tax
benefit of $3.5 million, related to the adoption of SOP 98-5
"Reporting on the Costs of Start-Up Activities" which was recorded as
a cumulative effect of a change in an accounting principle.
Reference is made to Note 3 of the Notes to Consolidated Financial
with respect to the cumulative effect of a change in an accounting
principle.
Liquidity and Financial Position
Cash and cash equivalents were $16.8 million at March 31, 1999
(which included $4.6 million of restricted cash and cash
equivalents), an increase of $2.1 million from year end 1998.
Working capital was a negative $2.4 million compared with a negative
$9.5 million at December 31, 1998. At March 31, 1999, receivables
were up 24.6% to $51.0 million and inventories increased slightly to
$7.3 million from the balances at the end of 1998. Accounts payable
were up $3.7 million to $8.5 million, accrued fuels decreased by $4.0
million to $10.1 million and accrued expenses and other current
liabilities were up $6.3 million to $26.0 million at March 31, 1999.
Our working capital requirements vary in line with the peak heating
demand in the winter and peak cooling demand in the summer.
During the first three months of 1999, the Company generated
$14.1 million of cash from operating activities compared with $17.2
million in the like period last year. The decrease in cash generated
from operations in 1999 was due to higher working capital
requirements. During the first three months of 1999, we invested
$16.6 million in capital expenditures, $.7 million in the acquisition
of energy facilities and non-consolidated partnership investments and
paid dividends of $.4 million to shareholders.
Total debt was $381.0 million at March 31, 1999 compared with
$375.1 million at the end of 1998. The $5.9 million increase, along
with cash generated from operations, was predominately used to fund
capital expenditures.
During the first three months of 1999, stockholders' equity
increased $1.5 million to $149.5 million at March 31, 1999. This
increase reflects $1.2 million of net earnings, $.2 million of
amortization of unearned compensation related to restricted shares
and a profit sharing contribution of $.5 million from treasury,
partially offset by $.4 million of dividend payments to shareholders.
Reference is made to Note 5 of the Notes to Consolidated
Financial Statements with respect to legal proceedings involving the
Company.
Year 2000 Date Conversion
An issue affecting us and other businesses is the inability of
many computer systems and applications to process the year 2000
("Y2K") and beyond. To address this problem, we have developed a
plan that divides direction for Y2K preparedness into four
responsibility areas. These areas are Plant Production, Plant Non-
Production, Desktop Systems and Corporate Systems.
<PAGE>
Plant Production includes primary plant systems that produce
steam, chilling and hot water, electricity and other forms of
energy. A plan to upgrade all non-compliant software and hardware
has been underway since 1996. Testing of our Plant Production
systems for Y2K compatibility is on schedule and expected to be
completed by June 1999. If any Plant and Production systems fail
these tests, we plan to take additional steps to make those systems
Y2K compatible as soon as possible. We anticipate that all primary
plant systems will be compliant by the third quarter of 1999. If we
are not successful in these efforts, we may experience operational
difficulties in serving our customers at some locations.
Plant Non-Production includes Y2K issues related to
telecommunications hardware, climate control systems, security
systems, elevators, parking controls, and related systems.
Generally, these systems achieve 100% compliance with minor hardware
upgrades or chip replacements from original parts manufacturers. At
this time, we believe that all of our material Plant Non-Production
systems are Y2K compliant.
We anticipate all Desktop systems to be compliant by September
1999 and Corporate Systems, which include financial and billing
systems, to be compliant by December 1999. At this time, we believe
our accounting system is Y2K compliant. We are in the process of
upgrading our billing and other systems to achieve compliance. If
we are not successful in these efforts, we believe that it would not
impact our ability to serve our customers, although we may
experience administrative difficulties.
We estimate the total external cost to achieve Y2K compliance to
be $1 million for the years 1997 through 1999. We believe we are
staffed sufficiently to address all Y2K issues.
We purchase raw material from key vendors to produce energy.
These vendors include major natural gas, electricity, and water
utilities, fuel oil and chemical distributors and coal producers.
We will continue to survey our key vendors to determine their Y2K
compliance. At this time, we do not expect any material disruption
in services from vendors due to Y2K issues. We are, however,
dependent in part, upon the ability of our vendors to be Y2K
compliant.
Our Y2K efforts are ongoing and our overall plan, as well as
consideration of contingency plans, will continue to evolve as new
information becomes available. At this time, we do not expect any
major interruption of our business activities due to Y2K issues.
However, we are unable to estimate the ultimate effect Y2K risks
will have on our operating results.
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
We do not engage in the trading of market risk sensitive
instruments in the normal course of business. Our short and long-
term debt is subject to fixed and variable interest rates including
rates primarily based on LIBOR. Based upon the debt balances at
March 31, 1999, a change in the LIBOR rate of .25% would have a
corresponding change in interest expense of approximately $630,000
per year when three-month LIBOR is under 6.0% ranging to
approximately $539,000 per year when three-month LIBOR is over 7.5%.
Three-month LIBOR at March 31, 1999 was 5.06%.
We use financial instruments to limit the financial risk of
increases in interest rates on our floating rate debt. The
differential to be paid or received under financial instruments is
accrued and recognized in interest expense as interest rates change.
As of March 31, 1999, we had outstanding interest rate swap, cap and
collar agreements related to $42.5 million of debt outstanding, with
an average fixed interest rate of 5.8% and an average remaining life
of 6 years. The cost to terminate the swap, cap and collar was not
material at March 31, 1999. We do not expect these financial
instruments to have a material effect on our earnings or cash flows.
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings.
We report information regarding our legal proceedings under
Note 5 to the Consolidated Financial Statements in this Report and
in our Annual Report on Form 10-K for the year ended December 31,
1998.
Item 3. Defaults Upon Senior Securities.
As part of the settlement of the lawsuit between Grays Ferry
Cogeneration Partnership (the "Partnership") and PECO Energy
Company, The Chase Manhattan Bank and certain other commercial banks
(collectively the "Banks") and Westinghouse Power Generation agreed
to waive claims for default interest against the Partnership up to
April 16, 1999. The Banks and Westinghouse financed the
construction of the Grays Ferry Cogeneration Facility under separate
loan agreements. The Partnership owes a total principal amount of
approximately $84,400,000 to the Banks. The Partnership owes a
total principal amount of approximately $15,000,000 to Westinghouse.
As of the date of this Report, the Partnership is in default
under its debt agreements with the Banks and Westinghouse for the
following reasons. The Partnership did not convert on time the
Bank's short term construction loan for the Grays Ferry Cogeneration
Facility to a longer term loan. The Partnership could not complete
that conversion because of a dispute with the construction
contractor which has now been resolved. The Partnership also did
not make a principal payment to Westinghouse because the Banks
required the Partnership to apply the Partnership's available cash
(net of operating expenses) to repayment of principal owed to the
Banks.
Westinghouse and the Banks have not accelerated the debt owed
to them nor charged default interest against the Partnership,
although the Banks have reserved their rights to do so. The Banks
have required to date, and may require in the future, the
Partnership to apply the Partnership's available cash (net of
operating expenses) to repayment of principal owed to the Banks.
We expect to resolve all outstanding default issues with the
Banks and Westinghouse in the second quarter.
Item 6. Exhibits and Reports on Form 8-K
(a)The following exhibits are filed as part of this amendment:
27 Financial Data Schedule
(b) The following reports on Form 8-K were filed during the
three months ended March 31, 1999
Item 2. Acquisition or Disposition of Assets, April 27,
1999.
<PAGE>
SIGNATURES
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/ MARTIN S. STONE
----------------------------
Martin S. Stone
Vice President Finance &
Chief Financial Officer
/s/ DANIEL J. SAMELA
----------------------------
Daniel J. Samela
Controller
Date: May 14, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q for quarter ending March 31, 1999 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 16,785
<SECURITIES> 0
<RECEIVABLES> 52,084
<ALLOWANCES> 1,103
<INVENTORY> 7,250
<CURRENT-ASSETS> 77,025
<PP&E> 554,890
<DEPRECIATION> 100,693
<TOTAL-ASSETS> 633,842
<CURRENT-LIABILITIES> 79,429
<BONDS> 352,643
0
0
<COMMON> 124
<OTHER-SE> 149,336
<TOTAL-LIABILITY-AND-EQUITY> 633,842
<SALES> 85,429
<TOTAL-REVENUES> 85,429
<CGS> 58,325
<TOTAL-COSTS> 68,544
<OTHER-EXPENSES> 146
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,280
<INCOME-PRETAX> 10,459
<INCOME-TAX> 4,330
<INCOME-CONTINUING> 6,129
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (4,903)
<NET-INCOME> 1,226
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
