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, 1996
Commission File Number 33-82034
INDIANTOWN COGENERATION, L.P. (Exact name of co-registrant as specified in
its charter)
Delaware 52-1722490
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
INDIANTOWN COGENERATION FUNDING CORPORATION (Exact name of co-registrant as
specified in its charter)
Delaware 52-1889595
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
7500 Old Georgetown Road, 13th Floor Bethesda, Maryland 20814-6161
(Registrants' address of principal executive offices)
(301)-718-6800 (Registrants' 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 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. [ X ] Yes [ ] No
Indiantown Cogeneration, L.P. Indiantown Cogeneration Funding Corporation
PART I FINANCIAL INFORMATION Page No.
Item 1 Financial Statements: Consolidated Balance Sheets as of
December 31, 1995 and March 31, 1996 (Unaudited)....................1
Consolidated Statement of Operations for the Year Ended December
31, 1995 and the Three Months Ended March 31, 1996 (Unaudited)......3
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1996 (Unaudited) and March 31, 1995
(Unaudited).........................................................4
Notes to Consolidated Financial Statements (Unaudited)..............5
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................8
PART II OTHER INFORMATION
Item 1 Legal Proceedings..............................................13
Item 5 Other Information..............................................13
Item 6 Exhibits and Reports on Form 8-K...............................14
Signatures.............................................................17
PART I FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Indiantown Cogeneration, L.P. Consolidated Balance Sheets As of December 31,
1995 and March 31, 1996
<S> <C> <C>
ASSETS March 31,1996 December 31,1995
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $2,087,660 $2,666,296
Accounts receivable-trade 13,168,398 6,806,299
Inventories 880,300 127,115
Prepaids 951,065 1,844,328
Deposits 193,356 193,357
Investments held by
Trustee, including
restricted funds of
$958,530 and $45,018,215,
respectively 77,665,820 59,251,661
Total current assets 94,946,599 70,889,056
INVESTMENTS HELD BY
TRUSTEE, restricted funds 12,501,000 12,501,000
DEPOSITS 60,000 60,000
PROPERTY, PLANT & EQUIPMENT:
Land 8,579,399 8,579,399
Electric and steam
generating facilities 685,565,111 683,536,498
Less accumulated
depreciation (5,287,886) (527,742)
Net property,
plant & equipment 688,856,624 691,588,155
FUEL RESERVE 4,899,246 4,662,617
DEFERRED FINANCING COSTS,
net of accumulated
amortization of $40,656,450
and $40,436,799,
respectively 19,580,751 19,750,511
Total assets $820,844,220 $799,451,339
<FN>
The accompanying notes are an integral part of these consolidated balance
sheets.
</TABLE>
<TABLE>
<CAPTION>
Indiantown Cogeneration, L. P. Consolidated Balance Sheets As of December 31,
1995 and March 31, 1996
<S> <C> <C>
LIABILITIES AND PARTNERS' CAPITAL March 31, 1996 December 31, 1995
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $9,013,903 $5,885,114
Accrued liabilities 14,680,757 14,740,306
Accrued interest 16,774,270 2,396,324
Current portion -
First Mortgage Bonds 8,795,000 8,795,000
Current portion lease
payable - railcars 171,777 231,158
Total current liabilities 49,435,707 32,047,902
LONG TERM DEBT:
First Mortgage Bonds 496,205,000 496,205,000
Tax Exempt Facility Revenue Bonds 125,010,000 125,010,000
Lease payable - railcars 5,386,265 5,386,265
Total long term debt 626,601,265 626,601,265
Total liabilities 676,036,972 658,649,167
PARTNERS' CAPITAL:
Toyan Enterprises 69,507,479 67,585,042
Palm Power Corporation 17,376,870 16,896,261
TIFD III-Y, Inc. 57,922,899 56,320,869
Total partners' capital 144,807,248 140,802,172
Total liabilities and
partners' capital $820,844,220 $799,451,339
<FN>
The accompanying notes are an integral part of these balance sheets.
</TABLE>
<TABLE>
<CAPTION>
Indiantown Cogeneration, L.P. Consolidated Statement of Operations For the
Year Ended December 31, 1995 and the Three Months Ended March 31, 1996
<C> <C>
March 31, 1996 December 31,1995
(Unaudited)
<S>
Operating Revenues:
Electric capacity and
capacity bonus revenue $28,463,276 $3,361,877
Electric energy revenue 10,295,279 1,202,983
Steam revenue 8,333 0
Total operating revenues 38,766,888 4,564,860
Cost of Sales:
Fuel and ash 10,145,391 1,270,381
Operating and maintenance 3,463,400 345,258
Depreciation 4,844,073 527,742
Total cost of sales 18,452,864 2,143,381
Gross Profit 20,314,024 2,421,479
Other Operating Expenses:
General and administrative 595,052 97,236
Insurance and taxes 2,004,862 222,191
Total other operating expenses 2,599,914 319,427
Operating Income 17,714,110 2,102,052
Non-Operating Income (Expenses):
Interest expense (14,778,072) (3,522,739)
Interest income 1,069,037 2,222,859
Net non-operating expense (13,709,035) (1,299,880)
Net Income $ 4,005,075 $ 802,172
<FN>
The accompanying notes are an integral part of this consolidated statement.
</TABLE>
<TABLE>
<CAPTION>
Indiantown Cogeneration, L.P. Consolidated Statements of Cash Flows For the
Three Months Ended March 31, 1996 and 1995
<C> <C>
Three Months Three Months
Ended Ended
Mar. 31, 1996 Mar. 31, 1995
(Unaudited) (Unaudited)
<S>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $4,005,075 $--
Adjustments to reconcile
net income to net cash
provided by operating activities:
Depreciation and amortization 4,979,795 --
Increase in accounts receivable (6,362,099) --
Increase in property, plant,
& equipment (2,078,503) --
Increase in inventories and
fuel reserves (989,814) --
Decrease in deposits and prepaids 893,263 --
Increase in accounts payable and
accrued interest 17,447,186 --
Decrease in lease payable (59,380) --
Net cash provided by operating
activities 17,835,523 --
CASH FLOWS FROM INVESTING
ACTIVITIES:
Cash paid for construction in
progress -- (29,649,022)
(Increase) Decrease in investment
held by trustee (18,414,159) 24,485,863
Net cash used in investing
activities (18,414,159) (5,163,159)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payment of debt issuance
and financing costs -- (5,452,948)
Proceeds from GECC loan -- --
Payment of GECC loan -- 11,100,000
Capital contributions -- --
Net cash provided by
financing activities -- 5,647,052
INCREASE (DECREASE) IN CASH (578,636) 483,893
CASH and CASH EQUIVALENTS,
beginning of year 2,666,296 2,113,081
CASH and CASH EQUIVALENTS,
end of period 2,087,660 2,596,974
SUPPLEMENTAL DISCLOSURE OF
INVESTING ACTIVITIES:
Change in total construction
in progress -- (42,850,783)
Amortization of deferred financing
costs duringconstruction -- 255,189
Increase in property, plant,
and equipment -- --
Increase in accounts receivable -- --
Increase in inventories and
fuel reserve -- --
Increase in deposits &
prepaids -- (5,000)
Increase in accounts payable
and accrued interest -- 12,951,572
Increase in lease payable -- --
Cash paid for construction
in progress -- $(29,649,022)
</TABLE>
Indiantown Cogeneration, L.P.
Notes to Consolidated Financial Statements As of March 31, 1996 (Unaudited)
1. ORGANIZATION AND BUSINESS:
Indiantown Cogeneration, L.P. (the "Partnership") is a special purpose
Delaware limited partnership formed on October 4, 1991. The general partners
are Toyan Enterprises ("Toyan"), a California corporation and a special
purpose indirect subsidiary of PG&E Enterprises, and Palm Power Corporation
("Palm"), a Delaware corporation and a special purpose indirect subsidiary of
Bechtel Enterprises, Inc.("Bechtel Enterprises"). The sole limited partner
is TIFD III-Y, Inc. ("TIFD"), a special purpose indirect subsidiary of
General Electric Capital Corporation ("GECC"). During 1994, the Partnership
formed its sole, wholly owned subsidiary, Indiantown Cogeneration Funding
Corporation ("ICL Funding"), to act as agent for, and co-issuer with, the
Partnership in accordance with the 1994 bond offering discussed in Note 4.
ICL Funding has no separate operations and has only $100 in assets and
capitalization.
The Partnership was formed to develop, construct, and operate an
approximately 330 megawatt (net) pulverized coal-fired cogeneration facility
(the "Facility") located on an approximately 240 acre site in southwestern
Martin County, Florida. The Facility was designed to produce electricity for
sale to Florida Power & Light Company ("FPL") and will also supply steam to
Caulkins Indiantown Citrus Co. ("Caulkins") for its plant located near the
Facility.
The Partnership was in the development stage through December 21, 1995
and commenced commercial operations on December 22, 1995 (the "Commercial
Operation Date"). The accompanying consolidated statement of operations for
the year ended December 31, 1995 reflects the results of operations for the
ten days from December 22, 1995 through December 31, 1995. The accompanying
statement of operations for the year ended December 31, 1995 also includes,
in accordance with generally accepted accounting principles, portions of the
full year's interest income and interest cost which were not capitalized.
The consolidated statement of operations for the three months ended March 31,
1996 reflects operations through the entire quarter. The Partnership's
continued existence is dependent on the ability of the Partnership to sustain
successful operations. Management of the Partnership is of the opinion that
the assets of the Partnership are realizable at their current carrying value.
The net profits and losses of the Partnership are allocated to Toyan,
Palm and TIFD (collectively, the "Partners") based on the following ownership
percentages:
Toyan 48% Palm 12% TIFD 40%
All distributions other than liquidating distributions will be made based
on the Partners' percentage interest as shown above, in accordance with the
project documents and at such times and in such amounts as the Board of
Control of the Partnership determines. The Partners contributed, pursuant to
an equity commitment agreement, approximately $140,000,000 of equity when
commercial operation commenced in December 1995.
2. FINANCIAL STATEMENTS: The consolidated balance sheet as of March 31,
1996, and the consolidated statement of cash flows for the three months
ended on March 31, 1996 and 1995 and the consolidated statement of
operations for the three months ended March 31, 1996, have been prepared
by the Partnership, without audit and in accordance with the rules and
regulations of the Securities and Exchange Commission. In the opinion of
management, these financial statements include all adjustments
(consisting only of normal recurring adjustments) necessary to present
fairly the financial position of the Partnership as of March 31, 1996,
results of operations for the three months ended March 31, 1996, and cash
flows for the three months ended March 31, 1996 and 1995.
The financial statements and related notes contained herein should be
read in conjunction with the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1995.
Investments Held by Trustee The investments held by trustee represent bond
and equity proceeds held by a bond trustee/disbursement agent and are
carried at cost which approximates market. The proceeds include
$12,501,000 of restricted tax-exempt debt service reserve required by the
financing documents. The Partnership also maintains restricted
investments in the amount of accrued interest payable. Property, Plant
and Equipment Property, plant and equipment are recorded at actual cost.
Substantially all property, plant and equipment consist of the Facility,
which is depreciated on a straight-line basis over the useful life of the
Facility, estimated to be 35 years. Other property and equipment are
depreciated on a straight-line basis over the estimated economic or
service lives of the respective assets (ranging from three to ten years).
Routine maintenance and repairs are charged to expense as incurred.
New Accounting Pronouncement
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS No.
121"). SFAS No. 121, which will be adopted for the Partnership's 1996
financial statements, establishes criteria for recognizing and measuring
impairment losses when recovery of recorded long-lived asset values is
uncertain. Management anticipates that adoption of this pronouncement will
not impact the Partnership's financial condition or results of operations.
Equity Contribution Agreement Pursuant to an Equity Contribution Agreement,
dated as of November 1, 1994, between TIFD and NationsBank of Florida,
N.A. (succeeded by The Bank of New York Trust Company of Florida, N.A.)
(the "Trustee"), the Partners contributed approximately $140,000,000 of
equity on December 26, 1995. Proceeds were used to repay the
$139,000,000 outstanding under the Equity Loan Agreement. The remaining
$1,000,000 was deposited with the Trustee according to a disbursement
agreement among the Partnership, the Trustee and the other lenders and is
included in investments held by trustee in the accompanying consolidated
balance sheet as of December 31, 1995 and March 31, 1996.
3. DEPOSITS: In 1991, in accordance with a contract between the Partnership
and Martin County, the Partnership provided Martin County with a security
deposit in the amount of $149,357 to secure installation and maintenance
of required landscaping materials. This amount is included in current
assets as of December 31, 1995 and in noncurrent assets as of December
31, 1994. The landscaping has been completed and the Partnership has
applied to the County for a return of funds in excess of the required
deposit as security for the first year maintenance.
In 1991, in accordance with the Planned Unit Development Zoning Agreement
between the Partnership and Martin County, the Partnership deposited
$1,000,000 in trust with the Board of County Commissioners of Martin County
(the "PUD Trustee"). Income from this trust will be used solely for projects
benefiting the community of Indiantown. On July 23, 2025, the PUD Trustee is
required to return the deposit to the Partnership. As of December 31, 1995,
the estimated present value of this deposit of approximately $60,000 has been
included in deposits in the accompanying balance sheets. The remaining
balance has been included in property plant, and equipment as part of total
construction expenses. 4. FAIR VALUE OF FINANCIAL INSTRUMENTS The following
table presents the carrying amounts and estimated fair values of the
Partnership's financial instruments at March 31, 1996. Statement of
Financial Accounting Standards No. 107, "Disclosures about Fair Value of
Financial Instruments", defines the fair market value of a financial
instrument as the amount at which the instrument could be exchanged in a
current transaction between willing parties.
Carrying Amount Fair Value
Financial Liabilities
Tax-Exempt Bonds 125,010,000 139,536,275
Taxable Bonds 505,000,000 565,693,217
For the Tax Exempt Bonds and First Mortgage Bonds, the fair values of the
Partnership's bonds payable are based on the stated rates of the Tax Exempt
Bonds and First Mortgage Bonds and current market interest rates to estimate
market values for the Tax Exempt Bonds and the First Mortgage Bonds.
The carrying amounts of the Partnership's cash and cash equivalents,
accounts receivable, deposits, prepaid expenses, investments held by trustee,
accounts payable, accrued liabilities and accrued interest approximate fair
value because of the short maturities of these instruments.
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Consolidated Financial Statements of the Partnership and the notes thereto
included elsewhere in this report.
General
The Partnership is primarily engaged in the completion of construction,
ownership and operation of a non-utility electric generating Facility. Since
its inception, and until December 21, 1995, the Partnership was in the
development stage and had no operating revenues or expenses. On December 22,
1995 the Facility commenced commercial operation. As of March 31, 1996, the
Partnership had approximately $705 million of property, plant and equipment
consisting primarily of purchased equipment, construction-related labor and
materials, interest during construction, financing costs and other costs
directly associated with the construction of the Facility. For the three
months ended March 31, 1996, the Partnership had total operating revenues of
approximately $39 million, total operating costs of $21 million, and total
net interest expenses of approximately $14 million resulting in net income of
approximately $4 million.
The Partnership has obtained all material environmental permits and
approvals required as of March 1996 for the operation of the Facility.
Certain of such permits and approvals are subject to periodic renewal.
Certain additional permits and approvals will be required in the future for
the continued operation of the Facility. The Partnership is not presently
aware of any technical circumstances that would prevent the issuance of such
permits and approvals or the renewal of currently existing permits.
On September 9, 1994 Costain Group PLC, parent company of Costain Coal,
Inc. ("Costain Coal"), the Facility's primary fuel supplier, announced that
it was proceeding with the sale of its U.S. coal assets. On March 8, 1995,
Costain Group PLC suspended its sales efforts and announced that it would,
for the time being, retain and manage its remaining U.S. coal assets, which
include Costain Coal. During the first quarter of 1996, offers to purchase
Costain Coal were solicited and received by Costain Group PLC. If Costain
Coal were to be sold to or merged with another entity, any surviving
corporation in a merger of Costain Coal, or any transferee of its assets,
will be required to assume Costain Coal's obligations under the Coal Purchase
Agreement. In light of the terms of the Coal Purchase Agreement compared
with similar coal supply and ash disposal agreements which the Partnership
believes are currently obtainable in the market, the Partnership currently
does not believe that the sale of Costain Coal will have an adverse effect on
the Partnership's ability to arrange for coal supply and ash disposal
services.
Results of Operations
Because the Facility entered commercial operation on December 22, 1995,
no operating results from the first quarter of last year are available. For
its first ten days of operation ending December 31, 1995, the Facility
achieved an average Capacity Billing Factor of 99.86%. For its first full
quarter of commercial operation ending March 31, 1996, the Facility achieved
an average Capacity Billing Factor of 95.13%. This resulted in earning full
monthly capacity payments aggregating $26.7 million and bonuses aggregating
$1.8 million for the quarter. The Capacity Billing Factor measures the
overall availability of the Facility, but gives a heavier weighting to
on-peak availability. During the quarter, the Facility was dispatched by FPL
and generated 372,986 megawatt-hours representing a dispatch rate of 67.10%.
The Facility's dispatch rate is calculated excluding any scheduled outages.
Liquidity and Capital Resources
On November 22, 1994 the Partnership and ICL Funding issued first
mortgage bonds in an aggregate principal amount of $505 million (the "First
Mortgage Bonds"). $236.6 million of the First Mortgage Bonds bear an average
interest rate of 9.26% and $268.4 million of the First Mortgage Bonds bear an
interest rate of 9.77%. Concurrently with the Partnership's issuance of its
First Mortgage Bonds, the Martin County Industrial Development Authority
issued $113 million of Industrial Development Refunding Revenue Bonds (Series
1994A) which bear an interest rate of 7.875% (the "1994A Tax Exempt Bonds").
A second series of tax exempt bonds (Series 1994B) in the approximate amount
of $12 million, which bear an interest rate of 8.05%, were issued by the
Martin County Industrial Development Authority on December 20, 1994 (the
"1994B Tax Exempt Bonds" and, together with the 1994A Tax Exempt Bonds, the
"1994 Tax Exempt Bonds"). The First Mortgage Bonds and the 1994 Tax Exempt
Bonds are hereinafter collectively referred to as the "Bonds."
Certain proceeds from the issuance of the First Mortgage Bonds were used
to repay $421 million of the Partnership's indebtedness and financing fees
and expenses incurred in connection with the development and construction of
the Facility and the balance of the proceeds were deposited in various
restricted funds that are being administered by an independent disbursement
agent pursuant to trust indentures and a disbursement agreement. Funds
administered by such disbursement agent are invested in specified
investments. These funds together with other funds available to the
Partnership were being used: (i) to finance completion of construction,
testing, and initial operation of the Facility; (ii) to finance construction
interest and contingency; and (iii) to provide for initial working capital.
The proceeds of the 1994 Tax Exempt Bonds were used to refund $113
million principal amount of Industrial Development Revenue Bonds (Series
1992A and Series 1992B) previously issued by the Martin County Industrial
Development Authority for the benefit of the Partnership, and to fund, in
part, a debt service reserve account for the benefit of the holders of its
tax-exempt bonds and to complete construction of certain portions of the
Facility.
The Partnership's borrowings through March 1996 were $770 million, of
which the $139 million equity loan was repaid on December 26, 1995. Table I
illustrates the current application of borrowings (as of March 1996) compared
to estimated sources and uses of funds through the Guaranteed Completion Date
(January 21, 1996) found in the Partnership's Registration Statement (No.
33-82034) filed with the Securities and Exchange Commission.
TABLE I Sources and Uses of Funds
The following table sets forth the budgeted sources and uses of funds by
the Partnership as of March 31, 1996. Certain actual uses of funds through
the Substantial Completion Date shown below under "Uses as of 3/31/96" differ
from the budgeted amounts shown under "Total Funds" because, among other
things, the budget was based upon a Substantial Completion Date of January
21, 1996 (the Guaranteed Completion Date) instead of the actual Substantial
Completion Date of December 22, 1995. In addition, certain uses for
completion of construction and other costs under the Construction Contract
remain indeterminable.
<TABLE>
<CAPTION>
Estimated Sources and Uses of Funds (in thousands)
<S> <C> <C> <C>
SOURCES OF FUNDS Total Funds Uses as of 3/31/96 Remaining Funds
First Mortgage
Bonds $505,000 $505,000 $ --
1994 Tax-Exempt
Bonds 125,010 125,010 --
Equity Contribution
of Partners 140,000 140,000 --
total sources of
funds $770,010 $770,010 $40,275 (1)
Uses of Funds
CAPITAL COSTS
Engineering, Procurement,
and Construction
Costs $438,730 $441,240 $ (2,510)(2)
Electrical, Potable
Water and Sewer
Interconnection 6,850 6,317 533
Property Acquisition
Costs 8,811 8,579 232
Steam Host Modification 14,500 14,500 --
Development Costs and
Fees 30,442 30,442 --
Mobilization and Spare
Parts 10,618 14,141 (3,523)(2)
General & Administrative
Costs and Fees 13,057 10,039 3,018
Taxes 8,827 4,738 4,089
Startup Consumables 3,584 6,145 (2,561)(2)
Initial Working Capital 3,450 2,397 1,053
Fuel Reserve 5,000 5,101 (101)(2)
Title Insurance 3,187 2,655 532
Other Construction-
Related Costs 4,223 866 3,357
FPL Delay Damages -- 508 (508)(2)
Contractor Performance
Bonus -- 7,000(3) (7,000) (2)
Contractor Schedule
Bonus -- 6,100 (6,100)(2)
Owner's Contingency 37,000 -- 37,000
total capital cost 588,279 560,768 27,511
FINANCING COSTS
Initial Bank Financing
Interest and Related
Expenses 58,441 50,081 8,360
Termination of Interest
Rate Hedging Agreements (7,046) (7,046) --
First Mortgage Bonds and
Tax-Exempt Bonds Interest
and Related Expenses 84,311 81,633 2,678
Equity Loan Interest
and Related Expenses 33,524 31,798 1,726
Tax-Exempt Bond Debt
Service Reserve Account 12,501 (4) 12,501 (4) --
Total financing costs 181,731 168,967 12,764
Total uses of funds $770,01 $729,735 (5) $ 40,275(5)
<FN>
(1) Pursuant to the Disbursement Agreement, $44.7 million remaining of
construction funds at commercial operation were transferred into a completion
account for the payment of remaining construction expenses (including
contractor bonuses) and $1 million was transferred to the Revenue Account for
use in connection with the operation of the Facility. (2) Overruns in these
categories have been funded by cost underruns in other budget categories
where spending is considered complete or are anticipated to underrun
allocated costs. The reallocation of such underruns is not reflected in the
"Uses of 3/31/96" or "Remaining Funds" columns. (3) A partial payment of
$4.5 million was made in April, 1996, for Contractor performance bonuses.
The total amount is expected to be approximately $7 million. (4) The Debt
Service Reserve Letter of Credit is available to serve as a debt service
reserve for the holders of the First Mortgage Bonds and the Tax-Exempt Bonds.
(5) The difference between the Total Sources and Total Uses of Funds as of
3/31/96 is reflected in the Remaining Funds column.
</TABLE>
As of March 31, 1996, the borrowings included all of the available $125
million of the proceeds of the 1994 Tax Exempt Bonds and all of the available
First Mortgage Bond proceeds. The weighted average interest rate paid by the
Partnership on its debt, including the equity loan, for the three months
ended March 31, 1996, was 9.18%. The comparable rate was 9.24% for the same
period in 1995.
The Partnership, pursuant to certain of the Project Contracts, is
required to post letters of credit which, in the aggregate, will have a face
amount of no more than $65 million. Certain of these letters of credit have
been issued pursuant to a Letter of Credit and Reimbursement Agreement with
Credit Suisse and the remaining letters of credit will be issued when
required under the Project Contracts, subject to conditions contained in such
Letter of Credit and Reimbursement Agreement. As of March 31, 1996, no
drawings have been made on any of these letters of credit. The Letter of
Credit and Reimbursement Agreement has a term of seven years subject to
extension at the discretion of the banks party thereto.
The Partnership entered into a debt service reserve letter of credit and
reimbursement agreement, dated as of November 1, 1994, with Banque Nationale
de Paris pursuant to which a debt service reserve letter of credit in the
amount of approximately $60 million was issued. Such agreement has a rolling
term of five years, subject to extension at the discretion of the banks party
thereto. Drawings on the debt service reserve letter of credit became
available on the Commercial Operation Date of the Facility to pay principal
and interest on the First Mortgage Bonds, the 1994 Tax Exempt Bonds and
interest on any loans created by drawings on such debt service reserve letter
of credit. Cash and other investments held in the debt service reserve
account will be drawn on for the Tax Exempt Bonds prior to any drawings on
the debt service reserve letter of credit. As of March 31, 1996, no drawings
have been made on the debt service reserve letter of credit.
In order to provide for the Partnership's working capital needs, the
Partnership entered into a Revolving Credit Agreement with Credit Suisse
dated as of November 1, 1994. Such Agreement has a term of seven years
subject to extension at the discretion of the banks party thereto. The
revolving credit agreement has a maximum available amount of $15 million and
may be drawn on by the Partnership from time to time. The interest rate is
based upon various short term indices at the Partnership's option and is
determined separately for each draw. As of March 31, 1996, no working
capital loans have been made to the Partnership under the working capital
loan facility.
The Partnership believes that it has adequate sources of capital to
complete final construction of the Facility.
PART II OTHER INFORMATION
Item 1 LEGAL PROCEEDINGS
The Partnership is not currently aware of any pending or threatened
litigation that it anticipates would have a material adverse effect on the
Partnership. The Partnership has been named as a co-defendant with Bechtel
Power in a suit brought by the spouse of an employee of Bechtel Power who
died in an accident which occurred on the Facility's site. Pursuant to the
terms of the Construction Contract, Bechtel Power has notified the
Partnership that it has assumed the defense in this case on behalf of the
Partnership. Although the ultimate resolution of this action is not
currently determinable, the Partnership believes that Bechtel Power maintains
insurance coverage adequate to cover any resulting liability and that any
resulting liability in excess of such insurance coverage should not have a
material adverse effect on the Partnership's financial position.
Item 5 OTHER INFORMATION
Governmental Approvals
The Partnership has obtained all material environmental permits and
approvals required, as of March 1996, in order to continue commercial
operation of the Facility. Certain of such permits and approvals are subject
to periodic renewal. Certain additional permits and approvals will be
required in the future for the continued operation of the Facility. The
Partnership is not aware of any technical circumstances that would prevent
the issuance of such permits and approvals or the renewal of currently issued
permits.
Energy Prices
In October 1995, FPL filed with the Florida Public Service Commission its
most recent projections for its 1995-1997 "as available" energy costs (in
this context, "as available" energy costs reflect actual energy production
costs avoided by FPL resulting from the purchase of energy from the Facility
and other Qualifying Facilities). The projections filed by FPL are lower
for certain periods than the energy prices specified in the Power Purchase
Agreement for energy actually delivered by the Facility. Should FPL's "as
available" energy cost projections prove to reflect actual rates, FPL may
elect, pursuant to its dispatch and control rights over the Facility set
forth in the Power Purchase Agreement, to run the Facility less frequently
or at lower loads than if the Facility's energy prices were lower than the
cost of other energy sources available to FPL. Because capacity payments
under the Power Purchase Agreement are not affected by FPL's dispatch of the
Facility and because capacity payments are expected by the Partnership to
cover all of the Partnership's fixed costs, including debt service, the
Partnership currently expects that, if the recently filed projections prove
to reflect actual rates, such rates and the resulting dispatch of the
Facility will not have a material adverse effect on the Partnership's
ability to service its debt. To the extent the Facility is not operated by
FPL during Caulkins' processing season (January to May), the Partnership may
elect to run the Facility at a minimum load or shut down the Facility and
run auxiliary boilers to produce steam for Caulkins in amounts required
under the Partnership's steam agreement with Caulkins. Such operations may
result in decreased net operating income for such periods. The Partnership
expects that the decrease, if any, will not be material.
<TABLE>
<CAPTION>
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
a) Reports on Form 8-K: The Partnership filed a Form 8-K and press
release on January 3, 1996 announcing the commencement of commercial
operation.
b) Exhibits:
<S> <C>
Exhibit No. Description
3.1 Certificate of Incorporation of Indiantown
Cogeneration Funding Corporation.*
3.2 By-laws of Indiantown Cogeneration Funding
Corporation.*
3.3 Certificate of Limited Partnership of Indiantown
Cogeneration, L.P.*
3.4 Amended and Restated Limited Partnership
Agreement of Indiantown Cogeneration, L.P., among
Palm Power Corporation, Toyan Enterprises and
TIFD III-Y Inc.*
3.5 Form of First Amendment to Amended and Restated
Limited Partnership Agreement of Indiantown
Cogeneration, L.P.*
4.1 Trust Indenture, dated as of November 1, 1994,
among Indiantown Cogeneration Funding
Corporation, Indiantown Cogeneration, L.P., and
NationsBank of Florida, N.A., as Trustee, and
First Supplemental Indenture thereto.**
4.2 Amended and Restated Mortgage, Assignment of
Leases, Rents, Issues and Profits and Security
Agreement and Fixture Filing among Indiantown
Cogeneration, L.P., as Mortgagor, and Bankers
Trust Company as Mortgagee, and NationsBank of
Florida, N.A., as Disbursement Agent and, as when
and to the extent set forth therein, as Mortgagee
with respect to the Accounts, dated as of
November 1, 1994.**
4.3 Assignment and Security Agreement between
Indiantown Cogeneration, L.P., as Debtor, and
Bankers Trust Company as Secured Party, and
NationsBank of Florida, N.A., as Disbursement
Agent and, as when, and to the extent set forth
therein, a Secured Party with respect to the
Accounts, dated as of November 1, 1994.**
10.1.1 Amended and Restated Indenture of Trust between
Martin County Industrial Development Authority,
as Issuer, and NationsBank of Florida, N.A., as
Trustee, dated as of November 1, 1994.**
10.1.2 Amended and Restated Authority Loan Agreement by
and between Martin County Industrial Development
Authority and Indiantown Cogeneration, L.P.,
dated as of November 1, 1994.**
10.1.3 Letter of Credit and Reimbursement Agreement
among Indiantown Cogeneration, L.P., as
Borrower, and the Banks Named Therein, and
Credit Suisse, as Agent, dated as of November 1,
1994.**
10.1.4 Disbursement Agreement, dated as of November 1,
1994, among Indiantown Cogeneration, L.P.,
Indiantown Cogeneration Funding Corporation,
NationsBank of Florida, N.A., as Tax-Exempt
Trustee, NationsBank of Florida, N.A., as
Trustee, Credit Suisse, as Letter of Credit
Provider, Credit Suisse, as Working Capital
Provider, Banque Nationale de Paris, as Debt
Service Reserve Letter of Credit Provider,
Bankers Trust Company, as Collateral Agent,
Martin County Industrial Development Authority,
and NationsBank of Florida, N.A., as Disbursement
Agent.**
10.1.5 Revolving Credit Agreement among Indiantown
Cogeneration, L.P., as Borrower, and the Banks
Named Therein, and Credit Suisse, as Agent, dated
as of November 1, 1994.**
10.1.6 Collateral Agency and Intercreditor Agreement,
dated as of November 1, 1994, among NationsBank
of Florida, N.A., as Trustee under the Trust
Indenture, dated as of November 1, 1994,
NationsBank of Florida, N.A., as Tax-Exempt
Trustee under the Tax Exempt Indenture, dated as
of November 1, 1994, Credit Suisse, as letter of
Credit Provider, Credit Suisse, as Working
Capital Provider, Banque Nationale de Paris, as
Debt Service Reserve Letter of Credit Provider,
Indiantown Cogeneration, L.P., Indiantown
Cogeneration Funding Corporation, Martin County
Industrial Development Authority, NationsBank of
Florida, N.A., as Disbursement Agent under the
Disbursement Agreement dated as of November 1,
1994, and Bankers Trust Company, as Collateral
Agent.**
10.1.7 Amended and Restated Equity Loan Agreement dated
as of November 1, 1994, between Indiantown
Cogeneration, L.P., as the Borrower, and TIFD
III-Y Inc., as the Equity Lender.**
10.1.8 Equity Contribution Agreement, dated as of
November 1, 1994, between TIFD III-Y Inc. and
NationsBank of Florida, N.A., as Disbursement
Agent.**
10.1.9 GE Capital Guaranty Agreement, dated as of
November 1, 1994, between General Electric
Capital Corporation, as Guarantor, and
NationsBank of Florida, N.A., as Disbursement
Agent.**
10.1.11 Debt Service Reserve Letter of Credit and
Reimbursement Agreement among Indiantown
Cogeneration, L.P., as Borrower, and the Banks
Named Therein, and Banque Nationale de Paris, as
Agent, dated as of November 1, 1994.**
10.2.18 Amendment No. 2 to Coal Purchase Agreement, dated
as of April 19, 1995.***
10.2.19 Fourth Amendment to Energy Services Agreement,
dated as of January 30, 1996.*****
21 Subsidiaries of Registrant*
27 Financial Data Schedule.
(For electronic filing purposes only.)*****
99 Copy of Registrants' press release
dated January 3, 1996.****
<FN>
* Incorporated by reference from the Registrant Statement on Form S-1, as
amended, file no. 33-82034 filed by the Registrants with the SEC in July
1994.
** Incorporated by reference from the quarterly report on Form 10-Q,
file no. 33-82034 filed by the Registrants with the SEC in December 1994.
*** Incorporated by reference from the quarterly report on Form 10-Q, file
no. 33-82034 filed by the Registrants with the SEC in May 1995.
**** Incorporated by reference from the current report on Form 8-K, file no.
33-82034 filed by the Registrants with the SEC in January 1996. ***** Filed
herewith.
</TABLE>
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
Indiantown Cogeneration, L.P. (Co-Registrant)
Date: May 15, 1996 /s/ John Cooper
John R. Cooper - Vice
President (Chief Financial Officer)
INDIANTOWN COGENERATION FUNDING Corporation
(Co-Registrant)
Date: May 15, 1996 /s/ John Cooper
John R. Cooper - Vice
President (Chief Financial Officer)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE>5
<MULTIPLIER>1
<CAPTION>
Exhibit 27: Financial Data Schedule
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 79,753,480
<SECURITIES> 0
<RECEIVABLES> 13,168,398
<ALLOWANCES> 0
<INVENTORY> 880,301
<CURRENT-ASSETS> 94,946,599
<PP&E> 688,856,624
<DEPRECIATION> 5,287,886
<TOTAL-ASSETS> 820,844,220
<CURRENT-LIABILITIES> 49,435,707
<BONDS> 626,601,265
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 820,844,220
<SALES> 38,766,888
<TOTAL-REVENUES> 38,766,888
<CGS> 18,452,864
<TOTAL-COSTS> 18,452,864
<OTHER-EXPENSES> 2,599,914
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,778,072
<INCOME-PRETAX> 4,005,075
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,005,075
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,005,075
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
