SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
FORM 10-Q
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
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 of (I.R.S. Employer Identification Number)
incorporation or organization)
INDIANTOWN COGENERATION FUNDING CORPORATION (Exact name of
co-registrant as specified in its charter)
Delaware 52-1889595 (State or other
jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
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 March 31, 1997 (Unaudited) and
December 31,
1996...................................................1
Consolidated Statements of Operations for the Three Months
Ended March 31, 1997 (Unaudited) and March 31, 1996
(Unaudited)............................................3
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1997 (Unaudited) and March 31, 1996
(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..................................................12
Item 5 Other
Information..................................................12
Item 6 Exhibits and Reports on Form
8-K..........................................................14
Signatures...................................................17
<TABLE>
<CAPTION>
PART I
FINANCIAL INFORMATION
Indiantown Cogeneration, L.P.
Consolidated Balance Sheets
As of March 31, 1997 and December 31, 1996
<S> <C> <C>
ASSETS March 31,1997 December 31,1996
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 721,809 $ 344,323
Accounts receivable-trade 13,139,350 14,859,879
Inventories 1,420,883 1,218,356
Prepaids 101,259 560,368
Deposits 193,357 193,357
Investments held by Trustee,
including restricted funds of
$19,411,815 and $3,673,116,
respectively 40,755,479 19,250,140
Total current assets 56,332,137 36,426,423
INVESTMENTS HELD BY TRUSTEE,
restricted funds 12,501,000 12,501,000
DEPOSITS 65,000 60,000
PROPERTY, PLANT & EQUIPMENT:
Land 8,579,399 8,579,399
Electric and steam
generating facilities 694,845,731 694,051,333
Less accumulated
depreciation 24,182,970 20,416,001
Net property, plant
& equipment 679,242,160 682,214,731
FUEL RESERVE 3,761,779 3,591,713
DEFERRED FINANCING COSTS,
net of accumulated
amortization of $41,527,900
and $41,311,315,
respectively 18,659,411 18,875,996
Total assets $ 770,561,487 $ 753,669,863
<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 March 31, 1997 and December 31, 1996
<S> <C> <C>
LIABILITIES AND
PARTNERS CAPITAL March 31, 1997 December 31, 1996
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $4,798,029 $6,515,052
Accrued liabilities 2,492,698 1,987,427
Accrued interest 16,582,649 2,368,950
Current portion -
First Mortgage Bonds 9,701,000 9,701,000
Current portion lease
payable - railcars 252,984 248,460
Total current liabilities 33,827,360 20,820,889
LONG TERM DEBT:
First Mortgage Bonds 486,504,000 486,504,000
Tax Exempt Facility
Revenue Bonds 125,010,000 125,010,000
Lease payable - railcars 5,072,837 5,137,805
Total long term debt 616,586,837 616,651,805
Total liabilities 650,414,197 637,472,694
PARTNERS' CAPITAL:
Toyan Enterprises 55,774,641 55,774,642
Palm Power Corporation 13,943,661 13,943,660
TIFD III-Y, Inc. 46,478,867 46,478,867
Retained Earnings 3,950,121 --
Total partners capital 120,147,290 116,197,169
Total liabilities and partners
capital $770,561,487 $753,669,863
<FN>
The accompanying notes are an integral part of these
consolidated balance sheets.
</TABLE>
<TABLE>
Indiantown Cogeneration, L.P.
Consolidated Statements of Operations
For the Three Months Ended March 31, 1997 and March 31, 1996
<S> <C> <C>
Three Months Ended Three Months Ended
March 31, 1997 March 31, 1996
(Unaudited) (Unaudited)
Operating Revenues:
Electric capacity and
capacity bonus revenue $29,871,287 $ 29,671,997
Electric energy revenue 7,567,191 9,086,558
Steam revenue 33,333 8,333
Total operating revenues 37,471,811 38,766,888
Cost of Sales:
Fuel and ash 9,274,323 10,145,391
Operating and maintenance 4,136,367 3,463,400
Depreciation 3,887,664 4,844,073
Total cost of sales 17,298,354 18,452,864
Gross Profit 20,173,457 20,314,024
Other Operating Expenses:
General and administrative 756,425 595,052
Insurance and taxes 1,831,834 2,004,862
Total other operating
expenses 2,588,259 2,599,914
Operating Income 17,585,198 17,714,110
Non-Operating Income (Expenses):
Interest expense (14,591,085) (14,778,072)
Interest/Other income 956,008 1,069,037
Net non-operating expense (13,635,077) (13,709,035)
Net Income $ 3,950,121 $ 4,005,075
<FN>
The accompanying notes are an integral part of these
consolidated statements.
</TABLE>
<TABLE>
<CAPTION>
Indiantown Cogeneration, L.P.
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1997 and 1996
<S> <C> <C>
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1996
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income $ 3,950,121 $ 4,005,075
Adjustments to reconcile
net income to net
cash provided by
operating activities:
Depreciation and
amortization 3,983,554 4,979,795
(Increase) Decrease in
accounts receivable 1,720,529 (6,362,099)
(Increase) Decrease in
inventories and
fuel reserves (372,593) (989,814)
Decrease in deposits
and prepaids 454,110 893,263
Increase (Decrease) in
accounts payable
and accrued interest 12,957,816 17,447,186
Increase (Decrease) in
Major Maintenance Reserve 44,130 --
Increase (Decrease) in
lease payable (60,444) (59,380)
Net cash provided by
operating activities 22,677,223 19,914,026
CASH FLOWS FROM INVESTING
ACTIVITIES:
(Increase) Decrease in
property, plant &
equipment (794,398) (2,078,503)
(Increase) Decrease in
investment held by
trustee (21,505,339) (18,414,159)
Net cash used in
investing activities (22,299,737) (20,492,662)
INCREASE (DECREASE) IN CASH 377,486 (578,636)
CASH and CASH EQUIVALENTS,
beginning of year 344,323 2,666,296
CASH and CASH EQUIVALENTS,
end of period 721,809 2,087,660
</TABLE>
Indiantown Cogeneration, L.P.
Notes to Consolidated Financial Statements As of March 31, 1997
(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 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 of
the Facility commenced in December 1995.
2. FINANCIAL STATEMENTS: The consolidated balance sheet as of
March 31, 1997, and the consolidated statements of cash flows
for the three months ended on March 31, 1997 and 1996 and the
consolidated statements of operations for the three months ended
March 31, 1997 and 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, 1997, results of operations for the three months ended
March 31, 1997 and 1996, and cash flows for the three months
ended March 31, 1997 and 1996.
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, 1996.
Investments Held by Trustee The investments held by trustee
represent bond and equity proceeds and revenue funds 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 an amount equal to the amount of accrued
principal and interest payables. 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 was adopted for
the Partnership's 1996 annual financial statements, establishes
criteria for recognizing and measuring impairment losses when
recovery of recorded long-lived asset values is uncertain. Adoption
of this pronouncement has not impacted 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 March 31, 1997 and December 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, 1996. 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, 1996, 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, 1997.
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 $139,767,346
Taxable Bonds $500,603,000 $543,780,449
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 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, 1997, the Partnership had approximately $679 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, 1997, the Partnership had total operating revenues of
approximately $37.5 million, total operating costs of $19.9 million,
and total net interest expenses of approximately $13.6 million
resulting in net income of approximately $3.95 million.
The Partnership has obtained all material environmental permits
and approvals required as of March 31, 1997 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. The
Partnership filed its application for a Title V air permit on May
24, 1996. A permit is expected within the next two years.
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 17, 1997, Costain Group PLC announced that it
completed the sale of Costain Coal to Rencoal Inc. for $44.7
million. Costain Coal will remain obligated under the Coal Purchase
Agreement and the coal will be supplied from the same coal reserves
which remain with Costain Coal. 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
For the three months ending March 31, 1997 and 1996, the
Facility achieved an average Capacity Billing Factor of 95.38% and
96.67%, respectively. This resulted in earning full monthly
capacity payments aggregating $27.9 million, for both periods and
bonuses aggregating $1.9 and $1.8 million for the three months ended
March 31, 1997 and 1996, respectively. The Capacity Billing Factor
measures the overall availability of the Facility, but gives a
heavier weighting to on-peak availability. During the three months
ended March 31, 1997, the Facility was dispatched by FPL and
generated 330,586 megawatt-hours compared with 372,986
megawatt-hours during the same period in 1996. The 42,400
megawatt-hour decrease was primarily due to lower dispatch levels by
FPL primarily driven by mild weather. The monthly dispatch rate for
the first quarter of 1997 ranged from 44% to 72%, as compared to a
range of 64% to 78% for the corresponding period in 1996. The
difference is primarily attributable to lower dispatch levels by
FPL.
Net income for the three months ended March 31, 1997, was
approximately $3.95 million which is comparable to the net income of
approximately $4.0 million for the corresponding period in the prior
year.
For the three months ended March 31, 1997, the Partnership had
total operating revenues of approximately $37.5 million as compared
to $38.8 million for the corresponding period in the prior year.
The $1.3 million decrease in operating revenue is primarily due to a
$1.5 million decrease in electric revenue resulting from lower
dispatch by FPL. This decrease is partially offset by a $.2 million
increase in electric capacity and bonus revenue resulting from
higher availability levels during the first quarter of 1997.
Electric Revenues (dollars and KWh's in millions)
For the three months ended
March 31, 1997 March 31, 1996
Dollars 37.5 38.8
KWhs 331 373
Average Capacity Billing
Factor 95.38% 96.67%
Average Dispatch Rate 58% 67%
Costs of revenues for the three months ended March 31, 1997, were
approximately $17.3 million on sales of 330,586 MWhs as compared
to $18.5 million on sales of 372,986 MWhs for the corresponding
period in the prior year.
Total other operating expenses for the three months ended March
31, 1997, were approximately $2.6 million, which is comparable to
the total other operating expenses for the corresponding period in
the prior year.
Net interest expense for the three months ended March 31, 1997,
was approximately $13.6 million which is comparable to the $13.7
million of net interest expense for the same period in the prior
year.
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 total borrowings through March 1997 were $769
million, of which the $139 million equity loan was repaid on
December 26, 1995. As of March 31, 1997, 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.
Series A-1 of the First Mortgage Bonds, in the aggregate principal
amount of $4,397,000, matured and were repaid on June 15, 1996.
Series A-2 of the First Mortgage Bonds, in the aggregate principal
amount of $4,398,000, matured and were repaid on December 15, 1996.
The weighted average interest rate paid by the Partnership on its
debt for the three months ended March 31, 1997, was 9.02%. The
comparable rate was 9.18% for the same period in 1996.
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, 1997, 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, 1997, 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, 1997, no
working capital loans have been made to the Partnership under the
working capital loan 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's steam host, Caulkins, has been named as a
defendant in a lawsuit by various Florida citrus growers. The
plaintiffs allege that Caulkins did not pay the growers the proper
amounts for their crops at various times from 1989 through 1994 and
are claiming $10 million in damages. Caulkins, without admitting
the veracity of the plaintiffs' allegations, has settled with citrus
growers not involved in the litigation which represent over 95% of
the fruit processed during the period which is the subject of the
lawsuit and, therefore, over 95% of the damages alleged. While the
Partnership is not, and does not anticipate being, involved with
this action, a significant judgment against Caulkins could have an
adverse impact on Caulkins' ability to continue purchasing steam
from the Partnership and, therefore, require the Partnership to take
certain actions, under the Energy Services Agreement with Caulkins
and otherwise, to preserve the Facility's status as a qualifying
facility. Caulkins has informed the Partnership of its view that
the magnitude of the remaining exposure with respect to this
litigation is not material to Caulkins' financial position. The
Partnership does not, and cannot, express any opinion as to the
likelihood or remoteness of a decision being rendered against
Caulkins in this case.
Item 5 OTHER INFORMATION
Governmental Approvals
The Partnership has obtained all material environmental permits
and approvals required, as ofMarch 31, 1997, 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. The Partnership timely filed its application for a Title V
air permit on May 24, 1996. A permit is expected within the next
two years.
Energy Prices
On October 1, 1996, FPL filed with the Florida Public Service
Commission its most recent projections for its 1996-1999 "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.
At other times, the projections exceed the energy prices specified
in the Power Purchase Agreement. 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
(November to June), 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.
For the three months ended March 31, 1997, FPL requested to decommit
the Facility numerous times and the Partnership has exercised its
rights to operate at minimum load (100MW) during all but one such
decommit order. The Partnership's election to continue to operate
at minimum load has not had a material impact although energy
delivered during such operations is sold at reduced prices. Based
upon FPL's projections, the Partnership does not expect that, if the
recently filed projections prove to reflect actual rates, its
dispatch rate will change materially during the period covered by
such projections.
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. The Partnership also filed a Form 8-K on
December 30, 1996, announcing Final Completion of the Facility and
the first cash distribution to the Partners.
b) Exhibits:
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.****
* 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.
***** Incorporated by reference from the quarterly report on Form
10-Q, file no. 33-82034 filed by the Registrants with the SEC in
May 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized
INDIANTOWN COGENERATION, L.P.
(Co-Registrant)
Date: May 12, 1997 /s/ John Cooper
John R. Cooper Vice
President (Chief Financial Officer)
INDIANTOWN COGENERATION FUNDING
CORPORATION (Co-Registrant)
Date: May 12, 1997 /s/ John Cooper
John R. Cooper
Vice President (Chief Financial
Officer)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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Exhibit 27: Financial Data Schedule
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