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 September 30, 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
September 30, 1997 (Unaudited) and December 31,
1996..........................................................1
Consolidated Statements of Operations for the Nine Months Ended
September 30, 1997 (Unaudited) and September 30, 1996
(Unaudited)...................................................3
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 1997 (Unaudited) and September 30, 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
PART I FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Indiantown Cogeneration, L.P. Consolidated Balance Sheets As of September
30, 1997 and December 31, 1996
<S> <C> <C>
ASSETS September 30, 1997 December 31, 1996
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 176,942 $ 344,323
Accounts receivable-trade 15,979,519 14,859,879
Inventories 1,831,077 1,218,356
Prepaids 1,455,365 560,368
Deposits 193,357 193,357
Investments held by Trustee,
including restricted
funds of $19,302,061
and $3,673,116, respectively 43,467,374 19,250,140
Total current assets 63,103,634 36,426,423
INVESTMENTS HELD BY TRUSTEE,
restricted funds 12,501,000 12,501,000
DEPOSITS 65,000 60,000
PROPERTY, PLANT & EQUIPMENT:
Land 8,582,364 8,579,399
Electric and steam
generating facilities 695,528,595 694,051,333
Less accumulated
depreciation 31,728,008 20,416,001
Net property, plant
& equipment 672,382,951 682,214,731
FUEL RESERVE 2,096,435 3,591,713
DEFERRED FINANCING COSTS,
net of accumulated
amortization of $41,958,818
and $41,311,315,
respectively 18,228,493 18,875,996
Total assets $ 768,377,513 $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 September 30, 1997 and December 31, 1996
<S> <C> <C>
LIABILITIES AND
PARTNERS' CAPITAL September 30, 1997 December 31, 1996
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $8,240,148 $6,515,052
Accrued liabilities 6,007,842 1,987,427
Accrued interest 16,472,311 2,368,950
Current portion -
First Mortgage Bonds 9,983,000 9,701,000
Current portion lease
payable - railcars 262,282 248,460
Total current liabilities 40,965,583 20,820,889
LONG TERM DEBT:
First Mortgage Bonds 481,372,000 486,504,000
Tax Exempt Facility
Revenue Bonds 125,010,000 125,010,000
Lease payable - railcars 4,939,329 5,137,805
Total long term debt 611,321,329 616,651,805
Total liabilities 652,286,912 637,472,694
PARTNERS' CAPITAL:
Toyan Enterprises 58,045,301 55,774,642
Palm Power Corporation 11,609,060 13,943,660
TIFD III-Y, Inc. 46,436,240 46,478,867
Total partners' capital 116,090,601 116,197,169
Total liabilities and
partners' capital $768,377,513 $753,669,863
<FN>
The accompanying notes are an integral part of these consolidated
balance sheets.
</TABLE>
<TABLE>
<CAPTION>
Indiantown Cogeneration, L.P.
Consolidated Statements of Operations
For the Nine Months Ended September 30, 1997 and June 30, 1996
<S> <C> <C>
Nine Months Ended Nine Months Ended
September 30, 1997 September 30, 1996
(Unaudited) (Unaudited)
Operating Revenues:
Electric capacity
and capacity
bonus revenue $91,453,854 $85,986,128
Electric energy revenue 29,168,878 35,677,510
Steam revenue 100,000 58,334
Total operating
revenues 120,722,732 121,721,972
Cost of Sales:
Fuel and ash 32,212,057 38,276,231
Operating and
maintenance 11,639,412 10,305,868
Depreciation 11,671,841 14,999,128
Total cost of sales 55,523,310 63,581,227
Gross Profit 65,199,422 58,140,745
Other Operating
Expenses:
General and
administrative 2,081,092 1,982,566
Insurance and taxes 5,158,623 5,739,954
Total other operating
expenses 7,239,715 7,722,520
Operating Income 57,959,707 50,418,225
Non-Operating Income
(Expenses):
Interest expense (43,670,510) (44,193,814)
Interest/Other income 1,882,279 3,168,116
Net non-operating
expense (41,788,231) (41,025,698)
Net Income $ 16,171,476 $ 9,392,527
<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 Nine Months Ended September 30, 1997 and 1996
<S> <C> <C>
Nine Months Nine Months
Ended Ended
September 30, 1997 September 30, 1996
(Unaudited) (Unaudited)
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Income $ 16,171,476 $ 9,392,527
Adjustments to
reconcile net income
to net cash provided
by operating activities:
Depreciation and
amortization 11,959,510 15,166,813
Increase in accounts
receivable (1,119,640) (8,438,124)
Decrease in inventories
and fuel reserves 882,557 969,007
(Increase) Decrease in
deposits and prepaids (899,997) 1,736,843
Increase in accounts
payable and accrued
interest 19,716,483 6,312,823
Increase in Major
Maintenance Reserve 132,389 153,424
Decrease in lease payable (184,654) (171,795)
Net cash provided by
operating activities 46,658,124 25,121,518
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property,
plant & equipment (1,480,225) (8,291,643)
Increase in investment
held by trustee (24,217,234) (14,653,817)
Net cash provided by
(used in) investing
activities (25,697,459) (22,945,460)
CASH FLOW FROM FINANCING ACTIVITIES:
Capital Distributions (16,278,046) --
Decrease in Bonds Payable (4,850,000) (4,397,000)
Net cash used in
financing activities (21,128,046) (4,397,000)
DECREASE IN CASH AND
CASH EQUIVALENTS (167,381) (2,220,942)
CASH and CASH EQUIVALENTS,
beginning of year 344,323 2,666,296
CASH and CASH EQUIVALENTS,
end of period 176,942 445,354
<FN>
The accompanying notes are an integral part of these consolidated
statements.
</TABLE>
Indiantown Cogeneration, L.P.
Notes to Consolidated Financial Statements
As of September 30, 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 is managed by U.S. Generating Company ("USGen")
pursuant to a Management Services Agreement (the "MSA"). The
Facility is operated by U.S. Operating Services Company ("USOSC")
pursuant to an Operation and Maintenance Agreement (the "O&M
Agreement"). USGen and USOSC are general partnerships formed
between affiliates of PG&E Enterprises and Bechtel Enterprises. On
September 19, 1997, PG&E Enterprises indirectly acquired Bechtel
Enterprises' interests in USGen and USOSC so that PG&E Enterprises
now indirectly owns all of the interests in USGen and USOSC. This
will not affect USGen's obligations under the MSA or USOSC's
obligations under the O&M Agreement. In addition, Toyan purchased
16.67% of Palm's interest in the Partnership, which represents
approximately 2% of the ownership interests in the Partnership. The
transfer is retroactive to January 1, 1997. On October 17, 1997,
the Federal Energy Regulatory Commission recertified the Facility as
a Qualifying Facility with the revised ownershi p interests.
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 50%
Palm 10%
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.
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.
2. FINANCIAL STATEMENTS: The consolidated balance sheet as of
September 30, 1997, and the consolidated statements of
operations and cash flows for the nine months ended on September
30, 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
September 30, 1997, and the results of operations and cash flows
for the nine months ended September 30, 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 on the Bonds described at Note
4. 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.
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 balance
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 to the Partnership and is included in
investments held by trustee in the accompanying consolidated
balance sheet as of September 30, 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
September 30, 1997 and 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 September 30, 1997 and December 31, 1996,
the estimated present value of this deposit $65,000 and $60,000,
respectively, 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 September 30, 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.
Financial Liabilities Carrying Amount Fair Value
Tax-Exempt Bonds $ 125,010,000 $ 145,176,847
Taxable Bonds $ 491,355,000 $ 573,066,770
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 September 30, 1997, the Partnership had approximately $672.4
million of property, plant and equipment (net of accumulated
depreciation) 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 nine months ended
September 30, 1997, the Partnership had total operating revenues of
approximately $120.7 million, total operating costs of $62.7
million, and total net interest expenses of approximately $41.8
million resulting in net income of approximately $16.2 million.
The Partnership has obtained all material environmental permits
and approvals required as of September 30, 1997 for the operation
of the Facility. Certain of these 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 two years.
Results of Operations
For the nine months ending September 30, 1997 and 1996, the
Facility achieved an average Capacity Billing Factor of 97.55% and
93.74%, respectively. This resulted in earning monthly capacity
payments aggregating $83.9 million and $83.7 million, and bonuses
aggregating $7.5 million and $2.3 million for the nine months ended
September 30, 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 nine months
ended September 30, 1997, the Facility was dispatched by FPL and
generated 1,220,675 megawatt-hours compared with 1,506,313
megawatt-hours during the same period in 1996. The 285,638
megawatt-hour decrease was primarily due to lower dispatch levels by
FPL primarily driven by mild winter weather. The monthly dispatch
rate for the first nine months of 1997 ranged from 44% to 84%, as
compared to a range of 64% to 91% for the corresponding period in
1996. The difference is primarily attribut able to lower dispatch
levels by FPL due to mild winter weather.
Net income for the nine months ended September 30, 1997, was
approximately $16.2 million compared to the net income of
approximately $9.4 million for the corresponding period in the prior
year. The $6.8 million increase is primarily attributable to a $7.5
million increase in operating income (described below) partially
offset by a net interest expense increase of $760,000.
Electric Revenues (dollars and KWh's in millions)
For the nine months ended
September 30, 1997 September 30, 1996
Dollars 120.7 121.7
KWhs 1,220.7 1,506.3
Average Capacity Billing
Factor 97.55% 93.74%
Average Dispatch Rate 65% 78%
For the nine months ended September 30, 1997, the Partnership had
total operating revenues of approximately $120.7 million as
compared to $121.7 million for the corresponding period in the
prior year. The $1 million decrease in operating revenue is
primarily due to a $6.5 million decrease in electric revenue
resulting from lower dispatch by FPL and is offset by a $5.5
million increase in electric capacity and bonus revenue
resulting from higher availability levels during the nine months
ended September 30, 1997.
Costs of revenues for the nine months ended September 30, 1997,
were approximately $55.5 million on sales of 1,220,675 MWhs as
compared to $63.6 million on sales of 1,506,313 MWhs for the
corresponding period in the prior year. This decrease is largely
attributable to a $6.0 million decrease in fuel and ash disposal
costs resulting from lower dispatch by FPL.
Total other operating expenses for the nine months ended
September 30, 1997, were approximately $7.2 million, which is
comparable to the $7.7 million of total other operating expenses for
the corresponding period in the prior year. The $500,000 decrease
is mainly due to lower insurance premiums.
Net interest expense for the nine months ended September 30,
1997, was approximately $41.8 million compared to the $41.0 million
of net interest expense for the same period in the prior year. The
$760,000 increase is a result of a $524,000 decrease in interest
expense due to the maturity of Series A-3 of the First Mortgage
Bonds in June 1997 offset by a decrease in interest income of $1.3
million.
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 which bear
an average interest rate of 9.26% and $268.4 million of which 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 from inception through
September 1997 were $769 million. The equity loan of $139 million
was repaid on December 26, 1995. As of September 30, 1997, the
borrowings included $125 million from 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. Series
A-3 of the First Mortgage Bonds, in the aggregate principal amount
of $4,850,000, matured and were repaid on June 15, 1997. The
weighted average interest rate paid by the Partnership on its debt
for the six months ended June 30, 1997 and 1996, was 9.18%.
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 September 30, 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 September 30, 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 September 30, 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.
Item 5 OTHER INFORMATION
Governmental Approvals
The Partnership has obtained all material environmental permits
and approvals required, as of September 30, 1997, in order to
continue commercial operation of the Facility. Certain of these
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 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 nine months ended
September 30, 1997, FPL requested the Partnership to decommit the
Facil ity numerous times and the Partnership has typically
exercised its rights to operate at minimum load (100MW) during such
decommit requests. The Partnership's election to operate at
minimum load has not had a material impact on the Partnership or
its financial condition 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: November 14, 1997 /s/ John Cooper
John R. Cooper
Vice President and Chief
Financial Officer
INDIANTOWN COGENERATION FUNDING
CORPORATION (Co-Registrant)
Date: November 14, 1997 /s/ John Cooper
John R. Cooper
Vice President and 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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