CONFORMED COPY
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 33-83618
SELKIRK COGEN PARTNERS, L.P.
(Exact name of Registrant (Guarantor) as specified in its charter)
Delaware 51-0324332
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
SELKIRK COGEN FUNDING CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 51-0354675
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Bowdoin Square, Boston, Massachusetts 02114
(Address of principal executive offices, including zip code)
(617) 227-8080
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
8.65% First Mortgage Bonds Due 2007, Series A
8.98% First Mortgage Bonds Due 2012, Series A
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
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This document consists of 16 pages of which this page is page 1.
<PAGE>
TABLE OF CONTENTS
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of September 30, 1997
and December 31, 1996.......................................... 3
Condensed Consolidated Statements of Operations for the three
and nine months ended September 30, 1997 and September 30, 1996. 4
Condensed Consolidated Statements of Cash Flows for the three
and nine months ended September 30, 1997 and September 30, 1996. 5
Notes to Condensed Consolidated Financial Statements............ 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations........................................... 7
Liquidity and Capital Resources................................. 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................... 14
SIGNATURES............................................................. 15
2
<PAGE>
<TABLE>
SELKIRK COGEN PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<CAPTION>
(unaudited)
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash............................................ $ 2,474 $ 2,591
Restricted funds................................ 19,433 6,284
Accounts receivable............................. 15,794 19,899
Due from affiliates............................. 14 40
Fuel inventory and supplies..................... 4,798 4,401
Other current assets............................ 534 449
--------- ---------
Total current assets...................... 43,047 33,664
Plant and equipment, net........................ 324,709 334,229
Long-term restricted funds...................... 21,368 20,446
Deferred financing charges, net................. 12,237 13,115
--------- ---------
Total Assets $ 401,361 $ 401,454
--------- ---------
--------- ---------
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Current liabilities:
Accounts payable................................ $ 731 $ 588
Accrued bond interest payable................... 9,006 385
Accrued expenses................................ 12,118 16,239
Due to affiliates............................... 1,192 937
Advances from customer.......................... --- 17
Current portion of long-term bonds.............. 2,987 2,167
--------- ----------
Total current liabilities................. 26,034 20,333
Other long-term liabilities..................... 13,887 10,678
Long-term bonds, less current portion........... 387,372 389,253
General partners' capital....................... (248) (173)
Limited partners' capital....................... (25,684) (18,637)
--------- --------
Total partners' capital................... (25,932) (18,810)
--------- --------
Total Liabilities and
Partners' Capital $ 401,361 $ 401,454
--------- ---------
--------- ---------
<FN> See Notes to Condensed Consolidated Financial Statements.
</TABLE>
3
<PAGE>
<TABLE>
SELKIRK COGEN PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)
<CAPTION>
For the For the
Three Months Ended Nine Months Ended
--------------------- --------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating revenues:
Electric and steam......... $ 38,238 $ 36,128 $ 116,292 $ 109,837
Gas resale................. 4,148 5,011 10,869 19,816
--------- --------- --------- ---------
Total operating
revenues.............. 42,386 41,139 127,161 129,653
Cost of revenue............. 29,503 29,570 89,918 89,236
--------- --------- --------- ---------
Gross Profit................ 12,883 11,569 37,243 40,417
Other operating expenses:
Administrative services -
affiliates............... 874 656 2,212 1,836
Other general and
administrative expenses.. 550 694 1,770 2,520
Amortization of deferred
financing charges........ 292 293 878 880
--------- --------- --------- ---------
Total other operating
expenses.............. 1,716 1,643 4,860 5,236
--------- --------- --------- ---------
Operating income............ 11,167 9,926 32,383 35,181
Net interest expense........ 8,199 8,210 24,585 24,699
--------- --------- --------- ---------
Net income.................. $ 2,968 $ 1,716 $ 7,798 $ 10,482
--------- --------- --------- ---------
--------- --------- --------- ---------
Allocated to:
General partners.......... $ 29 $ 17 $ 78 $ 105
Limited partners.......... 2,939 1,699 7,720 10,377
--------- --------- --------- ---------
Total................... $ 2,968 $ 1,716 $ 7,798 $ 10,482
--------- --------- --------- ---------
--------- --------- --------- ---------
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
4
<PAGE>
<TABLE>
SELKIRK COGEN PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<CAPTION>
For the For the
Three Months Ended Nine Months Ended
--------------------- --------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1997 1996 1997 1996
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net cash provided by
operating activities....... $ 15,915 $ 16,506 $ 29,936 $ 35,058
Cash flows provided by
(used in) investing
activities:
Plant and equipment
additions............... (18) (99) 16 (602)
Restricted funds......... (14,479) (16,218) (14,071) (11,555)
--------- ---------- ---------- --------
Net cash used in
investing activities.. (14,497) (16,317) (14,055) (12,157)
Cash flows provided by
(used in) financing
activities:
Cash distributions....... --- --- (14,920) (23,607)
Payments of principal on
long-term debt.......... --- --- (1,061) (284)
Advances from a
customer................ --- --- (17) (136)
--------- --------- --------- ---------
Net cash used in
financing activities.. --- --- (15,998) (24,027)
Net increase (decrease)
in cash.................... 1,418 189 (117) (1,126)
Cash at beginning
of period.................. 1,056 1,357 2,591 2,672
---------- ---------- ---------- ---------
Cash at end of period....... $ 2,474 $ 1,546 $ 2,474 $ 1,546
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
Supplemental disclosures of
cash flow information:
Cash paid for interest.... $ --- $ --- $ 17,320 $ 17,620
--------- --------- --------- ---------
--------- --------- --------- ---------
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
5
<PAGE>
SELKIRK COGEN PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
consolidate Selkirk Cogen Partners, L.P. and its wholly-owned subsidiary,
Selkirk Cogen Funding Corporation, (collectively the "Partnership"). All
significant intercompany accounts and transactions have been eliminated.
The condensed consolidated financial statements for the interim periods
presented are unaudited and have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. The information
furnished in the condensed consolidated financial statements reflects all
normal recurring adjustments which, in the opinion of management, are
necessary for a fair presentation of such financial statements. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to rules and regulations
applicable to interim financial statements.
These condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements included in
the Partnership's December 31, 1996 Annual Report on Form 10-K.
Note 2. Contingency
In connection with transactions in 1994 involving the investment by
affiliates of Cogen Technology, Inc. in the Partnership and the purchase of
J. Makowski Company, Inc. by Beale Generating Company, the Partnership filed
New York State real estate transfer and gains tax returns with New York tax
authorities. The New York tax authorities have raised certain questions and
issues about such tax returns.
Although the New York tax authorities have assessed no additional tax against
the Partnership or any other transferor at this time, the issue currently is
under consideration and it is possible that the New York tax authorities will
assert that additional tax is owed by the Partnership or one or more of the
other transferors in connection with these transactions. The Partnership
presently cannot predict the likelihood of the New York tax authorities
making such an assertion or, if made, the amount of tax that might be
asserted.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
-------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Results of Operations
Three and Nine Months Ended September 30, 1997 Compared to the Three and Nine
Months Ended September 30, 1996
Net income for the quarter ended September 30, 1997 was approximately $3.0
million as compared to $1.7 million for the corresponding period in the prior
year. Net income for the nine months ended September 30, 1997 was
approximately $7.8 million as compared to $10.5 million for the corresponding
period in the prior year. The increase in net income for the quarter ended
September 30, 1997 is primarily due to a $2.3 million increase in electric
revenues offset by a $0.9 million decrease in gas resale revenues. The
decrease in net income for the nine months ended September 30, 1997 is
primarily due to a $8.9 million decrease in gas resale revenues offset by a
$8.1 million increase in electric revenues.
Total revenues for the quarter and nine months ended September 30, 1997 were
approximately $42.4 million and $127.2 million as compared to $41.1 million
and $129.7 million for the corresponding periods in the prior year.
Electric Revenues (dollars and kWh's in millions):
- -------------------------------------------------
For the Three Months Ended
September 30, 1997 September 30, 1996
------------------------------- -------------------------------
Dollars kWh's Capacity Dispatch Dollars kWh's Capacity Dispatch
------- ----- -------- -------- ------- ----- -------- --------
Niagara Mohawk 7.4 70.9 40.19% 44.93% 6.9 59.4 33.68% 47.83%
Con Edison 30.8 495.9 79.87% 89.06% 29.0 416.6 71.16% 88.63%
For the Nine Months Ended
September 30, 1997 September 30, 1996
------------------------------- -------------------------------
Dollars kWh's Capacity Dispatch Dollars kWh's Capacity Dispatch
------- ------ ------- -------- ------- ----- -------- --------
Niagara Mohawk 23.6 259.4 49.02% 54.21% 20.8 180.0 34.26% 44.74%
Con Edison 92.5 1,400.6 79.01% 89.81% 87.1 1,216.0 69.78% 88.79%
Revenues from Niagara Mohawk Power Corporation ("Niagara Mohawk") increased
approximately $0.5 million and $2.8 million for the quarter and nine months
ended September 30, 1997 as compared to the corresponding periods in the
prior year. For the nine months ended September 30, 1997, Niagara Mohawk
dispatched the Unit on-line for the months of January, February, March, June,
July and August at full contract rates except for the month of March.
7
<PAGE>
Energy delivered in March was sold under special dispatch arrangements which
called for the pricing of the delivered energy at variable rates less than
full contract rates. For the nine months ended September 30, 1996, Niagara
Mohawk dispatched the Unit on-line for the months of January, February,
April, May, June, July, August and September at full contract rates. The
increase in revenues from Niagara Mohawk for the quarter and nine months
ended September 30, 1997 was primarily due to an increase in delivered energy
as evidenced by increases of 6.5% and 14.8% in the corresponding capacity
factors. Revenue from energy delivered pursuant to the special dispatch
arrangement with Niagara Mohawk for the nine months ended September 30, 1997
was approximately $1.2 million as compared to $29.3 thousand for the
corresponding period in the prior year.
Revenues from Consolidated Edison Company of New York, Inc. ("Con Edison")
for the quarter and nine months ended September 30, 1997 increased
approximately $1.8 million and $5.4 million as compared to the corresponding
periods in the prior year. The increase in revenues from Con Edison for the
quarter and nine months ended September 30, 1997 was primarily due to an
increase in delivered energy as evidenced by increases of 8.7% and 9.2% in
the corresponding capacity factors and higher contract energy rates resulting
from higher index fuel prices.
Pursuant to the Steam Sales Agreement General Electric may implement
productivity or energy efficiency projects in its manufacturing processes,
including projects involving the production of steam within the General
Electric plant commencing in 1996. General Electric has implemented an
energy efficiency project in 1997 that will reduce the quantity of steam
required by the General Electric plant. Under the energy efficiency project,
General Electric anticipates managing its annual average steam demand at
160,000lbs/hr. Steam revenues for the nine months ended September 30, 1997
and September 30, 1996 were reduced by an annual true-up of $0.9 million and
$0.2 million, respectively, so that General Electric would be charged a
nominal amount which is the annual equivalent of 160,000lbs/hr. Steam
revenues for the quarter and nine months ended September 30, 1997 were
approximately $0 and $172.5 thousand on 287.323 million and 1,116.003 million
pounds of steam delivered as compared to approximately $200.2 thousand and
$1.9 million on 357.164 million and 1,378.420 million pounds of steam
delivered for the corresponding periods in the prior year. The decrease in
steam revenues during the quarter and nine months ended September 30, 1997
was due to lower steam demand and a reduction in fuel prices.
Gas resale revenues for the quarter ended September 30, 1997 was
approximately $4.1 million on sales of 1.5 million MMBtu's as compared to
$5.0 million on sales of 2.2 million MMBtu's for the corresponding period in
the prior year. Gas resale revenues for the nine months ended September 30,
1997 were approximately $10.9 million on 4.3 million MMBtu's as compared to
approximately $19.8 million on sales of 6.4 million MMBtu's for the
corresponding period in the prior year.
8
<PAGE>
The $0.9 million and $8.9 million decrease in gas resale revenues during the
quarter and nine months ended September 30, 1997 was primarily due to higher
dispatch of Units 1 or 2, which resulted in lower volumes of natural gas
becoming available for resale. Natural gas resale prices were also lower
during the nine months ended September 30, 1997, the decrease generally
resulted from more moderate temperatures in the Northeast region as compared
to the colder than normal temperatures, which caused an increase in the
demand for natural gas a nd resulted in lower than normal gas storage levels
during the corresponding period in the prior year. The Partnership enters
into gas resales during periods when Units 1 and 2 are not operating at full
capacity.
Cost of revenues for the quarter and nine months ended September 30, 1997
were approximately $29.5 million and $89.9 million on purchases of 7.1
million MMBtu's and 21.1 million MMBtu's as compared to approximately $29.6
million and $89.2 million on purchases of 7.1 million MMBtu's and 21.3
million MMBtu's for the corresponding periods in the prior year. The cost of
revenues and MMBtu's purchases for the quarter and nine months ended
September 30, 1997 are comparable to the corresponding periods in the prior
year.
Total other operating expenses for the quarter and nine months ended
September 30, 1997 were approximately $1.7 million and $4.9 million as
compared to approximately $1.6 million and $5.2 million for the corresponding
periods in the prior year. The decrease in other operating expenses for the
nine months ended September 30, 1997 is primarily due to a decrease in other
general and administrative expenses offset by an increase in administrative
services - affiliates.
Net interest expense for the quarter and nine months ended September 30, 1997
of approximately $8.2 million and $24.6 million are comparable to the
corresponding periods in the prior year.
Liquidity and Capital Resources
Net cash flows provided by operating activities decreased from approximately
$16.5 million and $35.1 million for the quarter and nine months ended
September 30, 1996 to approximately $15.9 million and $29.9 million for the
quarter and nine months ended September 30, 1997. The decrease in net cash
flows provided by operating activities during the quarter ended September 30,
1997 is due to normally recurring cash receipts and disbursements within the
Partnership's operating asset and liability accounts offset by the increase
in net income. The decrease in net cash flows provided by operating
activities during the nine months ended September 30, 1997 is due to the
decrease in net income and normally recurring cash receipts and disbursements
within the Partnership's operating asset and liability accounts.
9
<PAGE>
Net cash flows used in investing activities for the quarter and nine months
ended September 30, 1997 were approximately $14.5 million and $14.1 million
as compared to approximately $16.3 million and $12.2 million for the
corresponding periods in the prior year. Net cash flows used in investing
activities represent monies deposited into or withdrawn from funds created
pursuant to the Partnership's Depositary and Disbursement Agreement,
administered by Bankers Trust Company, as depositary agent (the "Funds").
Monies deposited into the Funds for the nine months ended September 30, 1997
and 1996 primarily represent monies set aside for interest and principal
payments to Bondholders scheduled for December 26 and Partner distributions.
Monies withdrawn from the Funds for the nine months ended September 30, 1997
and 1996 represent the payment of interest and principal on the Bonds and
distributions to Partners.
There were no financing activities during the quarters ended September 30,
1997 and September 30, 1996. Net cash flows used in financing activities
decreased from approximately $24.0 million for the nine months ended
September 30, 1996 to approximately $16.0 million for the nine months ended
September 30, 1997. The decrease in net cash flows used in financing
activities for the nine months ended September 30, 1997 is primarily due to a
decrease in distributions to Partners.
Con Edison by a letter dated September 19, 1994 claimed the right to acquire
that portion of Unit 2's firm natural gas supply not used in operating Unit
2, when Unit 2 is dispatched off-line or at less than full capability. The
Con Edison Power Purchase Agreement contains no express language granting Con
Edison any rights with respect to such excess natural gas. Nevertheless, Con
Edison has argued that, since payments under the contract include fixed fuel
charges which are payable whether or not Unit 2 is dispatched on-line, Con
Edison is entitled to take delivery of any excess natural gas. The
Partnership vigorously disputes the position adopted by Con Edison, based
notably on the absence of any contractual provision according Con Edison the
claimed rights but also on the fact that the Partnership has assumed the risk
under the Con Edison Power Purchase Agreement that the fuel charges payable
by Con Edison are insufficient to cover the costs actually incurred by the
Partnership. By a letter dated May 23, 1995, Con Edison indicated its
intention to pursue the claim asserted in the September 19, 1994 letter. In
the May 23, 1995 letter, Con Edison reserved the right to claim 100% of the
margins derived from the sales of Unit 2's firm natural gas supply not used
in operating Unit 2 (non-plant gas sales) and requested that the Partnership
reduce the monthly amount invoiced to Con Edison by 50% of a calculated value
of the non-plant gas sales. The Partnership strenuously objected to Con
Edison's contentions and, at a meeting between the Partnership and Con
Edison, Con Edison agreed to continue not to deduct any amount attributable
to non-plant gas sales from payments made upon monthly invoices but stated it
would do so under protest, pending further discussions between the parties.
Since the commencement of commercial operations of Unit 2, the Partnership
made and continues to make, from time to time, excess gas lay-off sales from
Unit 2's gas supply. The Partnership does not intend to adjust the monthly
inv oices issued to Con Edison and continues to assert that Con Edison is not
entitled to any revenues or margins derived from non-plant gas sales. In the
event Con Edison were to pursue its asserted claim, the Partnership would
expect to pursue all available legal remedies, but there can be no certainty
that the outcome of such remedial action would be favorable to the
Partnership or, if favorable, would provide for the Partnership's full
recovery of its damages.
10
<PAGE>
The Partnership's cash flows from the sale of electric output would be
materially and adversely affected if Con Edison were to prevail in its claim
to Unit 2's excess natural gas volumes and the related margins.
On October 6, 1995, Niagara Mohawk filed its "PowerChoice" proposal with the
New York State Public Service Commission ("NYPSC"). On October 12, 1995,
Niagara Mohawk filed a Report on Form 8-K with the Securities and Exchange
Commission (the "Commission") explaining the PowerChoice proposal (the
"PowerChoice Statement"). In the PowerChoice Statement, Niagara Mohawk
describes a number of related proposals to restructure the utility's
business, including the reorganization of its assets and the renegotiation of
its contracts with generators which, like the Partnership, are not regulated
as utilities ("non-utility generators"). On July 10, 1997, Niagara Mohawk
filed a Report on Form 8-K with the Commission stating that Niagara Mohawk
had entered into a Master Restructuring Agreement ("MRA") pursuant to which
it and the twenty-nine independent power producers which have signed the MRA
propose to terminate, restate or amend their respective power purchase
agreements and on October 17, 1997, Niagara Mohawk filed a Report on Form 8-K
with the Commission stating that on October 11, 1997 Niagara Mohawk filed its
Power Choice settlement with the NYPSC which incorporates the terms of the
MRA. The consideration for the independent power purchasers' agreement
varies by party, and may consist of cash, short term notes, shares of Niagara
Mohawk's Common Stock or certain swap contracts. Among the contracts which
is proposed to be amended and restated is the Niagara Mohawk Power Purchase
Agreement for the electric output of Unit 1. Pursuant to the MRA and subject
to negotiation as described below, the parties propose to restructure the
Niagara Mohawk Power Purchase Agreement to provide for the sale of
electricity by the Partnership pursuant to a pre-determined schedule of
output at one or more pricing arrangements for up to 12 years in lieu of the
delivery and price provisions of the Niagara Mohawk Power Purchase Agreement
as currently in effect.
11
<PAGE>
The details of the price arrangements as well as other possible contract
modifications continue to be the subject of extensive negotiations and
implementation of the MRA is subject to a number of significant conditions,
including without limitation Niagara Mohawk and the Partnership negotiating
the amended and restated Unit 1 Power Purchase Agreement, the receipt of all
regulatory approvals, the receipt of all consents by third parties necessary
for the transaction contemplated by the MRA (including satisfying certain
standards under the Partnership's Trust Indenture relating to the absence of
material adverse changes and the maintenance of required projected debt
service coverage ratios or receiving any required approval of bondholders or
other creditors), the Partnership's entering into new third party
arrangements which will enable the Partnership to restructure its project on
a reasonably satisfactory economic basis, and the receipt by Niagara Mohawk
and the Partnership of all necessary approvals from the ir respective boards
of directors, shareholders and partners. Should Niagara Mohawk and the
Partnership satisfy all of the conditions to effectuating the transactions
contemplated by the MRA with respect to the Partnership, Niagara Mohawk may
nevertheless terminate the MRA if Niagara Mohawk determines that, as a result
of the failure to satisfy the conditions of the MRA by other independent
power producers, the benefits anticipated to be received by Niagara Mohawk
pursuant to the MRA have been materially and adversely affected.
The Partnership, as a party to the MRA, is committed to negotiate to reach
agreement on an amended and restated power purchase agreement; however, the
Partnership expresses no opinion with respect to the likelihood that all of
the conditions to implementation of the MRA will be met. Further, the
Partnership expresses no opinion with respect to the viability of Niagara
Mohawk's proposed alternatives should the implementation of the MRA not be
completed, such as Niagara Mohawk's proposal in the context of the
PowerChoice Statement to take possession of independent power projects
through the power of eminent domain and to thereafter sell such projects or
Niagara Mohawk's position that it has not ruled out the ultimate possibility
of a filing for restructuring under Chapter 11 of the U.S. Bankruptcy Code as
set forth in the PowerChoice Statement. Nevertheless, in the absence of
agreement on a definitive restructured power purchase agreement, the
Partnership continues to believe that the Niagara Mohawk Power Purc hase
Agreement is a valid and binding contract with Niagara Mohawk. Until
negotiations on the restructured power purchase agreement advance further,
the Partnership will not be able to determine what effect, if any, the
restructured power purchase agreement or the PowerChoice proposal will have
on the Partnership, its business or net operating revenues. For the nine
months ended September 30, 1997, electric sales to Niagara Mohawk accounted
for approximately 18.6% of total project revenues.
Previously in connection with Niagara Mohawk's March 10, 1997 announcement of
the agreement in principle, Standard & Poor's placed the Bonds on credit
watch "with negative implications," based in part on its analysis of the
current reports on Form 8-K filed in March 1997 by Niagara Mohawk and the
Partnership, respectively, and its belief that the restructuring has the
potential to erode cash flow coverage derived from long-term contracts
supporting the Bonds. To date Standard & Poor's has not changed their
outlook on the Bonds. Additionally, as of the date of this report, Moody's
Investors Service has not changed its rating or its previous "negative
outlook" on the Bonds as a result of the developments.
12
<PAGE>
Future operating results and cash flows from operations are dependent on,
among other things, the performance of equipment and processes as expected,
level of dispatch, fuel deliveries and price as contracted and the receipt of
certain capacity and other fixed payments. A significant change in any of
these factors could have a material adverse effect on the results for the
Partnership.
The Partnership believes that based on current conditions and circumstances
it will have sufficient liquidity available provided by cash flows from
operations to fund existing debt obligations and operating costs.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(A) Exhibits
Exhibit No. Description Page No.
---------- ----------- -------
27 Financial Data Schedule
(For electronic filing purposes only)
(B) Reports on Form 8-K
On July 18, 1997, the Registrant filed a report on Form 8-K disclosing
the Master Restructuring Agreement entered into between Niagara Mohawk and 16
Independent Power Producers.
Omitted from this Part II are items which are not applicable or to which the
answer is negative for the periods covered.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SELKIRK COGEN PARTNERS, L.P.
Date: November 13, 1997 /s/ JMC SELKIRK, INC.
--------------------------
General Partner
Date: November 13, 1997 /s/ JOHN R. COOPER
--------------------------
Name: John R. Cooper
Title: Senior Vice President and
and Chief Financial Officer
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SELKIRK COGEN FUNDING
CORPORATION
Date: November 13, 1997 /s/ JOHN R. COOPER
--------------------------
Name: John R. Cooper
Title: Senior Vice President and
and Chief Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 000929540
<NAME> SELKIRK COGEN PARTNERS, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Sep-30-1997
<CASH> 21907
<SECURITIES> 0
<RECEIVABLES> 15808
<ALLOWANCES> 0
<INVENTORY> 4798
<CURRENT-ASSETS> 43047
<PP&E> 371285
<DEPRECIATION> 46576
<TOTAL-ASSETS> 401361
<CURRENT-LIABILITIES> 26034
<BONDS> 387372
0
0
<COMMON> 0
<OTHER-SE> (25932)
<TOTAL-LIABILITY-AND-EQUITY> 401361
<SALES> 127161
<TOTAL-REVENUES> 127161
<CGS> 89918
<TOTAL-COSTS> 89918
<OTHER-EXPENSES> 4860
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24585
<INCOME-PRETAX> 7798
<INCOME-TAX> 0
<INCOME-CONTINUING> 7798
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7798
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
