- -----------------------------------------------------------------------------
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 March 31, 1999
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) 788-3000
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b)OR 12(g)OF THE ACT:
None
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
--- ---
As of May 14, 1999, there were 10 shares of common stock of Selkirk Cogen
Funding Corporation, $1 par value outstanding.
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<PAGE>
TABLE OF CONTENTS
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of March 31, 1999
and December 31, 1998......................................... 3
Condensed Consolidated Statements of Operations for the three
months ended March 31, 1999 and March 31, 1998................ 4
Condensed Consolidated Statements of Cash Flows for the three
months ended March 31, 1999 and March 31, 1998................ 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
Item 3. Quanitative and Qualitative Disclosures About Market Risk..... 13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.......................... 15
SIGNATURES............................................................ 16
2
<PAGE>
<TABLE>
SELKIRK COGEN PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<CAPTION>
(unaudited)
March 31, December 31,
1999 1998
---------- ------------
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash............................................ $ 1,401 $ 1,839
Restricted funds................................ 21,718 4,185
Accounts receivable............................. 14,859 14,281
Due from affiliates............................. 721 743
Fuel inventory and supplies..................... 5,039 5,033
Other current assets............................ 371 333
--------- ---------
Total current assets...................... 44,109 26,414
Plant and equipment, net........................ 305,914 308,999
Long-term restricted funds...................... 28,737 28,188
Deferred financing charges, net................. 10,493 10,782
--------- ---------
Total Assets $ 389,253 $ 374,383
--------- ---------
--------- ---------
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Current liabilities:
Accounts payable................................ $ 245 $ 617
Accrued bond interest payable................... 8,913 379
Accrued expenses................................ 10,101 12,235
Due to affiliates............................... 322 639
Current portion of long-term bonds.............. 4,822 4,822
--------- ---------
Total current liabilities................. 24,403 18,692
Deferred revenues .............................. 6,392 6,565
Other long-term liabilities..................... 15,939 14,803
Long-term bonds, less current portion........... 381,133 381,133
General partners' capital....................... (375) (457)
Limited partners' capital....................... (38,239) (46,353)
--------- ---------
Total partners' capital................... (38,614) (46,810)
--------- ---------
Total Liabilities and
Partners' Capital $ 389,253 $ 374,383
--------- ---------
--------- ---------
<FN>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
</TABLE>
3
<PAGE>
<TABLE>
SELKIRK COGEN PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)
<CAPTION>
For the Three Months Ended
--------------------------
March 31, March 31,
1999 1998
---------- ----------
<S> <C> <C>
Operating revenues:
Electric and steam............................ $ 41,236 $ 39,418
Gas resale.................................... 1,087 1,991
--------- ---------
Total operating revenues.................. 42,323 41,409
Cost of revenues.................................. 25,105 28,108
--------- ---------
Gross Profit...................................... 17,218 13,301
Other operating expenses:
Administrative services - affiliates.......... 238 587
Other general and administrative expenses..... 459 544
Amortization of deferred financing charges.... 289 291
--------- ---------
Total other operating expenses............ 986 1,422
--------- ---------
Operating income.................................. 16,232 11,879
Interest (income)expense:
Interest income............................... (498) (448)
Interest expense.............................. 8,534 8,605
--------- ---------
Net interest expense..................... 8,036 8,157
--------- ---------
Net income........................................ $ 8,196 $ 3,722
--------- ---------
--------- ---------
Allocated to:
General partners.............................. $ 82 $ 37
Limited partners.............................. 8,114 3,685
--------- ---------
Total..................................... $ 8,196 $ 3,722
--------- ---------
--------- ---------
<FN>
The accompanying notes are an integral part of these 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 Three Months Ended
--------------------------
March 31, March 31,
1999 1998
---------- ----------
<S> <C> <C>
Net cash provided by operating activities......... $ 16,552 $ 17,438
Cash flows provided by (used in)
investing activities:
Plant and equipment additions................. (45) ---
--------- ---------
Net cash used in investing activities..... (45) ---
Cash flows used in financing activities:
Restricted funds.............................. (16,945) (13,994)
--------- --------
Net cash used in financing activities..... (16,945) (13,994)
Net increase (decrease) in cash................... (438) 3,444
Cash at beginning of period....................... 1,839 1,337
--------- ---------
Cash at end of period............................. $ 1,401 $ 4,781
--------- ---------
--------- ---------
Supplemental disclosures of cash flow information:
Cash paid for interest........................ $ --- $ ---
--------- ---------
--------- ---------
<FN>
The accompanying notes are an integral part of these 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. Certain reclassifications have
been made to the Condensed Consolidated Statements of Operations for the
three months ended March 31, 1998 to conform with the current period's basis
of presentation.
These condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements included in
the Partnership's December 31, 1998 Annual Report on Form 10-K.
Note 2. New Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument be recorded in
the balance sheet as either an asset or liability measured at its fair value.
Changes in the derivatives fair value must be recognized in the statement of
operations as a gain or loss unless specific hedge accounting criteria are
met. SFAS No. 133 is effective for fiscal years beginning after June 15,
1999. SFAS No. 133 must be applied to (a) derivative instruments and (b)
certain derivative instruments embedded in hybrid contracts. Management has
not yet quantified the impact of adopting SFAS No. 133 on the Partnership's
financial statements.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ----------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Results of Operations
Three Months Ended March 31, 1999 Compared to the Three Months Ended
March 31, 1998
Net income for the quarter ended March 31, 1999 was approximately $8.2
million as compared to $3.7 million for the corresponding period in the prior
year. The $4.5 million increase in net income is primarily due to an
increase in Unit 1 revenues and decreases in fuel costs and other operating
expenses.
Total revenues for the quarter ended March 31, 1999 were approximately $42.3
million as compared to $41.4 million for the corresponding period in the
prior year.
Electric Revenues (dollars and kWh's in millions):
- --------------------------------------------------
For the Three Months Ended
March 31, 1999 March 31, 1998
---------------------------------- --------------------------------
Dollars kWh's Capacity Dispatch Dollars kWh's Capacity Dispatch
------- ----- -------- -------- ------- ----- -------- --------
Unit 1 11.4 152.6 90.65% 99.03% 8.3 102.6 59.43% 64.44%
Unit 2 29.5 465.8 81.37% 88.80% 31.1 519.4 90.75% 93.94%
Revenues from Unit 1 increased approximately $3.1 million for the quarter
ended March 31, 1999 as compared to the corresponding period in the prior
year. During the quarter ended March 31, 1999 revenues from Niagara Mohawk
Power Corporation ("Niagara Mohawk") and PG&E Energy Trading - Power, L.P.
("PG&E Energy Trading") were approximately $10.6 million and $0.8 million,
respectively. During the quarter ended March 31, 1998 all revenues from Unit
1 were from Niagara Mohawk. The increase in revenues from Unit 1 for the
quarter ended March 31, 1999 was primarily due to an increase in delivered
energy as evidenced by the increase in capacity factors from 59.43% to
90.65%, and improved contract pricing resulting from the execution of the
Amended and Restated Niagara Mohawk Power Purchase Agreement on August 31,
1998. In conjunction with the execution of the Amended and Restated Niagara
Mohawk Power Purchase Agreement, Niagara Mohawk no longer has the right to
direct the dispatch of Unit 1. During the quarter ended March 31, 1999 the
Partnership received Monthly Contract Payments and delivered energy up to the
monthly contract quantity to Niagara Mohawk. During the month of January
1999 the Partnership sold all of the Excess Energy generated from Unit 1 to
Niagara Mohawk. During the months of February and March 1999 the Partnership
sold all of the Excess Energy generated from Unit 1 to PG&E Energy Trading.
Excess Energy delivered to Niagara Mohawk and PG&E Energy Trading was sold at
negotiated market prices. Deferred revenues of approximately $0.2 million
are also included in revenues from Niagara Mohawk during the quarter ended
March 31, 1999. During the quarter ended March 31, 1998, Niagara Mohawk
dispatched Unit 1 on-line during January and February and off-line during
March. Energy delivered during the majority of January and the entire month
of February was sold at full contract rates. Energy delivered during the
first four days in January was sold under special dispatch arrangements which
called for the pricing of delivered energy at variable rates less than full
contract rates. Had the Partnership not entered into the special dispatch
arrangements, the Unit would have otherwise been dispatched off-line during
the relevant periods.
7
<PAGE>
Revenues from Unit 2 decreased approximately $1.6 million for the quarter
ended March 31, 1999 as compared to the corresponding period in the prior
year. During the quarter ended March 31, 1999, revenues from Consolidated
Edison Company of New York, Inc. ("Con Edison") and PG&E Energy Trading were
approximately $29.2 million and $0.3 million as compared to approximately
$31.1 million and $41.3 thousand, respectively for the corresponding period
in the prior year. The decrease in revenues from Unit 2 for the quarter
ended March 31, 1999 was primarily due to the decrease in the Con Edison
contract price for delivered energy resulting from lower index fuel prices
and a decrease in delivered energy as evidenced by the decrease in capacity
factors from 90.75% to 81.37%. During the quarter ended March 31, 1999,
revenues from PG&E Energy Trading resulted from the sale of other
energy-related products. During the quarter ended March 31, 1998, revenues
from PG&E Energy Trading resulted from the sale of generated capacity in
excess of the contract amount due under the Con Edison Power Purchase
Agreement.
Steam revenues for the quarter ended March 31, 1999 were approximately $0.3
million. Steam revenues for the quarter ended March 31, 1998 of
approximately $0.2 million were reduced by a reserve of the same amount to
reflect the estimated annual true-up so that General Electric would be
charged a nominal amount which is the annual equivalent of 160,000 lbs/hr.
Delivered steam for the quarter ended March 31, 1999 was approximately 409.8
million pounds as compared to approximately 385.9 million pounds for the
corresponding period in the prior year. The increase in steam revenues for
the quarter ended March 31, 1999 was primarily due to the increase in
delivered steam.
Gas resale revenues for the quarter ended March 31, 1999 were approximately
$1.1 million on sales of approximately 0.6 million MMBtu's as compared to
approximately $2.0 million on sales of approximately 0.9 million MMBtu's for
the corresponding period in the prior year. The $0.9 million decrease in gas
resale revenues during the quarter ended March 31, 1999 is primarily due to
higher dispatch of Unit 1 and lower natural gas resale prices, which resulted
in lower volumes of natural gas becoming available for resale at lower
prices. The decrease in natural gas resale prices during the quarter ended
March 31, 1999 generally resulted from more moderate temperatures in the
Northeast region as compared to colder temperatures, which resulted in higher
demand for natural gas, during the corresponding period in the prior year.
The Partnership entered into gas resales during periods when Units 1 and 2
were not operating at full capacity.
Cost of revenues for the quarter ended March 31, 1999 were approximately
$25.1 million on gas purchases of approximately 6.9 million MMBtu's as
compared $28.1 million on gas purchases of approximately 6.9 million MMBtu's
for the corresponding period in the prior year. The largest component of the
decrease for the quarter ended March 31, 1999 was fuel costs, which decreased
approximately $2.6 million from the corresponding period in the prior year.
The decrease in the cost of fuel was primarily due to lower contract firm
fuel rates which resulted from lower index fuel prices and lower
transportation demand costs and the write-off of a reserve of approximately
$0.5 million for amounts no longer in dispute with a gas transporter. The
Partnership has foreign currency swap agreements to hedge against future
exchange rate fluctuations under fuel transportation agreements which are
denominated in Canadian dollars. During the quarters ended March 31, 1999
and 1998, fuel costs were increased by approximately $0.6 million and $0.5
million, respectively as a result of the currency swap agreements.
8
<PAGE>
Total other operating expenses for the quarter ended March 31, 1999 were
approximately $1.0 million as compared to approximately $1.4 million for the
corresponding period in the prior year. The decrease in other operating
expenses was primarily due to lower affiliate administrative services and the
write-off of a reserve of approximately $0.2 million for amounts no longer
claimed by an affiliate.
Net interest expense for the quarter ended March 31, 1999 of approximately
$8.0 million was comparable to the corresponding period in the prior year.
Liquidity and Capital Resources
Net cash flows provided by operating activities for the quarter ended March
31, 1999 were approximately $16.6 million as compared to approximately $17.4
million for the corresponding period in the prior year. Net cash flows
provided by operating activities primarily represents net income plus the net
effect of normally recurring changes in cash receipts and disbursements
within the Partnership's operating assets and liability accounts.
Net cash used in investing activities for the quarter ended March 31, 1999
were approximately $45.0 thousand as compared to approximately $0 for the
corresponding period in the prior year. Net cash flows used in or provided
by investing activities primarily represent additions or adjustments to plant
and equipment, respectively.
Net cash used in financing activities for the quarter ended March 31, 1999
was approximately $16.9 million as compared to approximately $14.0 million
for the corresponding period in the prior year. The increase in net cash
flows used in financing activities for the quarter ended March 31, 1999 is
primarily due to more cash becoming available to deposit into Restricted
Funds. Pursuant to the Partnership's Depositary and Disbursement Agreement,
administered by Bankers Trust Company, as depositary agent, the Partnership
is required to maintain certain Restricted Funds. Net cash flows used in
financing activities for the quarters ended March 31, 1999 and 1998 primarily
represent deposits of monies into the Interest Fund.
9
<PAGE>
In 1994 and 1995 Con Edison 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 ("non-plant gas"), or
alternatively to be compensated for 100% of the margins derived from
non-plant gas sales. 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 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 exercise such rights. The
Partnership vigorously disputes the position adopted by Con Edison, and since
the commencement of Unit 2's operation in 1994 has made and continues to
make, from time to time, non-plant gas sales from Unit 2's gas supply.
Although representatives of Con Edison have expressly reserved all rights
that Con Edison may have to pursue its asserted claim with respect to
non-plant gas sales, the Partnership has received no further formal
communication from Con Edison on this subject since 1995. 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.
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 July 21, 1998 the NYPSC approved a plan submitted by Con Edison for the
divestiture of certain of its generating assets (the "Con Edison Divestiture
Plan"). Although the Con Edison Divestiture Plan does not include any
proposal by Con Edison for the sale or other disposition of its contractual
obligations for purchasing power from non-utility generators, like the
Partnership, the NYPSC has ordered Con Edison to submit a report regarding
the feasibility of divesting its non-utility generator entitlements. At this
time, the Partnership has insufficient information to determine whether, in
the course of these proceedings at the NYPSC, Con Edison may seek to assign
its rights and obligations under the Con Edison Power Purchase Agreement with
the Partnership to a third party or to take some other action for the purpose
of divesting itself of the power purchase obligations under such contract;
nor can the Partnership evaluate the impact which any such assignment or
other action, if proposed, may ultimately have on the Con Edison Power
Purchase Agreement.
Future operating results and cash flows from operations are also dependent
on, among other things, the performance of equipment and processes as
expected, levels of dispatch, the receipt of certain capacity and other fixed
payments, electricity prices, natural gas resale prices, fuel deliveries and
prices as contracted. 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.
10
<PAGE>
Year 2000
The Year 2000 issue exists because many computer programs use only two digits
to refer to a year, and was developed without considering the impact of the
upcoming change in the century. The Partnership has a program in place to
address its exposure to the Year 2000 issue. This program is designed to
minimize the possibility of significant Year 2000 interruptions.
In 1998, the Partnership established the program to address its software and
hardware product and customer concerns, its internal business systems,
including technology infrastructure and embedded technology systems, and the
compliance of its suppliers. This program includes the following phases:
inventory and assessment, remediation, testing, and certification.
Certification occurs when mission-critical software and hardware products are
determined to be "Year 2000 Ready." The "Year 2000 Ready" category indicates
that the Partnership has determined that the product, when used in its
designated manner, will not terminate abnormally or give incorrect results
with respect to date data before, during or after December 31, 1999.
The Partnership's Year 2000 certification phase was completed in April 1999.
The Partnership will continue to perform work associated with contingency
planning implementation and the assessment and remediation of non-mission
critical items through the end of 1999. The Partnership determined that its
only mission-critical software was vendor software. As to mission-critical
vendor software, Year 2000 ready upgrades have been obtained from the
vendors, tested as appropriate and deemed Year 2000 Ready.
The Partnership has tested remediated software and embedded systems both for
ability to handle Year 2000 dates, including appropriate leap year
calculations, and to assure that code repair has not affected the base
functionality of the code. Software and embedded systems were tested
individually where necessary and tested in an integrated manner with other
systems, with dates and data advanced and aged to simulate Year 2000
operations. Testing, by its nature, however, cannot comprehensively address
all future combinations of dates and events. Because some uncertainty
remains after testing as to the ability of code to process future dates, as
well as the ability of remediated systems to work in an integrated fashion
with other systems, failure of such systems, should they occur, could have a
material adverse impact on future results.
In addition to internal systems, the Partnership depends upon external
parties, including customers, suppliers, business partners, gas and electric
system operators, government agencies, and financial institutions to support
the functioning of its business. To the extent that any of these parties are
considered mission-critical to the Partnership's business and experience Year
2000 problems in their systems, the Partnership's mission-critical business
functions may be adversely affected. To deal with this vulnerability, the
Partnership has another phased approach. The primary phases for dealing with
external parties are: (1) inventory, (2) action planning, (3) risk
assessment, and (4) contingency planning.
11
<PAGE>
In April 1999, the Partnership completed its inventory, action planning, risk
assessment and contingency planning phases for mission-critical external
parties.
Although the Partnership expects its efforts and those of its external
parties to be largely successful, the Partnership recognizes that with the
complex interaction of today's computing and communication systems, it cannot
be certain the Partnership will be completely successful. Therefore,
contingency plans have been developed and tested through April 1999 to
address its external dependencies as well as any significant schedule delays
of mission-critical system work, should they occur. These plans have taken
into account possible interruptions of power, computing, financial, and
communications infrastructures. Due to the speculative nature of contingency
planning, however, it is uncertain whether these plans will be sufficient to
remove the risk of material impacts on the Partnerships operations resulting
from Year 2000 problems.
Through April 1999, the Partnership spent approximately $273,000 to assess
and remediate Year 2000 problems for both mission critical and non-mission
critical items. The Partnership's estimate of future costs to address Year
2000 issues is approximately $108,000 to implement contingency plans and to
address remaining non-mission critical items; all of which will be expensed.
The Partnership has concluded that the most reasonably likely worst case Year
2000 scenarios that could affect its business include localized telephone
problems due to congestion and small isolated malfunctions in the
Partnership's computer systems that would be immediately repaired. The
Partnership has developed contingency plans to address these scenarios.
If third parties with whom the Partnership has significant business
relationships, fail to achieve Year 2000 readiness of mission-critical
systems, there could be a material adverse impact on the Partnership's
financial position, results of operations, and cash flows.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements included herein are forward-looking statements concerning
the Partnership's operations, economic performance and financial condition.
Such statements are subject to various risks and uncertainties. Actual
results could differ materially from those currently anticipated due to a
number of factors, including general business and economic conditions, the
performance of equipment and processes as expected, levels of dispatch, the
receipt of certain capacity and other fixed payments, electricity prices,
natural gas resale prices, fuel deliveries and prices as contracted and
issues related to Year 2000 compliance.
12
<PAGE>
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
The Partnership is exposed to market risk from changes in interest rates and
foreign currency exchange rates, which could affect its future results of
operations and financial condition. The Partnership manages its exposure to
these risks through its regular operating and financing activities. The
Partnership does not enter into derivative financial instruments for trading
purposes.
Interest Rates
- --------------
The Partnership's cash and restricted cash are sensitive to changes in
interest rates. Interest rate changes would result in a change in interest
income due to the difference between the current interest rates on cash and
restricted cash and the variable rate that these financial instruments may
adjust to in the future. A 10% decrease in interest rates for the quarter
ended March 31, 1999 would have resulted in a negative impact of
approximately $50.0 thousand on the Partnership's net income for that period.
The Partnership's long-term bonds have fixed interest rates. Changes in the
current market rates for the bonds would not result in a change in interest
expense due to the fixed coupon rate of the bonds.
Foreign Currency Exchange Rates
- -------------------------------
The Partnership's currency swap agreements hedge against future exchange rate
fluctuations which could result in additional costs incurred under fuel
transportation agreements which are denominated in a Canadian currency. In
the event a counterparty fails to meet the terms of the agreements, the
Partnership's exposure is limited to the currency exchange rate differential.
During the quarter ended March 31, 1999 the exchange rate differential had a
negative impact of approximately $0.6 million on the Partnership's net
income.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. OTHER ITEMS
-----------
A Consent of Directors in lieu of an annual meeting was held on April 5, 1999
for both Selkirk Cogen Funding Corporation and JMC Selkirk, Inc. ("The
Managing General Partner"). The following tables set forth the names and
positions of newly appointed directors.
Selkirk Cogen Funding Corporation:
----------------------------------
Name Position
---- --------
P. Chrisman Iribe Director
Sanford L. Hartman* Director
The Managing General Partner:
-----------------------------
Name Position
---- --------
P. Chrisman Iribe Director
Sanford L. Hartman* Director
*Stephen A. Herman resigned on April 2, 1999.
Sanford L. Hartman is General Counsel of U.S. Generating Company, an
affiliate of the Partnership, and has been with U.S. Generating Company since
1990. Mr. Hartman assumed the role of General Counsel in April 1999. Prior
to joining U.S. Generating Company, Mr. Hartman was counsel to Long Lake
Energy Corporation, an independent power producer with headquarters in New
York City and was an attorney with the Washington, D.C. law firm of Bishop,
Cook, Purcell & Reynolds.
Effective March 5, 1999, the name of Cogen Technologies Selkirk LP, Inc. was
changed to RCM Selkirk LP, Inc. and the name of Cogen Technologies Selkirk
GP, Inc. was changed to RCM Selkirk GP, Inc.
14
<PAGE>
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 March 9, 1999, the Registrant filed a report on Form 8-K disclosing a
change in its independent accounting firm.
Omitted from this Part II are items which are not applicable or to which the
answer is negative for the periods covered.
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 PARTNERS, L.P.
Date: May 17, 1999 /s/ JMC SELKIRK, INC.
--------------------------
Name: General Partner
Date: May 17, 1999 /s/ JOHN R. COOPER
--------------------------
Name: John R. Cooper
Title: Senior Vice President and
and Chief Financial Officer
16
<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: May 17, 1999 /s/ JOHN R. COOPER
--------------------------
Name: John R. Cooper
Title: Senior Vice President and
and Chief Financial Officer
17
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 000929540
<NAME> SELKIRK COGEN PARTNERS,L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Mar-31-1999
<CASH> 23119
<SECURITIES> 0
<RECEIVABLES> 15580
<ALLOWANCES> 0
<INVENTORY> 5039
<CURRENT-ASSETS> 44109
<PP&E> 371247
<DEPRECIATION> 65333
<TOTAL-ASSETS> 389253
<CURRENT-LIABILITIES> 24403
<BONDS> 381133
0
0
<COMMON> 0
<OTHER-SE> (38614)
<TOTAL-LIABILITY-AND-EQUITY> 389253
<SALES> 42323
<TOTAL-REVENUES> 42323
<CGS> 25105
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<INCOME-CONTINUING> 8196
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8196
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
