SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
CURRENT REPORT
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THEE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2001
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. Item 1 BUSINESS
1
*Now beneficially owned by Cogentrix.
2
The Partnership began construction of the Facility in October 1992 and was
in the development phase through the commencement of commercial operation. The
Facility commenced commercial operation under its power purchase agreement (the
"Power Purchase Agreement" or "PPA") with FPL on December 22, 1995. The Facility
synchronized with the FPL system on June 30, 1995 and the Partnership sold to
FPL electricity produced by the Facility during startup and testing. The
Partnership's continued existence is dependent on the ability of the Partnership
to maintain successful commercial operation under the Power Purchase Agreement.
Management of the Partnership is of the opinion that the assets of the
Partnership are realizable at their current carrying value. The Partnership has
no assets other than the Facility, the Facility site, contractual arrangements
relating to the Facility (the "Project Contracts") and the stock of ICL Funding.
3
The Partnership has a coal purchase agreement (the "Coal Purchase
Agreement") with Lodestar Energy, Inc. ("LEI") pursuant to which Lodestar
supplies all of the Facility's coal needs, which are estimated to be 1 million
tons of coal per year. The Partnership has no obligation to purchase a minimum
quantity of coal under the Coal Purchase Agreement.
4
Business Strategy and Outlook
5
The Partnership entered into a debt service reserve letter of credit and
reimbursement agreement, dated as of November 1, 1994, with BNP Paribas
(formerly known as Banque Nationale de Paris) pursuant to which a debt service
reserve letter of credit in the amount of approximately $60 million was issued.
On January 11, 1999, in accordance with the Partnership's financing documents,
the debt service reserve letter of credit was reduced to approximately $30
million, which, together with cash in the debt service reserve account,
represents the maximum remaining semi-annual debt service on the First Mortgage
Bonds and the 1994 Tax Exempt Bonds. BNP Paribas notified the Partnership on May
18, 2001 of its intention not to extend the term of the agreement, which expires
on November 22, 2005. Pursuant to the terms of the Disbursement Agreement, if
the Partnership is unsuccessful in its continuing effort to effect an extension
of the agreement or replace the agreement, available cash flows will begin to be
deposited on a monthly basis beginning on May 22, 2002 into the Debt Service
Reserve Account or the Tax Exempt Debt Service Reserve Account, as the case may
be, until the required Debt Service Reserve Account Maximum Balance is achieved.
6
Item 3 LEGAL PROCEEDINGS
7
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
8
PART II
Item 5 MARKET FOR THE REGISTRANT'S COMMON STOCK AND
9
The following is a summary
of the quarterly results of operations (unaudited) for the years ended December
31, 2001 and 2000.
Indicate by check mark if disclosure of delinquent filer pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of April 1, 2002, there were 100 shares of common stock of Indiantown
Cogeneration Funding Corporation, $1 par value outstanding.
Indiantown Cogeneration Funding Corporation
PART I Page Number
------ -----------
Item 1 Business..................................................... 1
Item 2 Properties................................................... 7
Item 3 Legal Proceedings............................................ 7
Item 4 Submission of Matters to a Vote of Security Holders.......... 8
PART II
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Item 5 Market for the Registrant’s Common Stock and
Related Security Holder Matters.............................. 9
Item 6 Selected Financial Data...................................... 9
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations................10
Item 7A Qualitative and Quantitative Disclosures About
Market Risk..................................................16
Item 8 Financial Statements and Supplementary Data..................17
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.......................39
PART III
--------
Item 10 Directors and Executive Officers.............................40
Item 11 Remuneration of Directors and Officers.......................41
Item 12 Security Ownership of Certain Beneficial Owners
and Management...............................................41
Item 13 Certain Relationships and Related Transactions...............42
PART IV
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Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K.........................................43
Signatures..................................................47
The Partnership
Indiantown Cogeneration, L.P. (the "Partnership") is a special purpose
Delaware limited partnership formed on October 4, 1991. The Partnership was
formed to develop, construct, own 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
produces electricity for sale to Florida Power & Light Company ("FPL") and
supplies steam to Caulkins Indiantown Citrus Co. ("Caulkins") for its plant
located near the Facility. In September 2001, Caulkins sold its processing plant
to Louis Dreyfus Citrus, Inc. ("LDC").
The original general partners were Toyan Enterprises ("Toyan"), a
California corporation and a wholly owned special purpose indirect subsidiary of
PG&E National Energy Group, Inc. ("NEG, Inc."), and Palm Power Corporation
("Palm"), a Delaware corporation and a special purpose indirect subsidiary of
Bechtel Enterprises, Inc. ("Bechtel Enterprises"). The sole limited partner was
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 of $505,000,000 of First Mortgage Bonds.
ICL Funding has no separate operations and has only $100 in assets.
In 1998, Toyan consummated transactions with DCC Project Finance Twelve,
Inc. ("PFT"), whereby PFT, through a new partnership (Indiantown Project
Investment, L.P. ("IPILP")) with Toyan, became a new general partner in the
Partnership. Toyan is the sole general partner of IPILP. Prior to the PFT
transaction, Toyan converted some of its general partnership interest into a
limited partnership interest such that Toyan now directly holds only a limited
partnership interest in the Partnership. In addition, Bechtel Generating
Company, Inc. ("Bechtel Generating"), sold all of the stock of Palm to a wholly
owned indirect subsidiary of Cogentrix Energy, Inc. ("Cogentrix"). Palm holds a
10% general partner interest in the Partnership.
On June 4, 1999, Thaleia, LLC ("Thaleia"), a wholly-owned subsidiary of
Palm and indirect wholly-owned subsidiary of Cogentrix, acquired from TIFD a
19.9% limited partner interest in the Partnership. On September 20, 1999,
Thaleia acquired another 20.0% limited partnership interest from TIFD and TIFD's
membership on the Board of Control. On November 24, 1999, Thaleia purchased
TIFD's remaining limited partner interest in the Partnership from TIFD.
The net profits and losses of the Partnership are allocated to Toyan, Palm,
TIFD and IPILP and Thaleia (collectively, the "Partners") based on the following
ownership percentages:
Toyan 30.05%
Palm 10%*
IPILP 19.95%
TIFD --
Thaleia 40%*
The changes in ownership were the subject of notices of
self-recertification of Qualifying Facility status filed by the Partnership with
the Federal Energy Regulatory Commission on August 20, 1998, November 16, 1998,
June 4, 1999, September 21, 1999, and November 24, 1999.
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 Partnership is managed by PG&E National Energy Group Company
("NEG"), formerly known as PG&E Generating Company, pursuant to a Management
Services Agreement (the "MSA"). The Facility is operated by PG&E Operating
Services Company ("PG&E OSC"), formerly known as U.S. Operating Services
Company, pursuant to an Operation and Maintenance Agreement (the "O&M
Agreement"). NEG and PG&E OSC are general partnerships indirectly wholly
owned by NEG, Inc., an indirect wholly owned subsidiary of PG&E
Corporation.
December 2000, and in January and February 2001, PG&E Corporation and
NEG completed a corporate restructuring of NEG, known as a
“ringfencing” transaction. The ringfencing involved the use or
creation of limited liability companies (“LLCs”) as intermediate
owners between a parent company and its subsidiaries. One of these LLCs is
PG&E National Energy Group, LLC, which owns 100% of the stock of NEG. After
the ringfencing structure was implemented, two independent rating agencies,
Standard and Poor’s and Moody’s Investor Services issued investment
grade ratings for NEG and reaffirmed such ratings for certain NEG subsidiaries.
On April 6, 2001, Pacific Gas and Electric Company (the “Utility”),
another subsidiary of PG&E Corporation, filed a voluntary petition for
relief under the provisions of Chapter 11 of the U.S. Bankruptcy Code. Pursuant
to Chapter 11 of the U.S. Bankruptcy Code, the Utility retains control of its
assets and is authorized to operate its business as a debtor-in-possession while
being subject to the jurisdiction of the Bankruptcy Court. On September 20,
2001, the Utility and PG&E Corporation jointly filed a plan of
reorganization that entails separating the Utility into four distinct
businesses. The plan of reorganization does not directly affect NEG or any of
its subsidiaries. Subsequent to the bankruptcy filing, the investment grade
ratings of NEG and its rated subsidiaries were reaffirmed on April 6 and 9,
2001. NEG'S mananagement believes that NEG and its direct and indirect
subsidiaries as described above, including the Partnership, would not be
substantively consolidated with PG&E Corporation in any insolvency or
bankruptcy proceeding involving PG&E Corporation or the Utility.
Certain Project Contracts
The Facility supplies (i) electric generating capacity and energy to FPL
pursuant to the Power Purchase Agreement and (ii) steam to LDC pursuant to a
long-term energy services agreement (the "Energy Services Agreement").
Payments from FPL pursuant to the Power Purchase Agreement provide
approximately 99% of Partnership revenues. Under and subject to the terms of the
Power Purchase Agreement, FPL is obligated to purchase electric generating
capacity made available to it and associated energy from the Facility through
December 22, 2025.
Payments by FPL consist of capacity payments and energy payments. FPL is
required to make capacity payments to the Partnership on a monthly basis for
electric generating capacity made available to FPL during the preceding month
regardless of the amount of electric energy actually purchased. The capacity
payments have two components, an un-escalated fixed capacity payment and an
escalated fixed operation and maintenance payment, which together are expected
by the Partnership to cover all of the Partnership's fixed costs, including debt
service. Energy payments are made only for the amount of electric energy
actually delivered to FPL. The energy payments to be made by FPL in the next
two-year period are not expected to be sufficient to cover the Partnership's
variable costs of electric energy production due to a mismatch of the index that
the coal cost component of the energy payment is determined and the price
increase of base coal in the amended coal purchase agreement (see below). The
energy payments will continue to be insufficient to cover the variable costs of
steam production for steam supplied to LDC. These shortfalls are not expected by
the Partnership to have a material adverse effect on its ability to service its
debt.
The Partnership supplies thermal energy to LDC in order for the Facility to
meet the operating and efficiency standards under the Public Utility Regulatory
Policy Act of 1978, as amended, and the FERC's regulations promulgated
thereunder (collectively, "PURPA"). The Facility has been certified as a
Qualifying Facility under PURPA. Under PURPA, Qualifying Facilities are exempt
from certain provisions of the Public Utility Holding Company Act of 1935, as
amended ("PUHCA"), most provisions of the Federal Power Act (the "FPA"), and,
except under certain limited circumstances, rate and financial regulation under
state law. The Energy Services Agreement with LDC requires LDC to purchase the
lesser of (i) 525 million pounds of steam per year or (ii) the minimum quantity
of steam per year necessary for the Facility to maintain its status as a
Qualifying Facility under PURPA (currently estimated by the Partnership not to
exceed 525 million pounds per year).
As previously reported, on April 27, 2001, an order for relief was entered
in the Involuntary Petition under Chapter 11 of the United States Bankruptcy
Code with respect to LEI and its parent, Lodestar Holdings Inc. ("LHI"), in the
U.S. Bankruptcy Court in Lexington, Kentucky. Since that time, LHI and LEI have
been operating their business as "debtors in possession." On October 3, 2001,
LEI filed a motion with the Bankruptcy Court seeking to reject the Coal Purchase
Agreement. The Partnership and LEI agreed to and executed Amendment No. 3 to the
Coal Purchase Agreement effective October 16, 2001 (the "Amendment"). The
principal change effected in the Coal Purchase Agreement by the Amendment is an
increase from $26.632 to $34.00 per ton in the base coal price for coal
delivered after October 16, 2001, with a 2% additional increase in the base coal
price effective October 16, 2002. The transportation and administrative fees the
Partnership is required to pay remain unchanged, but will continue to adjust in
accordance with the terms of the Coal Purchase Agreement. The Amendment also
includes market price reopener provisions, beginning October 16, 2003.
During 1997, coal ash produced during operation of the Facility was
disposed of pursuant to the Coal Purchase Agreement and back-up disposal
arrangements with Chambers Waste Systems, Inc. of Florida ("Chambers"). In 1998,
the Partnership entered into agreements with Lodestar and VFL Technology
Corporation ("VFL") for ash disposal at alternative sites. These agreements will
reduce the cost of ash disposal. The Partnership has been informed that LEI,
Chambers, and VFL have obtained the permits necessary to receive such coal ash.
The Partnership entered into a lime purchase agreement (the "Lime Purchase
Agreement") with Chemical Lime Company ("Chemlime"), an Alabama corporation, to
supply the lime requirements of the Facility's dry scrubber and sulfur dioxide
removal system. The initial term of the Lime Purchase Agreement is 15 years from
the commercial operation date. Chemlime is obligated to provide all of the
Facility's lime requirements, but the Partnership has no obligation to purchase
a minimum quantity of lime. The price of lime was renegotiated in 1999 for a
three-year period beginning January 1, 2000. Chemlime notified the Partnership
of its intention to cancel the agreement effective in the first quarter of 2002.
The price was again renegotiated for a three-year period beginning February 1,
2002.
Competition
Since the Partnership has a long-term contract to sell electric generating
capacity and energy from the Facility to FPL, it does not expect competitive
forces to have a significant effect on its business. The Partnership expects
that the capacity payments under the Power Purchase Agreement, which are not
affected by the level of FPL's dispatch of the Facility, will cover all of the
Partnership's fixed costs, including debt service.
Employees
The Partnership has no employees and does not anticipate having any
employees in the future because, under a management services agreement, NEG acts
as the Partnership's representative in all aspects of managing the operation of
the Facility as directed by the Partnership's Board of Control. As noted above,
PG&E OSC is providing operations and maintenance services for the
Partnership.
The Partnership's overall business plan is to safely produce clean,
reliable energy pursuant to the terms of the Power Purchase Agreement and the
Energy Services Agreement. The Facility commenced commercial operation on
December 22, 1995 and completed its sixth full calendar year of operation on
December 31, 2001.
During 2001, the Facility produced 2,276,568 MW-hr of energy for sale to
FPL compared to 2,343,677 MW-hr in 2000. This decrease was due primarily to an
unplanned extension to the scheduled outage in November 2001 to make repairs to
the generator.
The Facility produced approximately 658 million pounds of steam for sale to
LDC in 2001 compared to approximately 649 million pounds in 2000 thereby
continuing to exceed the minimum requirements to maintain Qualifying Facility
status.
The Facility ended the year with a twelve-month rolling average Capacity
Billing Factor of 89.869% in 2001 and 98.636% in 2000. The Capacity Billing
Factor measures the overall availability of the Facility, but gives a heavier
weighting to on-peak availability. Cash flows during 2001 were sufficient to
fund all operating expenses and debt repayment obligations.
The Facility is planning on ten weeks of scheduled outages during 2002 to
perform routine inspections and maintenance and make permanent repairs to the
generator. The primary outage is scheduled for September 15, 2002 through
November 9, 2002, which is before or at the beginning of citrus production.
In the absence of any major equipment failures, unit availability is
expected to be above the 2001 levels. However, capacity bonuses will be lower in
2002 since the Capacity Billing Factor will remain low for most of the year
primarily due to the unplanned extension to the scheduled outage in November
2001 for generator repairs.
The Partnership believes that its current financial resources will be
adequate to cover operating expenses and debt repayment obligations in 2002.
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/First Boston (formerly known as 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. In
September 2001, Credit Suisse/First Boston notified the Partnership of its
intention not to extend the term of these agreements, which are due to expire in
the fourth quarter of 2002. The Partnership expects to obtain a replacement
letter of credit provider before the current letters of credit expire.
Forward Looking Statements
When used in this report, words or phrases that are predictions of or
indicate future events and trends are subject to a number of risks and
uncertainties which could cause actual results to differ materially from those
projected. Given such uncertainties, readers are cautioned not to place undue
reliance on such statements. The Partnership undertakes no obligation to
publicly update or revise any forward-looking statement to reflect current or
future events or circumstances.
Governmental Approvals
The Partnership has obtained all material environmental permits and
approvals required, as of December 31, 2001, 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. The permit was issued on October 11, 1999.
On November 10, 2000 the Partnership submitted to the Florida Department of
Environmental Protection ("FDEP") an application for modifications to the Site
Certificate. The proposed modifications include a requested increase of the
groundwater withdrawal, clarification of authority to allow emergency water
withdrawals, changes to groundwater monitoring requirements and programs, and
changing the address of the facility. On March 14, 2001 DEP approved and issued
a final order modifying the Conditions of Certification related to South Florida
Management District ("SFWMD") authority to authorize withdrawals of ground or
surface water and a modification for storage pond elevation changes. The
remaining modifications remain under review with DEP.
Item 2 PROPERTIES
The Facility is located in a predominantly industrial area in southwestern
Martin County, Florida, on approximately 240 acres of land owned by the
Partnership (the "Site"). Other than the Facility, the Site, and the make-up
water pipeline and associated equipment, the Partnership does not own or lease
any material properties.
Dispute with FPL
On March 19, 1999, the Partnership filed a complaint against FPL in the
United States District Court for the Middle District of Florida. The lawsuit
stemmed from a course of action pursued by FPL in which FPL purported to
exercise its dispatch and control rights under the Power Purchase Agreement in a
manner which the Partnership believes violated the terms of the power sales
agreement. In its complaint, the Partnership charged that such conduct was
deliberately calculated to cause the Partnership to be unable to meet the
requirements to maintain the Facility's status as a Qualifying Facility under
the Public Utility Regulatory Policies Act of 1978. Since the loss of Qualifying
Facility status may result in an event of default under the Power Purchase
Agreement, the Partnership took action to address this matter.
On May 17, 2001, the Partnership and FPL executed an amendment to the power
purchase agreement to settle the litigation then pending in federal court. The
amendment was filed for approval by the Florida Public Service Commission
("FPSC") on June 7, 2001. On October 11, 2001, the FPSC issued an order
approving the amendment. At that time, the FPSC's action was subject to an
appeal period, which expired on November 12, 2001. In addition, the conditions
set forth in the Indenture for the Bonds have been met.
An outline of the business terms set forth in the amendment provides that
if the Facility is off-line for any reason, the Partnership shall have the
right, upon up to 6 hours notice and subject only to safety and system
reliability issues, to reconnect to FPL's system and produce up to 100 MW. The
amendment provides that if this occurs when FPL has decommitted the Facility,
the Partnership will be paid the lesser of the contract price or FPL's actual
"as available" energy rates for the first 360 of such hours each year (in this
context, "as available" energy costs reflect actual energy production costs
avoided by FPL resulting from the production or purchase of energy from the
Facility and other sources). If fewer than 360 hours are used in any year, FPL
may carry the balance forward, not to exceed a total of 1,440 hours in any year.
If the hours accumulated exercising this reconnection right exceed FPL's
balance, the Partnership will be paid for energy produced during those hours at
the energy rates set forth under the power sales agreement.
Management of the Partnership believes that this resolution provides the
Partnership with the flexibility it requires to maintain its Qualifying Facility
status without materially adversely affecting the Project.
On December 12, 2000, FPL filed a complaint against the Partnership in the
Circuit Court of the 19th Judicial District in and for Martin County, Florida.
In its complaint, FPL alleged that the Partnership breached the power sales
agreement by failing to include certain payments from its coal supplier and its
coal transporter in the Partnership's calculation of its fuel costs, which are
included in the calculation of the actual energy costs under the power sales
agreement. FPL sought unspecified damages and declaratory relief including a
finding that the Partnership breached the power sales agreement. The Partnership
made a one-time payment of $1,289,579 to FPL in November 2001, which constituted
a settlement of all issues and claims with respect to, and permanently closes,
FPL's audits for calendar years 1996, 1997, 1998, 1999, and 2000.
No matters were submitted to a vote of the security holders of the
Partnership during 2001.
RELATED SECURITY HOLDER MATTERS
The Partnership is a Delaware limited partnership wholly owned by Palm,
Toyan, Thaleia and IPILP. Beneficial interests in the Partnership are not
available to other persons except with the consent of the Partners.
There is no established public market for ICL Funding's common stock. The
100 shares of $1 par common stock are owned by the Partnership. ICL Funding has
not paid, and does not intend to pay, dividends on the common stock.
Item 6 SELECTED FINANCIAL DATA
The selected financial data of the Partnership presented below, which consists
primarily of certain summary consolidated balance sheet information of the
Partnership as of December 31, 2001, 2000, 1999, 1998, and 1997, should be read
in conjunction with Item 7 of this report, “Management’s Discussion an
Analysis of Financial Condition And Results of Operations”, and with the
Partnership’s consolidated financial statements appearing elsewhere in this
report. The Partnership, which was in the development stage through December 21,
1995, began construction of the Facility in October 1992 and declared commercial
operation of the Facility on December 22, 1995. The financial statements and
supplementary data required by this item are presented under Item 8.
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Total Assets $675,194,455 $680,669,565 $694,852,029 $708,139,691 $735,468,011
Long-Term Debt 560,702,525 572,521,507 583,994,031 595,835,699 606,119,747
Total Liabilities 586,320,011 595,689,890 606,607,479 616,339,161 629,342,447
Capital Distributions 12,400,000 25,400,000 25,970,000 35,680,000 28,080,382
Total Partners' Capital 88,874,444 84,979,675 88,244,550 91,800,530 106,125,564
Property, Plant &
Equipment, Net 615,144,286 628,354,758 641,449,055 654,188,458 668,464,373
Operating Revenues 175,432,091 177,790,391 163,270,119 159,183,399 162,517,435
Net Income 16,294,769 22,135,125 22,414,020 21,354,967 18,008,777
Quarter Ended
--------------
March 31 June 30 September 30 December 31 Total
-------- ------- ------------ ----------- -----
(in thousands)
2001
- ----
Operating revenues $46,459 $45,220 $45,972 $37,781 $175,432
Gross profit 21,549 21,324 22,389 16,399 81,661
Net income 4,976 5,101 6,067 151 16,295
2000
- ----
Operating revenues $44,106 $42,589 $47,318 $43,777 $177,790
Gross profit 22,611 20,965 22,977 20,813 87,367
Net income before
cumulative change in
accounting principle
5,794 4,529 6,466 4,426 21,215
Net income 6,714 4,529 6,466 4,426 22,135
Item 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Year ended December 31, 2001 Compared to the Year Ended December 31, 2000
For the years ended December 31, 2001 and 2000, the Partnership had total
operating revenues of $175.4 million and $177.8 million, respectively. This
decrease in 2001 was attributable primarily to decreased energy revenues of $0.8
million and decreased capacity bonus and capacity revenues of $1.8 million,
offset by an increase of $0.2 million of steam revenue reconciliation for 2000
recorded in 2001. For the years ending December 31, 2001 and 2000, the Facility
achieved an average Capacity Billing Factor of 89.87% and 98.64% respectively.
This decrease was primarily attributable to decreased availability due to boiler
tube leaks and repairs to the generator. This resulted in earning monthly
capacity payments aggregating $113.2 million for the year in 2001 and $112.8
million for the year in 2000. Bonuses aggregated $9.0 million for the year in
2001 and $11.2 million for the year in 2000. The increased revenues from
capacity are due primarily to the quarterly escalations on the fixed operating
and maintenance component of the capacity charge. The decrease in bonus revenues
is due to the decrease in the Capacity Billing Factor relating to decreased
availability due to boiler tube leaks and the generator repairs. The lower
energy revenues are due primarily to an increase in forced outages for boiler
tube leaks and the extension of the scheduled outage for the generator repairs.
During 2001 and 2000, the Facility was dispatched by FPL and generated 2,276,568
megawatt-hours and 2,343,677 megawatt-hours, respectively. The monthly average
dispatch rate requested by FPL was 85.3% and 87.6% for the twelve months ended
December 31, 2001 and 2000, respectively.
10
Total operating costs were $105.4 million and $102.1 million for the years
ended December 31, 2001 and 2000, respectively. This increase was due primarily
to an increase of $0.4 million in fuel and ash costs, a result of the
renegotiated coal cost per ton with Lodestar, and an increase of $2.3 million in
operating and maintenance expenses relating to the generator repairs and the
replacement of baghouse bags, an increase for the loss on disposal of assets of
$0.5 million incurred for baghouse repairs, and an increase in depreciation of
$0.1 million. For the years ended December 31, 2001 and 2000, the total net
interest expense was approximately $53.8 million and $54.5 million,
respectively. The decrease was primarily due to a $1.2 million reduction in bond
interest expense due to installment payments of the Series A-9 First Mortgage
Bonds on June 15, 2001 and on December 15, 2001, and a decrease in letter of
credit fees of $0.1 million, offset by a decrease in interest income of $0.6
million.
Net income was $16.3 million and $22.1 million for the twelve months ended
December 31, 2001 and 2000, respectively. This $5.8 million decrease was
primarily attributable to a $3.3 million increase in operating costs, a decrease
in revenues of $2.4 million, and the effect of a cumulative change in accounting
principle for major maintenance of $0.9 million, offset by a decrease in net
interest expense of $0.8 million.
As of December 31, 2001 and 2000, the Partnership had approximately $615.1
million and $628.4 million, respectively, of property, plant and equipment, net
of accumulated depreciation. The property, plant and equipment consists
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. This decrease is due primarily
to depreciation of $15.2 million, offset by $1.9 million of capital
improvements.
Year ended December 31, 2000 Compared to the Year Ended December 31, 1999
For the years ended December 31, 2000 and 1999, the Partnership had total
operating revenues of $177.8 million and $163.3 million, respectively. This
increase in 2000 was attributable primarily to increased energy revenues of
$14.2 million and by increased capacity bonus and capacity revenues of $0.3
million. For the years ending December 31, 2000 and 1999, the Facility achieved
an average Capacity Billing Factor of 98.64% and 100.64% respectively. This
decrease was primarily attributable to minor mechanical problems with turbine
control valves. This resulted in earning full monthly capacity payments
aggregating $112.8 million for the year in 2000 and $112.5 million for the year
in 1999. Bonuses aggregated $11.2 million for the year in both 2000 and 1999.
The increased revenues from capacity are due primarily to the quarterly
escalations on the fixed operating& maintenance component of the capacity
charge. The higher energy revenues are due primarily to greater dispatch levels
by FPL. During 2000 and 1999, the Facility was dispatched by FPL and generated
2,343,677 megawatt-hours and 1,745,760 megawatt-hours, respectively. The monthly
average dispatch rate requested by FPL was 87.6% and 65.4% for the twelve months
ended December 31, 2000 and 1999, respectively.
Total operating costs were $102.1 million and $85.5 million for the years
ended December 31, 2000 and 1999, respectively. This increase was due primarily
to an increase of $16.1 million in fuel and ash costs, both resulting from
higher dispatch by FPL, and an increase of $0.7 million in general and
administrative expenses relating to the FPL litigation costs. For the years
ended December 31, 2000 and 1999, the total net interest expense was
approximately $54.5 million and $55.4 million, respectively. The decrease was
primarily due to a $0.8 million reduction in bond interest expense due to
installment payments of the Series A-9 First Mortgage Bonds on June 15, 2000 and
on December 15, 2000, an increase in interest income of $0.3 million, and an
increase in letter of credit fees of $0.2 million.
11
Net income was $22.1 million and $22.4 million for the twelve months ended
December 31, 2000 and 1999, respectively. This $0.3 million decrease was
primarily attributable to a $16.6 million increase in operating costs offset by
the increased revenues of $14.5 million, the effect of a cumulative change in
accounting principle for major maintenance of $0.9 million, and a decrease in
net interest expense of $0.9 million.
As of December 31, 2000 and 1999 the Partnership had approximately $628.4
million and $641.4 million, respectively, of property, plant and equipment
consisting primarily of purchased equipment, construction related labor and
materials, interest during construction, financing costs, and other costs
directly associated with the construction of the Facility. This decrease is due
primarily to depreciation of $15.0 million, offset by $2.1 million of capital
improvements.
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"). Of this amount, $236.6 million of the First Mortgage Bonds bear an
average interest rate of 9.05% and $268.4 million of the First Mortgage Bonds
bear an interest rate of 9.77%. Concurrent 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. 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 used: (i) to finance
completion of construction, testing, and initial operation of the Facility; (ii)
to finance construction interest and construction-related contingencies; 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.
12
Series Aggregate Principal Amount Date Matured and Paid
------ -------------------------- ---------------------
A-1 $4,397,000 June 15, 1996
A-2 4,398,000 December 15, 1996
A-3 4,850,000 June 15, 1997
A-4 4,851,000 December 15, 1997
A-5 5,132,000 June 15, 1998
A-6 5,133,000 December 15, 1998
A-7 4,998,000 June 15, 1999
A-8 4,999,000 December 15, 1999**
**As of December 31, 2001, the Partnership has made semi-annual installments
totaling $22,674,031 for the A-9 Series, which does not fully mature until
December 15, 2010.
The weighted average interest rate paid by the Partnership on its debt for
the years ended December 31, 2001 and 2000, was 9.197% and 9.204%,
respectively.
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/First Boston (formerly known as 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
December 31, 2001, 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. In September
2001, Credit Suisse/First Boston notified the Partnership of its intention not
to extend the term of these agreements, which are due to expire in the fourth
quarter of 2002. The Partnership expects to obtain a replacement letter of
credit provider before the current letters of credit expire.
The Partnership entered into a debt service reserve letter of credit and
reimbursement agreement, dated as of November 1, 1994, with BNP Paribas
(formerly known as Banque Nationale de Paris) pursuant to which a debt service
reserve letter of credit in the amount of approximately $60 million was issued.
This agreement has a 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 December 31, 2001, no drawings have
been made on the debt service reserve letter of credit. On January 11, 1999, in
accordance with the Partnership's financing documents, the debt service reserve
letter of credit was reduced to approximately $30 million, which, together with
cash in the debt service reserve account, represents the maximum remaining
semi-annual debt service on the First Mortgage Bonds and the 1994 Tax Exempt
Bonds. BNP Paribas notified the Partnership on May 18, 2001 of its intention not
to extend the term of the agreement, which expires on November 22, 2005.
Pursuant to the terms of the Disbursement Agreement, if the Partnership is
unsuccessful in its continuing effort to effect an extension of the agreement or
replace the agreement, available cash flows will begin to be deposited on a
monthly basis beginning on May 22, 2002 into the Debt Service Reserve Account or
the Tax Exempt Debt Service Reserve Account, as the case may be, until the
required Debt Service Reserve Account Maximum Balance is achieved.
13
In order to provide for the Partnership's working capital needs, the
Partnership entered into a Revolving Credit Agreement with Credit Suisse/First
Boston dated as of November 1, 1994. In September 2001, Credit Suisse/First
Boston notified the Partnership of its intention not to extend the term of the
agreement, which expired on November 22, 2001. The Partnership is actively
engaging in discussions with other financial institutions to obtain another
working capital facility. The Partnership believes that it has adequate cashflow
from operations to fund all of its working capital requirements even if no
replacement working capital facility is obtained.
For 2002, we have identified possible capital improvements of approximately
$2.0 million that will enhance the reliability of the facility and will be
funded through cash normally available for partner distributions. This list
includes combustion tuning, additional upper aquifer wells, and rotating vane
classifiers for the pulverizers.
Derivative Financial Instruments
The Partnership adopted SFAS No. 133 "Accounting for Derivative Instruments
and Hedging Activities"("SFAS No. 133"), as amended by SFAS Nos. 137 and 138, on
January 1, 2001. This standard requires the Partnership to recognize all
derivatives, as defined in the statements listed above, on the balance sheet at
fair value. Derivatives, or any portion thereof, that are not effective hedges
must be adjusted to fair value through income. If derivatives are effective
hedges, depending on the nature of the hedges, changes in the fair value of
derivatives either will offset the change in fair value of the hedged assets,
liabilities, or firm commitments through earnings, or will be recognized in
other comprehensive income, a component of partners' capital, until the hedged
items are recognized in earnings. The Partnership has certain derivative
commodity contracts for the physical delivery of purchase and sale quantities
transacted in the normal course of business. Since these activities qualify as
normal purchase and sale activities, the Partnership has not recorded the value
of the related contracts on its balance sheet, as permitted under the standards.
In December 2001, the FASB approved an interpretation issued by the
Derivatives Implementation Group ("DIG") that changes the definition of normal
purchases and sales for certain power contracts. Based on the Partnership's
current analysis, the power contract with FPL is a derivative, but qualifies as
a normal purchase and sales exemption, thus is exempt from the requirements of
SFAS No. 133 and is not reflected on the balance sheet at fair value. The FASB
has also approved another DIG interpretation that disallows normal purchases and
sales treatment for commodity contracts (other than power contracts) that
contain volumetric variability or optionality. Certain of our derivative
commodity contracts may no longer be exempt from the requirements of SFAS No.
133. We are evaluating the impact of the implementation guidance on our
financial statements, and will implement this guidance, as appropriate, by the
effective date of April 1, 2002.
14
New Accounting Pronouncements
In October 2001, the FASB issued SFAS No. 144, “Accounting for the
Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”).
SFAS No. 144 supercedes FSAS No. 121, “Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of”, but retains
its fundamental provisions for recognizing and measuring impairment of
long-lived assets to be held and used. This Statement also requires that all
long-lived assets to be disposed of by sale are carried at the lower of carrying
amount or fair value less cost to sell, and that depreciation should cease to be
recorded on such assets. SFAS No. 144 standardizes the accounting and
presentation requirements for all long-lived assets to be disposed of by sale,
superceding previous guidance for discontinued operations of business segments.
This Standard is effective for fiscal years beginning after December 15, 2001.
The Partnership anticipates that implementation of this standard will have no
impact on its financial statements. The Partnership will apply this guidance
prospectively.
Item 7A
Qualitative and Quantitative Disclosures About Market Risk
The table below presents principal, interest and related weighted average
interest rates by year of maturity (in thousands).
- ------------------------------------------------------------------------------------------------------------------------------------------
DEBT (all fixed rate) 2002 2003 2004 2005 2006 Thereafter Total Fair Value
---- ---- ---- ---- ---- ---------- ----- ----------
Tax Exempt Bonds:
Principal $0.0 $0.0 $0.0 $0.0 $0.0 $125,010 $125,010 $130,409
Interest $9,865 $9,865 $9,865 $9,865 $9,865 $165,818 $215,143
Average Interest Rate 7.89% 7.89% 7.89% 7.89% 7.89% 7.89%
First Mortgage Bonds:
Principal $11,460 $14,566 $16,785 $16,257 $18,224 $366,275 $443,567 $447,411
Interest $42,178 $41,045 $39,645 $38,102 $36,552 $246,030 $443,552
Average Interest Rate 9.57% 9.58% 9.59% 9.61% 9.63% 9.73%
- ------------------------------------------------------------------------------------------------------------------------------------------
15
Item 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements Page
----------------------------- ----
Report of Independent Public Accountants 18
Consolidated Balance Sheets 19
Consolidated Statements of Operations 21
Consolidated Statements of Changes in Partners' Capital 22
Consolidated Statements of Cash Flows 23
Notes to Consolidated Financial Statements 24
16
Report of independent public accountants
To Indiantown Cogeneration, L.P.:
We have audited the accompanying consolidated balance sheets of Indiantown
Cogeneration, L.P. (a Delaware limited partnership) and subsidiary (“the
Partnership”) as of December 31, 2001 and 2000, and the related
consolidated statements of operations, changes in partners’ capital and
cash flows for the years then ended. These financial statements are the
responsibility of the Partnership’s management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Indiantown Cogeneration, L.P.
and subsidiary as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States.
As discussed in Note 2 to the financial statements, the Partnership changed its
method of accounting for scheduled major overhauls in 2000.
/S/ ARTHUR ANDERSEN LLP
Vienna, Virginia
January 23, 2002
17
Indiantown Cogeneration, L.P. and Subsidiary
Consolidated Balance Sheets
As of December 31, 2001 and 2000
ASSETS 2001 2000
- ------------------------------------------------------------------------ ------------------ --------------------
CURRENT ASSETS:
Cash and cash equivalents $ 331,956 $ 821,955
Accounts receivable-trade 14,443,374 13,853,485
Inventories 259,282 2,116,636
Prepaid expenses 981,571 800,238
Deposits 44,450 44,450
Investments held by Trustee, including restricted funds
of $2,666,539 and $2,694,068, respectively 9,572,996 2,980,292
----------------- -------------------
Total current assets 25,633,629 20,617,056
INVESTMENTS HELD BY TRUSTEE,
restricted funds 15,502,121 15,108,428
DEPOSITS 171,737 159,365
PROPERTY, PLANT&EQUIPMENT:
Land 8,582,363 8,582,363
Electric and steam generating facilities 702,175,087 700,310,050
Less - accumulated depreciation (95,613,164) (80,537,655)
------------------ -------------------
Net property, plant&equipment 615,144,286 628,354,758
FUEL RESERVE 4,059,534 922,254
DEFERRED FINANCING COSTS, net of accumulated
amortization of $45,503,768 and $44,679,212, respectively 14,683,148 15,507,704
------------------ --------------------
Total assets $ 675,194,455 $ 680,669,565
================== ====================
The accompanying notes are an integral part of these consolidated financial statements.
18
Indiantown Cogeneration, L.P. and Subsidiary
Consolidated Balance Sheets
As of December 31, 2001 and 2000
LIABILITIES AND PARTNERS' CAPITAL 2001 2000
- ------------------------------------------------------------------ ----------------- -----------------
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 11,474,326 $ 9,325,173
Accrued interest 2,324,178 2,370,686
Current portion - First Mortgage Bonds 11,460,407 11,140,896
Current portion of lease payable - railcars 358,575 331,628
----------------- -----------------
Total current liabilities 25,617,486 23,168,383
----------------- -----------------
LONG TERM DEBT:
First Mortgage Bonds 432,107,562 443,567,969
Tax Exempt Facility Revenue Bonds 125,010,000 125,010,000
Lease payable - railcars 3,584,963 3,943,538
----------------- -----------------
Total long term debt 560,702,525 572,521,507
----------------- -----------------
Total liabilities 586,320,011 595,689,890
----------------- -----------------
COMMITMENTS AND CONTINGENCIES (NOTE 7)
PARTNERS' CAPITAL:
Toyan Enterprises 26,706,773 25,536,395
Palm Power Corporation 8,887,444 8,497,967
Indiantown Project Investment, L.P. Partnership 17,730,450 16,953,444
Thaleia, LLC 35,549,777 33,991,869
----------------- -----------------
Total partners' capital 88,874,444 84,979,675
----------------- -----------------
Total liabilities and partners' capital $ 675,194,455 $ 680,669,565
================= =================
The accompanying notes are an integral part of these consolidated financial statements.
19
Indiantown Cogeneration, L.P. and Subsidiary
20
Indiantown Cogeneration, L. P. and Subsidiary
21
Indiantown Cogeneration, L.P. and Subsidiary
22
Indiantown Cogeneration, L.P. and Subsidiary
1. ORGANIZATION AND BUSINESS:
23
The net income of the Partnership is allocated to Toyan, Palm, TIFD and
IPILP and Thaleia (collectively, the "Partners") based on the following
ownership percentages:
* Now beneficially owned by Cogentrix.
24
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
25
Property, Plant and Equipment
26
Revenue Recognition
27
3. DEPOSITS:
28
Future minimum payments related to outstanding First Mortgage Bonds and
1994 Tax Exempt Bonds as of December 31, 2001 are as follows:
Equity Contribution Agreement
29
FPL Termination Fee Letter of Credit
On or before the Commercial Operation Date, the Partnership was required to
provide FPL with a letter of credit equal to the total termination fee as
defined in the Power Purchase Agreement in each year not to exceed $50,000,000.
Pursuant to the terms of the Letter of Credit and Reimbursement Agreement, the
Partnership obtained a commitment for the issuance of this letter of credit. At
the Commercial Operation Date, this letter of credit replaced the completion
letter of credit. The initial amount of $13,000,000 was issued for the first
year of operations and increased to $40,000,000 in January 1999 and then to
$50,000,000 in January 2000. During 2001, 2000, and 1999 no draws were made on
this letter of credit. Commitment fees of $697,049, $689,092, and $704,555 were
paid on this letter of credit in 2001, 2000, and 1999, respectively.
30
Debt Service Reserve Letter of Credit
31
6. SALES AND SERVICES AGREEMENTS:
32
An outline of the business terms set forth in the Settlement Agreement
provides that if the Facility is off-line for any reason, the Partnership shall
have the right, upon up to 6 hours notice and subject only to safety and system
reliability issues, to reconnect to FPL's system and produce up to 100 MW. The
Settlement Agreement provides that if this occurs when FPL has decommitted the
Facility, the Partnership will be paid FPL's actual "as available" energy rates
for the first 360 of such hours each year (in this context, "as available"
energy costs reflect actual energy production costs avoided by FPL resulting
from the production or purchase of energy from the Facility and other sources).
If fewer than 360 hours are used in any year, FPL may carry the balance forward,
not to exceed a total of 1440 hours in any year. If the hours accumulated
exercising this reconnection right exceed FPL's balance, the Partnership will be
paid for energy produced during those hours at the energy rates set forth under
the power sales agreement.
33
8. RELATED PARTY TRANSACTIONS:
34
Future minimum payments related to the Car Leasing Agreement as of December
31, 2001 are as follows:
Distribution to Partners
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.
35
The carrying amounts of the Partnership's cash and cash equivalents,
accounts receivable, deposits, prepaid expenses, investments held by trustee,
accounts payable and accrued liabilities and accrued interest approximate fair
value, due to their short-term nature.
36
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated January 23, 2002 in this Form 10-K included in Registration
Statement File No. 33-82034. It should be noted that we have not audited any
financial statements of the company subsequent to December 31, 2001 or performed
any audit procedures subsequent to the date of our report.
Consolidated Statements of Operations
For the Years Ended December 31, 2001, 2000 and 1999
2001 2000 1999
----------------------- --------------------- ---------------------
----------------------- --------------------- ---------------------
Operating Revenues:
Electric capacity and capacity bonus $122,202,351 $124,029,498 $123,682,957
Electric energy revenue 52,901,962 53,652,475 39,461,349
Steam 327,778 108,418 125,813
------------------- ------------------ ------------------
Total operating revenues 175,432,091 177,790,391 163,270,119
------------------- ------------------ ------------------
Cost of Sales:
Fuel and ash 56,320,761 55,910,214 39,794,007
Operating and maintenance 21,654,029 19,353,798 19,767,743
Depreciation 15,187,033 15,003,258 15,227,631
Loss on disposal of assets 609,097 155,780 --
------------------- ------------------ ------------------
Total cost of sales 93,770,920 90,423,050 74,789,381
------------------- ------------------ ------------------
Gross Profit 81,661,171 87,367,341 88,480,738
------------------- ------------------ ------------------
Other Operating Expenses:
General and administrative 4,450,258 5,179,313 4,501,136
Insurance and taxes 7,155,260 6,475,006 6,212,453
------------------- ------------------ ------------------
Total other operating expenses 11,605,518 11,654,319 10,713,589
------------------- ------------------ ------------------
Operating Income 70,055,653 75,713,022 77,767,149
------------------- ------------------ ------------------
Non-Operating Income (Expense):
Interest expense (55,528,078) (56,905,787) (57,475,271)
Interest income 1,767,194 2,407,354 2,122,142
------------------- ------------------ ------------------
Net non-operating expense (53,760,884) (54,498,433) (55,353,129)
------------------- ------------------ ------------------
Income before cumulative effect of a change in accounting
principles 16,294,769 21,214,589 22,414,020
Cumulative effect of a change in accounting
for scheduled major overhaul costs (Note 2) -- 920,536 --
------------------- ------------------ ------------------
Net Income $ 16,294,769 $ 22,135,125 $ 22,414,020
=================== ================== ==================
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Changes in Partners' Capital
For the Years Ended December 31, 2001, 2000 and 1999
Toyan Palm Power Total Partners'
Enterprises Corporation TIFD III-Y, Inc. IPILP Thaleia, LLC Capital
--------------- ------------ --------------- ------------- ----------- -------------
Partners' capital, December 31, 1998 $27,586,061 $9,180,053 $36,720,211 $18,314,205 $ -- $91,800,530
Net Income (1/1/99 through 6/4/99) 3,139,325 1,044,700 4,178,802 2,084,177 -- 10,447,004
--------------- ------------ --------------- ------------- ----------- -------------
Partners' capital, June 4, 1999 $30,725,386 $10,224,753 $40,899,013 $20,398,382 $ -- $102,247,534
Transfer TIFD III-Y, Inc. 19.90% interest to
Thaleia, LLC -- -- (20,347,259) -- 20,347,259 --
Net Income (6/5/99 through 9/20/99) 1,915,912 637,575 1,281,525 1,271,961 1,268,773 6,375,746
Capital distributions (6/5/99
through 9/20/99) (5,039,385) (1,677,000) (3,370,770) (3,345,615) (3,337,230) (16,770,000)
--------------- ------------ --------------- ------------- ----------- -------------
Partners' capital, September 20, 1999 $27,601,913 $9,185,328 $18,462,509 $18,324,728 $18,278,802 $91,853,280
Transfer TIFD III-Y, Inc. 20.00% interest to
Thaleia, LLC -- -- (18,370,656) -- 18,370,656 --
Net Income (9/21/99 through 11/24/99) 1,175,664 391,236 3,912 780,517 1,561,032 3,912,361
--------------- ------------ --------------- ------------- ----------- --------------
Partners' capital, November 24, 1999 $28,777,577 $9,576,564 $ 95,765 $19,105,245 $38,210,490 $95,765,641
Transfer TIFD III-Y, Inc. 0.10% interest to
Thaleia, LLC -- -- (95,765) -- 95,765 --
Net Income (11/25/99 through 12/31/99) 504,512 167,891 -- 334,942 671,564 1,678,909
Capital distributions (11/25/99 through
12/31/99) (2,764,600) (920,000) -- (1,835,400) (3,680,000) (9,200,000)
--------------- ------------ -------------- ------------- ----------- ------------
Partners' capital, December 31, 1999 $26,517,489 $8,824,455 $ -- $17,604,787 $35,297,819 $88,244,550
=============== ============ =============== ============= =========== ===========
Net Income 6,651,606 2,213,512 -- 4,415,957 8,854,050 22,135,125
Capital distributions (7,632,700) (2,540,000) -- (5,067,300) (10,160,000) (25,400,000)
--------------- ------------ --------------- ------------- ------------ ------------
Partners' capital, December 31, 2000 $25,536,395 $8,497,967 $ -- $16,953,444 $33,991,869 $84,979,675
=============== ============ =============== =========== =========== =============
Net Income 4,896,578 1,629,477 -- 3,250,806 6,517,908 16,294,769
Capital distributions (3,726,200) (1,240,000) -- (2,473,800) (4,960,000) (12,400,000)
--------------- ------------ --------------- ------------- ----------- --------------
Partners' capital, December 31, 2001 $26,706,773 $8,887,444 $ -- $17,730,450 $35,549,777 $88,874,444
=============== ============ =============== ============= =========== ==============
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999
------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $16,294,769 $22,135,125 $22,414,020
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of a change in accounting principles -- (920,536) --
Depreciation and amortization 16,011,589 15,827,822 15,681,507
Loss on disposal of assets 609,097 155,780 --
Effect of changes in assets and liabilities:
Increase in accounts receivable-trade (589,889) (381,500) (1,102,391)
(Increase) decrease in inventories and fuel reserve (1,279,926) (574,774) 1,904,412
Increase in deposits and prepaid expenses (193,705) (72,231) (76,122)
Increase in accounts payable and accrued
liabilities and accrued interest 2,102,645 1,844,616 552,186
----------- ----------- ----------
Net cash provided by operating activities 32,954,580 38,014,302 39,373,612
----------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant&equipment, net of disposals (2,585,658) (2,064,741) (2,108,071)
Increase in investments held by Trustee (6,986,397) (302,934) (1,013,585)
----------- --------- -----------
Net cash used in investing activities (9,572,055) (2,367,675) (3,121,656)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on capital lease obligation - railcars (331,628) (308,534) (287,048)
Borrowings under revolving credit agreement 3,697,173 12,835,436 14,568,378
Repayments under revolving credit agreement (3,697,173) (12,835,436) (14,568,378)
Payment on First Mortgage Bonds (11,140,896) (11,533,135) (9,997,000)
Capital distributions (12,400,000) (25,400,000) (25,970,000)
------------ ------------ ------------
Net cash used in financing activities (23,872,524) (37,241,669) (36,254,048)
------------ ------------ ------------
CHANGE IN CASH AND CASH EQUIVALENTS (489,999) (1,595,042) (2,092)
Cash and cash equivalents, beginning of year 821,955 2,416,997 2,419,089
------------ ------------ ------------
Cash and cash equivalents, end of year $ 331,956 $ 821,955 $ 2,416,997
============ =========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $53,082,539 $54,141,427 $55,039,501
=========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000
Indiantown Cogeneration, L.P. (the "Partnership") is a special purpose
Delaware limited partnership formed on October 4, 1991. 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
produces electricity for sale to Florida Power&Light Company ("FPL") and
supplies steam to Caulkins Indiantown Citrus Co. ("Caulkins") for its plant
located near the Facility. In September 2001, Caulkins sold its processing plant
to Louis Dreyfus Citrus, Inc. ("LDC").
The original general partners were Toyan Enterprises ("Toyan"), a
California corporation and a wholly owned special purpose indirect subsidiary of
PG&E National Energy Group, Inc. ("NEG, Inc.") and Palm Power Corporation
("Palm"), a Delaware corporation and a special purpose indirect subsidiary of
Bechtel Enterprises, Inc. ("Bechtel Enterprises"). The sole limited partner was
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.
In 1998, Toyan consummated transactions with DCC Project Finance Twelve,
Inc. ("PFT"), whereby PFT, through a new partnership (Indiantown Project
Investment, L.P. ("IPILP")) with Toyan, became a new general partner in the
Partnership. Toyan is the sole general partner of IPILP. Prior to the PFT
transaction, Toyan converted some of its general partnership interest into a
limited partnership interest such that Toyan now directly holds only a limited
partnership interest in the Partnership. In addition, Bechtel Generating
Company, Inc. ("Bechtel Generating"), sold all of the stock of Palm to a wholly
owned indirect subsidiary of Cogentrix Energy, Inc. ("Cogentrix"). Palm holds a
10% general partner interest in the Partnership.
On June 4, 1999, Thaleia, LLC ("Thaleia"), a wholly owned subsidiary of
Palm and indirect wholly owned subsidiary of Cogentrix, acquired from TIFD a
19.90% limited partner interest in the Partnership. On September 20, 1999,
Thaleia acquired another 20.00% limited partnership interest from TIFD and
TIFD's membership on the Board of Control of the Partnership. On November 24,
1999, Thaleia purchased TIFD's remaining limited partnership interest in the
Partnership from TIFD.
Toyan 30.05%
Palm 10.00%*
IPILP 19.95%**
Thaleia 40.00%
** PFT’s beneficial ownership in the Partnership through IPILP was
equal to 10% as of August 21, 1998, and 15% as of November 23, 1998.
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 Partnership is managed by PG&E National Energy Group Company
("NEG"), formerly known as PG&E Generating Company pursuant to a Management
Services Agreement (the "MSA"). The Facility is operated by PG&E Operating
Services Company ("PG&E OSC"), formerly known as U.S. Operating Services
Company, pursuant to an Operation and Maintenance Agreement (the "O&M
Agreement"). NEG and PG&E OSC are general partnerships indirectly wholly
owned by NEG, Inc., an indirect wholly owned subsidiary of PG&E Corporation
(see Note 8).
The Partnership commenced commercial operations on December 22, 1995 (the
"Commercial Operation Date").
NEG, Inc. is a wholly-owned indirect subsidiary of PG&E Corporation.
Because the California energy markets situation has caused financial
difficulties for Pacific Gas and Electric Company, a wholly owned subsidiary of
PG&E Corporation, PG&E Corporation's credit ratings were downgraded to
below investment grade in January 2001, which caused PG&E Corporation to
default on outstanding commercial paper and bank borrowings. In January 2001,
certain corporate actions were taken to insulate the assets of NEG and its
direct and indirect subsidiaries from an effort to substantively consolidate
those assets in any insolvency or bankruptcy proceeding of PG&E Corporation.
In March 2001, PG&E Corporation refinanced all of its outstanding commercial
paper and bank borrowings, and Standard&Poor's subsequently removed its below
investment grade credit rating since PG&E Corporation no longer had rated
securities outstanding. Management of NEG believes that NEG and its direct and
indirect subsidiaries as described above, including the Partnership, would not
be substantively consolidated with PG&E Corporation in any insolvency or
bankruptcy proceeding involving PG&E Corporation.
Presentation
The Partnership's consolidated financial statements are prepared on the
accrual basis of accounting in accordance with accounting principles generally
accepted in the United States. The preparation of financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ
from those estimates.
The accompanying consolidated financial statements include the accounts of
the Partnership and ICL Funding. All significant intercompany balances have been
eliminated in consolidation.
Cash and Cash Equivalents
For the purposes of reporting cash flows, cash equivalents include
short-term investments with original maturities of three months or less.
Inventories
Coal and lime inventories are stated at the lower of cost or market using
the average cost method.
Deposits
Deposits are stated at cost and include amounts required under certain of
the Partnership's agreements as described in Note 3.
Investments Held by Trustee
The investments held by the Trustee represent bond and equity proceeds held
by a bond Trustee/disbursement agent and are carried at cost, which approximates
market value. All funds are invested in either Nations Treasury Fund-Class A or
other permitted investments for longer periods. The Partnership also maintains
restricted investments covering a portion of the partnership's debt as required
by the financing documents. The proceeds include $12,501,000 of restricted
tax-exempt debt service reserve required by the financing documents and are
classified as a noncurrent asset on the accompanying consolidated balance
sheets. The Partnership maintains restricted investments covering a portion of
debt principal and interest payable, as required by the financing documents.
These investments are classified as current assets in the accompanying
consolidated balance sheets. A qualifying facility ("QF") reserve of $3,000,000
is also held as a non-current asset (see Note 4).
Property, plant and equipment, which consist primarily of the Facility, are
recorded at actual cost. The Facility is depreciated on a straight-line basis
over 35 years with a residual value on the Facility approximating 25 percent of
the gross Facility costs.
Other property, plant and equipment are depreciated on a straight-line
basis over the estimated economic or service lives of the respective assets
(ranging from five to seven years). Routine maintenance and repairs are charged
to expense as incurred.
The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("SFAS No. 121").
SFAS No. 121 establishes criteria for recognizing and measuring impairment
losses when recovery of recorded long-lived asset values is uncertain. During
2001, the Partnership assessed for possible impairment of the facility when
Lodestar Energy, Inc., ("Lodestar") the Partnership's coal supplier, announced
it had filed for bankruptcy (see Note 5). In the opinion of management of the
Partnership and based on its impairment analysis, there has been no impairment
of the facility and thus no impact on the Partnership's financial condition or
results of operations in 2001.
Fuel Reserve
The fuel reserve, carried at cost, represents an approximate twenty-five
day supply of coal held for emergency purposes.
Deferred Financing Costs
Financing costs, consisting primarily of the costs incurred to obtain
project financing, are deferred and amortized using the effective interest rate
method over the term of the related permanent financing.
Scheduled Major Overhauls
In fiscal year 2000, the Securities and Exchange Commission ("SEC") issued
a ruling that changed the allowable methods of accounting for scheduled major
overhaul to the as incurred method rather than the accrue in advance method
which had been used by the Partnership. The SEC's ruling allows companies to
recognize the change as a cumulative effect of a change in accounting principle
in the year of adoption. As such, the Partnership reflected a cumulative effect
of a change in accounting principle in the year of adoption. The Partnership
reflected a cumulative effect of a change in accounting principle of $920,536 in
the accompanying financial statements. Since no scheduled major overhaul
expenses were incurred in 2000, the effect of adopting this new accounting
principle was a reduction of operating and maintenance costs of $424,000.
Revenues from the sale of electricity are recorded based on output
delivered and capacity provided at rates as specified under contract terms in
the periods to which they pertain.
Income Taxes
Under current law, no Federal or state income taxes are paid directly by
the Partnership. All items of income and expense of the Partnership are
allocable to and reportable by the Partners in their respective income tax
returns. Accordingly, no provision is made in the accompanying consolidated
financial statements for Federal or state income taxes.
Derivative Financial Instruments
The Partnership adopted SFAS No. 133 "Accounting for Derivative Instruments
and Hedging Activities"("SFAS No. 133"), as amended by SFAS Nos. 137 and 138, on
January 1, 2001. This standard requires the Partnership to recognize all
derivatives, as defined in the statements listed above, on the balance sheet at
fair value. Derivatives, or any portion thereof, that are not effective hedges
must be adjusted to fair value through income. If derivatives are effective
hedges, depending on the nature of the hedges, changes in the fair value of
derivatives either will offset the change in fair value of the hedged assets,
liabilities, or firm commitments through earnings, or will be recognized in
other comprehensive income, a component of partners' capital, until the hedged
items are recognized in earnings. The Partnership has certain derivative
commodity contracts for the physical delivery of purchase and sale quantities
transacted in the normal course of business. Since these activities qualify as
normal purchase and sale activities, the Partnership has not recorded the value
of the related contracts on its balance sheet, as permitted under the standards.
In December 2001, the FASB approved an interpretation issued by the
Derivatives Implementation Group ("DIG") that changes the definition of normal
purchases and sales for certain power contracts. Based on the Partnership's
current analysis, the power contract with FPL is a derivative, but qualifies as
a normal purchase and sales exemption, thus is exempt from the requirements of
SFAS No. 133 and is not reflected on the balance sheet at fair value. The FASB
has also approved another DIG interpretation that disallows normal purchases and
sales treatment for commodity contracts (other than power contracts) that
contain volumetric variability or optionality. Certain of our derivative
commodity contracts may no longer be exempt from the requirements of SFAS No.
133. We are evaluating the impact of the implementation guidance on our
financial statements, and will implement this guidance, as appropriate, by the
effective date of April 1, 2002.
New Accounting Pronouncements
In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"). SFAS No. 144
supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of", but retains its fundamental provisions
for recognizing and measuring impairment of long-lived assets to be held and
used. This Statement also requires that all long-lived assets to be disposed of
by sale are carried at the lower of carrying amount or fair value less cost to
sell, and that depreciation should cease to be recorded on such assets. SFAS No.
144 standardizes the accounting and presentation requirements for all long-lived
assets to be disposed of by sale, superceding previous guidance for discontinued
operations of business segments. This Standard is effective for fiscal years
beginning after December 15, 2001. The Partnership anticipates that
implementation of this standard will have no impact on its financial statements.
The Partnership will apply this guidance prospectively.
In 1991, in accordance with the Planned Unit Development Zoning Agreement
between the Partnership and Martin County, the Partnership deposited $1,000,000
in trust with the Board of County Commissioners of Martin County (the "PUD
Trustee"). Income from this trust will be used solely for projects benefiting
the community of Indiantown. On July 23, 2025, the PUD Trustee is required to
return the deposit to the Partnership. As of December 31, 2001 and 2000,
estimated present values of this deposit of $171,737 and $159,365, respectively,
are included in deposits in the accompanying consolidated balance sheets. The
remaining balance is included in property, plant and equipment as part of total
capitalized construction expenses.
4. BONDS AND NOTES PAYABLE:
First Mortgage Bonds
In November 22, 1994, the Partnership and ICL Funding jointly issued
$505,000,000 of First Mortgage Bonds (the "First Mortgage Bonds") in a public
issuance registered with the SEC. Proceeds from the issuance were used to repay
outstanding balances of $273,513,000 on a prior construction loan and to
complete the project. The First Mortgage Bonds are secured by a lien on and
security interest in substantially all of the assets of the Partnership. The
First Mortgage Bonds were issued in 10 separate series with fixed interest rates
ranging from 7.38 to 9.77 percent and with maturities ranging from 1996 to 2020.
Interest is payable semi-annually on June 15 and December 15 of each year.
Interest expense related to the First Mortgage Bonds was $43,176,476,
$44,275,872, and $45,138,915, in 2001, 2000, and 1999 respectively.
Tax Exempt Facility Revenue Bonds
The proceeds from the issuance of $113,000,000 of Series 1992A and 1992B
Industrial Development Revenue Bonds (the "1992 Bonds") through the Martin
County Industrial Development Authority (the "MCIDA") were invested in an
investment portfolio with Fidelity Investments Institutional Services Company.
On November 22, 1994, the Partnership refunded the 1992 Bonds with proceeds from
the issuance of $113,000,000 Series 1994A and of $12,010,000 Series 1994B Tax
Exempt Facility Refunding Revenue Bonds which were issued on December 20, 1994
(the Series 1994A Bonds and the Series 1994B Bonds, collectively, the "1994 Tax
Exempt Bonds").
The 1994 Tax Exempt Bonds were issued by the MCIDA pursuant to an Amended
and Restated Indenture of Trust between the MCIDA and NationsBank of Florida,
N.A. (succeeded by The Bank of New York Trust Company of Florida, N.A.) as
trustee (the "Trustee"). Proceeds from the 1994 Tax Exempt Bonds were loaned to
the Partnership pursuant to the MCIDA Amended and Restated Authority Loan
Agreement dated as of November 1, 1994 (the "Authority Loan"). The Authority
Loan is secured by a lien on and a security interest in substantially all of the
assets of the Partnership. The 1994 Tax Exempt Bonds, which mature December 15,
2025, carry fixed interest rates of 7.875 percent and 8.05 percent for Series
1994A and 1994B, respectively. Total interest paid related to the 1994 Tax
Exempt Bonds was $9,865,555 for each of the years ended December 31, 2001, 2000,
and 1999. The Tax Exempt Bonds and the First Mortgage Bonds are equal in
seniority.
2002 $ 11,460,407
2003 14,566,086
2004 16,785,152
2005 16,257,206
2006 18,224,203
Thereafter 491,284,915
--------------------
Total $568,577,969
====================
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 Partners contributed approximately
$140,000,000 of equity on December 26, 1995. Proceeds were used to repay the
$139,000,000 outstanding under the Equity Loan Agreement. The remaining
$1,000,000 was deposited with the Trustee according to the disbursement
agreement among the Partnership, the Trustee and the other lenders to the
Partnership. On June 15, 1998, the funds were released and subsequently
distributed in accordance with the Disbursement Agreement.
Revolving Credit Agreement
In November 2001, the Revolving Credit Agreement was terminated. The
Revolving Credit Agreement provided for the availability of funds for the
working capital requirements of the Facility. It had a term of seven years from
November 1, 1994. The interest rate was based upon various short-term indices
chosen at the Partnership's option and was determined separately for each draw.
The weighted average interest rate for the borrowings were approximately 5.52%,
7.98% and 6.58% during 2001, 2000 and 1999, respectively. The credit facility
included commitment fees, to be paid quarterly, of 0.375 percent on the
unborrowed portion. The face amount of the original working capital letter of
credit was increased in November 1994 from $10 million to $15 million. Under the
original and new working capital credit facilities, the Partnership paid
$53,170, $52,919 and $52,836 in commitment fees in 2001, 2000 and 1999,
respectively. All borrowings made under this agreement were repaid in the year
borrowed. As of December 31, 2001, 2000, and 1999, no borrowings were
outstanding. The Partnership incurred interest expense of $17,148, $84,574 and
$78,343 in 2001, 2000 and 1999, respectively, related to the aforementioned
borrowings.
FPL QF Letter of Credit
Within 60 days after the Commercial Operation Date, the Partnership was
required to provide a letter of credit for use in the event of a loss of
Qualifying Facility ("QF") status under the Public Utility Regulatory Policies
Act of 1978 ("PURPA"). The initial amount was $500,000 increasing by $500,000
per agreement year to a maximum of $5,000,000. Pursuant to the terms of the
Letter of Credit and Reimbursement Agreement, the Partnership obtained a
commitment for the issuance of this letter of credit. The amount will be used by
the Partnership as necessary to maintain or reinstate the Facility's qualifying
facility status. The Partnership may, in lieu of a letter of credit, make
regular cash deposits to a dedicated account in amounts of $500,000 per
agreement year to a maximum of $5,000,000. In February 1996, the Partnership
established a QF account with the Trustee. The balance in this account as of
December 31, 2001 and 2000, was $3,000,000 and $2,500,000, respectively, and is
included in noncurrent, restricted funds held by trustee in the accompanying
consolidated balance sheets.
Steam Host Letter of Credit
At financial closing in October 1992, the Partnership provided LDC a letter
of credit in the amount of $10,000,000 pursuant to the Energy Services Agreement
(see Note 6). This letter of credit was terminated in 1994 and a new one was
issued with essentially the same terms. In the event of a default under the
Energy Services Agreement (see Note 6), the Partnership is required to pay
liquidated damages in the amount of $10,000,000. Failure by the Partnership to
pay the damages within 30 days allows the steam host to draw on the letter of
credit for the amount of damages suffered by LDC. As of December 31, 2001, 2000,
and 1999, no draws had been made on this letter of credit. Commitment fees of
$139,409, $137,818 and $143,011 were paid relating to this letter of credit in
2001, 2000, and 1999, respectively.
On November 22, 1994, the Partnership also entered into a debt service
reserve letter of credit and reimbursement agreement with Banque Nationale de
Paris pursuant to which a debt service reserve letter of credit in the amount of
approximately $60,000,000 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 are available 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 prior to any drawings on the debt service reserve
letter of credit. As of December 31, 2001, 2000, and 1999, no draws had been
made on this letter of credit. Commitment fees of $409,611, $410,733, and
$488,281 were paid on this letter of credit in 2001, 2000, and 1999,
respectively. On January 11, 1999, pursuant to the Disbursement Agreement, the
Debt Service Reserve Letter of Credit was reduced to $29,925,906. The
Partnership is currently working with BNP Paribas to extend this letter of
credit.
5. PURCHASE AGREEMENTS:
Coal Purchase and Transportation Agreement
The Partnership entered into a 30-year purchase contract with Lodestar
(formerly known as Costain Coal, Inc.), commencing from the first day of the
calendar month following the Commercial Operation Date, for the purchase of the
Facility's annual coal requirements at a price defined in the agreement, as well
as for the disposal of ash residue. The Partnership has no obligation to
purchase a minimum quantity of coal under this agreement.
On June 8, 1998, the Partnership entered into a three-year agreement with
Lodestar, which established an arrangement for the Partnership's disposal of ash
at alternative locations. The Partnership also entered a three-year agreement
with VFL Technology Corporation for the disposal of ash with similar terms,
which terminated in 2002.
Lodestar Energy, Inc. and its parent Lodestar Holding, Inc. filed for
voluntary Chapter 11 bankruptcy on April 26, 2001. On October 16, 2001 the
Partnership and Lodestar agreed to and executed Amendment No. 3 to the Coal
Purchase Agreement. The principal change effected in the Agreement by the
Amendment is an increase from $26.632 to $34.00 per ton in the base coal price
with a 2% additional increase in the base price effective October 16, 2002. The
Amendment also includes market price reopener provisions, beginning October 16,
2003, and a revision to Section 10.2 of the Agreement whereby the Partnership
shall provide to Lodestar for disposal no less than fifty (50) percent and no
more than seventy-five (75) percent of the Ash Residue produced annually at the
Facility.
Lime Purchase Agreement
On May 1, 1992, the Partnership entered into a lime purchase agreement with
Chemical Lime Company of Alabama, Inc. ("Chemlime") for supply of the Facility's
lime requirements for the Facility's dry scrubber sulfur dioxide removal system.
The Partnership has no obligation to purchase a minimum quantity of lime under
the agreement. The initial term of the agreement is 15 years from the Commercial
Operation Date and may be extended for a successive 5-year period. Either party
may cancel the agreement after January 1, 2000, upon proper notice. The price of
lime was renegotiated in 1999 for a three-year period beginning January 1, 2000.
Chemlime notified the Partnership of its intention to cancel the agreement
effective in the first quarter of 2002. The Partnership renegotiated the price
of lime with Chemlime beginning February 1, 2002.
Power Purchase Agreement
On May 21, 1990, the Partnership entered into a Power Purchase Agreement
with FPL for sales of the Facility's electric output. As amended, the agreement
is effective for a 30-year period, commencing with the Commercial Operation
Date. The pricing structure provides for both capacity and energy payments.
Capacity payments remain relatively stable because the amounts do not vary
with dispatch. Price increases are contractually provided. Capacity payments
include a bonus or penalty payment if actual capacity is in excess of or below
specified levels of available capacity. Energy payments are derived from a
contractual formula defined in the agreement based on the actual cost of
domestic coal at another FPL plant, St. Johns River Power Park.
Energy Services Agreement
On September 30, 1992, the Partnership entered into an energy services
agreement with Caulkins Indiantown Citrus Company ("Caulkins"). In September
2001, Caulkins sold its processing plant to Louis Dreyfus Citrus, Inc. ("LDC").
Commencing on the Commercial Operation Date and continuing throughout the
15-year term of the agreement, LDC is required to purchase the lesser of 525
million pounds of steam per year or the minimum quantity of steam per year
necessary for the Facility to maintain its status as a Qualifying Facility under
PURPA. The Facility declared Commercial Operation with LDC on March 1, 1996.
7. COMMITMENTS AND CONTINGENCIES
On March 19, 1999, the Partnership filed a complaint against FPL in the
United States District Court for the Middle District of Florida. The lawsuit
stemmed from a course of action pursued by FPL beginning in the Spring of 1997,
in which FPL purported to exercise its dispatch and control rights under the
Power Purchase Agreement in a manner which the Partnership believes violated the
terms of the power purchase agreement. In its complaint, the Partnership charged
that such conduct was deliberately calculated to cause the Partnership to be
unable to meet the requirements to maintain the Facility's status as a
Qualifying Facility under the Public Utility Regulatory Policies Act of 1978.
On December 19, 2000, FPL and the Partnership participated in a mediation
conference with respect to the pending litigations described herein. As a result
of this conference, FPL and the Partnership executed two Settlement Agreements
intended to resolve all pending litigation. Only the Settlement Agreement for
the pending federal court litigation requires amendment of the power sales
agreement. The amendment must be approved by the Florida Public Service
Commission, and certain conditions set forth in the Indenture for the Bonds,
including confirmation of the Bonds' investment grade rating, must be met for it
to become effective.
Management of the Partnership believes that this resolution provides the
Partnership with the flexibility it requires to maintain its Qualifying Facility
status without materially adversely affecting the Project.
On May 17, 2001, the Partnership and FPL executed an amendment to the power
purchase agreement to implement the Settlement Agreement relating to the
litigation pending in federal court. The amendment was filed for approval by the
Florida Public Service Commission ("FPSC") on June 7, 2001. At a public meeting
on July 24, 2001, the FPSC voted to approve the amendment. On August 8, 2001,
the FPSC issued its order on Proposed Agency Plan ("PAA"), in which it proposed
to approve the amendment. The PAA order provided a 21-day period in which an
affected party could have protested the proposed approval. No protest was filed;
however, on October 11, 2001, the FPSC issued an amended order clarifying the
PAA. At that time, the FPSC's action was subject to an appeal period, which
expired on November 12, 2001, without appeal. In addition, the conditions set
forth in the Indenture for the Bonds have been met.
On December 12, 2000, FPL filed a complaint against the Partnership in the
Circuit Court of the 19th Judicial District in and for Martin County, Florida.
In its complaint, FPL alleged that the Partnership breached the power sales
agreement by failing to include certain payments from its coal supplier and its
coal transporter in the Partnership's calculation of its fuel costs which are
included in the calculation of the actual energy costs under the power sales
agreement. The power sales agreement requires a sharing of actual energy costs
between FPL and the Partnership to the extent the actual costs differ (either
upward or downward) from a formula contained in the agreement. FPL sought
unspecified damages and declaratory relief including a finding that the
Partnership breached the power sales agreement. A Settlement Agreement was
executed on October 17, 2001, and provides that the Partnership will include,
among other things, in future calculations of its actual energy costs all costs,
credits, rebates, discounts, and allowances/concessions from all past, current
or future vendors of fuel, fuel transportation, ash, and lime. The Partnership
made a one-time payment of $1,289,579 to FPL in November 2001, which constituted
a settlement of all issues and claims with respect to, and permanently closes,
FPL's audits for calendar years 1996, 1997, 1998, 1999, and 2000.
Management Services Agreement
The Partnership has a Management Services Agreement with NEG, a California
general partnership and a wholly owned indirect subsidiary of NEG, Inc., for the
day-to-day management and administration of the Partnership's business relating
to the Facility. The agreement commenced on September 30, 1992 and will continue
through August 31, 2026. Compensation to NEG under the agreement includes an
annual base fee of $650,000 (adjusted annually), wages and benefits for
employees performing work on behalf of the Partnership and other costs directly
related to the Partnership. Payments of $4,167,428, $4,324,042, and $4,120,468,
in 2001, 2000, and 1999 were made to NEG, respectively. As of December 31, 2001
and 2000, the Partnership owed NEG $315,730 and $437,925, respectively, which
are included in accounts payable and accrued liabilities in the accompanying
consolidated balance sheets.
Operations and Maintenance Agreement
The Partnership has an Operation and Maintenance Agreement with PG&E
OSC, a California general partnership and a wholly owned indirect subsidiary of
NEG, Inc., for the operations and maintenance of the Facility for a period of 30
years (starting September 30, 1992). Thereafter, the agreement will be
automatically renewed for periods of 5 years until terminated by either party
with 12 months notice. If targeted plant performance is not reached on a monthly
basis, PG&E OSC will pay liquidated damages to the Partnership. Compensation
to PG&E OSC under the agreement includes an annual base fee of $1.5 million
($900,000 of which is subordinate to debt service and certain other costs),
certain earned fees and bonuses based on the Facility's performance and
reimbursement for certain costs including payroll, supplies, spare parts,
equipment, certain taxes, licensing fees, insurance and indirect costs expressed
as a percentage of payroll and personnel costs. The fees are adjusted quarterly
by a measure of inflation as defined in the agreement. Payments of $9,326,634,
$9,921,638, and $9,790,473 were made to PG&E OSC in 2001, 2000, and 1999,
respectively. As of December 31, 2001 and 2000, the Partnership owed PG&E
OSC $320,402 and $201,840, respectively, which is included in accounts payable
and accrued liabilities in the accompanying consolidated balance sheets.
Railcar Lease
The Partnership entered into a 15 year Car Leasing Agreement with GE
Capital Railcar Services Corporation, an affiliate of GECC, to furnish and lease
72 pressure differential hopper railcars to the Partnership for the
transportation of fly ash and lime. The cars were delivered starting in April
1995, at which time the lease was recorded as a capital lease. The leased asset
of $5,753,375 and accumulated depreciation of $2,551,580 and $2,168,022,
respectively is included in property, plant and equipment as of December 31,
2001 and 2000. Payments of $629,856, including principal and interest, were made
in 2001, 2000, and 1999.
2002 $629,856
2003 629,856
2004 629,856
2005 629,856
2006 629,856
-----------
Thereafter 2,114,911
-----------
Total minimum lease payments 5,264,191
Interest portion of lease payable (1,320,653)
-----------
Present value of future
minimum lease payments 3,943,538
Current portion (358,575)
-----------
Long-term portion $3,584,963
===========
On June 15, 2001, as provided in the Partnership Agreement, the Partnership
distributed approximately $12.4 million to the Partners.
9. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and estimated fair values
of certain of the Partnership's financial instruments as of December 31, 2001
and 2000.
December 31, 2001
- -------------------------------------------------------------------------------------------------
Financial Liabilities Carrying Amount Fair Value
--------------------- --------------- ----------
Tax Exempt Bonds $125,010,000 $130,409,212
First Mortgage Bonds $443,567,970 $447,410,766
December 31, 2000
- -------------------------------------------------------------------------------------------------
Financial Liabilities Carrying Amount Fair Value
--------------------- --------------- ----------
Tax Exempt Bonds $125,010,000 $127,510,200
First Mortgage Bonds $454,708,865 $492,483,915
/S/ ARTHUR ANDERSEN LLP
Vienna, VA
April 1, 2002
Item 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
37
PART III
Item 10 DIRECTORS AND EXECUTIVE OFFICERS
Indiantown Cogeneration, L.P. Board of Control
The following table sets forth the names, ages and positions of the members
of the Board of Control of the Partnership. Members of the Board of Control are
selected from time to time by, and serve at the pleasure of, the Partners of the
Partnership.
Name Age Position
---- --- --------
Thomas J. Bonner................. 47 Palm Representative and
Thaleia Representative
Thomas F. Schwartz .............. 40 Palm Representative and
Thaleia Representative
P. Chrisman Iribe................ 50 IPILP Representative
Sanford L. Hartman............... 48 IPILP Representative
Thomas J. Bonner is Vice President - Asset Management for Cogentrix Energy,
Inc. and has been with Cogentrix since 1987. Prior to joining Cogentrix Energy,
Inc., Mr. Bonner spent five years as a utilities manager in an integrated fiber
and chemical production facility. Mr. Bonner holds a B.S. from the U.S. Naval
Academy, and an M.B.A. from Old Dominion University.
Thomas F. Schwartz is Senior Vice President and Chief Financial Officer of
Cogentrix Energy, Inc. He is responsible for the areas of corporate finance and
tax planning. Mr. Schwartz joined Cogentrix Energy, Inc. in 1991, and has held
various positions in accounting and finance. Prior to joining Cogentrix Energy,
Inc., Mr. Schwartz was Audit Manager with Arthur Andersen, LLP. Mr. Schwartz
holds a B.A. degree in accounting from the University of North Carolina -
Charlotte.
P. Chrisman Iribe is President of NEG and has been with NEG since it was
formed in 1989. Prior to joining NEG, Mr. Iribe was senior vice president for
planning, state relations and public affairs with ANR Pipeline Company, a
natural gas pipeline company and a subsidiary of the Coastal Corporation. Mr.
Iribe holds a B.A. degree in Economics from George Washington University.
Sanford L. Hartman joined NEG's legal group in 1990 and became its General
Counsel in April 1999. Prior to joining NEG, Hartman was counsel to Long Lake
Energy Corporation, an independent power producer with headquarters in New York
City and was an attorney with Bishop, Cook, Purcell&Reynolds, a Washington,
D.C., law firm. Mr. Hartman has a BA in Political Science from Drew University
and a JD from Temple University.
38
ICL Funding Corporation Board of Directors
The following table sets forth the names, ages and positions of the
directors and executive officers of ICL Funding. Directors are elected annually
and each elected director holds office until a successor is elected. Officers
are elected from time to time by vote of the Board of Directors.
Name Age Position
---- --- --------
P. Chrisman Iribe 50 Director, President
Sanford L. Hartman 48 Director
John R. Cooper 54 Vice President, Chief
Financial Officer and
Principal Accounting
Officer
Item 11 REMUNERATION OF DIRECTORS AND OFFICERS
No cash compensation or non-cash compensation was paid in any prior year or
is currently proposed to be paid in the current calendar year by ICL Funding or
the Partnership to any of the officers and directors listed above. Accordingly,
the Summary Compensation Table and other tables required under Item 402 of the
Securities and Exchange Commission's Regulation S-K have been omitted, as
presentation of such tables would not be meaningful.
Management services for the Partnership are being performed by NEG on a
cost-plus basis in addition to the payment of a base fee. Operation and
maintenance services for the Partnership will be performed by PG&E OSC on a
cost-plus basis. In addition to a base fee, PG&E OSC may earn certain
additional fees and bonuses based on specified performance criteria.
Item 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Partnership interests in the Partnership, as of December 31, 2001, are held
as follows:
Toyan 30.05% L.P.
IPILP 19.95% G.P.
Palm 10.00% G.P.
Thaleia 40.00% L.P.
All of the outstanding shares of common stock of ICL Funding are owned by
the Partnership.
Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has several material contracts with affiliated entities.
These contracts, which include the Construction Contract, the Management
Services Agreement, the Operations and Maintenance Agreement and the Railcar
Lease, are described elsewhere in this report, most notably in Note 8 to the
Partnership's consolidated financial statements.
39
PART IV
Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Page
----
a) Documents filed as of this Report
(1) Consolidated financial statements:
Report of Independent Public Accountants............... 18
Consolidated Balance Sheets as of
December 31, 2001 and 2000 ............................ 19
Consolidated Statements of Operations for the years
ended December 31, 2001, 2000 and 1999................ 21
Consolidated Statements of Changes
in Partners' Capital for the years ended
December 31, 2001, 2000 and 1999...................... 22
Consolidated Statements of Cash Flows for the
years ended December 31, 2001, 2000 and 1999......... 23
Notes to Consolidated Financial
Statements........................................... 24
(2) Consolidated Financial Statement
Schedules............................................
None
b) Reports on Form 8-K:
None
| The Partnership filed a Report on Form 8-K on October 9, 2001 announcing Lodestar’s decision to reject the coal purchase agreement. This report was amended by a report on form 8-K/A, filed on October 12, 2001. |
| The Partnership filed a Report on Form 8-K on October 22, 2001 announcing the deferral of a hearing on Lodestar Energy, Inc.‘s motion filed with the Bankruptcy Court seeking to reject the Coal Purchase Agreement. |
| The Partnership filed a Report on Form 8-K on November 9, 2001 announcing the Amendment No. 3 to the Coal Purchase Agreement. |
c) 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.*
3.6 Dana Amendment to Amended and Restated Limited Partnership Agreement
of Indiantown Cogeneration, L.P.*****
40
3.7 Cogentrix Amendment to Amended and Restated Limited Partnership
Agreement of Indiantown Cogeneration, L.P.*****
3.8 Third 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.**
41
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.****
10.2.20 Third Amendment to the Agreement for the Purchase of Firm Capacity and
Energy, dated as of May 17, 2001.******
10.2.21 Third Amendment to Coal Purchase Agreement, dated as of November 2,
2001.*******
21 Subsidiaries of Registrant*
99 Copy of Registrants' press release dated January 3, 1996.****
99.1 Confirmation of Receipt of Assurances from Arthur Andersen LLP dated
April 1, 2002.
___________________________
* 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 August 1999.
****** Incorporated by reference from the current report on Form 8-K file no. 33-82034 filed by the
Registrants with the SEC in January 2001.
******* Incorporated by reference from the current report on Form 8-K file no. 33-82034 filed by the
Registrants with the SEC in November 2001.
42
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the co-registrant has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Bethesda, state of Maryland, on April 1, 2002.
INDIANTOWN COGENERATION, L.P.
Date: April 1, 2002 /s/ John R. Cooper
-----------------------------------
Name: John R. Cooper
Title: Chief Financial Officer,
Principal Accounting Officer
and Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Form 10-K has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ P. Chrisman Iribe Member of Board of Control, April 1, 2002
- ---------------------- President and Secretary
P. Chrisman Iribe
/s/ John R. Cooper Chief Financial Officer, April 1, 2002
- ---------------------- Principal Accounting
John R. Cooper Officer and Senior
Vice President
/s/ Thomas J. Bonner Member of Board of Control April 1, 2002
- --------------------
Thomas J. Bonner
/s/ Thomas F. Schwartz Member of Board of Control April 1, 2002
- ----------------------
Thomas F. Schwartz
/s/ Sanford L. Hartman Member of Board of Control April 1, 2002
- ---------------------- and Senior Vice President
Sanford L. Hartman
43
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
co-registrant has duly caused this Form 10-K to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Bethesda, state of
Maryland, on April 1, 2002.
INDIANTOWN COGENERATION
FUNDING CORPORATION
Date: April 1, 2002 /s/ John R. Cooper
-----------------------------------
Name: John R. Cooper
Title: Chief Financial Officer,
Principal Accounting Officer
and Vice President
Pursuant to the requirements of the Securities Act of 1933, this Form 10-K has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date - --------- ----- ---- /s/ P. Chrisman Iribe Director and President April 1, 2002 - ---------------------- P. Chrisman Iribe /s/ John R. Cooper Chief Financial Officer, April 1, 2002 - ---------------------- Principal Accounting John R. Cooper Officer and Vice President
44
45
46
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.*
3.9 Dana Amendment to Amended and Restated Limited Partnership
Agreement of Indiantown Cogeneration, L.P.*****
3.10 Cogentrix Amendment to Amended and Restated Limited Partnership
Agreement of Indiantown Cogeneration, L.P.*****
3.11 Third 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.***
10.2.22 Fourth Amendment to Energy Services Agreement, dated as of January
30, 1996.****
10.2.23 Third Amendment to the Agreement for the Purchase of Firm Capacity
and Energy, dated as of May 17, 2001.******
10.2.24 Third Amendment to Coal Purchase Agreement, dated as of November 2,
2001.*******