SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2002
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)-280-6800
(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.
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Indiantown Cogeneration, L.P. and Subsidiary
1. ORGANIZATION AND BUSINESS:
5
The net profits and losses of the Partnership are currently allocated to
Toyan, Palm, IPILP, and Thaleia (collectively, the "Partners") based on the
following ownership percentages:
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 21, 1998, November 16, 1998,
June 4, 1999, September 21, 1999, and November 24, 1999.
6
Currently, NEG is experiencing liquidity problems due to the deterioration
in PG&E Corporation's credit position, the Utility's bankruptcy and the
downturn in the energy industry. On July 31, 2002 and August 5, 2002, S&P
and Moody's, respectively, downgraded NEG's ratings, as previously reported. On
October 8, 2002, October 16, 2002 and October 18, 2002, Moody's further
downgraded the senior unsecured debt rating, issuer rating and syndicated bank
credit facilities of NEG. Moody's current rating of NEG is "B3". On October 11,
2002, S&P further downgraded certain of NEG's debt facilities. S&P's
current rating of NEG is "B-". The result of these downgrades has left the
credit ratings of NEG and its debt instruments below investment grade. Both
S&P and Moody's credit ratings assigned to NEG and its affiliates are under
review for possible further downgrade. The credit rating agency action has had
no material impact on the financial condition or results of operations of the
Partnership.
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Property, Plant and Equipment
8
Adoption of New Accounting Pronouncements
9
In 2002, deposits totaling $2,710,000 were paid to General Electric
International, Inc. for stator bars and long lead time equipment to perform full
repairs to the generator during the 2002 fall scheduled outage. As of September
30, 2002, an additional $1,740,000 was committed to be paid by the Partnership
for the repairs, which started on September 18, 2002 and were completed on
November 7, 2002. The Facility was returned to service on November 10, 2002 on
schedule and at full rated capacity.
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Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
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Results of Operations
12
For the nine months ended September 30, 2002, the Partnership had total
operating revenues of approximately $122.8 million as compared to $137.6 million
for the corresponding period in the prior year. The $14.8 million decrease in
operating revenue is primarily due to lower energy revenue resulting from the
decrease in the index used to adjust the unit energy price paid by FPL and from
decreased capacity bonus payments due to the lower CBF resulting from decreased
availability primarily caused by boiler tube leaks and repairs to the generator.
13
Net cash used in investing activities for the nine months ended September
30, 2002 was approximately $18.0 million primarily due to an increase in
investments held by the trustee, partially offset by capital expenditures. This
compares to an increase in net cash used for investing activities for the nine
months ended September 30, 2001 of approximately $25.7 million primarily driven
by capital expenditures and an increase in investments held by the trustee.
14
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.
As of September 30, 2002, the Partnership has made semi-annual principal
installments totaling $28,404,234 for the A-9 series, which does not fully
mature until December 15, 2010.
15
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. The Partnership has been unable to find an issuer to
replace BNP Paribas which meets the credit requirements under the Indenture.
Pursuant to the terms of the Disbursement Agreement, available cash flows are
required 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, which is $29,925,906. No cash flows have been available to make
such deposits and therefore no funds have been deposited as of September 30,
2002.
16
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." This statement eliminates the current requirement that gains and
losses on debt extinguishment must be classified as extraordinary items in the
income statement. Instead, such gains and losses will be classified as
extraordinary items only if they are deemed to be unusual and infrequent, in
accordance with the current GAAP criteria for extraordinary classification. In
addition, SFAS 145 eliminates an inconsistency in lease accounting by requiring
that modifications of capital leases that result in reclassification as
operating leases be accounted for consistent with sale-leaseback accounting
rules. The statement also contains other 46 nonsubstantive corrections to
authoritative accounting literature. The changes related to debt extinguishment
will be effective for fiscal years beginning after May 15, 2002, and the changes
related to lease accounting will be effective for transactions occurring after
May 15, 2002. The Partnership does not expect that implementation of this
statement will have a significant impact on its consolidated financial
statements.
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PART II
Item 5 OTHER INFORMATION
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Indiantown Cogeneration Funding Corporation
PART I FINANCIAL INFORMATION Page No.
Item 1 Financial Statements:
Consolidated Balance Sheets as of September 30, 2002 (Unaudited) and
December 31, 2001.....................................................1
Consolidated Statements of Operations for the
Three Months and Nine Months Ended September 30, 2002 (Unaudited)
and September 30, 2001 (Unaudited)................................3
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2002 (Unaudited) and September 30, 2001 (Unaudited)....4
Notes to Consolidated Financial Statements (Unaudited) ..................5
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations..............................11
Item 4 Controls and Procedures.............................................17
PART II OTHER INFORMATION
Item 5 Other Information...................................................18
Item 6 Exhibits and Reports on Form 8K.....................................19
Signatures.................................................................20
PART I
FINANCIAL INFORMATION
Indiantown Cogeneration, L.P. and Subsidiary
Consolidated Balance Sheets
As of September 30, 2002 and December 31, 2001
September 30, December 31,
ASSETS 2002 2001
- --------------------------------------------------------------- ----------------------- ---------------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 275,124 $ 331,956
Accounts receivable-trade 11,935,677 14,443,374
Inventories 1,637,216 259,282
Prepaids 1,086,093 981,571
Deposits 2,777,561 44,450
Investments held by Trustee, including restricted funds
of $18,608,510 and $2,666,539, respectively
27,494,615 9,572,996
----------------------- ---------------------
Total current assets 45,206,286 25,633,629
----------------------- ---------------------
INVESTMENTS HELD BY TRUSTEE,
restricted funds 15,526,447 15,502,121
DEPOSITS 181,642 171,737
PROPERTY, PLANT & EQUIPMENT:
Land 8,582,363 8,582,363
Electric and steam generating facilities 702,212,212 702,175,087
Less accumulated depreciation (107,023,181) (95,613,164)
----------------------- ---------------------
Net property, plant & equipment 603,771,394 615,144,286
----------------------- ---------------------
FUEL RESERVE 5,180,853 4,059,534
DEFERRED FINANCING COSTS, net of accumulated amortization of
$46,122,697 and $45,503,768, respectively
14,064,731 14,683,148
----------------------- ---------------------
Total assets $ 683,931,353 $ 675,194,455
======================= =====================
The accompanying notes are an integral part of these consolidated financial statements.
Indiantown Cogeneration, L. P. and Subsidiary
Consolidated Balance Sheets
As of September 30, 2002 and December 31, 2001
September 30, December 31, 2001
LIABILITIES AND PARTNERS' CAPITAL 2002
- -------------------------------------------------------------- --------------------- ----------------------
(Unaudited)
CURRENT LIABILITIES:
Accrued payables/liabilities $ 8,483,472 $ 11,474,326
Accrued interest 15,253,936 2,324,178
Current portion - First Mortgage Bonds 13,013,247 11,460,407
Current portion lease payable - railcars 376,279 358,575
--------------------- ----------------------
Total current liabilities 37,126,934 25,617,486
--------------------- ----------------------
LONG TERM DEBT:
First Mortgage Bonds 424,824,519 432,107,562
Tax Exempt Facility Revenue Bonds 125,010,000 125,010,000
Lease payable - railcars 3,302,348 3,584,963
--------------------- ----------------------
Total long term debt 553,136,867 560,702,525
--------------------- ----------------------
Total liabilities 590,263,801 586,320,011
--------------------- ----------------------
PARTNERS' CAPITAL:
Toyan Enterprises 28,147,102 26,706,773
Palm Power Corporation 9,366,755 8,887,444
Indiantown Project Investment Partnership 18,686,675 17,730,450
Thaleia 37,467,020 35,549,777
--------------------- ----------------------
--------------------- ----------------------
Total partners' capital 93,667,552 88,874,444
--------------------- ----------------------
Total liabilities and partners' capital $ 683,931,353 $ 675,194,455
===================== ======================
The accompanying notes are an integral part of these consolidated financial statements.
Indiantown Cogeneration, L.P. and Subsidiary
Consolidated Statements of Operations
For the Three Months and Nine Months Ended September 30, 2002 and September 30, 2001
Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
September 30, 2002 September 30, 2001 September 30, 2002 September 30, 2001
------------------------ ---------------------- --------------------- --------------------
Operating Revenues: (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Electric capacity and capacity bonus revenue
$ 28,324,596 $31,050,188 $84,982,573 $93,234,527
Electric energy revenue 12,045,461 14,880,333 37,563,310 44,181,448
Steam revenue 61,388 41,973 208,189 235,437
----------------------- ---------------------- -------------------- --------------------
Total operating revenues 40,431,445 45,972,494 122,754,072 137,651,412
----------------------- ---------------------- -------------------- --------------------
Cost of Sales:
Fuel and ash 14,160,684 14,866,474 45,411,958 46,623,296
Operating and maintenance 4,466,100 4,918,801 13,783,742 14,383,730
Depreciation 3,803,374 3,798,397 11,410,018 11,383,269
----------------------- ---------------------- -------------------- --------------------
Total cost of sales 22,430,158 23,583,672 70,605,718 72,390,295
----------------------- ---------------------- -------------------- --------------------
Gross Profit 18,001,287 22,388,822 52,148,354 65,261,117
----------------------- ---------------------- -------------------- --------------------
Other Operating Expenses:
General and administrative 713,518 758,755 2,318,789 3,119,801
Insurance and taxes 1,728,067 1,700,636 5,175,537 5,006,646
----------------------- ---------------------- -------------------- --------------------
Total other operating expenses 2,441,585 2,459,391 7,494,326 8,126,447
----------------------- ---------------------- -------------------- --------------------
Operating Income 15,559,702 19,929,432 44,654,028 57,134,670
Non-Operating Income (Expenses):
Interest expense (13,416,695) (14,233,047) (40,745,458) (42,340,721)
Interest/Other income (expense) 313,151 370,830 884,538 1,350,586
----------------------- ---------------------- -------------------- --------------------
Net non-operating expense (13,103,544) (13,862,217) (39,860,920) (40,990,135)
----------------------- ---------------------- -------------------- --------------------
Net Income $2,456,158 $6,067,214 $4,793,108 $16,144,535
======================= ====================== ==================== ====================
The accompanying notes are an integral part of these consolidated financial statements.
Indiantown Cogeneration, L.P. and Subsidiary
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2002 and 2001
Nine Months Nine Months
Ended Ended
September 30, September 30,
2002 2001
-------------------- ----------------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,793,108 $ 16,144,535
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 12,028,947 12,001,686
Loss on disposal of assets - 609,067
Decrease in accounts receivable 2,507,697 266,675
Increase in inventories and fuel reserves (2,499,253) (206,584)
Increase in deposits and prepaids (2,847,538) (417,600)
Increase in accounts payable, accrued liabilities and
accrued interest 9,938,904 15,120,038
-------------------- ----------------------
Net cash provided by operating activities 23,921,865 43,517,817
-------------------- ----------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant & equipment (37,638) (2,489,075)
Increase in investment held by trustee (17,945,945) (23,254,304)
-------------------- ----------------------
Net cash used in investing activities (17,983,583) (25,743,379)
-------------------- ----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of bonds (5,730,203) (5,570,448)
Capital distribution - (12,400,000)
Decrease in lease payable (264,911) (246,463)
-------------------- ----------------------
-------------------- ----------------------
Net cash used in financing activities (5,995,114) (18,216,911)
-------------------- ----------------------
-------------------- ----------------------
CHANGE IN CASH AND CASH EQUIVALENTS (56,832) (442,473)
CASH and CASH EQUIVALENTS, beginning of year 331,956 821,955
-------------------- ----------------------
CASH and CASH EQUIVALENTS, end of period $ 275,124 $ 379,482
==================== ======================
The accompanying notes are an integral part of these consolidated financial statements.
Notes to Consolidated Financial Statements
As of September 30, 2002
(Unaudited)
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. 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% 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.
Toyan 30.05%
Palm 10%*
IPILP 19.95%
Thaleia 40%*
*Now beneficially owned by Cogentrix.
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.
In December 2000, and in January and February 2001, PG&E Corporation
and NEG completed a corporate restructuring that 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 restructuring was
completed, 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.
On October 8, 2002, Moody's stated that in conjunction with the downgrade
of NEG it had placed the Partnership's debt under review for possible downgrade.
On October 15, 2002, S&P stated that the recent downgrade of NEG will not
have an effect on the rating of the Partnership's debt at this time. S&P's
rating of the Partnership's debt is "BBB-". On November 5, 2002, Moody's issued
an opinion update changing the rating outlook of the Partnership's debt to
"under review for possible downgrade" from "negative outlook". Moody's rating of
the Partnership's debt is "Baa3".
2. BASIS OF PRESENTATION:
Management believes that the accompanying unaudited Consolidated Financial
Statements reflect all adjustments that are necessary to present a fair
statement of the consolidated financial position and results of operations for
the interim periods. All material adjustments are of a normal recurring nature
unless otherwise disclosed in this Report on Form 10-Q. Results of operations
for interim periods are not necessarily indicative of results to be expected for
a full year.
This quarterly report should be read in conjunction with the Partnership's
Consolidated Financial Statements and Notes to Consolidated Financial Statements
included in its 2001 Annual Report on Form 10-K and its other reports filed with
the Securities and Exchange Commission (SEC) since the 2001 Annual Report on
Form 10-K was filed.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions. These estimates and assumptions affect the reported
amounts of revenue, expenses, assets and liabilities, and the disclosure of
contingencies. Actual results could differ from these estimates.
Investments Held by Trustee
The investments held by trustee represent bond and equity proceeds and
revenue funds held by a bond trustee/disbursement agent and are carried at cost,
which approximates market. 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 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
in long-term assets in the accompanying balance sheets.
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 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.
Derivative Financial Instruments
The Partnership adopted SFAS No. 133, entitled, 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. Based on the Partnership's
current analysis, the commodity contracts held by the Partnership are exempt
from the requirements of SFAS No. 133.
In June 2001, the FASB issued SFAS No. 141, entitled, Business
Combinations. This statement prohibits the use of the pooling-of-interests
method of accounting for business combinations initiated after June 30, 2001 and
applies to all business combinations accounted for under the purchase method
that are completed after June 30, 2001. This statement was adopted on January 1,
2002, and did not have an impact on the Partnership's consolidated financial
statements.
Also in June 2001, the FASB issued SFAS No. 142, entitled, Goodwill and
Other Intangible Assets. This statement eliminates the amortization of goodwill,
and requires goodwill to be reviewed periodically for impairment. This statement
also requires the useful lives of previously recognized intangible assets to be
reassessed and the remaining amortization periods to be adjusted accordingly.
This statement is effective for fiscal years beginning after December 15, 2001,
for all goodwill and other intangible assets recognized on the Partnership's
consolidated balance sheets at that date, regardless of when the assets were
initially recognized. This statement was adopted on January 1, 2002, and did not
have an impact on the Partnership's consolidated financial statements.
In August 2001, the FASB issued SFAS No. 144, entitled, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No. 144 supercedes SFAS No.
121, entitled, 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 statement is effective for fiscal years
beginning after December 15, 2001. This statement was adopted on January 1,
2002, and did not have an impact on the Partnership's consolidated financial
statements.
3. DEPOSITS:
In 1991, in accordance with the Planned Unit Development Zoning Agreement
between the Partnership and Martin County, the Partnership deposited $1,000,000
in trust with the Board of County Commissioners of Martin County (the "PUD
Trustee"). Income from this trust will be used solely for projects benefiting
the community of Indiantown. On July 23, 2025, the PUD Trustee is required to
return the deposit to the Partnership. As of September 30, 2002 and December 31,
2001, estimated present value of this deposit was $181,642 and $171,737,
respectively. The remaining balance has been included in property plant, and
equipment as part of total construction expenses.
4. LETTERS OF CREDIT:
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. 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. The
Partnership has been unable to find an issuer to replace BNP Paribas which meets
the credit requirements under the Indenture. Pursuant to the terms of the
Disbursement Agreement, available cash flows are required 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, which is
$29,925,906. No cash flows have been available to make such deposits and
therefore no funds have been deposited as of September 30, 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
and the remaining letters of credit will be issued when required under the
Project Contracts, subject to conditions contained in such Letter of Credit and
Reimbursement Agreement. As of September 30, 2002, 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 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 current amount of these letters of credit is
$13.1 million, which, if not renewed 30 days prior to expiration, may be drawn
and will convert into letter of credit loans. The Partnership was notified on
November 1, 2002 by LDC of its intention to draw on the $10.0 million letter of
credit, which will be deposited into a security escrow account on November 14,
2002 and will be included in the long-term liability section of the balance
sheet in the fourth quarter. The principal amount of this seven year term loan
is payable in fourteen semi-annual installments with a prepayment provision of
any outstanding loan amount before cash would be available for distribution to
the Partners.
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Consolidated Financial Statements of the Partnership and the notes thereto
included elsewhere in this report.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements included herein are forward-looking statements
concerning the Partnership's operations, economic performance and financial
condition. Such statements are subject to various risks and uncertainties.
Actual results could differ materially from those currently anticipated due to a
number of factors, including general business and economic conditions; the
performance of equipment; levels of dispatch; the receipt of certain capacity
and other fixed payments; and electricity prices.
General
The Partnership is primarily engaged in the ownership and operation of a
non-utility electric generating facility. From its inception and until December
21, 1995, the Partnership was in the development stage and had no operating
revenues or expenses. On December 22, 1995 the Facility commenced commercial
operation. As of September 30, 2002, the Partnership had approximately $603.8
million of property, plant and equipment (net of accumulated depreciation)
consisting primarily of purchased equipment, construction related labor and
materials, interest during construction, financing cost, and other costs
directly associated with the construction of the Facility. For the nine months
ended September 30, 2002, the Partnership had total operating revenues of
approximately $122.8 million, total operating costs of approximately $78.1
million, and total net interest expenses of approximately $39.9 million,
resulting in net income of approximately $4.8 million.
The Partnership's fuel supplier is in bankruptcy. Please see Part II, Item
5, Other Information, for a description of the bankruptcy and the Partnership's
actions in respect of the bankruptcy.
The Partnership has obtained all material environmental permits and
approvals required as of September 30, 2002, in order to continue the operation
of the Facility. Certain of these permits and approvals are subject to periodic
renewal. Certain additional permits and approvals will be required in the future
for the continued operation of the Facility. The Partnership is not aware of any
technical circumstances that would prevent the issuance of such permits and
approvals or the renewal of currently existing permits.
For the nine months ending September 30, 2002 and 2001, the Facility
achieved an average Capacity Billing Factor ("CBF") of 89.49% and 96.69%,
respectively. The CBF measures the overall availability of the Facility, but
gives a heavier weighting to on-peak availability. The lower CBF in 2002
resulted from decreased availability in the fall of 2001 primarily caused by
boiler tube leaks and repairs to the generator, which required the Facility to
be out of service for eleven days. Repairs to the generator started on September
18, 2002 and were completed on November 7, 2002. The Facility was returned to
service on November 10, 2002 on schedule and at full rated capacity. For the
nine months ended September 30, 2002 and 2001, respectively, this resulted in
earning monthly capacity payments aggregating $85.0 million and $84.8 million.
In addition to the monthly capacity payments, the Partnership is entitled to
capacity bonus payments if the CBF, at the end of each month, exceeds certain
levels. Since the CBF was below these levels due to the decreased availability
in the fall of 2001, no bonus has been received in 2002 compared to $8.4 million
in the same period in 2001.
During the nine months ended September 30, 2002, the Facility was
dispatched by FPL and generated 1,704,657 megawatt-hours compared to 1,879,194
megawatt-hours during the same period in 2001. The decrease in 2002 was due to a
scheduled outage, which began on September 15, 2002. The monthly dispatch rate
for the first nine months of 2002 ranged from 78% to 97%, as compared to a range
of 78% to 95% for the corresponding period in 2001.
Net income for the nine months ended September 30, 2002, was approximately
$4.8 million compared to the net income of approximately $16.1 million for the
corresponding period in the prior year. The $11.3 million decrease is primarily
attributable to not receiving monthly capacity bonus payments in 2002 as
compared to the receipt of $8.4 million in payments in 2001, due to the lower
CBF resulting from decreased availability in the fall of 2001. Additionally,
there was a decrease in net energy margins of $5.4 million. The deterioration
was due in part to higher costs of coal of $3.8 million under the amended
contract for coal supply (see Part II, Item 5, Coal Supplier Bankruptcy) and a
decrease in the index used to adjust quarterly the mine coal component of the
unit energy price paid by FPL under the Power Purchase Agreement ("PPA"). The
index decrease reduced energy revenue by $2.0 million, but was partially offset
by reduced net fuel cycle costs of $0.4 million as a result of generating fewer
mega-watt hours. Offsetting these variances is a decrease in general and
administrative costs of $0.8 million due to reduced legal costs incurred, a
decrease in operating and maintenance costs of $0.6 million and a decrease in
net non-operating expenses of $1.1 million. See below for variation of
non-operating expense variation.
Net income for the three months ended September 30, 2002 was approximately
$2.5 million compared to the net income of approximately $6.1 million for the
corresponding period in the prior year. The $3.6 million decrease is primarily
attributable to not receiving monthly capacity bonus payments of $2.7 million in
2002 and a decrease in net energy margins of $2.1 million resulting from the
higher cost of coal and lower unit energy price per mega-watt hour. This is
offset by lower operating and maintenance costs of $0.5 million and lower
non-operating expenses of $0.7 million.
Operating Revenues
For the nine months ended
September 30, 2002 September 30, 2001
Revenues $ 122.8 million $ 137.6 million
KWhs 1,704,657,000 1,879,194,000
Average Capacity Billing Factor 89.49% 96.69%
Average Dispatch Rate 88.56% 89.11%
Cost of Sales
Costs of sales for the nine months ended September 30, 2002, were
approximately $70.6 million on sales of 1,704,657 MWhs as compared to $72.4
million on sales of 1,879,194 MWhs for the corresponding period in the prior
year. The overall cost of fuel and ash decreased $1.2 million due to lower
dispatch causing lower fuel consumption; however, the cost per ton of coal
increased as a result of the amended coal purchase agreement, resulting in a
higher cost per mega-watt hour generated. There was also a decrease in operating
and maintenance costs of $0.6 million primarily due to baghouse bag replacements
in 2001.
Non-Operating Income (Expense)
Net interest expense for the nine months ended September 30, 2002, was
approximately $39.9 million compared to $41.0 million for the same period in the
prior year. June 2002 and December 2001 principal payments of Series A-9 of the
first mortgage bonds decreased interest expense by approximately $1.6 million.
This was offset by reduced interest income earned of $0.5 million in 2002 as
compared to the corresponding period in 2001 due to lower rates on investments
held by the trustee.
Liquidity and Capital Resources
Net cash provided by operating activities for the nine months ended
September 30, 2002 was approximately $23.9 million as compared to $43.5 million
for the corresponding period in 2001. The decrease is primarily driven by the
reduction in net income, a decrease in 2002 in accrued liabilities for a payment
of 2001 property taxes processed in March 2002, an increase in coal inventory,
an increase in deposits for generator parts and repairs, and the effect of coal
invoices paid net ten days after receipt of each shipment in accordance with the
amended coal purchase agreement. Previously, coal invoices were paid twenty days
after receipt of each invoice for all coal loaded for delivery during the
preceding month.
Net cash used in financing activities for the nine months ended September
30, 2002 and 2001 was $6.0 million and $18.2 million, respectively. A capital
distribution of $12.4 million was made in 2001; however, no distributions were
made in 2002.
On October 8, 2002, Moody's stated that in conjunction with the downgrade
of NEG it had placed the Partnership's debt under review for possible downgrade.
On October 15, 2002, S&P stated that the recent downgrade of NEG will not
have an effect on the rating of the Partnership's debt at this time. S&P's
rating of the Partnership's debt is "BBB-". On November 5, 2002, Moody's issued
an opinion update changing the rating outlook of the Partnership's debt to
"under review for possible downgrade" from "negative outlook". Moody's rating of
the Partnership's debt is "Baa3". There are no credit rating requirements in the
Partnership's financing agreements.
On November 22, 1994 the Partnership and ICL Funding issued first mortgage
bonds in an aggregate principal amount of $505 million (the "First Mortgage
Bonds"), $236.6 million of which bear an average interest rate of 9.26% and
$268.4 million of which bear an interest rate of 9.77%. Concurrently with the
Partnership's issuance of its First Mortgage Bonds, the Martin County Industrial
Development Authority issued $113 million of Industrial Development Refunding
Revenue Bonds (Series 1994A) which bear an interest rate of 7.875% (the "1994A
Tax Exempt Bonds"). A second series of tax exempt bonds (Series 1994B) in the
approximate amount of $12 million, which bear an interest rate of 8.05%, were
issued by the Martin County Industrial Development Authority on December 20,
1994 (the "1994B Tax Exempt Bonds" and, together with the 1994A Tax Exempt
Bonds, the "1994 Tax Exempt Bonds"). The First Mortgage Bonds and the 1994 Tax
Exempt Bonds are hereinafter collectively referred to as the "Bonds."
Certain proceeds from the issuance of the First Mortgage Bonds were used to
repay $421 million of the Partnership's indebtedness and financing fees and
expenses incurred in connection with the development and construction of the
Facility and the balance of the proceeds were deposited in various restricted
funds that are being administered by an independent disbursement agent pursuant
to trust indentures and a disbursement agreement. Funds administered by such
disbursement agent are invested in specified investments. These funds together
with other funds available to the Partnership were being used: (i) to finance
completion of construction, testing, and initial operation of the Facility; (ii)
to finance construction interest and contingency; and (iii) to provide for
initial working capital.
The Partnership's total borrowings from inception through September 30,
2002 were $769 million. The equity loan of $139 million was repaid on December
26, 1995. As of September 30, 2002, the borrowings included $125 million from
the 1994 Tax Exempt Bonds and all of the available First Mortgage Bond proceeds.
The First Mortgage Bonds have matured as follows:
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
The weighted average interest rate paid by the Partnership on its debt for
the nine months ended September 30, 2002 and 2001, was 9.202% and 9.197%,
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
and the remaining letters of credit will be issued when required under the
Project Contracts, subject to conditions contained in such Letter of Credit and
Reimbursement Agreement. As of September 30, 2002, 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 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 current amount of these letters of credit is
$13.1 million, which, if not renewed 30 days prior to expiration, may be drawn
and will convert into letter of credit loans. The Partnership was notified on
November 1, 2002 by LDC of its intention to draw on the $10.0 million letter of
credit, which will be deposited into a security escrow account on November 14,
2002.
In order to provide for the Partnership's working capital needs, the
Partnership entered into a Revolving Credit Agreement with Credit Suisse dated
as of November 1, 1994. In September 2001, Credit Suisse notified the
Partnership of its intention not to extend the term of the agreement, which
expired on November 22, 2001. The Partnership believes that it has adequate cash
flow from operations to timely fund all of its working capital, capital
expenditures and major maintenance requirements.
See Report on Form 10-K dated December 31, 2001 for qualitative and
quantitative disclosures about market risk regarding the fair value of debt.
Accounting Principles Issued But Not Yet Adopted
In August 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Statements ("SFAS") No. 143, entitled,
Accounting for Asset Retirement Obligations. This statement is effective for
fiscal years beginning after June 15, 2002. SFAS No. 143 provides accounting
requirements for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. Under the
statement, the asset retirement obligation is recorded at fair value in the
period in which it is incurred by increasing the carrying amount of the related
long-lived asset. The liability is accreted to its present value in each
subsequent period and the capitalized cost is depreciated over the useful life
of the related asset. The Partnership is currently evaluating the impact of SFAS
No. 143 on its consolidated financial statements.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," which addresses accounting for
restructuring and similar costs. SFAS No. 146 supersedes previous accounting
guidance, principally Emerging Issues Task Force ("EITF") Issue No. 94-3. This
statement is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002. SFAS No. 146 requires that the liability for
costs associated with an exit or disposal activity be recognized when the
liability is incurred. Under EITF No. 94-3, a liability for an exit cost was
recognized at the date of a company's commitment to an exit plan. SFAS No. 146
also establishes that the liability should initially be measured and recorded at
fair value. The Partnership does not expect that implementation of this
statement will have a significant impact on its consolidated financial
statements.
Item 4 CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Based on an evaluation of the Partnership's disclosure controls and
procedures conducted on October 21, 2002, the Partnership's principal executive
officer and principal financial officer have concluded that such controls and
procedures effectively ensure that information required to be disclosed by the
Partnership in reports the Partnership files or submits under the Securities and
Exchange Act of 1934 is recorded, processed, summarized, and reported, within
the time periods specified in the SEC's rules and forms.
Changes in Internal Controls
There were no significant changes in internal controls or in other factors
that could significantly affect these controls subsequent to the date of their
evaluation.
OTHER INFORMATION
Coal Supplier Bankruptcy
Indiantown Cogeneration, L.P. (Partnership) has a coal purchase agreement
(the "Coal Purchase Agreement") with Lodestar Energy, Inc. (LEI) pursuant to
which LEI supplies all of the coal for the facility.
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 agreement also reduced the amount of ash
the Partnership is required to provide to LEI. 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.
Other than with respect to developments that may have a material impact on
the Partnership or its business operations, the Partnership is under no
obligation nor does it intend to continuously provide updates of the LEI
bankruptcy proceedings. However, copies of all pleadings filed with the
Bankruptcy Court are available from the office of the clerk of the Bankruptcy
Court.
Governmental Approvals
The Partnership has obtained all material environmental permits and
approvals required, as of September 30, 2002, in order to continue commercial
operation of the Facility. Certain of these permits and approvals are subject to
periodic renewal. On October 9, 2002 the Partnership received an order modifying
Conditions of Certification from the Florida Department of Environmental
Protection ("FDEP"), as initially requested by the Partnership on November 10,
2000. That request to the FDEP included changes to surface and groundwater
withdrawals, elimination of a condition requiring ambient air monitoring,
modifications to conform the conditions to the facility's final Prevention of
Significant Deterioration ("PSD") and Title V permits, modification of current
regulatory references and Best Management Practice Plans. 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.
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
a) Reports on Form 8-K:
None
b) Exhibits:
Exhibit
No. Description
- ------- -----------
99.1 Certification of P. Chrisman Iribe, President of Indiantown
Cogeneration, L.P. and Indiantown Cogeneration Funding
Corporation, pursuant to 18 U.S.C. Section 1350.
99.2 Certification of Thomas E. Legro, Vice President, Controller and
Principal Accounting Officer of Indiantown Cogeneration, L.P.,
pursuant to 18 U.S.C. Section 1350.
99.3 Certification of John R. Cooper, Vice President, Treasurer, Chief
Financial Officer and Principal Accounting Officer of Indiantown
Cogeneration Funding Corporation, pursuant to 18 U.S.C. Section
1350.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized
INDIANTOWN COGENERATION, L.P.
(Co-Registrant)
Date: November 14, 2002 /s/ Thomas E. Legro
-------------------------------
Thomas E. Legro
Vice President, Controller and Principal
Accounting Officer
INDIANTOWN COGENERATION FUNDING
CORPORATION
(Co-Registrant)
Date: November 14, 2002 /s/ John R. Cooper
-------------------------------
John R. Cooper
Vice President, Treasurer, Chief Financial
Officer and Principal Accounting Officer
I, P. Chrisman Iribe, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Indiantown
Cogeneration, L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant’s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant’s disclosure
controls and procedures within 90 days prior to the filing date of
this quarterly report (the “Evaluation Date”); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant’s other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant’s auditors and the
audit committee of registrant’s board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant’s auditors any material weaknesses
in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant’s other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 14, 2002
/s/ P. CHRISMAN IRIBE
-----------------------------
P. Chrisman Iribe
President
Indiantown Cogeneration, L.P.
I, Thomas E. Legro, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Indiantown
Cogeneration, L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant’s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant’s disclosure
controls and procedures within 90 days prior to the filing date of
this quarterly report (the “Evaluation Date”); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant’s other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant’s auditors and the
audit committee of registrant’s board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant’s auditors any material weaknesses
in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant’s other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 14, 2002
/s/ THOMAS E. LEGRO
---------------------------------
Thomas E. Legro
Vice President, Controller and Principal
Accounting Officer
Indiantown Cogeneration, L.P.
I, P. Chrisman Iribe, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Indiantown
Cogeneration Funding Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant’s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant’s disclosure
controls and procedures within 90 days prior to the filing date of
this quarterly report (the “Evaluation Date”); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant’s other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant’s auditors and the
audit committee of registrant’s board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant’s auditors any material weaknesses
in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant’s other certifying officers and I have indicated
in this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: November 14, 2002
/s/ P. CHRISMAN IRIBE
-------------------------------
P. Chrisman Iribe
President
Indiantown Cogeneration Funding Corporation
I, John R. Cooper, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Indiantown
Cogeneration Funding Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant’s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant’s disclosure
controls and procedures within 90 days prior to the filing date of
this quarterly report (the “Evaluation Date”); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant’s other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant’s auditors and the
audit committee of registrant’s board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant’s auditors any material weaknesses
in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant’s other certifying officers and I have indicated
in this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: November 14, 2002
/s/ JOHN R. COOPER
----------------------------------
John R. Cooper
Vice President, Treasurer, Chief Financial Officer
and Principal Accounting Officer
Indiantown Cogeneration Funding Corporation