10-Q 1 c62283e10-q.txt FORM 10-Q 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X Quarterly report pursuant to Section 13 or 15(d) of the Securities ----- Exchange Act of 1934 Transition report pursuant to Section 13 or 15(d) of the Securities ------ Exchange Act of 1934 For Quarter Ended: MARCH 31, 2001 Commission File Number: 333-84609 ------------------- 333-84609-01 ------------ LSP ENERGY LIMITED PARTNERSHIP LSP BATESVILLE FUNDING CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 22-3422042 Delaware 22-3615403 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 901 Marquette Avenue, Suite 2300 Minneapolis, MN 55402 ------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (612) 373-5300 ------------------- LSP Energy Limited Partnership, LSP Batesville Funding Corporation, 10719 Airline Highway, Baton Rouge, Louisiana, December 31 -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- The Registrant meets the conditions set forth in general instruction H (1) (a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format. ================================================================================ 2 INDEX

1 3 STATEMENTS OF INCOME AND MEMBER'S EQUITY LSP ENERGY LIMITED PARTNERSHIP

See accompanying notes to consolidated financial statements. 2 4 BALANCE SHEETS LSP ENERGY LIMITED PARTNERSHIP

See accompanying notes to consolidated financial statements. 3 5 BALANCE SHEETS LSP ENERGY LIMITED PARTNERSHIP

See accompanying notes to consolidated financial statements. 4 6 STATEMENTS OF CASH FLOWS LSP ENERGY LIMITED PARTNERSHIP (UNAUDITED)

See accompanying notes to consolidated financial statements. 5 7 LSP ENERGY LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS LSP Energy Limited Partnership (the "Partnership") is a Delaware limited partnership formed in February 1996 to develop, construct, own and operate a gas-fired electric generating facility with a design capacity of approximately 837 megawatts, located in Batesville, Mississippi (the "Facility"). The 1% General Partner of the Partnership is LSP Energy, Inc. the 99% Limited Partner of the Partnership is LSP Batesville Holding, Inc. The accompanying unaudited consolidated financial statements have been prepared in accordance with SEC regulations for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accounting policies followed by the Partnership are set forth in Note 1 to the Partnership's financial statements in its annual report on Form 10-K for the year ended December 31, 2000 (Form 10-K). The following notes should be read in conjunction with such policies and other disclosures in the Form 10-k. Interim results are not necessarily indicative of results for a full year. In the opinion of management, the accompanying unaudited interim financial statements contain all material adjustments necessary to present fairly the consolidated financial position of the Partnership as of March 31, 2001 and December 31, 2000, the results of its operations for the three months ended March 31, 2001 and 2000, and its cash flows and members' equity for the three months ended March 31, 2001 and 2000. 1 - BUSINESS DEVELOPMENT In January 2001, 49% of the Partnership was sold to NRG Energy, Inc. ("NRG"). In March 2001, the remaining 51% interest was sold to NRG. As of March 31, 2001, the assets and liabilities of the Partnership have not been adjusted to reflect the purchase accounting adjustments for the NRG acquisition. In addition, the historical equity accounts of the partnership are presented in the March 31, 2001 balance sheet. 2 - PROPERTY, PLANT AND EQUIPMENT, NET Property, Plant and Equipment consisted of:

3 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES On January 1, 2001, the Partnership adopted Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133), as amended by SFAS No. 137 and SFAS No. 138. SFAS No. 133 requires the Partnership to record all derivatives on the balance sheet at fair value. Changes in the fair value of non-hedge derivatives will be immediately recognized in earnings. Changes in fair values of derivatives accounted for as hedges will either be recognized in earnings as offsets to the changes in fair value of related hedged assets, liabilities and firm commitments or, for forecasted transactions, deferred and recorded as a component of other accumulated comprehensive income until the hedged transactions occur and are recognized in earnings. There was no effect of SFAS No. 133 upon adoption on January 1, 2001 or during the quarter ended March 31, 2001. 6 8 STATEMENTS OF OPERATIONS AND MEMBER'S DEFICIT LSP BATESVILLE FUNDING CORPORATION

See accompanying notes to consolidated financial statements. 7 9 BALANCE SHEETS LSP BATESVILLE FUNDING CORPORATION

See accompanying notes to consolidated financial statements. 8 10 BALANCE SHEETS LSP BATESVILLE FUNDING CORPORATION

See accompanying notes to consolidated financial statements. 9 11 STATEMENTS OF CASH FLOWS LSP BATESVILLE FUNDING CORPORATION (UNAUDITED)

See accompanying notes to consolidated financial statements. 10 12 LSP BATESVILLE FUNDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS LSP Batesville Funding Corporation ("Funding") is a Delaware corporation established on August 3, 1998. Funding's business purpose is limited to maintaining its organization and activities necessary to facilitate the acquisition of financing by the Partnership from the institutional debt market and to offer debt securities. On May 21, 1999, the Partnership and Funding issued two series of senior secured bonds. Funding is wholly owned by LSP Batesville Holding, LLC ("Holding"), a Delaware limited liability company. The accompanying unaudited consolidated financial statements have been prepared in accordance with SEC regulations for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accounting policies followed by Funding are set forth in Note 1 to Funding's financial statements in its annual report on Form 10-K for the year ended December 31, 2000 (Form 10-K). The following notes should be read in conjunction with such policies and other disclosures in the Form 10-K. Interim results are not necessarily indicative of results for a full year. In the opinion of management, the accompanying unaudited interim financial statements contain all material adjustments necessary to present fairly the consolidated financial position of Funding as of March 31, 2001 and December 31, 2000, the results of its operations for the three months ended March 31, 2001 and 2000, and its cash flows and members' equity for the three months ended March 31, 2001 and 2000. 1 - BUSINESS DEVELOPMENT In January 2001, 49% of Funding was sold to NRG Energy, Inc. ("NRG"). In March 2001, the remaining 51% interest was sold to NRG. As of March 31, 2001, the assets and liabilities of Funding have not been adjusted to reflect the purchase accounting adjustments for the NRG acquisition. In addition, the historical equity accounts of Funding are presented in the March 31, 2001 balance sheet. 11 13 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's Discussion and Analysis of Financial Condition is omitted per conditions as set forth in General Instructions H (1) (a) and (b) of Form 10-Q for wholly owned subsidiaries. It is replaced with management's narrative analysis of the results of operations as permitted by General Instructions H (2) (a) of Form 10-Q for wholly owned subsidiaries (reduced disclosure format). This analysis will primarily compare the Partnership's revenue and expense items for the quarter ended March 31, 2001 with the quarter ended March 31, 2000. Funding has nominal assets, and does not conduct any operations, and therefore will be excluded from this analysis. RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2001 COMPARED TO THE QUARTER ENDED MARCH 31, 2000 OPERATING REVENUES For the quarter ended March 31, 2001, the Partnership had total revenues of $11.4 million. The Partnership had no revenues for the quarter ended March 31, 2000, as commercial operations did not begin until August 2000. OPERATING COSTS AND EXPENSES Operating costs were $2.6 million for the quarter ended March 31, 2001, which is an increase of $1.9 million, or 306.8% over the same period in 2000. The increase is due to commercial operations not beginning until August 2000. Operating costs consisted of expenses for fuel, and plant operations and maintenance. The $0.6 million of operating costs recorded during the quarter ended March 31, 2000 related to testing activities which were conducted prior to the commencement of commercial activities. DEPRECIATION Depreciation costs were $3.6 million for the quarter ended March 31, 2001. The depreciation expense was primarily related to the acquisition costs of the power generation facility, which is being depreciated over thirty years. Depreciation represents 31.3% of revenues for the quarter ended March 31, 2001. There was no depreciation expense for the quarter ended March 31, 2000, as the power generation facility was not placed in service until August 2000. INTEREST EXPENSE Interest expense for the quarter ended March 31, 2001 was $6.4 million, which is an increase of $6.2 million from the same period in 2000. The increase in interest expense is due to the discontinuance of interest capitalization. Interest expense was capitalized as a component of construction in progress until August 2000. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES On January 1, 2001, the Partnership adopted Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133), as amended by SFAS No. 137 and SFAS No. 138. SFAS No. 133 requires the Partnership to record all derivatives on the balance sheet at fair value. Changes in the fair value of non-hedge derivatives will be immediately recognized in earnings. Changes in fair values of derivatives accounted for as hedges will either be recognized in earnings as offsets to the changes in fair value of related hedged assets, liabilities and firm commitments or, for forecasted transactions, deferred and recorded as a component of other accumulated comprehensive income until the hedged transactions occur and are recognized in earnings. There was no effect of SFAS No. 133 upon adoption on January 1, 2001 or during the quarter ended March 31, 2001. FORWARD-LOOKING STATEMENTS Certain statements included in this report are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. While the Company believes that the expectations expressed in such forward-looking statements are reasonable, The Partnership or Funding can give no assurances that these expectations will prove to have been correct. In addition to any assumptions and other factors referred to 12 14 specifically in connection with such forward-looking statements, factors that could cause the actual results to differ materially from those contemplated in any forward-looking statements include, among others, the following: o government, statutory, regulatory or administrative changes or initiatives affecting the Partnership, Funding or the Power Facility; o operating risks, including equipment failure, unusual weather conditions, environmental compliance issues, dispatch levels for the Power Facility, availability of the Power Facility, heat rate and output, transmission credits and the amounts and timing of revenues and expenses; o the cost and availability of fuel and transmission service for the Power Facility; o the enforceability of the long-term power purchase agreements for the Power Facility; o the ongoing creditworthiness of the purchasers of power from the Power Facility; o competition from other power plants, including new plants that may be developed in the future; o financial or regulatory accounting principles or policies imposed by the Financial Accounting Standards Board, the Securities and Exchange Commission, the Federal Energy Regulatory Commission and similar entities with regulatory oversight; o cost and other effects of legal and administrative proceedings, settlements, investigations and claims; and o other business or investment considerations that may be disclosed from time to time in the Partnership's and Funding's Securities and Exchange Commission filings or in other publicly disseminated written documents. The Partnership and Funding undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors that could cause actual results to differ materially from those contemplated in any forward-looking statements included in this Form 10-Q should not be construed as exhaustive. 13 15 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There are no pending material legal proceedings to which the Partnership or Funding is a party or to which any of the Partnership's or fundings property is subject. 14 16 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS None (B) REPORTS ON FORM 8-K: None 15 17 SIGNATURES 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. LSP Energy Limited Partnership (Registrant) By: LSP Energy, Inc. Its: General Partner /s/ Craig A. Mataczynski ----------------------------------------- Craig A. Mataczynski, President /s/ Brian B. Bird ----------------------------------------- Brian B. Bird, Treasurer (Principal Financial Officer) LSP Batesville Funding Corporation (Registrant) /s/ Craig A. Mataczynski ----------------------------------------- Craig A. Mataczynski, President /s/ Brian B. Bird ----------------------------------------- Brian B. Bird, Treasurer (Principal Financial Officer) Date: May 14, 2001 ------------------------- 16

LSP ENERGY LTD PARTNERSHIP 10-Q