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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15d OF THE
SECURITIES EXCHANGE ACT OF 1934
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN
GENERAL INSTRUCTIONS I (1)(a) AND (b) OF FORM 10-K AND
IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED] For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from
___________ to ____________
Commission File Registrant; State of Incorporation; IRS Employer
Number Address and Telephone Number Identification No.
333-79619 WEST PENN FUNDING LLC 25-1843349
(Exact name of Registrant as specified in
its charter)
(Delaware)
2325B-2 Renaissance Drive
Las Vegas, NV 89119
(702) 895-6752
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if disclosure of delinquent filers 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. [X]
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES [X] NO[ ]
The aggregate market value of the voting and non-voting common equity
held by non- affiliates of the Registrant: None.
DOCUMENTS INCORPORATED BY REFERENCE.
Not applicable.
WEST PENN FUNDING LLC
FORM 10-K ANNUAL REPORT TO
THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED DECEMBER 31, 1999
TABLE OF CONTENTS
Page #
PART I
Item 1. Business..........................................................4
Item 2. Properties........................................................5
Item 3. Legal Proceedings.................................................5
Item 4. Submission of Matters to a Vote of Security Holders...............5
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters........................................................5
Item 6. Selected Financial Data...........................................5
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.........................................6
Item 7A. Quantitative and Qualitative Disclosures About Market Risk........7
Item 8 Financial Statements and Supplementary Data ......................7
Report of Independent Accountants..............................7
Statement of Income and Member's Equity........................7
Statement of Cash Flows........................................8
Balance Sheet..................................................9
Notes to Financial Statements.................................10
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure......................................13
PART III
Item 10. Directors and Executive Officers of the Registrant...............13
Item 11. Executive Compensation...........................................13
Item 12. Security Ownership of Certain Beneficial Owners and
Management....................................................14
Item 13. Certain Relationships and Related Transactions...................14
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..14
Signatures.................................................15
Exhibit Index..............................................16
2
Glossary of Terms and Abbreviations
CAPITAL SUBACCOUNT - An account held by the Trustee under the Indenture
which is funded by a contribution to West Penn Funding LLC by West Penn
Funding Corporation at the date of issuance of each series of transition
bonds.
COMPETITION ACT - The Pennsylvania Electricity Generation Customer Choice
and Competition Act, enacted in Pennsylvania in December 1996.
GENERAL SUBACCOUNT - An account held by the Trustee under the Indenture,
into which ITC remittances by the Servicer are deposited. The Trustee
allocates the funds from the General Subaccount to other subaccounts on the
quarterly payment dates.
INDENTURE - The Indenture entered into by West Penn Funding LLC and the
Trustee, providing for the issuance of transition bonds.
ITC - Intangible Transition Charge, which West Penn has been authorized
by the PUC to impose on customer bills and to collect through a nonbypassable
billing mechanism to recover Qualified Transition Expenses.
ITP - Intangible Transition Property, which is the property right created
under the Competition Act representing the irrevocable right of West Penn
Funding LLC to receive, through ITC, amounts sufficient to recover all
Qualified Transition Expenses.
OVERCOLLATERALIZATION SUBACCOUNT - An account held by the Trustee under
the Indenture, which is funded ratably from collections of ITC over the term
of each series of transition bonds.
PUC - The Pennsylvania Public Utility Commission.
QUALIFIED RATE ORDER - The final order issued by the PUC to West Penn in
November 1998, in connection with West Penn's restructuring filing under the
Competition Act, as supplemented by an August 1999 PUC order.
QUALIFIED TRANSITION EXPENSES - The transition or stranded costs of an
electric utility approved by the PUC for recovery through the issuance of
transition bonds; the costs of retiring existing debt or equity capital of the
electric utility or its holding company parent, including accrued interest and
acquisition or redemption premium, costs of defeasance, and other related
fees, costs and charges, through the issuance of transition bonds or the
assignment, sale or other transfer of ITP; and the costs incurred to issue,
service or refinance the transition bonds, including accrued interest and
acquisition or redemption premium, and other related fees, costs and charges
associated with the transition bonds, or to assign, sell or otherwise transfer
ITP.
RESERVE SUBACCOUNT - An account held by the Trustee under the Indenture,
which consists of remaining funds available after required allocations on the
quarterly payment dates.
SERVICER - West Penn acting in this capacity under the Servicing
Agreement. In this capacity, West Penn calculates, bills and collects ITC, and
maintains applicable accounting records, among other duties.
SERVICING AGREEMENT - The Intangible Transition Property Servicing
Agreement between West Penn, as Servicer, and West Penn Funding LLC, as
Issuer.
3
TRUSTEE - Bankers Trust Company, a New York banking corporation, as
Trustee under the Indenture.
WEST PENN - West Penn Power Company, a Pennsylvania corporation.
WEST PENN FUNDING LLC
ITEM 1. BUSINESS
General
West Penn Funding LLC (the Company) is a Delaware limited liability
company, whose sole member is West Penn Funding Corporation. West Penn Funding
Corporation is a wholly owned subsidiary of West Penn. The Company was
organized in May 1999, for the sole purpose of purchasing and owning ITP,
issuing transition bonds (the Bonds), pledging its interest in ITP and other
collateral to the Trustee under an Indenture between the Company and the
Trustee to collateralize the Bonds, and performing activities that are
necessary to accomplish these purposes. The Company's organizational documents
require it to operate in a manner so that its assets would not be consolidated
with the bankruptcy estate of West Penn or West Penn Funding Corporation in
the event that West Penn or West Penn Funding Corporation becomes subject to a
bankruptcy proceeding.
The only material business conducted by the Company has been the
acquisition of ITP from West Penn Funding Corporation and the issuance in
November 1999 of $600 million of Bonds, Series 1999-A, Class A-1 through Class
A-4. The specific interest rate and maturity of each class of bonds is
specified in Note C of the Notes to Financial Statements. Each series of Bonds
have been registered in the name of Cede & Co., as nominee of the Depository
Trust Company. All of the Bonds were sold to a syndicate of underwriters
managed by Morgan Stanley Dean Witter.
The Company used the proceeds of the issuance of the Bonds to pay
expenses of issuance and to purchase the ITP from West Penn
Funding Corporation. West Penn arranged for the formation of West Penn Funding
Corporation as a bankruptcy remote special purpose entity for the purpose of
holding ITP before the issuance of the first series of the Bonds.
The Company has no employees. West Penn, as Servicer under the Servicing
Agreement, is required to manage, service, administer and make collections of
the ITP. The Servicing Agreement also requires West Penn, as Servicer, to file
adjustment requests on each calculation date, and the Competition Act and the
Qualified Rate Order require the PUC to act upon these requests within
specified time periods. These adjustment requests are based on actual ITC
collections and updated assumptions by the Servicer as to projected future
usage of electricity by customers, expected delinquencies and write-offs, and
future payments and expenses relating to the ITP and the Bonds. The Servicer
has not yet filed any such adjustment request.
Intangible Transition Property
The ITP represents the irrevocable right of West Penn, or its successor
or assignee, to collect a non-bypassable ITC from customers pursuant to the
Qualified Rate Order in accordance with the Competition Act. The Qualified
Rate Order authorized West Penn to securitize up to $670 million of its
stranded costs. West Penn, or any assignee of West Penn to whom ITP is sold,
may issue and sell, in reliance on the Qualified Rate Order, one or more
series of the Bonds, each series in one or more classes, secured by ITP. The
Company acquired the ITP and issued the Bonds in November 1999. The principal
amount of the Bonds, interest, fees, and
4
funding of the Overcollateralization Subaccount will be recovered through ITC
payable by retail consumers of electricity within West Penn's service
territory who receive electric delivery service from West Penn.
ITEM 2. PROPERTIES
The Company has no physical property. Its primary asset is the ITP
described above in Item 1 ("Business - Intangible Transition Property").
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Omitted pursuant to Instruction I of Form 10-K.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(a) Sales of Unregistered Securities. There is no established public
trading market for the Company's equity securities. West Penn Funding
Corporation, which is a wholly owned subsidiary of West Penn, owns all of the
Company's equity. On October 21, 1999, West Penn Funding Corporation
transferred $3 million to the Company as an initial capital contribution. Such
transaction was exempt from registration under the Securities Act of 1933, as
amended, pursuant to Section 4(2). The Company has made no other sales of
unregistered securities.
(b) Restriction on Dividends. The Company may not make any payments,
distributions or dividends to any member of the Company with respect to its
membership interest in the Company except in accordance with the Indenture.
(c) Bondholders. As of December 31, 1999 the sole holder of the Bonds was
Cede & Co., as nominee of the Depository Trust Company. The Bonds are not
registered on any national securities exchange and are not traded on any
established trading market.
ITEM 6. SELECTED FINANCIAL DATA
Omitted pursuant to Instruction I of Form 10-K.
5
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following analysis of the results of operations and financial
condition of the Company is in an abbreviated format pursuant to Instruction I
of Form 10-K. Such analysis should be read in conjunction with the financial
statements attached hereto.
As discussed above under Item 1 "Business - General," the Company is a
Delaware limited liability company, whose sole member is West Penn Funding
Corporation, which is a wholly owned subsidiary of West Penn. As discussed in
Note C to Financial Statements, on November 16, 1999, the Company issued the
Bonds and transferred the proceeds in exchange for all rights, title and
interest in the ITP from West Penn Funding Corporation. As the Company was
formed for limited purposes, as discussed under Item 1 "Business - General,"
the income statement effects were limited primarily to revenue from
collections of ITC by the Servicer, interest income earned on the Capital
Subaccount maintained by the Trustee and on temporary investments, interest
expense on the Bonds, amortization of the ITP, servicing fees and other
administrative expenses.
From the period of inception, May 26, 1999, to December 31, 1999, the
income generated from the ITP was approximately $7,502,000. The Company also
earned approximately $6,000 in interest from the Capital Subaccount maintained
by the Trustee and temporary investments. Interest expense of approximately
$5,070,000 consists of interest on the Bonds, amortization of debt issuance
expenses and the discount on the Bonds. The Company also incurred servicing
fees of approximately $104,000 and other administrative fees of $1,000.
The principal amount of the Bonds, interest, fees, and funding of the
Overcollateralization Subaccount will be recovered through ITC payable by
retail consumers of electricity within West Penn's service territory who
receive electric delivery service from West Penn. As part of West Penn's
responsibility as Servicer under the Servicing Agreement, as discussed in Item
1 "Business - General," West Penn remitted to the Trustee $7,438,000 of ITC
collections for the period from November 16, 1999 to December 31, 1999. The
first quarterly payment of Bond principal, interest and all related expenses
will be made by the Trustee on March 27, 2000.
The Company currently anticipates that there will be sufficient revenue
to make interest payments due on the first quarterly payment date, March 27,
2000. However, due to the lag between amounts of ITC billed by West Penn to
its customers and amounts collected from those customers during the initial
period for the implementation of the ITC, after application of the amounts in
the Capital Subaccount, the Company anticipates a shortfall of approximately
$3,000,000 in the scheduled principal payment on that date (which shortfall
does not constitute an Event of Default under the Indenture.)
Under the Competition Act and the Qualified Rate Order, withdrawals from
the Capital Subaccount must be replenished by increases in the ITC. Under the
Servicing Agreement, West Penn, as Servicer, intends to file a request for an
adjustment to the ITC with the PUC on October 1, 2000 to produce additional
revenues sufficient to replenish the Capital Subaccount prior to the December
2001 quarterly payment date. The adjustment will go into effect on January 1,
2001.
6
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
In our opinion, the financial statements listed in the index appearing under
Item 14(a)(1) present fairly, in all material respects, the financial position
of West Penn Funding LLC (the Company) at December 31, 1999, and the results
of its operations and its cash flows from May 26, 1999 (inception date)
through December 31, 1999 in conformity with accounting principles generally
accepted in the United States. These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audit. We conducted our
audit of these statements in accordance with auditing standards generally
accepted in the United States, which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
February 3, 2000
STATEMENT OF INCOME
FROM MAY 26, 1999 INCEPTION
TO DECEMBER 31, 1999
(Thousands of Dollars)
Revenues:
Intangible transition charges........................................ $ 7,502
Interest income...................................................... 6
Total Revenues..................................................... 7,508
Operating Expenses:
Amortization of intangible transition property....................... 2,323
Interest expense..................................................... 4,944
Amortization of debt issuance costs.................................. 126
Administrative and general expense................................... 105
Total operating expenses........................................... 7,498
---------
Operating income................................................... 10
Income tax expense..................................................... 4
--------
Net income............................................................. $ 6
========
________________________________________________________________________________
STATEMENT OF MEMBER'S EQUITY
Balance at May 26, 1999................................................ $ 0
Add:
Member's cash contribution........................................... 3,025
--------
3,025
Deduct:
Net income........................................................... 6
--------
Balance at December 31................................................. $ 3,031
========
See accompanying notes to financial statements.
7
STATEMENT OF CASH FLOWS
FROM MAY 26, 1999 INCEPTION DATE
TO DECEMBER 31, 1999
(Thousands of Dollars)
Cash Flows from Operations:
Net income........................................................... $ 6
Amortization of intangible transition property....................... 2,323
Amortization of debt issuance expenses............................... 126
Changes in certain current assets and liabilities:
Accounts receivable from parent.................................... (7,474)
Interest and taxes accrued......................................... 4,948
Accounts payable to parent......................................... 633
______
562
______
Cash Flows from Investing:
Purchase of intangible transition property...........................(594,941)
_________
(594,941)
Cash Flows from Financing:
Proceeds from issuance of transition bonds........................... 595,363
Equity contribution from member...................................... 3,025
Change in restricted funds......................... ................. (3,006)
_________
595,382
Net Change in Cash and Temporary Cash Investments...................... 1,003
Cash and Temporary Cash Investments at May 26.......................... 0
Cash and Temporary Cash Investments at December 31..................... $ 1,003
Supplemental Cash Flow Information
Cash paid from inception:
Interest........................................................... $ 0
Income taxes....................................................... $ 0
See accompanying notes to financial statements.
8
BALANCE SHEET
DECEMBER 31, 1999
(Thousands of Dollars)
ASSETS
Current Assets:
Cash and temporary cash investments................................. $ 1,003
Accounts receivable from parent..................................... 7,474
Restricted funds.................................................... 3,006
Intangible transition property...................................... 52,779
_________
64,262
Noncurrent Assets:
Intangible transition property...................................... 539,838
Unamortized debt issuance expense................................... 4,453
_________
544,291
Total................................................................. $608,553
LIABILITIES AND MEMBER'S EQUITY
Current Liabilities:
Long-term debt due within one year.................................. $ 49,734
Accounts payable to parent.......................................... 633
Federal and state income taxes accrued.............................. 4
Interest accrued.................................................... 4,944
_________
...................................................................... 55,315
Long-term debt, net of discount....................................... 550,207
_________
Member's Equity....................................................... 3,031
_________
Total................................................................. $608,553
========
See accompanying notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
(These notes are an integral part of the financial statements.)
NOTE A: NATURE OF OPERATIONS
West Penn Funding LLC (the Company), a limited liability company established
under the laws of the State of Delaware, was formed on May 26, 1999. West Penn
Funding Corporation is the sole member of the Company. West Penn Funding
Corporation is a wholly owned subsidiary of West Penn Power Company (West
Penn), an operating electric utility. West Penn is a wholly owned subsidiary
of Allegheny Energy, Inc., a public utility holding company.
The Company was organized for the sole purpose of purchasing and owning
Intangible Transition Property (ITP), issuing Transition Bonds (Bonds),
pledging its interest in ITP and other collateral to the bond trustee, and
performing activities that are necessary, suitable or convenient to accomplish
these purposes. ITP represents the irrevocable right of West Penn, or its
successor or assignee, to collect a non-bypassable Intangible Transition
Charge (ITC) from customers pursuant to a Qualified Rate Order (PUC Order)
issued on November 19, 1998, and supplemented by order dated August 12, 1999,
by the Pennsylvania Public Utility Commission (PUC) in accordance with the
Pennsylvania Electricity Generation Customer Choice Order and Competition Act
(applicable law) enacted in Pennsylvania in December 1996. The PUC Order
authorizes the ITC to be sufficient to recover the principal amount of Bonds
issued by the Company, plus an amount sufficient to provide for any credit
enhancement, to fund any reserves and to pay interest, redemption premiums,
servicing fees and other expenses relating to the Bonds.
West Penn transferred the ITP to West Penn Funding Corporation which sold the
ITP to West Penn Funding LLC.
The Company issued $600.0 million of Bonds in four different classes on
November 16, 1999 (see Note C for additional information). The proceeds were
used to fund the purchase of ITP. The ITP and restricted funds were used to
collateralize the Bonds. Under applicable law, the Bonds are recourse to the
Company and are collateralized on a pro rata basis by the ITP and the equity
and assets of the Company. The source of repayment is the ITC authorized
pursuant to the PUC Order, which charges are collected from West Penn
customers by West Penn, as servicer.
ITC collections are deposited by West Penn with the Company and used to pay
the expenses of the Company, to pay debt service on the Bonds and to fund
credit enhancement for the Bonds. The Company also pledged the capital
contributed by West Penn Funding Corporation to collateralize the debt service
requirements of the Bonds. The Bonds are non-recourse to West Penn Funding
Corporation, West Penn, and Allegheny Energy, Inc.
NOTE B: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates that affect the
reported amounts of assets, liabilities, revenues, expenses, and disclosures
of contingencies during the reporting period.
Actual results could differ from these estimates.
10
Cash and Temporary Cash Investments
For purposes of the statement of cash flows, temporary cash investments with
original maturities of three months or less, generally in the form of
commercial paper, certificates of deposit, and repurchase agreements, are
considered to be the equivalent of cash.
Restricted Funds
Under the Indenture, the Company deposited an amount equal to 0.5% of the
initial principal amount of the Bonds into the "Capital Subaccount" with the
Bond Trustee (Bankers Trust Company, a New York banking corporation). West
Penn Funding Corporation contributed this amount to the Company. This account
is the last account drawn in the event that "General Subaccount" collections
are insufficient to make required allocations. If the "Capital Subaccount" is
used, it will be replenished from the ITC remittances to its original level
through the periodic reconciliation process. Accordingly, the "Capital
Subaccount" is classified as Restricted Funds on the Balance Sheet.
Revenue
The Company records intangible transition charges in the period ITC is billed
to customers by West Penn.
Amortization of Intangible Transition Property
The ITP is being amortized over the life of the Bonds, based on ITC revenues,
interest accruals and other fees.
Amortization of Debt Issuance Costs and Discount on Debt
The costs associated with the issuance of the Bonds have been capitalized and
are being amortized in interest expense over the life of the Bonds utilizing
the effective interest method.
Income Taxes
The Company joins with its Parents and affiliates in filing a consolidated
federal income tax return. The consolidated tax liability is allocated among
the participants generally in proportion to the taxable income of each
participant, except that no subsidiary pays tax in excess of its separate
return tax liability. For the Company, the difference between the effective
tax rate and the statutory tax rate of 35% is not significant.
Comprehensive Income
SFAS No. 130, "Reporting Comprehensive Income," effective for 1998,
establishes standards for reporting comprehensive income and its components
(revenues, expenses, gains, and losses) in the financial statements. The
Company does not have any elements of other comprehensive income to report in
accordance with SFAS No. 130.
NOTE C: LONG-TERM DEBT
In November 1999, the Company issued $600.0 million of Series 1999-A Bonds.
The Bonds consist of four classes. The Company used the proceeds from the
Bonds to purchase ITP from West Penn Funding Corporation. The ITP and other
assets of the Company collateralize the Bonds.
11
Scheduled maturities and interest rates for the Bonds at December 31, 1999,
are:
Initial Class Expected Final Final
Class Bond Rate Principal Payment Date Maturity Date
Balance
($ Thousands)
A-1 6.320% $74,000 June 25, 2001 June 25, 2003
A-2 6.630% 172,000 December 26, 2003 December 26, 2005
A-3 6.810% 198,000 September 25, 2006 September 25, 2008
A-4 6.980% 156,000 June 25, 2008 December 26,2008
Total $600,000
Current Maturities (49,734)
Unamortized Discount (59)
Long-term Debt $550,207
========
The source of repayment is ITC. West Penn is collecting this non-bypassable
charge from its retail customers of electricity. The Servicer deposits
collections of the ITC monthly into a "General Subaccount" maintained by the
Trustee under the Indenture. Each quarter, such monies are used to make
principal and interest payments on the Bonds and pay fees, costs and charges
specified in the Indenture. The Trustee is required to make the first payment
on March 27, 2000. The Indenture also includes a "Reserve Subaccount" that is
maintained for the purpose of retaining any excess amount of ITC collections
and investment earnings not released to the Company. The Indenture also
provides for an "Overcollateralization Subaccount." The overcollateralization
for these securities will be funded over the life of the Series 1999-A Bonds
and is expected to reach 0.5% of the initial principal balance of this series
of transition bonds. Additionally, an amount equal to 0.5% of the initial
principal amount of the Bonds was deposited into the "Capital Subaccount"
under the Indenture on the date of issuance. If amounts available in the
"General Subaccount", "Reserve Subaccount", and the "Overcollateralization
Subaccount" are not sufficient on any payment date to make scheduled payments
specified in the Indenture, the Trustee will draw on amounts in the "Capital
Subaccount." On payment in full of the Bonds, any remaining amounts that
collateralize the Bonds will be released to the Company.
NOTE D: SIGNIFICANT AGREEMENTS AND RELATED PARTY TRANSACTIONS
Under the Servicing Agreement, West Penn is required to manage and administer
the ITP of the Company and to collect the ITC on behalf of the Company. The
Company will pay a maximum annual service fee of $1.25 million to West Penn.
For the period ended December 31, 1999, the Company recorded servicing fees of
$0.10 million.
Debt issuance costs of approximately $4.58 million were incurred and recorded
by the Company during 1999, including $0.53 million incurred by West Penn to
be reimbursed by the Company. The Company will reimburse West Penn for any
additional debt issuance costs it incurs for the transition bonds.
At December 31, 1999, the Balance Sheet includes a receivable from West Penn
of approximately $7.5 million for ITC collections. The Balance Sheet also
includes a payable to West Penn of approximately $0.63 million for servicing
fees and debt issuance costs.
12
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Omitted pursuant to Instruction I of Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Omitted pursuant to Instruction I of Form 10-K.
13
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Omitted pursuant to Instruction I of Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Omitted pursuant to Instruction I of Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements--included in response to Item 8.
Report of Independent Accountants
Statement of Income and Member's Equity for the period May 26, 1999
(inception) to December 31, 1999
Statement of Cash Flows for the period May 26, 1999 (inception) to
December 31, 1999
Balance Sheet at December 31, 1999
2. Financial Statement Schedules.
None.
3. Exhibits.
See Exhibit Index which appears following the Signature page
to this report.
(b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K dated
November 12, 1999 relating to disclosure of the use of
Computational Materials by the underwriters in connection
with the offering of the Bonds.
The Company also filed a Current Report on Form 8-K dated
November 12, 1999 disclosing the opinion of Cravath, Swaine
& Moore relating to the legality of the Bonds.
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
WEST PENN FUNDING LLC
-------------------------
(Registrant)
By /s/ Michael P. Morrell
-------------------------------
Michael P. Morrell, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Title Date
By /s/ Michael P. Morrell
__________________________ President (Principal Executive March 27, 2000
Michael P. Morrell Officer)
By /s/ Keith L. Warchol Treasurer (Principal Financial March 27, 2000
__________________________ Officer and Principal Accounting
Keith L. Warchol Officer)
By /s/ Bruce M. Sedlock Director March 27, 2000
__________________________
Bruce M. Sedlock
By /s/ Terrence A. Burke Director March 27, 2000
__________________________
Terrence A. Burke
By /s/ Thomas C. Sheppard, Jr. Director March 27, 2000
__________________________
Thomas C. Sheppard, Jr.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE
NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.
No such annual report, proxy statement, form of proxy or other soliciting
material has been sent to security holders.
15
INDEX TO EXHIBITS
The following Exhibits indicated by an asterisk preceding the Exhibit
number are filed herewith. The balance of the Exhibits have heretofore been
filed with the Commission and pursuant to Rule 12b-32 are incorporated herein
by reference.
Exhibits
Exhibit No. Description
3.1 Certificate of Formation of West Penn Funding LLC
(Exhibit 4.2 to Registration Statement No. 333-79619)
3.2 Limited Liability Company Agreement of West Penn Funding
LLC, dated May 26, 1999 (Exhibit 4.1.1 to Registration
Statement No. 333-79619)
*3.3 Assignment of Limited Liability Company Interest and
Amendment to Limited Liability Company Agreement of West
Penn Funding LLC, dated October 20, 1999
*3.4 Amended and Restated Limited Liability Company Agreement
of West Penn Funding LLC, dated November 3, 1999
*4.1 Indenture, dated as of November 16, 1999, between West
Penn Funding LLC and Bankers Trust Company
*4.2 Series Supplement, dated as of November 16, 1999,
between West Penn Funding LLC and Bankers Trust Company
4.3 Form of Transition Bonds (Exhibit 4.4 to Registration
Statement No. 333- 79619) *10.1 Intangible Transition
Property Transfer Agreement, dated November 16, 1999,
between West Penn Power Company and West Penn Funding
Corporation
*10.2 Intangible Transition Property Sale Agreement, dated
November 16, 1999, between West Penn Funding LLC and
West Penn Funding Corporation
*10.3 Intangible Transition Property Servicing Agreement,
dated November 16, 1999, between West Penn Funding LLC
and West Penn Power Company
*23 Consent of PricewaterhouseCoopers LLP
*27 Financial Data Schedule
*99 Monthly Servicer's Certificates
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