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
For the quarterly period ended June 30, 2003
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number 333-89725
AES Eastern Energy,
L.P.
(Exact name of registrant as specified in its charter)
| Delaware | 54-1920088 |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 1001 N. 19th Street, Arlington, Va. | 22209 |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (703) 522-1315
N/A
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 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 [_]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act)
Yes [_] No [X]
Registrant is a wholly owned subsidiary of The AES Corporation. Registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is filing this Quarterly Report on Form 10-Q with the reduced disclosure format authorized by General Instruction H.
TABLE OF CONTENTS
PART I
Page
| Item 1. Condensed Consolidated Financial Statements (Unaudited) | ||
| AES EASTERN ENERGY, L.P. | ||
| Condensed Consolidated Financial Statements: | ||
| Consolidated Statements of Income for the three months ended June 30, 2003 and June 30, 2002 | 3 | |
| Consolidated Statements of Income for the six months ended June 30, 2003 and June 30, 2002 | 4 | |
| Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002 | 5 | |
| Consolidated Statements of Cash Flows for the six months ended June 30, 2003 and June 30, 2002 | 6 | |
| Statement of Changes in Partners’ Capital for the six months ended June 30, 2003 | 7 | |
| Notes to Condensed Consolidated Financial Statements | 8 | |
| AES NY, L.L.C. (General Partner of AES Eastern Energy, L.P.)* | ||
| Condensed Consolidated Financial Statements: | ||
| Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002 | 13 | |
| Notes to Condensed Consolidated Balance Sheets | 14 | |
| * | The condensed consolidated balance sheets of AES NY, L.L.C. | |
| contained in this Quarterly Report on Form 10-Q should be | ||
| considered only in connection with its status as the general | ||
| partner of AES Eastern Energy, L.P. | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 19 |
| (a) Results of Operations | 20 | |
| (b) Liquidity and Capital Resources | 22 | |
| Item 4. | Controls and Procedures | 24 |
| PART II | ||
| Item 1. | Legal Proceedings | 25 |
| Item 6. | Exhibits and Reports on Form 8-K | |
| (a) Exhibits | 25 | |
| (b) Reports on Form 8-K | 25 | |
| Signatures | 25 | |
2
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
AES Eastern Energy, L.P.
Condensed Consolidated Statements of Income
For the three months ending June 30, 2003 and June 30, 2002
(Amounts in Thousands)
| Three months ended June 30, | 2003 | 2002 | ||||||
| Operating Revenues | ||||||||
| Energy | $ | 92,080 | $ | 66,063 | ||||
| Capacity | 7,751 | 9,673 | ||||||
| Transmission congestion contract | (2,567 | ) | 12,632 | |||||
| Other | 653 | 1,014 | ||||||
| Total operating revenues | 97,917 | 89,382 | ||||||
| Operating Expenses | ||||||||
| Fuel | 34,176 | 29,683 | ||||||
| Operations and maintenance | 4,915 | 5,205 | ||||||
| General and administrative | 13,812 | 14,087 | ||||||
| Depreciation and amortization | 9,027 | 8,689 | ||||||
| Total operating expenses | 61,930 | 57,664 | ||||||
| Operating Income | 35,987 | 31,718 | ||||||
| Other Income/(Expense) | ||||||||
| Interest expense | (14,912 | ) | (14,387 | ) | ||||
| Interest income | 605 | 592 | ||||||
| Loss on derivative valuation | (21 | ) | (6 | ) | ||||
| Net Income | $ | 21,659 | $ | 17,917 | ||||
The notes are an integral part of the condensed consolidated financial statements.
3
Item 1. Condensed Consolidated Financial Statements (Unaudited) (Cont’d)
AES Eastern Energy, L.P.
Condensed Consolidated Statements of Income
For the six months ending June 30, 2003 and June 30, 2002
(Amounts in Thousands)
| Six months ended June 30, | 2003 | 2002 | ||||||
| Operating Revenues | ||||||||
| Energy | $ | 194,390 | $ | 135,115 | ||||
| Capacity | 16,397 | 15,125 | ||||||
| Transmission congestion contract | (6,425 | ) | 18,969 | |||||
| Other | 1,358 | 4,693 | ||||||
| Total operating revenues | 205,720 | 173,902 | ||||||
| Operating Expenses | ||||||||
| Fuel | 70,874 | 64,550 | ||||||
| Operations and maintenance | 9,767 | 8,338 | ||||||
| General and administrative | 27,910 | 26,225 | ||||||
| Depreciation and amortization | 17,999 | 17,371 | ||||||
| Total Operating Expenses | 126,550 | 116,484 | ||||||
| Operating Income | 79,170 | 57,418 | ||||||
| Other Income/(Expense) | ||||||||
| Interest expense | (29,533 | ) | (28,802 | ) | ||||
| Interest income | 1,082 | 1,070 | ||||||
| Gain on derivative valuation | 188 | 85 | ||||||
| Net income before cumulative effect of change | ||||||||
| in accounting principle | 50,907 | 29,771 | ||||||
| Cumulative effect of change in accounting principle | (1,656 | ) | - | |||||
| Net Income | $ | 49,251 | $ | 29,771 | ||||
The notes are an integral part of the condensed consolidated financial statements.
4
Item 1. Condensed Consolidated Financial Statements (Unaudited) (Cont’d)
AES Eastern Energy, L.P.
Condensed Consolidated Balance Sheets
June 30, 2003 and December 31, 2002
(Amounts in thousands)
| June
30, 2003 |
Dec.
31, 2002 |
|||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Restricted cash: | ||||||||
| Operating - cash and cash equivalents | $ | 3,652 | $ | 4,605 | ||||
| Revenue account | 108,700 | 76,566 | ||||||
| Accounts receivable - trade | 36,215 | 35,233 | ||||||
| Accounts receivable - affiliates | 202 | - | ||||||
| Accounts receivable - other | 1,569 | 1,235 | ||||||
| Inventory | 30,152 | 26,982 | ||||||
| Prepaid expenses | 7,533 | 7,617 | ||||||
| Total Current Assets | 188,023 | 152,238 | ||||||
| Property, Plant, Equipment and Related Assets | ||||||||
| Land | 7,011 | 7,011 | ||||||
| Electric generation assets (net of accumulated | ||||||||
| depreciation of $138,334 and $117,222) | 916,445 | 929,654 | ||||||
| Total property, plant, equipment and | ||||||||
| related assets | 923,456 | 936,665 | ||||||
| Other Assets | ||||||||
| Deferred financing -net of | ||||||||
| accumulated amortization of $1,016 and $863 | 454 | 293 | ||||||
| Derivative valuation | 15,879 | 2,510 | ||||||
| Transmission congestion contract | - | 2,416 | ||||||
| Rent reserve account | 31,717 | 31,717 | ||||||
| Total Assets | $ | 1,159,529 | $ | 1,125,839 | ||||
| LIABILITIES | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 1,069 | $ | 1,195 | ||||
| Lease financing - current | 5,040 | 1,665 | ||||||
| Environmental remediation | - | 20 | ||||||
| Accrued interest expense | 28,893 | 28,078 | ||||||
| Due to The AES Corporation and affiliates | 8,207 | 6,945 | ||||||
| Accrued coal and rail expenses | 8,156 | 8,492 | ||||||
| Other liabilities and accrued expenses | 11,199 | 9,311 | ||||||
| Total Current Liabilities | 62,564 | 55,706 | ||||||
| Long-term liabilities | ||||||||
| Lease financing - long term | 632,972 | 637,660 | ||||||
| Environmental remediation | 5,055 | 9,192 | ||||||
| Defined benefit plan obligation | 17,398 | 17,439 | ||||||
| Derivative valuation liability | 28,189 | 20,996 | ||||||
| Asset retirement obligation | 9,569 | - | ||||||
| Transmission congestion contract | 2,397 | - | ||||||
| Other liabilities | 2,535 | 2,600 | ||||||
| Total Long-term Liabilities | 698,115 | 687,887 | ||||||
| Total Liabilities | 760,679 | 743,593 | ||||||
| Commitments and Contingencies (Note 2) | ||||||||
| PARTNERS’ CAPITAL | 398,850 | 382,246 | ||||||
| Total Liabilities and Partners’ Capital | $ | 1,159,529 | $ | 1,125,839 | ||||
The notes are an integral part of the condensed consolidated financial statements.
5
Item 1. Condensed Consolidated Financial Statements (Unaudited) (Cont’d)
AES Eastern Energy, L.P.
Condensed Consolidated Statements of Cash Flows
For the six months ending June 30, 2003 and June 30, 2002
(Amounts in Thousands)
| Six
months ended June 30, 2003 |
Six
months ended June 30, 2002 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Income | $ | 49,251 | $ | 29,771 | ||||
| Adjustments to reconcile net income to | ||||||||
| Net cash used in operating activities: | ||||||||
| Cumulative effect of change in accounting principle | 1,656 | - | ||||||
| Depreciation and amortization | 17,994 | 17,355 | ||||||
| Asset retirement obligation accretion | 380 | - | ||||||
| Loss (Gain) on derivative valuation | 4,625 | (15,697 | ) | |||||
| Write off of deferred financing | 21 | - | ||||||
| Net defined benefit plan cost | (41 | ) | 349 | |||||
| Changes in current assets and liabilities: | ||||||||
| Accounts receivable | (1,518 | ) | (1,308 | ) | ||||
| Inventory | (3,170 | ) | 3,139 | |||||
| Prepaid expenses | 84 | 1,600 | ||||||
| Accounts payable | (126 | ) | (581 | ) | ||||
| Accrued interest expense | 815 | (116 | ) | |||||
| Due to The AES Corporation and affiliates | 1,262 | 825 | ||||||
| Accrued expenses and other liabilities | 1,467 | (5,077 | ) | |||||
| Net cash provided by operating activities | 72,700 | 30,260 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Payments for capital additions | (1,236 | ) | (5,093 | ) | ||||
| (Increase) decrease in restricted cash | (31,181 | ) | 8,499 | |||||
| Net change in rent reserve account | - | (2 | ) | |||||
| Net cash (used in) provided by investing activities | (32,417 | ) | 3,404 | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Dividends paid | (38,700 | ) | (32,560 | ) | ||||
| Principal payments on lease obligations | (1,313 | ) | (2,618 | ) | ||||
| Partner’s contribution | 65 | 1,514 | ||||||
| Payments for deferred financing | (335 | ) | - | |||||
| Net cash used in financing activities | (40,283 | ) | (33,664 | ) | ||||