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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2004

Commission File No. 001-12995

CE CASECNAN WATER AND ENERGY COMPANY, INC.
(Exact name of registrant as specified in its charter)


Philippines
 
Not Applicable
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
24th Floor, 6750 Building, Ayala Avenue
Makati, Metro Manila, Philippines
 

Not Applicable
(Address of principal executive offices)
 
(Zip Code)

011 63 2 892-0276
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: N/A
Securities registered pursuant to Section 12(g) of the Act: N/A

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]

As of June 30, 2004, 767,162 shares of common stock were outstanding.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

3
10
14
14

PART II – OTHER INFORMATION

15
15
15
15
15
15
 
16
17
 
 
 
 
 
 
 
2
 
 
PART I – FINANCIAL INFORMATION

Item 1.   Financial Statements.
 
Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
CE Casecnan Water and Energy Company, Inc.
 

We have reviewed the accompanying balance sheet of CE Casecnan Water and Energy Company, Inc. (the “Company”) as of June 30, 2004, and the related statements of operations for each of the three-month and six-month periods ended June 30, 2004 and 2003 and of cash flows for each of the six-month periods ended June 30, 2004 and 2003. These interim financial statements are the responsibility of the Company's management.
 
We conducted our review in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical review procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited in accordance with standards of the Public Company Accounting Oversight Board (United States), the balance sheet as of December 31, 2003, and the related statements of operations, changes in stockholders’ equity and of cash flows for the year then ended (not presented herein), and in our report dated February 9, 2004, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of December 31, 2003, is fairly stated in all material respects in relation to the balance sheet from which it has been derived.

/s/ Joaquin Cunanan & Co.

JOAQUIN CUNANAN & CO.
A PricewaterhouseCoopers Member Firm
Makati City, Philippines
July 21, 2004
 
 
 
3
 
 
CE CASECNAN WATER AND ENERGY COMPANY, INC.
BALANCE SHEETS
(Amounts in thousands of U.S. Dollars, except share data)
 
   

 As of 

   
 
    
June 30, 
    
December 31,
  
 
    
2004
    
2003
  
   
 
 
 
  

 (Unaudited) 

    
 
  
ASSETS
Current assets:
    
 
    
 
  
Cash and cash equivalents
  
$
16,640
  
$
4,513
  
Trade receivable, net
   
17,362
    
16,451
  
Note receivable (Note 2)
    
-
    
97,000
  
Accrued interest and other receivables
    
4,358
    
8,229
  
Prepaid insurance and other current assets
    
4,081
    
4,685
  
   
 
 
Total current assets
    
42,441
    
130,878
  
   
 
 
Restricted cash and investments
    
52,389
    
18,121
  
Bond issue costs, net
    
3,270
    
3,861
  
Property, plant and equipment, net (Note 4)
    
373,164
    
407,082
  
Deferred income tax
    
5,371
    
5,371
  
   
 
 
Total assets
  
$
476,635
  
$
565,313
  
   
 
 
 
    
 
    
 
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
    
 
    
 
  
Accounts payable
  
$
7,832
  
$
7,395
  
Accrued interest
   
7,866
    
7,368
  
Dividends payable (Note 4)
    
12,750
    
-
  
Accrued liquidated damages (Note 4)
    
-
    
3,800
  
Other accrued expenses
    
390
    
1,702
  
Payable to affiliates
    
34,718
    
34,739
  
Current portion of long-term debt
    
52,056
    
49,360
  
   
 
 
Total current liabilities
    
115,612
    
104,364
  
   
 
 
 
    
 
    
 
  
Notes payable
   
51,263
    
51,263
  
Deferred revenue (Note 1)
    
3,993
    
902
  
Long-term debt, net of current portion
    
169,721
    
197,098
  
   
 
 
Total liabilities
    
340,589
    
353,627
  
   
 
 
 
    
 
    
 
  
Commitments and contingencies (Note 4)
    
 
    
 
  
 
    
 
    
 
  
Stockholders’ equity:
    
 
    
 
  
Capital stock – authorized 2,148,000 common shares, one Philippine peso ($0.038) par value; 767,162 shares issued and outstanding
    
29
    
29
  
Additional paid-in capital
    
123,807
    
123,807
  
Retained earnings (Note 5)
    
12,210
    
87,850
  
   
 
 
Total stockholders’ equity
    
136,046
    
211,686
  
   
 
 
Total liabilities and stockholders’ equity
  
$
476,635
  
$
565,313
  
   
 
 

The accompanying notes are an integral part of these financial statements.
 
4
 
 
CE CASECNAN WATER AND ENERGY COMPANY, INC.
STATEMENTS OF OPERATIONS
(Amounts in thousands of U.S. Dollars)

   

 Three Months 

  

 Six Months 

  
   

 Ended June 30, 

  

 Ended June 30, 

  
   
 		  
 		  
 
    
2004
    
2003
    
2004
    
2003
  
   
 
 
 
 
         

 (Unaudited)  

        
Revenue:
    
 
    
 
    
 
    
 
  
Lease rental and service contract
  
$
19,512
  
$
33,219
  
$
39,427
  
$
64,718
  
   
 
 
 
 
Operating expenses:
    
 
    
 
    
 
    
 
  
Depreciation
    
5,560
    
5,745
    
11,273
    
11,418
  
Plant operations and other operating expenses
    
2,392
    
4,173
    
4,373
    
7,349
  
Doubtful accounts expense
    
-
    
2,345
    
-
    
6,412
  
   
 
 
 
 
Total operating expenses
    
7,952
    
12,263
    
15,646
    
25,179
  
   
 
 
 
 
 
    
 
    
 
    
 
    
 
  
Operating income
    
11,560
    
20,956
    
23,781
    
39,539
  
   
 
 
 
 
 
    
 
    
 
    
 
    
 
  
Other income (expense):
    
 
    
 
    
 
    
 
  
Interest expense
    
(7,624
)
  
(10,778
)
  
(15,184
)
  
(20,931
)
Interest income
    
191
    
62
    
841
    
118
  
Other
    
42
    
(2
)
  
(78
)
  
20
  
   
 
 
 
 
Total other expense, net
    
(7,391
)
  
(10,718
)
  
(14,421
)
  
(20,793
)
   
 
 
 
 
 
    
 
    
 
    
 
    
 
  
Net income
  
$
4,169
  
$
10,238
  
$
9,360
  
$
18,746
  
   
 
 
 
 

The accompanying notes are an integral part of these financial statements.
 
5
 
 
CE CASECNAN WATER AND ENERGY COMPANY, INC.
STATEMENTS OF CASH FLOWS
(Amounts in thousands of U.S. Dollars)

   

 Six Months 

  
   

 Ended June 30, 

  
   
 
 
    
2004
    
2003
  
   
 
 
   

 (Unaudited) 

  
 
    
 
    
 
  
Cash flows from operating activities:
    
 
    
 
  
Net income
  
$
9,360
  
$
18,746
  
Adjustments to reconcile net income to cash flows from operating activities:
    
 
    
 
  
Depreciation
    
11,273
    
11,418
  
Amortization of bond issue costs
    
591
    
679
  
Changes in other items:
    
 
    
 
  
Trade receivable, net
    
(911
)
  
(7,733
)
Accrued interest and other receivables
    
3,871
    
(2,403
)
Prepaid insurance and other current assets
    
604
    
1,727
  
Accounts payable
    
437
    
(902
)
Accrued interest
    
498
    
556
  
Deferred revenue
    
3,091
    
-
  
   
 
 
Net cash flows provided from operating activities
    
28,814
    
22,088
  
   
 
 
Cash flows from investing activities:
    
 
    
 
  
Additions to property, plant and equipment
    
(1,367
)
  
(2,629
)
Liquidated damages received, net of amounts accrued (Note 4)
    
18,900
    
-
  
Collection of ROP note (Note 2)
    
97,000
    
-
  
Other assets
    
-
    
5,542
  
   
 
 
Net cash flows provided from investing activities
    
114,533
    
2,913
  
   
 
 
Cash flows from financing activities:
    
 
    
 
  
Increase in restricted cash and investments
    
(34,268
)
  
(4,241
)
Increase (decrease) in payable to affiliates
    
(21
)
  
962