CE GENERATION LLC - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

For the quarterly period ended September 30, 2004

Commission File No. 333-89521

CE GENERATION, LLC

(Exact name of registrant as specified in its charter)

Delaware		47-0818523
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

302 South 36^th Street, Suite 400 Omaha, Nebraska		68131
(Address of principal executive offices)		(Zip Code)

(402) 341-4500

(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 T No £

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

The members’ equity accounts are held 50% by MidAmerican Energy Holdings Company and 50% by TransAlta USA Inc. as of October 31, 2004.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.	Controls and Procedures	16

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Submission of Matters to a Vote of Security Holders	17
Item 5.	Other Information	17
Item 6.	Exhibits	17

Signatures		18
Exhibit Index		19

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Members

We have reviewed the accompanying consolidated balance sheet of CE Generation, LLC and subsidiaries (collectively, the "Company") as of September 30, 2004, and the related consolidated statements of operations and other comprehensive income for the three-month and nine-month periods ended September 30, 2004 and 2003, and of cash flows for the nine-month periods ended September 30, 2004 and 2003. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical 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 (United States), 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 reviews, we are not aware of any material modifications that should be made to such consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of CE Generation, LLC and subsidiaries as of December 31, 2003, and the related consolidated statements of operations and other comprehensive income, members’ equity and cash flows for the year then ended (not presented herein); and in our report dated February 20, 2004 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2003 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP

CE GENERATION, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of
	September 30,			December 31,
	2004			2003
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	73,318		$	33,853
Restricted cash		7,096			7,297
Trade accounts receivable, net		65,924			49,434
Trade accounts receivable from affiliate		53			1,564
Prepaid expenses and other current assets		10,936			6,104
Inventories		25,734			25,265
Note receivable from related party and other due from affiliates		740			137,034
Total current assets		183,801			260,551
Restricted cash		3,140			6,419
Properties, plants, contracts and equipment, net		1,119,623			1,167,359
Goodwill		265,897			265,897
Deferred financing charges and other assets		7,470			8,516
Total assets	$	1,579,931		$	1,708,742

LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable	$	3,519		$	1,262
Accrued interest		15,157			3,156
Interest rate swap liability		8,565			13,873
Other accrued liabilities		35,266			31,893
Income tax payable		1,044			1,138
Current portion of long-term debt		79,347			201,915
Total current liabilities		142,898			253,237
Project loans		80,830			100,473
Salton Sea notes and bonds		273,316			298,377
Senior secured bonds		316,400			323,800
Deferred income taxes		269,277			257,045
Other long-term liabilities		8,161			8,039
Total liabilities		1,090,882			1,240,971

Minority interest		48,019			48,886

Commitments and contingencies (Note 5)

Members’ equity		444,982			425,122
Accumulated other comprehensive loss		(3,952	)		(6,237	)
Total members’ equity		441,030			418,885
Total liabilities and members’ equity	$	1,579,931		$	1,708,742

The accompanying notes are an integral part of these financial statements.

CE GENERATION, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

AND OTHER COMPREHENSIVE INCOME

	Three Months				Nine Months
	Ended September 30,				Ended September 30,
	2004		2003		2004		2003
			(Unaudited)

Revenue:
Operating revenue	$	134,685	$	142,803	$	336,806	$	388,213
Interest and other income		1,779		696		3,996		1,969
Total revenue		136,464		143,499		340,802		390,182
Costs and expenses:
Fuel		25,841		32,085		69,273		95,790
Plant operations, general and administrative		29,600		34,500		105,544		101,569
Depreciation and amortization