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

FORM 10-Q

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

For the quarterly period ended March 31, 2005

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

(402) 341-4500
(Registrant’s telephone number, including area code)
 
 
(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 T No £ 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes £ No T

The members’ equity accounts are held 50% by MidAmerican Energy Holdings Company and 50% by TransAlta USA Inc. as of April 30, 2005.




TABLE OF CONTENTS
 

PART I - FINANCIAL INFORMATION
     
3
11
16
16
     
PART II - OTHER INFORMATION
     
17
17
17
17
17
17
 
18
 
19



2

PART I - FINANCIAL INFORMATION

Item 1.    Financial Statements.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Members
CE Generation, LLC

We have reviewed the accompanying consolidated balance sheet of CE Generation, LLC and subsidiaries (collectively, the “Company”) as of March 31, 2005, and the related consolidated statements of operations and other comprehensive income, and of cash flows for the three-month periods ended March 31, 2005 and 2004. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the 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 the 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 the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of CE Generation, LLC and subsidiaries as of December 31, 2004, 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 25, 2005, 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, 2004 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Deloitte & Touche LLP

Omaha, Nebraska
May 5, 2005


3

CE GENERATION, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)


   
As of
  
   
March 31,
  
December 31,
  
   
2005
  
2004
  
   
(Unaudited)
      
ASSETS
  
Current assets:
          
Cash and cash equivalents
  
$
49,701
  
$
27,540
  
Short-term investments
    
11,250
    
5,000
  
Restricted cash
    
7,090
    
7,252
  
Trade accounts receivable, net
   
47,507
    
49,800
  
Trade accounts receivable from affiliate
    
1,868
    
1,285
  
Inventories
   
30,459
    
26,604
  
Prepaid expenses and other current assets
   
8,177
    
6,088
  
Note receivable from related party and other due from affiliates
    
-
    
1,165
  
Total current assets
    
156,052
    
124,734
  
Restricted cash
    
1,779
    
1,732
  
Properties, plants and equipment, net
    
906,993
    
916,419
  
Goodwill
    
265,897
    
265,897
  
Intangible assets, net
    
127,535
    
131,482
  
Deferred financing charges and other assets
    
6,825
    
7,124
  
Total assets
  
$
1,465,081
  
$
1,447,388
  
               
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
              
Accounts payable
  
$
4,641
  
$
1,990
  
Accrued interest
    
14,661
    
2,915
  
Interest rate swap liability
    
4,380
    
6,391
  
Accrued natural gas liability
    
7,842
    
7,590
  
Other accrued liabilities
    
25,111
    
24,706
  
Income tax payable
    
2,391
    
1,949
  
Due to affiliates
    
2,210
    
-
  
Current portion of long-term debt
    
70,840
    
69,612
  
Total current liabilities
    
132,076
    
115,153
  
Project loans
    
66,505
    
74,281
  
Salton Sea notes and bonds
    
269,757
    
269,757
  
Senior secured bonds
    
309,000
    
309,000
  
Deferred income taxes
    
249,087
    
247,978
  
Other long-term liabilities
    
8,374
    
8,220
  
Total liabilities
    
1,034,799
    
1,024,389
  
               
Minority interest
    
46,451
    
45,658
  
               
Commitments and contingencies (Note 5)
              
               
Members’ equity:
              
Members’ equity
    
385,848
    
380,238
  
Accumulated other comprehensive loss
    
(2,017
)
  
(2,897
)
Total members’ equity
    
383,831
    
377,341
  
Total liabilities and members’ equity
  
$
1,465,081
  
$
1,447,388
  

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


4

CE GENERATION, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE INCOME
(In thousands)
 
   
Three Months
  
   
Ended March 31,
  
   
2005
  
2004
  
   
(Unaudited)
  
           
Operating revenue
  
$
106,521
  
$
99,126
  
               
Costs and expenses:
              
Fuel
    
24,125
    
20,364
  
Plant operations
    
29,148
    
31,860
  
General and administrative
    
1,015
    
1,034
  
Depreciation and amortization
    
23,726
    
20,748
  
Total costs and expenses
    
78,014
    
74,006
  
               
Operating income
    
28,507
    
25,120
  
               
Other income (expense):
              
Interest expense
    
(14,489
)
  
(15,809
)
Interest and other income
    
851
    
802
  
Total other income (expense)
    
(13,638
)
  
(15,007