Back to GetFilings.com



 
 
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. 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)

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 o
 
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).   Yes o   No x
 
The members’ equity accounts are held 50% by MidAmerican Energy Holdings Company and 50% by TransAlta USA Inc. as of July 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
 
 
 
 
Legal Proceedings
17
Item 2.
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
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 and Reports on Form 8-K
17
     
 
18
 
19


 
  2  
 
 
PART I – FINANCIAL INFORMATION

Item 1.   Financial Statements.
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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 June 30, 2004, and the related consolidated statements of operations and other comprehensive income for the three-month and six-month periods ended June 30, 2004 and 2003, and of cash flows for 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 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
Omaha, Nebraska
July 28, 2004

 
  3  
 
CE GENERATION, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
 
  
As of
   
 
  
June 30,
December 31,
 
  

2004

 2003

   
 
 
 

(Unaudited)

    
ASSETS
Current assets:
    
 
    
 
  
Cash and cash equivalents
  
$
20,718
  
$
33,853
  
Restricted cash
    
7,239
    
7,297
  
Trade accounts receivable, net
   
53,541
    
49,434
  
Trade accounts receivable from affiliate
    
1,723
    
1,564
  
Prepaid expenses and other current assets
    
11,278
    
6,104
  
Income tax receivable
    
5,496
    
-
  
Inventories
    
25,597
    
25,265
  
Note receivable from related party and other due from affiliates
    
966
    
137,034
  
   
 
 
Total current assets
    
126,558
    
260,551
  
   
 
 
Restricted cash
    
3,673
    
6,419
  
Properties, plants, contracts and equipment, net
    
1,134,850
    
1,167,359
  
Goodwill
    
265,897
    
265,897
  
Deferred financing charges and other assets
    
7,813
    
8,516
  
   
 
 
Total assets
  
$
1,538,791
  
$
1,708,742
  
   
 
 
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
    
 
    
 
  
Accounts payable
  
$
4,834
  
$
1,262
  
Accrued interest
    
2,980
    
3,156
  
Interest rate swap liability
    
9,469
    
13,873
  
Other accrued liabilities
    
30,531
    
31,893
  
Income tax payable
    
-
    
1,138
  
Current portion of long-term debt
    
78,324
    
201,915
  
   
 
 
   Total current liabilities
    
126,138
    
253,237
  
   
 
 
Project loans
    
87,378
    
100,473
  
Salton Sea notes and bonds
    
273,316
    
298,377
  
Senior secured bonds
    
316,400
    
323,800
  
Deferred income taxes
    
265,161
    
257,045
  
Other long-term liabilities
    
8,104
    
8,039
  
   
 
 
Total liabilities
    
1,076,497
    
1,240,971
  
   
 
 
Minority interest
    
48,812
    
48,886
  
 
    
 
    
 
  
Commitments and contingencies (Note 5)
    
 
    
 
  
 
    
 
    
 
  
Members’ equity
    
417,934
    
425,122
  
Accumulated other comprehensive loss
    
(4,452
)
  
(6,237
)
   
 
 
Total members’ equity
    
413,482
    
418,885
  
   
 
 
Total liabilities and members’ equity
  
$
1,538,791
  
$
1,708,742
  
   
 
 

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
Six Months
 
Ended June 30, 
Ended June 30,
   
 
    
2004
    
2003
    
2004

 

 
2003
  
   
 
 
 
 
 

 (Unaudited)

  
Revenue:
    
 
    
 
    
 
    
 
  
Operating revenue
  
$
102,995
  
$
123,405
  
$
202,121
  
$
245,410
  
Interest and other income
    
1,415
    
550
    
2,217
    
1,273
  
   
 
 
 
 
Total revenue
    
104,410
    
123,955
    
204,338
    
246,683
  
   
 
 
 
 
Costs and expenses:
    
 
    
 
    
 
    
 
  
Fuel
    
23,068
    
30,242
    
43,432
    
63,705
  
Plant operations, general and administrative
    
42,806
    
33,546
    
75,944
    
67,069
  
Depreciation and amortization
    
20,826
    
21,626
    
41,574
    
42,783
  
Interest expense
    
15,509
    
17,886
    
31,318
    
35,910
  
   
 
 
 
 
Total costs and expenses
    
102,209
    
103,300
    
192,268
    
209,467
  
   
 
 
 
 
Income before provision (benefit) for income taxes
    
2,201
    
20,655
    
12,070
    
37,216
  
Provision (benefit) for income taxes
    
(740
)
  
5,140
    
470
    
9,135
  
   
 
 
 
 
Income before minority interest
    
2,941
    
15,515
    
11,600
    
28,081
  
Minority interest
    
5,429
    
4,772
    
11,788
    
10,517
  
   
 
 
 
 
Income (loss) before cumulative effect of change in accounting principle
    
(2,488
)
  
10,743
    
(188
)
  
17,564
  
Cumulative effect of change in accounting principle, net of tax
    
-
    
-
    
-
    
(2,467
)
   
 
 
 
 
Net income (loss)
  
$
(2,488
)
$
10,743
  
$
(188
)
$
15,097
  
   
 
 
 
 
Other comprehensive income (loss):
    
 
    
 
    
 
    
 
  
Unrealized gain (loss) on cash flow hedges, net of tax
    
2,347
    
(570
)
  
1,785
    
212
  
   
 
 
 
 
Comprehensive income (loss)
  
$
(141
)
$
10,173
  
$
1,597
  
$
15,309
  
   
 
 
 
 

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

 
  5  
 
CE GENERATION, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

 
  
Six Months
 
  
Ended June 30,
   
 
  

 2004

  

 2003

  
   
 
 
 
(Unaudited) 
Cash flows from operating activities:
    
 
    
 
  
Net income (loss)
  
$
(188
)
$
15,097
  
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
    
 
    
 
  
Depreciation and amortization
    
41,574
    
42,783
  
Provision for deferred income taxes
    
7,123
    
3,236
  
Distributions to minority interest in excess of income
    
(1,699
)
  
(2,193
)
Cumulative effect of change in accounting principle, net of tax
    
-
    
2,467
  
Asset impairment
    
1,878
    
3,383
  
Amortization of deferred financing costs
    
624
    
744
  
Changes in other items:
    
 
    
 
  
Accounts receivable, net
    
(4,266
)
  
(1,429
)
Due from affiliates
    
687
    
(1,187
)
Accounts payable and other accrued liabilities
    
961
    
2,254