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
MARCH 31, 1997
COMMISSION FILE NO. 333-608
CE CASECNAN WATER AND ENERGY COMPANY, INC.
(Exact name of registrant as specified in its charter)
PHILIPPINES Not Applicable
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6750 Ayala Avenue, 24th Floor
Makati, Metro Manila Philippines Not Applicable
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (632) 892-0276
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
Former name, former address and former fiscal year, if changed since last
report. Not Applicable
767,162 shares of Common Stock, $0.038 par value were outstanding as of March
31, 1997.
CE CASECNAN WATER AND ENERGY COMPANY, INC.
Form 10-Q
March 31, 1997
_____________
C O N T E N T S
PART I: FINANCIAL INFORMATION Page
Item 1. Financial Statements
Report of Independent Public Accountants 3
Balance Sheets, March 31, 1997 and December 31, 1996 4
Statements of Operations for the Three Months Ended March 31, 1997
and 1996 and for the period from inception (September 21, 1994)
to March 31,1997 5
Statements of Cash Flows for the Three Months Ended March 31, 1997
and 1996 and for the period from inception (September 21, 1994)
to March 31, 1997 6
Notes to Financial Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-10
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults on Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
Exhibit 27 13
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Stockholders and the Board of Directors
CE Casecnan Water and Energy Company, Inc.
We have reviewed the accompanying balance sheet of CE Casecnan Water and Energy
Company, Inc. (a company in the development stage) as of March 31, 1997, and
the related statements of operations for the three months ended March 31, 1997
and the period from inception (September 21, 1994) to March 31, 1997, and cash
flows for the three months ended March 31, 1997 and the period from inception
(September 21, 1994) to March 31, 1997. The financial statements are the
responsibility of the Company's management.
A review of interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of persons
responsible for financial and accounting matters. It is substantially less in
scope than an audit conducted in accordance with auditing standards generally
accepted in the United States of America, 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 financial statements referred to above for them to be in
conformity with accounting principles generally accepted in the United States
of America.
We have audited in accordance with auditing standards generally accepted in the
United States of America, the balance sheet of CE Casecnan Water and Energy
Company, Inc. as of December 31, 1996, and the related statements of operations
for the year ended December 31, 1996, changes in stockholders' equity for the
period from date of inception (September 21, 1994) to December 31, 1996 and
cash flows for the year ended December 31, 1996, and for the period from
inception (September 21, 1994) to December 31, 1996 (not presented separately
herein) and, in our report dated January 16, 1997, we expressed an unqualified
opinion on those financial statements.
SYCIP, GORRES, VELAYO & CO.
Makati City, Philippines
May 12, 1997
CE CASECNAN WATER AND ENERGY COMPANY, INC.
UNAUDITED BALANCE SHEET
March 31, 1997
(with comparative audited figures for 1996)
(in thousands, except share and per share amounts)
________________________________
March 31, December 31,
1997 1996
ASSETS
Cash $ 55 $ 32
Restricted cash and short-term investments 150,226 144,122
Accrued interest and other receivables 2,794 4,958
Restricted investments 266,283 273,015
Bond issue costs, net 12,303 12,566
Development costs 58,906 50,793
Deferred income tax 6,013 4,676
Total assets $ 496,580 $ 490,162
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 19,216 $ 8,803
Advances from an affiliate 558 434
Notes and bonds payable 371,500 371,500
Total liabilities 391,274 380,737
Commitments and contingencies
Stockholders' equity:
Common stock - par value $0.038 per share,
authorized 2,148,000 shares, issued and
outstanding 767,162 shares 29 29
Additional paid in capital 123,807 123,807
Accumulated deficit (18,530) (14,411)
Total stockholders' equity 105,306 109,425
Total liabilities and stockholders' equity $ 496,580 $ 490,162
The accompanying notes are an integral part of these financial statements
CE CASECNAN WATER AND ENERGY COMPANY, INC.
UNAUDITED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
________________________________
Three Months Three Months From Inception
Ended Ended (September 21, 1994)
March 31, March 31, to March 31,
1997 1996 1997
Revenues:
Interest and other income $ 4,504 $ 6,946 $ 32,609
Total revenues 4,504 6,946 32,609
Costs and expenses:
Interest expense 11,442 11,452 61,537
Less interest capitalized (1,746) (507) (5,672)
Amortization of bond issue costs 263 234 1,287
Total cost and expenses 9,959 11,179 57,152
Loss before income taxes (5,455) (4,233) (24,543)
Deferred income tax benefit 1,336 1,482 6,013
Net loss to common
stockholders $ (4,119) $ (2,751) $(18,530)
Net loss per share - primary $ (5.37) $ (3.59) $ (27.76)
Average number of common and
common equivalent shares
outstanding 767,162 767,162 667,431
The accompanying notes are an integral part of these financial statements.
CE CASECNAN WATER AND ENERGY COMPANY, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
(in thousands)
________________________________
<TABLE>
<CAPTION>
Three Months Three Months From Inception
Ended Ended (September 21, 1994)
March 31, March 31, to March 31,
1997 1996 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (4,119) $ (2,751) $ (18,530)
Adjustments to reconcile net cash
flow from operating activities:
Deferred income tax benefit (1,336) (1,482) (6,013)
Amortization of bond issue costs 263 234 1,287
Decrease (increase) in accrued interest and
other receivables 2,164 (2,801) (2,794)
Increase in accounts payable and
accrued expenses 9,848 10,010 15,942
Net cash flows from operating activities 6,820 3,210 (10,108)
Cash flows from investing activities:
Additions to development costs (8,113) (10,288) (58,906)
Decrease (increase) in restricted
cash and short-term investments (6,104) 7,400 (150,226)
Decrease (increase) in restricted investments 6,732 999 (266,283)
Increase (decrease) in accounts payable
and accrued expenses related to
development activities 564 (1,146) 3,275
Net cash flows from investing activities (6,921) (3,035) (472,140)
Cash flows from financing activities:
Issuance of bonds payable - - 371,500
Proceeds from issuance of capital stock - - 29
Additional paid-in capital - - 123,807
Bond issue costs - - (13,591)
Accrued expense related to financing activities - (279) -
Advances from an affiliate 124 164 558
Net cash flows from financing activities 124 (115) 482,303
Net increase (decrease) in cash and
cash equivalents 23 60 55
Cash and cash equivalents at beginning
of period 32 1,696 -
Cash and cash equivalents at end of period $ 55 $ 1,756 $ 55
Supplemental disclosure of cash flow information
Interest paid (net of amount capitalized) $ (152) $ 935 $ 39,922
</TABLE>
The accompanying notes are an integral part of these financial statements.
CE CASECNAN WATER AND ENERGY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
(in thousands, except per share amounts)
________________________________
1. General:
In the opinion of management of CE Casecnan Water and Energy Company, Inc. ("CE
Casecnan" or the "Company"), the accompanying unaudited financial statements
contain all adjustments (consisting only of normal recurring accruals)
necessary to present fairly the financial position as of March 31, 1997 and the
results of operations for the three months ended March 31, 1997, 1996 and the
period from inception (September 21, 1994) to March 31, 1997, and cash flows
for the three months ended March 31, 1997 and 1996 and the period from
inception (September 21, 1994) to March 31, 1997.
The results of operations for the three months ended March 31, 1997 are not
necessarily indicative of the results to be expected for the full year.
2. Other Footnote Information:
Reference is made to the Company's December 31, 1996 audited financial
statements included in Form 10-K dated March 28, 1997 that included information
necessary or useful to the understanding of the Company's business and
financial statement presentations. In particular, the Company's significant
accounting policies and practices were presented as Note 3 to the financial
statements included in that report.
3. Commitments and Contingencies
In November 1995, the Company closed the financing and commenced construction
of the Casecnan Project, a combined irrigation and 150 net MW hydroelectric
power generation project (the "Casecnan Project") located in the central part
of the island of Luzon in the Republic of the Philippines.
CE Casecnan is presently indirectly owned as to approximately 35% of its
equity by CalEnergy Company, Inc. and approximately 35% indirectly owned by
Peter Kiewit Sons' Inc. CE Casecnan financed a portion of the costs of the
Casecnan Project through the issuance of $125,000 of its 11.45% Senior Secured
Series A Notes due 2005 and $171,500 of its 11.95% Senior Secured Series B
Bonds due 2010 and $75,000 of its Secured Floating Rate Notes due 2002,
pursuant to an indenture dated as of November 27, 1995, as amended to date.
The Casecnan Project was being constructed pursuant to a fixed-price, date-
certain, turnkey construction contract (the "Hanbo Contract") on a joint and
several basis by Hanbo Corporation ("Hanbo") and Hanbo Engineering and
Construction Co., Ltd. ("HECC"), both of which are
CE CASECNAN WATER AND ENERGY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
(in thousands, except per share amounts)
________________________________
Commitments and Contingencies (continued)
South Korean corporations. As of May 7, 1997, CE Casecnan terminated the
Hanbo Contract and CE Casecnan has entered into a new engineering, procurement
and construction contract to complete the construction of the Casecnan
Project. The Hanbo Contract has been terminated because of events of default
under the contract including the fact that both HECC and Hanbo are insolvent
and have filed for court receivership protection in the Republic of Korea. In
connection with the Hanbo Contract termination, CE Casecnan made a draw under
the irrevocable standby letter of credit issued by Korea First Bank ("KFB") as
security under the Hanbo Contract to pay for certain transition costs and
other presently ascertainable damages under the Hanbo Contract. If KFB were
to fail to honor its obligations under the Casecnan letter of credit, such
action could have a material adverse effect on the Casecnan Project and CE
Casecnan.
CE Casecnan entered into a new turnkey engineering, procurement and
construction contract to complete the construction of the Casecnan Project
(the "Replacement Contract"). The work under the Replacement Contract will be
conducted by a consortium of contractors and subcontractors including Siemens
A.G., Sulzer Hydro Ltd., Black & Veatch and Colenco Power Engineering Ltd. and
will be headed by Cooperativa Muratori Cementisti CMC di Ravenna and Impressa
Pizzarotti & C. Spa.
CE CASECNAN WATER AND ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share amounts)
________________________________
Results of Operations:
The Company is in the construction stage and has not yet started commercial
operations. Revenue for the three months ended March 31, 1997 was $4,504
consisting of interest income from cash received from bond proceeds and equity
contributions. For the three months ended March 31, 1997 interest expense for
the three months was $11,442, interest capitalized was $1,746 and amortization
of bond issue costs was $263 which relate to the notes and bonds payable issued
by the Company in the fourth quarter of 1995.
Liquidity and Capital Resources:
In November 1995, the Company closed the financing and commenced construction
of the Casecnan Project, a combined irrigation and 150 net MW hydroelectric
power generation project (the "Casecnan Project") located in the central part
of the island of Luzon in the Republic of the Philippines.
CE Casecnan is presently indirectly owned as to approximately 35% of its
equity by CalEnergy Company, Inc. and approximately 35% indirectly owned by
Peter Kiewit Sons' Inc. CE Casecnan financed a portion of the costs of the
Casecnan Project through the issuance of $125,000 of its 11.45% Senior Secured
Series A Notes due 2005 and $171,500 of its 11.95% Senior Secured Series B
Bonds due 2010 and $75,000 of its Secured Floating Rate Notes due 2002,
pursuant to an indenture dated as of November 27, 1995, as amended to date.
The Casecnan Project was being constructed pursuant to a fixed-price, date-
certain, turnkey construction contract (the "Hanbo Contract") on a joint and
several basis by Hanbo Corporation ("Hanbo") and Hanbo Engineering and
Construction Co. Ltd. ("HECC"), both of which are South Korean corporations.
As of May 7, 1997, CE Casecnan terminated the Hanbo Contract because of events
of default under the contract including the fact that both HECC and Hanbo are
insolvent and have filed for court receivership protection in the Republic of
Korea. In connection with the Hanbo Contract termination, CE Casecnan made a
draw under the irrevocable standby letter of credit issued by Korea First Bank
("KFB") as security under the Hanbo Contract to pay for certain transition
costs and other presently ascertainable damages under the Hanbo Contract. If
KFB were to fail to honor its obligations under the Casecnan letter of credit,
such action could have a material adverse effect on the Casecnan Project and
CE Casecnan.
CE CASECNAN WATER AND ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share amounts)
________________________________
Liquidity and Capital Resources: (continued)
CE Casecnan entered into a new turnkey engineering, procurement and
construction contract to complete the construction of the Casecnan Project
(the "Replacement Contract"). The work under the Replacement Contract will be
conducted by a consortium of contractors and subcontractors including Siemens
A.G., Sulzer Hydro Ltd., Black & Veatch and Colenco Power Engineering Ltd. and
will be headed by Cooperativa Muratori Cementisti CMC di Ravenna and Impressa
Pizzarotti & C. Spa.
The securities are senior debt of the Company and are secured by a collateral
assignment of all revenues received from the Project, a collateral assignment
of all material contracts, a lien on any accounts and funds on deposit under a
Deposit and Disbursement Agreement, a pledge of 100% of the capital stock of
the Company and a lien on all other material assets and property. The
securities rank pari passu with and will share the collateral on a pro rata
basis with other senior secured debt, if any.
The securities are subject to certain optional and mandatory redemption
schemes as provided for in the offering circular.
The debt securities contain customary events of default and restrictive
covenants.
The financial statements of the Company were prepared in United States dollar
amounts. Gains or losses from translation of monetary assets and liabilities
in foreign currencies are not material.
CE CASECNAN WATER AND ENERGY COMPANY, INC.
PART II - OTHER INFORMATION
Item 1 - Legal proceedings.
Not Applicable; however, see Note 3 Commitments and Contingencies and
Liquidity and Capital Resources.
Item 2 - Changes in Securities.
Not applicable.
Item 3 - Defaults on Senior Securities.
Not applicable.
Item 4 - Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5 - Other Information.
Not applicable.
Item 6 - Exhibits and Reports on Form 8-K.
(i) The Company filed a Current Report on Form 8-K dated February 25, 1997
reporting Hanbo Corporation and Hanbo Iron-Steel Company, Ltd. filed
to seek court receivership protection.
(ii) The Company filed a current Report on Form 8-K dated March 28, 1997
reporting Hanbo Engineering and Construction Co. Ltd. filed to seek
court receivership protection.
(iii) The Company filed a current Report on Form 8-K dated May 7, 1997
reporting termination of the Hanbo contract and finalization of
replacement contract.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CE CASECNAN WATER AND ENERGY COMPANY, INC.
Date: May 13, 1997 /s/ John G. Sylvia
John G. Sylvia
Senior Vice President and
Chief Financial Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 148,895
<SECURITIES> 0
<RECEIVABLES> 4,180
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 58,906
<DEPRECIATION> 0
<TOTAL-ASSETS> 496,580
<CURRENT-LIABILITIES> 0
<BONDS> 371,500
0
0
<COMMON> 29
<OTHER-SE> 105,277
<TOTAL-LIABILITY-AND-EQUITY> 496,580
<SALES> 0
<TOTAL-REVENUES> 4,504
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,959
<INCOME-PRETAX> (5,455)
<INCOME-TAX> 1,366
<INCOME-CONTINUING> (4,119)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,119)
<EPS-PRIMARY> (5.37)
<EPS-DILUTED> (5.37)
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