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, 2000
COMMISSION FILE NO. 333-608
CE CASECNAN WATER AND ENERGY COMPANY, INC.
(Exact name of registrant as specified in its charter)
PHILIPPINES Not Applicable
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
24th Floor 6750 Building, Ayala Avenue
Makati, Manila, Philippines Not Applicable
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (632) 892-0276
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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
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Former name, former address and former fiscal year, if changed since last
report. Not Applicable
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767,162 shares of Common Stock, $0.038 par value were outstanding as of March
31, 2000.
<PAGE>
CE CASECNAN WATER AND ENERGY COMPANY, INC.
Form 10-Q
March 31, 2000
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C O N T E N T S
PART I: FINANCIAL INFORMATION Page
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Item 1. Financial Statements
Report of Independent Public Accountants 3
Balance Sheets, March 31, 2000 and December 31, 1999 4
Statements of Operations for the Three Months Ended March 31, 2000
and 1999 and for the period from inception
(September 21, 1994) to March 31, 2000 5
Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999
and for the period from inception (September 21, 1994) to March 31, 2000 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 10
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Item 2. Changes in Securities 10
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Item 3. Defaults on Senior Securities 10
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Item 4. Submission of Matters to a Vote of Security Holders 10
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Item 5. Other Information 10
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Item 6. Exhibits and Reports on Form 8-K 10
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Signatures 11
Exhibit 27 12
<PAGE>
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 sheets of CE Casecnan Water and Energy
Company, Inc. (a company in the development stage) as of March 31, 2000, and the
related statements of operations and cash flows for the three months ended March
31, 2000 and 1999 and the period from the date of inception (September 21, 1994)
to March 31, 2000. These 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, 1999, and the related statements of operations
and changes in stockholders' equity for the period from the date of inception
(September 21, 1994) to December 31, 1999 and cash flows for the year ended
December 31, 1999, and for the period from the date of inception (September 21,
1994) to December 31, 1999 (not presented separately herein) and, in our report
dated January 25, 2000, we expressed an unqualified opinion on those financial
statements.
SYCIP GORRES VELAYO & CO.
An Arthur Andersen Member Firm
Makati City, Philippines
May 10, 2000
<PAGE>
<TABLE>
CE CASECNAN WATER AND ENERGY COMPANY, INC.
BALANCE SHEETS
(in thousands, except number of shares and per share amount)
--------------------------------
<CAPTION>
March 31, December 31,
2000
1999
--------------------- ---------------------
--------------------- ---------------------
(unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 2,334 $ 2,318
Restricted cash and short-term investments 28,616 42,064
Accrued interest and other receivables 1,655 1,750
Restricted investments 122,409 122,175
Bond issue costs - net 8,644 9,010
Development and construction costs 359,160 337,983
Deferred income tax 6,751 7,098
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--------------------- ---------------------
Total assets $ 529,569 $ 522,398
===================== =====================
===================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 45,933 $ 41,633
Advances from affiliates 11,692 10,024
Notes and bonds payable 371,500 371,500
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--------------------- ---------------------
Total liabilities 429,125 423,157
--------------------- ---------------------
--------------------- ---------------------
Stockholders' equity:
Common stock - par value $0.038 per share,
Additional paid-in capital 123,807 123,807
Deficit (23,392) (24,595)
--------------------- ---------------------
--------------------- ---------------------
Total stockholders' equity 100,444 99,241
--------------------- ---------------------
--------------------- ---------------------
Total liabilities and stockholders' equity $ 529,569 $ 522,398
===================== =====================
===================== =====================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CE CASECNAN WATER AND ENERGY COMPANY, INC.
UNAUDITED STATEMENTS OF OPERATIONS
(in thousands, except number of shares and per share amounts)
--------------------------------
<TABLE>
<CAPTION>
Three Months Ended From the date of Inception
March 31 (September 21, 1994)
2000 1999 to March 31, 2000
------------------------- ------------------------ --------------------------
Revenues:
<S> <C> <C> <C>
Interest income $ 2,314 $ 3,302 $ 81,393
------------------------- ------------------------ --------------------------
Total revenues 2,314 3,302 81,393
------------------------- ------------------------ --------------------------
Costs and expenses:
Interest expense 12,127 11,350 202,747
Less capitalized interest (11,363) (8,210) (91,211)
------------------------- ------------------------ --------------------------
Total costs and expenses 764 3,140 111,536
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Net income (loss) before income tax 1,550 162 (30,143)
Benefit from (provision for)
deferred income tax (347) (48) 6,751
------------------------- ------------------------ --------------------------
Net income (loss) $ 1,203 $ 114 $ (23,392)
========================= ======================== ==========================
Net income (loss) per share $ 1.57 $ 0.15 $ (32.42)
========================= ======================== ==========================
Average number shares outstanding 767,162 767,162 721,544
========================= ======================== ==========================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
CE CASECNAN WATER AND ENERGY COMPANY, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
(in thousands)
--------------------------------
<CAPTION>
From the Date of
Three Months Ended Inception
March 31 (September 21, 1994)
2000 1999 to March 31, 2000
.................... ................... ........................
Cash flows from operating activities:
<S> <C> <C> <C>
Net income (loss) $ 1,203 $ 114 $ (23,392)
Adjustments to reconcile net income (loss) to net
Provision for (benefit from) deferred income tax 347 48 (6,751)
Amortization of bond issue costs 366 331 4,946
Decrease (increase) in accrued interest and other
receivables 95 448 (1,655)
Increase (decrease) in accounts payable and accrued
expenses (18) 9,322 8,632
.................... ................... ........................
Net cash provided by (used in) operating activities 1,993 10,263 (18,220)
-------------------- ------------------- ------------------------
Cash flows from investing activities:
Additions to development and construction costs (21,177) (18,184) (359,160)
Decrease (increase) in restricted cash and
Increase in restricted investments (234) (442) (122,409)
Increase (decrease) in accounts payable and
accrued expenses related to development and
construction activities 4,318 (2,847) 37,301
.................... ................... ........................
Net cash used in investing activities (3,645) (11,815) (472,884)
.................... ................... ........................
Cash flows from financing activities:
Increase in advances from an affiliate 1,668 1,699 11,692
Issuance of bonds payable - - 371,500
Proceeds from issuance of capital stock - - 123,836
Bond issue costs - - (13,590)
.................... ................... ........................
Net cash provided by financing activities 1,668 1,699 493,438
.................... ................... ........................
Net increase in cash and cash
equivalents 16 147 2,334
Cash and cash equivalents at beginning of period 2,318 1,996 -
.................... ................... ........................
Cash and cash equivalents at end of period $ 2,334 $ 2,143 $ 2,334
==================== =================== ========================
Supplemental disclosure:
Interest paid (net of amount capitalized) $ (9,533) $ (6,512) $ 92,740
==================== =================== ========================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CE CASECNAN WATER AND ENERGY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
(in thousands, except per share amounts)
--------------------------------
1. General:
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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, 2000 and the results of
operations and cash flows for the three months ended March 31, 2000 and 1999 and
the period from the date of inception (September 21, 1994) to March 31, 2000.
The results of operations for the three months ended March 31, 2000 and 1999 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, 1999 audited financial
statements included in Form 10-K 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 2 to the financial statements included in that
report.
<PAGE>
CE CASECNAN WATER AND ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands)
--------------------------------
Results of Operations:
- ---------------------
The Company is in the development stage and has not yet started commercial
operations. Revenue consists of interest income on cash received from bond
proceeds and equity contributions. Interest income decreased in the first
quarter of 2000 to $2,314 from $3,302 in the same period in 1999, a 29.9%
decrease. This decrease is primarily due to lower cash balances due to the use
of existing cash to support the ongoing construction activities.
Interest expense increased in the first quarter of 2000 to $11,761 compared to
$11,019 for the same period in 1999. Capitalized interest in the first quarter
2000 increased to $11,363 from $8,210 for the same period in 1999, a 38.4%
increase. The increase in capitalized interest results from higher cumulative
development and construction costs. Amortization of bond issue costs for the
three-month period ended March 31, 2000 was $366, compared to $331 for the same
period in 1999. Interest expense, capitalized interest and amortization of bond
issue costs relate to the notes and bonds payable issued by the Company in the
fourth quarter of 1996.
Liquidity and Capital Resources:
- -------------------------------
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 (the "Securities"), pursuant to a Trust
Indenture dated as of November 27, 1995, as amended to date.
The Securities are senior debt of the Company and are secured by an assignment
of all revenues that will be received from the Casecnan 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 interest of the Company. 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 Trust Indenture. The Securities contain customary events
of default and restrictive covenants.
<PAGE>
CE CASECNAN WATER AND ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands)
--------------------------------
Liquidity and Capital Resources (continued):
- -------------------------------------------
The Casecnan Project is being constructed pursuant to a fixed-price,
date-certain, turnkey engineering, procurement and construction contract to
complete the construction of the Casecnan Project (the "EPC Contract"). The work
under the EPC Contract is being conducted by a consortium consisting of
Cooperativa Muratori Cementisti CMC di Ravenna and Impresa Pizzarotti & C. Spa
working together with Siemens A.G., Sulzer Hydro Ltd., Black & Veatch and
Colenco Power Engineering Ltd. (collectively, the "Contractor").
In November 20, 1999, the EPC Contract, was amended to extend the Guaranteed
Substantial Completion Date for the Casecnan Project to March 31, 2001.
Accordingly, the Casecnan Project is now expected to become operational by the
second quarter of 2001.
Certain information included in this report contains forward-looking statements
made pursuant to the Private Securities Litigation Reform Act of 1995 ("Reform
Act"). Such statements are based on current expectations and involve a number of
known and unknown risks and uncertainties that could cause the actual results
and performance of the Company to differ materially from any expected future
results or performance, expressed or implied, by the forward-looking statements.
In connection with the safe harbor provisions of the Reform Act, the Company has
identified important factors that could cause actual results to differ
materially from such expectations, including development uncertainty, operating
uncertainty, acquisition uncertainty, uncertainties relating to doing business
outside of the United States, uncertainties relating to domestic and
international economic and political conditions and uncertainties regarding the
impact of regulations, changes in government policy, industry deregulation and
competition. Reference is made to all of the Company's SEC filings, incorporated
herein by reference, for a description of such factors. The Company assumes no
responsibility to update forward-looking information contained herein.
<PAGE>
CE CASECNAN WATER AND ENERGY COMPANY, INC.
PART II - OTHER INFORMATION
Item 1 - Legal proceedings.
Not applicable.
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.
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Not applicable.
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
Not applicable.
<PAGE>
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 12, 2000 /s/ Patrick J. Goodman
-----------------------
Patrick J. Goodman
Senior Vice President &
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 30,950
<SECURITIES> 0
<RECEIVABLES> 1,665
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 359,160
<DEPRECIATION> 0
<TOTAL-ASSETS> 529,569
<CURRENT-LIABILITIES> 0
<BONDS> 371,500
0
0
<COMMON> 29
<OTHER-SE> 100,415
<TOTAL-LIABILITY-AND-EQUITY> 529,569
<SALES> 0
<TOTAL-REVENUES> 2,314
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 764
<INCOME-PRETAX> 1,550
<INCOME-TAX> (347)
<INCOME-CONTINUING> 1,203
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,203
<EPS-BASIC> 1.57
<EPS-DILUTED> 1.57
</TABLE>
