SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
September 30, 2000
For the quarterly period ended. . . . . . . . . . . . . . . . . . . . . . . . .
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from. . . . . . . .to. . . . . . . . . . . . . . . . .
333-89725
Commission file number . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AES Eastern Energy, L.P.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Exact name of registrant as specified in its charter)
Delaware 54-1920088
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1001 N. 19th Street, Arlington, Va. 22209
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Address of principal executive offices) (Zip Code)
(703) 522-1315
Registrant's telephone number, including area code . . . . . . . . . . . . . . .
N/A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
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 [X] No [ ]
Registrant is a wholly owned subsidiary of The AES Corporation. Registrant meets
the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and
is filing this Quarterly Report on Form 10-Q with the reduced disclosure format
authorized by General Instruction H.
<PAGE>
TABLE OF CONTENTS
PART I
Page
Item 1. Condensed Consolidated Financial Statements . . . . . . . . . 3
AES EASTERN ENERGY, L.P.
Condensed Consolidated Financial Statements:
Statements of Income for the periods ended September 30, 2000 and 1999
(unaudited)
Balance Sheets as of September 30, 2000 and December 31, 1999
(unaudited)
Statements of Cash Flows for the periods ended September 30, 2000 and
1999 (unaudited)
Statement of Changes in Partners' Capital for the period ended
September 30, 2000 (unaudited)
Notes to Condensed Consolidated Financial Statements
AES NY, L.L.C. (General Partner of AES Eastern Energy, L.P.)*
Condensed Consolidated Financial Statements:
Balance Sheets as of September 30, 2000 and December 31, 1999
(unaudited)
Notes to Condensed Consolidated Balance Sheets
* The condensed and consolidated balance sheets of AES NY, L.L.C. contained in
this Quarterly Report on Form 10-Q should be considered only in connection
with its status as the general partner of AES Eastern Energy, L.P.
Item 2. Discussion and Analysis of Financial Condition
and Results of Operations
(a) Liquidity and Capital Resources . . . . . . . . . . . . 14
(b) Results of Operations . . . . . . . . . . . . . . . . . 15
PART II
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 16
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Reports on Form 8-K . . . . . . . . . . . . . . . . . . 16
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
AES Eastern Energy, L.P.
Condensed Consolidated Statements of Income (Unaudited)
Three months ended September 30, 2000 1999
---- ----
(Thousands)
Operating Revenues
Energy $86,571 $92,173
Capacity 7,957 7,933
Other 2,691 3,512
--------- --------
Total operating revenues 97,219 103,618
Operating Expenses
Fuel 35,042 33,732
Operations and maintenance 4,496 2,264
General and administrative 14,489 16,123
Depreciation and amortization 7,789 7,871
--------- --------
Total Operating Expenses 61,816 59,990
--------- --------
Operating Income 35,403 43,628
Other Income/(Expense)
Interest expense (11,784) (16,366)
Interest income 933 468
-------- --------
Net Income $24,552 $27,730
========= ========
The notes are an integral part of the condensed consolidated financial
statements.
3
<PAGE>
Item 1. Condensed Consolidated Financial Statements (Cont'd)
AES Eastern Energy, L.P.
Condensed Consolidated Statement of Income (Unaudited)
Nine months Perod from May 14,
ended 1999 (inception)
Sep. 30, 2000 to Sep. 30, 1999
------------- ----------------
(Thousands)
Operating Revenues
Energy $239,432 $107,211
Capacity 23,659 10,006
Other 3,837 3,626
--------- --------
Total operating revenues 266,928 120,843
Operating Expenses
Fuel 94,756 42,363
Operations and maintenance 12,903 2,978
General and administrative 42,290 18,070
Depreciation and amortization 23,647 9,818
--------- --------
Total Operating Expenses 173,596 73,229
--------- --------
Operating Income 93,332 47,614
Other Income/(Expense)
Interest expense (42,782) (18,546)
Interest income 2,022 715
-------- --------
Net Income $52,572 $29,783
========= ========
The notes are an integral part of the condensed consolidated financial
statements.
4
<PAGE>
Item 1. Condensed Consolidated Financial Statements (Cont'd)
AES Eastern Energy, L.P.
Condensed Consolidated Balance Sheets - (Unaudited)
Sep. 30, Dec. 31,
2000 1999
ASSETS (Thousands)
Current Assets
Restricted cash and cash equivalents $58,115 $52,637
Accounts receivable - trade 30,094 22,481
Accounts receivable - affiliates 1,964 271
Accounts receivable - other - 322
Inventory 26,803 27,989
Prepaid expenses 6,048 6,189
---------- ----------
Total Current Assets 123,024 109,889
Property, Plant and Equipment
Land 6,850 6,850
Electric generation assets 1,010,983 1,003,941
Accumulated depreciation (41,036) (17,389)
---------- ----------
Total property, plant and equipment 976,797 993,402
Other Assets
Rent reserve account 30,620 29,543
Other 1,363 -
---------- ----------
Total Assets $1,131,804 $1,132,834
========== ==========
LIABILITIES
Current Liabilities
Accounts payable $2,720 $508
Accrued interest 10,483 38,460
Due to The AES Corporation 6,257 3,250
Other liabilities and accrued expenses 24,928 20,832
---------- ----------
Total Current Liabilities 44,388 63,050
Long-term liabilities
Lease financing - long-term 650,000 650,000
Environmental remediation 10,235 11,080
Defined benefit plan obligation 26,049 23,880
Other liabilities 5,339 6,603
---------- ----------
Total Long-term Liabilities 691,623 691,563
---------- ----------
Total Liabilities 736,011 754,613
Commitments and Contingencies - -
PARTNERS' CAPITAL 395,793 378,221
---------- ----------
Total Liabilities and Partners' Capital $1,131,804 $1,132,834
========== ==========
The notes are an integral part of the condensed consolidated financial
statements.
5
<PAGE>
Item 1. Condensed Consolidated Financial Statements (Cont'd)
AES Eastern Energy, L.P.
Condensed Consolidated Statement of Cash Flow (Unaudited)
<TABLE>
<CAPTION>
Nine months Period from May 14,
ended 1999 (inception)
Sep. 30, 2000 to Sep. 30, 1999
------------- ----------------
(Thousands)
<S> <C> <C>
Operating Activities
Net income $52,572 $29,783
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 23,647 9,818
Accrued interest expense (27,977) 18,546
Interest income accrued in the rent reserve account (1,077) (515)
Changes in current operating assets and liabilities
Accounts receivable (8,984) (52,795)
Prepaid expenses 141 (11,663)
Inventory 1,186 1,337
Accounts payable and accrued liabilities 9,375 32,130
Other (1,363) 824
-------- --------
Net Cash Provided by Operating Activities 47,520 27,465
-------- --------
Investing Activities
Acquisition of assets at inception date - (267,424)
Payments for capital additions (7,042) (55,065)
Increase in restricted cash (5,478) (31,256)
-------- --------
Net Cash Used in Investing Activities (12,520) (353,745)
-------- --------
Financing Activities
Cash capital contributions - 354,953
Payments to rent service reserve - (28,673)
Dividends paid (35,000) -
-------- --------
Net Cash (Used in)/Provided by Financing Activities (35,000) 326,280
-------- --------
Net Change in Cash and Cash Equivalents - -
Cash and Cash Equivalents, Beginning of Period - -
-------- --------
Cash and Cash Equivalents, End of Period - -
======== ========
</TABLE>
The notes are an integral part of the condensed consolidated financial
statements.
6
<PAGE>
Item 1. Condensed Consolidated Financial Statements (Cont'd)
AES Eastern Energy, L.P.
Condensed Consolidated Statement of Changes in Partners' Capital - (Unaudited)
Nine months ended September 30, 2000
(Thousands)
General Limited
Partner Partner Total
------- ------- -----
Balance, December 31, 1999 $3,782 $374,439 $378,221
Add net income 526 52,046 52,572
Less dividends paid (350) (34,650) (35,000)
-------- -------- --------
Balance, September 30, 2000 $3,958 $391,835 $395,793
======== ======== ========
The notes are an integral part of the condensed consolidated financial
statements.
7
<PAGE>
Item 1. Condensed Consolidated Financial Statements (Cont'd)
Note 1. Unaudited Condensed Consolidated Financial Statements
The accompanying unaudited condensed consolidated financial statements of
AES Eastern Energy, L.P. (the Partnership) reflect all adjustments which are
necessary, in the opinion of management, for a fair presentation of the
Partnership's consolidated results for the interim periods. All such adjustments
are of a normal recurring nature. The unaudited condensed consolidated financial
statements should be read in conjunction with the Partnership's consolidated
financial statements and notes contained therein, for the period from May 14,
1999 (inception) to December 31, 1999. Due to the seasonal nature of the
Partnership's operations, financial results for interim periods are not
necessarily indicative of trends for a 12-month period.
Note 2. Reclassifications
Certain amounts have been reclassified on the condensed consolidated
financial statements to conform with the 2000 presentation.
Note 3. Commitments and Contingencies
Coal Purchases - In connection with the acquisition of the Partnership's
four coal-fired electric generating stations (the Plants), the Partnership has
assumed from New York State Electric & Gas Corporation (NYSEG) an agreement to
purchase the coal required by the Somerset and Cayuga plants. Each year, either
party can request renegotiation of the price of one-third of the coal supplied
pursuant to this agreement. The Partnership renegotiated the price of one-third
of the coal commitment for 2001. As of May 14, 1999, the acquisition date of the
Plants, the contract prices were above the market price, and the Partnership
recorded a purchase accounting liability for approximately $15.7 million related
to the fulfillment of its obligation to purchase coal under this agreement. As
of September 30, 2000, the remaining liability was approximately $8.6 million.
Environmental - The Partnership has recorded a liability for environmental
remediation associated with the acquisition of the Plants. On an ongoing basis,
the Partnership monitors its compliance with environmental laws. Because of the
uncertainties associated with environmental compliance and remediation
activities, future costs of compliance or remediation could be higher or lower
than the amount currently accrued.
On October 14, 1999, the Partnership received an information request letter
from the New York State Attorney General, which seeks detailed operating and
maintenance history for the Westover and Greenidge Plants. On January 13, 2000,
the Partnership received a subpoena from New York State Department of
Environmental Conservation (DEC) seeking similar operating and maintenance
history for all four of the Plants. This information is being sought in
connection with the Attorney General's and the DEC's investigations of several
electricity generating stations in New York that are suspected of undertaking
modifications in the past without undergoing an air permitting review. The
Partnership has provided the requested information to the Attorney General and
DEC.
8
<PAGE>
On April 14, 2000, the Partnership received a request for information
pursuant to Section 114 of the Clean Air Act from the U.S. Environmental
Protection Agency (EPA) seeking detailed operating and maintenance history data
for the Cayuga and Somerset Plants. EPA has commenced an industry-wide
investigation of coal-fired electric power generators to determine compliance
with environmental requirements under the Clean Air Act associated with repairs,
maintenance, modifications and operational changes made to coal-fired facilities
over the years. The EPA's focus is on whether the changes were subject to new
source review or new source performance standards, and whether best available
control technology was or should have been used. The Partnership has provided
the requested documentation and the EPA is currently evaluating the materials.
By letter dated May 25, 2000, the DEC issued a Notice of Violation (NOV) to
NYSEG for violations of the Clean Air Act and the Environmental Conservation Law
at the Greenidge and Westover plants related to NYSEG's alleged failure to
obtain an air permitting review for repairs and improvements made during the
1980s and 1990s, which was prior to the acquisition of the Plants by the
Partnership. Pursuant to the Asset Purchase Agreement relating to the
acquisition of the Plants from NYSEG, the Partnership agreed to assume
responsibility for environmental liabilities that arose while NYSEG owned the
Plants. The Partnership has agreed with NYSEG that the Partnership will assume
the responsibility for the NOV, subject to a reservation of the Partnership's
right to assert any applicable exception to its contractual undertaking to
assume preexisting environmental liabilities. The financial and operational
effect of this NOV is still being discussed with the DEC. The Partnership is
unable to estimate the effect of this NOV on its financial condition or results
of future operations.
The NOV issued by the DEC, and any additional enforcement actions that might
be brought by the New York State Attorney General, the DEC or the EPA, against
the Somerset, Cayuga, Greenidge or Westover Plants, might result in the
imposition of penalties and might require further emission reductions at those
Plants. The Partnership is unable to estimate the effect, if any, of these
matters on its financial condition or results of future operations.
Nitrogen Oxide and Sulfur Dioxide Emission Allowances - The Plants emit
nitrogen oxide (NOx) and sulfur dioxide (SO2) as a result of burning coal to
produce electricity. The Plants have been allocated allowances by the DEC to
emit NOx during the ozone season, which runs from May 1 to September 30. Each
NOx allowance authorizes the emission of one ton of NOx during the ozone season.
The Plants are also subject to SO2 emission allowance requirements imposed by
the EPA. Each SO2 allowance authorizes the emission of one ton of SO2 during the
calendar year. All of the Plants are required to hold sufficient allowances to
emit SO2. Both NOx and SO2 allowances may be bought, sold, or traded. If NOx
and/or SO2 emissions exceed the allowance amounts allocated to the Plants, then
the Partnership may need to purchase additional allowances on the open market or
otherwise reduce its production of electricity to stay within the allocated
amounts.
9
<PAGE>
Item 1. Condensed Consolidated Financial Statements (Cont'd)
AES NY, L.L.C.
Condensed Consolidated Balance Sheets - (Unaudited)
Sep. 30, Dec. 31,
2000 1999
---- ----
(Thousands)
ASSETS
Current Assets
Restricted cash and cash equivalents $60,522 $54,711
Accounts receivable - trade 34,081 25,072
Accounts receivable - other 2,052 368
Inventory 29,104 30,524
Prepaid expenses 6,244 6,327
---------- ----------
Total Current Assets 132,003 117,002
Property, Plant and Equipment
Land 7,300 7,300
Electric generation assets 1,016,062 1,008,969
Accumulated depreciation (43,325) (18,596)
---------- ----------
Total property, plant and equipment 980,037 997,673
Other Assets
Rent reserve account 30,620 29,543
Other 1,363 -
---------- ----------
Total Assets $1,144,023 $1,144,218
========== ==========
LIABILITIES AND MEMBER'S EQUITY
Current Liabilities
Accounts payable $3,037 $552
Accrued interest 10,483 38,460
Due to The AES Corporation 6,324 3,250
Other liabilities and accrued expenses 26,642 21,954
---------- ----------
Total Current Liabilities 46,486 64,216
Long-term liabilities
Lease financing - long-term 650,000 650,000
Environmental remediation 12,795 13,641
Defined benefit plan obligation 30,165 28,046
Other liabilities 5,341 6,603
---------- ----------
Total Long-term Liabilities 698,301 698,290
---------- ----------
Total Liabilities 744,787 762,506
Commitments and Contingencies - -
Minority Interest 395,244 377,895
Member's Equity 3,992 3,817
---------- ----------
Total Liabilities and Member's Equity $1,144,023 $1,144,218
========== ==========
The notes are an integral part of the condensed consolidated financial
statements.
10
<PAGE>
Item 1. Condensed Consolidated Financial Statements (Cont'd)
Note 1. Unaudited Condensed Consolidated Balance Sheets
The accompanying unaudited condensed consolidated balance sheets of AES NY,
L.L.C. (the Company) reflect all adjustments which are necessary, in the opinion
of management, for a fair presentation of the Company's consolidated results for
the interim periods. All such adjustments are of a normal recurring nature. The
unaudited condensed consolidated balance sheets should be read in conjunction
with the Company's consolidated balance sheet and notes contained therein, as of
December 31, 1999. Due to the seasonal nature of the Company's operations,
financial results for interim periods are not necessarily indicative of trends
for a 12-month period.
Note 2. Plants Placed on Long-Term Cold Standby
During the fourth quarter of 2000, AES Creative Resources, L.P. (ACR) placed
its AES Hickling and AES Jennison plants on long-term cold standby. The
long-term cold standby designation means that these plants require more than 14
days to be brought on-line. The Company is currently evaluating the future of
these plants.
Note 3. Commitments and Contingencies
Coal Purchases - In connection with the acquisition by AES Eastern Energy,
L.P. (AEE) of its four coal-fired electric generating stations (the AEE Plants),
AEE has assumed from New York State Electric & Gas Corporation (NYSEG) an
agreement to purchase the coal required by the Somerset and Cayuga plants. Each
year, either party can request renegotiation of the price of one-third of the
coal supplied pursuant to this agreement. AEE renegotiated the price of
one-third of its coal commitment for 2001. As of the acquisition date, the
contract prices were above the market price, and the Company recorded a purchase
accounting liability for approximately $15.7 million related to the fulfillment
of its obligation to purchase coal under this agreement. As of September 30,
2000, the remaining liability was approximately $8.6 million.
Environmental - The Company has recorded a liability for environmental
remediation associated with the acquisition of the AEE Plants and the
acquisition by ACR of two additional coal-fired electric generating stations
(the ACR Plants). On an ongoing basis, the Company monitors its compliance with
environmental laws. Because of the uncertainties associated with environmental
compliance and remediation activities, future costs of compliance or remediation
could be higher or lower than the amount currently accrued.
On October 14, 1999, AEE received an information request letter from the New
York State Attorney General, which seeks detailed operating and maintenance
history for the Westover and Greenidge Plants. On January 13, 2000, the Company
received a subpoena from New York State Department of Environmental Conservation
11
<PAGE>
(DEC) seeking similar operating and maintenance history from the AEE Plants and
the ACR Plants. This information is being sought in connection with the Attorney
General's and the DEC's investigations of several electricity generating
stations in New York that are suspected of undertaking modifications in the past
without undergoing an air permitting review. ACR and AEE have provided the
requested information to the Attorney General and DEC.
On April 14, 2000, AEE received a request for information pursuant to
Section 114 of the Clean Air Act from the U.S. Environmental Protection Agency
(EPA) seeking detailed operating and maintenance history data for the Cayuga and
Somerset Plants. EPA has commenced an industry-wide investigation of coal-fired
electric power generators to determine compliance with environmental
requirements under the Clean Air Act associated with repairs, maintenance,
modifications and operational changes made to coal-fired facilities over the
years. The EPA's focus is on whether the changes were subject to new source
review or new source performance standards, and whether best available control
technology was or should have been used. AEE has provided the requested
documentation and the EPA is currently evaluating the materials.
By letter dated May 25, 2000, the DEC issued a Notice of Violation (NOV) to
NYSEG for violations of the Clean Air Act and the Environmental Conservation Law
at the Greenidge and Westover plants related to NYSEG's alleged failure to
obtain an air permitting review for repairs and improvements made during the
1980s and 1990s, which was prior to the acquisition of the plants by the
Company. Pursuant to the Asset Purchase Agreement relating to the acquisition of
the AEE Plants and ACR Plants from NYSEG, the Company agreed to assume
responsibility for environmental liabilities that arose while NYSEG owned the
plants. The Company has agreed with NYSEG that the Company will assume the
responsibility for the NOV, subject to a reservation of the Company's right to
assert any applicable exception to its contractual undertaking to assume
preexisting environmental liabilities. The financial and operational effect of
this NOV is still being discussed with the DEC. The Company is unable to
estimate the effect of this NOV on its financial condition or results of future
operations.
The NOV issued by the DEC, and any additional enforcement actions that might
be brought by the New York State Attorney General, the DEC or the EPA, against
the Somerset, Cayuga, Greenidge, Westover or ACR plants, might result in the
imposition of penalties and might require further emission reductions at those
plants. The Company is unable to estimate the effect, if any, of these matters
on its financial condition or results of future operations.
In October 1999, ACR entered into a consent order with the DEC to resolve
alleged violations of the water quality standards in the groundwater down
gradient of an ash disposal site. The consent order includes a suspended $5,000
civil penalty and a requirement to submit a work plan to initiate closure of the
landfill. The Company expects ACR will file the work plan by the end of 2000.
The consent order also calls for a site investigation and there is a possibility
that some groundwater remediation at the site may be required. AEE2, L.L.C., a
subsidiary of AEE, will contribute two-thirds of the costs to close the
landfill, which are anticipated to be approximately $3 million, and of any
additional costs for long term groundwater monitoring. While the actual closure
costs may exceed $3 million, which is included in the environmental remediation
liability, the Company does not expect any added closure costs to be material.
12
<PAGE>
Nitrogen Oxide and Sulfur Dioxide Emission Allowances - The AEE Plants and
the ACR Plants emit nitrogen oxide (NOx) and sulfur dioxide (SO2) as a result of
burning coal to produce electricity. The AEE Plants and the ACR Plants have been
allocated allowances by the DEC to emit NOx during the ozone season, which runs
from May 1 to September 30. Each NOx allowance authorizes the emission of one
ton of NOx during the ozone season. The AEE Plants and the ACR Plants are also
subject to SO2 emission allowance requirements imposed by the EPA. Each SO2
allowance authorizes the emission of one ton of SO2 during the calendar year.
All of the AEE Plants and the ACR Plants are required to hold sufficient
allowances to emit SO2. Both NOx and SO2 allowances may be bought, sold, or
traded. If NOx and/or SO2 emissions exceed the allowance amounts allocated to
the AEE Plants and the ACR Plants, then AEE and ACR may need to purchase
additional allowances on the open market or otherwise reduce their production of
electricity to stay within the allocated amounts.
13
<PAGE>
Item 2. Discussion and analysis of financial condition and results of
operations
(a) Liquidity and Capital Resources
Operations
Cash flow from our operations during the first half of 2000 was sufficient
to cover the aggregate rental payments under the leases on the Somerset
Generating Station and the Cayuga Generating Station due July 3, 2000. We
believe that cash flow from our operations will be sufficient to cover aggregate
rental payments on each rent payment date thereafter.
We have entered into contracts for the sale of an aggregate of 450 megawatts
(MW) of electric energy on a 24-hour per day basis through December 31, 2000 at
set prices that exceed historical average prices for all months except June,
July and August. These contracts provide a set price for a portion of our
available power while reducing our exposure to market price fluctuations during
the year. We have also entered into additional contracts for the sale of
electric energy during 2000. The maximum capacity that we have committed under
these additional contracts during any month is an aggregate of 480MW. These
contracts allowed us to lock-in the price of our electric energy at prices we
considered favorable. These contracts represent less than our total generating
capacity of 1,268MW during those periods. This provides us with the flexibility
to use our remaining generating capacity to take advantage of any significant
price increases during peak demand periods while minimizing the risk of having
to purchase replacement power due to a forced outage.
We are obligated to make payments under the Coal Hauling Agreement with
Somerset Railroad Corporation, an affiliated company, in an amount sufficient,
when added with funds available from other sources, to enable Somerset Railroad
to pay, when due, all of its operating expenses and other expenses, including
interest on and principal of outstanding indebtedness. Somerset Railroad
refinanced its $26 million credit facility with a 14-year note. This note has a
floating interest rate and requires quarterly principal and interest payments
over the term of the note.
Investing Activities
During the first nine months of 2000, we incurred approximately $7 million
in capital expenditures. These expenditures were primarily for the installation
of a selective catalytic reduction system at the Cayuga Generating Station and
other necessary expenditures under our life extension program. We expect capital
expenditures to be $12 million in 2000, $15 million in 2001 and $5 million in
2002.
Financing Activities
The pass through trust certificates accrued additional interest at a rate of
0.50% per annum from November 10, 1999 until March 27, 2000, when we completed
an exchange offer for the pass through trust certificates. The additional
interest accrued as a result of our failure to complete the exchange offer on or
prior to November 10, 1999. This additional interest was approximately $1
million with the amount due through December 31, 1999 being paid in April 2000.
The remaining additional interest was paid on the scheduled rent payment date,
July 3, 2000.
Cash flow from operations in excess of the aggregate rental payments under
our leases is permitted, if certain criteria are met, to be paid in the form of
a dividend to AES NY, LLC. On July 11, 2000, we made a dividend payment of $35
million.
14
<PAGE>
(b) Results of Operations
We began operations on May 14, 1999. There are no separate financial
statements available with regard to our electricity generating stations prior to
May 14, 1999 because their operations were fully integrated with, and therefore
results of operation consolidated into, New York State Electric & Gas
Corporation.
Revenues for the three months ended September 30, 2000, compared to the
prior year, decreased $6 million primarily due to lower energy prices. Operating
expenses for the three months ended September 30, 2000, compared to the prior
year, increased $2 million primarily due to increased fuel cost. Net income
decreased $3 million.
During the nine months ended September 30, 2000, compared to the period from
May 14, 1999 to September 30, 1999, revenues increased $146 million while
operating expenses increased $100 million due to the limited operations in 1999.
Net income increased $23 million.
Forward-looking Statements
Certain statements contained in this Form 10-Q are forward-looking
statements as that term is defined in the Private Securities Litigation Reform
Act of 1995. These forward-looking statements speak only as of the date hereof.
Forward-looking statements can be identified by the use of forward-looking
terminology such as "believe," "expects," "may," "intends," "will," "should" or
"anticipates" or the negative forms or other variations of these terms or
comparable terminology, or by discussions of strategy. Future results covered by
the forward-looking statements may not be achieved. Forward-looking statements
are subject to risks, uncertainties and other factors, which could cause actual
results to differ materially from future results expressed or implied by such
forward-looking statements. The most significant risks, uncertainties and other
factors are discussed under the heading "Business--General Development of
Business" in our Annual Report on Form 10-K, and you are urged to read this
section and carefully consider such factors.
15
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Note 3 to our Condensed Consolidated Financial Statements in Part I.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See Exhibit Index.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter.
Signature
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.
AES EASTERN ENERGY, L.P.
By: AES NY, L.L.C., as General Partner
By:/s/ Daniel J. Rothaupt
--------------------------------
Daniel J. Rothaupt
President
By:/s/ Michael Romaniw
---------------------------------
Michael Romaniw
Vice President
(principal financial officer)
Date: November 3, 2000
16
<PAGE>
EXHIBIT INDEX
(a) The following exhibits are delivered with this report:
Exhibit No.
27 - Financial Data Schedule.
17
