<PAGE>
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 September 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 333-91391
AES IRONWOOD, L.L.C.
(Exact name of registrant as specified in its charter)
DELAWARE 54-1457537
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
305 PRESCOTT ROAD, LEBANON, PA 17042
(717) 228-1328
(Registrant's address of principal executive offices,)
(zip code and telephone number, including area code)
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 [ ]
Page 1 of 15
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AES IRONWOOD, L.L.C.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements (unaudited)
Condensed Statements of Operations -- Three month period ended September 30, 1999 and 2000,
nine month period ended September 30, 2000 and the period from June 25, 1999 (inception)
through September 30, 2000 ....................................................................3
Condensed Balance Sheets -- September 30, 2000 and December 31, 1999...............................4
Condensed Statement of Changes in Member's Deficit -- Period from June 25, 1999
(inception) through September 30, 2000 ........................................................5
Condensed Statements of Cash Flows -- Nine months ended September 30, 2000 and the period
from June 25, 1999 (inception) through September 30, 2000 .....................................6
Notes to the Condensed Financial Statements........................................................7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..................10
Item 3. Quantitative and Qualitative Disclosures About Market Risk.............................................12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.......................................................................13
SIGNATURES.................................................................................................................14
</TABLE>
Page 2 of 15
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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
AES IRONWOOD, L.L.C.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF OPERATIONS,
THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000,
NINE MONTHS ENDED SEPTEMBER 30, 2000
AND THE PERIOD FROM JUNE 25, 1999 (INCEPTION) THROUGH SEPTEMBER 30, 2000
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
June 25,1999
(inception)
Three Months Ended Nine Months Ended through
September 30, September 30, September 30,
------------------------------- -------------------- ----------------
2000 1999 2000 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING EXPENSES
General and
Administrative costs $ (137) $ (162) $ (138) $ (307)
------------- ------------- ------------- ----------------
Operating Loss (137) (162) (138) (307)
OTHER INCOME/EXPENSE
Interest income 581 1,896 2,292 5,576
Interest expense (455) (3,504) (2,775) (8,531)
------------- ------------- ------------- ----------------
NET LOSS $ (11) $(1,770) $ (621) $(3,262)
============= ============= ============= ================
</TABLE>
See notes to condensed financial statements.
Page 3 of 15
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AES IRONWOOD, L.L.C.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED BALANCE SHEETS,
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
---- ----
ASSETS:
<S> <C> <C>
Current Assets:
Cash ............................................................... $ 289 $ 633
Interest Receivable................................................. 341 437
Accounts Receivable - other......................................... 164 -
Investments held by trustee -at cost, which approximates market 29,498 22,568
value.............................................................
----------------- -----------------
Total current assets............................................ 30,292 23,638
Land 528 528
Construction in progress................................................. 289,000 244,563
Certificate of deposit................................................... 385 385
Deferred financing costs - net of accumulated amortization of $182 and $44, 3,452 2,447
respectively........................................................
Investments held by trustee- at cost, which approximates market value.... - 68,145
Other assets............................................................. 410 317
----------------- -----------------
Total assets.................................................... $ 324,067 $ 340,023
================= =================
LIABILITIES AND MEMBER'S DEFICIT:
Current Liabilities:
Accounts payable.................................................... $ 2,466 $ 20,139
Accrued Interest.................................................... 2,277 2,429
Payable to affiliate................................................ 2,465 918
Payable to parent................................................... 499 442
Retention payable................................................... 11,122 -
----------------- -----------------
Total current liabilities....................................... 18,829 23,928
Retention payable........................................................ - 10,236
Bonds payable............................................................ 308,500 308,500
----------------- -----------------
Total liabilities............................................... 327,329 342,664
================= =================
Commitments (Notes 4 and 5)
Member's deficit:
Common stock, $1 par value-10 shares authorized, none issued or - -
outstanding.....................................................
Deficit accumulated during the development stage.................... (3,262) (2,641)
----------------- -----------------
Total member's deficit.......................................... (3,262) (2,641)
----------------- -----------------
Total liabilities and member's deficit.......................... $ 324,067 $ 340,023
================= =================
</TABLE>
See notes to condensed financial statements.
Page 4 of 15
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AES IRONWOOD, L.L.C.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENT OF CHANGES IN MEMBER'S DEFICIT, PERIOD FROM JUNE 25,
1999 (INCEPTION) THROUGH SEPTEMBER 30, 2000
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ACCUMULATED
------------ -----------
SHARES AMOUNT DEFICIT TOTAL
------ ------ ------- -----
<S> <C> <C> <C> <C>
BALANCE, JUNE 25,1999 - - $ - $ -
Net Loss - - (2,641) (2,641)
-------------- -------------- ----------------- --------------
BALANCE, DECEMBER 31,1999 - - (2,641) (2,641)
Net Loss - - (621) (621)
-------------- -------------- ----------------- --------------
BALANCE, SEPTEMBER 30, 2000 - - $ (3,262) $ (3,262)
============== ============== ================= ==============
</TABLE>
See notes to condensed financial statements.
Page 5 of 15
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AES IRONWOOD, L.L.C.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
2000 AND THE PERIOD FROM JUNE 25, 1999 (INCEPTION) THROUGH SEPTEMBER 30, 2000
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
June 25, 1999
Nine Months ended (inception) through
September 30, 2000 September 30, 2000
------------------------- ------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss............................................ $ (621) $ (3,262)
Amortization of deferred financing costs............ 138 182
Change in:
Interest receivable.............................. 96 (341)
Accrued interest................................ (152) (164)
Other receivables............................... (164) 2,277
------------------------- ------------------------
Net cash used in operating activities........ (703) (1,308)
INVESTING ACTIVITIES:
Payments for construction in progress............... (59,620) (272,448)
Payments for land................................... - (528)
Change in debt service reserve...................... 61,215 (29,883)
Purchase of other assets............................ (93) (410)
------------------------- ------------------------
Net cash provided by (used in) investing activities. 1,502 (303,269)
FINANCING ACTIVITIES:
Proceeds from project debt issuance................. - 308,500
Payments for deferred financing costs............... (1,143) (3,634)
------------------------- ------------------------
Net cash (used in) provided by financing activities. (1,143) 304,866
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS ....................................... (344) 289
------------------------- ------------------------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD....... 633 -
CASH AND CASH EQUIVALENTS, END OF PERIOD............. $ 289 $ 289
------------------------- ------------------------
SUPPLEMENTAL DISCLOSURE:
Interest paid................................ $ 20,930 $ 32,694
========================= ========================
</TABLE>
See notes to condensed financial statements.
Page 6 of 15
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AES IRONWOOD, L.L.C.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000,
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND
THE PERIOD FROM JUNE 25, 1999 (INCEPTION) THROUGH SEPTEMBER 30, 2000
1. ORGANIZATION
AES Ironwood, L.L.C. was formed on October 30, 1998, in the State of
Delaware, to develop, construct, and operate a 705-megawatt (MW)
gas-fired, combined cycle electric generating facility in South Lebanon
Township, Pennsylvania. AES Ironwood, L.L.C. was considered dormant
until June 25, 1999, at which time it consummated a project financing
and certain related agreements. The facility, currently under
construction, will consist of two Westinghouse 501 G combustion
turbines, two heat recovery steam generators, and one steam turbine.
The facility will produce and sell electricity, as well as provide fuel
conversion and ancillary services, solely to Williams Energy under a
power purchase agreement with a term of 20 years that will commence on
the facility's anticipated commercial operation date, June 30, 2001.
AES Ironwood, L.L.C. is in the development stage and is not expected to
generate any operating revenues until the facility achieves commercial
operations. As with any new business venture of this size and nature,
operation of the facility could be affected by many factors. Management
of AES Ironwood, L.L.C. believes that the assets of AES Ironwood,
L.L.C. are realizable.
AES Ironwood, L.L.C. is a wholly-owned subsidiary of AES Ironwood,
Inc., which is a wholly-owned subsidiary of The AES Corporation. AES
Ironwood, Inc. has no assets other than its ownership interests in AES
Ironwood, L.L.C. and AES Prescott, L.L.C. AES Ironwood, Inc. has no
operations and is not expected to have any operations. Its only income
will be from distributions it receives from AES Ironwood, L.L.C. and
AES Prescott, L.L.C., once AES Ironwood, L.L.C. achieves commercial
operation. The equity that AES Ironwood, Inc. is to provide to AES
Ironwood, L.L.C. will be provided to AES Ironwood, Inc. by The AES
Corporation, which owns all of the stock of AES Ironwood, Inc. The AES
Corporation files quarterly and annual audited reports with the
Securities and Exchange Commission under the Securities Exchange Act of
1934, which are publicly available. AES Ironwood Inc.'s equity
contribution obligations are required to be supported by either an
insurance bond or letter of credit. Currently those obligations are
supported by an insurance bond issued to the collateral agent.
On June 25, 1999, AES Ironwood, L.L.C. issued $308.5 million in senior
secured bonds for the purpose of providing financing for the
construction of the facility and to fund, through the construction
period, interest payments to the bondholders. On May 12, 2000, the
Company consummated an exchange offer whereby the holders of the senior
secured bonds exchanged their privately placed senior secured bonds for
registered senior secured bonds.
Pursuant to an equity subscription agreement (see Note 3), AES
Ironwood, Inc. has agreed to contribute up to approximately $50.1
million to AES Ironwood, L.L.C. to fund construction after the bond
proceeds have been fully utilized.
Page 7 of 15
<PAGE>
2. BASIS OF PRESENTATION
In AES Ironwood, L.L.C.'s opinion, all adjustments necessary for a fair
presentation of the unaudited results of operations for the interim
periods presented herein, are included. All such adjustments are
accruals of a normal and recurring nature. The results of operations
for the three and nine months periods presented herein are not
necessarily indicative of the results of operations to be expected for
the full year.
These financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. Because the accompanying condensed consolidated
financial statements do not include all of the information and
footnotes required by generally accepted accounting principles, they
should be read in conjunction with the audited financial statements for
the period ended December 31, 1999 and notes thereto included in AES
Ironwood, L.L.C.'s prospectus dated March 31, 2000.
3. EQUITY SUBSCRIPTION AGREEMENT
AES Ironwood, L.L.C., along with AES Ironwood, Inc., has entered into
an equity subscription agreement, pursuant to which AES Ironwood, Inc.
has agreed to contribute up to approximately $50.1 million to AES
Ironwood, L.L.C. to fund project costs. This amount is secured by an
acceptable bond issued by AES Ironwood, Inc. AES Ironwood, Inc. will
fund these amounts as they come due upon the earlier of (a) expenditure
of all funds that have been established for construction or (b) the
occurrence, and during the continuation of, an event of default, as
defined under the indenture governing its senior secured bonds. A
portion of this equity requirement may be made in the form of affiliate
debt, between AES Ironwood, Inc. and AES Ironwood, L.L.C., which would
be subordinate to the senior secured bonds.
4. POWER PURCHASE AGREEMENT
AES Ironwood, L.L.C. and Williams Energy have entered into a power
purchase agreement for the sale of all electric energy and capacity
produced by the facility, as well as ancillary services and fuel
conversion services. The term of the power purchase agreement is 20
years, commencing when the construction of the facility is complete and
the facility is commercially viable to produce electricity and related
capacity, as well as to provide ancillary and fuel conversion services.
Payment obligations to AES Ironwood, L.L.C. are guaranteed by The
Williams Companies, Inc. Such payment obligations under the guarantee
are capped at an amount equal to 125% of the sum of the principal
amount of the senior secured bonds plus the maximum debt service
reserve account required balance. AES Ironwood, L.L.C. has provided
Williams Energy a guaranty issued by The AES Corporation of specific
payment obligations should the facility not achieve commercial
operation by June 30, 2001. The AES Corporation's liability under the
guaranty is capped at $30 million. AES Ironwood, L.L.C. has the option,
and may be required under specific conditions described in the power
purchase agreement, to replace the guaranty issued by The AES
Corporation with a letter of credit issued by a commercial bank. In
such case, the repayment obligations with respect to drawings under the
letter of credit are to be a senior debt obligation of AES Ironwood,
L.L.C.
Page 8 of 15
<PAGE>
5. COMMITMENTS AND CONTINGENCIES
CONSTRUCTION - AES Ironwood, L.L.C. has entered into a fixed-price
turnkey construction agreement with Siemens Westinghouse for the
design, engineering, procurement and construction of the facility.
Siemens Westinghouse will provide AES Ironwood, L.L.C., at a cost of
approximately $500,000 per month, with specific combustion turbine
maintenance services and spare parts for an initial term of between
eight and ten years under a maintenance service agreement. As of
September 30, 2000 and December 31, 1999 AES Ironwood, L.L.C. was
liable to Siemens Westinghouse for a retention payment as part of
the total contract price due at the completion of the contract for
approximately $11.1 million and $10.2 million, respectively.
WATER SUPPLY - AES Ironwood, L.L.C. has entered into a contract with
the City of Lebanon Authority for the purchase of 50 percent of the
water use of the facility. The contract has a term of 25 years. Costs
associated with the use of water by the facility under this contract
are based on gallons used per day at prices specified under the
contract terms. AES Ironwood, L.L.C. has also entered into an agreement
with Pennsy Supply, Inc. which will provide the remaining 50 percent of
the water use of the facility.
INTERCONNECTION AGREEMENT - AES Ironwood, L.L.C. has entered into an
interconnection agreement with Metropolitan Edison Company to transmit
the electricity generated by the facility to the transmission grid so
that it may be sold as prescribed under AES Ironwood, L.L.C.'s power
purchase agreement. The agreement is in effect for the life of the
facility, yet may be terminated by mutual consent of both Metropolitan
Edison Company and AES Ironwood, L.L.C. under certain circumstances as
detailed in the agreement. Costs associated with the agreement are
based on electricity transmitted via Metropolitan Edison Company at a
variable price, the tariff imposed by the Pennsylvania/New
Jersey/Maryland power pool market, as charged by Metropolitan Edison
Company to AES Ironwood, L.L.C., which is comprised of both service
cost and asset recovery cost, as determined by Metropolitan Edison
Company and approved by the Federal Energy Regulatory Committee.
WATER SUPPLY PIPELINE - AES Ironwood, L.L.C. has entered into two
agreements in relation to the construction of the water supply
pipeline. The first agreement is with G.L. Marks Contracting, Inc., for
the construction of the water pipeline for approximately $2.7 million.
The second agreement is with Conewago Enterprises, Inc., for the
construction of the pumping station, at an estimated cost of
approximately $3.3 million.
LETTER OF CREDIT - AES Ironwood, L.L.C. also has a letter of credit
agreement outstanding to fund the construction of an access road to the
facility during construction. In connection with this letter of credit,
AES Ironwood, L.L.C. has made a collateral deposit into a certificate
of deposit account of approximately $385,000, which equals the amount
available under this agreement.
SURETY BOND AGREEMENT - AES Ironwood, Inc. has a surety bond agreement
for $50.1 million in relation to its equity subscription agreement.
Annual commitment fees will be assessed based on the amount outstanding
during the year. At September 30, 2000, no amount has been drawn and no
amount is outstanding under the surety bond agreement.
Page 9 of 15
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this Form 10-Q, as well as statements made by
the Company in periodic press releases and other public communications,
constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Certain, but not
necessarily all, of such forward-looking statements can be identified
by the use of forward-looking terminology, such as "believes,"
"estimates," "plans," "projects," "expects," "may," "will," "should,"
"approximately," or "anticipates" or the negative thereof or other
variations thereof or comparable terminology, or by discussion of
strategies, each of which involves risks and uncertainties. The Company
has based these forward-looking statements on its current expectations
and projections about future events based upon its knowledge of facts
as of the date of this Form 10-Q and its assumptions about future
events.
All statements other than of historical facts included herein,
including those regarding market trends, the Company's financial
position, business strategy, projected plans and objectives of
management for future operations, are forward-looking statements. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors outside of the Company's control that
may cause the actual results or performance of the Company to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements.
These risks, uncertainties and other factors include, among others, the
following:
o unexpected construction delays
o unexpected problems relating to the start-up, commissioning
and performance of the facility
o the financial condition of third parties on which we depend
o an adequate merchant market after the expiration of the
power purchase agreement
o capital shortfalls and access to additional capital on
reasonable terms
o inadequate insurance coverage
o unexpected expenses or lower than expected revenues once
commercial operations have begun
o environmental and regulatory compliance, and
o the additional factors discussed in the "Risk Factors"
section of the Company's prospectus dated March 31, 2000
The Company has no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
GENERAL
AES Ironwood, L.L.C. (the "Company") was formed on October 30, 1998 to
develop, construct, own, operate and maintain its facility. The Company
was dormant until June 25, 1999, the date of the sale of the senior
secured bonds. The Company is in the development stage and has no
operating revenues. The Company obtained $308,500,000 of project
financing from the sale of the senior secured bonds. The total cost of
the construction of the Company's facility is estimated
Page 10 of 15
<PAGE>
to be approximately $359 million, which will be financed by the
proceeds from the sale of the senior secured bonds and the equity
contribution described below. On May 12, 2000, the Company consummated
an exchange offer whereby the holders of the senior secured bonds
exchanged their privately placed senior secured bonds for registered
senior secured bonds.
The Company's facility is still under construction and is expected to
be completed and operational by approximately June 30, 2001. The
Company cannot assure that these expectations will be met. See
"--Cautionary Note Regarding Forward-Looking Statements."
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities." In
June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Financial Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133." SFAS No. 137 amends SFAS
No. 133 to require implementation of SFAS No. 133 for all fiscal
quarter of fiscal years beginning after June 15, 2000.
In June 2000, the FASB issued SFAS No. 138, "Accounting for
Derivative Instruments and Hedging Activities - an Amendment of FASB
Statement No. 133." SFAS No. 138 expands the "normal purchase and
sale" exemption under SFAS No. 133.
The Company is in the process of evaluating the potential effect on
the financial statements of adopting SFAS No. 133 and SFAS No. 138.
The impact of adopting SFAS No. 133 and SFAS No. 138 may be
significantly affected by certain implementation issues that are due
for discussion at the December 2000 meeting of the Derivatives
Implementation Group.
EQUITY CONTRIBUTIONS
Under the equity subscription agreement, AES Ironwood, Inc. is
obligated to contribute up to approximately $50.1 million to the
Company to fund project costs. AES Ironwood, Inc.'s obligation to make
the contributions is, and will be, supported by an acceptable letter of
credit or an acceptable bond.
RESULTS OF OPERATIONS
As of September 30, 2000 and December 31, 1999, Construction in
Progress, which includes capitalized facility construction costs, was
$289.0 million and $244.6 million, respectively. For the three and
nine months ended September 30, 2000, capitalized facility contruction
costs were $12.6 million and $44.4 million, respectively. As discussed
in greater detail below, Construction in Progress also includes the
capitalization of construction related interest cost incurred on the
portion of the bond proceeds expended during the construction period.
These capitalized costs are included as assets on the balance sheet.
Additionally, the cost of purchasing land for construction of the
Company's facility has been separately identified on the Balance
Sheets.
For the three months and nine months ended September 30, 2000 and the
period from June 25, 1999 (inception) through September 30, 2000,
general and administrative costs of $137,000, $138,000 and $307,000,
respectively, were incurred. These costs did not directly relate to
construction and are included as expenses in the Statement of
Operations.
A portion of the proceeds from the sale of the senior secured bonds
have not yet been expended on construction and were invested by the
trustee. For the three months and nine months ended September 30, 2000
and the period from June 25, 1999 (inception) through September 30,
2000, the interest income earned on these invested funds was
approximately $581,000, $2.3 million and $5.6 million, respectively,
and is included in the Statement of Operations.
As noted above, for the three and nine months ended September 30, 2000
and the period from June 25, 1999 (inception) through September 30,
2000, construction related interest costs incurred on the portion of
the bond proceeds expended during the construction period is
capitalized to Construction in Progress and was approximately
$6.4 million, $18.0 million and $26.0 million, respectively. For the
three months and nine months ended September 30, 2000 and the period
from June 25, 1999 (inception) through September 30, 2000, interest
cost incurred on the bond proceeds not spent on construction of the
Company's facility was approximately $455,000, $2.8 million and
$8.5 million respectively, and is included as interest expense in the
Statement of Operations .
For the three and nine months ended September 30, 2000 and the period
from June 25, 1999 (inception) through September 30 2000,
non-capitalizable costs plus interest cost and less interest income
resulted in a net loss of approximately $11,000, $621,000 and $3.3
respectively. The results
Page 11 of 15
<PAGE>
of operations may not be comparable with the results of operations
during future periods, especially when the Company's facility commences
commercial operations .
LIQUIDITY AND CAPITAL RESOURCES
The Company believes that the net proceeds from the sale of the senior
secured bonds, together with the equity contribution, will be
sufficient to (1) fund the engineering, procurement, construction,
testing and commissioning of the Company's facility until it is placed
in commercial operation, (2) pay certain fees and expenses in
connection with the financing and development of the Company's project
and (3) pay project costs, including interest on the senior secured
bonds. After the Company's facility is placed in commercial operation,
it will depend on revenues under the power purchase agreement, and
after the power purchase agreement expires, it will depend on market
sales of electricity.
In order to provide liquidity in the event of cash flow shortfalls, the
debt service reserve account will contain an amount equal to the debt
service reserve account required balance through cash funding, issuance
of the debt service reserve letter of credit or a combination of the
two.
As of September 30, 2000, the Company had original commitments totaling
$240 million arising from the construction of its facility of which
$209 million had been paid. In addition, the Company has committed to
two additional capital expenditures totaling $5.7 million. With respect
to these two commitments, $ 5.4 million has been paid as of
September 30, 2000. The remainder of the committed amounts are expected
to be paid in fiscal years 2000 and 2001. These amounts are expected
to be paid out of the proceeds from the sale of the senior secured
bonds and the equity contribution.
BUSINESS STRATEGY AND OUTLOOK
The Company's overall business strategy is to market and sell all of
its net capacity, fuel conversion and ancillary services to Williams
Energy during the 20-year term of the power purchase agreement. After
expiration of the power purchase agreement, the Company anticipates
selling its facility's capacity, ancillary services and energy under a
power purchase agreement or into the Pennsylvania/New Jersey/Maryland
power pool market. The Company intends to cause its facility to be
managed, operated and maintained in compliance with the project
contracts and all applicable legal requirements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
AES Ironwood, L.L.C.'s market risks are not materially different from
those market risks described in its prospectus dated March 31, 2000.
Page 12 of 15
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBITS
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
27 Financial data schedule
b) REPORTS ON FORM 8-K.
The Company did not file any reports on Form 8-K during the quarter
ended September 30, 2000.
Page 13 of 15
<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.
AES IRONWOOD, L.L.C.
Date: November 14, 2000 By: /s/ Pete Norgeot
-------------------
Pete Norgeot
President
Date: November 14, 2000 By: /s/ Barry Sharp
------------------
Barry Sharp
Vice President and Chief Financial Officer
(and principal accounting officer)
Page 14 of 15
