EXHIBIT 99(B)
Jorf Lasfar Energy Company S.C.A
JLEC
CENTRALE THERMIQUE DE JORF LASFAR
B P 99 SIDI BOUZID
EL JADIDA
MOROCCO
Tel : 212 23 34 53 71
Fax : 212 23 34 54 05
US GAAP
FINANCIAL STATEMENTS
AS OF
DECEMBER 31, 2002, 2001 AND 2000
- --------------------------------------------------------------------------------
R.C. n(degree)86655 - Patente n(degree)35511273 - Identification Fiscale
(I.S TVA) n(degree)1021595
JORF LASFAR ENERGY COMPANY
INDEX TO FINANCIAL STATEMENTS
Page(s)
------------
Report of Independent Auditors 3
Balance Sheet as of December 31, 2002, 2001 and 2000 4
Statements of Income for the year ended December 31, 2002, 2001 and 2000 5
Statements of Stockholders' Equity for the year ended December 31, 2002,
2001 and 2000 6
Statements of Cash Flows for the year ended December 31, 2002, 2001 and 2000 7
Notes to US GAAP Financial Statements 8-20
Report of Independent Auditors
JORF LASFAR ENERGY COMPANY
BALANCE SHEETS
December 31, 2002 December 31, 2001 December 31, 2000
----------------- ----------------- -----------------
(000) U.S. Dollars (000) U.S. Dollars (000) U.S. Dollars
ASSETS
Current Assets
Cash ............................................... $ 46,683 $ 67,106 $ 67,203
Inventories ........................................ 40,615 31,759 22,517
Accounts receivable ................................ 76,175 86,515 63,540
Prepayments ........................................ 10,431 4,477 5,455
Net investment in direct financing leases .......... 51,504 77,362 81,776
Other .............................................. - - 191
----------- ----------- -----------
Total current assets ......................... 225,408 267,219 240,682
Long Term Assets, net
Restricted cash .................................... 53,778 17,140 -
Fixed Assets ....................................... 6,554 6,284 -
Net investment in direct financing leases .......... 1,053,057 1,026,152 1,121,934
Other long term assets ............................. 10,968 9,445 1,576
----------- ----------- -----------
Total long term assets ....................... 1,124,357 1,059,021 1,123,510
----------- ----------- -----------
Total assets ................................. $ 1,349,765 $ 1,326,240 $ 1,364,192
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable to third parties .................. $ 25,498 $ 34,764 $ 55,465
Accounts payable to related parties ................ 145,065 74,704 10,902
Current part of long-term loans in US Dollars ...... 25,749 24,873 18,436
Current part of long-term loans in Euro ............ 36,855 31,167 24,543
Other current liabilities .......................... 18,370 8,426 21,689
----------- ----------- -----------
Total current liabilities .................... 251,537 173,934 131,035
Non-Current Liabilities
Long-term loans in US Dollars ...................... 238,174 251,667 227,167
Long-term loans in Euro ............................ 340,912 319,457 322,168
Deferred tax liability ............................. 13,005 6,097 -
Derivative instrument liability .................... 21,410 10,665 -
Unfunded pension obligation ........................ 5,693 - -
----------- ----------- -----------
Total non-current liabilities ................ 619,194 587,886 549,335
Commitment and Contingencies
Stockholders' Equity
Common stock ....................................... 58 58 58
Convertible stockholders' securities ............... 201,425 201,425 387,355
Preferred stock .................................... 185,930 185,930 -
Retained earnings .................................. 113,031 187,672 296,409
Accumulated other comprehensive loss ............... (21,410) (10,665) -
----------- ----------- -----------
Total stockholders' equity ................... 479,034 564,420 683,822
----------- ----------- -----------
Total liabilities and stockholders' equity.... $ 1,349,765 $ 1,326,240 $ 1,364,192
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
JORF LASFAR ENERGY COMPANY
STATEMENTS OF INCOME
FOR THE YEARS ENDED
December 31, 2002 December 31, 2001 December 31, 2000
----------------- ----------------- -----------------
(000) U.S. Dollars (000) U.S. Dollars (000) U.S. Dollars
REVENUE
Lease revenue from direct financing leases..... $ 183,542 $ 195,224 $ 146,153
Energy ........................................ 130,446 116,709 70,487
Operations and maintenance .................... 42,930 38,809 24,981
Other ......................................... 7,354 6,554 4,968
--------- --------- ---------
Total Revenue ........................... 364,272 357,296 246,589
Operating Expenses
Coal cost ..................................... 126,957 115,066 69,180
Fuel oil cost ................................. 911 753 586
Operations and maintenance .................... 30,484 20,329 21,775
Operator's incentive .......................... 3,721 2,099 1,411
Generator costs ............................... 11,397 12,547 6,583
Amortization of major maintenance ............. 1,128 470 -
Depreciation of fixed assets .................. 1,624 261 -
--------- --------- ---------
Total Operating Expenses ................ 176,222 151,525 99,535
OPERATING INCOME ......................................... 188,050 205,771 147,054
Financial Items
Financial income .............................. 1,764 4,735 1,319
Exchange gain (loss) .......................... (1,558) 8,197 229
Financial expenses ............................ (44,834) (50,617) (22,437)
--------- --------- ---------
Total Financial Items ................... (44,628) (37,685) (20,889)
INCOME BEFORE TAXES ...................................... 143,422 168,086 126,165
Income taxes
Current ................................. 4,226 603 8,580
Deferred ................................ 6,908 6,097 (88)
--------- --------- ---------
NET INCOME ............................................... $ 132,288 $ 161,386 $ 117,673
========= ========= =========
The accompanying notes are an integral part of these financial statements.
JORF LASFAR ENERGY COMPANY
STATEMENT OF STOCKHOLDERS' EQUITY
COMMON STOCK 2002 2001 2000 2002 2001 2000
---- ---- ---- --------- --------- ---------
Number of shares (000) U.S. Dollars
At beginning and end of period ................5,500 5,500 5,500 $ 58 $ 58 $ 58
CONVERTIBLE STOCKHOLDERS' SECURITIES
At beginning of period .................................................. 201,425 387,355 -
Conversion of the Company Loan to Convertible Stockholder's Securities... - - 387,355
Conversion of Convertible Stockholder's Securities to Preferred Stock.... - (185,930) -
--------- --------- ---------
At end of period ............................................... 201,425 201,425 387,355
PREFERRED STOCK
At beginning of period .................................................. 185,930 - -
Conversion of Convertible Stockholder's Securities to Preferred Stock.... - 185,930 -
--------- --------- ---------
At end of period ............................................... 185,930 185,930 -
RETAINED EARNINGS (DEFICIT)
At beginning of period ............................................. 187,672 296,409 178,736
Net income ......................................................... 132,288 161,386 117,673
Common stock dividend declared ..................................... (184,891) (270,123) -
Preferred stock dividend declared .................................. (9,942) - -
Dividend on convertible stockholders' securities ................... (12,096) - -
--------- --------- ---------
At end of period ............................................... 113,031 187,672 296,409
OTHER COMPREHENSIVE INCOME (LOSS) (a)
Derivative Instruments
At beginning of period ............................................. (10,665) - -
Reclassification of gains (losses) included in net income .......... 2,950 699 -
Unrealized gain (loss) on derivative instruments ................... (13,695) (11,364) -
--------- --------- ---------
At end of period ............................................... (21,410) (10,665) -
--------- --------- ---------
479,034 564,420 683,822
========= ========= =========
(a) Disclosure of Comprehensive Income (Loss)
Net income ..................................................... $ 132,288 $ 161,386 $ 117,673
Derivative instruments
Reclassification of gains (losses) in net income ........... 2,950 699 -
Unrealized gain (loss) on derivative instruments ........... (13,695) (11,364) -
--------- --------- ---------
Total Comprehensive Income ..................................... $ 121,543 $ 150,721 $ 117,673
========= ========= =========
The accompanying notes are an integral part of these financial statements.
JORF LASFAR ENERGY COMPANY
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED
December 31, 2002 December 31, 2001 December 31, 2000
----------------- ----------------- -----------------
(000) U.S. Dollars (000) U.S. Dollars (000) U.S. Dollars
CASH FLOWS FROM OPERATING ACTIVITIES
Payments received from ONE ........................ $ 471,044 $ 411,872 $ 240,827
Interest received ................................. 1,748 4,543 1,286
Insurance payments ................................ (5,665) (7,104) 1,389
Payments of operating costs ....................... (261,641) (228,771) (93,587)
Cash effect of value added tax .................... (321) 4,430 9,236
--------- --------- ---------
Net cash provided by operating activities ... 205,165 184,970 159,151
CASH FLOWS USED FOR INVESTING ACTIVITIES
Net (increase) in restricted cash ................. (36,638) (17,140) -
Acquisition of fixed assets ....................... (3,957) (5,501) (80,121)
Payment of project costs .......................... (93) (21,504) (20,693)
--------- --------- ---------
Net cash (used in) investing activities ..... (40,688) (44,145) (100,814)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans ............................... - 92,589 44,152
Repayment of loans ................................ (57,964) (41,961) -
Payment of financing costs ........................ - - (52,661)
Payment of dividend ............................... (132,114) (189,600) -
--------- --------- ---------
Net cash (used in) financing activities ..... (190,078) (138,972) (8,509)
Effect of exchange rate changes on cash ........... 5,178 (1,950) (450)
CASH AT BEGINNING OF PERIOD .................................. 67,106 67,203 17,825
NET (DECREASE) INCREASE IN CASH .............................. (20,423) (97) 49,378
--------- --------- ---------
CASH AT END OF PERIOD ........................................ $ 46,683 $ 67,106 $ 67,203
========= ========= =========
SUPPLEMENTAL CASH FLOWS INFORMATION
Cash paid during the year-
Interest .......................................... 56,054 45,486 52,671
Income taxes ...................................... 5,150 6,173 -
The accompanying notes are an integral part of these financial statements.
JORF LASFAR ENERGY COMPANY
NOTES TO US GAAP FINANCIAL STATEMENTS
1. GENERAL
a. BACKGROUND
The power station at Jorf Lasfar is located on the Atlantic coast of Morocco,
adjacent to the Port of Jorf Lasfar, in the Province of El Jadida. This location
is approximately 127 km south--west of Casablanca.
Units 1 and 2 of the power station were constructed by GEC Alstom for the
Moroccan Electricity Company, Office National de l'Electricite ("ONE"), and are
in commercial operation. Each of these existing Units is 330 MW, fired by coal.
In October of 1994, the ONE issued a public tender for international companies
to expand the power station at Jorf Lasfar. In February of 1995, the ONE
selected the "Consortium" of ABB Energy Ventures and CMS Generation Company as
the preferred bidder and exclusive partner for negotiation. In April of 1996,
the Consortium and ONE reached agreement in principle, and initialed the
necessary Project Agreements.
b. ESTABLISHMENT
In order to officially conclude and implement these Project Agreements, the
Consortium established the Jorf Lasfar Energy Company (the "Company" or "JLEC")
on January 20, 1997. The Company was established as a limited partnership
("societe en commandite par actions") in accordance with the Laws of the Kingdom
of Morocco, with Commercial Registration Number 86655, Fiscal Identification
Number 1021595, and Patente Number 35511274.
In accordance with its charter documents, the Company's objective and purpose
was to construct, operate, manage and maintain the power station at Jorf Lasfar,
including the development, financing, engineering, design, construction,
commissioning, testing, operation and maintenance of two (2) new coal-fired
Units, which are very similar in size and technology to the previously existing
Units. In order to secure its fuel supply the Company also operates and
maintains the coal-unloading pier in the Port of Jorf Lasfar. For these
activities, the Company received a "right of possession" ("droit de jouissance")
for the Site, the existing Units, the new Units and coal unloading pier. This
"right of possession" will continue for the duration of the Project Agreements,
which is anticipated to be from 15 to 30 years.
c. COMPANY LOAN, TRANSFER OF POSSESSION, PROJECT FINANCING AND INITIAL
DISBURSEMENT
On September 12, 1997, all Project Agreements were signed, the Company Loan
Agreement was executed and the first disbursement of the Company Loan was used
to pay the Transfer of Possession Agreement (TPA) fee to ONE, amounting to US$
263,158,000. As a consequence, JLEC received possession of the power station at
Jorf Lasfar on September 13, 1997, and began to sell its available capacity and
net generation to ONE. All remaining requirements for project financing were
completed in November, and initial disbursement of the Project Loans occurred on
November 25, 1997.
d. CONSTRUCTION, COMMERCIAL OPERATION, PURCHASE OF COMPANY LOAN AND REPAYMENT OF
PROJECT LOANS
After a period of construction lasting 33 months and 41 months, Unit 3 and 4
began normal commercial operation on June 9, 2000, and February 2, 2001,
respectively. Consequently, the JLEC shareholders converted 100% of the Company
Loan Notes on December 11, 2000 in equity, and JLEC began the repayment of all
Project Loans on May 15, 2001. After JLEC completes the repayment of all Project
Loans (which is scheduled for February 15, 2013), ONE has the option to pay
JLEC a Termination Amount of US$ 229,544,000, and then terminate all Project
Agreements and retake possession of the Site and power station at Jorf Lasfar.
The Termination Amount declines from US$ 220,076,000 in 2013 to zero in 2027.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The Company's books and records are maintained using the historical cost
convention. The accounting and reporting policies of the Company are in
accordance with the accounting principles generally accepted in Morocco, which
are called "Code General de Normalisation Comptable" or "CGNC". These financial
statements reflect all adjustments necessary to comply with accounting
principles generally accepted in the United States.
JORF LASFAR ENERGY COMPANY
NOTES TO US GAAP FINANCIAL STATEMENTS
b. REVENUE RECOGNITION
On September 12, 1997, the Company and the Office National de L'Electricite
(ONE) executed a set of contracts related to the power station at Jorf Lasfar.
In accordance with Statement of Financial Accounting Standard (SFAS) No. 13,
these contracts are accounted for as a direct financing lease.
JLEC ( the "Lessor") is entitled to receive a stream of payments from ONE (the
"Lessee") through September 2013, the date at which ONE can repurchase the
facility through the payment of the Termination Amount, as defined.
LEASE REVENUE FROM DIRECT FINANCING LEASES is based on the accretion of the
unearned income in the direct financing leases (See Note 12) over the lease term
using the interest method.
ENERGY REVENUES are recognized for the sale of energy to ONE when delivered.
OPERATIONS AND MAINTENANCE REVENUES are earned based on the terms of the
contracts. The revenues provide for the recovery of these costs incurred by JLEC
to meet the contract requirements, including a profit mark-up. Revenues are
recognized upon the sale of energy to ONE.
c. INVENTORIES
The Company accounts for inventories by applying the FIFO or average cost method
to each item on a lower of market value or cost.
d. FOREIGN CURRENCY TRANSACTIONS
The books and records of the Company for U.S. GAAP are maintained in U.S.
Dollars, which is both the reporting and functional currency. Transactions in
other currencies are translated to U.S. Dollars at the spot rate. Monetary
assets and monetary liabilities outstanding in foreign currencies on balance
sheet dates are translated into U.S. Dollars at rates prevailing on such balance
sheet dates. Exchange gains and losses on those foreign currency operations are
included in determining net income for the period in which exchange rates
change.
e. CORPORATE TAX
Current Income tax is determined under Moroccan Income tax rules. In 1997, JLEC
signed a "Tax incentive" convention with the Moroccan tax authorities. The main
principals of this convention are summarized below :
- - Income is subject to corporate tax and "Produit de Solidarite National" tax
(PSN)
- - PSN tax rate is 8.75% and is not subject of any tax holiday
- - Income tax holiday period is ten years
- - income tax holiday period starts on the "commercial operation date" for
each unit
- - income tax holiday is 100% during the first five-year period then at 50% of
the income tax rate during the second five-year period
- - income not related to the sale of electricity is subject to a tax rate of
35%
The "commercial operation date" for units 1 and 2, unit 3 and unit 4 were
September 1997, June 2000 and February 2001, respectively. On September 12,
2002, income related to units 1 and 2 became taxable at 17.5%. Unit 3 and Unit 4
are still in the tax holiday period. The PSN tax was eliminated on January 1,
2001.
JORF LASFAR ENERGY COMPANY
NOTES TO US GAAP FINANCIAL STATEMENTS
f. DEFERRED INCOME TAX
Starting September 12, 2002, JLEC tax rate on Units 1&2 is 17.5%. JLEC records
current income tax as required by tax rules. JLEC uses the liability method in
accounting for income taxes. Under this method, deferred tax assets and
liabilities are determined based on differences between financial reporting and
tax bases of assets and liabilities and are measured using the enacted tax rates
and laws that will be in effect when the differences are expected to reverse. A
valuation allowance is established if, based on the weight of available
evidence, it is more likely than not that some portion or all of the deferred
tax asset will not be realized. The difference between the statutory income tax
rate of 35% and the effective income tax relates primarily to the effect of the
tax holiday for fiscal years ended December 31, 2002 and 2001 and to the effect
of the tax holiday and the PNS for the fiscal year ended December 31, 2000.
The principal temporary difference results from the use of the direct financing
lease method under US GAAP. In particular, the treatment of the net investment
and revenue recognition (as disclosed in note 2.b above) under US GAAP are
different from the treatment of these items under tax rules. Total deferred tax
liabilities are US$13,005,298 as of December 31, 2002 and $6,097,093 for 2001.
g. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the
reported period. Actual result could differ from these estimates and
assumptions.
h. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and restricted cash approximates fair value because
of the short-term maturity of these instruments. The fair value of long term
debt has been estimated based on the discounted value of future cash flows for
non quoted instruments using the interest rates obtained by JLEC for instruments
with similar conditions and maturities. The carrying value and the fair value of
long-term debt as of December 31 are as follows (in 000's):
2002 2001 2000
US$ US$ US$
------------- ---------------------------------
Carrying value 641,690 627,164 592,314
Fair value 669,709 652,250 610,083
3. CASH
3.1 Cash
The Company's cash as of December 31 includes the initial capital deposits of
the Company's stockholders, as explained further in Note 11 . Such cash is held
in Moroccan Dirhams. The remainder of JLEC's cash is held by the Offshore
Collateral Agent, Deutsche Bank Trust Company Americas in US$ and Euro, and by
the Onshore Collateral Agent, BMCI - Banque Marocaine pour le Commerce et
l'Industrie in Morocain Dirhams and US$.
The cash balances includes the following categories:
2002 2001 2000
US$ US$ US$
------------- ---------------------------------
Off-shore Revenue in US$ 22,666,875 36,223,422 53,051,958
Off-shore Revenue in Euro 5,331,124 5,000,414 80,376
------------- ---------------------------------
Total Off-Shore Revenue 27,997,999 41,223,836 53,132,334
On-shore O&M Account - Generator 793,293 2,899,102 2,023,823
On-shore O&M Account - Operator 3,258,836 2,298,642 2,376,961
Off-shore O&M Accounts 10,607 8,464 7,231
------------- ---------------------------------
Total O&M Accounts 4,062,736 5,206,208 4,408,015
Fuel & Spare Part Accounts 5,289,381 12,080,028 7,197,326
On-shore Construction Accounts - 1,100,363 2,276,433
Off-shore Construction Accounts - - 90,005
Company Loan Accrual Account - - 42,085
Off-shore Debt Service Accrual Accounts in US$ 3,843,187 3,540,479 -
Off-shore Debt Service Accrual Accounts in Euro 5,433,301 3,898,143 -
------------- ---------------------------------
Total Debt Service Accrual Accounts 9,276,488 7,438,622 -
Stockholder capital deposits 56,624 56,624 56,624
------------- ---------------------------------
Total 46,683,228 67,105,681 67,202,822
============= =================================
JORF LASFAR ENERGY COMPANY
NOTES TO US GAAP FINANCIAL STATEMENTS
3.2 Restricted Cash
The Reserve Accounts are as follow : 2002 2001 2000
US$ US$ US$
--------------- --------------------------
Major Maintenance Reserve Account in US$ 2,500,000 5,000,000 -
Fixed O&M Reserve Account in US$ 4,800,000 9,600,000 -
Debt Service Reserve Account in US$ 11,730,000 730,000 -
Super Reserve Account in US$ 18,100,000 - -
--------------- --------------------------
Off-shore Reserve Accounts in US$ 37,130,000 15,330,000 -
Fixed O&M Reserve Account in Euro 197,262 161,372 -
Debt Service Reserve Account in Euro 16,450,805 1,649,031 -
--------------- --------------------------
Off-shore Reserve Accounts in Euro 16,648,067 1,810,403 -
--------------- --------------------------
Total Reserve Accounts 53,778,067 17,140,403 -
=============== ==========================
3.3 Total Cash
2002 2001 2000
US$ US$ US$
--------------- --------------------------
Cash 46,683,228 67,105,681 67,202,822
Restricted Cash in Reserve Accounts 53,778,067 17,140,403 -
--------------- --------------------------
100,461,295 84,246,084 67,202,822
=============== ==========================
3.4 Letters of Credit
Additional liquidity is available, if needed for debt service, from Sponsor (CMS
and ABB) Letters of Credit in the following accounts as of December 31, 2002:
a. Major Maintenance Reserve Account US$ 2,500,000
b. Fixed O&M Reserve Account US$ 4,800,000
c. Debt Service Reserve Account US$ 11,300,000
d. Super Reserve Account US$ 47,900,000
e. Debt Service Reserve Account Euro 15,000,000
4. INVENTORIES
Inventories as of December 31 are detailed as follows :
2002 2001 2000
US$ US$ US$
--------------- --------------------------
Stock of Coal 22,499,748 23,305,684 20,456,351
Stock of Fuel-oil 2,078,600 2,988,752 1,625,767
Stock of Spare Parts 15,081,606 4,952,377 -
Other 954,692 512,445 434,716
--------------- --------------------------
40,614,646 31,759,259 22,516,834
=============== ==========================
5. ACCOUNTS RECEIVABLE
Accounts Receivable as of December 31 are detailed as follows :
2002 2001 2000
US$ US$ US$
--------------- --------------------------
Account receivable - ONE 76,098,673 85,811,099 63,416,998
Account receivable - other 76,097 704,024 122,976
--------------- --------------------------
76,174,770 86,515,123 63,539,974
=============== ==========================
JORF LASFAR ENERGY COMPANY
NOTES TO US GAAP FINANCIAL STATEMENTS
6. PREPAYMENTS
Prepayments as of December 31 are detailed as follows : 2002 2001 2000
US$ US$ US$
---------------------------------------------
Prepaid insurance 3,582,404 3,822,746 1,942,019
Prepayments for income tax 5,194,869 - -
Other prepayments 1,653,537 653,896 3,513,054
---------------------------------------------
10,430,810 4,476,642 5,455,073
=============================================
7. OTHER LONG TERM ASSETS
Other long term assets as of December 31 are as follows : 2002 2001 2000
US$ US$ US$
---------------------------------------------
Long term receivables loan 2,754,540 2,016,161 1,575,678
Long term ash disposal site 1,913,308 - -
Capitalized major maintenance 7,898,850 7,898,850 -
Less : accumulated amortization (1,598,577) (470,170) -
---------------------------------------------
10,968,121 9,444,841 1,575,678
=============================================
JLEC has a long term major maintenance schedule for each of its 4 units. The
cost of major maintenance is capitalized and amortized over the estimated useful
life of the investment, which for the turbine overhauls is 7 years (84 months).
8. ACCOUNTS PAYABLE TO THIRD PARTIES
Account Payable to Third Parties includes the main suppliers of JLEC as of
December 31 and are detailed as follows:
2002 2001 2000
US$ US$ US$
---------------------------------------------
Billiton (coal supplier) 4,119,817 16,060,510 6,916,220
Anglo (coal supplier) 2,245,218 5,281,412 -
Total (coal supplier) 2,267,178 -
RAG Trading (coal supplier) 4,499,958 - -
Glencore 2,187,744 - -
Consol (coal supplier) - 5,033,586
Guasare (coal supplier) - 2,359,559
Alstom Power 2,845,357 2,607,834 1,283,788
ONE 2,767,010 3,547,774 9,601,292
Other suppliers 6,832,615 4,999,250 30,271,318
---------------------------------------------
25,497,719 34,763,958 55,465,763
=============================================
9. RELATED PARTY TRANSACTIONS
During 2002, related party transactions consisted of the following:
----------------------------------------------------------------------------------------------
ABB ABB CMS CMS CMS Total
EV MAROC MOPCO MOPCO RD & GEN
----------------------------------------------------------------------------------------------
Currencies US$ MAD MAD MAD US$ US$
- ------------------------------------------------------------------------------------------------------------------------------------
Acc. Payable 12/31/01 137,581 78,576 7,726,314 44,598,493 76,753
- -----------------------------------------------------------------------------------------------------------------------
Management Fees 35,654,033
Incentive Accrual 46,253,517
Other 207,059 778,086 -6,139,521 114,510
- -----------------------------------------------------------------------------------------------------------------------
Total Payments 2002 238,876 730,782 38,693,220 44,598,665 108,577
- -----------------------------------------------------------------------------------------------------------------------
Acc. Payable 12/31/02 105,764 125,880 -1,452,394 46,253,345 82,686
- ------------------------------------------------------------------------------------------------------------------------------------
Acc. Pay. in US$ 12/31/02 105,764 12,345 -142,433 4,535,976 82,686 4,594,337
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Jorf Lasfar Jorf Lasfar Jorf Lasfar Tre Kronor
Common Stock Energiaktie Power Energy Handels-bolag Investment AB AB Cythere 61 AB Cythere 63
-bolag AB Total
- ------------------------------------------------------------------------------------------------------------------------------------
Currencies MAD MAD MAD MAD MAD MAD MAD
- ------------------------------------------------------------------------------------------------------------------------------------
Acc. Payable 12/31/01 202,826,993 186,600,834 16,226,160 16,226,160 885,063 388,542,764 811,307,973
- ------------------------------------------------------------------------------------------------------------------------------------
Dividend Payable Oct 29, 2002 495,000,000 455,400,000 39,600,000 39,600,000 2,160,000 948,240,000 1,980,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Payments 2002 477,660,429 439,447,594 38,212,834 16,144,045 880,600 386,583,232 1,358,928,734
- ------------------------------------------------------------------------------------------------------------------------------------
Acc. Payable 12/31/02 220,166,565 202,553,239 17,613,325 39,682,115 2,164,464 950,199,532 1,432,379,240
- ------------------------------------------------------------------------------------------------------------------------------------
B/S FX Rate MAD/USD 10.20 10.20 10.20 10.20 10.20 10.20 10.20
- ------------------------------------------------------------------------------------------------------------------------------------
Acc. Pay. in US$ 12/31/02 21,591,308 19,864,003 1,727,305 3,891,548 212,265 93,184,224 140,470,652
- ------------------------------------------------------------------------------------------------------------------------------------
------------
Total Accounts Payable to Related Parties 145,064,989
------------
JORF LASFAR ENERGY COMPANY
NOTES TO US GAAP FINANCIAL STATEMENTS
9. RELATED PARTY TRANSACTIONS (CONTINUED)
During 2001, related party transactions consisted of the following:
-----------------------------------------------------------------------------------------------------
ABB ABB ABB ABB CMS CMS CMS Total
EV Secheron Secheron MAROC MOPCO MOPCO RD & GEN
- ------------------------------------------------------------------------------------------------------------------------------------
Currencies US$ DEM CHF MAD MAD MAD US$ US$
- ------------------------------------------------------------------------------------------------------------------------------------
Acc. Payable 12/31/00 43,545 - - - 16,747,904 96,757,074 200,667
- ------------------------------------------------------------------------------------------------------------------------------------
Management Fees 35,287,098
Incentive Accrual 44,314,093
Other 331,716 375,000 25,200 469,461 -5,873,718 471,870
- ----------------------------------------------------------------------------------------------------------------------
Total Payments 2001 237,679 375,000 25,200 390,885 38,434,970 96,472,673 595,784
- ----------------------------------------------------------------------------------------------------------------------
Acc. Payable 12/31/01 137,581 - - 78,576 7,726,314 44,598,493 76,753
- ------------------------------------------------------------------------------------------------------------------------------------
Acc. Pay. in US$ 12/31/01 137,581 - - 6,777 666,349 3,846,356 76,753 4,733,816
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AB Cythere Jorf Lasfar Jorf Lasfar Tre Kronor Jorf Lasfar AB Cythere
63 Energiaktie- Power Investment Handels- 61 Total
bolag Energy AB AB bolag
- ------------------------------------------------------------------------------------------------------------------------------------
Currencies MAD MAD MAD MAD MAD MAD MAD
- ------------------------------------------------------------------------------------------------------------------------------------
Dividend Payable Apr 24, 2001 790,200,000 412,500,000 379,500,000 33,000,000 33,000,000 1,800,000 1,650,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
Dividend Payable Oct 29, 2001 650,598,000 339,625,000 312,455,000 27,170,000 27,170,000 1,482,000 1,358,500,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Payments 2001 1,052,255,236 549,298,007 505,354,166 43,943,841 43,943,841 2,396,937 2,197,192,027
- ------------------------------------------------------------------------------------------------------------------------------------
Acc. Payable 12/31/01 388,542,764 202,826,993 186,600,834 16,226,160 16,226,160 885,063 811,307,973
- ------------------------------------------------------------------------------------------------------------------------------------
B/S FX Rate MAD/USD 11.60 11.60 11.60 11.60 11.60 11.60 11.60
- ------------------------------------------------------------------------------------------------------------------------------------
Acc. Pay. in US$ 12/31/01 33,509,510 17,492,626 16,093,216 1,399,410 1,399,410 76,331 69,970,502
- ------------------------------------------------------------------------------------------------------------------------------------
---------------
74,704,318
---------------
During 2000, related party transactions consisted of the following:
----------------------------------------------------------------------------------------------------------
ABB ABB ABB ABB ABB CMS CMS CMS Total
EV Secheron Secheron Trafo MAROC MOPCO MOPCO RD
- ------------------------------------------------------------------------------------------------------------------------------------
Currencies US$ DEM CHF DEM MAD MAD MAD US$ US$
- ------------------------------------------------------------------------------------------------------------------------------------
Acc. Payable 12/31/99 29,636 - - - - 19,442,763 78,401,202 64,739
- ------------------------------------------------------------------------------------------------------------------------------------
Management Fees 21,346,655
Incentive Accrual 22,044,199
Other 166,848 3,375,000 630,000 567,355 53,580 24,968,135 -3,688,327 788,927
- -------------------------------------------------------------------------------------------------------------------
Total Payments 2000 152,939 3,375,000 630,000 567,355 53,580 49,009,650 - 653,000
- -------------------------------------------------------------------------------------------------------------------
Acc. Payable 12/31/00 43,545 - - - - 16,747,904 96,757,074 200,667
- ------------------------------------------------------------------------------------------------------------------------------------
Acc. Pay. in US$ 12/31/00 43,545 - - - - 1,572,481 9,085,171 200,667 10,901,863
- ------------------------------------------------------------------------------------------------------------------------------------
JORF LASFAR ENERGY COMPANY
NOTES TO US GAAP FINANCIAL STATEMENTS
10. LONG TERM LOANS
Long term loans are detailed as follows as of December 31, 2002:
- ------------------------------------------------------------------------------------------------------------------------------------
Borrowing Principal Interest Interest Reimbursement
--------------------- ----------------------------
Loan Date Currency Amount Type Rate Payment Maturity Periodicity
- ------------------------------------------------------------------------------------------------------------------------------------
US EXIM 9/12/02 US$ 200,971,655 Fixed 7.2% Quarterly Feb. 15, 2013 Quarterly
OPIC Note A 11/25/97 US$ 51,677,083 Fixed 10.23% Quarterly Feb. 15, 2013 Quarterly
OPIC Note B 02/11/98 US$ 11,275,000 Fixed 9.92% Quarterly Feb. 15, 2013 Quarterly
----------
62,952,083
- ------------------------------------------------------------------------------------------------------------------------------------
Total L.T loan in US$ 263,923,738
---------------------------------------------
Current part in USD 25,748,560
---------------------------------------------
Non-Current part in USD 238,175,178
---------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Borrowing Principal Interest Interest Reimbursement
--------------------- ----------------------------
Loan Date Currency Amount Type Rate Payment Maturity Periodicity
- ------------------------------------------------------------------------------------------------------------------------------------
SACE 11/15/02 Euro 198,720,273 Fixed 5.73% Quarterly Feb. 15, 2013 Quarterly
ERG 11/15/02 Euro 25,537,392 Variable 5.14% Quarterly Feb. 15, 2013 Quarterly
World Bank 11/15/02 Euro 136,696,015 Variable 4.89% Quarterly Feb. 15, 2013 Quarterly
- ------------------------------------------------------------------------------------------------------------------------------------
Total L.T loan in Euro 360,953,680
---------------------------------------------
B/S FX Rate Euro/USD 1.04658
---------------------------------------------
Total L.T loan in USD 377,767,743
---------------------------------------------
Current part in USD 36,855,389
---------------------------------------------
Non-Current part in USD 340,912,354
---------------------------------------------
Total principal repayments for the next five years are detailed below. Forecasts
of interest payments, interest-rate swap payments and guarantee fees are also
shown below. For further information regarding interest rate swaps, see Note
15.
------------------------------------------------------------------------------------------------------------------
Remaining Remaining Remaining
Principal Principal Principal Principal Principal Payments Swap Guarantee
Repayment in Repayment in Repayment in Repayment in Repayment in Interest Payments Fees
2003 2004 2005 2006 2007 2003-2013 2003-2013 2003-2013
------------------------------------------------------------------------------------------------------------------
In USD
- ------------------------------------------------------------------------------------------------------------------------------------
US EXIM 19,606,893 19,606,893 19,606,893 19,606,893 19,606,893 76,033,383 - -
- ------------------------------------------------------------------------------------------------------------------------------------
OPIC A 5,041,667 5,041,666 5,041,666 5,041,666 5,041,666 27,754,052 - -
- ------------------------------------------------------------------------------------------------------------------------------------
OPIC B 1,100,000 1,100,000 1,100,000 1,100,000 1,100,000 5,871,955 - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total in USD 25,748,560 25,748,559 25,748,559 25,748,559 25,748,559 109,659,390 - -
- ------------------------------------------------------------------------------------------------------------------------------------
In Euro
- ------------------------------------------------------------------------------------------------------------------------------------
SACE 19,387,344 19,387,344 19,387,344 19,387,344 19,387,344 60,663,342 - -
- ------------------------------------------------------------------------------------------------------------------------------------
ERG 2,491,452 2,491,452 2,491,452 2,491,452 2,491,452 7,093,552 4,535,473 -
- ------------------------------------------------------------------------------------------------------------------------------------
WB 13,336,197 13,336,197 13,336,197 13,336,197 13,336,197 36,148,188 23,844,995 6,757,469
- ------------------------------------------------------------------------------------------------------------------------------------
Total in Euro 35,214,993 35,214,993 35,214,993 35,214,993 35,214,993 103,905,082 28,380,468 6,757,469
- ------------------------------------------------------------------------------------------------------------------------------------
B/S FX Rate
Euro/USD 1.047 1.047 1.047 1.047 1.047 1.047 1.047 1.047
- ------------------------------------------------------------------------------------------------------------------------------------
Total in USD 36,855,389 36,855,389 36,855,389 36,855,389 36,855,389 108,745,223 29,702,496 7,072,248
- ------------------------------------------------------------------------------------------------------------------------------------
JORF LASFAR ENERGY COMPANY
NOTES TO US GAAP FINANCIAL STATEMENTS
10. LONG TERM LOANS (CONTINUED)
Long term loans are detailed as follows as of December 31, 2001:
- ------------------------------------------------------------------------------------------------------------------------------------
Borrowing Principal Interest Interest Reimbursement
--------------------- ----------------------------
Loan Date Currency Amount Type Rate Payment Maturity Periodicity
- ------------------------------------------------------------------------------------------------------------------------------------
US EXIM 11/15/2001 US$ 207,446,204 Variable 4.14% Quarterly Feb. 15, 2013 Quarterly
OPIC Note A 11/25/97 US$ 56,718,750 Fixed 10.48% Quarterly Feb. 15, 2013 Quarterly
OPIC Note B 02/11/98 US$ 12,375,000 Fixed 10.17% Quarterly Feb. 15, 2013 Quarterly
----------
69,093,750
- ------------------------------------------------------------------------------------------------------------------------------------
Total L.T loan in US$ 276,539,954
-----------------------------------------
Current part in USD 24,873,137
-----------------------------------------
Non-Current part in USD 251,666,817
-----------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Borrowing Principal Interest Interest Reimbursement
--------------------- ----------------------------
Loan Date Currency Amount Type Rate Payment Maturity Periodicity
- ------------------------------------------------------------------------------------------------------------------------------------
SACE 11/15/2001 Euro 218,107,617 Fixed 5.73% Quarterly Feb. 15, 2013 Quarterly
ERG 11/15/2001 Euro 28,028,845 Variable 5.34% Quarterly Feb. 15, 2013 Quarterly
World Bank 11/15/2001 Euro 150,032,211 Variable 5.09% Quarterly Feb. 15, 2013 Quarterly
- ------------------------------------------------------------------------------------------------------------------------------------
Total L.T loan in Euro 396,168,673
------------------------------------------
B/S FX Rate Euro/USD 0.885
------------------------------------------
Total L.T loan in USD 350,623,797
------------------------------------------
Current part in USD 31,166,559
------------------------------------------
Non-Current part in USD 319,457,237
------------------------------------------
Long term loans are detailed as follows as of December 31, 2000:
Drawdown Drawdown Interest Interest Reimbursement
--------------------- ----------------------------
Loan Date Currency Amount Type Rate Payment Maturity Periodicity
- ------------------------------------------------------------------------------------------------------------------------------------
US EXIM 12/11/2000 US$ 171,078,318 Variable 8.39% Added to Feb. 15, 2013 Quarterly
Principal
OPIC Note A 11/25/97 US$ 60,500,000 Fixed 10.48% Quarterly Feb. 15, 2013 Quarterly
OPIC Note B 02/11/98 US$ 13,200,000 Fixed 10.17% Quarterly Feb. 15, 2013 Quarterly
----------
73,700,000
- ------------------------------------------------------------------------------------------------------------------------------------
Accrual for Capitalized Interests 824,884
- ------------------------------------------------------------
Total L.T loan in US$ 245,603,202
----------------------------------------------
Drawdown Drawdown Interest Interest Reimbursement
--------------------- ----------------------------
Loan Date Currency Amount Type Rate Payment Maturity Periodicity
- ------------------------------------------------------------------------------------------------------------------------------------
SACE 10/11/2000 DEM 138,444,711 Fixed 5.73% Added to Feb. 15, 2013 Quarterly
11/9/2000 DEM 175,403,182 Fixed 5.73% Principal Feb. 15, 2013 Quarterly
12/11/2000 DEM 127,398,544 Fixed 5.73% Feb. 15, 2013 Quarterly
-----------
441,246,437
ERG 12/11/2000 DEM 56,914,448 Variable 6.96% Added to Feb. 15, 2013 Quarterly
Principal
World Bank 12/11/2000 DEM 228,100,000 Variable 6.71% Quarterly Feb. 15, 2013 Quarterly
- ------------------------------------------------------------------------------------------------------------------------------------
Accrual for Capitalized Interests in DEM 3,456,603
- ------------------------------------------------------------
Total L.T loan in DEM 729,717,488
----------------------------------------------
B/S FX Rate DEM/USD 2.105
----------------------------------------------
Total L.T loan in USD 346,711,732
----------------------------------------------
JORF LASFAR ENERGY COMPANY
NOTES TO US GAAP FINANCIAL STATEMENTS
10. LONG TERM LOANS (CONTINUED)
PLEADGE OF STOCK AND OTHER ASSETS
As security for the repayment of the loans, and the payment of all related
interest, fees and swap obligations, JLEC and its stockholders have entered into
various pledge agreements with Deutsche Bank Trust Company Americas, as Offshore
Collateral Agent, and with Banque Marocaine pour le Commerce et l'Industrie, as
Onshore Collateral Agent, for the benefit of such lenders and other secured
parties. Such security shall continue in effect until the repayment in full of
all outstanding principal amounts and the payment in full of all related
interest, fee and swap obligations, which is scheduled to occur in February of
2013. The principle pledge agreements are:
1. The Stockholder Pledge and Security Agreements, in which each of JLEC's
stockholders pledges all of its shares, claims, rights and interests in JLEC to
the Offshore Collateral Agent.
2. The Security and Assignment Agreement, in which JLEC assigns to the Offshore
Collateral Agent a security interest in all of JLEC's rights, title and interest
in the following collateral, among others:
a. all of JLEC's contractual rights,
b. all rents, profits, income and revenues derived by JLEC from its ownership
of the Project,
c. all cash deposits and other assets in any of JLEC's accounts with financial
institutions,
d. all permits, licenses and other governmental authorizations obtained by
JLEC in connection with its ownership of the Project,
e. all of JLEC's insurance policies and related claims and proceeds, and
f. all personal property and inventories of JLEC.
3. The Agreement for Pledge of Shares, in which each of JLEC's stockholders
pledges all of its shares, claims, rights and interests in JLEC to the
Onshore Collateral Agent, and assigns to the Onshore Collateral Agent the
direct payment by JLEC of all dividends and other stockholder distributions
if and whenever a Default has occurred and is continuing.
4. The General Delegation of Contract Claims, in which JLEC assigns to the
Onshore Collateral Agent the direct payment of any and all contract claims
due to JLEC if and whenever a Default has occurred and is continuing.
5. The Pledge over General Operating Accounts, in which JLEC pledges to the
Onshore Collateral Agent any and all monies in JLEC's accounts with the
Onshore Collateral Agent.
6. The Master Agreement for Assignment of Accounts Receivable as Security, in
which JLEC assigns to the Onshore Collateral Agent a security interest in
all of the accounts receivable payable by ONE to JLEC under the Power
Purchase Agreement.
COVENANTS
The covenants on the loans also place restrictions on JLEC's payment of
dividends and other distributions to JLEC's stockholders. Specifically, JLEC may
not:
1. Pay any dividends to its stockholders, or
2. Make any distribution, payment or delivery of property or cash to its
stockholders, or
3. Redeem, retire, purchase or otherwise acquire any shares of its capital
stock, or
4. Purchase or redeem any subordinated debt except, on quarterly repayment
dates and only then after first satisfying all debt service obligations and
satisfying all of the following conditions, among others:
a. No default shall have occurred,
b. The cash balance in all JLEC reserve and accrual accounts shall equal or
exceed required levels,
c. JLEC's actual debt service coverage ratios for the current quarter and
preceding four quarters have all been greater than 1.3, and
d. JLEC's forecasted debt service coverage ratios for the next succeeding two
quarters are greater than 1.3
JLEC has complied with these covenants since May 2001, when the loans began to
be repaid.
JORF LASFAR ENERGY COMPANY
NOTES TO US GAAP FINANCIAL STATEMENTS
11. STOCKHOLDERS' EQUITY
The composition of Stockholders' Equity is as follows as of December 31, 2002:
11.1 COMMON STOCK
Common Stock
------------------------------------
Number Par value Par value
Shareholders of Shares Dirham US Dollar
- ------------------------------------------------ ------------------------------------
AB Cythere 63, Sweden ...................... 2,634 263,400 27,668
Jorf Lasfar Energiaktiebolag, Sweden ....... 1,375 137,500 14,443
Jorf Lasfar Power Energy AB, Sweden ........ 1,265 126,500 13,288
Tre Kronor Investment AB, Sweden .......... 110 11,000 1,155
Jorf Lasfar Handelsbolag, Sweden ........... 110 11,000 1,155
AB Cythere 61, Sweden ...................... 6 600 63
------------------------------------
Total ..................... 5,500 550,000 57,773
11.2 CONVERTIBLE STOCKHOLDERS' SECURITIES
On December 11, 2000, the JLEC stockholders purchased all Company Loan Notes
totaling US$ 387,355,000, and amended the Company Loan Agreement, to convert
these notes into securities convertible into Preferred Stock or Common Stock. On
January 1, 2001, a portion of these convertible securities held by AB Cythere
61and AB Cythere 63 were converted into Preferred Stock (itself convertible into
common stock) as shown below. After these conversions, the balance of
convertible stockholders' securities as follows at December 31, 2002 and 2001:
Convertible Shareholders' Securities
------------------------------------------------
Number Par value Par value
Shareholders of Shares Dirham US Dollar
- ------------------------------------------ ------------------------------------------------
Jorf Lasfar Energiaktiebolag, Sweden ... 10,537,024 1,053,702,400 96,838,750
Jorf Lasfar Power Energy AB, Sweden .... 9,694,062 969,406,200 89,091,650
Tre Kronor Investment AB, Sweden ...... 842,962 84,296,200 7,747,100
Jorf Lasfar Handelsbolag, Sweden ....... 842,962 84,296,200 7,747,100
------------------------------------------------
Total ................. 21,917,010 2,191,701,000 201,424,600
Under the terms of the amended Agreement, these convertible securities may be
converted into one share of common stock for each 100 MAD.
(a) Expression of the Loan in MAD
The outstanding US$ 201,424,600 principal amount is expressed as MAD
2,191,701,000 for the purpose of computing interest and principal payments due
under this Agreement. However, principal and renumeration payments will be paid
to the stockholders in US$, provided that the Company is not responsible for any
losses realized by the stockholders resulting from the depreciation of the value
of the MAD relative to the USD.
(b) Repayment or conversion into Stock
Under the terms of the amended Agreement:
- - the Security may only be repaid, in whole or in part, at the Company's option;
- - the part of the Security principal held by other Company Lenders listed above
may be converted into Common Stock at any time, using the same conversion ratio
used for the conversion of the parts of AB Cythere 61 and AB Cythere 63 (one
share of Common Stock for each 100 MAD);
- - the shares of Preferred Stock issued to AB Cythere 61 and AB Cythere 63 may be
converted into Common Stock. In this case, all outstanding securities held by
Company lenders will be mandatorily converted into Common Stock at the same
conversion ratio.
(c) Renumeration
The Company will pay renumeration on the unpaid principal amount once per year,
at the rate per annum equal to the Moroccan maximum deductible rate, which was
4.87% p.a, in 2002. Accruals for such payments are reported as part of the
Retained Earnings allocation.
JORF LASFAR ENERGY COMPANY
NOTES TO US GAAP FINANCIAL STATEMENTS
11.3 PREFERRED STOCK
In accordance with Section 3.01 par.(b) of the amended Company Loan Agreement
(see note 11.2 above), the Company has converted on January 1, 2001 all
outstanding Company Loan principal held by AB Cythere 61 and AB Cythere 63, at
the conversion ratio of one share of Preferred Stock for each 100 MAD of such
Company Loan principal converted into Preferred Stock, as follows :
Preferred Stock
-------------------------------------------------------
Number Par value Par value
Shareholders of Shares Dirham US Dollar
- -------------------------- -------------------------------------------------------
AB Cythere 63, Sweden .... 20,185,145 2,018,514,500 185,508,183
AB Cythere 61, Sweden .... 45,941 4,594,100 422,217
-------------------------------------------------------
Total ...... 20,231,086 2,023,108,600 185,930,400
Such shares are non-participating voting shares of convertible Preferred Stock
of the Company, and:
- - are convertible at any moment into shares of Common Stock;
- - give right to the collection of a minimum priority dividend, at least equal to
4% of the aggregate par value of the preferred shares,
- - do not participate in the distribution of the undistributed balance of
Retained Earnings, which is divided among the shares of Common Stock as shown in
Note 11.4.
11.4 ALLOCATION OF RETAINED EARNINGS
The Retained Earnings are allocated among the shareholders as follows:
Common
Convertible Securities Preferred Stock Stock Total
-----------------------------------------------------------------------------------
Shareholders Dirhams US Dollars Dirhams US Dollars US Dollars US Dollars
- --------------------------------------- -----------------------------------------------------------------------------------
AB Cythere 63, Sweden ................. - - 99,666,957 9,774,145 44,357,210 54,131,355
Jorf Lasfar Energiaktiebolag, Sweden .. 52,028,019 5,102,287 - - 23,155,340 28,257,627
Jorf Lasfar Power Energy AB, Sweden ... 47,865,778 4,694,104 - - 21,302,912 25,997,016
Tre Kronor Investment AB, Sweden ..... 4,162,242 408,183 - - 1,852,427 2,260,610
Jorf Lasfar Handelsbolag, Sweden ...... 4,162,242 408,183 - - 1,852,427 2,260,610
AB Cythere 61, Sweden ................. - - 226,840 22,246 101,041 123,287
------------------------------------------------------- --------------------------
Total ................... 108,218,281 10,612,757 99,893,797 9,796,391 92,621,357 113,030,505
The allocations for Convertible Securities (108,218,281 Dirhams) and Preferred
Stock (99,893,797 Dirhams) are payable as of January 1, 2003, and are scheduled
for payment on May 15, 2003.
12. NET INVESTMENT IN DIRECT FINANCING LEASE
The following lists the components of the net investment in direct financing
leases as of December 31 (in 000s):
2002 2001 2000
US$ US$ US$
----------- -------------------------
Total minimum lease payments to be received 2,284,642 2,433,939 2,763,561
Less: unearned income 1,180,081 1,330,425 1,559,851
----------- -------------------------
Net investment in direct financing leases 1,104,561 1,103,514 1,203,710
=========== =========================
Minimum lease payments are based on the estimated capacity payments that ONE
makes to JLEC. Under the terms of the contracts with ONE, capacity payments are
made monthly based on the availability of the Units and energy deliveries to
ONE. Management has estimated the total minimum lease payments over the term of
the contracts based on its estimate of the plants' availability. If the Units do
not achieve the performance estimated in JLEC's models, adjustments to the
revenues recorded using the interest method for the direct financing lease may
be required.
The minimum lease payments do not include reimbursable or executory costs such
as the reimbursement of coal costs.
As of December 31, 2002, minimum lease payments for the next five years are as
follows (in 000s):
2003 228,783
2004 238,734
2005 228,530
2006 201,868
2007 185,640
JORF LASFAR ENERGY COMPANY
NOTES TO US GAAP FINANCIAL STATEMENTS
13. PENSION PLANS
JLEC contributes to the following pension plans:
13.1 CAISSE COMMUNE DES RETRAITES (CCR)
As required by PPA Section 23.2.4, most of JLEC's employees ( 263 employees of
314, or 84%) plus 1 recent retiree are participants in the CCR defined benefit
pension plan. This plan is funded by employee payroll deductions equal to 9% of
the employees' gross pay, plus JLEC contributions equal to 18% of the
participating employees' gross pay. In 2002, 2001 and 2000, JLEC contributed to
the CCR US$ 291,036, US$ 266,972 and US$ 280,577, respectively.
Benefits provided under this plan include pension and retiree health insurance.
As of December 31, 2002, the benefit obligation totaled US$ 7,738,000. The fair
value of assets contributed to the CCR was US$ 1,947,000 as of December 31,
2002. The net unfunded benefit obligation as of December 31, 2002 reflected in
the accompanying balance sheet was US$ 5,693,000.
The following assumptions were used to perform the actuarial valuation for 2002:
Discount rate 7.58%
Rate of compensation increase 6.50%
13.2 CAISSE INTERPROFESSIONNELLE MAROCAINE DE RETRAITES (CIMR)
Employees of JLEC not covered by CCR participate in a fund to which the employer
contributes an amount equal to 12 percent of the employee's gross pay. This fund
is carried in the employee's name, and the pension benefits an employee will
receive depend only on the amount contributed to this account and the returns
earned on investments of those contributions. During 2002, 2001 and 2000, JLEC's
contributed US$ 109,147, US$ 105,912 and US$ 102,558, respectively.
14. COMMITMENTS AND CONTINGENCIES
JLEC's corporate tax return for the years 1999 to 2002, and the JLEC's payroll
and VAT returns for the years 1997 to 2002 are open to audit by the Moroccan Tax
Authorities.
JLEC is peridiocally involved in other legal, tax and other proceedings
regarding matters arising in the oridinary course of business. JLEC believes
that the outcome of these matters will not materially affect its results of
operations or liquidity.
15. DERIVATIVE INSTRUMENT LIABILITY / OTHER COMPREHENSIVE LOSS
JLEC adopted SFAS N(degree). 133 on January 1, 2001. This standard requires JLEC
to recognize at fair value on the balance sheet, as assets or liabilities, all
contracts that meet the definition of a derivative instrument. Details of all
JLEC derivative instruments (interest rate swaps) are provided in the following
table as of December 31, 2002, and all such swaps qualify with 100%
effectiveness as cash flow hedge for JLEC's variable interest rate loans.
Therefore, in accordance with SFAS N(degree). 133, the changes in fair value of
these interest rate swaps are reflected directly in Stockholders' Equity under
"Accumulated Other Comprehensive Loss". JLEC determines fair value based upon
market price estimations provided by the swap providers.
Fixed Current Current Notional Settlement and Forecast of
Credit Swap Currency Rate Paid Libor Paid Amount Amortization Termination Date Remaining Valuation in
Facility Providers by JLEC to JLEC Payments Euro
- ------------------------------------------------------------------------------------------------------------------------------------
World Bank BNP Euro 6.41% 3.14% 45,565,338 Quarterly 2/15/2013 7,947,927 5,729,083
ABN Euro 6.42% 3.14% 45,565,338 Quarterly 2/15/2013 7,962,491 5,739,581
CSFB Euro 6.41% 3.14% 45,565,338 Quarterly 2/15/2013 7,934,576 5,719,459
- ------------------------------------------------------------------------------------------------------------------------------------
136,696,014 23,844,995 17,188,123
----------- -------------------------
ERG BNP Euro 6.47% 3.14% 8,512,464 Quarterly 2/15/2013 1,511,371 1,089,437
ABN Euro 6.48% 3.14% 8,512,464 Quarterly 2/15/2013 1,513,638 1,091,072
CSFB Euro 6.47% 3.14% 8,512,464 Quarterly 2/15/2013 1,510,464 1,088,783
- ------------------------------------------------------------------------------------------------------------------------------------
25,537,392 4,535,473 3,269,292
----------- -------------------------
Total in Euro 20,457,415
----------
B/S FX rate X 1.04658
Total in USD 21,410,369
==========
Approximately USD 1.9 million of the current net deferred loss on derivative
instruments in accumulated comprehensive loss is expected to be reclassified to
earnings during the next twelve months as hedged transactions occur, assuming no
significant fluctuation in interest rates.