Exhibit 99.1
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[GREAT LAKES POWER -- LOGO]
FIRST QUARTER 2002 INTERIM REPORT
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[GREAT LAKES POWER -- LOGO]
INTERIM REPORT FOR THE THREE MONTHS ENDED MARCH 31, 2002
First Quarter Highlights
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o Completed acquisition of a 126 megawatt ("MW") hydroelectric generating and
transmission system in northern Maine, which will enhance the company's
ability to market power in the increasingly integrated North American
energy markets.
o Reached agreement to acquire four hydroelectric generating stations on the
Mississagi River in northern Ontario from Ontario Power Generation Inc. for
Cdn$340 million.
o Continued construction on two hydroelectric generating facilities in
Canada: the 45 MW High Falls redevelopment in northern Ontario and the new
30 MW Pingston Creek station in central British Columbia.
o Continued development work on five hydroelectric generating stations in
Brazil, three of which are now under construction.
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>> MISSISSAGI ACQUISITION
In March 2002, Great Lakes' shareholder, Brascan Corporation, announced that it
had reached agreement to acquire four hydroelectric stations in northern Ontario
with a combined generating capacity of 488 MW from Ontario Power Generation Inc.
("OPG") for Cdn$340 million. These stations are located on the Mississagi River
immediately to the east of Great Lakes' integrated power system based in Sault
Ste. Marie. These stations have been identified by OPG as part of its effort to
reduce its share of generating capacity in Ontario in conjunction with
establishing a competitive market in this province.
On April 12, 2002, Brascan announced that it was assigning its interest in the
Mississagi River purchase agreement to the Great Lakes Hydro Income Fund, in
which it owns 50% of the units through Great Lakes. The transaction is expected
to close in early May 2002.
The four hydroelectric generating stations being acquired are: Wells (239 MW),
Aubrey Falls (162 MW), George W. Rayner (46 MW) and Red Rock Falls (41 MW). The
acquisition also includes four water storage reservoirs on Rocky Island Lake,
which facilitate the peaking operation of these power stations, and a service
centre, which serves as the office, warehouse and workshop for these facilities.
The four Mississagi power stations will expand Great Lakes' power generating
capacity to over 1,600 megawatts. They also have special value to Great Lakes as
they can be operated in conjunction with its twelve other power stations in the
adjacent area of northern Ontario.
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GREAT LAKES POWER INC. 1
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>> OPERATING RESULTS
The company's power operations generated 1,630 gigawatt hours ("GWh") of
electricity during the first quarter of 2002 compared to 1,036 GWh during the
same period in 2001. All operations but one reported higher power generation as
a result of improved precipitation levels and productivity improvements. Results
for the first quarter of 2002 also include three months' contribution from
Powell River Energy in British Columbia, acquired in February 2001, as well as
two months' contribution from Great Northern Energy in northern Maine, acquired
in February 2002.
The company's northern Ontario power generating, transmission and distribution
system generated 481 GWh of electricity in the first quarter of 2002, up from
249 GWh in the same period in 2001 due to improved winter precipitation levels.
Power sales in the first quarter, including power purchased externally to meet
customer demand with the system's service area, totalled 626 GWh in the first
quarter of 2002 compared to 631 GWh in 2001.
Operations owned through the Great Lakes Hydro Income Fund generated a total of
617 GWh of power in the first quarter of 2002, up from 340 GWh in the same
period of last year. Maclaren Power generated 413 GWh of electricity during the
first quarter of 2002, up from 306 GWh last year due to improved precipitation
levels in western Quebec. Powell River Energy contributed 156 GWh during the
quarter, up from 34 GWh in the two month period last year as a result of
significantly higher precipitation levels in western British Columbia. Great
Northern Energy's power generation since acquisition in February 2002 was 48
GWh.
The company's other power operations in Canada and the United States generated
532 GWh of electricity in the first quarter of 2002, up from 447 GWh in the same
period in 2001. Louisiana HydroElectric's generation was 239 GWh, up from 176
GWh last year as water flows on the Mississippi River started to return to more
normal levels. Power generation from the company's other operations in Ontario
and Quebec also increased, mainly as a result of improved precipitation.
>> FINANCIAL REVIEW
Great Lakes earned net income of $42.3 million for the three months ended March
31, 2002, up from $30.4 million in the first quarter of 2001.
Power revenues for the first quarter increased to $89.4 million in 2002 from
$67.1 million in 2001. Revenue from the Great Lakes Hydro Income Fund increased
as a result of higher precipitation in western Quebec and the acquisition of
Powell River Energy in February 2001 and Great Northern Energy in February 2002.
Revenue from Louisiana HydroElectric Power also increased with the return to
more normal levels of water flow on the lower Mississippi.
Income from long-term investments, which consists of dividends from the
company's investments, was $10.8 million in the first quarter of 2002, down from
$11.4 million in the same period last year. Investment and other income, which
includes dividends earned on the company's securities portfolio, interest on
loans receivable and other fee income, was $12.9 million for the first quarter
of 2002, down from $15.8 million in 2001 due to lower average interest rates.
Expenses for the first quarter increased to $70.8 million in 2002 from $63.9
million in 2001. This $6.9 million net increase in expenses reflects mainly a
$2.0 million increase in operating and maintenance expense, a $2.1 million
increase in depreciation and a $1.0 million increase in minority expenses, all
related to the acquisitions of Powell River Energy and Great Northern Energy.
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2 FIRST QUARTER 2002 INTERIM REPORT
>> CAPITAL INVESTMENT PROGRAM
Work continues on Great Lakes' $500 million capital investment plan, which forms
an integral part of a strategic plan to double power operating earnings by the
year 2005.
High Falls, Ontario. Construction continues on the 45 MW, High Falls
hydroelectric generating station on the Michipicoten River in northern
Ontario. This $75 million redevelopment project is expected to be completed
in the fourth quarter of 2002. Capital expenditures on the project during
the three months ended March 31, 2002 were $4.6 million.
Pingston Creek, British Columbia. Construction continues on a 30 MW
hydroelectric generating station near Revelstoke, B.C. in a 50/50
partnership with Canadian Hydro Developers Inc. This $48 million project is
expected to be completed in mid 2002. Capital expenditures on the project
during the three months ended March 31, 2002 were $3.5 million.
Sault Ste. Marie, Ontario/Michigan. Permitting and preliminary engineering
are under way for a $30 million high voltage transmission interconnection
to link the company's generating stations in Ontario with the neighbouring
power grid in Michigan. This interconnection will have a capacity of up to
300 MW at 230 kilovolts and will enhance Great Lakes' ability to access
U.S. energy markets to maximize the value of its power system.
Brascan Energetica, Brazil. Development work continues for five new
hydroelectric generating stations in southern Brazil. Construction is under
way on three of these stations, the 30 MW Passo do Meio project in the
State of Rio Grande do Sul and the 16 MW Pedrinho and 15 MW Salto Natal
projects in the State of Parana.
>> OUTLOOK
Precipitation levels have returned to normal in northern Ontario and western
Quebec. This improvement, combined with the higher water flows already
experienced on the Mississippi River and the acquisition of Great Northern
Energy, should lead to higher power generation levels in 2002 compared to prior
years. Through its capital investment plan, Great Lakes is aggressively seeking
to increase returns as system improvements, new development projects and
acquisitions are brought on stream.
"signed"
Edward C. Kress
Chairman
April 17, 2002
* * * * * * * * * *
Note: This Interim Report contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. The words "believe",
"expect", "anticipate", "intend", "estimate" and other expressions which are
predictions of or indicate future events and trends and which do not relate to
historical matters identify forward-looking statements. Reliance should not be
placed on forward-looking statements because they involve known and unknown
risks, uncertainties and other factors, which may cause the actual results,
performance or achievements of the company to differ materially from anticipated
future results, performance or achievements expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially from those set forth in the forward-looking statements include
general economic conditions, interest rates, availability of equity and debt
financing and other risks. The company undertakes no obligation to publicly
update or revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
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GREAT LAKES POWER INC. 3
>> OPERATING STATISTICS
ELECTRICITY GENERATION AND SALES
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Three months ended March 31
gigawatt hours 2002 2001
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GENERATION
Great Lakes Power Limited 481 249
Great Lakes Hydro Income Fund
Maclaren Power 413 306
Powell River Energy (1) 156 34
Great Northern Energy (2) 48 --
Other Power Operations
Lake Superior Power (3) 221 211
Valerie Falls Power 14 11
Pontiac Power 58 49
Louisiana HydroElectric Power 239 176
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TOTAL GENERATION 1,630 1,036
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SALES
Great Lakes Power Limited (4) 626 631
Great Lakes Hydro Income Fund
Maclaren Power 413 305
Powell River Energy (1) 156 34
Great Northern Energy (2) 48 --
Other Power Operations
Lake Superior Power (3) 221 211
Valerie Falls Power 14 11
Pontiac Power 58 47
Louisiana HydroElectric Power 231 171
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TOTAL SALES 1,767 1,410
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(1) Acquired February 2, 2001
(2) Acquired February 1, 2002
(3) Including electricity equivalents of contracted gas sales
(4) Including power purchased externally to supply customer demand in the
system's northern Ontario service area
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4 FIRST QUARTER 2002 INTERIM REPORT
>> CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
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(unaudited) March 31, December 31,
millions 2002 2001
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ASSETS
Securities $ 723.0 $ 715.6
Loans and other receivables 258.0 425.0
Long-term investments 515.0 521.8
Property, plant and equipment 1,574.7 1,267.6
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$3,070.7 $2,930.0
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LIABILITIES
Accounts payable and other $ 91.3 $ 91.9
Mortgage bonds 677.1 555.6
Term debentures 596.3 596.2
FUTURE INCOME TAX LIABILITY 115.1 116.4
MINORITY INTERESTS 269.8 271.3
SHAREHOLDERS' EQUITY (Note 2) 1,321.1 1,298.6
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$3,070.7 $2,930.0
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GREAT LAKES POWER INC. 5
CONSOLIDATED STATEMENT OF INCOME
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(unaudited) THREE MONTHS ENDED MARCH 31
millions, except per share amounts 2002 2001
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REVENUE
Power operations $ 89.4 $ 67.1
Long-term investments 10.8 11.4
Investment and other income 12.9 15.8
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113.1 94.3
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EXPENSES
Interest 20.1 21.4
Power and fuel purchases 23.8 24.9
Operating and maintenance costs 9.9 7.9
Depreciation 8.7 6.6
Minority interests 3.9 2.9
Income and other taxes 4.4 0.2
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70.8 63.9
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NET INCOME $ 42.3 $ 30.4
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FULLY DILUTED NET INCOME PER COMMON SHARE $ 0.34 $ 0.24
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CONSOLIDATED STATEMENT OF RETAINED EARNINGS
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(unaudited) THREE MONTHS ENDED MARCH 31
millions 2002 2001
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RETAINED EARNINGS
Balance, beginning of year $447.7 $397.8
Net income 42.3 30.4
Convertible debenture interest (3.6) (4.4)
Common share dividends (16.2) (16.2)
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Balance, end of period $470.2 $407.6
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6 FIRST QUARTER 2002 INTERIM REPORT
CONSOLIDATED STATEMENT OF CASH FLOWS
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(unaudited) THREE MONTHS ENDED MARCH 31
Millions 2002 2001
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CASH PROVIDED FROM OPERATIONS (Note 3) $ 45.4 $ 29.6
Net change in non-cash working capital (6.7) (4.5)
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CASH PROVIDED BY OPERATING ACTIVITIES 38.7 25.1
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FINANCING AND SHAREHOLDER DISTRIBUTIONS
Borrowings 131.3 51.3
Debt repayments (9.7) (2.2)
Convertible debenture interest (3.6) (4.4)
Common share dividends (16.2) (16.2)
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101.8 28.5
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INVESTING
Sale of securities 7.7 --
Loans and other receivables 170.0 7.7
Property, plant and equipment (310.8) (50.8)
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(133.1) (43.1)
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CASH AND CASH EQUIVALENTS
Increase 7.4 10.5
Balance, beginning of year 10.3 12.7
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Balance, end of period $ 17.7 $ 23.2
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GREAT LAKES POWER INC. 7
>> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements include the
accounts of the company consolidated with the accounts of all its subsidiaries.
Reference is made to the company's most recently issued Annual Financial Report,
which included information necessary or useful to understanding the company's
businesses and financial statement presentations. In particular, the company's
significant accounting policies and practices were presented as Note 1 to the
Consolidated Financial Statements included in that report. The company's
accounting policies and methods of their application are consistent with those
of the most recent annual financial statements, except as may be described
elsewhere in these financial statements.
The quarterly financial statements are unaudited. Financial information in this
Interim Report reflects any adjustments (consisting only of normal recurring
adjustments) that are, in the opinion of management, necessary to a fair
statement of results for the interim periods in accordance with generally
accepted accounting principles.
The results reported in these consolidated financial statements should not be
regarded as necessarily indicative of results that may be expected for the
entire year.
The company is incorporated under the laws of Ontario and develops, owns and
operates hydroelectric and other power generating facilities principally in
Canada. The company also conducts investment activities, which include the
receipt of interest and dividends on the company's financial assets as well as
gains realized on investment transactions.
2. SHAREHOLDERS' EQUITY
The company is authorized to issue an unlimited amount of common shares, of
which the following were issued and outstanding:
March 31 December 31
millions 2002 2001
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101,383,135 (2001 - 101,383,135) Common shares $ 603.2 $ 603.2
Retained earnings 470.2 447.7
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1,073.4 1,050.9
Subordinated convertible debentures 247.7 247.7
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$1,321.1 $1,298.6
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The subordinated convertible debentures mature September 30, 2013, bear interest
at the prime rate subject to a minimum of 6% and a maximum of 8%.
3. CASH PROVIDED FROM OPERATIONS
THREE MONTHS ENDED MARCH 31
millions 2002 2001
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Net income $ 42.3 $ 30.4
Add non-cash items:
Depreciation 8.7 6.6
Hydrological provisions -- (2.4)
Equity income (loss) and other (5.6) (5.0)
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$ 45.4 $ 29.6
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4. COMPARATIVE FIGURES
Certain of the prior year's figures have been reclassified to conform with the
2002 presentation.
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8 FIRST QUARTER 2002 INTERIM REPORT
>> PROFILE
Great Lakes Power Inc. generates, transmits and distributes electricity in
Ontario and Quebec, and has ownership and operating interests in other power
generating facilities and developments in Canada, the United States and Brazil.
Its production and development base currently includes 28 generating stations
with an installed generating capacity of 1,117 megawatts, which will increase to
1,605 megawatts on the closing of the Mississagi River acquisition in early May
2002.
Great Lakes is a wholly-owned subsidiary of Brascan Corporation (TSE: BNN.A,
NYSE: BNN).
PRODUCTION BASE
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Generating Generating
Ownership Stations Units Capacity
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(megawatts)
Great Lakes Power Limited(1) 100% 12 22 331
Great Lakes Hydro Income Fund (50%)
Maclaren Power, Quebec(1) 100% 3 10 238
Powell River Energy, British Columbia(2) 50% 2 7 82
Great Northern Energy, Maine(1) 100% 6 31 126
Mississagi River, Ontario(2,5) 100% 4 8 488
Other Power Operations
Lake Superior Power, Ontario(3) 50% 1 3 110
Valerie Falls Power, Ontario(2) 65% 1 2 10
Pontiac Power, Quebec(2) 100% 2 7 28
Louisiana HydroElectric Power(2) 75%(4) 1 8 192
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TOTAL 32 98 1,605
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(1) Integrated hydroelectric power generating and transmission systems
(2) Other hydroelectric generating stations
(3) Natural gas-fired cogeneration plant
(4) Residual interest
(5) Acquisition expected to close in early May 2002
>> HEAD OFFICE
GREAT LAKES POWER INC.
Suite 4400, P.O. Box 762
BCE Place, 181 Bay Street
Toronto, Ontario
M5J 2T3
Telephone: 416-363-9491
Facsimile: 416-363-2856
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9 FIRST QUARTER 2002 INTERIM REPORT