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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 2003
-- OR --
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Commission File Number 333-91935
Oncor Electric Delivery Transition Bond Company LLC
A Delaware Limited Liability Company I.R.S. Employer Identification No.
75-2851358
500 N. AKARD STREET, DALLAS, TEXAS 75201
(214) 486-2000
------------------------------
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
-- ---
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes No X
-- ---
As of November 7, 2003, all outstanding membership interests in Oncor Electric
Delivery Transition Bond Company LLC were held by Oncor Electric Delivery
Company.
Oncor Electric Delivery Transition Bond Company LLC meets the conditions set
forth in General Instructions (H) (1) (a) and (b) of Form 10-Q and is therefore
filing this report with the reduced disclosure format.
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TABLE OF CONTENTS
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Page
----
Glossary............................................................................................ ii
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Income Statement --
Three and Nine Months Ended September 30, 2003.......................................... 1
Condensed Statement of Cash Flows --
Nine Months Ended September 30, 2003.................................................... 2
Condensed Balance Sheets --
September 30, 2003 and December 31, 2002................................................ 3
Notes to Financial Statements........................................................... 4
Independent Accountants' Report......................................................... 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................................... 9
Item 4. Controls and Procedures........................................................... 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................................................. 12
SIGNATURE........................................................................................... 13
Periodic reports on Form 10-K and Form 10-Q and current reports on Form 8-K that
contain financial information of Oncor Electric Delivery Transition Bond Company
LLC will be made available to the public, free of charge, on the Oncor Electric
Delivery Company website at http://www.oncorgroup.com, shortly after they have
been filed with the Securities and Exchange Commission. Oncor Electric Delivery
Transition Bond Company LLC will provide copies of current reports not posted
on the website upon request.
i
GLOSSARY
When the following terms and abbreviations appear in the text of this report,
they have the meanings indicated below.
1999 Restructuring Legislation.......legislation that restructured the electric
utility industry in Texas to provide for
competition
Commission...........................Public Utility Commission of Texas
Company..............................Oncor Electric Delivery Transition Bond
Company LLC, a wholly-owned
subsidiary of Oncor
Oncor................................Oncor Electric Delivery Company, a
subsidiary of US Holdings
REPs.................................retail electric providers
SEC..................................United States Securities and Exchange
Commission
Settlement...........................regulatory settlement plan agreed to by
the Commission in 2002
Settlement Plan......................regulatory settlement plan filed with the
Commission in December 2001
SFAS.................................Statement of Financial Accounting Standards
SFAS 71..............................SFAS No. 71, "Accounting for the Effects
of Certain Types of Regulation"
US GAAP..............................accounting principles generally accepted
in the United States of America
US Holdings..........................TXU US Holdings Company, a subsidiary of
TXU Corp.
ii
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ONCOR ELECTRIC DELIVERY TRANSITION BOND COMPANY LLC
CONDENSED INCOME STATEMENT
(Unaudited)
Three and Nine
Months Ended
September 30,
2003
------
Operating revenues:
Transition charge revenue...................................................... $7,915,143
Investment income.............................................................. 3,361
----------
Total operating revenues..................................................... 7,918,504
Operating expenses:
Interest expense............................................................... 2,393,156
Amortization of transition property............................................ 1,782,755
Over-recovery of transition charges............................................ 3,685,499
Administrative and general expenses............................................ 57,094
----------
Total operating expenses..................................................... 7,918,504
----------
Net income.......................................................................... $ --
==========
See Notes to Financial Statements
1
ONCOR ELECTRIC DELIVERY TRANSITION BOND COMPANY LLC
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
2003
------
Cash flows - operating activities:
Net income................................................................... $ --
Adjustments to reconcile net income to cash
provided by operating activities:
Amortization of transition property...................................... 1,782,755
Over-recovery of transition charges...................................... 3,685,499
Changes in operating assets and liabilities.................................. (5,331,919)
------------
Cash provided by operating activities.................................... 136,335
Cash flows - investing activities:
Purchase of transition property.............................................. (500,000,000)
Deposit of restricted funds with indenture trustee........................... (6,349,501)
------------
Cash used by investing activities........................................ (506,349,501)
Cash flows - financing activities:
Issuance of transition bonds................................................. 500,000,000
Equity contribution from parent.............................................. 6,347,154
------------
Cash provided by financing activities.................................... 506,347,154
------------
Net increase in cash and cash equivalents.................................... 133,988
Cash and cash equivalents, beginning of period............................... --
------------
Cash and cash equivalents, end of period..................................... $ 133,988
============
See Notes to Financial Statements
2
ONCOR ELECTRIC DELIVERY TRANSITION BOND COMPANY LLC
CONDENSED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2003 2002
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents............................... $ 133,988 $ --
Transition charge receivable:
Affiliates............................................ 6,476,800 1,000
Trade................................................. 1,732,782 --
----------- ---------
Total current assets.................................. 8,343,570 1,000
Investments:
Restricted funds held in trust.......................... 6,349,501 --
Transition property, net of accumulated amortization
of $1,782,755......................................... 498,217,244 --
Unamortized debt issuance costs........................... -- 1,136,183
------------ ----------
Total assets.......................................... $512,910,315 $1,137,183
============ ==========
LIABILITIES AND MEMBER'S EQUITY
Current liabilities:
Long-term debt due currently............................ $22,543,239 $ --
Accounts payable - affiliate............................ 52,244 1,136,183
Accrued interest........................................ 2,393,156 --
Other current liabilities............................... 432,262 --
------------ ----------
Total current liabilities............................. 25,420,901 1,136,183
Transition bonds.......................................... 477,456,761 --
Regulatory liability...................................... 3,685,499 --
------------ ----------
Total liabilities..................................... 506,563,161 1,136,183
Member's equity........................................... 6,347,154 1,000
------------ ----------
Total liabilities and member's equity................. $512,910,315 $1,137,183
============ ==========
See Notes to Financial Statements
3
ONCOR ELECTRIC DELIVERY TRANSITION BOND COMPANY LLC
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BUSINESS AND BASIS OF PRESENTATION
Business - The Company is a bankruptcy remote special purpose Delaware
limited liability company, wholly-owned by Oncor. Oncor is a wholly-owned
subsidiary of US Holdings, which is a wholly-owned subsidiary of TXU Corp. Oncor
is a regulated electricity transmission and distribution company principally
engaged in providing delivery services to REPs that sell electricity in the
north-central, eastern and western parts of Texas.
The Company was organized in November 1999 for the sole purpose of
purchasing and owning transition property acquired from Oncor. The Company had
no operations until August 2003. In connection with the acquisition of the
transition property, the Company has agreed to (a) register and issue one or
more series of transition bonds, each of which may be comprised of one or more
classes, (b) pledge its interest in the transition property and other transition
bond collateral to secure the transition bonds, (c) make debt service payments
on the transition bonds, and (d) perform other activities that are necessary,
suitable or convenient to accomplish these purposes. The Company is structured
and is operated in a manner such that in the event of bankruptcy proceedings
against Oncor, the assets of the Company will not be consolidated into the
bankruptcy estate of Oncor. Oncor is not the owner of the transition property
described herein, and the assets of the Company are not available to pay
creditors of Oncor or any of its affiliates.
In September 1999, the Texas legislature passed the 1999 Restructuring
Legislation to restructure the electric utility industry in Texas. The 1999
Restructuring Legislation provided for a transition to competition in the retail
and generation markets for electricity beginning in January 2002, and provided
for recovery of certain costs previously incurred by electric utilities. These
costs consist of generation-related regulatory assets as well as stranded costs,
which represent the excess of net book value over market value of generation
assets (as such regulatory and generation assets are defined by the 1999
Restructuring Legislation). Recovery of these costs is provided through
irrevocable, nonbypassable "transition charges" assessed on substantially all
existing and future retail electric customers within a utility's certificated
service territory as it existed on May 1, 1999. The 1999 Restructuring
Legislation authorized the Commission to issue a "financing order" approving the
issuance of "transition bonds" to facilitate the recovery of generation-related
regulatory assets and stranded costs.
The 1999 Restructuring Legislation and the financing order permit an
electric utility to transfer its rights and interests in the financing order,
including the right to collect transition charges pursuant to the 1999
Restructuring Legislation, to a special purpose entity formed by the electric
utility to issue debt secured by the right to receive revenues arising from the
transition charges. The electric utility's right to receive the transition
charges and its other rights and interests under the financing order constitute
"transition property" once transferred to the Company. The transition property
represents the irrevocable right to impose, collect and receive transition
charges in an amount sufficient to pay the interest, fees, and expenses
associated with the transition bonds, and the aggregate principal amount of the
transition bonds. Oncor and the Company have entered into a servicing agreement.
Transition charges are assessed by the servicer. The servicer manages, services,
bills and collects payments in respect of the transition property under the
terms of a servicing agreement. Transition charges are billed based on a retail
customer's actual consumption of electricity. However, transition charges for
demand customers are based on the maximum amount of electricity that such
customers are expected to consume based on their actual consumption during the
prior year. Transition charges are collected by the servicer from REPs that
collect transition charges from retail customers as part of its normal
collection activities. The Commission reviews and adjusts transition charges at
least once a year. This review is used to adjust any over or under collections
during the preceding 12 months and to provide for recovery of amounts sufficient
to pay all debt service and other required amounts and charges in connection
with the transition bonds. As long as Oncor or its affiliate or agent acts as
servicer, the aggregate annual servicing fee will be the greater of $400,000 for
all series of outstanding transition bonds or 0.05% per year of the initial
principal amount of all series of outstanding transition bonds. If a successor
servicer that is not affiliated with Oncor is appointed, it will be entitled to
receive a servicing fee not in excess of 0.60% per year of the initial principal
amount of each series of outstanding transition bonds. The servicing fee will be
recovered by the Company through the transition charges.
4
In accordance with the Settlement, Oncor received a financing order
authorizing it to issue transition bonds in the aggregate principal amount of
$1.3 billion to recover regulatory assets and other qualified costs as discussed
above. The Settlement provides that there can be an initial issuance of
transition bonds in the amount of up to $500 million, which was completed in the
third quarter of 2003, as described below, followed by a second issuance of $800
million, which is expected to be completed in the first quarter of 2004.
In August 2003, the Company issued and sold the first series of
transition bonds in an amount of $500 million aggregate principal amount. The
net proceeds from the transition bond issuance were used to acquire transition
property. The Company pledged its interest in the transition property and other
transition bond collateral to secure the transition bonds.
In connection with the issuance of the first series of transition
bonds, Oncor made a capital contribution of $6.3 million to the Company, of
which $2.5 million is held by the indenture trustee and pledged as collateral
for such transition bonds, and the remaining $3.8 million is held by the
indenture trustee to be used to fund any future fees and expenses of the
indenture trustee not recovered from transition charges.
Basis of Presentation -- The condensed financial statements of the Company
have been prepared in accordance with US GAAP. In the opinion of management, all
adjustments (consisting of normal recurring accruals) necessary for a fair
presentation of the financial position have been included therein. Certain
information and footnote disclosures normally included in annual financial
statements prepared in accordance with US GAAP have been omitted pursuant to the
rules and regulations of the SEC. Comparable income statements are not presented
because there were no operations prior to August 2003 even though the company
existed. Because the condensed interim financial statements do not include all
of the information and footnotes required by US GAAP, they should be read in
conjunction with the audited financial statements included in the Company's
prospectus dated August 14, 2003 as filed with the SEC on August 18, 2003
pursuant to Rule 424(b) under the Securities Act of 1933 (Prospectus) relating
to the Company's registration statement, as amended, on Form S-3, which was
declared effective on July 2, 2003 (Registration No. 333-91935). The results of
operations for an interim period may not give a true indication of results for a
full year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates -- The preparation of the Company's financial
statements requires management to make estimates and assumptions about future
events that affect the reporting and disclosure of assets and liabilities at the
balance sheet dates and the reported amounts of revenue and expense. In the
event estimates and/or assumptions prove to be different from actual amounts,
adjustments are made in subsequent periods to reflect more current information.
No material adjustments, other than those disclosed elsewhere herein, were made
to previous estimates during the current year.
Regulatory Assets and Liabilities -- The Company's business meets the
applicability criteria of SFAS 71. This accounting standard recognizes the
cost-based rate making process, which may result in differences in the
application of generally accepted accounting principles between regulated and
non-regulated entities.
Revenue Recognition -- Transition charges are billed to REPs by Oncor,
as servicer, on behalf of the Company. These transition charges are recorded as
revenue by the Company. Transition charges are recognized when delivery services
are provided to customers on the basis of periodic cycle meter readings and
include an estimated accrual for the transition charge from the meter reading
date to the end of the period. The accrued transition charge is based on actual
daily billings for the most recent metered period applied to the number of
unmetered days through the end of the period.
Amortization -- The transition property acquired from Oncor is
amortized over the life of the transition bonds based on revenues from
transition charges, interest accruals and other expenses. In accordance with
SFAS 71, amortization is adjusted for over/under collection of transition
charges.
5
Investment Income -- The Company earns investment income on funds held
by the indenture trustee, which funds are invested as allowed by the indenture.
Investment income on transition charge collections is recognized as earned and
serves to increase the over-recovery of transition charges by a corresponding
amount since it will be used to make payments on the transition bonds.
Investment income on the capital account (Member's Equity) is recognized on
payment dates. When it is determined that such income is not required to satisfy
payment obligations, Oncor is entitled to such revenues.
Income and Other Taxes -- The Company is organized as a single-member
limited liability company and will not be subject to United States federal
income tax as an entity separate from Oncor. In addition, the Company's receipt
of transition property, transition charges and short-term earnings from
investments of the transition charges will not be subject to state and local
tax. Accordingly, there is no provision for federal, state or local taxes.
3. RELATED PARTY TRANSACTIONS
Notwithstanding the non-recourse nature of the transactions, Oncor
(individually, as servicer or otherwise) is required under the transaction
documents (i) to make certain representations and warranties with respect to,
among other things, the validity of the Company's and its assignees' title to
the transition property and (ii) to observe certain covenants for the benefit of
the Company and its assignees. Oncor is also required to indemnify the Company
against breach of such representations and warranties and its failure to perform
its covenants and to protect holders of the bonds against certain other losses,
which result from actions or inactions of Oncor.
Oncor provides administrative services to the Company pursuant to an
administration agreement between the Company and Oncor. Under this agreement,
Oncor furnishes to the Company, at a fixed fee per year, clerical, secretarial
and other accounting services, which is reflected as administrative and general
expenses in the income statement.
All transition bond issuance costs incurred through June 2003
($1,817,852) were paid by Oncor and are currently included with transition
property.
4. TRANSITION BONDS
At September 30, 2003, the long-term debt of the Company consisted of
the following:
2.26% Fixed Series 2003 Transition Bonds due in bi-annual installments through February 15, 2007... $103,000,000
4.03% Fixed Series 2003 Transition Bonds due in bi-annual installments through February 15, 2010... 122,000,000
4.95% Fixed Series 2003 Transition Bonds due in bi-annual installments through February 15, 2013... 130,000,000
5.42% Fixed Series 2003 Transition Bonds due in bi-annual installments through August 15, 2015..... 145,000,000
------------
Total....................................................................................... 500,000,000
Less amount due currently...................................................................... 22,543,239
------------
Total long-term debt........................................................................... $477,456,761
============
The transition property sold to the Company as described above, is
pledged as collateral for the bonds, as well as restricted cash at
September 30, 2003 of $2,500,180. Collections of transition charges will be
used to pay the principal, interest and associated costs of the transition
bonds. The Company is required to maintain restricted cash pledged as
collarteral for the bonds in an amount equal to 0.5% of the initial aggregate
principal amount of bonds outstanding. Should the transition charges collected
through the specified payment dates listed above not provide adequate funds to
make the scheduled payments of principal and interest, the transition charges
can continue to be collected for approximately two years before the bond goes
into default for non-payment.
6
Maturity requirements for the years 2004 through 2008 and thereafter
under long-term debt instruments outstanding at September 30, 2003, were as
follows:
Year
2004 ............................................. $ 22,543,239
2005 ............................................. 35,760,468
2006 ............................................. 36,576,586
2007 ............................................. 37,514,014
2008 ............................................. 39,023,742
Thereafter........................................ 328,581,951
-------------
Total........................................ $ 500,000,000
=============
Financial Covenants -- The terms of the indenture contain financial
covenants that require maintenance of specified collateral deposits in
proportion to the aggregate principal amount of the bonds outstanding. As of
September 30, 2003, the Company was in compliance with such covenants.
5. MEMBER'S INTEREST
In August 2003, Oncor contributed cash of $2.5 million to the Company,
which is pledged as collateral for the transition bonds. Oncor will contribute
an additional $4.0 million to the Company, which will be pledged as collateral
for the $800 million of transition bonds when those bonds are issued.
Also in August 2003, Oncor contributed $3.8 million to the Company,
which was placed in a reserve account with the indenture trustee to cover any
future fees and expenses associated with the transition bonds not recovered
from the transition charges. On the earlier of January 15, 2004 or the date on
which the $800 million of transition bonds are issued, Oncor will be required
to contribute an additional $6.2 million to the Company, which will also be
placed in the reserve account.
7
INDEPENDENT ACCOUNTANTS' REPORT
Oncor Electric Delivery Transition Bond Company LLC:
We have reviewed the accompanying condensed balance sheet of Oncor Electric
Delivery Transition Bond Company LLC (a wholly owned subsidiary of Oncor
Electric Delivery Company) (the "Company") as of September 30, 2003 and the
related condensed statement of income for the three-month and nine-month periods
ended September 30, 2003, and the condensed statement of cash flows for the
nine-month period ended September 30, 2003. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit in accordance with auditing standards
generally accepted in the United States of America, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed financial statements for them to be in conformity with
accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the balance sheet of the Company as of
December 31, 2002, and the related statement of member's equity for the year
then ended (not presented herein); and in our report, dated June 17, 2003, we
expressed an unqualified opinion on those financial statements. In our opinion,
the information set forth in the accompanying condensed balance sheet as of
December 31, 2002, is fairly stated in all material respects in relation to the
balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Dallas, Texas
November 11, 2003
8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
BUSINESS
The following discussion and analysis should be read in combination
with the interim financial statements contained in this Form 10-Q and the annual
financial statements included in the Company's Prospectus.
Business - The Company is a bankruptcy remote special purpose Delaware
limited liability company, wholly-owned by Oncor. Oncor is a wholly-owned
subsidiary of US Holdings, which is a wholly-owned subsidiary of TXU Corp. Oncor
is a regulated electricity transmission and distribution company principally
engaged in providing delivery services to REPs that sell electricity in the
north-central, eastern and western parts of Texas.
The Company was organized in November 1999 for the sole purpose of
purchasing and owning transition property acquired from Oncor. The Company had
no operations until August 2003. In connection with the acquisition of the
transition property, the Company has agreed to (a) register and issue one or
more series of transition bonds, each of which may be comprised of one or more
classes, (b) pledge its interest in the transition property and other transition
bond collateral to secure the transition bonds, (c) make debt service payments
on the transition bonds, and (d) perform other activities that are necessary,
suitable or convenient to accomplish these purposes. The Company is structured
and is operated in a manner such that in the event of bankruptcy proceedings
against Oncor, the assets of the Company will not be consolidated into the
bankruptcy estate of Oncor. Oncor is not the owner of the transition property
described herein, and the assets of the Company are not available to pay
creditors of Oncor or any of its affiliates.
RESULTS OF OPERATIONS
In August 2003, the Company issued and sold the first series of
transition bonds in an amount of $500 million aggregate principal amount. The
proceeds from the transition bond issuance were used to acquire transition
property from Oncor. Such property represents the irrevocable right to impose,
collect and receive transition charges in an amount sufficient to pay the
interest, fees, and expenses associated with the transition bonds, as well as
the aggregate principal amount of the transition bonds.
Also in August 2003, Oncor made a capital contribution of $6.3 million
to the Company, of which $2.5 million is held by the indenture trustee and
pledged as collateral to the first series of transition bonds, and the remaining
$3.8 million is held by the indenture trustee to be used to fund any future fees
and expenses of the trust not recovered from the transition charges.
The Company pledged its interests in the transition property and other
transition bond collateral to secure the transition bonds.
In September 2003, Oncor, on behalf of the Company, began billing REPs
the initial transition charges approved by the Commission-approved on behalf of
the Company to collect the funds needed to make scheduled principal and interest
payments on the transition bonds issued in August 2003. Operating revenues
of $7,915,143 include $2,974,575 of accrued unbilled revenues, as well as
interest income on those funds collected.
In connection with the issuance of the first series of transition
bonds, the Company began accruing interest on the $500 million aggregate
principal amount of such bonds. For the three months ended September 30, 2003,
interest expense totaled $2,393,156.
In September 2003, the Company commenced amortization of the transition
property in accordance with the amortization schedule approved by the Commission
and based on expected collections of transition charges over the life of the
bonds. Such amortization for the period ended September 30, 2003 was $1,768,666.
The transition charges billed to REPs are designed to, over time,
equate to the interest costs, the principal of the bonds, represented in the
income statement as amortization of the transition property, and other related
costs. However, transition charge revenues are expected to vary from projected
amounts due to variations in power usage and the effects of unbilled revenue
accruals resulting in temporary over or under recovery of transition charges.
In the current period, the Company recorded over recovery of transition charges
expense and an offsetting regulatory liability of $3,685,499. The Commission
reviews and adjusts transition charges at least once a year. This review is
used to adjust any over or under collections during the preceding 12 months and
to provide for recovery of amounts sufficient to pay the debt service and
related costs.
9
Servicing fees accrued, payable to Oncor, totaled $57,094
for the three months ended September 30, 2003. This amount is expected to
increase once the remaining $800 million of transition bonds are issued, which
is expected to be completed in the first quarter of 2004.
FINANCIAL CONDITION
Liquidity and Capital Resources
Cash Flows -- Cash flows provided by operating activities for the
nine months ended September 30, 2003 were $136,335. This amount represents the
cash collected on receivables and investment income on restricted cash.
Cash flows provided by financing activities in 2003 of $506,347,154,
reflected proceeds from the issuance of $500 million of transition bonds in
August 2003 and $6,347,154 of cash contributed from the parent.
Cash flows used in investing activities in 2003 of $506,349,501,
reflected $500,000,000 paid to Oncor to purchase the intangible transition
property and $6,349,501 of cash deposited with the indenture trustee for
collateral and restricted use.
Financing Activities
The Company's financial needs are limited to issuance of the $1.3 billion
in transition bonds. There is no provision to allow for any other borrowings.
Long-Term Debt -- During the three months ended September 30, 2003, the
Company issued $500 million of long-term debt and is expected to issue $800
million of additional long-term debt in the first quarter of 2004.
Financial Covenants -- The terms of the indenture contain financial
covenants that require maintenance of specified collateral deposits in
proportion to the aggregate principal amount of the bonds outstanding. As of
September 30, 2003, the Company was in compliance with such covenants.
FORWARD-LOOKING STATEMENTS
This report and other presentations made by the Company contain
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. Although the Company believes that in making
any such statement its expectations are based on reasonable assumptions, any
such statement involves uncertainties that could cause the actual results of the
Company to differ materially from those projected in such forward-looking
statements. The following are among the important factors that could cause
actual results to differ materially from the forward-looking statements:
o state or federal legislative or regulatory developments,
o national or regional economic conditions,
o the accuracy of the servicer's estimates of market demand for energy,
o the accuracy of the servicer's estimates of industrial, commercial and
residential growth in Oncor's service territory, including related
estimates of conservation and electric usage efficiency,
o weather conditions and other natural phenomena affecting retail
electric customer energy usage,
o acts of sabotage, terrorist activities or other catastrophic events,
o the speed, degree and effect of continued electric industry
restructuring,
o the operating performance of Oncor's facilities and third-party
suppliers of electric energy in Oncor's service territory,
o the accuracy of the servicer's estimates of the payment patterns of
retail electric customers, including the rate of delinquencies and any
collections curves, and
o the operational and financial ability of REPs to bill and collect
transition charges and make timely payments of amounts billed by the
servicer to the REPs for transition charges.
Any forward-looking statement speaks only as of the date on which
such statement is made, and the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time and it is not possible for the
Company to predict all of such factors, nor can it assess the impact of each
such factor or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in any
forward-looking statement.
10
Item 4. CONTROLS AND PROCEDURES
An evaluation was performed under the supervision and with the
participation of the Company's management, including the principal executive
officer and principal financial officer, of the effectiveness of the design and
operation of the disclosure controls and procedures in effect as of the end of
the current period included in this quarterly report. Based on the evaluation
performed, the Company's management, including the principal executive officer
and principal financial officer, concluded that the disclosure controls and
procedures were effective. During the most recent fiscal quarter covered by this
quarterly report, there has been no change in the Company's internal control
over financial reporting that has materially affected, or is reasonably likely
to materially affect, the Company's internal control over financial reporting.
11
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed as a part of Part II are:
15 Letter from independent accountants as to unaudited interim
financial information
31(a) Section 302 Certification of Chief Executive Officer
31(b) Section 302 Certification of Principal Financial Officer
32(a)* Section 906 Certification of Chief Executive Officer
32(b)* Section 906 Certification of Principal Financial Officer
99(a) Monthly Servicer's Certificate
99(b) Statement of Balances as of September 30, 2003
99(c) Quarterly Statement Regarding the Status of Materially Significant
Retail Electric Providers
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* Pursuant to Item 601(b)(32)(ii) of Regulation S-K, this Certificate
is not being "filed" for purposes of Section 18 of the Securities Act
of 1934
(b) Reports on Form 8-K furnished or filed since June 30, 2003:
July 25, 2003 Item 5. Other Events and Regulation FD Disclosure
Item 7. Financial Statements and Exhibits
August 4, 2003 Item 5. Other Events and Regulation FD Disclosure
Item 7. Financial Statements and Exhibits
August 28, 2003 Item 5. Other Events and Regulation FD Disclosure
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ONCOR ELECTRIC DELIVERY TRANSITION
BOND COMPANY LLC
By /s/ Marc D. Moseley
----------------------------------------
Marc D. Moseley,
Manager and Principal Accounting Officer
Date: November 14, 2003
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