10-Q 1 m10qmarch2002.txt FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2002 -------------- or [_] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _______________to________________ Commission File Number: 333-83815 --------- Caithness Coso Funding Corp. ---------------------------- (Exact name of registrant as specified in its charter) Delaware 94-3328762 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Coso Finance Partners California 68-0133679 Coso Energy Developers California 94-3071296 Coso Power Developers California 94-3102796 --------------------- ---------- ---------- (Exact names of Registrants (State or other (I.R.S. Employer as specified in their charters) jurisdiction of Identification No.) incorporation or organization) 565 Fifth Avenue, 29th Floor, New York, New York 10017-2478 ------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (212) 921-9099 -------------- (Registrant's telephone number, including area code) Not Applicable -------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 300 shares in Caithness Coso Funding Corp. as of May 7, 2002 ------------------------------------------------------------ CAITHNESS COSO FUNDING CORP. Form 10-Q For the Quarter Ended March 31, 2002 PART I. FINANCIAL INFORMATION Page No. ITEM 1. Financial Statements Caithness Coso Funding Corp. Unaudited condensed balance sheets at March 31, 2002 and December 31, 2001 4 Unaudited condensed statements of operations for the three- months ended March 31, 2002 and the three-months ended March 31, 2001 5 Unaudited condensed statements of cash flows for the three- months ended March 31, 2002 and the three-months ended March 31, 2001 6 Notes to the unaudited condensed financial statements 7 Coso Finance Partners Unaudited condensed balance sheets at March 31, 2002 and December 31, 2001 8 Unaudited condensed statements of operations for the three- months ended March 31, 2002 and the three-months ended March 31, 2001 9 Unaudited condensed statements of cash flows for the three- months ended March 31, 2002 and the three-months ended March 31, 2001 10 Notes to the unaudited condensed financial statements 11 Coso Energy Developers Unaudited condensed balance sheets at March 31, 2002 and December 31, 2001 12 Unaudited condensed statements of operations for the three- months March 31, 2002 and the three-months ended March 31, 2001 13 Unaudited condensed statements of cash flows for the three- months ended March 31, 2002 and the three-months ended March 31, 2001 14 Notes to the unaudited condensed financial statements 15 Coso Power Developers Unaudited condensed balance sheets at March 31, 2002 and December 31, 2001 16 Unaudited condensed statements of operations for the three- months ended March 31, 2002 and the three-months ended March 31, 2001 17 Unaudited condensed statements of cash flows for the three- months ended March 31, 2002 and the three-months ended March 31, 2001 18 Notes to the unaudited condensed financial statements 19 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 20 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 29 ITEM 2. Change in Securities and Use of Proceeds 29 ITEM 3. Defaults upon Senior Securities 29 ITEM 4. Submission of Matters to a Vote of Security Holders 29 ITEM 5. Other Information 29 Supplemental condensed combined financial information for the Coso Partnerships Unaudited condensed combined balance sheets at March 31, 2002 and December 31, 2001 31 Unaudited condensed combined statements of operations for the three-months ended March 31, 2002 and the three-months ended March 31, 2001 32 Unaudited condensed combined statements of cash flows for the three-months ended March 31, 2002 and the three-months ended March 31, 2001 33 Notes to the unaudited condensed combined financial statements 34 ITEM 6. Exhibits and Reports on Form 8-K 35 CAITHNESS COSO FUNDING CORP. UNAUDITED CONDENSED BALANCE SHEETS (Dollars in thousands)
March 31, December 31, 2002 2001 (Note) Assets: Accrued interest receivable....................... $ 8,079 $ 1,225 Project loan to Coso Finance Partners............ 122,550 122,550 Project loan to Coso Energy Developers........... 96,250 96,250 Project loan to Coso Power Developers............ 84,200 84,200 ------- ------- $ 311,079 $ 304,225 ======= ======= Liabilities and Stockholders' Equity: Senior secured notes: Accrued interest payable........................ $ 8,079 $ 1,225 9.05% notes due 2009............................ 303,000 303,000 ------- ------- 311,079 304,225 Stockholders' equity................................. --- --- ------- ------- $ 311,079 $ 304,225 ======= =======
Note: The condensed balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. See accompanying notes to the unaudited condensed financial statements 4 CAITHNESS COSO FUNDING CORP. UNAUDITED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands) Three-Months Three-Months Ended Ended March 31, March 31, 2002 2001 Interest income................. $ 6,854 $ 8,601 Interest expense................ (6,854) (8,601) ------- ------- Net income................. $ --- $ --- ======= ======= See accompanying notes to the unaudited condensed financial statements 5 CAITHNESS COSO FUNDING CORP. UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2002 2001 Net cash provided by (used in) investing activities....... $ 6,854 $ (8,601) Net cash provided by (used in) financing activities....... (6,854) 8,601 ------- ------- Net change in cash and cash equivalents................... $ --- $ --- ======= =======
See accompanying notes to the unaudited condensed financial statements 6 CAITHNESS COSO FUNDING CORP. NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS (1) Organization and Operations Caithness Coso Funding Corp. (Funding Corp.), which was incorporated on April 22, 1999, is a single-purpose Delaware corporation formed to issue senior secured notes (Notes) for its own account and as an agent acting on behalf of Coso Finance Partners (CFP), Coso Energy Developers (CED), and Coso Power Developers (CPD), collectively, the "Partnerships." The Partnerships are California general Partnerships. On May 28, 1999, Funding Corp. sold $413,000 of senior secured notes. Pursuant to separate credit agreements between Funding Corp. and each Partnership, the net proceeds from the offering of $110,000 of 6.80% senior secured notes due 2001 and $303,000 of 9.05% senior secured notes due 2009 were loaned to the Partnerships, and the Partnerships have jointly and severally guaranteed repayment on a senior basis. Payment of the Notes is provided for by payments made by the Partnerships under their respective project loans. Funding Corp. has no material assets other than the loans, and the accrued interest thereon, that have been made to the Partnerships. Also, Funding Corp. does not conduct any business, other than issuing the senior secured notes and making the loans to the Partnerships. (2) Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules. Management believes that the disclosures are adequate to make the information presented not misleading when read in conjunction with the financial statements and the notes thereto in the audited financial statements for the year ended December 31, 2001. The financial information herein presented reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for interim periods presented. The results for the interim periods are not necessarily indicative of results to be expected for the full year. 7 COSO FINANCE PARTNERS UNAUDITED CONDENSED BALANCE SHEETS (Dollars in thousands)
March 31, December 31, 2002 2001 (Note) Assets: Cash and cash equivalents................................................. $ 14,992 $ 264 Restricted cash and investments........................................... 23,766 21,325 Accounts receivable, net.................................................. 4,758 3,454 Prepaid expenses & other assets........................................... 680 650 Amounts due from related parties.......................................... 2,104 9,362 Property, plant & equipment, net.......................................... 138,231 140,437 Power purchase agreement, net............................................. 10,806 11,093 Investment in New CLPSI Company, LLC...................................... 3,981 4,005 Deferred financing costs, net............................................. 2,445 2,524 ------- ------- $ 201,763 $ 193,114 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities.................................. $ 17,268 $ 17,578 Amounts due to related parties............................................ 3,367 561 Project loans............................................................. 122,550 122,550 ------- ------- 143,185 140,689 Partners' capital........................................................... 58,578 52,425 -------- ------- $ 201,763 $ 193,114 ======= =======
Note: The condensed balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. See accompanying notes to the unaudited condensed financial statements 8 COSO FINANCE PARTNERS UNAUDITED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2002 2001 Revenue: Energy revenues........................................................... $ 42,350 $ 5,977 Capacity revenues......................................................... 3,148 76 Interest and other income................................................. 474 135 ------ ------ Total revenue...................................................... 45,972 6,188 Operating expenses: Plant operating expenses.................................................. 2,307 1,762 Royalty expense........................................................... 2,212 3,770 Depreciation and amortization............................................. 2,536 2,499 ------ ------ Total operating expenses........................................... 7,055 8,031 Operating income (loss)............................................ 38,917 (1,843) Other expenses: Interest expense.......................................................... 2,775 2,984 Amortization of deferred financing costs.................................. 79 130 ------ ------ Total other expenses............................................... 2,854 3,114 Net income (loss).................................................. $ 36,063 $ (4,957) ====== ======
See accompanying notes to the unaudited condensed financial statements 9 COSO FINANCE PARTNERS UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2002 2001 Net cash provided by (used in) operating activities.......................... $ 47,122 $ (2,470) Net cash provided by (used in) investing activities.......................... (2,484) (18) Net cash provided by (used in) financing activities.......................... (29,910) --- -------- ------- Net change in cash and cash equivalents...................................... $ 14,728 $ (2,488) ======== =======
See accompanying notes to the unaudited condensed financial statements 10 COSO FINANCE PARTNERS NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS (1) Organization and Operation Coso Finance Partners (CFP), a general Partnership, is engaged in the operation of a 80 MW power generation facility located at the China Lake Naval Air Weapons Station, China Lake California. CFP sells all electricity produced to Southern California Edison under a 24-year power purchase contract expiring in 2011. (2) Basis of Presentation The accompanying unaudited condensed combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules. Management believes that the disclosures are adequate to make the information presented not misleading when read in conjunction with the financial statements and the notes thereto in the audited financial statements for the year ended December 31, 2001. The financial information herein presented reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for interim periods presented. The results for the interim periods are not necessarily indicative of results to be expected for the full year. CFP has experienced significant quarterly fluctuations in operating results and it expects that these fluctuations in energy revenues, expenses and net income will continue. (3) Accounts Receivable and Revenue Recognition Due to the uncertainty surrounding Edison's ability to make payment on past due amounts, collection was not reasonably assured and CFP had not recognized revenue from Edison for energy delivered during the period November 1, 2000 through March 26, 2001. The provision for doubtful accounts previously recorded by CFP of $25.8 million for the three-months ended March 31, 2001, has been reclassified as a reduction of revenue to conform with the 2002 presentation. On March 1, 2002, Edison reached certain financing milestones and paid CFP for revenue generated, but not recognized for the period November 1, 2000 through March 26, 2001. For the three-month period ended March 31, 2002, CFP recognized revenue for energy delivered from November 1, 2000 through March 26, 2001 of $37.3 million. (4) Reclassifications Certain other reclassifications have been made to the 2001 statements of operations to conform to the 2002 presentation. 11 COSO ENERGY DEVELOPERS UNAUDITED CONDENSED BALANCE SHEETS (Dollars in thousands)
March 31, December 31, 2002 2001 (Note) Assets: Cash and cash equivalents................................................. $ 10,233 $ --- Restricted cash and investments........................................... 8,551 7,368 Accounts receivable, net.................................................. 4,132 2,939 Prepaid expenses and other assets......................................... 526 849 Amounts due from related parties.......................................... 409 401 Property, plant and equipment, net........................................ 145,012 148,417 Power purchase agreement, net............................................. 18,169 18,437 Investment in Coso Transmission Line Partners............................. 2,710 2,738 Investment in New CLPSI Company, LLC...................................... 738 789 Deferred financing costs, net............................................. 1,976 2,040 ------- ------- $ 192,456 $ 183,978 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities.................................. $ 3,090 $ 7,699 Amounts due to related parties............................................ 27,898 27,267 Project loans............................................................. 96,250 96,250 ------- ------- 127,238 131,216 Partners' capital......................................................... 65,218 52,762 ------- ------- $ 192,456 $ 183,978 ======= =======
Note: The condensed balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. See accompanying notes to the unaudited condensed financial statements 12 COSO ENERGY DEVELOPERS UNAUDITED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2002 2001 Revenue: Energy revenues........................................................... $ 40,429 $ 756 Capacity revenues......................................................... 3,051 69 Interest and other income................................................. 642 620 ------ ------ Total revenue...................................................... 44,122 1,445 Operating expenses: Plant operating expenses.................................................. 2,605 2,361 Royalty expense........................................................... 11 2,868 Depreciation and amortization............................................. 4,059 3,946 ------ ------ Total operating expenses........................................... 6,675 9,175 Operating income (loss)............................................ 37,447 (7,730) Other expenses: Interest expense.......................................................... 2,180 2,257 Amortization of deferred financing costs.................................. 64 79 ------ ------ Total other expenses............................................... 2,244 2,336 Net income (loss)................................................. $ 35,203 $ (10,066) ====== ======
See accompanying notes to the unaudited condensed financial statements 13 COSO ENERGY DEVELOPERS UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2002 2001 Net cash provided by (used in) operating activities.......................... $ 34,552 $ 947 Net cash provided by (used in) investing activities.......................... (1,569) (2,045) Net cash provided by (used in) financing activities.......................... (22,750) --- -------- ------ Net change in cash and cash equivalents...................................... $ 10,233 $ (1,098) ======= =======
See accompanying notes to the unaudited condensed financial statements 14 COSO ENERGY DEVELOPERS NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS (1) Organization and Operation Coso Energy Developers (CED), a general Partnership, is engaged in the operation of a 80 MW power generation facility located at the Coso Hot Springs, China Lake California. CED sells all electricity produced to Southern California Edison under a 30-year power purchase contract expiring in 2019. (2) Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules. Management believes that the disclosures are adequate to make the information presented not misleading when read in conjunction with the financial statements and the notes thereto in the audited financial statements for the year ended December 31, 2001. The financial information herein presented reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for interim periods presented. The results for the interim periods are not necessarily indicative of results to be expected for the full year. CED has experienced significant quarterly fluctuations in operating results and it expects that these fluctuations in energy revenues, expenses and net income will continue. (3) Accounts Receivable and Revenue Recognition Due to the uncertainty surrounding Edison's ability to make payment on past due amounts, collection was not reasonably assured and CED had not recognized revenue from Edison for energy delivered during the period November 1, 2000 through March 26, 2001. The provision for doubtful accounts previously recorded by CED of $26.0 million for the three-months ended March 31, 2001, has been reclassified as a reduction of revenue to conform with the 2002 presentation. On March 1, 2002, Edison reached certain financing milestones and paid CED for revenue generated, but not recognized for the period November 1, 2000 through March 26, 2001. For the three-month period ended March 31, 2002, CED recognized revenue for energy delivered from November 1, 2000 through March 26, 2001 of $37.1 million. (4) Reclassifications Certain other reclassifications have been made to the 2001 statements of operations to conform to the 2002 presentation. 15 COSO POWER DEVELOPERS UNAUDITED CONDENSED BALANCE SHEETS (Dollars in thousands)
March 31, December 31, 2002 2001 (Note) Assets: Cash and cash equivalents................................................. $ 13,187 $ --- Restricted cash and investments........................................... 5,556 5,517 Accounts receivable, net.................................................. 4,648 3,210 Prepaid expenses and other assets......................................... 431 660 Amounts due from related parties.......................................... 5,559 6,139 Property, plant and equipment, net........................................ 121,603 124,665 Power purchase agreement, net............................................. 22,122 22,820 Investment in Coso Transmission Line Partners............................. 3,365 3,398 Investment in New CLPSI Company, LLC...................................... 1,890 1,913 Deferred financing costs, net............................................. 1,682 1,736 ------- ------ $ 180,043 $ 170,058 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities.................................. $ 7,377 $ 15,860 Amounts due to related parties............................................ 3,710 7,778 Project loans............................................................. 84,200 84,200 ------- ------- 95,287 107,838 Partners' capital............................................................ 84,756 62,220 ------- ------- $ 180,043 $ 170,058 ======= =======
Note: The condensed balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. See accompanying notes to the unaudited condensed financial statements 16 COSO POWER DEVELOPERS UNAUDITED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2002 2001 Revenue: Energy revenues........................................................... $ 41,371 $ (2,623) Capacity revenues......................................................... 3,051 69 Interest and other income................................................. 482 358 ------ ------- Total revenue...................................................... 44,904 (2,196) Operating expenses: Plant operating expenses.................................................. 1,971 1,975 Royalty expense........................................................... 1,057 3,712 Depreciation and amortization............................................. 3,829 3,753 ------ ------- Total operating expenses........................................... 6,857 9,440 Operating income (loss)............................................ 38,047 (11,636) Other expenses: Interest expense.......................................................... 1,908 2,075 Amortization on deferred financing costs.................................. 54 192 ------ ------- Total other expenses............................................... 1,962 2,267 Net income (loss).................................................. $ 36,085 $ (13,903) ====== =======
See accompanying notes to the unaudited condensed financial statements 17 COSO POWER DEVELOPERS UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2002 2001 Net cash provided by (used in) operating activities.......................... $ 26,844 $ (911) Net cash provided by (used in) investing activities.......................... (107) 366 Net cash provided by (used in) financing activities.......................... (13,550) --- -------- ------ Net change in cash and cash equivalents...................................... $ 13,187 $ (545) ======== ======
See accompanying notes to the unaudited condensed financial statements 18 COSO POWER DEVELOPERS NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS (1) Organization and Operation Coso Power Developers (CPD), a general Partnership, is engaged in the operation of a 80 MW power generation facility located at the Coso Hot Springs, China Lake California. CPD sells all electricity produced to Southern California Edison under a 20-year power purchase contract expiring in 2010. (2) Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules. Management believes that the disclosures are adequate to make the information presented not misleading when read in conjunction with the financial statements and the notes thereto in the audited financial statements for the year ended December 31, 2001. The financial information herein presented reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for interim periods presented. The results for the interim periods are not necessarily indicative of results to be expected for the full year. CPD has experienced significant quarterly fluctuations in operating results and it expects that these fluctuations in energy revenues, expenses and net income will continue. (3) Accounts Receivable and Revenue Recognition Due to the uncertainty surrounding Edison's ability to make payment on past due amounts, collection was not reasonably assured and CPD had not recognized revenue from Edison for energy delivered during the period November 1, 2000 through March 26, 2001. The provision for doubtful accounts previously recorded by CPD of $27.0 million for the three-months ended March 31, 2001, has been reclassified as a reduction of revenue to conform with the 2002 presentation. On March 1, 2002, Edison reached certain financing milestones and paid CPD for revenue generated but not recognized for the period November 1, 2000 through March 26, 2001. For the three-month period ended March 31, 2002, CPD recognized revenue for energy delivered from November 1, 2000 through March 26, 2001 of $38.0 million. (4) Reclassifications Certain other reclassifications have been made to the 2001 statements of operations to conform to the 2002 presentation. 19 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Except for historical financial information contained herein, the matters discussed in this quarterly report may be considered 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, and subject to the safe harbor created by the Securities Litigation Reform Act of 1995. Such statements include declarations regarding the intent, belief or current expectations of Caithness Coso Funding Corp. ("Funding Corp."), Coso Finance Partners ("the Navy I Partnership"), Coso Energy Developers ("the BLM Partnership"), and Coso Power Developers ("the Navy II Partnerships"), collectively, (the "Coso Partnerships") and their respective management. Any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties; actual results could differ materially from those indicated by such forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: (i) risks relating to the uncertainties in the California energy market, (ii) the financial viability of Southern California Edison, ("Edison"), (iii) the information is of a preliminary nature and may be subject to further adjustment, (iv) risks related to the operation of power plants (v) the impact of avoided cost pricing, (vi) general operating risks, including resource availability and regulatory oversight, (vii) the dependence on third parties, (viii) changes in government regulation, (ix) the effects of competition, (x) the dependence on senior management, and (xi) fluctuations in quarterly results due in part to seosanality. General The Coso Partnerships consist of three 80MW geothermal power plants, which are referred to as Navy I, BLM and Navy II, and their transmission lines, wells, gathering systems and other related facilities. The Coso Partnerships are located near one another at the United States Naval Air Weapons Center at China Lake, California. The Navy I Partnership owns Navy I and its related facilities. The BLM Partnership owns BLM and its related facilities. The Navy II Partnership owns Navy II and its related facilities. Affiliates of Caithness Corporation and CalEnergy Company, Inc. ("CalEnergy"), which is now known as MidAmerican Energy Holdings Company, formed the Coso Partnerships in the 1980s to develop, construct, own and operate the Coso Partnerhips. On February 25, 1999 Caithness Acquisition Company, LLC, (CAC) purchased all of CalEnergy's interests in the Coso Partnerships for $205.0 million in cash, plus the assumption of CalEnergy's and its affiliates' share of debt outstanding at the Coso Partnerships which then totaled approximately $67.0 million. Each Coso Partnership sells 100% of the electrical energy generated at its plant to Edison under a long-term Standard Offer No.4 power purchase agreement. Each power purchase agreement expires after the final maturity date of the 6.8% Series B Senior Secured Notes and the 9.05% Series B Senior Secured Notes issued by Funding Corp. Each Coso Partnership is entitled to the following payments under its power purchase agreement: * Capacity payments for being able to produce electricity at certain levels. Capacity payments are fixed throughout the life of each power purchase agreement; * Capacity bonus payments if the Coso Partnership is able to produce electricity above a specified higher level. The maximum annual capacity bonus payment available is also fixed throughout the life of each power purchase agreement; and 20 * Energy payments which are based on the amount of electricity the Coso Partnership's plant actually produces. Energy payments were fixed for the first ten years of firm operation under each power purchase agreement. After the first ten years of firm operation and until a Coso Partnership's power purchase agreement expires, Edison makes energy payments to the Coso Partnership based on Edison's avoided cost of energy. Edison's avoided cost of energy is Edison's cost to generate electricity if Edison were to produce it itself or buy it from another power producer rather than buy it from the Coso Partnerships. The power purchase agreement for the Navy I Partnership will expire in August 2011, the power purchase agreement for the BLM Partnership will expire in March 2019, and the power purchase agreement for the Navy II Partnership will expire in January 2010. The fixed energy price period expired in August 1997 for the Navy I Partnership, in March 1999 for the BLM Partnership and in January 2000 for the Navy II Partnership. For the three-months ended March 31, 2002, the Coso Partnerships elected to receive from Edison a fixed avoided cost of energy rate of 3.25 cents per kWh. During that period, Edison's annual average avoided cost of energy was 2.87 cents per kWh as compared to 15.1 cents per kWh for the three-months ended March 31, 2001. Edison entered into an agreement ("Agreement") with the Coso Partnerships on June 19, 2001 that addressed renewable energy pricing and issues concerning California's energy crisis. The Agreement, which was amended on November 30, 2001, established May 1, 2002, as the date when the Coso Partnerships will begin receiving a fixed avoided cost of energy rate of 5.37 cents per kWh for five (5) years. Subsequent to the five year period, Edison will be required to make energy payments to the Coso Partnerships based on its avoided cost of energy until each partnership power purchase agreement expires. Estimates of Edison's future avoided cost of energy may vary significantly and no one can predict the likely level of future avoided cost of energy prices. In 1994, the Coso Partnerships implemented a steam-sharing program, under the Coso Geothermal Exchange Agreement. The purpose of the steam-sharing program is to enhance the management of the Coso geothermal resource and to optimize the resource's overall benefits to the Coso Partnerships by transferring steam among the Coso Partnerships. Under the steam sharing program, the partnership receiving the steam transfer splits revenue earned from electricity generated with the partnership that transferred the steam. The Coso Partnerships are required to make royalty payments to the U.S. Navy and the Bureau of Land Management. The Navy I Partnership pays a royalty for Unit I through reimbursement of electricity supplied to the U.S. Navy by Edison from electricity generated at the Navy I plant. The reimbursement is based on a pricing formula that is included in the U.S. Navy Contract. This formula is largely based upon the tariff rates charged by Edison, which have recently been increased by the California Public Utilities Commission (CPUC). Discussions with the U.S. Navy are continuing to re-adjust the formula to reflect recent activity in the local energy market. In November 2001, a modification to the calculation of the reimbursement pricing formula was made to the U.S. Navy Contract resulting in a reduction of accrued royalties of $6.5 million. For Units 2 and 3, the Navy I Partnership's royalty expense paid to the U.S. Navy is a fixed percentage of electricity sales at 15% of revenue received by the Navy I Partnership through 2003 and will increase to 20% from 2004 through 2009. In addition, the Navy I Partnership is required to pay the U.S. Navy $25.0 million in December 2009, the date their contract expires. The payment is secured by funds placed on deposit monthly, which funds plus accrued interest will aggregate $25.0 million. Currently, the monthly amount deposited is approximately $60,000. The BLM Partnership pays a 10% royalty to the Bureau of Land Management based on the net value of steam produced. The Navy II Partnership pays a royalty to the U.S. Navy based on a fixed percentage of electricity sales to Edison. The royalty rate was 10% of electricity sales through 1999, and increased to 18% for 2000 through 2004 and will increase to 20% from 2005 through the end of the contract term. The Coso Partnerships also pay other royalties, at various rates which in the aggregate are not material. 21 Funding Corp is a special purpose corporation and a wholly owned subsidiary of the Coso Partnerships. It was formed for the purpose of issuing the senior secured notes on behalf of the Coso Partnerships who have jointly, severally, and unconditionally guaranteed repayment of the senior secured notes. On May 28, 1999, Funding Corp. issued $110.0 million of 6.80% senior secured notes, which were paid off on December 15, 2001, and $303.0 million of 9.05% senior secured notes, which have payments due at various dates through December 15, 2009. The proceeds from the notes were loaned to the Coso Partnerships and are payable to Funding Corp from payments of principal and interest on the notes. Funding Corp. does not conduct any other operations apart from issuing the notes. Under the depository agreement with the trustee for the notes, the Coso Partnerships established accounts with a depository and pledged those accounts as security for the benefit of the holders of the senior secured notes. All amounts deposited with the depository are, at the direction of the Coso Partnerships, invested by the depository in permitted investments. All revenues or other proceeds actually received by the Coso Partnerships are deposited in a revenue account and withdrawn upon receipt by the depository of a certificate from the relevant Coso Partnerships detailing the amounts to be paid from funds in its respective revenue account. Periodic increases in natural gas prices and imbalances between supply and demand, among other factors, have at times led to significant increases in wholesale electricity prices in California. During those periods, Edison had fixed tariffs with their retail customers that were significantly below the wholesale prices it paid in California. This resulted in significant under-recoveries by Edison of its electricity purchase costs. On January 16, 2001 Edison announced that it was temporarily suspending payments for energy provided, including the energy provided by the Coso Partnerships, pending a permanent solution to its liquidity crisis. This cash flow shortfall has adversely affected Edison's liquidity and in turn it did not pay the Coso Partnerships for energy delivered from November 2000 through March 26, 2001. As of December 31, 2001, the Coso Partnerships were unable to determine the time frame during which any future payments would be received. Due to the uncertainty surrounding Edison's ability to make payment on past due amounts, collection was not reasonably assured and the Navy I, BLM and Navy II Partnerships did not recognize revenue from Edison for energy delivered during the period November 1, 2000 through March 26, 2001. The provision for doubtful accounts previously recorded by the Navy I, BLM and Navy II Partnerships of $25.8 million, $26.0 million and $27.0 million, respectively, for the three-months ended March 31, 2001, has been reclassified as a reduction of revenue to conform with the 2002 presentation. Pursuant to a CPUC order, Edison resumed making payments to the Coso Partnerships beginning with power generated on March 27, 2001. Edison also made a payment equal to 10% of the unpaid balance for power generated from November 1, 2000 to March 26, 2001, and continued to pay interest on the outstanding amount at 7% per annum. That payment was made pursuant to the Agreement between Edison and the Coso Partnerships described above. On March 1, 2002, Edison reached certain financing milestones and paid the Coso Partnerships for energy generated between November 1, 2000 and March 26, 2001 for which no revenue was recognized during that period. For the three-month period ended March 31, 2002, the Navy I, BLM and Navy II Partnerships recognized revenue for energy delivered from November 1, 2000 through March 26, 2001 of $37.3 million, $37.1 million and $38.0 million, respectively. 22 Capacity Utilization For purposes of consistency in financial presentation, the plant capacity factor for each of the Coso Partnerships is based on a nominal capacity amount of 80MW (240MW in the aggregate). The Coso Partnerships have a gross operating capacity that allows for the production of electricity in excess of their nominal capacity amounts. Utilization of this operating margin is based upon a number of factors and can be expected to vary throughout the year under normal operating conditions. The following data includes the operating capacity factor, capacity and electricity production (in kWh) for each Coso Partnership on a stand-alone basis: Three-Months Ended March 31, 2002 2001 ---- ---- Navy I Partnership (stand alone) Operating capacity factor 106.6% 109.6% Capacity (MW) (average) 85.30 87.70 kWh produced (000s) 184,240 189,422 BLM Partnership (stand alone) Operating capacity factor 92.7% 102.2% Capacity (MW) (average) 74.15 81.72 kWh produced (000s) 160,161 176,524 Navy II Partnership (stand alone) Operating capacity factor 109.0% 106.5% Capacity (MW) (average) 87.23 85.22 kWh produced (000s) 188,414 184,067 Total energy production for the BLM Partnership was 160.2 million kWh for the three-months ended March 31, 2002, as compared to 176.5 million kWh for the same period in 2001, a decrease of 9.2%. The decrease in energy production was primarily due to a decline in low pressure steam which is being remediated through well maintenance and capital improvements and a reduction in 2002 of steam transfers from the Navy II Partnership. Results of Operations for the three-months ended March 31, 2002 and 2001 The following discusses the results of operations of the Coso Partnerships for the three-months ended March 31, 2002 and 2001 (dollar amounts in tables are in thousands, except per kWh data): 23 Revenue
Three-Months Three-Months Ended Ended March 31, 2002 March 31, 2001 $ Cents/kWh $ Cents/kWh - --------- - --------- Total Operating Revenues Navy I Partnership 45,498 24.7 6,053 3.2 BLM Partnership 43,480 27.1 825 0.5 Navy II Partnership 44,422 23.6 (2,554) (1.4) Capacity & Capacity Bonus Revenues Navy I Partnership 3,148 1.7 76 0.0 BLM Partnership 3,051 1.9 69 0.0 Navy II Partnership 3,051 1.6 69 0.0 Energy Revenues Navy I Partnership 42,350 23.0 5,977 3.2 BLM Partnership 40,429 25.2 756 0.4 Navy II Partnership 41,371 22.0 (2,623) (1.4)
Total operating revenues for the Navy I, BLM and Navy II Partnerships, which consist of capacity payments, capacity bonus payments and energy payments, were $45.5 million, $43.5 million and $44.4 million, respectively, for the three-months ended March 31, 2002, as compared to $6.1 million, $.8 million and a loss of $2.6 million, respectively, for the same period in 2001, increases of $39.4 million, $42.7 million and $47.0 million, respectively. Capacity and capacity bonus revenues for each of the Navy I, BLM and Navy II Partnerships were $3.1 million for the three-months ended March 31, 2002, as compared to $0.1 million for the same period in 2001, each increased by $3.0 million. Total energy revenues for the Navy I, BLM and Navy II Partnerships were $42.4 million, $40.4 million and $41.4 million, respectively, for the three-months ended March 31, 2002, as compared to $6.0 million, $0.8 million and a loss of $2.6 million, respectively, for the same period in 2001, increases of $36.4 million $39.6 million and $44.0 million, respectively. Each Coso Partnership's increase in capacity and capacity bonus and energy revenues for the three-months ended March 31, 2002, as compared to the same period in 2001, was due to Edison's payment, on March 1, 2002, for revenue generated but not recognized for the period November 1, 2000 through March 26, 2001 discussed above. The Navy I, BLM and Navy II Partnerships had not recognized revenues of $22.0 million, $21.8 million and $22.7 million, respectively, for the three-month period ended March 31, 2001. Revenues generated but not recognized for the period November 1, 2000 through March 1, 2002 for the Navy I, BLM and Navy II Partnerships of $37.3 million, $37.1 million and $38.0 million, respectively, were paid and recognized during the three-months ended March 31, 2002. 24 Interest and Other Income Three-Months Three-Months Ended Ended March 31, 2002 March 31, 2001 $ Cents/kWh $ Cents/kWh - --------- - --------- Navy I Partnership 474 0.3 135 0.1 BLM Partnership 642 0.4 620 0.4 Navy II Partnership 482 0.3 358 0.2 The Navy I Partnership's interest and other income was $474,000 for the three-months ended March 31, 2002, as compared to $135,000 for the same period in 2001, an increase of $339,000. The Navy II Partnership's interest and other income was $482,000 for the three-months ended March 31, 2002 as compared to $358,000 for the same period in 2001, an increase of 34.6%. These increases for the three-months ended March 31, 2002, as compared to the same period in 2001, were primarily due to interest on amounts in arrears owed by Edison in 2002. Plant Operations Three-Months Three-Months Ended Ended March 31, 2002 March 31, 2001 $ Cents/kWh $ Cents/kWh - --------- - --------- Navy I Partnership 2,307 1.3 1,762 0.9 BLM Partnership 2,605 1.6 2,360 1.3 Navy II Partnership 1,971 1.0 1,975 1.1 The Navy I Partnership's operating expenses, including operating and general and administrative expenses, were $2.3 million for the three-months ended March 31, 2002 as compared to $1.8 million for the same period in 2001, an increase of 27.8%. The increase for the three-months ended March 31, 2002, as compared to the same period in 2001 was primarily due to increased repair and maintenance projects, which had been deferred during the same period in 2001 due to the Edison's non-payment for energy delivered during the period from November 1, 2000 through March 26, 2001 discussed above. The BLM Partnership's operating expenses, including operating and general and administrative expenses, were $2.6 million for the three-months ended March 31, 2002, as compared to $2.4 million for the same period in 2001, an increase of 8.3%. The increase for the three-months ended March 31, 2002, as compared to the same period in 2001 was primarily due to an increased repair and maintenance projects, which had been deferred during the same period in 2001 due to the Edison's non-payment for energy delivered during the period from November 1, 2000 through March 26, 2001 discussed above. 25 Royalty Expense Three-Months Three-Months Ended Ended March 31, 2002 March 31, 2001 $ Cents/kWh $ Cents/kWh - --------- - --------- Navy I Partnership 2,212 1.2 3,770 2.0 BLM Partnership 11 0.0 2,868 1.6 Navy II Partnership 1,057 0.6 3,712 2.0 The Navy I Partnership's royalty expenses were $2.2 million for the three-months ended March 31, 2002, as compared to $3.8 million for the same period in 2001, a decrease of 42.1%. The BLM Partnership's royalty expenses were $11,000 for the three-months ended March 31, 2002, as compared to $2.9 million for the same period in 2001, a decrease of $2.9 million. The Navy II Partnership's royalty expenses were $1.1 million for the three-months ended March 31, 2002, as compared to $3.7 million for the same period in 2001, a decrease of 70.3%. These decreases in royalty expense for the Navy I, BLM and Navy II Partnerships for the three-months ended March 31, 2002 as compared to the same period in 2001, were due to a decrease in the avoided cost of energy from 15.1 cents per kWh for the three-month period ended March 31, 2001 to 3.25 cents per kWh for the three-month period ended March 31, 2002. The decrease in royalty cost for the Navy I Partnership was partially offset by an increased royalty for Unit 1 based on the royalty reimbursement formula. Depreciation and Amortization Three-Months Three-Months Ended Ended March 31, 2002 March 31, 2001 $ Cents/kWh $ Cents/kWh - --------- - --------- Navy I Partnership 2,536 1.4 2,499 1.3 BLM Partnership 4,059 2.5 3,946 2.2 Navy II Partnership 3,829 2.0 3,753 2.0 Depreciation and Amortization expenses for the three-months ended March 31, 2002 as compared to the same period in 2001, remained consistent over the two periods. Interest Expense Three-Months Three-Months Ended Ended March 31, 2002 March 31, 2001 $ Cents/kWh $ Cents/kWh - --------- - --------- Navy I Partnership 2,775 1.5 2,984 1.6 BLM Partnership 2,180 1.4 2,257 1.3 Navy II Partnership 1,908 1.0 2,075 1.1 26 The Navy I Partnership's interest expense was $2.8 million for the three-months ended March 31, 2002, as compared to $3.0 million for the same period in 2001, a decrease of 6.7%. The Navy II Partnership's interest expense was $1.9 million for the three-months ended March 31, 2002, as compared to $2.1 million for the same period in 2001, a decrease of 9.5%. These decreases in interest expense for the three-months ended March 31, 2002, as compared to the same period in 2001 were due to reductions in the principal amount of the project loan from Funding Corp. Liquidity and Capital Resources Each of the Navy I Partnership, the BLM Partnership and the Navy II Partnership derive substantially all of their cash flow from Edison under their power purchase agreements and from interest income earned on funds on deposit. As of December 2001, the 6.8% notes were repaid, subsequently leaving the Coso Partnerships with increased annual cash flow. The Coso Partnerships have used their cash primarily for capital expenditures for power plant improvements, resource and operating costs, distributions to partners and payments with respect to the project debt. The Coso Partnerships ability to meet their obligations as they come due will depend upon the ability of Edison to meet its obligations under the terms of the standard offer No. 4 power purchase agreements. Edison's shortfall in collections, coupled with its near term capital requirements, materially and adversely affected its liquidity. In resolution of that issue, Edison settled with the CPUC on October 2, 2001, enabling it to recover in retail electric rates its historical shortfall in electric purchase costs. Immediately after this settlement, Edison and each of the Coso Partnerships entered into an amendment of their respective Agreement (referenced above) pertaining to partial payment and interest payments relating to Edison's past due obligations for the period from November 2000 through March 26, 2001. The Agreement, as amended, was approved by CPUC in January of 2002, and established the fixed energy rates discussed above and set payment terms for the past due amounts owed to the Coso Partnerships by Edison. Edison's failure to pay its future obligations may have a material adverse effect on the Coso Partnerships ability to make debt service payments to Funding Corp. as they come due under the Funding Corp. notes. On March 1, 2002, Edison reached certain financing milestones and paid the Coso Partnerships for revenue generated but not recognized for the period November 1, 2000 through March 26, 2001. In the first quarter of 2002 the Navy I, BLM and Navy II Partnerships recognized revenue for energy delivered during that period of $37.3 million. $37.1 million and $38.0 million, respectively. The following table sets forth a summary of each Coso Partnership's cash flows for the three-months ended March 31, 2002 and March 31, 2001.
Three-Months Three-Months Ended Ended March 31, 2002 March 31, 2001 Navy I Partnership (stand alone) Net cash provided by (used in) operating activities $ 47,122 $ (2,470) Net cash provided by (used in) investing activities (2,484) (18) Net cash provided by (used in) financing activities (29,910) --- -------- ------- Net change in cash and cash equivalents $ 14,728 $ (2,488) ======== ======= 27 BLM Partnership (stand alone) Net cash provided by operating activities $ 34,552 $ 947 Net cash provided by (used in) investing activities (1,569) (2,045) Net cash provided by (used in) financing activities (22,750) --- -------- ------- Net change in cash and cash equivalents $ 10,233 $ (1,098) ======== ======= Navy II Partnership (stand alone) Net cash provided by (used in) operating activities $ 26,844 $ (911) Net cash provided by (used in) investing activities (107) 366 Net cash provided by (used in) financing activities (13,550) --- -------- ------- Net change in cash and cash equivalents $ 13,187 $ 545 ======== =======
The Navy I Partnership's cash flows from operating activities increased by $49.6 million for the three-months ended March 31, 2002, as compared to the same period in 2001, primarily due to the increase in net income from the cash received for Edison's payment for revenue generated but not recognized for the period November 1, 2000 through March 26, 2001. Cash used in investing activities at the Navy I Partnership increased by $2.5 million for the three-months ended March 31, 2002, as compared to the same period in 2001, primarily due to an increase in restricted cash requirements associated with the project loan from Funding Corp. The Navy I Partnership's cash used in financing activities increased by $29.9 million for the three-months ended March 31, 2002, as compared to the same period in 2001, due to increased partner distributions paid during that period in 2002. The BLM Partnership's cash flows from operating activities increased by $33.6 million for the three-months ended March 31, 2002, as compared to the same period in 2001, primarily due to the increase in net income from the cash received for Edison's payment for revenue generated but not recognized for the period November 1, 2000 through March 26, 2001. Cash used in investing activities at the BLM Partnership decreased by $0.5 million for the three-months ended March 31, 2002, as compared to the same period in 2001, primarily due to a decrease in capital expenditures partially offset by an increase in restricted cash requirements associated with the project loan from Funding Corp. The BLM Partnership's cash used in financing activities increased by $22.8 million for the three-months ended March 31, 2002, as compared to the same period in 2001, due to increased partner distributions paid during that period in 2002. The Navy II Partnership's cash flows from operating activities increased by $27.8 million for the three-months ended March 31, 2002, as compared to the same period in 2001, primarily due to the increase in net income from the cash received for Edison's payment for revenue generated but not recognized for the period November 1, 2000 through March 26, 2001. Cash from investing activities at the Navy II Partnership decreased by $0.5 million for the three-months ended March 31, 2002, as compared to the same period in 2001, primarily due to an increase in restricted cash requirements associated with the project loan from Funding Corp. The Navy II Partnership's cash used in financing activities increased by $13.6 million for the three-months ended March 31, 2002, as compared to the same period in 2001, due to increased partner distributions paid during that period in 2002. 28 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings General The Coso Partnerships are currently parties to various items of litigation relating to day-to-day operations, none of which, if determined adversely, would be material to the financial condition and results of operations of the Coso Partnerships, either individually or taken as a whole. ITEM 2. Change in Securities and Use of Proceeds None. ITEM 3. Defaults Upon Senior Securities None. ITEM 4. Submission of Matters to a Vote of Security Holders None. 29 ITEM 5. Other Information Supplemental Condensed Combined Financial Information for the Coso Partnerships The following information presents unaudited condensed combined financial statements of the Coso Partnerships. These financial statements represent a combination of the financial statements of Caithness Coso Funding Corp., Coso Finance Partners, Coso Energy Developers and Coso Power Developers for the periods indicated. This supplemental financial information is not required by accounting principles generally accepted in the United States of America and has been provided to facilitate a more comprehensive understanding of the financial position, operating results and cash flows of the Coso Partnerships as a whole, which jointly and severally guarantee the repayment of Caithness Coso Funding Corp's senior notes. The unaudited condensed combined financial statements should be read in conjunction with each individual Coso Partnership's financial statements and their accompanying notes. The financial information herein presented reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for interim periods presented. The results for the interim periods are not necessarily indicative of results to be expected for the full year. 30 COSO PARTNERSHIPS UNAUDITED CONDENSED COMBINED BALANCE SHEETS (Dollars in thousands)
March 31, December 31, 2002 2001 Assets: Cash and cash equivalents................................................. $ 38,412 $ 264 Restricted cash and investments........................................... 37,873 34,210 Accounts receivable, net.................................................. 13,538 9,603 Prepaid expenses and other assets......................................... 1,637 2,159 Amounts due from related parties.......................................... 6,118 6,488 Property, plant and equipment, net........................................ 404,846 413,519 Power purchase agreement, net............................................. 51,097 52,350 Investments............................................................... 12,684 12,843 Deferred financing costs, net............................................. 6,103 6,300 ------- ------ $ 572,308 $ 537,736 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities.................................. $ 35,814 $ 42,362 Amounts due to related parties............................................ 24,942 24,967 Project loans............................................................. 303,000 303,000 ------- ------- 363,756 370,329 Partners' capital............................................................ 208,552 167,407 ------- ------- $ 572,308 $ 537,736 ======= ======= See accompanying notes to the unaudited condensed combined financial statements
31 COSO PARTNERSHIPS UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2002 2001 Revenue: Energy revenues........................................................... $ 124,150 $ 4,110 Capacity revenues......................................................... 9,250 214 Interest and other income................................................. 1,598 1,113 ------- ------ Total revenue...................................................... 134,998 5,437 Operating expenses: Plant operating expenses.................................................. 6,883 6,907 Royalty expense........................................................... 3,280 10,351 Depreciation and amortization............................................. 10,424 10,198 ------- ------ Total operating expenses........................................... 20,587 26,646 Operating income (loss)............................................ 114,411 (21,209) Other expenses: Interest expense.......................................................... 6,863 7,316 Amortization of deferred financing costs.................................. 197 401 ------- ------ Total other expenses............................................... 7,060 7,717 Net income (loss)................................................. $ 107,351 $ (28,926) ======= =======
See accompanying notes to the unaudited condensed combined financial statements 32 COSO PARTNERSHIPS UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2002 2001 Net cash provided by (used in) operating activities.......................... $ 108,518 $ (2,434) Net cash provided by (used in) investing activities.......................... (4,160) (1,697) Net cash provided by (used in) financing activities.......................... (66,210) --- -------- ------- Net change in cash and cash equivalents...................................... $ 38,148 $ (4,131) ======== ======= See accompanying notes to the unaudited condensed combined financial statements.
33 COSO PARTNERSHIPS NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS (1) Basis of Presentation The accompanying unaudited condensed combined financial statements were derived from the stand alone unaudited condensed financial statements of Caithness Coso Funding Corp., Coso Finance Partners, Coso Energy Developers and Coso Power Developers ("the Coso Partnerships"). All intercompany accounts and transactions were eliminated. This financial information has been provided to facilitate a more comprehensive understanding of the financial position, operating results and cash flows of the Coso Partnerships as a whole. The unaudited condensed combined financial statements should be read in conjunction with each individual Partnership's unaudited condensed financial statements. (2) Accounts Receivable and Revenue Recognition Due to the uncertainty surrounding Edison's ability to make payment on past due amounts, collection was not reasonably assured and the Coso Partnerships had not recognized revenue from Edison for energy delivered during the period November 1, 2000 through March 26, 2001. The provision for doubtful accounts previously recorded by the Coso Partnerships of $78.8 million for the three-months ended March 31, 2001, has been reclassified as a reduction of revenue to conform with the 2002 presentation. On March 1, 2002, Edison reached certain financing milestones and paid the Coso Partnerships for revenue generated but not recognized for the period November 1, 2000 through March 26, 2001. For the three-month period ended March 31, 2002, the Coso Partnerships recognized revenue for energy delivered from November 1, 2000 through March 26, 2001 of $112.4 million. (3) Reclassifications Certain other reclassifications have been made to the 2001 statements of operations to conform to the 2002 presentation. 34 ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits 27.1 Financial Data Schedule--Form SX--Caithness Coso Funding Corp. 27.2 Financial Data Schedule--Form SX--Coso Finance Partners 27.3 Financial Data Schedule--Form SX--Coso Energy Developers 27.4 Financial Data Schedule--Form SX--Coso Power Developers (b) Reports on Form 8-K None 35 EXHIBIT 27.1 Form S-X Commercial and Industrial Companies Financial Data Schedule Worksheet for: CAITHNESS COSO FUNDING CORP. ---------------------------- Review the following list of tags for Article 5 and fill in the correct data in the column(s) provided. Generally, only one column of information will be required, however, two columns are provided if required in the Financial Data Schedule. Unless otherwise noted, all tags are required. A response is required for each item within the schedule. Use the value "0" (zero) if information is immaterial, inapplicable or unknown. Decimals may not be used to state financial data except as indicated. Values not provided will be entered as "0" (zero). Missing dates will be entered as "TO COME". Please be sure to verify all information in the EDGARized exhibit. To include a footnote, place a number in parentheses next to the value and provide the text of each corresponding footnote at the end of the worksheet form. Do you wish to include a LEGEND? This schedule contains summary financial Yes X No information extracted from *_____________ --- --- and is equalified in its entirety by reference to such financial statements. *Identify the financial statement(s) to be referenced in the legend: RESTATED Are your financials being "restated" (NO VALUE REQUIRED) from a previously file period? Yes X No --- --- CIK Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT CIK: NAME Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT NAME: MULTIPLIER Do the financials require a multiplier X 1,000 1,000,000,000 other than 1 (one)? --- ---- X Yes No 1,000,000 1,000,000,000,000 --- --- --- ---- CURRENCY CURRENCY OF FINANCIAL DATA: Is the currency used other than US Dollars? Use in conjunction with EXCHANGE RATE tag. Yes X No --- --- PERIOD TYPE - MOS X 3 - MOS -- ---- -- --- X YEAR YEAR --- --- (for annual report filings) OTHER OTHER ---- ---- FISCAL YEAR END (example: DEC-31-1997) Dec-31-2001 DEC-31-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD START (example: JAN-01-1997) Jan-01-2001 JAN-01-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD END (example: SEP-30-1997) Dec-31-2001 MAR-31-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE: Is the exchange rate other than 1 (one)? Value may contain up to 5 decimal places) Use in conjunction with CURRENCY tag. Yes X No --- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS ---- ----- --- CASH 0 0 SECURITIES 0 0 RECEIVABLES 304,225 311,079 ALLOWANCES 0 0 INVENTORY 0 0 CURRENT ASSETDS 1,225 8,079 PP&E 0 0 DEPRECIATION 0 0 TOTAL ASSETS 304,225 311,079 CURRENT LIABILITIES 1,225 8,079 BONDS 303,000 303,000 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 304,225 311,079 SALES 0 0 TOTAL REVENUES 28,820 6,854 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 0 0 LOSS PROVISION 0 0 INTEREST EXPENSES 28,820 6,854 INCOME PRETAX 0 0 INCOME TAX 0 0 INCOME CONTINUING 0 0 DISCONTINUED 0 0 EXTRAORDINARY 0 0 CHANGES 0 0 NET INCOME 0 0 EPS BASIC 0 0 (Value may contain up to 3 decimal places) EPS DILUTED 0 0 (Value may contain up to 3 decimal places) Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.2 Form S-X Commercial and Industrial Companies Financial Data Schedule Worksheet for: COSO FINANCE PARTNERS --------------------- Review the following list of tags for Article 5 and fill in the correct data in the column(s) provided. Generally, only one column of information will be required, however, two columns are provided if required in the Financial Data Schedule. Unless otherwise noted, all tags are required. A response is required for each item within the schedule. Use the value "0" (zero) if information is immaterial, inapplicable or unknown. Decimals may not be used to state financial data except as indicated. Values not provided will be entered as "0" (zero). Missing dates will be entered as "TO COME". Please be sure to verify all information in the EDGARized exhibit. To include a footnote, place a number in parentheses next to the value and provide the text of each corresponding footnote at the end of the worksheet form. Do you wish to include a LEGEND? This schedule contains summary financial Yes X No information extracted from *_____________ --- --- and is equalified in its entirety by reference to such financial statements. *Identify the financial statement(s) to be referenced in the legend: RESTATED Are your financials being "restated" (NO VALUE REQUIRED) from a previously file period? Yes X No --- --- CIK Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT CIK: NAME Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT NAME: MULTIPLIER Do the financials require a multiplier X 1,000 1,000,000,000 other than 1 (one)? --- ---- X Yes No 1,000,000 1,000,000,000,000 --- --- --- ---- CURRENCY CURRENCY OF FINANCIAL DATA: Is the currency used other than US Dollars? Use in conjunction with EXCHANGE RATE tag. Yes X No --- --- PERIOD TYPE - MOS X 3 - MOS -- ---- -- ---- X YEAR YEAR --- --- (for annual report filings) OTHER OTHER ---- ---- FISCAL YEAR END (example: DEC-31-1997) Dec-31-2001 DEC-31-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD START (example: JAN-01-1997) Jan-01-2001 JAN-01-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD END (example: SEP-30-1997) Dec-31-2001 MAR-31-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE: Is the exchange rate other than 1 (one)? Value may contain up to 5 decimal places) Use in conjunction with CURRENCY tag. Yes X No --- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS ---- ----- CASH 264 14,992 SECURITIES 21,325 23,766 RECEIVABLES 12,816 6,862 ALLOWANCES 0 0 INVENTORY 0 0 CURRENT ASSETS 13,730 22,534 PP&E 229,084 229,112 DEPRECIATION 88,647 90,881 TOTAL ASSETS 193,114 201,763 CURRENT LIABILITIES 18,139 20,635 BONDS 122,550 122,550 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 193,114 201,763 SALES 75,419 45,498 TOTAL REVENUES 78,347 45,972 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 51,201 7,055 LOSS PROVISION 0 0 INTEREST EXPENSES 12,437 2,854 INCOME PRETAX 0 0 INCOME TAX 0 0 INCOME CONTINUING 0 0 DISCONTINUED 0 0 EXTRAORDINARY 0 0 CHANGES 0 0 NET INCOME 14,709 36,063 EPS BASIC 0 0 (Value may contain up to 3 decimal places) EPS DILUTED 0 0 (Value may contain up to 3 decimal places) Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.3 Form S-X Commercial and Industrial Companies Financial Data Schedule Worksheet for: COSO ENERGY DEVELOPERS ---------------------- Review the following list of tags for Article 5 and fill in the correct data in the column(s) provided. Generally, only one column of information will be required, however, two columns are provided if required in the Financial Data Schedule. Unless otherwise noted, all tags are required. A response is required for each item within the schedule. Use the value "0" (zero) if information is immaterial, inapplicable or unknown. Decimals may not be used to state financial data except as indicated. Values not provided will be entered as "0" (zero). Missing dates will be entered as "TO COME". Please be sure to verify all information in the EDGARized exhibit. To include a footnote, place a number in parentheses next to the value and provide the text of each corresponding footnote at the end of the worksheet form. Do you wish to include a LEGEND? This schedule contains summary financial Yes X No information extracted from *_____________ --- --- and is equalified in its entirety by reference to such financial statements. *Identify the financial statement(s) to be referenced in the legend: RESTATED Are your financials being "restated" (NO VALUE REQUIRED) from a previously file period? Yes X No --- --- CIK Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT CIK: NAME Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT NAME: MULTIPLIER Do the financials require a multiplier X 1,000 1,000,000,000 other than 1 (one)? --- ---- X Yes No 1,000,000 1,000,000,000,000 --- --- --- ---- CURRENCY CURRENCY OF FINANCIAL DATA: Is the currency used other than US Dollars? Use in conjunction with EXCHANGE RATE tag. Yes X No --- --- PERIOD TYPE - MOS X 3 - MOS -- ---- -- ---- X YEAR YEAR --- --- (for annual report filings) OTHER OTHER ---- ---- FISCAL YEAR END (example: DEC-31-1997) Dec-31-2001 DEC-31-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD START (example: JAN-01-1997) Jan-01-2001 JAN-01-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD END (example: SEP-30-1997) Dec-31-2001 MAR-31-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE: Is the exchange rate other than 1 (one)? Value may contain up to 5 decimal places) Use in conjunction with CURRENCY tag. Yes X No --- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS ---- ----- CASH 0 10,233 SECURITIES 7,368 8,551 RECEIVABLES 3,340 4,541 ALLOWANCES 0 0 INVENTORY 0 0 CURRENT ASSETS 4,189 15,300 PP&E 247,203 247,547 DEPRECIATION 98,786 102,535 TOTAL ASSETS 183,978 192,456 CURRENT LIABILITIES 34,966 30,988 BONDS 96,250 96,250 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 183,978 192,456 SALES 65,830 43,480 TOTAL REVENUES 69,596 44,122 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 53,185 6,675 LOSS PROVISION 0 0 INTEREST EXPENSES 9,398 2,244 INCOME PRETAX 0 0 INCOME TAX 0 0 INCOME CONTINUING 0 0 DISCONTINUED 0 0 EXTRAORDINARY 0 0 CHANGES 0 0 NET INCOME 7,013 35,203 EPS BASIC 0 0 (Value may contain up to 3 decimal places) EPS DILUTED 0 0 (Value may contain up to 3 decimal places) Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.4 Form S-X Commercial and Industrial Companies Financial Data Schedule Worksheet for: COSO POWER DEVELOPERS --------------------- Review the following list of tags for Article 5 and fill in the correct data in the column(s) provided. Generally, only one column of information will be required, however, two columns are provided if required in the Financial Data Schedule. Unless otherwise noted, all tags are required. A response is required for each item within the schedule. Use the value "0" (zero) if information is immaterial, inapplicable or unknown. Decimals may not be used to state financial data except as indicated. Values not provided will be entered as "0" (zero). Missing dates will be entered as "TO COME". Please be sure to verify all information in the EDGARized exhibit. To include a footnote, place a number in parentheses next to the value and provide the text of each corresponding footnote at the end of the worksheet form. Do you wish to include a LEGEND? This schedule contains summary financial Yes X No information extracted from *_____________ --- --- and is equalified in its entirety by reference to such financial statements. *Identify the financial statement(s) to be referenced in the legend: RESTATED Are your financials being "restated" (NO VALUE REQUIRED) from a previously file period? Yes X No --- --- CIK Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT CIK: NAME Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT NAME: MULTIPLIER Do the financials require a multiplier X 1,000 1,000,000,000 other than 1 (one)? --- ---- X Yes No 1,000,000 1,000,000,000,000 --- --- --- ---- CURRENCY CURRENCY OF FINANCIAL DATA: Is the currency used other than US Dollars? Use in conjunction with EXCHANGE RATE tag. Yes X No --- --- PERIOD TYPE - MOS X 3 - MOS -- ---- -- ---- YEAR YEAR --- --- (for annual report filings) OTHER OTHER ---- ---- FISCAL YEAR END (example: DEC-31-1997) Dec-31-2001 DEC-31-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD START (example: JAN-01-1997) Jan-01-2001 JAN-01-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD END (example: SEP-30-1997) Dec-31-2001 MAR-31-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE: Is the exchange rate other than 1 (one)? Value may contain up to 5 decimal places) Use in conjunction with CURRENCY tag. Yes X No --- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS ---- ----- CASH 0 13,187 SECURITIES 5,517 5,556 RECEIVABLES 9,349 10,207 ALLOWANCES 0 0 INVENTORY 0 0 CURRENT ASSETS 10,009 23,825 PP&E 209,652 209,664 DEPRECIATION 84,987 88,061 TOTAL ASSETS 170,058 180,043 CURRENT LIABILITIES 23,638 11,087 BONDS 84,200 84,200 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 170,058 180,043 SALES 59,122 44,422 TOTAL REVENUES 62,005 44,904 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 57,141 6,857 LOSS PROVISION 0 0 INTEREST EXPENSES 9,247 1,962 INCOME PRETAX 0 0 INCOME TAX 0 0 INCOME CONTINUING 0 0 DISCONTINUED 0 0 EXTRAORDINARY 0 0 CHANGES 0 0 NET INCOME (4,383) 36,085 EPS BASIC 0 0 (Value may contain up to 3 decimal places) EPS DILUTED 0 0 (Value may contain up to 3 decimal places) Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 7, 2002 CAITHNESS COSO FUNDING CORP., a Delaware corporation By: /S/ CHRISTOPHER T. MCCALLION ---------------------------- Christopher T. McCallion Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer) COSO FINANCE PARTNERS a California General Partnership By: New CLOC Company, LLC, its Managing General Partner By: /S/ CHRISTOPHER T. MCCALLION ---------------------------- Christopher T. McCallion Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer) COSO ENERGY DEVELOPERS a California General Partnership By: New CHIP Company, LLC, its Managing General Partner By: /S/ CHRISTOPHER T. MCCALLION ---------------------------- Christopher T. McCallion Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer) COSO POWER DEVELOPERS a California General Partnership By: New CTC Company, LLC, its Managing General Partner By: /S/ CHRISTOPHER T. MCCALLION ---------------------------- Christopher T. McCallion Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer)