-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SVMEzs3kWXTeAoD90bHNHU5hnfSDKl3TkNNAJTTRPAEyYj8GwOixLF/Kbb4N0hIT rwu5sqgD3KoZmFYb1J1eTg== 0001088866-03-000024.txt : 20031114 0001088866-03-000024.hdr.sgml : 20031114 20031114110154 ACCESSION NUMBER: 0001088866-03-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAITHNESS COSO FUNDING CORP CENTRAL INDEX KEY: 0001088866 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 943328762 STATE OF INCORPORATION: DE FISCAL YEAR END: 0923 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-83815 FILM NUMBER: 031001219 BUSINESS ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 565 FIFTH AVENUE, 29TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017-2478 BUSINESS PHONE: 2129219099 MAIL ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 565 FIFTH AVENUE, 29TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017-2478 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COSO ENERGY DEVELOPERS CENTRAL INDEX KEY: 0001088869 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 943071296 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-83815-01 FILM NUMBER: 031001222 BUSINESS ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 1114 AVENUE OF THE AMERICAS 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10036-7790 BUSINESS PHONE: 2129219099 MAIL ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 1114 AVENUE OF THE AMERICAS 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10036-7790 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COSO FINANCE PARTNERS CENTRAL INDEX KEY: 0001088870 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 580133679 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-83815-02 FILM NUMBER: 031001221 BUSINESS ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 1114 AVENUE OF THE AMERICAS 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10036-7790 BUSINESS PHONE: 2129219099 MAIL ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 1114 AVENUE OF THE AMERICAS 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10036-7790 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COSO POWER DEVELOPERS CENTRAL INDEX KEY: 0001088873 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 943102796 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-83815-03 FILM NUMBER: 031001220 BUSINESS ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 1114 AVENUE OF THE AMERICAS 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10036-7790 BUSINESS PHONE: 2129219099 MAIL ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 1114 AVENUE OF THE AMERICAS 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10036-7790 10-Q 1 sept10q2003.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 September 30, 2003 ------------------ 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 November 13, 2003 ------------------------------------------------------------------ CAITHNESS COSO FUNDING CORP. Form 10-Q For the Quarter Ended September 30, 2003 PART I. FINANCIAL INFORMATION Page No. ITEM 1. Financial Statements Caithness Coso Funding Corp. Unaudited condensed balance sheets at September 30, 2003 and December 31, 2002 4 Unaudited condensed statements of operations for the three-months ended September 30, 2003, the three-months ended September 30, 2002, the nine-months ended September 30, 2003, and the nine- months ended September 30, 2002 5 Unaudited condensed statements of cash flows for the nine-months ended September 30, 2003, and the nine-months ended September 30, 2002 6 Notes to the unaudited condensed financial statements 7 Coso Finance Partners Unaudited condensed balance sheets at September 30, 2003 and December 31, 2002 8 Unaudited condensed statements of operations for the three-months ended September 30, 2003, the three-months ended September 30, 2002, the nine-months ended September 30, 2003, and the nine- months ended September 30, 2002 9 Unaudited condensed statements of cash flows for the nine-months ended September 30, 2003, and the nine-months ended September 30, 2002 10 Notes to the unaudited condensed financial statements 11 Coso Energy Developers Unaudited condensed balance sheets at September 30, 2003 and December 31, 2002 13 Unaudited condensed statements of operations for the three-months ended September 30, 2003, the three-months ended September 30, 2002, the nine-months ended September 30, 2003, and the nine- months ended September 30, 2002 14 Unaudited condensed statements of cash flows for the nine-months ended September 30, 2003, and the nine-months ended September 30, 2002 15 Notes to the unaudited condensed financial statements 16 2 Coso Power Developers Unaudited condensed balance sheets at September 30, 2003 and December 31, 2002 18 Unaudited condensed statements of operations for the three-months ended September 30, 2003, the three-months ended September 30, 2002, the nine-months ended September 30, 2003, and the nine- months ended September 30, 2002 19 Unaudited condensed statements of cash flows for the nine-months ended September 30, 2003, and the nine-months ended September 30, 2002 20 Notes to the unaudited condensed financial statements 21 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 22 ITEM 3. Controls and Procedures 32 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 32 ITEM 2. Change in Securities and Use of Proceeds 32 ITEM 3. Defaults upon Senior Securities 32 ITEM 4. Submission of Matters to a Vote of Security Holders 33 ITEM 5. Other Information 33 Supplemental condensed combined financial information for the Coso Partnerships Unaudited condensed combined balance sheets at September 30, 2003 and December 31, 2002 34 Unaudited condensed combined statements of operations for the three-months ended September 30, 2003, the three-months ended September 30, 2002, the nine-months ended September 30, 2003, and the nine-months ended September 30, 2002 35 Unaudited condensed combined statements of cash flows for the nine-months ended September 30, 2003, and the nine-months ended September 30, 2002 36 Notes to the unaudited condensed combined financial statements 37 ITEM 6. Exhibits and Reports on Form 8-K 39 3
CAITHNESS COSO FUNDING CORP. UNAUDITED CONDENSED BALANCE SHEETS (Dollars in thousands) September 30, December 31, 2003 2002 (Note) Assets: Accrued interest receivable....................... $ 7,165 $ 1,130 Project loan to Coso Finance Partners............. 105,560 110,955 Project loan to Coso Energy Developers............ 87,853 89,875 Project loan to Coso Power Developers............. 76,739 80,401 ------ ------ $ 277,317 $ 282,361 ======= ======= Liabilities and Stockholders' Equity: Senior secured notes: Accrued interest payable....................... $ 7,165 $ 1,130 9.05% notes due 2009........................... 270,152 281,231 ------- ------- 277,317 282,361 Stockholders' equity................................. --- --- ------- ------- $ 277,317 $ 282,361 ======= =======
Note:The condensed balance sheet at December 31, 2002 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 Nine-Months Nine-Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2003 2002 2003 2002 Interest income................ $ 6,144 $ 6,659 $ 18,761 $ 20,369 Interest expense............... (6,144) (6,659) (18,761) (20,369) ------- ------- -------- -------- 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) Nine-Months Nine-Months Ended Ended September 30, September 30, 2003 2002 Net cash provided by (used in) investing activities....... $ 5,044 $ 2,051 Net cash provided by (used in) financing activities....... (5,044) (2,051) ----- ----- Net change in cash and cash equivalents................... $ --- $ --- ===== ===== Supplemental cash flow disclosure: Cash paid for interest............................... $ 12,726 $ 13,710 ====== ======
See accompanying notes to the unaudited condensed financial statements 6 CAITHNESS COSO FUNDING CORP. NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS (Dollars in thousands) (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 "Coso Partnerships." The Coso Partnerships are California general partnerships. On May 28, 1999, Funding Corp. sold $413,000 of Notes. Pursuant to separate credit agreements between Funding Corp. and each partnership, the net proceeds from the offering of $110,000 of 6.80% Notes due 2001 and $303,000 of 9.05% Notes due 2009 were loaned to the Coso Partnerships, and the Coso Partnerships have jointly and severally guaranteed repayment on a senior basis. Payment of the Notes is provided for by payments made by the Coso 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 Coso Partnerships. Also, Funding Corp. does not conduct any business, other than issuing the senior secured notes and making the loans to the Coso 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 audited financial statements and the notes thereto for the year ended December 31, 2002. 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) September 30, December 31, 2003 2002 (Note) Assets: Cash and cash equivalents.................................................. $ 11,786 $ 4,215 Restricted cash and investments............................................ 27,094 28,692 Accounts receivable, net................................................... 11,978 7,431 Prepaid expenses & other assets............................................ 1,276 1,068 Amounts due from related parties........................................... 1,169 1,190 Property, plant & equipment, net........................................... 137,237 136,313 Power purchase agreement, net.............................................. 9,084 9,945 Advances to New CLPSI Company, LLC......................................... 4,099 4,010 Deferred financing costs, net.............................................. 1,971 2,208 ----- ----- $ 205,694 $ 195,072 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities................................... $ 4,294 $ 5,764 Amounts due to related parties............................................. 3,162 467 Other liabilities.......................................................... 15,274 12,478 Project loans.............................................................. 105,560 110,955 ------- ------- 128,290 129,664 Partners' capital............................................................. 77,404 65,408 ------- ------- $ 205,694 $ 195,072 ======= =======
Note:The condensed balance sheet at December 31, 2002 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 Nine-Months Nine-Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2003 2002 2003 2002 Revenue: Energy revenues................................ $ 11,643 $ 11,571 $ 34,698 $ 64,683 Capacity revenues.............................. 8,190 8,190 13,011 14,904 ----- ----- ------ ------ Total revenue........................... 19,833 19,761 47,709 79,587 Operating expenses: Plant operating expenses....................... 2,291 2,811 6,875 7,379 Royalty expense................................ 4,982 5,762 11,603 11,393 Depreciation and amortization.................. 2,720 3,049 7,997 8,126 ----- ----- ----- ----- Total operating expenses................ 9,993 11,622 26,475 26,898 Operating income........................ 9,840 8,139 21,234 52,689 Other (income)/expenses: Interest and other income...................... (41) (136) (155) (1,655) Interest expense............................... 2,402 2,668 7,376 8,216 Amortization of deferred financing costs....... 79 79 237 237 ----- ----- ----- ----- Total other expenses.................... 2,440 2,611 7,458 6,798 ----- ----- ----- ----- Income before cumulative effect of change in accounting principle........................ 7,400 5,528 13,776 45,891 Cumulative effect of change in accounting principle........................... --- --- 1,780 --- ----- ----- ------ ------ Net income.............................. $ 7,400 $ 5,528 $ 11,996 $ 45,891 ===== ===== ====== ======
See accompanying notes to the unaudited condensed financial statements 9
COSO FINANCE PARTNERS UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands) Nine-Months Nine-Months Ended Ended September 30, September 30, 2003 2002 Net cash provided by (used in) operating activities .......... $ 19,017 $ 54,861 Net cash provided by (used in) investing activities .......... (6,051) (4,546) Net cash provided by (used in) financing activities........... (5,395) (40,568) ----- ------ Net change in cash and cash equivalents ...................... $ 7,571 $ 9,747 ===== ====== Supplemental cash flow disclosure: Cash paid for interest ................................ $ 5,021 $ 5,545 ===== ======
See accompanying notes to the unaudited condensed financial statements 10 COSO FINANCE PARTNERS NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS (Dollars in thousands) (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 (Edison) under a power purchase contract that expires 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 audited financial statements and the notes thereto for the year ended December 31, 2002. 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. 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. During the nine-months ended September 30, 2002, CFP recognized revenue for energy delivered from November 1, 2000 through March 26, 2001 of $37.3 million. (4) Reclassifications Certain balances in prior years have been reclassified to conform to the presentation adopted in the current year. (5) New Accounting Pronouncements In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations. This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs and amends SFAS No. 19, Financial Accounting and Reporting by Oil and Gas Producing Companies. The Statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, and that the associated asset retirement costs be capitalized as part of the carrying amount of the long-lived asset. The Statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. As a result of the adoption of SFAS No. 143, CFP was required to recognize a liability of $2,039, a net asset of $259 and a loss 11 from the cumulative effect of a change in accounting principle of $1,780 as of January 1, 2003. Annual depreciation and accretion expense resulting from adoption of SFAS No. 143 is estimated to be $218. In January 2003, the FASB issued Interpretation No. 46, (FIN 46) Consolidation of Variable Interest Entities, an interpretation of ARB No. 51. This Interpretation addresses the consolidation by business enterprises of variable interest entities as defined in the Interpretation. The Interpretation was originally intended to be applied immediately to variable interests in variable interest entities created after January 31, 2003, and in the first fiscal year or interim period beginning after June 15, 2003 to enterprises that hold a variable interest in variable interest entities created before February 1, 2003. On September 17, 2003, the FASB instructed the FASB staff to prepare a FASB Staff Position to defer the effective date of Interpretation 46 until the end of the first interim or annual period ending after December 15, 2003, for certain interests held by a public entity in certain variable interest entities. At that FASB meeting, the FASB also decided to address proposed modifications to FIN 46 in an Interpretation of that document. Those modifications would alter how companies identify variable interest entities and modify the determination of which party should consolidate them (the primary beneficiary). The effect of the application of this Interpretation on CFP's financial statements is currently being evaluated and the expected impact has not yet been determined. 12
COSO ENERGY DEVELOPERS UNAUDITED CONDENSED BALANCE SHEETS (Dollars in thousands) September 30, December 31, 2003 2002 (Note) Assets: Cash and cash equivalents ................................ $ 15,651 $ 1,423 Restricted cash and investments .......................... 7,244 6,646 Accounts receivable, net ................................. 10,947 6,681 Prepaid expenses and other assets ........................ 1,613 1,370 Amounts due from related parties ......................... 437 421 Property, plant and equipment, net ....................... 132,402 135,853 Power purchase agreement, net ............................ 16,561 17,365 Investment in Coso Transmission Line Partners............. 2,584 2,653 Advances to New CLPSI Company, LLC ....................... 556 674 Deferred financing costs, net ............................ 1,594 1,785 ------- ------- $ 189,589 $ 174,871 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities.................. $ 2,037 $ 1,644 Amounts due to related parties............................ 28,958 26,317 Other liabilities......................................... 1,638 432 Project loans............................................. 87,853 89,875 ------- ------- 120,486 118,268 Partners' capital............................................ 69,103 56,603 ------ ------ $ 189,589 $ 174,871 ======= =======
Note:The condensed balance sheet at December 31, 2002 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 13
COSO ENERGY DEVELOPERS UNAUDITED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands) Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2003 2002 2003 2002 Revenue: Energy revenues.................................. $ 8,220 $ 8,589 $ 24,453 $ 56,724 Capacity revenues................................ 8,002 8,002 12,713 14,537 ------ ------ ------ ------ Total revenue............................. 16,222 16,591 37,166 71,261 Operating expenses: Plant operating expenses......................... 3,421 3,328 9,185 8,581 Royalty expense.................................. 1,339 1,482 2,028 2,157 Depreciation and amortization.................... 2,371 3,903 7,055 12,135 ----- ----- ------ ------ Total operating expenses.................. 7,131 8,713 18,268 22,873 Operating income.......................... 9,091 7,878 18,898 48,388 Other (income)/expenses: Interest and other income........................ (236) (267) (749) (1,169) Interest expense................................. 1,998 2,120 6,032 6,477 Amortization of deferred financing costs......... 64 64 191 191 ----- ----- ----- ----- Total other expenses...................... 1,826 1,917 5,474 5,499 ----- ----- ----- ----- Income before cumulative effect of change in accounting principle.......................... 7,265 5,961 13,424 42,889 Cumulative effect of change in accounting principle............................. --- --- 924 --- ----- ----- ------ ------ Net income............................... $ 7,265 $ 5,961 $ 12,500 $ 42,889 ===== ===== ====== ======
See accompanying notes to the unaudited condensed financial statements 14
COSO ENERGY DEVELOPERS UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands) Nine-Months Nine-Months Ended Ended September 30, September 30, 2003 2002 Net cash provided by (used in) operating activities..... $ 19,366 $ 41,610 Net cash provided by (used in) investing activities..... (3,116) (1,674) Net cash provided by (used in) financing activities..... (2,022) (29,520) ------ ------ Net change in cash and cash equivalents................. $ 14,228 $ 10,416 ====== ====== Supplemental cash flow disclosure: Cash paid for interest............................. $ 4,067 $ 4,355 ====== ======
See accompanying notes to the unaudited condensed financial statements 15 COSO ENERGY DEVELOPERS NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS (Dollars in thousands) (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 (Edison) under a power purchase contract that expires 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 audited financial statements and the notes thereto for the year ended December 31, 2002. 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. 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. During the nine-months ended September 30, 2002, CED recognized revenue for energy delivered from November 1, 2000 through March 26, 2001 of $37.1 million. (4) Reclassifications Certain balances in prior years have been reclassified to conform to the presentation adopted in the current year. (5) New Accounting Pronouncements In June 2001, the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations. This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs and amends SFAS No. 19, Financial Accounting and Reporting by Oil and Gas Producing Companies. The Statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, and that the associated asset retirement costs be capitalized as part of the carrying amount of the long-lived asset. The Statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. As a result of the adoption of SFAS No. 143, CED was required to recognize a liability of $1,122, a net asset of $198 and a loss from the cumulative effect of a change in accounting principle of $924 as of January 1, 2003. Annual depreciation and accretion expense resulting from adoption of SFAS No. 143 is estimated to be $120. 16 In January 2003, the FASB issued Interpretation No. 46, (FIN 46) Consolidation of Variable Interest Entities, an interpretation of ARB No. 51. This Interpretation addresses the consolidation by business enterprises of variable interest entities as defined in the Interpretation. The Interpretation was originally intended to be applied immediately to variable interests in variable interest entities created after January 31, 2003, and in the first fiscal year or interim period beginning after June 15, 2003 to enterprises that hold a variable interest in variable interest entities created before February 1, 2003. On September 17, 2003, the FASB instructed the FASB staff to prepare a FASB Staff Position to defer the effective date of Interpretation 46 until the end of the first interim or annual period ending after December 15, 2003, for certain interests held by a public entity in certain variable interest entities. At that FASB meeting, the FASB also decided to address proposed modifications to FIN 46 in an Interpretation of that document. Those modifications would alter how companies identify variable interest entities and modify the determination of which party should consolidate them (the primary beneficiary). The effect of the application of this Interpretation on CED's financial statements is currently being evaluated and the expected impact has not yet been determined. 17
COSO POWER DEVELOPERS UNAUDITED CONDENSED BALANCE SHEETS (Dollars in thousands) September 30, December 31, 2003 2002 (Note) Assets: Cash and cash equivalents................................................ $ 9,537 $ 824 Restricted cash and investments.......................................... 9,492 10,855 Accounts receivable, net................................................. 12,177 7,234 Prepaid expenses and other assets........................................ 1,214 1,111 Amounts due from related parties......................................... 6,251 5,902 Property, plant and equipment, net....................................... 115,550 116,192 Power purchase agreement, net............................................ 17,930 20,026 Investment in Coso Transmission Line Partners............................ 3,177 3,260 Advances to New CLPSI Company, LLC....................................... 1,870 1,911 Deferred financing costs, net............................................ 1,356 1,519 ------- ------- $ 178,554 $ 168,834 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities................................. $ 3,158 $ 1,948 Amounts due to related parties........................................... 3,135 758 Other liabilities........................................................ 2,291 366 Project loans............................................................ 76,739 80,401 ------ ------ 85,323 83,473 Partners' capital........................................................... 93,231 85,361 ------ ------ $ 178,554 $ 168,834 ======= =======
Note:The condensed balance sheet at December 31, 2002 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 18
COSO POWER DEVELOPERS UNAUDITED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands) Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2003 2002 2003 2002 Revenue: Energy revenues.................................. $ 8,466 $ 7,791 $ 23,064 $ 55,428 Capacity revenues................................ 8,047 8,047 12,786 14,603 ------ ------ ------ ------ Total revenue............................. 16,513 15,838 35,850 70,031 Operating expenses: Plant operating expenses......................... 2,401 2,918 7,249 7,408 Royalty expense.................................. 2,655 2,588 5,830 5,337 Depreciation and amortization.................... 2,527 1,848 7,787 9,507 ----- ----- ------ ------ Total operating expenses.................. 7,583 7,354 20,866 22,252 Operating income.......................... 8,930 8,484 14,984 47,779 Other (income)/expenses: Interest and other income........................ (44) (237) (177) (888) Interest expense................................. 1,745 1,870 5,351 5,683 Amortization of deferred financing costs......... 55 55 163 163 ----- ----- ----- ----- Total other expenses...................... 1,756 1,688 5,337 4,958 ----- ----- ----- ----- Income before cumulative effect of change in accounting principle......................... 7,174 6,796 9,647 42,821 Cumulative effect of change in accounting principle............................. --- --- 1,777 --- ----- ----- ----- ------ Net income................................ $ 7,174 $ 6,796 $ 7,870 $ 42,821 ===== ===== ===== ======
See accompanying notes to the unaudited condensed financial statements 19
COSO POWER DEVELOPERS UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands) Nine-Months Nine-Months Ended Ended September 30, September 30, 2003 2002 Net cash provided by (used in) operating activities............. $ 15,547 $ 26,138 Net cash provided by (used in) investing activities............. (3,172) (1,337) Net cash provided by (used in) financing activities............. (3,662) (17,775) ----- ------ Net change in cash and cash equivalents......................... $ 8,713 $ 7,026 ===== ====== Supplemental cash flow disclosure: Cash paid for interest................................... $ 3,638 $ 3,810 ===== ======
See accompanying notes to the unaudited condensed financial statements 20 COSO POWER DEVELOPERS NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS (Dollars in thousands) (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 (Edison) under a power purchase contract that expires 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 audited financial statements and the notes thereto for the year ended December 31, 2002. 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. 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. During the nine-months ended September 30, 2002, CPD recognized revenue for energy delivered from November 1, 2000 through March 26, 2001 of $38.0 million. (4) Reclassifications Certain balances in prior years have been reclassified to conform to the presentation adopted in the current year. (5) New Accounting Pronouncements In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations. This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs and amends SFAS No. 19, Financial Accounting and Reporting by Oil and Gas Producing Companies. The Statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, and that the associated asset retirement costs be capitalized as part of the carrying amount of the long-lived asset. The Statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. As a result of the adoption of SFAS No. 143, CPD was required to recognize a liability of $2,131, a net asset of $354 and a loss from the cumulative effect of a change in accounting principle of $1,777 as of January 1, 2003. Annual depreciation and accretion expense resulting from adoption of SFAS No. 143 is estimated to be $334. 21 In January 2003, the FASB issued Interpretation No. 46, (FIN 46) Consolidation of Variable Interest Entities, an interpretation of ARB No. 51. This Interpretation addresses the consolidation by business enterprises of variable interest entities as defined in the Interpretation. The Interpretation was originally intended to be applied immediately to variable interests in variable interest entities created after January 31, 2003, and in the first fiscal year or interim period beginning after June 15, 2003 to enterprises that hold a variable interest in variable interest entities created before February 1, 2003. On September 17, 2003, the FASB instructed the FASB staff to prepare a FASB Staff Position (FSP) to defer the effective date of Interpretation 46 until the end of the first interim or annual period ending after December 15, 2003, for certain interests held by a public entity in certain variable interest entities. At that FASB meeting, the FASB also decided to address proposed modifications to FIN 46 in an Interpretation of that document. Those modifications would alter how companies identify variable interest entities and modify the determination of which party should consolidate them (the primary beneficiary). The effect of the application of this Interpretation on CPD's financial statements is currently being evaluated and the expected impact has not yet been determined. 22 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Except for 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 Partnership"), collectively, (the "Coso Partnerships") and their respective management. Such statements may be identified by terms such as expected, anticipated, may, will, believe or other terms or variations of such words. 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 include but are not limited to: (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 along with other pricing variables, (vi) general operating risks, including resource availability and regulatory oversight, (vii) the dependence on third parties including public and private entities, (viii) changes in government regulation, (ix) the effects of competition, (x) the dependence on senior management, (xi) fluctuations in quarterly results due in part to seasonality, (xii) effects of September 11, 2001, including U.S. Navy activity and (xiii) the alleged manipulation of the California energy market. General Each Coso Partnership owns an 80MW geothermal power plant, and its respective 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 Partnerships. On February 25, 1999, Caithness Acquisition Company, LLC, (CAC) purchased all of CalEnergy's interests in the Coso Partnerships. 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 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 level. The maximum annual capacity bonus payment available is also fixed throughout the life of each power purchase agreement; and * 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 January 1, 2002, Edison made energy payments to the Coso Partnerships based on its 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 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. 23 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 the Coso Partnerships began receiving a fixed energy rate of 5.37 cents per kWh for five (5) years in lieu of the rate calculated based on the avoided cost of energy. 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's power purchase agreement expires. 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. Estimates of Edison's future avoided cost of energy may vary significantly and it is not possible to predict with accuracy the likely level of future avoided cost of energy prices. From January 1, 2002 through April 30, 2002, the Coso Partnerships elected to receive from Edison a fixed energy rate of 3.25 cents per kWh. Starting May 1, 2002, the Coso Partnerships received 5.37 cents per kWh, pursuant to the agreement discussed above. 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 as amended. This formula is primarily based on the tariff rates charged by Edison, which were increased in 2001 by the California Public Utilities Commission (CPUC), and is subject to future revision. On July 10, 2003, the CPUC adopted a settlement between Edison and other parties to lower retail electric rates effective as of August 1, 2003. These rates are in effect for one year, after which new rates will be established in accordance with CPUC guidelines. Indices utilized in the calculation of the royalties under the Navy I Partnership Unit 1 contract remained unchanged historically based on an agreement between the U.S. Navy and the Navy I Partnership. In November 2001 and October 2002, modifications to the calculation of the reimbursement pricing formula were made to the U.S. Navy Contract resulting in a reduction of accrued royalties of $6.5 million and $1.3 million for those periods, respectively, which was agreed to by the U.S. Navy. The parties have currently agreed to a replacement index and true-up calculation in favor of the Navy I Partnership. 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 its contract expires. The payment is secured by funds placed on deposit monthly, which funds plus accrued interest are anticipated to aggregate $25.0 million by the expiration date of the contract. 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. 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 (Notes) on behalf of the Coso Partnerships who have jointly, severally, and unconditionally guaranteed repayment of the Notes. On May 28, 1999, Funding Corp. issued $110.0 million of 6.80% Notes that were due in 2001, and were paid off on December 15, 2001, and $303.0 million of 9.05% Notes due in 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 serving as the issuer of the Notes. 24 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 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 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 had not recognized revenue of $22.0 million, $21.8 million and $22.7 million, respectively, from Edison for Energy delivered during the period January 1, 2001 through March 26, 2001. 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 paid 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 Navy I, BLM and Navy II $37.3 million, $37.1 million and $38.0 million, respectively, for revenue generated but not recognized for the period November 1, 2000 through March 26, 2001. On September 23, 2002, the United States Court of Appeals for the Ninth Circuit issued an opinion and order on appeal from a district court's stipulated judgment, which affirmed the stipulated judgment in part and referred questions based on California state law to the California Supreme Court. The appeals court stated that if the Agreement violated California state law, then the appeals court would be required to void the stipulated judgment. The California Supreme Court has accepted the Ninth Circuit Court of Appeals request to address the issues referred to it in the September 23, 2002 ruling. The California Supreme Court found that the stipulated judgment did not violate state laws. Consequently, the Agreement remains in full force and effect and it is unknown if any additional appeals are planned. Edison filed a petition for a writ of review of a January 2001 CPUC decision, claiming that the "floor" line loss factor of 0.95 for renewable generators violated the Public Utility Regulatory Policies Act of 1978 (PURPA). Subsequently, the California Court of Appeals issued a decision on August 20, 2002 in response to the writs affirming the January 2001 CPUC decision, except for the 0.95 "floor", which it rejected as an abuse of discretion by the CPUC. While this matter was appealed to the California Supreme Court, the petition for review was denied. The Coso Partnerships are currently evaluating potential actions to redress this issue. Their Agreements set the line loss factor at 1.0 for all energy sold between May 2002 through April 2007. After April 2007, the Coso Partnerships will have a line loss factor of less than 1.0, effectively decreasing revenues if Edison's challenge to the CPUC ruling stands. The Coso Partnerships cannot predict whether any subsequent action regarding this matter will be successful. 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. 25 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 Nine-Months Ended September 30 September 30 2003 2002 2003 2002 ---- ---- ---- ---- Navy I Partnership (stand alone) Operating capacity factor 102.6% 104.8% 102.4% 104.6% Capacity (MW) (average) 82.05 83.81 81.93 83.69 kWh produced (000s) 181,165 185,058 536,809 548,312 BLM Partnership (stand alone) Operating capacity factor 88.2% 92.6% 88.5% 93.5% Capacity (MW) (average) 70.59 74.09 70.76 74.83 kWh produced (000s) 155,865 163,586 463,627 490,280 Navy II Partnership (stand alone) Operating capacity factor 106.9% 96.4% 100.6% 99.8% Capacity (MW) (average) 85.53 77.13 80.47 79.86 kWh produced (000s) 188,849 170,295 527,250 523,261
Total energy production for the Navy II Partnership for the three-months ended September 30, 2003, as compared to the same period in 2002, increased 10.9%. The increase was from an effort to increase production overall, in which the Coso Partnerships have implemented a capital program including well workovers on various wells to regain production limited by wellbore obstructions. These efforts, along with modifications to steam-field piping and gas removal systems, improved production at the Navy II Partnership during the second and third quarters of 2003. Total energy production for the BLM Partnership for the nine-months ended September 30, 2003, as compared to the same period in 2002, decreased 5.4%. The decrease was primarily due to a decline in steam, which management is attempting to remediate through well maintenance and capital improvements, including the addition of a new production well and additional steam-field piping modifications. The BLM Partnership along with the Navy I and Navy II Partnerships expect to further enhance the steam utilization and efficiency of the projects through a turbine enhancement program and additional steam-field piping modifications. With respect to the reservoir, an injection augmentation program, aimed at improving reservoir pressure and minimizing resource decline, is currently in the engineering design phase. The funds necessary to implement the capital improvement program is available from reserves established under the Notes and from excess cash flow generated after debt service during the nine-month period ending September 30, 2003. Results of Operations for the three and nine-months ended September 30, 2003 and 2002 The following discusses the results of operations of the Coso Partnerships for the three and nine-months ended September 30, 2003 and 2002 (dollar amounts in tables are in thousands, except per kWh data): 26 Revenue
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002 $ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh - --------- - --------- - --------- - --------- Total Operating Revenues Navy I Partnership 19,833 10.9 19,761 10.7 47,709 8.9 79,587 14.5 BLM Partnership 16,222 10.4 16,591 10.1 37,166 8.0 71,261 14.5 Navy II Partnership 16,513 8.7 15,838 9.3 35,850 6.8 70,031 13.4 Capacity & Capacity Bonus Revenues Navy I Partnership 8,190 4.5 8,190 4.4 13,011 2.4 14,904 2.7 BLM Partnership 8,002 5.1 8,002 4.9 12,713 2.7 14,537 3.0 Navy II Partnership 8,047 4.3 8,047 4.7 12,786 2.4 14,603 2.8 Energy Revenues, including steam transfers Navy I Partnership 11,643 6.4 11,571 6.3 34,698 6.5 64,683 11.8 BLM Partnership 8,220 5.3 8,589 5.3 24,453 5.3 56,724 11.6 Navy II Partnership 8,466 4.5 7,791 4.6 23,064 4.4 55,428 10.6
Total energy revenues, including steam transfers for the Navy II Partnership for the three-months ended September 30, 2003, as compared to the same period in 2002, increased 9.0%. The increase was primarily due to the increase in energy production discussed above. Total operating revenues, including steam transfers, for the Navy I, BLM and Navy II Partnerships, which consist of capacity payments, capacity bonus payments and energy payments for the nine-months ended September 30, 2003, as compared to the same period in 2002, decreased 40.1%, 47.8% and 48.7%, respectively. Capacity and capacity bonus revenues for each of the Navy I, BLM and Navy II Partnerships for the nine-months ended September 30, 2003, as compared to for the same period in 2002, decreased 12.8%, 12.4% and 12.3%, respectively. Total energy revenues including steam transfers, for the Navy I, BLM and Navy II Partnerships for the nine-months ended September 30, 2003, as compared to the same period in 2002, decreased 46.4%, 56.8% and 58.3%, respectively. Each of the Coso Partnership's decreases were primarily due to the recognition of revenues generated but not recognized for the period from November 1, 2000 through March 26, 2001 discussed above. On March 1, 2002, the Navy I, BLM and Navy II Partnerships received payment and recognized revenue of $37.3 million, $37.1 million and $38.0 million, respectively. These decreases were partially offset by the increase in the fixed energy rate to 5.37 cents per kWh paid during the nine-months ended September 30, 2003, as compared to the average fixed energy rate of 4.43 cents per kWh for the same period in 2002. Plant Operations
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002 $ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh - --------- - --------- - --------- - --------- Navy I Partnership 2,291 1.3 2,811 1.5 6,875 1.3 7,379 1.3 BLM Partnership 3,421 2.2 3,328 2.0 9,185 2.0 8,581 1.8 Navy II Partnership 2,401 1.3 2,918 1.7 7,249 1.4 7,408 1.4
27 The Navy I Partnership's operating expenses, including operating and general and administrative expenses for the three and nine-months ended September 30, 2003, as compared to the same periods in 2002, decreased 17.9% and 6.8%, respectively. The decrease was primarily due to decreased property taxes and well maintenance costs partially offset by increased plant maintenance costs. The BLM Partnership's operating expenses, including operating and general and administrative expenses for the nine-months ended September 30, 2003, as compared to the same period in 2002, increased 7.0%. The increase was primarily due to increased well workover and plant maintenance costs, partially offset by decreased property taxes. The Navy II Partnership's operating expenses, including operating and general and administrative expenses for the three-months ended September 30, 2003, as compared to the same period in 2002, decreased 17.2%. The decrease was due to decreased property taxes partially offset by increased well maintenance costs. Royalty Expense
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002 $ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh - --------- - --------- - --------- - --------- Navy I Partnership 4,982 2.7 5,762 3.1 11,603 2.2 11,393 2.1 BLM Partnership 1,339 0.9 1,482 0.9 2,028 0.4 2,157 0.4 Navy II Partnership 2,655 1.4 2,588 1.5 5,830 1.1 5,337 1.0
The Navy I Partnership's royalty expenses for the three-months ended September 30, 2003, as compared to the same period in 2002, decreased 13.8%. The decrease was primarily due to decreased royalties paid for Unit I resulting from lower retail electric rates paid to Edison by the U.S. Navy discussed above. The BLM Partnership's royalty expenses for the three and nine-months ended September 30, 2003, as compared to the same periods in 2002, decreased 13.3% and 9.1%, respectively. The decreases were primarily due to decreased production partially offset by an increase in the fixed energy rate to 5.37 cents per kWh for the nine-months ended September 30, 2003 from 4.43 cents per kWh for the nine-months ended September 30, 2002. The Navy II Partnership's royalty expenses for the nine-months ended September 30, 2003 as compared to the same period in 2002, increased 9.4%. The increase was primarily due to increased production and the increase in the fixed energy rate to 5.37 cents per kWh for the nine-months ended September 30, 2003 from 4.43 cents per kWh for the nine-months ended September 30, 2002. Depreciation and Amortization
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002 $ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh - --------- - --------- - --------- - --------- Navy I Partnership 2,720 1.5 3,049 1.6 7,997 1.5 8,126 1.5 BLM Partnership 2,371 1.5 3,903 2.4 7,055 1.5 12,135 2.5 Navy II Partnership 2,527 1.3 1,848 1.1 7,787 1.5 9,507 1.8
28 The Navy I Partnership's depreciation and amortization expense for the three-months ended September 30, 2003, as compared to the same period in 2002, decreased 10.0%. The decrease was primarily due to plant overhauls costs being fully depreciated. The BLM Partnership's depreciation and amortization expense for the three and nine-months ended September 30, 2003, as compared to the same periods in 2002, decreased 38.5% and 41.3%, respectively. The decreases were primarily due to older well costs being fully depreciated during the second half of 2002. The Navy II Partnership's depreciation and amortization expenses for the three and nine-months ended September 30, 2003 as compared to the same periods in 2002, increased 38.9% and decreased 17.9%, respectively. The increase was primarily due to an increase in capitalized assets during that period. The decrease was due to older wells being fully depreciated during the second half of 2002, partially offset by the increase in capitalized assets. Interest and Other Income
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002 $ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh - --------- - --------- - --------- - --------- Navy I Partnership 41 0.0 136 0.1 155 0.0 1,655 0.3 BLM Partnership 236 0.2 267 0.2 749 0.2 1,169 0.2 Navy II Partnership 44 0.0 237 0.1 177 0.0 888 0.2
The Navy I Partnership's interest and other income for the three and nine-months ended September 30, 2003, as compared to the same periods in 2002, decreased 60.0% and 88.2%, respectively. The BLM Partnership's interest and other income for the three and nine-months ended September 30, 2003, as compared to the same periods in 2002, decreased 33.3% and 41.7% respectively. The Navy II Partnership's interest and other income for the three and nine-months ended September 30, 2003, as compared to the same periods in 2002, decreased 80.0% and 77.8%, respectively. These decreases were primarily due to a decrease in the rate of return on investments due to lower market rates for fixed income investments during those periods in 2003 and decreased interest income on amounts in arrears, owed by Edison in 2001, that were settled and paid by Edison on March 1, 2002. Interest Expense
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002 $ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh - --------- - --------- - --------- - --------- Navy I Partnership 2,402 1.3 2,668 1.4 7,376 1.4 8,216 1.5 BLM Partnership 1,998 1.3 2,120 1.3 6,032 1.3 6,477 1.3 Navy II Partnership 1,745 0.9 1,870 1.1 5,351 1.0 5,683 1.1
The Navy I Partnership's interest expense for the three and nine-months ended September 30, 2003, as compared to the same periods in 2002, decreased 11.1% and 9.8%, respectively. The BLM Partnership's interest expense for the three and nine-months ended September 30, 2003, as compared to the same periods in 2002, decreased 4.8% and 7.7%, respectively. The Navy II Partnership's interest expense for the three and nine-months ended September 30, 2003, as compared to the same periods in 2002, decreased 10.5% and 5.3%, respectively. These decreases were due to reductions in the principal amount outstanding of the project loan from Funding Corp. 29 Change in Accounting Principle On January 1, 2003, as a result of the adoption of SFAS No. 143 as described in the notes to the financial statements, the Navy I, BLM and Navy II Partnerships recorded a loss on the cumulative effect of change in accounting principle in the amounts of $1.8 million, $0.9 million and $1.8 million, respectively. 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. 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 and the Coso Partnership's ability to continue to generate electricity. Edison's shortfall in collections, coupled with its near term capital requirements, materially and adversely affected its liquidity during 2000 and 2001. 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. On September 23, 2002, the United States Court of Appeals for the Ninth Circuit issued an opinion and order on appeal from the district court's stipulated judgment, which affirmed the stipulated judgment in part and referred questions based on California state law to the California Supreme Court. The appeals court stated that if the Agreement violated California state law then the appeals court would be required to void the stipulated judgment. The California Supreme Court has accepted the Ninth Circuit Court of Appeals request to address the issues referred to it in the September 23, 2002 ruling. The California Supreme Court found that the stipulated judgment did not violate state laws. Consequently, the Agreement remains in full force and effect and it is unknown if any additional appeals are planned. Immediately after the Edison-CPUC 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 1, 2000 through March 26, 2001. The Agreement, as amended, was approved by the 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 from 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. Since, March 27, 2001 Edison has been current with payments for revenue generated. The following table sets forth a summary of each the Coso Partnership's cash flows for the nine-months ended September 30, 2003 and September 30, 2002. 30
Nine-Months Nine-Months Ended Ended September 30, September 30, 2003 2002 Navy I Partnership (stand alone) Net cash provided by (used in) operating activities $ 19,017 $ 54,861 Net cash provided by (used in) investing activities (6,051) (4,546) Net cash provided by (used in) financing activities (5,395) (40,568) ----- ------ Net change in cash and cash equivalents $ 7,571 $ 9,747 ===== ====== BLM Partnership (stand alone) Net cash provided by (used in) operating activities $ 19,366 $ 41,610 Net cash provided by (used in) investing activities (3,116) (1,674) Net cash provided by (used in) financing activities (2,022) (29,520) ----- ------ Net change in cash and cash equivalents $ 14,228 $ 10,416 ====== ====== Navy II Partnership (stand alone) Net cash provided by (used in) operating activities $ 15,547 $ 26,138 Net cash provided by (used in) investing activities (3,172) (1,337) Net cash provided by (used in) financing activities (3,662) (17,725) ----- ------ Net change in cash and cash equivalents $ 8,713 $ 7,076 ===== ======
The Navy I Partnership's cash flows from operating activities decreased by $35.8 million for the nine-months ended September 30, 2003, as compared to the same period in 2002, primarily due to the increase in net income in 2002 resulting from Edison's payment received on March 1, 2002 for revenue generated but not recognized for the period November 1, 2000 through March 26, 2001 and a decrease in amounts due from related parties. Cash used in investing activities at the Navy I Partnership increased by $1.5 million for the nine-months ended September 30, 2003, as compared to the same period in 2002, primarily due to an increase in capital expenditures during that period in 2003, partially offset by a decrease in restricted cash requirements associated with the project loan from Funding Corp. The Navy I Partnership's cash used in financing activities decreased by $35.2 million for the nine-months ended September 30, 2003, as compared to the same period in 2002, due to decreased partner distributions paid during that period in 2003. The BLM Partnership's cash flows from operating activities decreased by $22.2 million for the nine-months ended September 30, 2003, as compared to the same period in 2002, primarily due to the increase in net income resulting from Edison's payment received on March 1, 2002 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 increased by $1.4 million for the nine-months ended September 30, 2003, as compared to the same period in 2002, primarily due to an increase in capital expenditures during that period in 2003 partially offset by a decrease in restricted cash requirements associated with the project loan from Funding Corp. The BLM Partnership's cash used in financing activities decreased by $27.5 million for the nine-months ended September 30, 2003, as compared to the same period in 2002, due to decreased partner distributions paid during that period in 2003. 31 The Navy II Partnership's cash flows from operating activities decreased by $10.6 million for the nine-months ended September 30, 2003, as compared to the same period in 2002, primarily due to the increase in net income resulting from Edison's payment received on March 1, 2002 for revenue generated but not recognized for the period November 1, 2000 through March 26, 2001, partially offset by a decrease in trade payables. Cash used in investing activities at the Navy II Partnership increased by $1.8 million for the nine-months ended September 30, 2003, as compared to the same period in 2002, primarily due to an increase in capital expenditures partially offset by a decrease in restricted cash requirements associated with the project loan from Funding Corp. The Navy II Partnership's cash used in financing activities decreased by $14.1 million for the nine-months ended September 30, 2003, as compared to the same period in 2002, due to decreased partner distributions paid during that period in 2003. Item 3. Control and Procedures The Registrant's Chief Executive Officer and Chief Financial Officer (the Registrant's principal executive officer and principal financial officer, respectively) have concluded, based on their evaluation as of September 30, 2003, that the design and operation of the Registrant's "disclosure controls and procedures" (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act") are effective to ensure that information required to be disclosed by the Registrant in the reports filed or submitted by the Registrant under the Exchange Act is accumulated, recorded, processed, summarized and reported to the Registrant's management, including the Registrant's principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding whether or not disclosure is required. During the quarter ended September 30, 2003, there were no changes in the Registrant's "internal controls over financial reporting" (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Registrant's internal controls over financial reporting. 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. 32 ITEM 4. Submission of Matters to a Vote of Security Holders None. 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. 33
COSO PARTNERSHIPS UNAUDITED CONDENSED COMBINED BALANCE SHEETS (Dollars in thousands) September 30, December 31, 2003 2002 Assets: Cash and cash equivalents.................................................... $ 36,974 $ 6,462 Restricted cash and investments.............................................. 43,830 46,193 Accounts receivable, net..................................................... 35,102 21,346 Prepaid expenses and other assets............................................ 4,103 3,549 Amounts due from related parties............................................. 6,308 6,516 Property, plant and equipment, net........................................... 385,189 388,358 Power purchase agreements, net............................................... 43,575 47,336 Investments and advances..................................................... 12,286 12,508 Deferred financing costs, net................................................ 4,921 5,512 ------- ------- $ 572,288 $ 537,780 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities..................................... $ 9,489 $ 10,486 Amounts due to related parties............................................... 33,706 25,415 Other liabilities............................................................ 19,203 13,276 Project loans................................................................ 270,152 281,231 ------- ------- 332,550 330,408 Partners' capital............................................................... 239,738 207,372 ------- ------- $ 572,288 $ 537,780 ======= =======
See accompanying notes to the unaudited condensed combined financial statements. 34
COSO PARTNERSHIPS UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS (Dollars in thousands) Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2003 2002 2003 2002 Revenue: Energy revenues.................................... $ 28,329 $ 27,951 $ 82,215 $ 176,835 Capacity revenues.................................. 24,239 24,239 38,510 44,044 ------ ------ ------- ------- Total revenue............................... 52,568 52,190 120,725 220,879 Operating expenses: Plant operating expenses........................... 8,113 9,057 23,309 23,368 Royalty expense.................................... 8,976 9,832 19,461 18,887 Depreciation and amortization...................... 7,618 8,800 22,839 29,768 ----- ------ ------ ------ Total operating expenses.................... 24,707 27,689 65,609 72,023 Operating income............................ 27,861 24,501 55,116 148,856 Other (income)/expenses: Interest and other income.......................... (321) (640) (1,081) (3,712) Interest expense................................... 6,145 6,658 18,759 20,376 Amortization of deferred financing costs........... 198 198 591 591 ----- ----- ------ ------ Total other expenses........................ 6,022 6,216 18,269 17,255 ----- ----- ------ ------ Income before cumulative effect of change in accounting principle............................... 21,839 18,285 36,847 131,601 Cumulative effect of change in accounting principle.......................................... --- --- 4,481 --- ------ ------ ------ ------- Net income.................................. $ 21,839 $ 18,285 $ 32,366 $ 131,601 ====== ====== ====== =======
See accompanying notes to the unaudited condensed combined financial statements. 35
COSO PARTNERSHIPS UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS (Dollars in thousands) Nine-Months Nine-Months Ended Ended September 30, September 30, 2003 2002 Net cash provided by (used in) operating activities.... $ 53,930 $ 122,607 Net cash provided by (used in) investing activities.... (12,339) (7,557) Net cash provided by (used in) financing activities.... (11,079) (87,861) ------ ------ Net change in cash and cash equivalents................ $ 30,512 $ 27,189 ====== ====== Supplemental cash flow disclosure: Cash paid for interest............................ $ 12,726 $ 13,710 ====== ======
See accompanying notes to the unaudited condensed combined financial statements. 36 COSO PARTNERSHIPS NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS (Dollars in thousands) (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. 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 nine-months ended September 30, 2002, the Coso Partnerships recognized revenue for energy delivered from November 1, 2000 through March 26, 2001 of $112.4 million. (3) Reclassifications Certain balances in prior years have been reclassified to conform to the presentation adopted in the current year. (4) New Accounting Pronouncements In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations. This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs and amends SFAS No. 19, Financial Accounting and Reporting by Oil and Gas Producing Companies. The Statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, and that the associated asset retirement costs be capitalized as part of the carrying amount of the long-lived asset. The Statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. As a result of the adoption of SFAS No. 143, the Coso Partnerships was required to recognize a liability of $5,292, a net asset of $811 and a loss from the cumulative effect of a change in accounting principle of $4,481 as of January 1, 2003. In 2003 additional depreciation and accretion expense resulting from adoption of SFAS No. 143 is estimated to be $675. In January 2003, the FASB issued Interpretation No. 46, (FIN 46) Consolidation of Variable Interest Entities, an interpretation of ARB No. 51. This Interpretation addresses the consolidation by business enterprises of variable interest entities as defined in the Interpretation. The Interpretation was originally intended to be applied immediately to variable interests in variable interest entities created after January 31, 2003, and in the first fiscal year or interim period beginning after June 15, 2003 to enterprises that hold a variable interest in variable interest entities created before February 1, 2003. On September 17, 2003, the FASB instructed the FASB staff to prepare a FASB Staff Position to defer the effective date of Interpretation 46 until the end of the first interim or annual period ending after December 15, 2003, for certain interests held by a public entity in certain variable interest entities. 37 At that FASB meeting, the FASB also decided to address proposed modifications to FIN 46 in an Interpretation of that document. Those modifications would alter how companies identify variable interest entities and modify the determination of which party should consolidate them (the primary beneficiary). The effect of the application of this Interpretation on Coso Partnership's financial statements is currently being evaluated and the expected impact has not yet been determined. 38 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 Certification of Chief Executive Officer Certification of Chief Financial Officer 99.1 Certification of Chief Executive Officer 99.2 Certification of Chief Financial Officer (b) Reports on Form 8-K None 39 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 9 - MOS --- --- --- --- X YEAR YEAR --- --- (for annual report filings) OTHER OTHER ---- ---- FISCAL YEAR END (example: DEC-31-1997) Dec - 31 - 2002 DEC - 31 - 2003 --------------- --------------- mmm - dd - yyyy mmm - dd - yyyy PERIOD START (example: JAN-01-1997) Jan - 01 - 2002 JAN - 01 - 2003 --------------- --------------- mmm - dd - yyyy mmm - dd - yyyy PERIOD END (example: SEP-30-1997) Dec - 31 - 2002 SEP - 30 - 2003 --------------- --------------- 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 9 MOS ---- ----- CASH 0 0 SECURITIES 0 0 RECEIVABLES 282,361 277,317 ALLOWANCES 0 0 INVENTORY 0 0 CURRENT ASSETDS 1,130 7,165 PP&E 0 0 DEPRECIATION 0 0 TOTAL ASSETS 282,361 277,317 CURRENT LIABILITIES 1,130 7,165 BONDS 281,231 270,152 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 282,361 277,317 SALES 0 0 TOTAL REVENUES 26,931 18,761 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 0 0 LOSS PROVISION 0 0 INTEREST EXPENSES 26,931 18,761 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 9 - MOS --- --- --- --- X YEAR YEAR --- --- (for annual report filings) OTHER OTHER ---- ---- FISCAL YEAR END (example: DEC-31-1997) Dec - 31 - 2002 DEC - 31 - 2003 --------------- --------------- mmm - dd - yyyy mmm - dd - yyyy PERIOD START (example: JAN-01-1997) Jan - 01 - 2002 JAN - 01 - 2003 --------------- --------------- mmm - dd - yyyy mmm - dd - yyyy PERIOD END (example: SEP-30-1997) Dec - 31 - 2002 SEP - 30 - 2003 --------------- --------------- 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 9 MOS ---- ----- CASH 4,215 11,786 SECURITIES 28,692 27,094 RECEIVABLES 8,621 13,147 ALLOWANCES 0 0 INVENTORY 0 0 CURRENT ASSETS 13,904 26,209 PP&E 234,442 242,563 DEPRECIATION 98,129 105,326 TOTAL ASSETS 195,072 205,694 CURRENT LIABILITIES 6,231 7,456 BONDS 110,955 105,560 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 195,072 205,694 SALES 92,065 47,709 TOTAL REVENUES 93,639 47,864 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 33,376 26,475 LOSS PROVISION 0 0 INTEREST EXPENSES 11,151 7,613 INCOME PRETAX 0 0 INCOME TAX 0 0 INCOME CONTINUING 0 0 DISCONTINUED 0 0 EXTRAORDINARY 0 0 CHANGES 0 1,780 NET INCOME 49,112 11,996 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 9 - MOS --- --- --- --- X YEAR YEAR --- --- (for annual report filings) OTHER OTHER ---- ---- FISCAL YEAR END (example: DEC-31-1997) Dec - 31 - 2002 DEC - 31 - 2003 --------------- --------------- mmm - dd - yyyy mmm - dd - yyyy PERIOD START (example: JAN-01-1997) Jan - 01 - 2002 JAN - 01 - 2003 --------------- --------------- mmm - dd - yyyy mmm - dd - yyyy PERIOD END (example: SEP-30-1997) Dec - 31 - 2002 SEP - 30 - 2003 --------------- --------------- 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 9 MOS ---- ----- CASH 1,423 15,651 SECURITIES 6,646 7,244 RECEIVABLES 7,102 11,384 ALLOWANCES 0 0 INVENTORY 0 0 CURRENT ASSETS 9,895 28,648 PP&E 247,912 250,732 DEPRECIATION 112,059 118,330 TOTAL ASSETS 174,871 189,589 CURRENT LIABILITIES 27,961 30,995 BONDS 89,875 87,853 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 174,871 189,589 SALES 81,252 37,166 TOTAL REVENUES 82,707 37,915 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 28,526 18,268 LOSS PROVISION 0 0 INTEREST EXPENSES 8,822 6,223 INCOME PRETAX 0 0 INCOME TAX 0 0 INCOME CONTINUING 0 0 DISCONTINUED 0 0 EXTRAORDINARY 0 0 CHANGES 0 924 NET INCOME 45,359 12,500 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 9 - MOS --- --- --- --- X YEAR YEAR --- --- (for annual report filings) OTHER OTHER ---- ---- FISCAL YEAR END (example: DEC-31-1997) Dec - 31 - 2002 DEC - 31 - 2003 --------------- --------------- mmm - dd - yyyy mmm - dd - yyyy PERIOD START (example: JAN-01-1997) Jan - 01 - 2002 JAN - 01 - 2003 --------------- --------------- mmm - dd - yyyy mmm - dd - yyyy PERIOD END (example: SEP-30-1997) Dec - 31 - 2002 SEP - 30 - 2003 --------------- --------------- 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 9 MOS ---- ----- CASH 824 9,537 SECURITIES 10,855 9,492 RECEIVABLES 13,136 18,428 ALLOWANCES 0 0 INVENTORY 0 0 CURRENT ASSETS 15,071 29,179 PP&E 210,548 215,706 DEPRECIATION 94,356 100,156 TOTAL ASSETS 168,834 178,554 CURRENT LIABILITIES 2,706 6,293 BONDS 80,401 76,739 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 168,834 178,554 SALES 79,592 35,850 TOTAL REVENUES 80,486 36,027 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 29,428 20,866 LOSS PROVISION 0 0 INTEREST EXPENSES 7,755 5,514 INCOME PRETAX 0 0 INCOME TAX 0 0 INCOME CONTINUING 0 0 DISCONTINUED 0 0 EXTRAORDINARY 0 0 CHANGES 0 1,777 NET INCOME 43,303 7,870 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)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002 I, James D. Bishop, Sr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Caithness Coso Funding Corp., Coso Finance Partners, Coso Energy Developers, and Coso Power Developers (collectively, the "Registrant"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report; 4. The Registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the Registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant's ability to record, process, summarize and report financial data and have identified for the Registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal controls; and 6. The Registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 13, 2003 Caithness Coso Funding Corp. a Delaware Corporation By: /S/ JAMES D. BISHOP, SR. ------------------------ James D. Bishop, Sr. Director, Chairman & Chief Executive Officer CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002 I, Christopher T. McCallion, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Caithness Coso Funding Corp., Coso Finance Partners, Coso Energy Developers, and Coso Power Developers (collectively, the "Registrant"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report; 4. The Registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the Registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant's ability to record, process, summarize and report financial data and have identified for the Registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal controls; and 6. The Registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 13, 2003 Caithness Coso Funding Corp. a Delaware Corporation By: /S/CHRISTOPHER T. MCCALLION --------------------------- Christopher T. McCallion Executive Vice President & Chief Financial Officer Principal Financial & Accounting Officer Exhibit 99.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Caithness Coso Funding Corp., Coso Finance Partners, Coso Energy Developers, and Coso Power Developers (collectively, the "Registrant") on Form 10-Q for the period ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James D. Bishop, Sr., Chief Executive Officer of the Registrant, certify, to the best of my knowledge and belief, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Registrant. Date: November 13, 2003 Caithness Coso Funding Corp. a Delaware Corporation By: /S/ JAMES D. BISHOP, SR. ------------------------ James D. Bishop, Sr. Director, Chairman & Chief Executive Officer Exhibit 99.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Caithness Coso Funding Corp., Coso Finance Partners, Coso Energy Developers, and Coso Power Developers (collectively, the "Registrant") on Form 10-Q for the period ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Christopher T. McCallion, Chief Financial Officer of the Registrant, certify, to the best of my knowledge and belief, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Registrant. Date: November 13, 2003 Caithness Coso Funding Corp. a Delaware Corporation By: /S/ CHRISTOPHER T. MCCALLION ---------------------------- Christopher T. McCallion Executive Vice President & Chief Financial Officer Principal Financial & Accounting Officer 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. CAITHNESS COSO FUNDING CORP., a Delaware corporation Date: November 13, 2003 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 Date: November 13, 2003 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 Date: November 13, 2003 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 Date: November 13, 2003 By: /S/ CHRISTOPHER T. MCCALLION ---------------------------- Christopher T. McCallion Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----