10-Q 1 sept10q02.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, 2002 ------------------ or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _______________to________________ Commission File Number: 333-83815 --------- Caithness Coso Funding Corp. ---------------------------- (Exact name of registrant as specified in its charter) Delaware 94-3328762 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Coso Finance Partners California 68-0133679 Coso Energy Developers California 94-3071296 Coso Power Developers California 94-3102796 --------------------- ---------- ---------- (Exact names of Registrants (State or other (I.R.S. Employer as specified in their charters) jurisdiction of Identification No.) incorporation or organization) 565 Fifth Avenue, 29th Floor, New York, New York 10017-2478 ------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (212) 921-9099 -------------- (Registrant's telephone number, including area code) Not Applicable -------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 300 shares in Caithness Coso Funding Corp. as of November 12, 2002 ------------------------------------------------------------------ CAITHNESS COSO FUNDING CORP. Form 10-Q For the Quarter Ended September 30, 2002 PART I. FINANCIAL INFORMATION Page No. ITEM 1. Financial Statements Caithness Coso Funding Corp. Unaudited condensed balance sheets at September 30, 2002 and December 31, 2001 4 Unaudited condensed statements of operations for the three-months ended September 30, 2002, the three-months ended September 30, 2001, the nine-months ended September 30, 2002, and the nine- months ended September 30, 2001 5 Unaudited condensed statements of cash flows for the nine-months ended September 30, 2002, and the nine-months ended September 30, 2001 6 Notes to the unaudited condensed financial statements 7 Coso Finance Partners Unaudited condensed balance sheets at September 30, 2002 and December 31, 2001 8 Unaudited condensed statements of operations for the three-months ended September 30, 2002, the three-months ended September 30, 2001, the nine-months ended September 30, 2002, and the nine- months ended September 30, 2001 9 Unaudited condensed statements of cash flows for the nine-months ended September 30, 2002, and the nine-months ended September 30, 2001 10 Notes to the unaudited condensed financial statements 11 Coso Energy Developers Unaudited condensed balance sheets at September 30, 2002 and December 31, 2001 12 Unaudited condensed statements of operations for the three-months ended September 30, 2002, the three-months ended September 30, 2001, the nine-months ended September 30, 2002, and the nine- months ended September 30, 2001 13 Unaudited condensed statements of cash flows for the nine-months ended September 30, 2002, and the nine-months ended September 30, 2001 14 Notes to the unaudited condensed financial statements 15 2 Coso Power Developers Unaudited condensed balance sheets at September 30, 2002 and December 31, 2001 16 Unaudited condensed statements of operations for the three-months ended September 30, 2002, the three-months ended September 30, 2001, the nine-months ended September 30, 2002, and the nine- months ended September 30, 2001 17 Unaudited condensed statements of cash flows the nine-months ended September 30, 2002, and the nine-months ended September 30, 2001 18 Notes to the unaudited condensed financial statements 19 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 20 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 30 ITEM 2. Change in Securities and Use of Proceeds 30 ITEM 3. Defaults upon Senior Securities 30 ITEM 4. Submission of Matters to a Vote of Security Holders 30 ITEM 5. Other Information 30 Supplemental condensed combined financial information for the Coso Partnerships Unaudited condensed combined balance sheets at September 30, 2002 and December 31, 2001 31 Unaudited condensed combined statements of operations for the three-months ended September 30, 2002, the three-months ended September 30, 2001, the nine-months ended September 30, 2002, and the nine-months ended September 30, 2001 32 Unaudited condensed combined statements of cash flows for the nine-months ended September 30, 2002, and the nine-months ended September 30, 2001 33 Notes to the unaudited condensed combined financial statements 34 ITEM 6. Exhibits and Reports on Form 8-K 35 3 CAITHNESS COSO FUNDING CORP. UNAUDITED CONDENSED BALANCE SHEETS (Dollars in thousands)
September 30, December 31, 2002 2001 (Note) Assets: Accrued interest receivable....................... $ 7,883 $ 1,225 Project loan to Coso Finance Partners............. 117,911 122,550 Project loan to Coso Energy Developers............ 93,700 96,250 Project loan to Coso Power Developers............. 82,680 84,200 ------- ------- $ 302,174 $ 304,225 ======= ======= Liabilities and Stockholders' Equity: Senior secured notes: Accrued interest payable........................ $ 7,883 $ 1,225 9.05% notes due 2009............................ 294,291 303,000 ------- ------- 302,174 304,225 Stockholders' Equity................................ --- --- ------- ------- $ 302,174 $ 304,225 ======= =======
Note: The condensed balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. See accompanying notes to the unaudited condensed financial statements 4 CAITHNESS COSO FUNDING CORP. UNAUDITED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands)
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2002 2001 2002 2001 Interest income................ $ 6,659 $ 7,105 $ 20,369 $ 21,703 Interest expense............... (6,659) (7,105) (20,369) (21,703) ------- ------- -------- -------- 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, 2002 2001 Net cash provided by (used in) investing activities....... $ 2,051 $ 4,136 Net cash provided by (used in) financing activities....... (2,051) (4,136) ------ ------ Net change in cash and cash equivalents.................. $ --- $ --- ====== ====== Supplemental cash flow disclosure: Cash paid for interest................................. $ 13,710 $ 14,631 ====== ======
See accompanying notes to the unaudited condensed financial statements 6 CAITHNESS COSO FUNDING CORP. NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS (1) Organization and Operations Caithness Coso Funding Corp. (Funding Corp.), which was incorporated on April 22, 1999, is a single-purpose Delaware corporation formed to issue senior secured notes (Notes) for its own account and as an agent acting on behalf of Coso Finance Partners (CFP), Coso Energy Developers (CED), and Coso Power Developers (CPD), collectively, the "Partnerships." The Partnerships are California general partnerships. On May 28, 1999, Funding Corp. sold $413,000 of 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 Partnerships, and the Partnerships have jointly and severally guaranteed repayment on a senior basis. Payment of the Notes is provided for by payments made by the Partnerships under their respective project loans. Funding Corp. has no material assets other than the loans, and the accrued interest thereon, that have been made to the Partnerships. Also, Funding Corp. does not conduct any business, other than issuing the senior secured notes and making the loans to the Partnerships. (2) Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules. Management believes that the disclosures are adequate to make the information presented not misleading when read in conjunction with the financial statements and the notes thereto in the audited financial statements for the year ended December 31, 2001. The financial information herein presented reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for interim periods presented. The results for the interim periods are not necessarily indicative of results to be expected for the full year. 7 COSO FINANCE PARTNERS UNAUDITED CONDENSED BALANCE SHEETS (Dollars in thousands)
September 30, December 31, 2002 2001 (Note) Assets: Cash and cash equivalents................................................ $ 10,011 $ 264 Restricted cash and investments.......................................... 24,239 21,325 Accounts receivable, net................................................. 12,108 3,454 Prepaid expenses & other assets.......................................... 1,546 650 Amounts due from related parties......................................... 2,023 9,362 Property, plant & equipment, net......................................... 134,804 140,437 Power purchase agreement, net............................................ 10,232 11,093 Investment in New CLPSI Company, LLC..................................... 3,960 4,005 Deferred financing costs, net............................................ 2,287 2,524 ----- ----- $ 201,210 $ 193,114 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities................................. $ 17,714 $ 17,578 Amounts due to related parties........................................... 3,198 561 Project loans............................................................ 117,911 122,550 ------- ------- 138,823 140,689 62,387 52,425 ------- ------- Partners' capital........................................................... $ 201,210 $ 193,114 ======= =======
Note: The condensed balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. See accompanying notes to the unaudited condensed financial statements 8 COSO FINANCE PARTNERS UNAUDITED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands)
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2002 2001 2002 2001 Revenue: Energy revenues.............................. $ 11,571 $ 7,666 $ 64,683 $ 33,746 Capacity revenues............................ 8,190 8,190 14,904 11,955 Interest and other income.................... 136 977 1,655 2,155 ------ ------ ------ ------ Total revenue......................... 19,897 16,833 81,242 47,856 Operating expenses: Plant operating expenses..................... 2,811 2,055 7,379 6,629 Royalty expense.............................. 5,762 7,005 11,393 13,759 Depreciation and amortization................ 3,049 2,647 8,126 7,687 ------ ------ ------ ------ Total operating expenses.............. 11,622 11,707 26,898 28,075 Operating income...................... 8,275 5,126 54,344 19,781 Other expenses: Interest expense............................. 2,668 2,896 8,216 8,851 Amortization of deferred financing costs..... 79 130 237 390 ------ ------ ------ ------ Total other expenses.................. 2,747 3,026 8,453 9,241 Net income............................ $ 5,528 $ 2,100 $ 45,891 $ 10,540 ====== ====== ====== ======
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, 2002 2001 Net cash provided by (used in) operating activities.... $ 54,861 $ 20,461 Net cash provided by (used in) investing activities.... (4,546) (1,867) Net cash provided by (used in) financing activities.... (40,568) (8,381) ------ ------ Net change in cash and cash equivalents................ $ 9,747 $ 10,213 ====== ====== Supplemental cash flow disclosure: Cash paid for interest.......................... $ 5,545 $ 5,968 ====== ======
See accompanying notes to the unaudited condensed financial statements 10 COSO FINANCE PARTNERS NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS (1) Organization and Operation Coso Finance Partners (CFP), a general partnership, is engaged in the operation of a 80 MW power generation facility located at the China Lake Naval Air Weapons Station, China Lake California. CFP sells all electricity produced to Southern California Edison (Edison) under a 24-year power purchase contract expiring in 2011. (2) Basis of Presentation The accompanying unaudited condensed combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules. Management believes that the disclosures are adequate to make the information presented not misleading when read in conjunction with the financial statements and the notes thereto in the audited financial statements for the year ended December 31, 2001. The financial information herein presented reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for interim periods presented. The results for the interim periods are not necessarily indicative of results to be expected for the full year. CFP has experienced significant quarterly fluctuations in operating results and it expects that these fluctuations in energy revenues, expenses and net income will continue. (3) Accounts Receivable and Revenue Recognition Due to the uncertainty surrounding Edison's ability to make payment on past due amounts, collection was not reasonably assured and CFP had not recognized revenue from Edison for energy delivered during the period November 1, 2000 through March 26, 2001. The provision for doubtful accounts previously recorded by CFP of $21.6 million for the nine-months ended September 30, 2001, has been reclassified as a reduction of revenue to conform with the 2002 presentation. On March 1, 2002, Edison reached certain financing milestones and paid CFP for revenue generated, but not recognized for the period November 1, 2000 through March 26, 2001. For the nine-month period 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 reclassifications have been made to the 2001 statements of operations to conform to the 2002 presentation. 11 COSO ENERGY DEVELOPERS UNAUDITED CONDENSED BALANCE SHEETS (Dollars in thousands)
September 30, December 31, 2002 2001 (Note) Assets: Cash and cash equivalents.............................................. $ 10,416 $ --- Restricted cash and investments........................................ 8,420 7,368 Accounts receivable, net............................................... 11,172 2,939 Prepaid expenses and other assets...................................... 1,946 849 Amounts due from related parties....................................... 426 401 Property, plant and equipment, net..................................... 137,708 148,417 Power purchase agreement, net.......................................... 17,633 18,437 Investment in Coso Transmission Line Partners........................ 2,701 2,738 Investment in New CLPSI Company, LLC................................... 665 789 Deferred financing costs, net.......................................... 1,849 2,040 ------- ------- $ 192,936 $ 183,978 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities............................... $ 2,164 $ 7,699 Amounts due to related parties........................................ 28,391 27,267 Project loans.......................................................... 93,700 96,250 ------ ------ 124,255 131,216 68,681 52,762 Partners' capital......................................................... ------ ------ $ 192,936 $ 183,978 ======= =======
Note: The condensed balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. See accompanying notes to the unaudited condensed financial statements 12 COSO ENERGY DEVELOPERS UNAUDITED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands)
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2002 2001 2002 2001 Revenue: Energy revenues.............................. $ 8,589 $ 6,053 $ 56,724 $ 25,510 Capacity revenues............................ 8,002 8,002 14,537 11,682 Interest and other income.................... 267 1,040 1,169 2,877 ------ ------ ------ ------ Total revenue......................... 16,858 15,095 72,430 40,069 Operating expenses: Plant operating expenses..................... 3,328 2,384 8,581 7,592 Royalty expense.............................. 1,482 967 2,157 4,993 Depreciation and amortization................ 3,903 4,009 12,135 11,884 ------ ------ ------ ------ Total operating expenses.............. 8,713 7,360 22,873 24,469 Operating income...................... 8,145 7,735 49,557 15,600 Other expenses: Interest expense............................. 2,120 2,225 6,477 6,733 Amortization of deferred financing costs..... 64 79 191 238 ------ ------ ------ ------ Total other expenses.................. 2,184 2,304 6,668 6,971 Net income............................ $ 5,961 $ 5,431 $ 42,889 $ 8,629 ====== ====== ====== ======
See accompanying notes to the unaudited condensed financial statements 13 COSO ENERGY DEVELOPERS UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Nine-Months Nine-Months Ended Ended September 30, September 30, 2002 2001 Net cash provided by (used in) operating activities.... $ 41,610 $ 21,413 Net cash provided by (used in) investing activities.... (1,674) (3,174) Net cash provided by (used in) financing activities.... (29,520) (5,885) ------ ------ $ 10,416 $ 12,354 Net change in cash and cash equivalents................ ====== ====== Supplemental cash flow disclosure: Cash paid for interest............................ $ 4,355 $ 4,514 ====== ======
See accompanying notes to the unaudited condensed financial statements 14 COSO ENERGY DEVELOPERS NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS (1) Organization and Operation Coso Energy Developers (CED), a general partnership, is engaged in the operation of a 80 MW power generation facility located at the Coso Hot Springs, China Lake California. CED sells all electricity produced to Southern California Edison (Edison) under a 30-year power purchase contract expiring in 2019. (2) Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules. Management believes that the disclosures are adequate to make the information presented not misleading when read in conjunction with the financial statements and the notes thereto in the audited financial statements for the year ended December 31, 2001. The financial information herein presented reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for interim periods presented. The results for the interim periods are not necessarily indicative of results to be expected for the full year. CED has experienced significant quarterly fluctuations in operating results and it expects that these fluctuations in energy revenues, expenses and net income will continue. (3) Accounts Receivable and Revenue Recognition Due to the uncertainty surrounding Edison's ability to make payment on past due amounts, collection was not reasonably assured and CED had not recognized revenue from Edison for energy delivered during the period November 1, 2000 through March 26, 2001. The provision for doubtful accounts previously recorded by CED of $21.8 million for the nine-months ended September 30, 2001, has been reclassified as a reduction of revenue to conform with the 2002 presentation. On March 1, 2002, Edison reached certain financing milestones and paid CED for revenue generated, but not recognized for the period November 1, 2000 through March 26, 2001. For the nine-month period 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 reclassifications have been made to the 2001 statements of operations to conform to the 2002 presentation. 15 COSO POWER DEVELOPERS UNAUDITED CONDENSED BALANCE SHEETS (Dollars in thousands)
September 30, December 31, 2002 2001 (Note) Assets: Cash and cash equivalents................................................ $ 7,026 $ --- Restricted cash and investments.......................................... 6,251 5,517 Accounts receivable, net................................................. 11,486 3,210 Prepaid expenses and other assets........................................ 1,648 660 Amounts due from related parties......................................... 6,352 6,139 Property, plant and equipment, net....................................... 117,856 124,665 Power purchase agreement, net............................................ 20,725 22,820 Investment in Coso Transmission Line Partners............................ 3,316 3,398 Investment in New CLPSI Company, LLC..................................... 1,903 1,913 Deferred financing costs, net............................................ 1,573 1,736 ----- ----- $ 178,136 $ 170,058 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities................................. $ 2,842 $ 15,860 Amounts due to related parties........................................... 3,828 7,778 Project loans............................................................ 82,680 84,200 ------ ------ 89,350 107,838 Partners' capital........................................................... 88,786 62,220 ------ ------ $ 178,136 $ 170,058 ======= =======
Note: The condensed balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. See accompanying notes to the unaudited condensed financial statements 16 COSO POWER DEVELOPERS UNAUDITED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands)
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2002 2001 2002 2001 Revenue: Energy revenues................................. $ 7,791 $ 5,006 $ 55,428 $ 17,991 Capacity revenues............................... 8,047 8,047 14,603 11,745 Interest and other income....................... 237 881 888 2,135 ------ ------ ------ ------ Total revenue............................ 16,075 13,934 70,919 31,871 Operating expenses: Plant operating expenses........................ 2,918 2,360 7,408 7,210 Royalty expense................................. 2,588 2,316 5,337 8,209 Depreciation and amortization................... 1,848 3,870 9,507 11,454 ------ ------ ------ ------ Total operating expenses................. 7,354 8,546 22,252 26,873 Operating income......................... 8,721 5,388 48,667 4,998 Other expenses: Interest expense................................ 1,870 2,003 5,683 6,140 Amortization of deferred financing costs........ 55 192 163 577 ------ ------ ------ ------ Total other expenses..................... 1,925 2,195 5,846 6,717 Net income (loss)........................ $ 6,796 $ 3,193 $ 42,821 $ (1,719) ====== ====== ====== ======
See accompanying notes to the unaudited condensed financial statements 17 COSO POWER DEVELOPERS UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Nine-Months Nine-Months Ended Ended September 30, September 30, 2002 2001 Net cash provided by (used in) operating activities............. $ 26,138 $ 19,184 Net cash provided by (used in) investing activities............. (1,337) (817) Net cash provided by (used in) financing activities............. (17,775) (14,762) ------ ------ Net change in cash and cash equivalents......................... $ 7,026 $ 3,605 ====== ====== Supplemental cash flow disclosure: Cash paid for interest..................................... $ 3,810 $ 4,149 ====== ======
See accompanying notes to the unaudited condensed financial statements 18 COSO POWER DEVELOPERS NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS (1) Organization and Operation Coso Power Developers (CPD), a general partnership, is engaged in the operation of a 80 MW power generation facility located at the Coso Hot Springs, China Lake California. CPD sells all electricity produced to Southern California Edison (Edison) under a 20-year power purchase contract expiring in 2010. (2) Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules. Management believes that the disclosures are adequate to make the information presented not misleading when read in conjunction with the financial statements and the notes thereto in the audited financial statements for the year ended December 31, 2001. The financial information herein presented reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for interim periods presented. The results for the interim periods are not necessarily indicative of results to be expected for the full year. CPD has experienced significant quarterly fluctuations in operating results and it expects that these fluctuations in energy revenues, expenses and net income will continue. (3) Accounts Receivable and Revenue Recognition Due to the uncertainty surrounding Edison's ability to make payment on past due amounts, collection was not reasonably assured and CPD had not recognized revenue from Edison for energy delivered during the period November 1, 2000 through March 26, 2001. The provision for doubtful accounts previously recorded by CPD of $22.7 million for the nine-months ended September 30, 2001, has been reclassified as a reduction of revenue to conform with the 2002 presentation. On March 1, 2002, Edison reached certain financing milestones and paid CPD for revenue generated but not recognized for the period November 1, 2000 through March 26, 2001. For the nine-month period 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 reclassifications have been made to the 2001 statements of operations to conform to the 2002 presentation. 19 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Except for historical financial information contained herein, the matters discussed in this quarterly report may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and subject to the safe harbor created by the Securities Litigation Reform Act of 1995. Such statements include declarations regarding the intent, belief or current expectations of Caithness Coso Funding Corp. ("Funding Corp."), Coso Finance Partners ("the Navy I Partnership"), Coso Energy Developers ("the BLM Partnership"), and Coso Power Developers ("the Navy II 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, (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) affects of September 11, 2001, including U.S. Navy activity and (xiii) the alleged manipulation of the California energy market. General The Coso Partnerships consist of three 80MW geothermal power plants, which are referred to as Navy I, BLM and Navy II, and their transmission lines, wells, gathering systems and other related facilities. The Coso Partnerships are located near one another at the United States Naval Air Weapons Center at China Lake, California. The Navy I Partnership owns Navy I and its related facilities. The BLM Partnership owns BLM and its related facilities. The Navy II Partnership owns Navy II and its related facilities. Affiliates of Caithness Corporation and CalEnergy Company, Inc. ("CalEnergy"), which is now known as MidAmerican Energy Holdings Company, formed the Coso Partnerships in the 1980s to develop, construct, own and operate the Coso Partnerships. On February 25, 1999 Caithness Acquisition Company, LLC, (CAC) purchased all of CalEnergy's interests in the Coso Partnerships for $205.0 million in cash, plus the assumption of CalEnergy's and its affiliates' share of debt outstanding at the Coso Partnerships which then totaled approximately $67.0 million. Each Coso Partnership sells 100% of the electrical energy generated at its plant to Edison under a long-term Standard Offer No.4 power purchase agreement. Each power purchase agreement expires after the final maturity date of the 9.05% Series B Senior Secured Notes issued by Funding Corp. Each Coso Partnership is entitled to the following payments under its power purchase agreement: * Capacity payments for being able to produce electricity at certain levels. Capacity payments are fixed throughout the life of each power purchase agreement; * Capacity bonus payments if the Coso Partnership is able to produce electricity above a specified higher level. The maximum annual capacity bonus payment available is also fixed throughout the life of each power purchase agreement; and 20 * Energy payments which are based on the amount of electricity the Coso Partnership's plant actually produces. Energy payments were fixed for the first ten years of firm operation under each power purchase agreement. After the first ten years of firm operation and until a Coso Partnership's power purchase agreement expires, Edison makes energy payments to the Coso Partnership based on Edison's avoided cost of energy. Edison's avoided cost of energy is Edison's cost to generate electricity if Edison were to produce it itself or buy it from another power producer rather than buy it from the Coso Partnerships. This avoided cost has now been fixed for a set period as described below. The power purchase agreements will expire as follows: Navy I Partnership in August 2011, the BLM Partnership in March 2019, and the Navy II Partnership in January 2010. The fixed energy price period expired in August 1997 for the Navy I Partnership, in March 1999 for the BLM Partnership and in January 2000 for the Navy II Partnership. 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 receive a fixed avoided cost of energy rate of 5.37 cents per kWh for five (5) years. Subsequent to the five-year period, Edison will be required to make energy payments to the Coso Partnerships based on its avoided cost of energy until each partnership's power purchase agreement expires. 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 avoided cost of 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. The average avoided cost of energy paid to the Coso Partnerships for the nine-month period ended September 30, 2002 was 4.43 cents per kWh, as compared to 8.94 cents per kWh for the nine-months ended September 30, 2001. In 1994, the Coso Partnerships implemented a steam-sharing program under the Coso Geothermal Exchange Agreement. The purpose of the steam-sharing program is to enhance the management of the Coso geothermal resource and to optimize the resource's overall benefits to the Coso Partnerships by transferring steam among the Coso Partnerships. Under the steam sharing program, the partnership receiving the steam transfer splits revenue earned from electricity generated with the partnership that transferred the steam. The Coso Partnerships are required to make royalty payments to the U.S. Navy and the Bureau of Land Management. The Navy I Partnership pays a royalty for Unit I through reimbursement of electricity supplied to the U.S. Navy by Edison from electricity generated at the Navy I plant. The reimbursement is based on a pricing formula that is included in the U.S. Navy Contract. This formula is largely based upon the tariff rates charged by Edison, which have recently been increased by the California Public Utilities Commission (CPUC), and is subject to future revision. The Navy I Partnership Unit 1 contract energy pricing has remained unchanged for several years based on a mutual agreement between the U.S. Navy and the Navy I Partnership since one of indecies utilized in the calculation no longer existed. Discussions with the U.S. Navy are continuing to re-adjust the formula for subsequent periods. In November 2001, a modification to the calculation of the reimbursement pricing formula was made to the U.S. Navy Contract resulting in a reduction of accrued royalties of $6.5 million, which was agreed to by the U.S. Navy. The parties have now agreed to a replacement index and a true-up calculation has been developed 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 their 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 21 $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 on behalf of the Coso Partnerships who have jointly, severally, and unconditionally guaranteed repayment of the senior secured notes. On May 28, 1999, Funding Corp. issued $110.0 million of 6.80% senior secured notes, which were paid off on December 15, 2001, and $303.0 million of 9.05% senior secured notes, which have payments due at various dates through December 15, 2009. The proceeds from the notes were loaned to the Coso Partnerships and are payable to Funding Corp. from payments of principal and interest on the notes. Funding Corp. does not conduct any other material operations apart from issuing the notes. Under the depository agreement with the trustee for the notes, the Coso Partnerships established accounts with a depository and pledged those accounts as security for the benefit of the holders of the senior secured notes. All amounts deposited with the depository are, at the direction of the Coso Partnerships, invested by the depository in permitted investments. All revenues or other proceeds actually received by the Coso Partnerships are deposited in a revenue account and withdrawn upon receipt by the depository of a certificate from the relevant Coso Partnership detailing the amounts to be paid from funds in its respective revenue account. Periodic increases in natural gas prices and imbalances between supply and demand, among other factors, have at times led to significant increases in wholesale electricity prices in California. During those periods, Edison had fixed tariffs with their retail customers that were significantly below the wholesale prices it paid in California. This resulted in significant under-recoveries by Edison of its electricity purchase costs. On January 16, 2001, Edison announced that it was temporarily suspending payments for energy provided, including the energy provided by the Coso Partnerships, pending a permanent solution to its liquidity crisis. This cash flow shortfall has adversely affected Edison's liquidity and in turn it did not pay the Coso Partnerships for energy delivered from November 2000 through March 26, 2001. As of December 31, 2001, the Coso Partnerships were unable to determine the time frame during which any future payments would be received. Due to the uncertainty surrounding Edison's ability to make payment on past due amounts, collection was not reasonably assured and the Navy I, BLM and Navy II Partnerships did not recognize revenue from Edison for energy delivered during the period from November 1, 2000 through March 26, 2001. The provision for doubtful accounts previously recorded by the Navy I, BLM and Navy II Partnerships of $21.6 million, $21.8 million and $22.7 million, respectively, for the nine-months ended September 30, 2001 has been reclassified as a reduction of revenue to conform with the 2002 presentation. Pursuant to a CPUC order, Edison resumed making payments to the Coso Partnerships beginning with power generated on March 27, 2001. Edison also made a payment equal to 10% of the unpaid balance for power generated from November 1, 2000 to March 26, 2001, and continued to pay interest on the outstanding amount at 7% per annum. That payment, which was received during the nine-months ended September 30, 2001, was made pursuant to the Agreement between Edison and the Coso Partnerships described above and was also reclassified as additional revenue to conform with the 2002 presentation. On March 1, 2002, Edison reached certain financing milestones and paid the Coso Partnerships in full for energy generated between November 1, 2000 and March 26, 2001 for which no revenue was recognized during that period. For the nine-month period ended September 30, 2002, the Navy I, BLM and Navy II Partnerships recognized revenue for energy delivered from November 1, 2000 through March 26, 2001 of $37.3 million, $37.1 million and $38.0 million, respectively. 22 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 Supreme Court of California. The appeals court stated that if the settlement Agreement violated California state law, then the appeals court would be required to void the stipulated judgment. Pending a response from the California Supreme Court the settlement Agreement remains in full force and effect. On March 27, 2001, the CPUC instituted a new formula to measure Edison's short run avoided costs ("SRAC"), which is the basis for a portion of the payments that Edison makes to the Coso Partnerships under their respective power purchase agreement. In a decision dated September 4, 2002, the California Court of Appeal ruled that the CPUC erred in not considering the possible retroactive application of the revised SRAC formula to deliveries beginning on December 1, 2000. The California Court of Appeal remanded the matter back to the CPUC to make such a consideration. Edison filed a petition for a writ of review of the 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 Appeal 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. The Coso Partnerships plan to appeal this decision in the California Court of Appeal. Capacity Utilization For purposes of consistency in financial presentation, the plant capacity factor for each of the Coso Partnerships is based on a nominal capacity amount of 80MW (240MW in the aggregate). The Coso Partnerships have a gross operating capacity that allows for the production of electricity in excess of their nominal capacity amounts. Utilization of this operating margin is based upon a number of factors and can be expected to vary throughout the year under normal operating conditions. The following data includes the operating capacity factor, capacity and electricity production (in kWh) for each Coso Partnership on a stand-alone basis:
Three-Months Nine-Months Ended Ended September 30 September 30 2002 2001 2002 2001 ---- ---- ---- ---- Navy I Partnership (stand alone) Operating capacity factor 104.8% 110.1% 104.6% 107.9% Capacity (MW) (average) 83.81 88.10 83.69 86.29 kWh produced (000s) 185,058 194,525 548,312 565,345 BLM Partnership (stand alone) Operating capacity factor 92.6% 99.3% 93.5% 103.2% Capacity (MW) (average) 74.09 79.45 74.83 82.55 kWh produced (000s) 163,586 175,417 490,280 540,837 Navy II Partnership (stand alone) Operating capacity factor 96.4% 102.0% 99.8% 103.5% Capacity (MW) (average) 77.13 81.64 79.86 82.83 kWh produced (000s) 170,295 180,257 523,261 542,677
23 The declines in total energy production for the Navy I Partnership for the three and nine-months ended September 30, 2002 as compared to the same periods in 2001, were not significant. Total energy production for the BLM Partnership was 163.6 million kWh and 490.3 million kWh for the three and nine-months ended September 30, 2002, respectively, as compared to 175.4 million kWh and 540.8 million kWh for the same periods in 2001, decreases of 6.7% and 9.3% respectively. Total energy production for the Navy II Partnership was 170.3 million kWh for the three-months ended September 30, 2002 as compared to 180.3 million kWh for the same period in 2001, a decrease of 5.5%. These decreases in energy production for the Navy I, BLM and Navy II Partnerships were primarily due to a decline in steam which they are attempting to remediate through well maintenance and capital improvements. Results of Operations for the three and nine-months ended September 30, 2002 and 2001 The following discusses the results of operations of the Coso Partnerships for the three and nine-months ended September 30, 2002 and 2001 (dollar amounts in tables are in thousands, except per kWh data): Revenue
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2002 2001 2002 2001 $ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh - --------- - --------- - --------- - --------- Total Operating Revenues Navy I Partnership 19,761 10.7 15,856 8.1 79,587 14.5 45,701 8.1 BLM Partnership 16,591 10.2 14,055 8.1 71,261 14.6 37,192 6.9 Navy II Partnership 15,838 9.3 13,053 7.3 70,031 13.4 29,736 5.5 Capacity & Capacity Bonus Revenues Navy I Partnership 8,190 4.4 8,190 4.2 14,904 2.7 11,955 2.1 BLM Partnership 8,002 4.9 8,002 4.6 14,537 3.0 11,682 2.2 Navy II Partnership 8,047 4.7 8,047 4.5 14,603 2.8 11,745 2.2 Energy Revenues Navy I Partnership 11,571 6.3 7,666 3.9 64,683 11.8 33,746 6.0 BLM Partnership 8,589 5.3 6,053 3.5 56,724 11.6 25,510 4.7 Navy II Partnership 7,791 4.6 5,006 2.8 55,428 10.6 17,991 3.3
Total operating revenues for the Navy I, BLM and Navy II Partnerships, which consist of capacity payments, capacity bonus payments and energy payments, were $19.8 million, $16.6 million and $15.8 million, respectively, for the three-months ended September 30, 2002, as compared to $15.9 million, $14.1 million and $13.1 million, respectively, for the same period in 2001, increases of 24.5%, 17.7%, and 20.6%, respectively. Total energy revenues for the Navy I, BLM and Navy II Partnerships were $11.6 million, $8.6 million and $7.8 million, respectively, for the three-months ended September 30, 2002, as compared to $7.7 million, $6.1 million and $5.0 million, respectively, for the same period in 2001, increases of 50.6%, 41.0%, and 56.0%, respectively. Each Coso Partnership's increase in energy revenues for the three-months ended September 30, 2002, as compared to the same period in 2001, was primarily due to an increase in the average avoided cost of energy of 5.37 cents per kWh paid during the three-months ended September 30, 2002, as compared to 3.60 cents per kWh paid for the three-months ended September 30, 2001. The increase in price was, partially offset by a decrease in production. Total operating revenues for the Navy I, BLM and Navy II Partnerships, which consist of capacity payments, capacity bonus payments and energy payments, were $79.6 million, $71.3 million and $70.0 million, respectively, for the nine-months ended September 30, 2002, as compared to $45.7 million, $37.2 million and $29.7 million, respectively, for the same period in 2001, increases of $33.9 million, $34.1 million and $40.3 million, respectively. Capacity and capacity bonus revenues for each of the Navy I, BLM and Navy II Partnerships 24 were $14.9 million, $14.5 million and $14.6 million, respectively, for the nine-months ended September 30, 2002, as compared to $12.0 million, $11.7 million and $11.7 million, respectively, for the same period in 2001, increases of 24.2%, 23.9%, and 24.8%, respectively. Energy revenues for the Navy I, BLM and Navy II Partnerships were $64.7 million, $56.7 million and $55.4 million, respectively, for the nine-months ended September 30, 2002, as compared to $33.7million, $25.5 million and $18.0 million, respectively, for the same period in 2001, increases of $31.0 million, $31.2 million and $37.4 million, respectively. Each Coso Partnership's increase in capacity, capacity bonus and energy revenues for the nine-months ended September 30, 2002, as compared to the same period in 2001, was due to Edison's payment, on March 1, 2002, for revenue generated but not recognized for the period from November 1, 2000 through March 26, 2001 discussed above. The Navy I, BLM and Navy II Partnerships had not recognized revenues of $21.6 million, $21.8 million and $22.7 million, respectively, for the nine-months ended September 30, 2001. Revenues generated but not recognized for the period November 1, 2000 through March 1, 2002 for the Navy I, BLM and Navy II Partnerships of $37.3 million, $37.1 million and $38.0 million, respectively, were paid and recognized during the nine-months ended September 30, 2002. These increases were partially offset by a decrease in production during the nine-months ended September 30, 2002 as compared to the same period in 2001. Interest and Other Income
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, 2002 September 30, 2001 September 30, 2002 September 30, 2001 $ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh - --------- - --------- - --------- - --------- Navy I Partnership 136 0.1 977 0.5 1,655 0.3 2,155 0.4 BLM Partnership 267 0.2 1,040 0.6 1,169 0.2 2,877 0.5 Navy II Partnership 237 0.1 881 0.5 888 0.2 2,135 0.4
Interest and other income for the Navy I, BLM and Navy II Partnerships were $.1 million, $.3 million and $.2 million, respectively, for the three-months ended September 30, 2002, as compared to $1.0 million, $1.0 million and $.9 million, respectively for the same period in 2001, decreases of $.9 million, $.7 million and $.7 million, respectively. Each Coso Partnership's decrease in interest and other income for the three-months ended September 30, 2002, as compared to the same period in 2001, was primarily due to interest on amounts in arrears that were settled and paid by Edison on March 1, 2002. The Navy I Partnership's interest and other income was $1.7 million for the nine-months ended September 30, 2002, as compared to $2.2 million for the same period in 2001, a decrease of 22.7%. The decrease in interest and other income for the nine-months ended September 30, 2002, as compared to the same period in 2001, was primarily due to interest on amounts in arrears that were settled and paid by Edison on March 1, 2002, partially offset by the collection of $0.8 million of insurance proceeds in 2002 for lost revenue in 1999 caused by equipment failure. The BLM and Navy II Partnerships interest and other income were $1.2 million and $.9 million for the nine-months ended September 30, 2002, respectively, as compared to $2.9 million and $2.1 million, respectively for the same periods in 2001, decreases of 58.6% and 57.1%, respectively. The decreases for the BLM and Navy II Partnerships in interest and other income for the nine-month period ended September 30, 2002, as compared to the same period in 2001, were primarily due to interest on amounts in arrears that were settled and paid by Edison on March 1, 2002. 25 Plant Operations
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, 2002 September 30, 2001 September 30, 2002 September 30, 2001 $ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh - --------- - --------- - --------- - --------- Navy I Partnership 2,811 1.5 2,055 1.1 7,379 1.3 6,629 1.1 BLM Partnership 3,328 2.0 2,384 1.4 8,581 1.8 7,592 1.4 Navy II Partnership 2,918 1.7 2,360 1.3 7,408 1.4 7,210 1.3
Plant operating expenses, including operating and general and administrative for the Navy I, BLM and Navy II Partnerships were $2.8 million, $3.3 million and $2.9 million, respectively, for the three-months ended September 30, 2002, as compared to $2.1 million, $2.4 million and $2.4 million, respectively, for the same period in 2001, increases of 33%, 37.5% and 20.8%, respectively. Plant operating expenses, including operating and general and administrative for the Navy I, BLM and Navy II Partnerships were $7.4 million, $8.6 million and $7.4 million, respectively, for the nine-months ended September 30, 2002, as compared to $6.6 million, $7.6 million and $7.2 million, respectively, for the same period in 2001, increases of 12.1%, 13.2% and 2.8%, respectively. Each Coso Partnership's increase in operating expenses, including operating and general and administrative for the three and nine-month periods ended September 30, 2002, as compared to the same periods in 2001, were due to increases in insurance costs, property taxes and repair and maintenance projects that had been deferred in 2001 due to Edison's non-payment, partially offset by a reduction in legal costs. The increased property taxes for Navy I, BLM and Navy II Partnerships primarily resulted from a correction to their 2001 assessment of $670,000, $720,000 and $610,000, respectively, billed to each Coso Partnership in 2002. Royalty Expense
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, 2002 September 30, 2001 September 30, 2002 September 30, 2001 $ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh - --------- - --------- - --------- - --------- Navy I Partnership 5,762 3.1 7,005 3.6 11,393 2.1 13,759 2.4 BLM Partnership 1,482 0.9 967 0.6 2,157 0.4 4,993 0.9 Navy II Partnership 2,588 1.5 2,316 1.3 5,337 1.0 8,209 1.5
The Navy I Partnership's royalty expenses were $5.8 million for the three-months ended September 30, 2002, as compared to $7.0 million for the same period in 2001, a decrease of 17.1%. The decrease in royalty expenses for the Navy I Partnership for the three-months ended September 30, 2002, as compared to the same period in 2001, was primarily due to an adjustment booked in 2001 that increased prior period royalty expense for Unit 1 by $1.8 million, partially offset by current period increases in Units 2 and 3 royalty expenses due to an increase in avoided cost of energy from 3.60 cents per kWh for the three months ending September 30, 2001 to 5.37 cents per kWh for the same period in 2002. The Navy I Partnership's royalty expenses were $11.4 million for the nine-months ended September 30, 2002, as compared to $13.8 for the same period in 2001, a decrease of 17.4%. The decrease in royalty expense for the Navy I Partnership for the nine-month period ended September 30, 2002, as compared to the same period in 2001, was primarily due to the decrease in the avoided cost of energy from 8.94 cents per kWh for the nine-months ended September 30, 2001 to 4.43 cents per kWh for the same period in 2002, partially offset by the increase in Unit 1 royalty expense in 2001 discussed above. 26 The BLM Partnership's royalty expenses were $1.5 million and $2.2 million for the three and nine-months ended September 30, 2002, respectively, as compared to $1.0 million and $5.0 million for the same periods in 2001, an increase of 50.0% and a decrease of 56.0% respectively. The Navy II Partnership's royalty expenses were $2.6 million and $5.3 million for the three and nine-months ended September 30, 2002, respectively, as compared to $2.3 million and $8.2 million for the same periods in 2001, an increase of 13.0% and a decrease of 35.4%, respectively. The increases in royalty expense for the three-month period ended September 30, 2002 as compared to the same period in 2001 were due to the increase in avoided cost of energy from 3.60 cents per kWh or the three months ending September 30, 2001 to 5.37 cents per kWh for the same period in 2002. The decreases in the nine-month period ended September 30, 2002 as compared to the same period in 2001 were due to a decrease in the avoided cost of energy from 8.94 cents per kWh for the nine-months ended September 30, 2001 to 4.43 cents per kWh for the same period in 2002. Depreciation and Amortization
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, 2002 September 30, 2001 September 30, 2002 September 30, 2001 $ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh - --------- - --------- - --------- - --------- Navy I Partnership 3,049 1.6 2,647 1.4 8,126 1.5 7,687 1.4 BLM Partnership 3,903 2.4 4,009 2.3 12,135 2.5 11,884 2.2 Navy II Partnership 1,848 1.1 3,870 2.1 9,507 1.8 11,454 2.1
The Navy I Partnership's depreciation and amortization expenses were $3.0 million and $8.1 million, respectively for the three and nine-months ended September 30, 2002, as compared to $2.6 million and $7.7 million for the same period in 2001, increases of 15.4% and 5.2%, respectively. These increases were due to an increase in capitalized assets during the three and nine-month periods ended September 30, 2002. The Navy II Partnership's depreciation and amortization expense were $1.8 million and $9.5 million, respectively for the three and nine-months ended September 30, 2002, as compared to $3.9 million and $11.5 million for the same period in 2001, decreases of 53.8% and 17.4%, respectively. These decreases were due to certain wells being fully depreciated during the three and nine-month periods ending September 30, 2002. Interest Expense
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, 2002 September 30, 2001 September 30, 2002 September 30, 2001 $ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh - --------- - --------- - --------- - --------- Navy I Partnership 2,668 1.4 2,896 1.5 8,216 1.5 8,851 1.6 BLM Partnership 2,120 1.3 2,225 1.3 6,477 1.3 6,733 1.2 Navy II Partnership 1,870 1.1 2,003 1.1 5,683 1.1 6,140 1.1
The Navy I Partnership's interest expense was $2.7 million and $8.2 million for the three and nine-months ended September 30, 2002, respectively, as compared to $2.9 million and $8.9 million for the same periods in 2001, decreases of 6.9% and 7.9% respectively. The Navy II Partnership's interest 27 expense was $1.9 million and $5.7 million for the three and nine-months ended September 30, 2002, respectively, as compared to $2.0 million and $6.1 million for the same periods in 2001, decreases of 5.0% and 6.6% respectively. The decreases in interest expense for the Navy I and Navy II Partnerships for the three and nine-month periods ended September 30, 2002, as compared to the same periods in 2001, were due to reductions in the principal amount of the project loan from Funding Corp. Liquidity and Capital Resources Each of the Navy I Partnership, the BLM Partnership and the Navy II Partnership derive substantially all of their cash flow from Edison under their power purchase agreements and from interest income earned on funds on deposit. As of December 2001, the 6.8% notes were repaid, subsequently leaving the Coso Partnerships with increased annual cash flow. The Coso Partnerships have used their cash primarily for capital expenditures for power plant and resource improvements, operating costs, distributions to partners and payments with respect to the project debt. The Coso Partnerships ability to meet their obligations as they come due will depend upon the ability of Edison to meet its obligations under the terms of the standard offer No. 4 power purchase agreements. Edison's shortfall in collections, coupled with its near term capital requirements, materially and adversely affected its liquidity. In resolution of that issue, Edison settled with the CPUC on October 2, 2001, enabling it to recover in retail electric rates its historical shortfall in electric purchase costs. 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 Supreme Court of California. The appeals court stated that if the Agreement violated California state law then the appeals court would be required to void the stipulated judgment. Pending a response from the California Supreme Court the Agreement remains in full force and effect. Immediately after this settlement, Edison and each of the Coso Partnerships entered into an amendment of their respective Agreement (referenced above) pertaining to partial payment and interest payments relating to Edison's past due obligations for the period from November 2000 through March 26, 2001. The Agreement, as amended, was approved by CPUC in January of 2002, and established the fixed energy rates discussed above and set payment terms for the past due amounts owed to the Coso Partnerships by Edison. Edison's failure to pay its future obligations may have a material adverse effect on the Coso Partnerships ability to make debt service payments to Funding Corp. as they come due under the Funding Corp. notes. On March 1, 2002, Edison reached certain financing milestones and paid the Coso Partnerships for revenue generated but not recognized for the period 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. The following table sets forth a summary of each Coso Partnership's cash flows for the nine-months ended September 30, 2002 and September 30, 2001.
Nine-Months Nine-Months Ended Ended September 30, September 30, 2002 2001 Navy I Partnership (stand alone) Net cash provided by (used in) operating activities $ 54,861 $ 20,461 Net cash provided by (used in) investing activities (4,546) (1,867) Net cash provided by (used in) financing activities (40,568) (8,381) ------ ------ Net change in cash and cash equivalents $ 9,747 $ 10,213 ====== ======
28
BLM Partnership (stand alone) Net cash provided by (used in) operating activities $ 41,610 $ 21,413 Net cash provided by (used in) investing activities (1,674) (3,174) Net cash provided by (used in) financing activities (29,520) (5,885) ------ ------ Net change in cash and cash equivalents $ 10,416 $ 12,354 ====== ====== Navy II Partnership (stand alone) Net cash provided by (used in) operating activities $ 26,138 $ 19,184 Net cash provided by (used in) investing activities (1,337) (817) Net cash provided by (used in) financing activities (17,725) (14,762) ------ ------ Net change in cash and cash equivalents $ 7,026 $ 3,605 ====== ======
The Navy I Partnership's cash flows from operating activities increased by $34.4 million for the nine-months ended September 30, 2002, as compared to the same period in 2001, primarily due to the increase in net income from the cash received for Edison's payment for revenue generated but not recognized for the period from November 1, 2000 through March 26, 2001. Cash used in investing activities at the Navy I Partnership increased by $2.7 million for the nine-months ended September 30, 2002, as compared to the same period in 2001, primarily due to an increase in restricted cash requirements associated with the project loan from Funding Corp. and increases in capital expenditures. The Navy I Partnership's cash used in financing activities increased by $32.2 million for the nine-months ended September 30, 2002, as compared to the same period in 2001, due to increased partner distributions paid during that period in 2002. The BLM Partnership's cash flows from operating activities increased by $20.2 million for the nine-months ended September 30, 2002, as compared to the same period in 2001, primarily due to the increase in net income from the cash received for Edison's payment for revenue generated but not recognized for the period from November 1, 2000 through March 26, 2001. Cash used in investing activities at the BLM Partnership decreased by $1.5 million for the nine-months ended September 30, 2002, as compared to the same period in 2001, primarily due to a decrease in capital expenditures partially offset by an increase in restricted cash requirements associated with the project loan from Funding Corp. The BLM Partnership's cash used in financing activities increased by $23.6 million for the nine-months ended September 30, 2002, as compared to the same period in 2001, due to increased partner distributions paid during that period in 2002. The Navy II Partnership's cash flows from operating activities increased by $7.0 million for the nine-months ended September 30, 2002, as compared to the same period in 2001, primarily due to the increase in net income from the cash received for Edison's payment for revenue generated but not recognized for the period from November 1, 2000 through March 26, 2001. Cash used in investing activities at the Navy II Partnership increased by $.5 million for the nine-months ended September 30, 2002, as compared to the same period in 2001, primarily due to an increase in restricted cash requirements associated with the project loan from Funding Corp. and increases in capital expenditures. The Navy II Partnership's cash used in financing activities increased by $3.0 million for the nine-months ended September 30, 2002, as compared to the same period in 2001, due to increased partner distributions paid during that period in 2002. 29 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings General The Coso Partnerships are currently parties to various items of litigation relating to day-to-day operations, none of which, if determined adversely, would be material to the financial condition and results of operations of the Coso Partnerships, either individually or taken as a whole. ITEM 2. Change in Securities and Use of Proceeds None. ITEM 3. Defaults Upon Senior Securities None. ITEM 4. Submission of Matters to a Vote of Security Holders None. ITEM 5. Other Information Supplemental Condensed Combined Financial Information for the Coso Partnerships The following information presents unaudited condensed combined financial statements of the Coso Partnerships. These financial statements represent a combination of the financial statements of Caithness Coso Funding Corp., Coso Finance Partners, Coso Energy Developers and Coso Power Developers for the periods indicated. This supplemental financial information is not required by accounting principles generally accepted in the United States of America and has been provided to facilitate a more comprehensive understanding of the financial position, operating results and cash flows of the Coso Partnerships as a whole, which jointly and severally guarantee the repayment of Caithness Coso Funding Corp's senior notes. The unaudited condensed combined financial statements should be read in conjunction with each individual Coso Partnership's financial statements and their accompanying notes. The financial information herein presented reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for interim periods presented. The results for the interim periods are not necessarily indicative of results to be expected for the full year. 30 COSO PARTNERSHIPS UNAUDITED CONDENSED COMBINED BALANCE SHEETS (Dollars in thousands)
September 30, December 31, 2002 2001 Assets: Cash and cash equivalents.................................................... $ 27,453 $ 264 Restricted cash and investments.............................................. 38,910 34,210 Accounts receivable, net..................................................... 34,766 9,603 Prepaid expenses and other assets............................................ 5,140 2,159 Amounts due from related parties............................................. 6,648 6,488 Property, plant and equipment, net........................................... 390,368 413,519 Power purchase agreement, net................................................ 48,590 52,350 Investments.................................................................. 12,545 12,843 Deferred financing costs, net................................................ 5,709 6,300 ------- ------- $ 570,129 $ 537,736 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities..................................... $ 22,720 $ 42,362 Amounts due to related parties............................................... 33,266 24,967 Project loans................................................................ 294,289 303,000 ------- ------- 350,275 370,329 Partners' capital............................................................... 219,854 167,407 ------- ------- $ 570,129 $ 537,736 ======= =======
See accompanying notes to the unaudited condensed combined financial statements. 31 COSO PARTNERSHIPS UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS (Dollars in thousands)
Three-Months Three-Months Nine-Months Nine-Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2002 2001 2002 2001 Revenue: Energy revenues.................................. $ 27,951 $ 18,725 $ 176,835 $ 77,233 Capacity revenues................................ 24,239 24,239 44,044 35,396 Interest and other income........................ 640 2,898 3,712 7,167 ------ ------ ------ ------ Total revenue............................. 52,830 45,862 224,591 119,796 Operating expenses: Plant operating expenses......................... 9,057 6,799 23,368 21,431 Royalty expense.................................. 9,832 10,288 18,887 26,961 Depreciation and amortization.................... 8,800 10,526 29,768 31,025 ------ ------ ------ ------ Total operating expenses.................. 27,689 27,613 72,023 79,417 Operating income.......................... 25,141 18,249 152,568 40,379 Other expenses: Interest expense................................. 6,658 7,124 20,376 21,724 Amortization of deferred financing costs......... 198 401 591 1,205 ------ ------ ------ ------ Total other expenses...................... 6,856 7,525 20,967 22,929 Net income................................. $ 18,285 $ 10,724 $ 131,601 $ 17,450 ====== ====== ======= ======
See accompanying notes to the unaudited condensed combined financial statements. 32 COSO PARTNERSHIPS UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Nine-Months Nine-Months Ended Ended September 30, September 30, 2002 2001 Net cash provided by (used in) operating activities... $ 122,607 $ 61,058 Net cash provided by (used in) investing activities... (7,557) (5,858) Net cash provided by (used in) financing activities... (87,861) (29,028) ------ ------ Net change in cash and cash equivalents............... $ 27,189 $ 26,172 ====== ====== Supplemental cash flow disclosure: Cash paid for interest............................ $ 13,710 $ 14,631 ====== ======
See accompanying notes to the unaudited condensed combined financial statements. 33 COSO PARTNERSHIPS NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS (1) Basis of Presentation The accompanying unaudited condensed combined financial statements were derived from the stand alone unaudited condensed financial statements of Caithness Coso Funding Corp., Coso Finance Partners, Coso Energy Developers and Coso Power Developers (the "Coso Partnerships"). All intercompany accounts and transactions were eliminated. This financial information has been provided to facilitate a more comprehensive understanding of the financial position, operating results and cash flows of the Coso Partnerships as a whole. The unaudited condensed combined financial statements should be read in conjunction with each individual Partnership's unaudited condensed financial statements. (2) Accounts Receivable and Revenue Recognition The Coso Partnerships sell all electricity produced to Southern California Edison (Edison) under long-term power purchase contracts. Due to the uncertainty surrounding Edison's ability to make payment on past due amounts, collection was not reasonably assured and the Coso Partnerships had not recognized revenue from Edison for energy delivered during the period November 1, 2000 through March 26, 2001. The provision for doubtful accounts previously recorded by the Coso Partnerships of $66.1 million for the nine-months ended September 30, 2001, has been reclassified as a reduction of revenue to conform with the 2002 presentation. On March 1, 2002, Edison reached certain financing milestones and paid the Coso Partnerships for revenue generated but not recognized for the period November 1, 2000 through March 26, 2001. For the nine-month period 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 reclassifications have been made to the 2001 statements of operations to conform to the 2002 presentation. 34 ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits 27.1 Financial Data Schedule--Form SX--Caithness Coso Funding Corp. 27.2 Financial Data Schedule--Form SX--Coso Finance Partners 27.3 Financial Data Schedule--Form SX--Coso Energy Developers 27.4 Financial Data Schedule--Form SX--Coso Power Developers 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 The Coso Partnerships filed a current report on Form 8-K dated September 23, 2002 reporting issues surrounding the settlement agreement between Edison and the CPUC, the court of appeals decision on line loss factors, and the court of appeals decision regarding retroactive application of SRAC rates. 35 EXHIBIT 27.1 Form S-X Commercial and Industrial Companies Financial Data Schedule Worksheet for: CAITHNESS COSO FUNDING CORP. ---------------------------- Review the following list of tags for Article 5 and fill in the correct data in the column(s) provided. Generally, only one column of information will be required, however, two columns are provided if required in the Financial Data Schedule. Unless otherwise noted, all tags are required. A response is required for each item within the schedule. Use the value "0" (zero) if information is immaterial, inapplicable or unknown. Decimals may not be used to state financial data except as indicated. Values not provided will be entered as "0" (zero). Missing dates will be entered as "TO COME". Please be sure to verify all information in the EDGARized exhibit. To include a footnote, place a number in parentheses next to the value and provide the text of each corresponding footnote at the end of the worksheet form. Do you wish to include a LEGEND? This schedule contains summary financial Yes X No information extracted from *_____________ --- --- and is equalified in its entirety by reference to such financial statements. *Identify the financial statement(s) to be referenced in the legend: RESTATED Are your financials being "restated" (NO VALUE REQUIRED) from a previously file period? Yes X No --- --- CIK Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT CIK: NAME Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT NAME: MULTIPLIER Do the financials require a multiplier X 1,000 1,000,000,000 other than 1 (one)? --- --- X Yes No 1,000,000 1,000,000,000,000 --- --- --- --- CURRENCY CURRENCY OF FINANCIAL DATA: Is the currency used other than US Dollars? Use in conjunction with EXCHANGE RATE tag. Yes X No --- --- PERIOD TYPE - MOS X 9 - MOS --- --- --- --- X YEAR YEAR --- --- (for annual report filings) OTHER OTHER --- --- FISCAL YEAR END (example: DEC-31-1997) Dec-31-2001 DEC-31-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD START (example: JAN-01-1997) Jan-01-2001 JAN-01-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD END (example: SEP-30-1997) Dec-31-2001 SEP-30-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE: Is the exchange rate other than 1 (one)? Value may contain up to 5 decimal places) Use in conjunction with CURRENCY tag. Yes X No --- ---
PERIOD TYPE Year PERIOD TYPE 9 MOS ---- ----- --- CASH 0 0 SECURITIES 0 0 RECEIVABLES 304,225 302,174 ALLOWANCES 0 0 INVENTORY 0 0 CURRENT ASSETDS 1,225 7,883 PP&E 0 0 DEPRECIATION 0 0 TOTAL ASSETS 304,225 302,174 CURRENT LIABILITIES 1,225 7,883 BONDS 303,000 294,291 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 304,225 302,174 SALES 0 0 TOTAL REVENUES 28,820 20,369 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 0 0 LOSS PROVISION 0 0 INTEREST EXPENSES 28,820 20,369 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-31-2001 DEC-31-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD START (example: JAN-01-1997) Jan-01-2001 JAN-01-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD END (example: SEP-30-1997) Dec-31-2001 SEP-30-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE: Is the exchange rate other than 1 (one)? Value may contain up to 5 decimal places) Use in conjunction with CURRENCY tag. Yes X No --- ---
PERIOD TYPE Year PERIOD TYPE 9 MOS ---- ----- CASH 264 10,011 SECURITIES 21,325 24,239 RECEIVABLES 12,816 14,131 ALLOWANCES 0 0 INVENTORY 0 0 CURRENT ASSETS 13,730 25,688 PP&E 229,084 230,664 DEPRECIATION 88,647 95,860 TOTAL ASSETS 193,114 201,210 CURRENT LIABILITIES 18,139 20,912 BONDS 122,550 117,911 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 193,114 201,210 SALES 53,400 79,587 TOTAL REVENUES 56,328 81,242 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 29,182 26,898 LOSS PROVISION 0 0 INTEREST EXPENSES 12,437 8,453 INCOME PRETAX 0 0 INCOME TAX 0 0 INCOME CONTINUING 0 0 DISCONTINUED 0 0 EXTRAORDINARY 0 0 CHANGES 0 0 NET INCOME 14,709 45,891 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-31-2001 DEC-31-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD START (example: JAN-01-1997) Jan-01-2001 JAN-01-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD END (example: SEP-30-1997) Dec-31-2001 SEP-30-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE: Is the exchange rate other than 1 (one)? Value may contain up to 5 decimal places) Use in conjunction with CURRENCY tag. Yes X No --- ---
PERIOD TYPE Year PERIOD TYPE 9 MOS ---- ----- CASH 0 10,416 SECURITIES 7,368 8,420 RECEIVABLES 3,340 11,598 ALLOWANCES 0 0 INVENTORY 0 0 CURRENT ASSETS 4,189 23,960 PP&E 247,203 247,708 DEPRECIATION 98,786 110,000 TOTAL ASSETS 183,978 192,936 CURRENT LIABILITIES 34,966 30,555 BONDS 96,250 93,700 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 183,978 192,936 SALES 44,041 71,261 TOTAL REVENUES 47,807 72,430 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 31,396 22,873 LOSS PROVISION 0 0 INTEREST EXPENSES 9,398 6,668 INCOME PRETAX 0 0 INCOME TAX 0 0 INCOME CONTINUING 0 0 DISCONTINUED 0 0 EXTRAORDINARY 0 0 CHANGES 0 0 NET INCOME 7,013 42,889 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 --- --- --- --- YEAR YEAR --- --- (for annual report filings) OTHER OTHER --- --- FISCAL YEAR END (example: DEC-31-1997) Dec-31-2001 DEC-31-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD START (example: JAN-01-1997) Jan-01-2001 JAN-01-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD END (example: SEP-30-1997) Dec-31-2001 SEP-30-2002 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE: Is the exchange rate other than 1 (one)? Value may contain up to 5 decimal places) Use in conjunction with CURRENCY tag. Yes X No --- ---
PERIOD TYPE Year PERIOD TYPE 9 MOS ---- ----- CASH 0 7,026 SECURITIES 5,517 6,251 RECEIVABLES 9,349 17,838 ALLOWANCES 0 0 INVENTORY 0 0 CURRENT ASSETS 10,009 26,512 PP&E 209,652 210,103 DEPRECIATION 84,987 92,247 TOTAL ASSETS 170,058 178,136 CURRENT LIABILITIES 23,638 6,670 BONDS 84,200 82,680 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 170,058 178,136 SALES 36,389 70,031 TOTAL REVENUES 39,272 70,919 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 34,408 22,252 LOSS PROVISION 0 0 INTEREST EXPENSES 9,247 5,846 INCOME PRETAX 0 0 INCOME TAX 0 0 INCOME CONTINUING 0 0 DISCONTINUED 0 0 EXTRAORDINARY 0 0 CHANGES 0 0 NET INCOME (4,383) 42,821 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 I, James D. Bishop, Sr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Caithness Coso Funding Corp.; 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 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 the 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 12, 2002 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 I, Christopher T. McCallion, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Caithness Coso Funding Corp.; 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 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 the 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 12, 2002 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. (the Company) on Form 10-Q for the period ending September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James D. Bishop, Sr., Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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 Company. Date: November 12, 2002 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. (the Company) on Form 10-Q for the period ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Christopher T. McCallion, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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 Company. Date: November 12, 2002 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. Date: November 12, 2002 CAITHNESS COSO FUNDING CORP., a Delaware corporation By: /S/ CHRISTOPHER T. MCCALLION ---------------------------- Christopher T. McCallion Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer) COSO FINANCE PARTNERS a California general Partnership By: New CLOC Company, LLC, its Managing General Partner By: /S/ CHRISTOPHER T. MCCALLION ---------------------------- Christopher T. McCallion Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer) COSO ENERGY DEVELOPERS a California general Partnership By: New CHIP Company, LLC, its Managing General Partner By: /S/ CHRISTOPHER T. MCCALLION ---------------------------- Christopher T. McCallion Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer) COSO POWER DEVELOPERS a California general Partnership By: New CTC Company, LLC, its Managing General Partner By: /S/ CHRISTOPHER T. MCCALLION ---------------------------- Christopher T. McCallion Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer)