-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SwPE3HdAKRyFZfMYttN9zdA8qEb26gOq5KDnde70gwszu+PAvOUjD5XC5+xsjGmq wV7Ul+/7uUWBR3RYQ6Rj1w== 0001088869-01-500003.txt : 20010514 0001088869-01-500003.hdr.sgml : 20010514 ACCESSION NUMBER: 0001088869-01-500003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAITHNESS COSO FUNDING CORP CENTRAL INDEX KEY: 0001088866 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 943328762 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-83815 FILM NUMBER: 1630455 BUSINESS ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 1114 AVENUE OF THE AMERICAS 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10036-7790 BUSINESS PHONE: 2129219099 MAIL ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 1114 AVENUE OF THE AMERICAS 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10036-7790 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COSO ENERGY DEVELOPERS CENTRAL INDEX KEY: 0001088869 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 943071296 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-83815-01 FILM NUMBER: 1630456 BUSINESS ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 1114 AVENUE OF THE AMERICAS 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10036-7790 BUSINESS PHONE: 2129219099 MAIL ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 1114 AVENUE OF THE AMERICAS 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10036-7790 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COSO FINANCE PARTNERS CENTRAL INDEX KEY: 0001088870 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 580133679 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-83815-02 FILM NUMBER: 1630457 BUSINESS ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 1114 AVENUE OF THE AMERICAS 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10036-7790 BUSINESS PHONE: 2129219099 MAIL ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 1114 AVENUE OF THE AMERICAS 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10036-7790 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COSO POWER DEVELOPERS CENTRAL INDEX KEY: 0001088873 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 943102796 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-83815-03 FILM NUMBER: 1630458 BUSINESS ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 1114 AVENUE OF THE AMERICAS 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10036-7790 BUSINESS PHONE: 2129219099 MAIL ADDRESS: STREET 1: C/O CAITHNESS ENERGY LLC STREET 2: 1114 AVENUE OF THE AMERICAS 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10036-7790 10-Q 1 f10qmay2001.txt FORM 10-Q -- QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITES EXCHANGE ACT OF 1934 (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2001 -------------- 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) 1114 Avenue of the Americas, 41st Floor, New York, New York 10036-7790 - ----------------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (212) 921-9099 -------------- (Registrant's telephone number, including area code) Not Applicable -------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [ X ] Yes [ ] No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 300 shares in Caithness Coso Funding Corp. as of May 10, 2001 ------------------------------------------------------------- CAITHNESS COSO FUNDING CORP. Form 10-Q For the Quarter Ended March 31, 2001 PART I. FINANCIAL INFORMATION Page No. ITEM 1. Financial Statements Caithness Coso Funding Corp Unaudited condensed balance sheet at March 31, 2001 and December 31, 2000 4 Unaudited condensed statement of operations for the three- months ended March 31, 2001 and the three-months ended March 31, 2000 5 Unaudited condensed statement of cash flows for the three- months ended March 31, 2001 and the three-months ended March 31, 2000 6 Notes to the unaudited condensed financial statements 7 Coso Finance Partners Unaudited condensed balance sheets at March 31, 2001 and December 31, 2000 8 Unaudited condensed statements of operations for the three- months ended March 31, 2001 and the three-months ended March 31,2000 9 Unaudited condensed statements of cash flows for the three- months ended March 31, 2001 and the three-months ended March 31, 2000. 10 Notes to the unaudited condensed financial statements 11 Coso Energy Developers Unaudited condensed balance sheets at March 31, 2001 and December 31, 2000 12 Unaudited condensed statements of operations for the three- months ended March 31, 2001 and the three-months ended March 31, 2000 13 Unaudited condensed statements of cash flows for the three- months ended March 31, 2001 and the three-months ended March 31, 2000. 14 Notes to the unaudited condensed financial statements 15 Coso Power Developers Unaudited condensed balance sheets at March 31, 2001 and December 31, 2000 16 Unaudited condensed statements of operations for the three- months ended March 31, 2001 and the three-months ended March 31, 2000 17 Unaudited condensed statements of cash flows for the three- months ended March 31, 2001 and the three-months ended March 31, 2000. 18 Notes to the unaudited condensed financial statements 19 2 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 20 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 28 ITEM 2. Change in Securities and Use of Proceeds 28 ITEM 3. Defaults upon Senior Securities 28 ITEM 4. Submission of Matters to a Vote of Security Holders 28 ITEM 5. Other Information 28 Supplemental condensed combined financial information for the Coso Partnerships Unaudited condensed combined balance sheets at March 31, 2001 and December 31, 2000 30 Unaudited condensed combined statements of operations for the three-months ended March 31, 2001, and the three-months ended March 31, 2000 31 Unaudited condensed combined statements of cash flows for the three-months ended March 31, 2001, and the three-months ended March 31, 2000 32 Notes to the unaudited condensed combined financial statements 33 ITEM 6. Exhibits and Reports on Form 8-K 34 3 CAITHNESS COSO FUNDING CORP. UNAUDITED CONDENSED BALANCE SHEET (Dollars in thousands)
March 31, December 31, 2001 2000 (Note) Assets: Accrued interest receivable....................... $ 8,601 $ 1,286 Project loan to Coso Finance Partners............. 134,984 134,984 Project loan to Coso Energy Developers............ 100,907 100,907 Project loan to Coso Power Developers............. 94,176 94,176 ------- ------- $ 338,668 $ 331,353 ======= ======= Liabilities and Stockholders' Equity: Senior secured notes: Accrued interest payable....................... $ 8,601 $ 1,286 6.80% notes due 2001........................... 27,067 27,067 9.05% notes due 2009........................... 303,000 303,000 ------- ------- 338,668 331,353 Stockholders' equity................................. --- --- ------- ------- $ 338,668 $ 331,353 ======= =======
Note: The condensed balance sheet at December 31, 2000 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See accompanying notes to the unaudited condensed financial statements 4 CAITHNESS COSO FUNDING CORP. UNAUDITED CONDENSED STATEMENT OF OPERATIONS (Dollars in thousands) Three-Months Three-Months Ended Ended March 31, March 31, 2001 2000 Interest income.......... $ 8,601 $ 9,221 Interest expense......... (8,601) (9,221) ------- ------- Net income.......... $ --- $ --- ======= ======= See accompanying notes to the unaudited condensed financial statements 5 CAITHNESS COSO FUNDING CORP. UNAUDITED CONDENSED STATEMENT OF CASH FLOWS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2001 2000 Cash flows from investing activities...... $ (8,601) $ 52,665 Cash flows from financing activities...... 8,601 (52,665) ------- -------- Net change in cash and cash equivalents... $ --- $ --- ======= ========
See accompanying notes to the unaudited condensed financial statements 6 CAITHNESS COSO FUNDING CORP. NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS (1) Organization and Operations Caithness Coso Funding Corp. (Funding Corp.), which was incorporated on April 22, 1999, is a single-purpose Delaware corporation formed to issue senior secured notes (Notes) for its own account and as an agent acting on behalf of Coso Finance Partners (CFP), Coso Energy Developers (CED), and Coso Power Developers (CPD), collectively, the "Partnerships." The Partnerships are California general partnerships. On May 28, 1999, Funding Corp. sold $413,000 of senior secured notes. Pursuant to separate credit agreements between Funding Corp. and each partnership, the net proceeds from the offering of $110,000 of 6.80% senior secured notes due 2001 and $303,000 of 9.05% senior secured notes due 2009 were loaned to the Partnerships, and the Partnerships have jointly and severally guaranteed repayment on a senior basis. Payment of the Notes is provided for by payments made by the Partnerships under their respective project loans. Funding Corp. has no material assets other than the loans, and the accrued interest thereon, that have been made to the Partnerships. Also, Funding Corp. does not conduct any business, other than issuing the senior secured notes and making the loans to the Partnerships. (2) Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles 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, 2000. 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. (3) New Accounting Pronouncements In June 1998, the Financial Accounting Standards Board issued Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and Hedging Activities." The statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires the changes in the derivative' s fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Funding Corp. has adopted FAS 133, and assessed that it has no material effect on it's financial statements. 7 COSO FINANCE PARTNERS UNAUDITED CONDENSED BALANCE SHEETS (Dollars in thousands)
March 31, December 31, 2001 2000 (Note) Assets: Cash and cash equivalents.................................................. $ 1,018 $ 3,506 Restricted cash and investments............................................ 22,461 22,996 Accounts receivable, net................................................... 1,491 521 Prepaid expenses & other assets............................................ 432 809 Amounts due from related parties........................................... 7,792 1,960 Property, plant & equipment, net........................................... 147,416 149,076 Power purchase agreement, net.............................................. 11,953 12,240 Investment in China Lake Plant Services, Inc............................... 4,062 4,072 Deferred financing costs, net.............................................. 3,100 3,229 ------- ------- $ 199,725 $ 198,409 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities................................... $ 18,650 $ 15,857 Amounts due to related parties............................................. 4,177 697 Project loans.............................................................. 134,984 134,984 ------- ------- 157,811 151,538 Partners' capital............................................................. 41,914 46,871 ------- ------- $ 199,725 $ 198,409 ======= =======
Note: The condensed balance sheet at December 31, 2000 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See accompanying notes to the unaudited condensed financial statements 8 COSO FINANCE PARTNERS UNAUDITED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2001 2000 Revenue: Energy revenues............................................................ $ 30,615 $ 7,725 Capacity................................................................... 1,255 1,255 Interest and other income 135 323 ------ ----- Total revenue......................................................... 32,005 9,303 Operating expenses: Plant operating expenses................................................... 1,762 2,072 Royalty expense............................................................ 3,770 1,189 Provision for doubtful accounts............................................ 25,817 -- Depreciation and amortization.............................................. 2,499 2,353 ------ ----- Total operating expenses.............................................. 33,848 5,614 Operating income (loss)............................................... (1,843) 3,689 Other expenses: Interest expense........................................................... 2,984 3,173 Amortization on deferred financing......................................... 130 130 ------ ----- Total other expenses.................................................. 3,114 3,303 Net income (loss)..................................................... $ (4,957) $ 386 ====== =====
See accompanying notes to the unaudited condensed financial statements 9 COSO FINANCE PARTNERS UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2001 2000 Net cash provided by (used in) operating activities........................... $ (2,470) $ 8,624 Net cash provided by (used in) investing activities........................... (18) 2,445 Net cash provided by (used in) financing activities........................... --- (5,556) ------- ------- Net change in cash and cash equivalents....................................... $ (2,488) $ 5,513 ======= =======
See accompanying notes to the unaudited condensed financial statements 10 COSO FINANCE PARTNERS NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS (1) Organization and Operation Coso Finance Partners (CFP), a general partnership, is engaged in the operation of a 80 MW power generation facility located at the China Lake Naval Air Weapons Station, China Lake California. CFP sells all electricity produced to Southern California Edison under a 24-year power purchase contract expiring in 2011. (2) Basis of Presentation The accompanying unaudited condensed combined financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles 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, 2000. 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) New Accounting Pronouncements In June 1998, the Financial Accounting Standards Board issued Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and Hedging Activities." The statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires the changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. CFP has adopted FAS 133, and assessed that it has no material effect on it's financial statements. 11 COSO ENERGY DEVELOPERS UNAUDITED CONDENSED BALANCE SHEETS (Dollars in thousands)
March 31, December 31, 2001 2000 (Note) Assets: Cash and cash equivalents............................................... $ 4,764 $ 5,862 Restricted cash and investments......................................... 12,514 14,502 Accounts receivable, net................................................ 1,539 40 Prepaid expenses and other assets....................................... 534 1,013 Amounts due from related parties........................................ 374 365 Property, plant and equipment, net...................................... 153,972 153,618 Power purchase agreement, net........................................... 19,242 19,510 Investment in Coso Transmission Line Partners........................... 2,871 2,871 Investment in China Lake Plant Services, Inc............................ 949 1,051 Deferred financing costs, net........................................... 2,401 2,480 ------- ------- $ 199,160 $ 201,312 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities................................ $ 10,779 $ 6,839 Amounts due to related parties.......................................... 28,293 24,321 Project loans........................................................... 100,907 100,907 ------- ------- 139,979 132,067 Partners' capital....................................................... 59,181 69,245 ------- ------- $ 199,160 $ 201,312 ======= =======
Note: The condensed balance sheet at December 31, 2000 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See accompanying notes to the unaudited condensed financial statements 12 COSO ENERGY DEVELOPERS UNAUDITED CONDENSED STATEMENT OF OPERATIONS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2001 2000 Revenue: Energy revenues............................................................ $ 25,547 $ 5,953 Capacity................................................................... 1,228 1,227 Interest and other income.................................................. 620 5,315 ------- ------ Total revenue........................................................... 27,395 12,495 Operating expenses: Plant operating expenses................................................... 2,361 2,539 Royalty expense............................................................ 2,868 65 Provisions for doubtful accounts........................................... 25,950 -- Depreciation and amortization.............................................. 3,946 3,876 ------- ------ Total operating expenses................................................ 35,125 6,480 Operating income (loss)................................................. (7,730) 6,015 Other expenses: Interest expense........................................................... 2,257 2,308 Amortization on deferred financing......................................... 79 80 ------- ------ Total other expenses.................................................... 2,336 2,388 Net income (loss)....................................................... $ (10,066) $ 3,627 ======= ======
See accompanying notes to the unaudited condensed financial statements 13 COSO ENERGY DEVELOPERS UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2001 2000 Net cash provided by operating activities..................................... $ 947 $ 9,651 Net cash provided by (used in) investing activities........................... (2,045) 2,968 Net cash provided by (used in) financing activities........................... --- (4,105) ------- ------- Net change in cash and cash equivalents....................................... $ (1,098) $ 8,514 ======= =======
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 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 generally accepted accounting principles for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles 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, 2000. 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) New Accounting Pronouncements In June 1998, the Financial Accounting Standards Board issued Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and Hedging Activities." The statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires the changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. CED has adopted FAS 133, and assessed that it has no material effect on it's financial statements. 15 COSO POWER DEVELOPERS UNAUDITED CONDENSED BALANCE SHEETS (Dollars in thousands)
March 31, December 31, 2001 2000 (Note) Assets: Cash and cash equivalents............................................... $ 7,196 $ 7,741 Restricted cash and investments......................................... 9,458 10,214 Accounts receivable, net................................................ 1,449 29 Prepaid expenses and other assets....................................... 450 849 Amounts due from related parties........................................ 5,822 5,953 Property, plant and equipment, net...................................... 134,282 136,947 Power purchase agreement, net........................................... 24,916 25,614 Investment in Coso Transmission Line Partners........................... 3,528 3,528 Investment in China Lake Plant Services, Inc............................ 1,981 1,963 Deferred financing costs, net........................................... 2,663 2,855 ------- ------- $ 191,745 $ 195,693 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities................................ 15,138 12,278 Amounts due to related parties.......................................... 8,911 1,816 Project loans........................................................... 94,176 94,176 ------- ------- 118,225 108,270 Partners' capital.......................................................... 73,520 87,423 ------- ------- $ 191,745 $ 195,693 ======= =======
Note: The condensed balance sheet at December 31, 2000 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See accompanying notes to the unaudited condensed financial statements 16 COSO POWER DEVELOPERS UNAUDITED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2001 2000 Revenues: Energy revenues............................................................ $ 23,211 $ 8,554 Capacity................................................................... 1,233 1,234 Interest and other income.................................................. 358 529 ------- ------ Total revenue........................................................... 24,802 10,317 Operating expenses: Plant operating expenses................................................... 1,975 2,105 Royalty expense............................................................ 3,712 1,775 Provision for doubtful accounts............................................ 26,998 -- Depreciation and amortization.............................................. 3,753 3,698 ------- ------ Total operating expenses................................................ 36,438 7,578 Operating income (loss)................................................. (11,636) 2,739 Other expenses: Interest expense........................................................... 2,075 2,354 Amortization on deferred financing......................................... 192 192 ------- ------ Total other expenses.................................................... 2,267 2,546 Net income (loss)....................................................... $ (13,903) $ 193 ======= ======
See accompanying notes to the unaudited condensed financial statements 17 COSO POWER DEVELOPERS UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2001 2000 Net cash provided by (used in) operating activities........................... $ (911) $ 16,815 Net cash provided by (used in) investing activities........................... 366 42,822 Net cash provided by (used in) financing activities........................... --- (43,004) ----- ------- Net change in cash and cash equivalents....................................... $ (545) $ 16,633 ===== ========
See accompanying notes to the unaudited condensed financial statements 18 COSO POWER DEVELOPERS NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS (1) Organization and Operation Coso Power Developers (CPD), a general partnership, is engaged in the operation of a 80 MW power generation facility located at the Coso Hot Springs, China Lake California. CPD sells all electricity produced to Southern California Edison under a 20-year power purchase contract expiring in 2010. (2) Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles 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, 2000. 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) New Accounting Pronouncements In June 1998, the Financial Accounting Standards Board issued Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and Hedging Activities." The statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires the changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. CPD has adopted FAS 133, and assessed that it has no material effect on it's financial statements. 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"), respectively, (the "Coso Partnerships") or collectively ("Coso") and their respective management. Any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties; actual results could differ materially from those indicated by such forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: (i) risks relating to the uncertainties in the California energy market, (ii) the financial viability of Southern California Edison, ("Edison"), (iii) that the information is of a preliminary nature and may be subject to further adjustment, (iv) risks related to the operation of power plants (v) the impact of avoided cost pricing, (vi) general operating risks, (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 and (xii) seasonality. General The Coso projects 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 projects 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 projects. On February 25, 1999 Caithness Acquisition Company, LLC, (CAC) purchased all of CalEnergy's interests in the Coso projects for $205.0 million in cash, plus the assumption of CalEnergy's and its affiliates share of debt outstanding at the Coso projects which then totaled approximately $67.0 million. Each Coso partnership sells 100% of the electrical energy generated at its plant to Edison under a long-term Standard Offer No.4 power purchase agreement. Each power purchase agreement expires after the final maturity date of the 6.8% Senior Secured Notes and the 9.05% Senior Secured Notes issued by Funding Corp. Each Coso partnership is entitled to the following payments under its power purchase agreement: * Capacity payments for being able to produce electricity at certain levels. Capacity payments are fixed throughout the life of each power purchase agreement; * Capacity bonus payments if the Coso partnership is able to produce electricity above a specified higher level. The maximum annual capacity bonus payment available is also fixed throughout the life of each power purchase agreement; and 20 * Energy payments which are based on the amount of electricity the Coso partnership's plant actually produces. Energy payments were fixed for the first ten years of firm operation under each power purchase agreement. After the first ten years of firm operation and until a Coso partnership's power purchase agreement expires, Edison makes energy payments to the Coso partnership based on Edison's "avoided cost of energy". Edison's avoided cost of energy is Edison's cost to generate electricity if Edison were to produce it itself or buy it from another power producer rather than buy it from the Coso partnerships. The power purchase agreement for the Navy I partnership will expire in August 2011, the power purchase agreement for the BLM partnership will expire in March 2019, and the power purchase agreement for the Navy II partnership will expire in January 2010. The fixed energy price period expired in August 1997 for the Navy I partnership, in March 1999 for the BLM partnership and in January 2000 for the Navy II partnership. For the three-months ended March 31, 2001, Edison's average avoided cost of energy paid to the Coso Partnerships was 15.1 cents per kWh, as compared to 9.3 cents per kWh for the three-months ended December 31, 2000. Estimates of Edison's future avoided cost of energy may vary significantly, and no one can predict the likely level of future avoided cost of energy prices. The Coso Partnerships implemented a steam-sharing program, which they established under the Coso Geothermal Exchange Agreement they entered into in 1994. 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 projects. 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. 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. The BLM Partnership pays a 10% royalty to the Bureau of Land Management based on the 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. 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 due in 2001 and $303.0 million of 9.05% senior secured notes due in 2009. The proceeds from the notes were loaned to the Coso partnerships and are payable to Funding Corp from payments of principal and interest on the notes. Funding Corp. does not conduct any other operations apart from issuing the notes. Under the depositary agreement, the Coso partnerships established accounts with a depositary and pledged those accounts as security for the benefit of the holders of the senior secured notes. All amounts deposited with the depositary are, at the direction of the Coso partnerships, invested by the depositary 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 depositary of a certificate from the relevant Coso partnerships detailing the amounts to be paid from funds in its respective revenue account. 21 Increases in natural gas prices and an imbalance between supply and demand, among other factors, has lead to significant increases in wholesale electricity prices in California. Edison had previously agreed to fixed tariffs with their retail customers that were significantly below the wholesale prices it pays in California. This resulted in significant under-recoveries by Edison of it's 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. Edison has not made payments to the Coso partnerships for power generated from November 2000 through March 26, 2001. The Coso partnerships have billed but uncollected receivables from Edison of $45,824 for November and December of 2000 and $78,765 for the first quarter of 2001. 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 capacity is based upon a number of factors and can be expected to vary throughout the year under normal operating conditions. The following data includes the operating capacity factor, capacity and electricity production (in kWh) for each Coso partnership on a stand alone basis: Three-Months Ended March 31, 2001 2000 ---- ---- Navy I Partnership (stand alone) Operating capacity factor 109.6% 113.3% Capacity (MW) (average) 87.70 90.62 kWh produced (000s) 189,422 197,916 BLM Partnership (stand alone) Operating capacity factor 102.2% 106.3% Capacity (MW) (average) 81.72 85.06 kWh produced (000s) 176,524 185,858 Navy II Partnership (stand alone) Operating capacity factor 106.5% 113.9% Capacity (MW) (average) 85.22 91.08 kWh produced (000s) 184,067 198,906 The Navy I Partnership's energy production was 189.4 million kWh for the three-months ended March 31, 2001, as compared to 197.9 million kWh for the same period in 2000, a decrease of 4.3%. The BLM Partnership's energy production was 176.5 million kWh for the three-months ended March 31, 2001, as compared to 185.9 million kWh for the same period in 2000, a decrease of 5.1%. The decrease in production for the BLM Partnership was due to a scheduled outage for turbine overhauls during that period in 2001, which did not occur during the same period in 2000. The Navy II Partnership's energy production was 184.1 million kWh for the three-months ended March 31, 2001, as compared to 198.9 million kWh for the same period in 2000, a decrease of 7.4%. That decrease in production in 2001 was due to increased steam transfers while the Navy II Partnership received 14.6 cents per kWh for energy delivered during that period in 2000. 22 Results of Operations for the three-months ended March 31, 2001 and 2000 The following discusses the results of operations of the Coso Partnerships for the three-months ending March 31, 2001 and 2000 (dollar amounts in tables are in thousands, except per kWh data):
Revenue Three-Months Three-Months Ended Ended March 31, 2001 March 31, 2000 $ cents/kWh $ cents/kWh - --------- - --------- Total Operating Revenues Navy I Partnership 31,870 16.8 8,980 4.5 BLM Partnership 26,775 15.2 7,180 3.9 Navy II Partnership 24,444 13.3 9,788 4.9 Capacity & Capacity Bonus Revenues Navy I Partnership 1,255 0.7 1,255 0.6 BLM Partnership 1,228 0.7 1,227 0.7 Navy II Partnership 1,233 0.7 1,234 0.6 Energy Revenues Navy I Partnership 30,615 16.2 7,725 3.9 BLM Partnership 25,547 14.5 5,953 3.2 Navy II Partnership 23,211 12.6 8,554 4.3
Total operating revenues for the Navy I Partnership, which consist of capacity payments, capacity bonus payments and energy payments, were $31.9 million for the three-months ended March 31, 2001, as compared to $9.0 million for the same period in 2000, an increase of $22.9 million. The Navy I Partnership's energy revenues were $30.6 million for the three-months ended March 31, 2001, as compared to $7.7 million for the same period in 2000, an increase of $22.9 million. Total operating revenues for the BLM Partnership, which consist of capacity payments, capacity bonus payments and energy payments, were $26.8 million for the three-months ended March 31, 2001, as compared to $7.2 million for the same period in 2000, an increase of $19.6 million. The BLM Partnership's energy revenues were $25.5 million for the three-months ended March 31, 2001, as compared to $6.0 million for the same period in 2000, an increase of $19.5 million. Total operating revenues for the Navy II Partnership, which consist of capacity payments, capacity bonus payments and energy payments, were $24.4 million for the three-months ended March 31, 2001, as compared to $9.8 million for the same period in 2000, an increase of $14.6 million. The Navy II Partnership's energy revenues were $23.2 million for the three-months ended March 31, 2001, as compared to $8.6 million for the same period in 2000, an increase of $14.6 million. These increases in operating and energy revenues for the three-month period ended March 31, 2001, as compared to the same period in 2000, were due to the increase in average avoided cost of energy from 3.25 cents per kWh for the three-month period in 2000, to 15.1 cents per kWh for three month period in 2001. Estimates of Edison's future avoided cost of energy, which fluctuate with the price of natural gas, may vary significantly, and no one can predict the likely level of future avoided cost of energy prices. 23 Interest and Other Income Three-Months Three-Months Ended Ended March 31, 2001 March 31, 2000 $ cents/kWh $ cents/kWh - --------- - --------- Navy I Partnership 135 0.1 323 0.2 BLM Partnership 620 0.4 5,315 2.9 Navy II Partnership 358 0.2 529 0.3 The Navy I Partnership's interest and other income was $135,000 for the three-months ended March 31, 2001, as compared to $323,000 for the same period in 2000, a decrease of 58.2%. The decrease for the three-months ended March 31, 2001, as compared to the same period in 2000, was primarily due to lower average cash balances resulting from Edison's non-payment for delivered energy. The BLM Partnership's interest and other income was $620,000 for the three-months ended March 31, 2001, as compared to $5.3 million for the same period in 2000, a decrease of $4.7 million. The decrease for the three-months ended March 31, 2001, as compared to the same period in 2000 was primarily due to a legal settlement of $5 million with Dow Chemical Company paid to the BLM Partnership in January of 2000 and lower average cash balances in 2001 resulting from Edison's non-payment for delivered energy. The Navy II Partnership's interest and other income was $358,000 for the three-months ended March 31, 2001, as compared to $529,000 for the same period in 2000, a decrease of 32.3%. The decrease for the three-months ended March 31, 2001, as compared to the same period in 2000, was primarily due to lower average cash balances resulting from Edison's non-payment for energy delivered during the three-month period ended March 31, 2001. Plant Operations Three-Months Three-Months Ended Ended March 31, 2001 March 31, 2000 $ cents/kWh $ cents/kWh - --------- - --------- Navy I Partnership 1,762 0.9 2,072 1.0 BLM Partnership 2,361 1.3 2,539 1.4 Navy II Partnership 1,975 1.1 2,105 1.1 The Navy I Partnership's operating expenses, including operating and general and administrative expenses, were $1.8 million for the three-months ended March 31, 2001, as compared to $2.1 million for the same period in 2000, a decrease of 14.3%. The BLM Partnership's operating expenses, including operating and general and administrative expenses, were $2.4 million for the three-months ended March 31, 2001, as compared to $2.5 million for the same period in 2000, a decrease of 4.0%. The Navy II Partnership's operating expenses, including operating and general and administrative expenses, were $2.0 million for the three-months ended March 31, 2001, as compared to $2.1 million for the same period in 2000, a decrease of 4.8%. The decreases for each of the Coso Partnerships for the three-months ended March 31, 2001, as compared to the same period in 2000, were primarily due to the implementation of management's ongoing plan to reduce operating costs, which began in March of 2000. 24 Royalty Expense Three-Months Three-Months Ended Ended March 31, 2001 March 31, 2000 $ cents/kWh $ cents/kWh - --------- - --------- Navy I Partnership 3,770 2.0 1,189 0.6 BLM Partnership 2,868 1.6 65 0.0 Navy II Partnership 3,712 2.0 1,775 0.9 The Navy I Partnership's royalty expense was $3.8 million for the three-months ended March 31, 2001, as compared to $1.2 million for the same period in 2000, an increase of $2.6 million. The BLM Partnership's royalty expense was $2.9 million for the three-months ended March 31, 2001, as compared to $65,000 for the same period in 2000, an increase of $2.8 million. The Navy II Partnership's royalty expense was $3.7 million for the three-months ended March 31, 2001, as compared to $1.8 million for the same period in 2000, an increase of $1.9 million. Each Coso Partnership's increase in royalty expense for the three-months ended March 31, 2001, as compared to the same period in 2000, was directly related to the increase in average avoided cost of energy from 3.25 cents per kWh for the three-month period ended March 31, 2000 to 15.1 cents per kWh for the three-month period ended March 31, 2001. Depreciation and Amortization Three-Months Three-Months Ended Ended March 31, 2001 March 31, 2000 $ cents/kWh $ cents/kWh - --------- - --------- Navy I Partnership 2,499 1.3 2,353 1.2 BLM Partnership 3,946 2.2 3,876 2.1 Navy II Partnership 3,753 2.0 3,698 2.0 Depreciation and amortization expenses for the three-months ended March 31, 2001 as compared to the same period in 2000, remained consistent over these periods. Interest Expense Three-Months Three-Months Ended Ended March 31, 2001 March 31, 2000 $ cents/kWh $ cents/kWh - --------- - --------- Navy I Partnership 2,984 1.6 3,173 1.6 BLM Partnership 2,257 1.3 2,308 1.2 Navy II Partnership 2,075 1.1 2,354 1.2 The Navy I Partnership's interest expense was $3.0 million for the three-months ended March 31, 2001, as compared to $3.2 million for the same period in 2000, a decrease of 6.3%. The Navy II Partnership's interest expense was $2.1 million for the three-months ended March 31, 2001, as compared to $2.4 million for the same period in 2000, a decrease of 12.5%. These decreases for the three-months ended March 31, 2001, as compared to the same period in 2000 were due to reductions in the principal amount of the project loan from Funding Corp. 25 Provision for Doubtful Accounts In recent months, Edison has experienced significant cash flow problems due in part to the difference between revenues received from its customers through currently frozen electric rates and the cost of producing service to its customers, including the cost to acquire electricity. This cash flow shortfall has adversely affected Edison's liquidity and in turn it has not paid the Coso Partnerships for the energy delivered from November 2000 through March 26, 2001. Despite extensive and continuing negotiations with Edison, the Coso Partnerships have been unable to secure from Edison a firm indication of the time frame during which they can expect payment for the remainder of the first quarter 2001 receivables, nor the amount, if any, that Edison is prepared to pay. Therefore, the Coso Partnerships increased the allowance for uncollectible amounts by $25,817, $25,950 and $26,998 for Navy I, BLM and Navy II, respectively, for the three-month period ended March 31, 2001. Liquidity and Capital Resources Each of the Navy I Partnership, the BLM Partnership and the Navy II Partnership derive substantially all of their cash flow from Edison under their power purchase agreements and from interest income earned on funds on deposit. The Coso Partnerships have used their cash primarily for capital expenditures for power plant improvements, resource and operating costs, distributions to partners and payments with respect to the project debt. The Coso Partnership's 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 increasing under-collections, coupled with its near term capital requirements has materially and adversely affected its liquidity. Unless actions are taken to restore Edison's financial condition, there is uncertainty of collection of receivables owed to the Coso Partnerships for revenues generated during the first quarter of 2001 and forward. Edison's failure to pay its obligations will have a material adverse effect on the Coso Partnership's ability to make debt service payments as they come due under the Funding Corp. notes. On March 27, 2001 the California Public Utility Commission ("CPUC") ordered Edison to resume paying qualifying facilities such as the Coso Partnerships at rates stipulated by the CPUC. For the month of April, the CPUC ordered Edison to prepay by mid-month for April generation. On April 19, 2001 the Coso Partnerships recieved the payment which was based on historical output. On April 30, 2001 a second payment was recieved for generation sold in the last five days of March. The following table sets forth a summary of each Coso Partnership's cash flows for the three-months ended March 31, 2001 and March 31, 2000.
Three-Months Three-Months Ended Ended March 31, 2001 March 31, 2000 Navy I Partnership (stand alone) Net cash provided by (used in) operating activities $ (2,470) $ 8,624 Net cash provided by (used in) investing activities (18) 2,445 Net cash provided by (used in) financing activties -- (5,556) ------- ------- Net change in cash and cash equivalents $ (2,488) $ 5,513 ======= ======= BLM Partnership (stand alone) Net cash provided by operating activities $ 947 $ 9,651 Net cash provided by (used in) investing activities (2,045) 2,968 Net cash provided by (used in) financing activities --- (4,105) ------- ------- Net change in cash and cash equivalents $ (1,098) $ 8,514 ======= ======= 26 Navy II Partnership (stand alone) Net cash provided by (used in) operating activities $ (911) $ 16,815 Net cash provided by (used in) investing activities 366 42,822 Net cash provided by (used in) financing activities --- (43,004) ------- ------- Net change in cash and cash equivalents $ 545 $ 16,633 ======= =======
The Navy I Partnership's cash flows from operating activities decreased by $11.1 million for the three-months ended March 31, 2001, as compared to the same period in 2000, primarily due to increases in receivables as a result of Edison's non-payment for energy delivered. Cash used in investing activities at the Navy I Partnership increased by $2.5 million for the three-months ended March 31, 2001, as compared to the same period in 2000, primarily due to a decrease in restricted cash requirements associated with the project loan from Funding Corp. The Navy I Partnership's cash flows from financing activities increased by $5.6 million for the three-months ended March 31, 2001, as compared to the same period in 2000, due to a payment on the project loan from Funding Corp. in January of 2000. The BLM Partnership's cash flows from operating activities decreased by $8.7 million for the three-months ended March 31, 2001, as compared to the same period in 2000, primarily due to increases in receivables as a result of Edison's non-payment for energy delivered. Cash used in investing activities at the BLM Partnership increased by $5.0 million for the three-months ended March 31, 2001, as compared to the same period in 2000, primarily due to a decrease in restricted cash requirements associated with the project loan from Funding Corp. for the three-month period ended March 31, 2000. The BLM Partnership's cash flows from financing activities increased by $4.1 million for the three-months ended March 31, 2001, as compared to the same period in 2000, due to a payment on the project loan from Funding Corp. in January of 2000. The Navy II Partnership's cash flows from operating activities decreased by $17.7 million for the three-months ended March 31, 2001, as compared to the same period in 2000, primarily due to increases in receivables as a result of Edison's non-payment for energy delivered. Cash flows from investing activities at the Navy II Partnership decreased by $42.5 million for the three-months ended March 31, 2001, as compared to the same period in 2000, primarily due to a decrease in restricted cash requirements associated with the project loan from Funding Corp. for the three-month period ended March 31, 2000 The Navy II Partnership's cash flows from financing activities increased by $43.0 million for the three-months ended March 31, 2001, as compared to the same period in 2000, due to a payment on the project loan from Funding Corp. in January of 2000. 27 New Accounting Pronouncements In June 1998, the Financial Accounting Standards Board issued Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and Hedging Activities." The statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires the changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Coso Partnerships have adopted FAS 133, and assessed that it has no material effect on their financial statements. PART II. OTHER INFORMATION ITEM 1. Legal Proceedings Settlement of Litigation In February 2000, Navy I, Navy II, and BLM reached a settlement with Edison, subject to the approval of California Public Utilities Commission, which was received in December 2000. The case has not yet been dismissed pending completion of certain obligations of the Coso Partnerships under the settlement agreements. The cost of the settlement was allocated among the Coso Partnerships. General Except as otherwise described above, the Coso Partnerships are currently parties to various minor items of litigation, 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 compilation 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 Generally Accepted Accounting Principles 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. 28 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. 29 COSO PARTNERSHIPS UNAUDITED CONDENSED COMBINED BALANCE SHEETS (Dollars in thousands)
March 31, December 31, 2001 2000 Assets: Cash and cash equivalents............................................... $ 12,978 $ 17,109 Restricted cash and investments......................................... 44,433 47,712 Accounts receivable, net................................................ 4,479 590 Prepaid expenses and other assets....................................... 1,416 2,671 Amounts due from related parties........................................ 5,964 6,191 Property, plant and equipment, net...................................... 435,670 439,641 Power purchase agreement, net........................................... 56,111 57,364 Investments............................................................. 13,391 13,485 Deferred financing costs, net........................................... 8,164 8,564 ------- ------- $ 582,606 $ 593,327 ======= ======= Liabilities and Partners' Capital: Accounts payable and accrued liabilities................................ $ 53,168 $ 36,260 Amounts due to related parties.......................................... 24,756 23,460 Project loans........................................................... 330,067 330,067 ------- ------- 407,991 389,787 Partners' capital.......................................................... 174,615 203,540 ------- ------- $ 582,606 $ 593,327 ======= ======= See accompanying notes to the unaudited condensed combined financial statements
30 COSO PARTNERSHIPS UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2001 2000 Revenue: Energy revenues............................................................ $ 79,372 $ 22,232 Capacity................................................................... 3,717 3,716 Interest and other income.................................................. 1,113 6,167 -------- ------ Total revenue....................................................... 84,202 32,115 Operating expenses: Plant operating expenses................................................... 6,097 6,716 Royalty expense............................................................ 10,351 3,029 Provision for doubtful accounts............................................ 78,765 -- Depreciation and amortization.............................................. 10,198 9,927 -------- ------ Total operating expenses............................................ 105,411 19,672 Operating income (loss)............................................. (21,209) 12,443 Other expenses: Interest expense........................................................... 7,316 7,835 Amortization on deferred financing......................................... 401 402 -------- ------ Total other expenses................................................ 7,717 8,237 Net income (loss)................................................... $ (28,926) $ 4,206 ======== ====== See accompanying notes to the unaudited condensed combined financial statements
31 COSO PARTNERSHIPS UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Three-Months Three-Months Ended Ended March 31, March 31, 2001 2000 Net cash provided by (used in) operating activities........................... $ (2,435) $ 35,090 Net cash provided by (used in) investing activities........................... (1,696) 48,235 Net cash provided by (used in) financing activities........................... --- (52,665) ------- -------- Net change in cash and cash equivalents....................................... $ (4,131) $ 30,660 ======= ======== See accompanying notes to the unaudited condensed combined financial statements
32 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 read in conjunction with each individual partnership's unaudited condensed financial statements. (2) New Accounting Pronouncements In June 1998, the Financial Accounting Standards Board issued Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and Hedging Activities." The statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires the changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Coso Partnerships have adopted FAS 133, and assessed that it has no material effect on their financial statements. 33 ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits 27.1 Financial Data Schedule-Form SX-Caithness Coso Funding Corp. 27.2 Financial Data Schedule-Form SX-Coso Finance Partners 27.3 Financial Data Schedule-Form SX-Coso Energy Developers 27.4 Financial Data Schedule-Form SX-Coso Power Developers (b) Reports on Form 8-K The Coso Partnerships filed current reports on Form 8-K dated January 18, 2001 reporting Moodys Investor Services downgrade of Funding Corp's notes on January 17, 2001 to "Caa2" reflecting their recent downgrade of Edison to a similar rating. 34 EXHIBIT 27.1 Form S-X Commercial and Industrial Companies Financial Data Schedule Worksheet for: CAITHNESS COSO FUNDING CORP. ---------------------------- Review the following list of tags for Article 5 and fill in the correct data in the column(s) provided. Generally, only one column of information will be required, however, two columns are provided if required in the Financial Data Schedule. Unless otherwise noted, all tags are required. A response is required for each item within the schedule. Use the value "0" (zero) if information is immaterial, inapplicable or unknown. Decimals may not be used to state financial data except as indicated. Values not provided will be entered as "0" (zero). Missing dates will be entered as "TO COME". Please be sure to verify all information in the EDGARized exhibit. To include a footnote, place a number in parentheses next to the value and provide the text of each corresponding footnote at the end of the worksheet form. Do you wish to include a LEGEND? This schedule contains summary financial Yes X No information extracted from *_____________ --- --- and is equalified in its entirety by reference to such financial statements. *Identify the financial statement(s) to be referenced in the legend: RESTATED Are your financials being "restated" (NO VALUE REQUIRED) from a previously file period? Yes X No --- --- CIK Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT CIK: NAME Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT NAME: MULTIPLIER Do the financials require a multiplier X 1,000 1,000,000,000 other than 1 (one)? --- ---- X Yes No 1,000,000 1,000,000,000,000 --- --- --- ---- CURRENCY CURRENCY OF FINANCIAL DATA: Is the currency used other than US Dollars? Use in conjunction with EXCHANGE RATE tag. Yes X No --- --- PERIOD TYPE - MOS X 3 - MOS -- ---- -- --- X YEAR YEAR --- --- (for annual report filings) OTHER OTHER ---- ---- FISCAL YEAR END (example: DEC-31-1997) Dec-31-2000 DEC-31-2001 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD START (example: JAN-01-1997) Jan-01-2000 JAN-01-2001 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD END (example: SEP-30-1997) Dec-31-2000 MAR-31-2001 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE: Is the exchange rate other than 1 (one)? Value may contain up to 5 decimal places) Use in conjunction with CURRENCY tag. Yes X No --- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS ---- ----- --- CASH 0 0 SECURITIES 0 0 RECEIVABLES 331,353 338,668 ALLOWANCES 0 0 INVENTORY 0 0 CURRENT ASSETDS 1,286 8,601 PP&E 0 0 DEPRECIATION 0 0 TOTAL ASSETS 331,353 338,668 CURRENT LIABILITIES 1,286 8,601 BONDS 300,067 330,067 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 331,353 338,668 SALES 0 0 TOTAL REVENUES 30,799 8,601 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 0 0 LOSS PROVISION 0 0 INTEREST EXPENSES 30,799 8,601 INCOME PRETAX 0 0 INCOME TAX 0 0 INCOME CONTINUING 0 0 DISCONTINUED 0 0 EXTRAORDINARY 0 0 CHANGES 0 0 NET INCOME 0 0 EPS BASIC 0 0 (Value may contain up to 3 decimal places) EPS DILUTED 0 0 (Value may contain up to 3 decimal places) Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.2 Form S-X Commercial and Industrial Companies Financial Data Schedule Worksheet for: COSO FINANCE PARTNERS --------------------- Review the following list of tags for Article 5 and fill in the correct data in the column(s) provided. Generally, only one column of information will be required, however, two columns are provided if required in the Financial Data Schedule. Unless otherwise noted, all tags are required. A response is required for each item within the schedule. Use the value "0" (zero) if information is immaterial, inapplicable or unknown. Decimals may not be used to state financial data except as indicated. Values not provided will be entered as "0" (zero). Missing dates will be entered as "TO COME". Please be sure to verify all information in the EDGARized exhibit. To include a footnote, place a number in parentheses next to the value and provide the text of each corresponding footnote at the end of the worksheet form. Do you wish to include a LEGEND? This schedule contains summary financial Yes X No information extracted from *_____________ --- --- and is equalified in its entirety by reference to such financial statements. *Identify the financial statement(s) to be referenced in the legend: RESTATED Are your financials being "restated" (NO VALUE REQUIRED) from a previously file period? Yes X No --- --- CIK Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT CIK: NAME Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT NAME: MULTIPLIER Do the financials require a multiplier X 1,000 1,000,000,000 other than 1 (one)? --- ---- X Yes No 1,000,000 1,000,000,000,000 --- --- --- ---- CURRENCY CURRENCY OF FINANCIAL DATA: Is the currency used other than US Dollars? Use in conjunction with EXCHANGE RATE tag. Yes X No --- --- PERIOD TYPE - MOS X 3 - MOS -- ---- -- ---- X YEAR YEAR --- --- (for annual report filings) OTHER OTHER ---- ---- FISCAL YEAR END (example: DEC-31-1997) Dec-31-2000 DEC-31-2001 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD START (example: JAN-01-1997) Jan-01-2000 JAN-01-2001 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD END (example: SEP-30-1997) Dec-31-2000 MAR-31-2001 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE: Is the exchange rate other than 1 (one)? Value may contain up to 5 decimal places) Use in conjunction with CURRENCY tag. Yes X No --- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS ---- ----- CASH 3,506 1,018 SECURITIES 22,996 22,461 RECEIVABLES 17,715 50,334 ALLOWANCES 15,234 41,051 INVENTORY 0 0 CURRENT ASSETS 6,796 10,733 PP&E 228,718 229,410 DEPRECIATION 79,642 81,994 TOTAL ASSETS 198,409 199,725 CURRENT LIABILITIES 16,554 22,827 BONDS 134,984 134,984 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 198,409 199,725 SALES 67,653 31,870 TOTAL REVENUES 70,159 32,005 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 44,358 33,848 LOSS PROVISION 0 0 INTEREST EXPENSES 13,013 3,114 INCOME PRETAX 0 0 INCOME TAX 0 0 INCOME CONTINUING 0 0 DISCONTINUED 0 0 EXTRAORDINARY 0 0 CHANGES 0 0 NET INCOME 12,788 (4,957) EPS BASIC 0 0 (Value may contain up to 3 decimal places) EPS DILUTED 0 0 (Value may contain up to 3 decimal places) Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.3 Form S-X Commercial and Industrial Companies Financial Data Schedule Worksheet for: COSO ENERGY DEVELOPERS ---------------------- Review the following list of tags for Article 5 and fill in the correct data in the column(s) provided. Generally, only one column of information will be required, however, two columns are provided if required in the Financial Data Schedule. Unless otherwise noted, all tags are required. A response is required for each item within the schedule. Use the value "0" (zero) if information is immaterial, inapplicable or unknown. Decimals may not be used to state financial data except as indicated. Values not provided will be entered as "0" (zero). Missing dates will be entered as "TO COME". Please be sure to verify all information in the EDGARized exhibit. To include a footnote, place a number in parentheses next to the value and provide the text of each corresponding footnote at the end of the worksheet form. Do you wish to include a LEGEND? This schedule contains summary financial Yes X No information extracted from *_____________ --- --- and is equalified in its entirety by reference to such financial statements. *Identify the financial statement(s) to be referenced in the legend: RESTATED Are your financials being "restated" (NO VALUE REQUIRED) from a previously file period? Yes X No --- --- CIK Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT CIK: NAME Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT NAME: MULTIPLIER Do the financials require a multiplier X 1,000 1,000,000,000 other than 1 (one)? --- ---- X Yes No 1,000,000 1,000,000,000,000 --- --- --- ---- CURRENCY CURRENCY OF FINANCIAL DATA: Is the currency used other than US Dollars? Use in conjunction with EXCHANGE RATE tag. Yes X No --- --- PERIOD TYPE - MOS X 3 - MOS -- ---- -- ---- X YEAR YEAR --- --- (for annual report filings) OTHER OTHER ---- ---- FISCAL YEAR END (example: DEC-31-1997) Dec-31-2000 DEC-31-2001 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD START (example: JAN-01-1997) Jan-01-2000 JAN-01-2001 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD END (example: SEP-30-1997) Dec-31-2000 MAR-31-2001 --------------- ----------- mmm-dd-yyyy mmm-dd-yyyy EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE: Is the exchange rate other than 1 (one)? Value may contain up to 5 decimal places) Use in conjunction with CURRENCY tag. Yes X No --- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS ---- ----- CASH 5,862 4,764 SECURITIES 14,502 12,514 RECEIVABLES 15,684 43,142 ALLOWANCES 15,279 41,229 INVENTORY 0 0 CURRENT ASSETS 7,280 7,211 PP&E 238,244 242,313 DEPRECIATION 84,626 88,341 TOTAL ASSETS 201,312 199,160 CURRENT LIABILITIES 31,160 39,072 BONDS 100,907 100,907 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 201,312 199,160 SALES 57,453 26,775 TOTAL REVENUES 65,578 27,395 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 46,693 35,125 LOSS PROVISION 0 0 INTEREST EXPENSES 9,492 2,336 INCOME PRETAX 0 0 INCOME TAX 0 0 INCOME CONTINUING 0 0 DISCONTINUED 0 0 EXTRAORDINARY 0 0 CHANGES 0 0 NET INCOME 9,393 (10,066) EPS BASIC 0 0 (Value may contain up to 3 decimal places) EPS DILUTED 0 0 (Value may contain up to 3 decimal places) Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.4 Form S-X Commercial and Industrial Companies Financial Data Schedule Worksheet for: COSO POWER DEVELOPERS --------------------- Review the following list of tags for Article 5 and fill in the correct data in the column(s) provided. Generally, only one column of information will be required, however, two columns are provided if required in the Financial Data Schedule. Unless otherwise noted, all tags are required. A response is required for each item within the schedule. Use the value "0" (zero) if information is immaterial, inapplicable or unknown. Decimals may not be used to state financial data except as indicated. Values not provided will be entered as "0" (zero). Missing dates will be entered as "TO COME". Please be sure to verify all information in the EDGARized exhibit. To include a footnote, place a number in parentheses next to the value and provide the text of each corresponding footnote at the end of the worksheet form. Do you wish to include a LEGEND? This schedule contains summary financial Yes X No information extracted from *_____________ --- --- and is equalified in its entirety by reference to such financial statements. *Identify the financial statement(s) to be referenced in the legend: RESTATED Are your financials being "restated" (NO VALUE REQUIRED) from a previously file period? Yes X No --- --- CIK Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT CIK: NAME Use this section only for coregistrant Does this data apply to a coregistrant filings. Yes X No --- --- COREGISTRANT NAME: MULTIPLIER Do the financials require a multiplier X 1,000 1,000,000,000 other than 1 (one)? --- ---- X Yes No 1,000,000 1,000,000,000,000 --- --- --- ---- CURRENCY CURRENCY OF FINANCIAL DATA: Is the currency used other than US Dollars? Use in conjunction with EXCHANGE RATE tag. Yes X No --- --- PERIOD TYPE - MOS X 3 - MOS -- ---- -- ---- YEAR YEAR --- --- (for annual report filings) OTHER OTHER ---- ---- FISCAL YEAR END (example: DEC-31-1997) Dec-31-2000 DEC-31-2001 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD START (example: JAN-01-1997) Jan-01-2000 JAN-01-2001 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy PERIOD END (example: SEP-30-1997) Dec-31-2000 MAR-31-2001 ----------- ----------- mmm-dd-yyyy mmm-dd-yyyy EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE: Is the exchange rate other than 1 (one)? Value may contain up to 5 decimal places) Use in conjunction with CURRENCY tag. Yes X No --- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS ---- ----- CASH 7,741 7,196 SECURITIES 10,214 9,458 RECEIVABLES 21,294 49,581 ALLOWANCES 15,312 42,310 INVENTORY 0 0 CURRENT ASSETS 14,572 14,917 PP&E 209,605 210,095 DEPRECIATION 72,658 75,813 TOTAL ASSETS 195,693 191,745 CURRENT LIABILITIES 14,094 24,049 BONDS 94,176 94,176 PREFERRED MANDATORY 0 0 PREFERRED 0 0 COMMON 0 0 OTHER SE 0 0 TOTAL LIABILITY AND EQUITY 195,639 191,745 SALES 58,366 24,444 TOTAL REVENUES 61,234 24,802 CGS 0 0 TOTAL COSTS 0 0 OTHER EXPENSES 49,895 36,438 LOSS PROVISION 0 0 INTEREST EXPENSES 9,899 2,267 INCOME PRETAX 0 0 INCOME TAX 0 0 INCOME CONTINUING 0 0 DISCONTINUED 0 0 EXTRAORDINARY 0 0 CHANGES 0 0 NET INCOME 1,440 (13,903) EPS BASIC 0 0 (Value may contain up to 3 decimal places) EPS DILUTED 0 0 (Value may contain up to 3 decimal places) Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 10, 2001 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 corporation By: /S/ CHRISTOPHER T. MCCALLION ----------------------------- Christopher T. McCallion Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer) COSO ENERGY DEVELOPERS a California corporation By: /S/ CHRISTOPHER T. MCCALLION ----------------------------- Christopher T. McCallion Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer) COSO POWER DEVELOPERS a California corporation By: /S/ CHRISTOPHER T. MCCALLION ----------------------------- Christopher T. McCallion Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----