-----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, JLOYnJoCIvu9QyQm90k/OOPxZy3Bbmyx4nH5cuA6S7ALXlBUnZxOmz7JUrNEdKJ0 a4U2mEZEtnCv1wNXmJhAgw== 0000949149-00-000003.txt : 20000516 0000949149-00-000003.hdr.sgml : 20000516 ACCESSION NUMBER: 0000949149-00-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SALTON SEA FUNDING CORP CENTRAL INDEX KEY: 0000949149 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 470790493 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-95538 FILM NUMBER: 630504 BUSINESS ADDRESS: STREET 1: 302 S 36TH STE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4023414500 MAIL ADDRESS: STREET 1: 302 SOUTH 36TH ST STREET 2: STE 400 A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SALTON SEA BRINE PROCESSING L P CENTRAL INDEX KEY: 0000949256 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 330601721 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-95538-01 FILM NUMBER: 630505 BUSINESS ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4022311641 MAIL ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SALTON SEA POWER GENERATION L P CENTRAL INDEX KEY: 0000949258 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 330567411 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-95538-02 FILM NUMBER: 630506 BUSINESS ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4022311641 MAIL ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FISH LAKE POWER LLC CENTRAL INDEX KEY: 0000949260 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 330453364 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-95538-03 FILM NUMBER: 630507 BUSINESS ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4022311641 MAIL ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 FORMER COMPANY: FORMER CONFORMED NAME: FISH LAKE POWER CO DATE OF NAME CHANGE: 19950810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SALTON SEA ROYALTY CO CENTRAL INDEX KEY: 0000949262 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 470790492 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-95538-06 FILM NUMBER: 630508 BUSINESS ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4022311641 MAIL ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VULCAN POWER CO /NV CENTRAL INDEX KEY: 0000949462 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 953992087 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-95538-04 FILM NUMBER: 630509 BUSINESS ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400 A CITY: OMAJA STATE: NE ZIP: 68131 BUSINESS PHONE: 4022311641 MAIL ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VULCAN/BN GEOTHERMAL POWER CO CENTRAL INDEX KEY: 0001017939 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC, GAS & SANITARY SERVICES [4900] IRS NUMBER: 953992087 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-07527-07 FILM NUMBER: 630510 BUSINESS ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4022311641 MAIL ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAN FELIPE ENERGY CO CENTRAL INDEX KEY: 0001017941 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC, GAS & SANITARY SERVICES [4900] IRS NUMBER: 330315787 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-07527-09 FILM NUMBER: 630511 BUSINESS ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4022311641 MAIL ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONEJO ENERGY CO CENTRAL INDEX KEY: 0001017943 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC, GAS & SANITARY SERVICES [4900] IRS NUMBER: 330268500 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-07527-10 FILM NUMBER: 630512 BUSINESS ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4022311641 MAIL ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEATHERS L P CENTRAL INDEX KEY: 0001017945 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC, GAS & SANITARY SERVICES [4900] IRS NUMBER: 330305342 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-07527-12 FILM NUMBER: 630513 BUSINESS ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4022311641 MAIL ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEL RANCH LP CENTRAL INDEX KEY: 0001017946 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 330278290 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-07527-13 FILM NUMBER: 630514 BUSINESS ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4022311641 MAIL ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELMORE LP CENTRAL INDEX KEY: 0001017947 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 330278294 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-07527-14 FILM NUMBER: 630515 BUSINESS ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4022311641 MAIL ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VPC GEOTHERMAL LLC CENTRAL INDEX KEY: 0001087415 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 330268085 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-79581-12 FILM NUMBER: 630516 BUSINESS ADDRESS: STREET 1: C/O SALTON SEA FUNDING CORP STREET 2: 302 S 36TH STE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4023414500 MAIL ADDRESS: STREET 1: C/O SALTON SEA FUNDING CORP STREET 2: 302 SOUTH 36TH ST #400A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SALTON SEA POWER LLC CENTRAL INDEX KEY: 0001087416 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 470810713 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-79581-13 FILM NUMBER: 630517 BUSINESS ADDRESS: STREET 1: C/O SALTON SEA FUNDING CORP STREET 2: 302 S 36TH STE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4023414500 MAIL ADDRESS: STREET 1: C/O SALTON SEA FUNDING CORP STREET 2: 302 SOUTH 36TH ST #400A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALENERGY MINERALS LLC CENTRAL INDEX KEY: 0001087417 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 470810713 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-79581-14 FILM NUMBER: 630518 BUSINESS ADDRESS: STREET 1: C/O SALTON SEA FUNDING CORP STREET 2: 302 S 36TH STE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4023414500 MAIL ADDRESS: STREET 1: C/O SALTON SEA FUNDING CORP STREET 2: 302 SOUTH 36TH ST #400A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CE TURBO LLC CENTRAL INDEX KEY: 0001087418 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 470810713 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-79581-15 FILM NUMBER: 630519 BUSINESS ADDRESS: STREET 1: C/O SALTON SEA FUNDING CORP STREET 2: 302 S 36TH STE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4023414500 MAIL ADDRESS: STREET 1: C/O SALTON SEA FUNDING CORP STREET 2: 302 SOUTH 36TH ST #400A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CE SALTON SEA INC CENTRAL INDEX KEY: 0001087419 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 470810713 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-79581-16 FILM NUMBER: 630520 BUSINESS ADDRESS: STREET 1: C/O SALTON SEA FUNDING CORP STREET 2: 302 S 36TH STE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4023414500 MAIL ADDRESS: STREET 1: C/O SALTON SEA FUNDING CORP STREET 2: 302 SOUTH 36TH ST #400A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SALTON SEA MINERALS CORP CENTRAL INDEX KEY: 0001087420 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 470810713 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-79581-17 FILM NUMBER: 630521 BUSINESS ADDRESS: STREET 1: C/O SALTON SEA FUNDING CORP STREET 2: 302 S 36TH STE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4023414500 MAIL ADDRESS: STREET 1: C/O SALTON SEA FUNDING CORP STREET 2: 302 SOUTH 36TH ST #400A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALENERGY OPERATING CORP CENTRAL INDEX KEY: 0001087421 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 470810713 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-79581-18 FILM NUMBER: 630522 BUSINESS ADDRESS: STREET 1: C/O SALTON SEA FUNDING CORP STREET 2: 302 S 36TH STE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4023414500 MAIL ADDRESS: STREET 1: C/O SALTON SEA FUNDING CORP STREET 2: 302 SOUTH 36TH ST #400A CITY: OMAHA STATE: NE ZIP: 68131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NIGUEL ENERGY CO CENTRAL INDEX KEY: 0001087460 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 330268502 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-79581-19 FILM NUMBER: 630523 BUSINESS ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4022311641 MAIL ADDRESS: STREET 1: 302 SOUTH 36TH STREET STREET 2: SUITE 400-A CITY: OMAHA STATE: NE ZIP: 68131 10-Q 1 FIRST QUARTER 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2000 Commission File No. 33-95538 SALTON SEA FUNDING CORPORATION (Exact name of registrant as specified in its charter) 47-0790493 (IRS Employer Identification No.) Salton Sea Brine Processing L.P. California 33-0601721 Salton Sea Power Generation L.P. California 33-0567411 Fish Lake Power LLC Delaware 33-0453364 Vulcan Power Company Nevada 95-3992087 CalEnergy Operating Corporation Delaware 33-0268085 Salton Sea Royalty LLC Delaware 47-0790492 VPC Geothermal LLC Delaware 91-1244270 San Felipe Energy Company California 33-0315787 Conejo Energy Company California 33-0268500 Niguel Energy Company California 33-0268502 Vulcan/BN Geothermal Power Company Nevada 33-3992087 Leathers, L.P. California 33-0305342 Del Ranch, L.P. California 33-0278290 Elmore, L.P. California 33-0278294 Salton Sea Power L.L.C. Delaware 47-0810713 CalEnergy Minerals LLC Delaware 47-0810718 CE Turbo LLC Delaware 47-0812159 CE Salton Sea Inc. Delaware 47-0810711 Salton Sea Minerals Corp. Delaware 47-0811261 (Exact name of Registrants (State or other (I.R.S. Employer as specified in their charters) jurisdiction of Identification No.) incorporation or organization) 302 S. 36th Street, Suite 400-A, Omaha, NE 68131 (Address of principal executive offices and Zip Code of Salton Sea Funding Corporation) Salton Sea Funding Corporation's telephone number, including area code: (402) 231-1641 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes X No All common stock of Salton Sea Funding Corporation is indirectly held by Magma Power Company. 100 shares of Common Stock were outstanding on March 31, 2000. SALTON SEA FUNDING CORPORATION Form 10-Q March 31, 2000 ------------- C O N T E N T S PART I: FINANCIAL INFORMATION Item 1. Financial Statements Page SALTON SEA FUNDING CORPORATION Independent Accountants' Report 4 Balance Sheets, March 31, 2000 and December 31, 1999 5 Statements of Operations for the Three Months Ended March 31, 2000 and 1999 6 Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999 7 Notes to Financial Statements 8 SALTON SEA GUARANTORS Independent Accountants' Report 9 Combined Balance Sheets, March 31, 2000 and December 31, 1999 10 Combined Statements of Operations for the Three Months Ended March 31, 2000 and 1999 11 Combined Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999 12 Notes to Combined Financial Statements 13 PARTNERSHIP GUARANTORS Independent Accountants' Report 14 Combined Balance Sheets, March 31, 2000 and December 31, 1999 15 Combined Statements of Operations for the Three Months Ended March 31, 2000 and 1999 16 Combined Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999 17 Notes to Combined Financial Statements 18 SALTON SEA ROYALTY LLC Independent Accountants' Report 19 Balance Sheets, March 31, 2000 and December 31, 1999 20 Statements of Operations for the Three Months Ended March 31, 2000 and 1999 21 Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999 22 Notes to Financial Statements 23 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 24 PART II: OTHER INFORMATION Item 1. Legal Proceedings 32 Item 2. Changes in Securities 32 Item 3. Defaults on Senior Securities 32 Item 4. Submission of Matters to a Vote of Security Holders 32 Item 5. Other Information 32 Item 6. Exhibits and Reports on Form 8-K 32 Signatures 33 Exhibit Index 34 INDEPENDENT ACCOUNTANTS' REPORT Board of Directors and Stockholder Salton Sea Funding Corporation Omaha, Nebraska We have reviewed the accompanying balance sheet of the Salton Sea Funding Corporation as of March 31, 2000, and the related statements of operations and cash flows for the three month periods ended March 31, 2000 and 1999. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such financial statements for them to be in conformity with generally accepted accounting principles generally accepted in the United States of America. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet of Salton Sea Funding Corporation as of December 31, 1999, and the related statements of operations, stockholder's equity, and cash flows for the year then ended (not presented herein); and in our report dated January 25, 2000, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of December 31, 1999 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. DELOITTE & TOUCHE LLP Omaha, Nebraska April 21, 2000 SALTON SEA FUNDING CORPORATION BALANCE SHEETS (Dollars in Thousands, Except per Share Amounts) March 31, December 31, 2000 1999 ----------- ---------- (unaudited) ASSETS Cash $ 10,720 $ 2,086 Prepaid expenses and other assets 14,494 3,617 Due from affiliates --- 2,118 Current portion secured project notes from Guarantors 25,072 25,072 Total current assets 50,286 32,893 Secured project notes from Guarantors 543,908 543,908 Investment in 1% of net assets of Guarantors 8,805 8,847 ---------- ---------- $ 602,999 $ 585,648 ========== ========== LIABILITIES AND STOCKHOLDER'S EQUITY Liabilities: Accrued liabilities $ 14,389 $ 3,607 Due to affiliates 6,628 --- Current portion long term debt 25,072 25,072 Total current liabilities 46,089 28,679 Senior secured notes and bonds 543,908 543,908 ---------- ---------- Total liabilities 589,997 572,587 Stockholder's equity: Common stock--authorized 1,000 shares, par value $.01 per share; issued and outstanding 100 shares --- --- Additional paid-in capital 5,366 5,366 Retained earnings 7,636 7,695 ---------- ---------- Total stockholder's equity 13,002 13,061 ---------- ---------- $ 602,999 $ 585,648 ========== ========== The accompanying notes are an integral part of these financial statements. SALTON SEA FUNDING CORPORATION STATEMENTS OF OPERATIONS (Dollars in Thousands) (Unaudited) Three Months Ended March 31, 2000 1999 Revenues: Interest income $ 10,963 $ 12,129 Equity in earnings (loss) of Guarantors (42) 116 - ---- -------- Total revenues 10,921 12,245 --------- -------- Expenses: General and administrative expenses 259 215 Interest expense 10,763 11,737 --------- -------- Total expenses 11,022 11,952 --------- -------- Income (loss) before income taxes (101) 293 Provision for income taxes expense (benefit) (42) 121 --------- -------- Net income (loss) $ (59) $ 172 ========= ========= The accompanying notes are an integral part of these financial statements. SALTON SEA FUNDING CORPORATION STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) Three Months Ended March 31, 2000 1999 Cash flows from operating activities: Net income (loss) $ (59) $ 172 Adjustments to reconcile net income (loss) to net cash flow from operating activities: Equity in (earnings) loss of guarantors 42 (116) Changes in assets and liabilities: Prepaid expenses and other assets (10,877) (10,361) Accrued liabilities 10,782 11,737 ---------- --------- Net cash flows from operating activities (112) 1,432 ---------- --------- Cash flows from financing activities: Increase in due to affiliates 8,746 22,929 ---------- --------- Net cash flows from financing activities 8,746 22,929 ---------- --------- Net change in cash 8,634 24,361 Cash at the beginning of period 2,086 17,629 ---------- --------- Cash at the end of period $ 10,720 $ 41,990 ========== ========= Supplemental disclosures: Interest paid $ --- $ --- ========== ========= The accompanying notes are an integral part of these financial statements. SALTON SEA FUNDING CORPORATION NOTES TO FINANCIAL STATEMENTS (in thousands) --------------------- 1. General: In the opinion of management of the Salton Sea Funding Corporation (the "Funding Corporation"), the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of March 31, 2000 and the results of operations for the three months ended March 31, 2000 and 1999 and cash flows for the three months ended March 31, 2000 and 1999. The results of operations for the three months ended March 31, 2000 and 1999 are not necessarily indicative of the results to be expected for the full year. The unaudited financial statements should be read in conjunction with the financial statements included in the Funding Corporation's annual report on Form 10-K for the year ended December 31, 1999. The Funding Corporation was formed on June 20, 1995 for the sole purpose of acting as issuer of senior secured notes and bonds. INDEPENDENT ACCOUNTANTS' REPORT Board of Directors and Stockholder Magma Power Company Omaha, Nebraska We have reviewed the accompanying combined balance sheet of the Salton Sea Guarantors as of March 31, 2000, and the related combined statements of operations and cash flows for the three month period ended March 31, 2000 and 1999. These financial statements are the responsibility of the Salton Sea Guarantors' management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such combined financial statements for them to be in conformity with generally accepted accounting principles generally accepted in the United States of America. We have previously audited, in accordance with generally accepted auditing standards, the combined balance sheet of the Salton Sea Guarantors as of December 31, 1999, and the related combined statements of operations, Guarantors' equity, and cash flows for the year then ended (not presented herein); and in our report dated January 25, 2000, we expressed an unqualified opinion on those combined financial statements. In our opinion, the information set forth in the accompanying combined balance sheet as of December 31, 1999 is fairly stated, in all material respects, in relation to the combined balance sheet from which it has been derived. DELOITTE & TOUCHE LLP Omaha, Nebraska April 21, 2000 SALTON SEA GUARANTORS COMBINED BALANCE SHEETS (Dollars in Thousands) March 31, December 31, 2000 1999 ---------- --------- (unaudited) ASSETS Accounts receivable $ 3,408 $ 11,537 Prepaid expenses and other assets 12,806 11,695 Total current assets 16,214 23,232 Restricted cash 7,907 10,001 Property, plant, contracts and equipment, net 556,112 552,903 Excess of cost over fair value of net assets acquired, net 46,552 46,878 ---------- --------- $ 626,785 $ 633,014 ========= ========= LIABILITIES AND GUARANTORS' EQUITY Liabilities: Accounts payable $ 198 $ 33 Accrued liabilities 13,932 7,862 Current portion of long term debt 9,737 9,737 Total current liabilities 23,867 17,632 Due to affiliates 18,878 27,993 Senior secured project note 284,217 284,217 ---------- --------- Total liabilities 326,962 329,842 Total Guarantors' equity 299,823 303,172 ---------- --------- $ 626,785 $ 633,014 ========== ========= The accompanying notes are an integral part of these financial statements. SALTON SEA GUARANTORS COMBINED STATEMENTS OF OPERATIONS (Dollars in Thousands) (Unaudited) Three Months Ended March 31 ------------------------ 2000 1999 -------- - ------- Revenues: Sales of electricity $ 8,893 $ 18,272 Interest and other income 127 792 --------- - ---- Total revenues 9,020 19,064 ---------- ---- Expenses: Operating, general and administration 5,758 7,308 Depreciation and amortization 4,094 4,022 Interest expense 5,840 6,076 Less capitalized interest (3,323) (1,704) ---------- ---- Total expenses 12,369 15,702 ---------- ---- Net income (loss) $ (3,349) $ 3,362 ========== ============= The accompanying notes are an integral part of these financial statements. SALTON SEA GUARANTORS COMBINED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) Three Months Ended March 31, -------------------- 2000 1999 Cash flows from operating activities: Net income (loss) $ (3,349) $ 3,362 Adjustments to reconcile net income (loss) to net cash flows from operating activities: Depreciation and amortization 4,094 4,022 Changes in assets and liabilities: Accounts receivable 8,129 5,688 Prepaid expenses and other assets (1,111) 1,211 Accounts payable and accrued liabilities 6,235 5,177 --------- ------------ Net cash flows from operating activities 13,998 19,460 -------- ------------ Cash flows from investing activities: Capital expenditures (6,977) (9,792) Decrease in restricted cash 2,094 7,760 -------- ------------ Net cash flows from investing activities (4,883) (2,032) Cash flows from financing activities: Decrease in due to affiliates (9,115) (17,428) -------- ------------ Net cash flows from financing activities (9,115) (17,428) ----------- ------- Net change in cash --- --- Cash at beginning of period --- --- ----------- - ------ Cash at end of period $ --- $ --- =========== ============= The accompanying notes are an integral part of these financial statements. SALTON SEA GUARANTORS NOTES TO COMBINED FINANCIAL STATEMENTS (in thousands) -------------------- 1. General: In the opinion of management of the Salton Sea Guarantors (the "Guarantors"), the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of March 31, 2000 and the results of operations for the three months ended March 31, 2000 and 1999 and cash flows for the three months ended March 31, 2000 and 1999. The results of operations for the three months ended March 31, 2000 and 1999 are not necessarily indicative of the results to be expected for the full year. The unaudited financial statements shall be read in conjunction with the financial statements included in the Funding Corporation's annual report on Form 10-K for the year ended December 31, 1999. The combined financial statements include the accounts of the partnerships in which the Guarantors have a 100% interest. INDEPENDENT ACCOUNTANTS' REPORT Board of Directors and Stockholder Magma Power Company Omaha, Nebraska We have reviewed the accompanying combined balance sheet of the Partnership Guarantors as of March 31, 2000, and the related combined statements of operations and cash flows for the three month periods ended March 31, 2000 and 1999. These financial statements are the responsibility of the Partnership Guarantors' management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such combined financial statements for them to be in conformity with generally accepted accounting principles generally accepted in the United States of America. We have previously audited, in accordance with generally accepted auditing standards, the combined balance sheet of the Partnership Guarantors as of December 31, 1999, and the related combined statements of operations, Guarantors' equity and cash flows for the year then ended (not presented herein); and in our report dated January 25, 2000, we expressed an unqualified opinion on those combined financial statements. In our opinion, the information set forth in the accompanying combined balance sheet as of December 31, 1999 is fairly stated, in all material respects, in relation to the combined balance sheet from which it has been derived. DELOITTE & TOUCHE LLP Omaha, Nebraska April 21, 2000 PARTNERSHIP GUARANTORS COMBINED BALANCE SHEETS (Dollars in Thousands) March 31, December 31, 2000 1999 (unaudited) ASSETS Accounts receivable $ 8,959 $ 16,295 Prepaid expenses and other assets 23,522 18,959 Total current liabilities 32,481 35,254 Restricted cash 26,470 60,454 Due from affiliates 66,487 75,274 Property, plant, contracts and equipment, net 589,226 531,427 Management fee 70,589 71,489 Excess of cost over fair value of net assets acquired, net 127,103 127,994 --------- --------- $ 912,356 $ 901,892 ========= ========= LIABILITIES AND GUARANTORS' EQUITY Liabilities: Accounts payable $ 3,422 $ 3,925 Accrued liabilities 26,255 13,534 Current portion of long term debt 10,562 10,562 Total current liabilities 40,239 28,021 Senior secured project notes 250,650 250,650 Deferred income taxes 98,328 98,907 --------- --------- Total liabilities 389,217 377,578 Guarantors' equity: Common stock 3 3 Additional paid-in capital 387,663 387,663 Retained earnings 135,473 136,648 --------- --------- Total Guarantors' equity 523,139 524,314 --------- --------- $ 912,356 $ 901,892 ========= ========= The accompanying notes are an integral part of these financial statements. PARTNERSHIP GUARANTORS COMBINED STATEMENTS OF OPERATIONS (Dollars in Thousands) (Unaudited) Three Months Ended March 31, 2000 1999 --------- --------- Revenues: Sales of electricity $ 10,389 $ 22,030 Interest and other income 476 2,319 ------------- -------- Total revenues 10,865 24,349 ------------- ------------- Expenses: Operating, general and administration 7,790 11,207 Depreciation and amortization 4,645 6,218 Interest expense 5,095 5,694 Less capitalized interest (4,911) (2,433) ------------- ------------- Total expenses 12,619 20,686 ------------- ------------- Income (loss) before income taxes (1,754) 3,663 Provision for income taxes expense (benefit) (579) 1,117 ------------- ------------- Net income (loss) $ (1,175) $ 2,546 ============= ============= The accompanying notes are an integral part of these financial statements. PARTNERSHIP GUARANTORS COMBINED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) Three Months Ended March 31, 2000 1999 --------- --------- Cash flows from operating activities: Net income (loss) $ (1,175) $ 2,546 Adjustments to reconcile net income (loss) to net cash flow from operating activities: Depreciation and amortization 4,645 6,218 Deferred income taxes (579) 1,117 Changes in assets and liabilities: Accounts receivable 7,336 12,159 Prepaid expenses and other assets (4,563) 190 Accounts payable and accrued liabilities 12,218 5,611 ----------- -------- Net cash flows from operating activities 17,882 27,841 ----------- -------- Cash flows from investing activities: Capital expenditures (60,850) (17,568) Decrease in restricted cash 33,984 10,580 Management fee 197 (384) ----------- -------- Net cash flows from investing activities (26,669) (7,372) ----------- -------- Cash flows from financing activities: Increase (decrease) in due from affiliates 8,787 (20,469) ----------- -------- Net cash flows from financing activities 8,787 (20,469) ----------- -------- Net change in cash --- --- Cash at beginning of period --- --- ----------- ------- - Cash at end of period $ --- $ --- =========== ============= The accompanying notes are an integral part of these financial statements. PARTNERSHIP GUARANTORS NOTES TO COMBINED FINANCIAL STATEMENTS (in thousands) -------------------- 1. General: In the opinion of management of the Partnership Guarantors (the "Guarantors"), the accompanying unaudited combined financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of March 31, 2000 and the results of operations for the three months ended March 31, 2000 and 1999 and cash flows for the three months ended March 31, 2000 and 1999. The results of operations for the three months ended March 31, 2000 and 1999 are not necessarily indicative of the results to be expected for the full year. The unaudited financial statements shall be read in conjunction with the financial statements included in the Funding Corporation's annual report on Form 10-K for the year ended December 31, 1999. The combined financial statements include the proportionate share of the accounts of the partnerships in which the Guarantors have an interest. INDEPENDENT ACCOUNTANTS' REPORT Board of Directors and Stockholder Magma Power Company Omaha, Nebraska We have reviewed the accompanying balance sheet of the Salton Sea Royalty LLC as of March 31, 2000, and the related statements of operations and cash flows for the three month periods ended March 31, 2000 and 1999. These financial statements are the responsibility of the Salton Sea Royalty LLC's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such financial statements for them to be in conformity with generally accepted accounting principles generally accepted in the United States of America. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet of the Salton Sea Royalty LLC as of December 31, 1999, and the related statements of operations, equity, and cash flows for the year then ended (not presented herein); and in our report dated January 25, 2000, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of December 31, 1999 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. As discussed in Note 1 to the financial statements, the Company converted to a limited liability company during 1999 and as such the statements of operations and cash flows for the three months ended March 31, 2000 and 1999 are not comparable due to the change in reporting entity which results in no tax expense in fiscal 2000. DELOITTE & TOUCHE LLP Omaha, Nebraska April 21, 2000 SALTON SEA ROYALTY LLC BALANCE SHEETS (Dollars in Thousands, Except per Share Amounts) March 31, December 31, 2000 1999 ----------- ----------- (unaudited) ASSETS Prepaid expenses and other assets $ 197 $ 235 Total current assets 197 235 Royalty stream, net 16,512 16,776 Excess of cost over fair value of net assets acquired, net 32,053 32,280 Due from affiliates 22,969 21,825 $ 71,731 $ 71,116 ============== ============== LIABILITIES AND EQUITY Liabilities: Accrued liabilities $ 327 $ 82 Current portion of long term debt 4,773 4,773 Total current liabilities 5,100 4,855 Senior secured project note 9,041 9,041 -------------- -------------- Total liabilities 14,141 13,896 Equity: Common stock, par value $.01 per share; 100 share authorized, issued and outstanding - - Additional paid-in capital 1,561 1,561 Retained earnings 56,029 55,659 -------------- -------------- Total equity 57,590 57,220 -------------- -------------- $ 71,731 $ 71,116 ============== ============== The accompanying notes are an integral part of these financial statements. SALTON SEA ROYALTY LLC STATEMENTS OF OPERATIONS (Dollars in Thousands) (Unaudited) Three Months Ended March 31, 2000 1999 ------- ------- Revenues: Royalty income $ 1,560 $ 13,459 Expenses: Operating, general and administrative expenses 415 1,108 Amortization of royalty stream and goodwill 491 2,449 Interest expense 284 468 ------------- ------------- Total expenses 1,190 4,025 ------------- ------------- Income before income taxes 370 9,434 Provision for income taxes --- 3,790 ------------- ------------- Net income $ 370 $ 5,644 ============= ============= The accompanying notes are an integral part of these financial statements. SALTON SEA ROYALTY LLC STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) Three Months Ended March 31, --------------------- 2000 1999 --------- -------- Cash flows from operating activities: Net income $ 370 $ 5,644 Adjustments to reconcile net income to net cash flow from operating activities: Amortization of royalty stream and goodwill 491 2,449 Changes in assets and liabilities: Prepaid expenses and other assets 38 70 Accrued liabilities and deferred income taxes 245 (5,130) Net cash flows from operating activities 1,144 3,033 Net cash flows from financing activities: Increase in due from affiliates (1,144) (3,033) ---------- ------ -- Net cash flows from financing activities (1,144) (3,033) Net change in cash --- --- Cash at beginning of period --- --- ---------- - ------- Cash at end of period $ --- $ --- ========== ============= The accompanying notes are an integral part of these financial statements. SALTON SEA ROYALTY LLC NOTES TO FINANCIAL STATEMENTS (in thousands) -------------------- 1. General: In the opinion of management of the Salton Sea Royalty LLC (the "Company"), the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of March 31, 2000 and the results of operations for the three months ended March 31, 2000 and 1999 and cash flows for the three months ended March 31, 2000 and 1999. The results of operations for the three months ended March 31, 2000 and 1999 are not necessarily indicative of the results to be expected for the full year. The Company was converted to a limited liability company during 1999 and as such the statements of operations and cash flows for the three months ended March 31, 2000 and 1999 are not comparable due to the change in reporting entity which results in no tax expense in fiscal 2000. Income taxes are now the responsibility of the partners and the Company has no obligation to provide funds to the partners for payment of any tax liabilities. Accordingly, the Company has no tax obligations. The unaudited financial statements shall be read in conjunction with the financial statements included in the Funding Corporation's annual report on Form 10-K for the year ended December 31, 1999. THE SALTON SEA FUNDING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (in thousands, except per kwh data) --------------------------------- Results of Operations: The following is management's discussion and analysis of certain significant factors which have affected the Salton Sea Funding Corporation's (the "Funding Corporation") and the Salton Sea Guarantors, the Partnership Guarantors and the Salton Sea Royalty LLC's (collectively, the "Guarantors") financial condition and results of operations during the periods included in the accompanying statements of operations. Funding Corporation was organized for the sole purpose of acting as issuer of senior secured notes and bonds (the "Securities"). The Securities are payable from the proceeds of payments made of principal and interest on the senior secured project notes by the Guarantors to the Funding Corporation. The Securities are guaranteed on a joint and several basis by the Guarantors. The guarantees of the Partnership Guarantors and Salton Sea Royalty LLC are limited to available cash flow. The Funding Corporation does not conduct any operations apart from the Securities. The Vulcan, Leathers, Del Ranch and Elmore partnerships (collectively, the "Partnership Projects") sell all electricity generated by the respective plants pursuant to four long-term SO4 Agreements between the projects and Southern California Edison Company ("Edison"). These SO4 Agreements provide for capacity payments, capacity bonus payments and energy payments. Edison makes fixed annual capacity payments to the projects and, to the extent that capacity factors exceed certain benchmarks, is required to make capacity bonus payments. The price for capacity and capacity bonus payments is fixed for the life of the SO4 Agreements and the capacity payments are significantly higher in the months of June through September. The scheduled energy price periods of the Partnership Project SO4 Agreements extended until February 1996 for the Vulcan Partnership, December 1998 for the Hoch (Del Ranch) and Elmore Partnerships, and December 1999 for the Leathers Partnership. For 2000, the Partnership Projects are receiving Edison's avoided cost of energy pursuant to their respective SO4 Agreements. The Salton Sea I Project sells electricity to Edison pursuant to a 30-year negotiated power purchase agreement, as amended (the "Salton Sea I PPA"), which provides for capacity and energy payments. The energy payment is calculated using a base price which is subject to quarterly adjustments based on a basket of indices. The time period weighted average energy payment for Salton Sea I was 5.4 cents per kWh during the three months ended March 31, 2000. As the Salton Sea I PPA is not an SO4 Agreement, the energy payments do not revert to Edison's avoided cost of energy. THE SALTON SEA FUNDING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (in thousands, except per kwh data) --------------------------------- Results of Operations: (continued) The Salton Sea II and Salton Sea III Projects sell electricity to Edison pursuant to 30-year modified SO4 Agreements that provide for capacity payments, capacity bonus payments and energy payments. The price for contract capacity and contract capacity bonus payments is fixed for the life of the modified SO4 Agreements. The energy payments for the first ten year period, which expires April 4, 2000 for Salton Sea II and expired on February 13, 1999 for Salton Sea III, are levelized at a time period weighted average of 10.6 cents per kWh and 9.8 cents per kWh for Salton Sea II and Salton Sea III, respectively. Thereafter, the monthly energy payments will be at Edison's avoided cost of energy. For Salton Sea II only, Edison is entitled to receive, at no cost, 5% of all energy delivered in excess of 80% of contract capacity through March 31, 2004. The Salton Sea IV Project sells electricity to Edison pursuant to a modified SO4 agreement which provides for contract capacity payments on 34 MW of capacity at two different rates based on the respective contract capacities deemed attributable to the original Salton Sea PPA option (20 MW) and to the original Fish Lake Power Purchase Agreement ("PPA") (14 MW). The capacity payment price for the 20 MW portion adjusts quarterly based upon specified indices and the capacity payment price for the 14 MW portion is a fixed levelized rate. The energy payment (for deliveries up to a rate of 39.6 MW) is at a fixed price for 55.6% of the total energy delivered by Salton Sea IV and is based on an energy payment schedule for 44.4% of the total energy delivered by Salton Sea IV. The contract has a 30-year term but Edison is not required to purchase the 20 MW of capacity and energy originally attributable to the Salton Sea I PPA option after September 30, 2017, the original termination date of the Salton Sea I PPA. For the three months ended March 31, 2000, Edison's average avoided cost of energy was 3.2 cents per kWh. Estimates of Edison's future avoided cost of energy vary substantially from year to year. The Company cannot predict the likely level of avoided cost of energy prices under the SO4 Agreements and the modified SO4 Agreements at the expiration of the scheduled payment periods. The revenues generated by each of the projects operating under such Agreements will likely decline significantly after the expiration of the respective scheduled payment periods. THE SALTON SEA FUNDING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (in thousands, except per kwh data) --------------------------------- Results of Operations: (continued) The following data includes the aggregate capacity and electricity production of Salton Sea Units I, II, III and IV: Three Months Ended March 31, ---------------------- 2000 1999 -------- ------- Overall capacity factor 45.2% 83.8% Capacity (NMW) (average) 119.4 119.4 kWh produced (in thousands) 117,900 216,000 The overall capacity factor for the Salton Sea Projects decreased for the three months ended March 31, 2000 compared to the same period in 1999 primarily due to scheduled overhauls in 2000 which were more extensive compared to 1999. The following data includes the aggregate capacity and electricity production of the Partnership Projects: Three Months Ended March 31, --------------------- 2000 1999 -------- --------- Overall capacity factor 81.9% 106.8% Capacity (NMW) (average) 148 148 kWh produced (in thousands) 264,600 341,500 The overall capacity factor for the Partnership Projects decreased for the three months ended March 31, 2000 compared to the same period in 1999 due to scheduled overhauls at all plants in 2000 and none in 1999. Revenues: The Salton Sea Guarantors' sales of electricity decreased to $8,893 for the three months ended March 31, 2000 from $18,272 for the same period in 1999, a 51.3% decrease. This decrease was primarily due to scheduled overhauls in 2000 which were more extensive compared to 1999 and the Unit III scheduled price period ended in February, 1999. THE SALTON SEA FUNDING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (in thousands, except per kwh data) --------------------------------- Results of Operations: (continued) The Partnership Guarantors' sales of electricity decreased to $10,389 for the three months ended March 31, 2000 from $22,030 for the same period in 1999, a 52.8% decrease. This decrease was primarily due to the expiration of the fixed price period at Leathers on December 31, 1999. The Royalty Guarantor revenue decreased to $1,560 for the three months ended March 31, 2000 from $13,459 for the same period last year. This was due primarily to a decrease in East Mesa payments related to a settlement agreement in 1998. Operating Expenses: The Salton Sea Guarantors' operating expenses, which include royalty, operating, and general and administrative expenses, decreased to $5,758, for the three months ended March 31, 2000 from $7,308 for the same period in 1999. The decrease was due to a reduction in royalty expenses due to the lower revenues. The Partnership Guarantors' operating expenses, which include royalty, operating, and general and administrative expenses, decreased to $7,790 for the three months ended March 31, 2000 from $11,207 for the same period in 1999. The decrease was due to a reduction in royalty expenses due to the lower revenues. The Royalty Guarantors' operating expenses decreased to $415 for the three months ended March 31, 2000 from $1,108 for the same period in 1999, a 62.5% decrease. This decrease was due to lower royalty costs due to the end of the scheduled price period at Leathers. Depreciation and Amortization: The Salton Sea Guarantors' depreciation and amortization increased to $4,094 for the three months ended March 31, 2000 from $4,022 for the same period of 1999, an 1.8% increase. The Partnership Guarantors' depreciation and amortization decreased to $4,645 for the three months ended March 31, 2000 from $6,218 for the same period in 1999. The decrease was due primarily to lower step up depreciation amortization after the end of the scheduled price period at Leathers. The Royalty Guarantors' amortization was $491 for the three months ended March 31, 2000 compared to $2,449 for the same period of 1999. The decrease was due to lower amortization after the end of the scheduled price period at the partnership plants. THE SALTON SEA FUNDING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (in thousands, except per kwh data) --------------------------------- Results of Operations: (continued) Interest Expense: The Salton Sea Guarantors' interest expense, net of capitalized amounts, decreased to $2,517 for the three months ended March 31, 2000 from $4,372 for the same period in 1999, a 42.4% decrease. The decrease was due to reduced indebtedness and higher capitalized interest on Unit V construction. The Partnership Guarantors' interest expense, net of capitalized amounts, decreased to $184 for the three months ended March 31, 2000 from $3,261 for the same period in 1999. The decrease was due to reduced indebtedness and higher capitalized interest on zinc construction. The Royalty Guarantors' interest expense decreased to $284 for the three months ended March 31, 2000 from $468 from the same period in 1999. The decrease was due to reduced indebtedness. Income Tax Provision: The Salton Sea Guarantors are comprised of partnerships. Income taxes are the responsibility of the partners and Salton Sea Guarantors have no obligation to provide funds to the partners for payment of any tax liabilities. Accordingly, the Salton Sea Guarantors have no tax obligations. The Partnership Guarantors income tax provision decreased to a benefit of $(579) for the three months ended March 31, 2000 from an expense of $1,117 for the same period in 1999. This decrease was primarily due to a lower pre-tax income. Income taxes will be paid by the parent of the Guarantors from distributions to the parent company by the Guarantors which occur after operating expenses and debt service. The Royalty Guarantor's income tax provision was $0 for the three months ended March 31, 2000 compared to $3,790 for the same period in 1999. The decrease in the provision is due to the change in the Royalty Guarantor from a corporation to a limited liability company which is not taxed. Income taxes are the responsibility of the partners and Royalty Guarantor has no obligation to provide funds to the partners for payment of any tax liabilities. Accordingly, the Royalty Guarantor has no tax obligations. THE SALTON SEA FUNDING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (in thousands, except per kwh data) --------------------------------- Results of Operations: (continued) Net Income: The Salton Sea Funding Corporation's net income (loss) for the three months ended March 31, 2000 was $(59) compared to $172 for the same period in 1999. The net income primarily represents interest income and expense, net of applicable tax, and the Salton Sea Funding Corporation's 1% equity in earnings of the Guarantors. The Salton Sea Guarantors' net income (loss) decreased to $(3,349) for the three months ended March 31, 2000 compared to $3,362 for the same period of 1999. The Partnership Guarantors' net income (loss) decreased to $(1,175) for the three months ended March 31, 2000 compared to $2,546 for the same period of 1999. The Royalty Guarantors' net income decreased to $370 for the three months ended March 31, 2000 compared to $5,644 for the same period of 1999. Liquidity and Capital Resources: Salton Sea Minerals LLC, a Partnership Guarantor ("Minerals LLC"), developed and owns the rights to proprietary processes for the extraction of zinc from elements in solution in the geothermal brine and fluids utilized at its Imperial Valley plants (the "Zinc Recovery Project") as well as the production of power to be used in the extraction process. A pilot plant has successfully produced commercial quality zinc at the Company's Imperial Valley Project. Minerals LLC is constructing the Zinc Recovery Project which will recover zinc from the geothermal brine (the "Zinc Recovery Project"). Four facilities will be installed near Imperial Valley Project sites to extract a zinc chloride solution from the brine through an ion exchange process. This solution will be transported to a central processing plant where zinc ingots will be produced through solvent extraction, electrowinning and casting processes. The Zinc Recovery Project is designed to have a capacity of approximately 30,000 metric tonnes per year and is scheduled to commence commercial operation in mid-2000.In September 1999, Minerals LLC entered into a sales agreement whereby all zinc produced by the Zinc Recovery Project will be sold to Cominco, Ltd. The initial term of the agreement expires in December 2005. The Zinc Recovery Project is being constructed by Kvaerner U.S. Inc. ("Kvaerner") pursuant to a date certain, fixed-price, turnkey engineering, procurement and construction contract (the "Zinc Recovery Project EPC Contract"). Total project costs of the Zinc Recovery Project are expected to be approximately $200,900. The Company has incurred $134,113 of such costs through March 31, 2000. THE SALTON SEA FUNDING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (in thousands, except per kwh data) --------------------------------- Liquidity and Capital Resources: (continued) Salton Sea Power LLC, a Salton Sea Guarantor, is constructing Salton Sea V. Salton Sea V is a 49 net MW geothermal power plant which will sell approximately one-third of its net output to the Zinc Recovery Project. The remainder will be sold through the California Power Exchange ("PX") or in other market transactions. Salton Sea V is being constructed pursuant to a date certain, fixed price, turn-key engineering, procurement and construction contract (the "Salton Sea V EPC Contract") by Stone & Webster Engineering Corporation ("SWEC"). Salton Sea V is scheduled to commence commercial operation in mid-2000. Total project costs of Salton Sea V are expected to be approximately $119,100. CE Turbo LLC, a Partnership Guarantor, is constructing the CE Turbo Project. The CE Turbo Project will have a capacity of 10 net MW. The net output of the CE Turbo Project will be sold to the Zinc Recovery Project or sold through the PX or in other market transactions. The Partnership Projects have upgraded the geothermal brine processing facilities at the Vulcan and Del Ranch Projects with the Region 2 Brine Facilities Construction. In addition to incorporating the pH modification process, which has reduced operating costs at the Salton Sea Projects, the new, more efficient facilities will achieve economies through improved brine processing systems and the utilization of more modern equipment. The Partnership Projects expect these improvements will reduce brine-handling operating costs at the Vulcan Project and the Del Ranch Project. The CE Turbo Project is being and the Region 2 Brine Facilities Construction has been constructed by SWEC pursuant to a date certain, fixed price, turnkey engineering, procurement and construction contract (the "Region 2 Upgrade EPC Contract"). The CE Turbo Project is scheduled to commence initial operations in mid-2000 and the Region 2 Brine Facilities Construction is in operation. Total project costs for both the CE Turbo Project and the Region 2 Brine Facilities Construction are expected to be approximately $63,700. Total equity funding for these projects is expected to be approximately $122,500. The EPC contractor's parent, Stone & Webster, Incorporated, has recently announced that it is having current liquidity problems and intends to sell substantially all of its assets to Jacobs Engineering Group, Inc. in exchange for an immediate $50 million secured revolving credit facility, assumption of substantially all of Stone & Webster's balance sheet liabilities, and $150 million in cash and stock, and subsequently intends to seek bankruptcy court approval of the asset sale and credit agreement. As the work on the construction projects are expected to be completed this summer, the Company does not believe there will be any material adverse effect on the final completion of those projects or the Company. THE SALTON SEA FUNDING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (in thousands, except per kwh data) --------------------------------- Liquidity and Capital Resources: (continued) The operating Salton Sea Guarantors' only source of revenue is payments received pursuant to long term power sales agreements with Edison, other than interest earned on funds on deposit. The operating Partnership Guarantors' primary source of revenue is payments received pursuant to long term power sales agreements with Edison. The Royalty Guarantor's only source of revenue is Royalties received pursuant to resource lease agreements with the Partnership Projects. These payments, for each of the Guarantors, are expected to be sufficient to fund operating and maintenance expenses, payments of interest and principal on the Securities, projected capital expenditures and debt service reserve fund requirements. Inflation has not had a significant impact on the Guarantors' operating revenue and costs. Certain information included in this report contains forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995 ("Reform Act"). Such statements are based on current expectations and involve a number of known and unknown risks and uncertainties that could cause the actual results and performance of the Company to differ materially from any expected future results or performance, expressed or implied, by the forward-looking statements. In connection with the safe harbor provisions of the Reform Act, the Company has identified important factors that could cause actual results to differ materially from such expectations, including development and construction uncertainty, operating uncertainty, acquisition uncertainty, uncertainties relating to doing business outside of the United States, uncertainties relating to geothermal resources, uncertainties relating to domestic and international economic and political conditions and uncertainties regarding the impact of regulations, changes in government policy, industry deregulation and competition. Reference is made to all of the Company's SEC filings, incorporated herein by reference, for a description of such factors. The Company assumes no responsibility to update forward-looking information contained herein. SALTON SEA FUNDING CORPORATION PART II - OTHER INFORMATION Item 1 - Legal proceedings. Neither the Salton Sea Funding Corporation nor the Guarantors are parties to any material legal matters. Item 2 - Changes in Securities. Not applicable. Item 3 - Default on Senior Securities. Not applicable. Item 4 - Submission of Matters to a Vote of Security Holders. Not applicable. Item 5 - Other Information. Not applicable. Item 6 - Exhibits and Reports on Form 8-K. (a) Exhibits: Exhibit 27 - Financial Data Schedule (b) Report on Form 8-K: Not applicable. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Omaha, State of Nebraska, on this 12th day of May, 2000. SALTON SEA FUNDING CORPORATION Date: May 12, 2000 /s/ Joseph M. Lillo* By: Joseph M. Lillo Vice President and Controller *By: /s/ Douglas L. Anderson Douglas L. Anderson Attorney-in-Fact EXHIBIT INDEX Exhibit Page No. No. 27 Financial Data Schedule 35 EX-27 2 FDS -- WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1,000 3-MOS Dec-31-2000 Jan-01-2000 Mar-31-2000 10,721 0 0 0 0 50,296 0 0 602,999 46,089 568,908 0 0 0 13,002 602,999 0 10,921 0 0 259 0 0 (101) (42) (59) 0 0 0 (59) 0 0
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