10-Q 1 0001.txt 2ND 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 June 30, 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.) (Exact name of Registrants (State or other (I.R.S. Employer as specified in their charters) jurisdiction of Identification No.) incorporation or organization) 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 LLC 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 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 June 30, 2000. SALTON SEA FUNDING CORPORATION Form 10-Q June 30, 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, June 30, 2000 and December 31, 1999 5 Statements of Operations for the Three and Six Months Ended June 30, 2000 and 1999 6 Statements of Cash Flows for the Six Months Ended June 30, 2000 and 1999 7 Notes to Financial Statements 8 SALTON SEA GUARANTORS Independent Accountants' Report 9 Combined Balance Sheets, June 30, 2000 and December 31, 1999 10 Combined Statements of Operations for the Three and Six Months Ended June 30, 2000 and 1999 11 Combined Statements of Cash Flows for the Six Months Ended June 30, 2000 and 1999 12 Notes to Combined Financial Statements 13 PARTNERSHIP GUARANTORS Independent Accountants' Report 14 Combined Balance Sheets, June 30, 2000 and December 31, 1999 15 Combined Statements of Operations for the Three and Six Months Ended June 30, 2000 and 1999 16 Combined Statements of Cash Flows for the Six Months Ended June 30, 2000 and 1999 17 Notes to Combined Financial Statements 18 SALTON SEA ROYALTY LLC Independent Accountants' Report 19 Balance Sheets, June 30, 2000 and December 31, 1999 20 Statements of Operations for the Three and Six Months Ended June 30, 2000 and 1999 21 Statements of Cash Flows for the Six Months Ended June 30, 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 June 30, 2000, and the related statements of operations for the three and six month periods ended June 30, 2000 and 1999 and cash flows for the six month periods ended June 30, 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 auditing standards generally accepted in the United States of America, 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 accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, 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 July 21, 2000 SALTON SEA FUNDING CORPORATION BALANCE SHEETS (Dollars in Thousands, Except per Share Amounts)
June 30, December 31, 2000 1999 ----------- ---------- (unaudited) ASSETS Cash $ 13 $ 2,086 Prepaid expenses and other assets 3,506 3,617 Due from affiliates 19,020 2,118 Current portion secured project notes from Guarantors 14,350 25,072 Total current assets 36,889 32,893 Secured project notes from Guarantors 532,078 543,908 Investment in 1% of net assets of Guarantors 8,903 8,847 $ 577,870 $ 585,648 ============== ============= LIABILITIES AND STOCKHOLDER'S EQUITY Liabilities: Accrued liabilities $ 3,439 $ 3,607 Revolving loan 15,000 --- Current portion of long term debt 14,350 25,072 Total current liabilities 32,789 28,679 Senior secured notes and bonds 532,078 543,908 Total liabilities 564,867 572,587 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 7,637 7,695 Total stockholder's equity 13,003 13,061 $ 577,870 $ 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 June 30 Six Months Ended June 30, 2000 1999 2000 1999 Revenues: Interest income $ 10,756 $ 11,982 $ 21,719 $ 24,111 Equity in earnings of Guarantors 98 92 56 __ 208 Total revenues 10,854 12,074 21,775 24,319 ---------- ---------- ---------- ---------- Expenses: General and administrative expenses 218 188 477 403 Interest expense 10,634 11,622 21,397 23,359 ---------- ---------- ---------- ---------- Total expenses 10,852 11,810 21,874 23,762 ---------- ---------- ---------- ---------- Income (loss) before income taxes 2 264 (99) 557 Provision for income taxes 1 107 (41) 228 ---------- ---------- ---------- ---------- Net income (loss) $ 1 $ 157 $ (58) $ 329 ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. SALTON SEA FUNDING CORPORATION STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)
Six Months Ended June 30, 2000 1999 Cash flows from operating activities: Net income (loss) $ (58) $ 329 Adjustments to reconcile net income to net cash flows from operating activities: Equity in earnings of guarantors (56) (208) Changes in assets and liabilities: Prepaid expenses and other assets 111 2,073 Accrued liabilities (168) (231) Net cash flows from operating activities (171) 1,963 Cash flows from investing activities: Principal repayments of secured project notes from Guarantors 22,552 28,918 Net cash flows from investing activities 22,552 28,918 Cash flows from financing activities: Increase in due from affiliates (16,902) (7,243) Proceeds from revolving loan 15,000 --- Repayment of senior secured notes and bonds (22,552) (28,918) Net cash flows from financing activities (24,454) (36,161) Net change in cash (2,073) (5,280) Cash at the beginning of period 2,086 17,629 Cash at the end of period $ 13 $ 12,349 ================= =============
The accompanying notes are an integral part of these financial statements. SALTON SEA FUNDING CORPORATION NOTES TO FINANCIAL STATEMENTS --------------------- 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 June 30, 2000 and the results of operations for the three and six months ended June 30, 2000 and 1999 and cash flows for the six months ended June 30, 2000 and 1999. The results of operations for the three and six months ended June 30, 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 Funding Corporation was formed on June 20, 1995 for the sole purpose of acting as issuer of senior secured notes and bonds. 2. New Borrowings: On July 21, 1995, Salton Sea Funding Corporation obtained a $15 million seven year revolving credit agreement between Credit Suisse as bank and agent and other lenders. The interest rate is at the Adjusted Base Rate plus .375% or at the LIBOR rate plus 100 basis points. On May 26, 2000, Salton Sea Funding Corporation borrowed $15 million under its revolving credit agreement. The loan is due in two installments, $5 million on July 26, 2000 and $10 million on August 28, 2000. 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 June 30, 2000, and the related combined statements of operations for the three and six month periods ended June 30, 2000 and 1999 and cash flows for the six month periods ended June 30, 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 auditing standards generally accepted in the United States of America, 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 accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, 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 July 21, 2000 SALTON SEA GUARANTORS COMBINED BALANCE SHEETS (Dollars in Thousands)
June 30, December 31, 2000 1999 ---------- ------------ (unaudited) ASSETS Accounts receivable $ 15,763 $ 11,537 Prepaid expenses and other assets 10,323 11,695 Total current assets 26,086 23,232 Restricted cash 7,845 10,001 Property, plant, contracts and equipment, net 560,401 552,903 Excess of cost over fair value of net assets acquired, net 46,226 46,878 $ 640,558 $ 633,014 ============ =========== LIABILITIES AND GUARANTORS' EQUITY Liabilities: Accounts payable $ 2 $ 33 Accrued liabilities 7,822 7,862 Current portion of long term debt 9,169 9,737 Total current liabilities 16,993 17,632 Due to affiliates 43,504 27,993 Senior secured project note 275,558 284,217 Total liabilities 336,055 329,842 Total Guarantors' equity 304,503 303,172 $ 640,558 $ 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 Six Months Ended June 30 June 30 ------------------------- --------------------------- 2000 1999 2000 1999 -------- -------- -------- -------- Revenues: Sales of electricity $ 18,605 $ 19,546 $ 27,498 $ 37,818 Interest and other income 86 651 213 1,443 ------- ------- ------- ------- Total revenues 18,691 20,197 27,711 39,261 ------- ------- ------- ------- Expenses: Operating, general and administration 6,806 6,227 12,564 13,535 Depreciation and amortization 4,227 4,421 8,321 8,443 Interest expense 5,791 6,095 11,631 12,171 Less capitalized interest (2,813) (1,947) (6,136) (3,651) ------- ------- ------- ------- Total expenses 14,011 14,796 26,380 30,498 ------- ------- ------- ------- Net income $ 4,680 $ 5,401 $ 1,331 $ 8,763 ======= ======= ======= =======
The accompanying notes are an integral part of these financial statements. SALTON SEA GUARANTORS COMBINED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) Six Months Ended June 30, ---------------------- 2000 1999 Cash flows from operating activities: Net income $ 1,331 $ 8,763 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 8,321 8,443 Changes in assets and liabilities: Accounts receivable (4,226) (4,301) Prepaid expenses and other assets 1,372 2,020 Accounts payable and accrued liabilities (71) 1,933 Net cash flows from operating activities 6,727 16,858 Cash flows from investing activities: Capital expenditures (15,167) (27,629) Decrease in restricted cash 2,156 22,325 Net cash flows from investing activities (13,011) (5,304) Cash flows from financing activities: Increase (decrease) in due to affiliates 15,511 (3,516) Repayments of senior secured project note (9,227) (8,038) Net cash flows from financing activities 6,284 (11,554) 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 -------------------- 1. General: In the opinion of management of the Salton Sea 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 June 30, 2000 and the results of operations for the three and six months ended June 30, 2000 and 1999 and cash flows for the six months ended June 30, 2000 and 1999. The results of operations for the three and six months ended June 30, 2000 and 1999 are not necessarily indicative of the results to be expected for the full year. The unaudited combined 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. 2. Related Party Transaction: Salton Sea Power LLC ("Salton Sea Power"), a Salton Sea Guarantor, and El Paso Merchant Energy L.P. ("EPME") entered into a power marketing agreement commencing June 13, 2000 and ending on June 30, 2000. Under the terms of the agreement, EPME purchased and Salton Sea Power sold all available power from the Salton Sea Unit V project. EPME sold the available power into the bulk power market. The purchase price of the available power is the value of the cash actually received by EPME for the sale of such power, plus any realized renewable premiums. On June 9, 2000, Salton Sea Power, entered into an agreement to sell all available power from the Salton Sea Unit V and CE Turbo projects to EPME. Under the terms of the agreement commencing on July 1, 2000 and ending on September 30, 2000, EPME will purchase up to 25 MW of available power for $53 per MWh, together with any premiums related to such power. EPME will also market any available power which exceeds 25 MW on behalf of Salton Sea Power and any available power from CE Turbo LLC. 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 June 30, 2000, and the related combined statements of operations for the three and six month periods ended June 30 2000 and 1999 and cash flows for the six month periods ended June 30, 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 auditing standards generally accepted in the United States of America, 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 accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, 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 July 21, 2000 PARTNERSHIP GUARANTORS COMBINED BALANCE SHEETS (Dollars in Thousands)
June 30, December 31, 2000 1999 (unaudited) ASSETS Accounts receivable $ 16,213 $ 16,295 Prepaid expenses and other assets 23,874 18,959 Total current assets 40,087 35,254 Restricted cash 6,111 60,454 Due from affiliates 41,981 75,274 Property, plant, contracts and equipment, net 610,149 531,427 Management fee 70,225 71,489 Excess of cost over fair value of net assets acquired, net 126,212 127,994 $ 894,765 $ 901,892 ============== ============ LIABILITIES AND GUARANTORS' EQUITY Liabilities: Accounts payable $ 2,252 $ 3,925 Accrued liabilities 12,636 13,534 Current portion of long term debt 2,954 10,562 Total current liabilities 17,842 28,021 Senior secured project notes 249,696 250,650 Deferred income taxes 100,229 98,907 Total liabilities 367,767 377,578 Guarantors' equity: Common stock 3 3 Additional paid-in capital 387,663 387,663 Retained earnings 139,332 136,648 Total Guarantors' equity 526,998 524,314 $ 894,765 $ 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 Six Months Ended June 30, June 30, 2000 1999 2000 1999 --------- --------- --------- --------- Revenues: Sales of electricity $ 19,628 $ 24,222 $ 30,017 $ 46,252 Interest and other income 625 2,155 1,101 4,474 --------- --------- --------- --------- Total revenues 20,253 26,377 31,118 50,726 --------- --------- --------- --------- Expenses: Operating, general and administration 9,518 11,858 17,308 23,065 Depreciation and amortization 4,848 6,262 9,493 12,480 Interest expense 5,045 5,641 10,140 11,335 Less capitalized interest (4,918) (4,314) (9,829) (6,747) --------- --------- --------- --------- Total expenses 14,493 19,447 27,112 40,133 --------- --------- --------- --------- Income before income taxes 5,760 6,930 4,006 10,593 Provision for income taxes 1,901 3,014 1,322 4,131 --------- --------- --------- --------- Net income $ 3,859 $ 3,916 $ 2,684 $ 6,462 ========= ========= ========= =========
The accompanying notes are an integral part of these financial statements. PARTNERSHIP GUARANTORS COMBINED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) Six Months Ended June 30, 2000 1999 --------- -------- Cash flows from operating activities: Net income $ 2,684 $ 6,462 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 9,493 12,480 Deferred income taxes 1,322 4,131 Changes in assets and liabilities: Accounts receivable 82 8,694 Prepaid expenses and other assets (4,915) (428) Accounts payable and accrued liabilities (2,569) 3,847 --------- --------- Net cash flows from operating activities 6,097 35,186 --------- --------- Cash flows from investing activities: Capital expenditures (85,028) (56,111) Decrease in restricted cash 54,343 36,631 Management fee (143) (851) --------- --------- Net cash flows from investing activities (30,828) (20,331) --------- --------- Cash flows from financing activities: Repayments of senior secured project notes (8,562) (16,182) Decrease in due from affiliates 33,293 1,327 --------- --------- Net cash flows from financing activities 24,731 (14,855) --------- --------- 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 -------------------- 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 June 30, 2000 and the results of operations for the three and six months ended June 30, 2000 and 1999 and cash flows for the six months ended June 30, 2000 and 1999. The results of operations for the three and six months ended June 30, 2000 and 1999 are not necessarily indicative of the results to be expected for the full year. The unaudited combined 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. 2. Property: The increase in property, plant, contracts and equipment is due to the Zinc Recovery Project and Region II Brine Facility construction costs. The decrease in restricted cash is due to expenditures on these projects. 3. Revenue: The decrease in revenue was due to the expiration of the scheduled price period at Leathers at December 31, 1999. 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 June 30, 2000, and the related statements of operations for the three and six month periods ended June 30, 2000 and 1999 and cash flows for the six month periods ended June 30, 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 auditing standards generally accepted in the United States of America, 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 accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, 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, Salton Sea Royalty LLC was converted to a limited liability company during 1999 and as such the statements of operations for the three and six months ended June 30, 2000 and 1999 and cash flows for the six months ended June 30, 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 July 21, 2000 SALTON SEA ROYALTY LLC BALANCE SHEETS (Dollars in Thousands, Except per Share Amounts)
June 30, December 31, 2000 1999 ----------- ---------- (unaudited) ASSETS Prepaid expenses and other assets $ 158 $ 235 Total current assets 158 235 Royalty stream, net 16,247 16,776 Excess of cost over fair value of net assets acquired, net 31,826 32,280 Due from affiliates 19,666 21,825 $ 67,897 $ 71,116 ============= ============= LIABILITIES AND EQUITY Liabilities: Accrued liabilities $ 55 $ 82 Current portion of long term debt 2,227 4,773 Total current liabilities 2,282 4,855 Senior secured project note 6,826 9,041 Total liabilities 9,108 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 57,228 55,659 Total equity 58,789 57,220 $ 67,897 $ 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 Six Months Ended June 30, June 30, ----------------------- ----------------------- 2000 1999 2000 1999 ------- ------- ------- ------- Revenues: Royalty income $ 2,707 $ 3,770 $ 4,267 $ 17,229 Expenses: Operating, general and administrative expenses 758 1,046 1,173 2,154 Amortization of royalty stream and goodwill 492 2,448 983 4,897 Interest expense 258 446 542 914 --------- ---------- --------- ---------- Total expenses 1,508 3,940 2,698 7,965 ---------- ---------- ---------- -------- Income (loss) before income taxes 1,199 (170) 1,569 9,264 Provision for (benefit from) income taxes --- (113) --- 3,677 --------- ---------- --------- ---------- Net income (loss) $ 1,199 $ (57) $ 1,569 $ 5,587 ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. SALTON SEA ROYALTY LLC STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) Six Months Ended June 30, ------------------- 2000 1999 --------- -------- Cash flows from operating activities: Net income $ 1,569 $ 5,587 Adjustments to reconcile net income to net cash flows from operating activities: Amortization of royalty stream and goodwill 983 4,897 Changes in assets and liabilities: Prepaid expenses and other assets 77 139 Accrued liabilities and deferred income taxes (27) (5,671) Net cash flows from operating activities 2,602 4,952 Net cash flows from financing activities: Decrease (increase) in due from affiliates 2,159 (254) Repayment of senior secured project note (4,761) (4,698) --------- --------- Net cash flows from financing activities (2,602) (4,952) 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 -------------------- 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 June 30, 2000 and the results of operations for the three and six months ended June 30, 2000 and 1999 and cash flows for the six months ended June 30, 2000 and 1999. The results of operations for the three and six months ended June 30, 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 for the three and six months ended June 30, 2000 and 1999 and cash flows for the six months ended June 30, 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. 2. Revenues: The second quarter and year to date decreases were due primarily to a reduction in royalty income from Leathers due to lower revenues from the expiration of the scheduled price period on December 31, 1999. The year to date decrease was also due to a decrease in East Mesa royalty income related to a royalty settlement. 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. 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 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 5.5 cents per kWh during the six months ended June 30, 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 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 expired 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 are 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 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. Salton Sea Unit V Project will sell approximately one-third of its net output to a Zinc facility, which is a subsidiary of MidAmerican and is expected to commence operation in the third quarter of 2000. The remainder of the Salton Sea Unit V output will be sold through the California Power Exchange (the "PX") or in other market transactions. The PX was created to establish markets for the sale of power on a daily and hourly basis. Thus, PX prices are expected to have the characteristics of short term spot prices and to fluctuate from time to time in a manner that cannot be predicted with accuracy. For the six months ended June 30, 2000 and 1999, Edison's average Avoided Cost of Energy was 3.8 and 2.7 cents respectively per kWh. Estimates of Edison's future Avoided Cost of Energy vary substantially from year to year. 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 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 following data includes the aggregate capacity and electricity production of Salton Sea Units I, II, III and IV: Three Months Ended Six Months Ended June 30, June 30, --------------------- --------------------- 2000 1999 2000 1999 ------- ------- -------- ------- Overall capacity factor 74.8% 93.3% 60.0% 88.6% Capacity (NMW) (weighted average) 119.4 119.4 119.4 119.4 kWh produced (in thousands) 195,000 243,300 312,900 459,300 The overall capacity factor for the Salton Sea Projects decreased for the three and six months ended June 30, 2000 compared to the same period in 1999 due to scheduled overhauls in 2000 which were more extensive compared to 1999. The following data includes the aggregate capacity and electricity production of Vulcan, Del Ranch, Elmore and Leathers: Three Months Ended Six Months Ended June 30, June 30, --------------------- --------------------- 2000 1999 2000 1999 -------- ------- ------- ------- Overall capacity factor 100.4% 94.6% 91.1% 100.7% Capacity (NMW) (average) 148 148 148 148 kWh produced (in thousands) 324,600 305,900 589,200 647,400 The overall capacity factor for the Partnership Projects increased for the three months ended June 30, 2000 compared to the same period in 1999 due to scheduled overhauls in 1999. The overall capacity factor for the Partnership Projects decreased for the six months ended June 30, 2000 compared to the same period in 1999 due to scheduled overhauls at all plants in the first quarter of 2000. 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) Revenues: The Salton Sea Guarantors' sales of electricity decreased to $18,605 for the three months ended June 30, 2000 from $19,546 for the same period in 1999, a 4.8% decrease. For the six months ended June 30, 2000, sales of electricity decreased to $27,498 from $37,818 in 1999, a 27.3% decrease. These decreases were primarily due to scheduled overhauls in 2000 which were more extensive compared to 1999 and the expiration of the fixed price periods at Salton Sea Unit II and III in April, 2000 and February, 1999, respectively. The Partnership Guarantors' sales of electricity decreased to $19,628 for the three months ended June 30, 2000 from $24,222 for the same period in 1999, a 19.0% decrease. For the six month period ended June 30, 2000, sales of electricity decreased to $30,017 from $46,252 in 1999, a 35.1% decrease. These decreases were primarily due to the expiration of the scheduled price period at Leathers on December 31, 1999 offset by increases resulting from higher avoided cost rates in the six months ended June 30, 2000 compared to 1999. The Royalty Guarantor revenue decreased to $2,707 for the three months ended June 30, 2000 from $3,770 for the same period last year. For the six month period ended June 30, 2000, revenue decreased to $4,267 from $17,229 in 1999. This decrease was due primarily to a decrease in East Mesa royalty income related to a royalty settlement and a reduction in royalty income from Leathers due to lower revenue. Operating Expenses: The Salton Sea Guarantors' operating expenses, which include royalty, operating, and general and administrative expenses, increased to $6,806, for the three months ended June 30, 2000 from $6,227 for the same period in 1999. This increase was due to higher operating costs resulting from Unit V start up. For the six month period ended June 30, 2000, operating expenses decreased to $12,564 from $13,535 in 1999. This decrease was primarily due to lower royalty costs resulting from lower revenues. The Partnership Guarantors' operating expenses, which include royalty, operating, and general and administrative expenses, decreased to $9,518 for the three months ended June 30, 2000 from $11,858 for the same period in 1999. For the six month period ended June 30, 2000, operating expenses decreased to $17,308 from $23,065 in 1999, a 25.0% decrease. These decreases were primarily due to a reduction in royalty expenses due to the lower revenues. The Royalty Guarantors' operating expenses decreased to $758 for the three months ended June 30, 2000 from $1,046 for the same period in 1999, a 27.5% decrease. For the six month period ended June 30, 2000, operating expenses decreased to $1,173 from $2,154 in 1999, a 45.5% decrease. These decreases were due to lower royalty costs due to the end of the scheduled price period at Leathers. 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) Depreciation and Amortization: The Salton Sea Guarantors' depreciation and amortization decreased to $4,227 for the three months ended June 30, 2000 from $4,421 for the same period of 1999, a 4.4% decrease. For the six month period ended June 30, 2000, depreciation and amortization decreased to $8,321 from $8,443 in 1999. The decreases were due to a decrease in step up depreciation charges. The Partnership Guarantors' depreciation and amortization decreased to $4,848 for the three months ended June 30, 2000 from $6,262 for the same period in 1999. For the six month period ended June 30, 2000, depreciation and amortization decreased to $9,493 from $12,480 in 1999. The decreases were due primarily to lower step up depreciation amortization after the end of the scheduled price period at Leathers. The Royalty Guarantors' amortization was $492 for the three months ended June 30, 2000 compared to $2,448 for the same period of 1999. For the six month period ended June 30, 2000, amortization was $983 compared to $4,897 in 1999. The decreases were due to lower amortization after the end of the scheduled price period at the partnership plants. Interest Expense: The Salton Sea Guarantors' interest expense, net of capitalized amounts, decreased to $2,978 for the three months ended June 30, 2000 from $4,148 for the same period in 1999, a 28.2% decrease. For the six month period ended June 30, 2000, interest expense, net of capitalized amounts, decreased to $5,495 from $8,520 in 1999. The decreases were due to reduced indebtedness and higher capitalized interest on construction projects. The Partnership Guarantors' interest expense, net of capitalized amounts, decreased to $127 for the three months ended June 30, 2000 from $1,327 for the same period in 1999. For the six month period ended June 30, 2000, interest expense, net of capitalized amounts, decreased to $311 from $4,588. The decreases were primarily due to reduced indebtedness and higher capitalized interest on construction projects. The Royalty Guarantors' interest expense decreased to $258 for the three months ended June 30, 2000 from $446 from the same period in 1999. For the six month period ended June 30, 2000, interest expense decreased to $542 from $914 in 1999. The decreases were 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 $1,901 for the three months ended June 30, 2000 from $3,014 for the same period in 1999, a 36.9% decrease. For the six month period ended June 30, 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) 2000, the provision for income taxes decreased to $1,322 from $4,131 in 1999. The decreases were 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 June 30, 2000 compared to an income tax benefit of $113 for the same period in 1999. For the six month period ended June 30, 2000, the income tax provision was $0 compared to $3,677 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 or any tax liabilities. Accordingly, the Royalty Guarantor has no tax obligations. Net Income: The Salton Sea Funding Corporation's net income for the three months ended June 30, 2000 decreased to $1 compared from $157 for the same period in 1999. For the six month period ended June 30, 2000, net loss was $58 compared to net income of $329 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 decreased to $4,680 for the three months ended June 30, 2000 compared to $5,401 for the same period of 1999. For the six month period ended June 30, 2000, net income decreased to $1,331 compared to $8,763 in 1999. The Partnership Guarantors' net income decreased to $3,859 for the three months ended June 30, 2000 compared to $3,916 for the same period of 1999. For the six month period ended June 30, 2000, net income decreased to $2,684 from $6,462 in 1999. The Royalty Guarantors' net income was $1,199 for the three months ended June 30, 2000 compared to a net loss of $57 for the same period of 1999. For the six month period ended June 30, 2000, net income decreased to $1,569 from $5,587 in 1999. Liquidity and Capital Resources: On July 21, 1995, Salton Sea Funding Corporation obtained a $15 million seven year revolving credit agreement between Credit Suisse as bank and agent and other lenders. The interest rate is at the Adjusted Base Rate plus .375% or at the LIBOR rate plus 100 basis points. On May 26, 2000, Salton Sea Funding Corporation borrowed $15 million under its revolving credit agreement. The loan is due in two installments, $5 million on July 26, 2000 and $10 million on August 28, 2000. The proceeds were used for general operating costs. 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 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 the third quarter of 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. at market value plus a premium. 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, which is being funded by $140,500 of debt and $60,400 from equity contributions. The Company has incurred $152,700 of such costs through June 30, 2000. Salton Sea Power LLC, a Salton Sea Guarantor, is constructing and testing 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 is being 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"). Total project costs of Salton Sea V are approximately $119,100, which is being funded by $83,300 of debt and $35,800 from equity contributions. Salton Sea Power LLC has incurred approximately $102,200 of these costs through June 30, 2000. 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 brine facilities construction. 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 CE Turbo Project is being and the brine facilities have been constructed by SWEC pursuant to a date certain, fixed price, turnkey engineering, procurement and construction contract. The CE Turbo Project is scheduled to commence initial operations in the third quarter of 2000 and the brine facilities is in operation. Total project costs for both the CE Turbo Project and the brine facilities are expected to be approximately $63,700, which is being funded by $44,600 of debt and $19,100 from equity contributions. The Company has incurred approximately $54,500 of such costs through June 30, 2000. The EPC contractor's parent, Stone & Webster, Incorporated, voluntarily filed Chapter 11 Bankruptcy on June 2, 2000 and has sold substantially all of its assets to Shaw Group Inc. Shaw Group Inc. has agreed to complete substantially all of Stone & Websters' contracts for future and current projects. The Company does not believe this situation will cause any material adverse effect on the final completion of the Company's projects or the Company. The operating Salton Sea Guarantors' only source of revenue is payments received pursuant to long term power sales agreements with Edison, other than Unit 5 revenue and 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 other than CE Turbo and Zinc revenue and interest earned on funds on deposit. 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. 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. Item 3. Qualitative and Quantitative Disclosures About Market Risk: On June 9, 2000, Salton Sea Power LLC, a subsidiary of CE Generation, entered into an agreement to sell all available power from the Salton Sea Unit V and CE Turbo projects to El Paso Merchant Energy, L.P. Under the terms of the agreement commencing on July 1, 2000 and ending on September 30, 2000, El Paso Merchant Energy will purchase up to 25 MW of available power for $53 per MWh, together with any premiums related to such power. El Paso will also market any available power which exceeds 25 MW on behalf of Salton Sea Power LLC and any available power from CE Turbo LLC. 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: None. 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. SALTON SEA FUNDING CORPORATION Date: August 14, 2000 /s/ Joseph M. Lillo Joseph M. Lillo Vice President and Controller EXHIBIT INDEX Exhibit Page No. No. 27 Financial Data Schedule 36