-----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, MG6jriYjOkl5Y6EIJEhu2VYukYx0l7tsY8cIovcP1nBd4JGD2RVaLd2MeH5DbGFC XIWYXEQLYLpSPBBWNWOESQ== 0000949149-99-000007.txt : 19990817 0000949149-99-000007.hdr.sgml : 19990817 ACCESSION NUMBER: 0000949149-99-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 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: 99690334 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: 99690335 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: 99690336 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: 99690337 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: 99690338 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: 99690339 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: 99690340 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: 99690341 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: 99690342 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: 99690343 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: 99690344 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: 99690345 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: 99690346 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: 99690347 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: 99690348 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: 99690349 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: 99690350 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: 99690351 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: 99690352 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: 99690353 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 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, 1999 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 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 Corporation 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 June 30, 1999. SALTON SEA FUNDING CORPORATION Form 10-Q June 30, 1999 _____________ 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, 1999 and December 31, 1998 5 Statements of Operations for the Three and Six Months Ended June 30, 1999 and 1998 6 Statements of Cash Flows for the Six Months Ended June 30, 1999 and 1998 7 Notes to Financial Statements 8 SALTON SEA GUARANTORS Independent Accountants' Report 9 Combined Balance Sheets, June 30, 1999 and December 31, 1998 10 Combined Statements of Operations for the Three and Six Months Ended June 30, 1999 and 1998 11 Combined Statements of Cash Flows for the Six Months Ended June 30, 1999 and 1998 12 Notes to Combined Financial Statements 13 PARTNERSHIP GUARANTORS Independent Accountants' Report 14 Combined Balance Sheets, June 30, 1999 and December 31, 1998 15 Combined Statements of Operations for the Three and Six Months Ended June 30, 1999 and 1998 16 Combined Statements of Cash Flows for the Six Months Ended June 30, 1999 and 1998 17 Notes to Combined Financial Statements 18 SALTON SEA ROYALTY COMPANY Independent Accountants' Report 19 Balance Sheets, June 30, 1999 and December 31, 1998 20 Statements of Operations for the Three and Six Months Ended June 30, 1999 and 1998 21 Statements of Cash Flows for the Six Months Ended June 30, 1999 and 1998 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 33 Item 2. Changes in Securities 33 Item 3. Defaults on Senior Securities 33 Item 4. Submission of Matters to a Vote of Security Holders 33 Item 5. Other Information 33 Item 6. Exhibits and Reports on Form 8-K 33 Signatures 34 Exhibit Index 35 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, 1999, and the related statements of operations for the three and six month periods ended June 30, 1999 and 1998 and cash flows for the six month periods ended June 30, 1999 and 1998. 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. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet of Salton Sea Funding Corporation as of December 31, 1998, 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 28, 1999, (March 3, 1999 as to Note 4) 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, 1998 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 26, 1999 SALTON SEA FUNDING CORPORATION BALANCE SHEETS (Dollars in Thousands, Except per Share Amounts) June 30, December 31, 1999 1998 ___________ __________ (unaudited) ASSETS Cash $ 12,349 $ 17,629 Prepaid expenses and other assets 4,695 6,768 Secured project notes from Guarantors 597,898 626,816 Investment in 1% of net assets of Guarantors 8,332 8,124 __________ __________ $ 623,274 $ 659,337 ========== ========== LIABILITIES AND STOCKHOLDER'S EQUITY Liabilities: Accrued liabilities $ 3,740 $ 3,971 Due to affiliates 9,369 16,612 Senior secured notes and bonds 597,898 626,816 __________ __________ Total liabilities 611,007 647,399 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 6,901 6,572 __________ __________ Total stockholder's equity 12,267 11,938 __________ __________ $ 623,274 $ 659,337 ========== ========== 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, 1999 1998 1999 1998 Revenues: Interest income $ 11,982 $ 8,719 $ 24,111 $ 17,709 Equity in earnings of Guarantors 92 236 208 397 Total revenues 12,074 8,955 24,319 18,106 _________ ________ _______ _______ Expenses: General and administrative expenses 188 235 403 473 Interest expense 11,622 8,020 23,359 16,279 _________ ________ _______ _______ Total expenses 11,810 8,255 23,762 16,752 _________ ________ _______ _______ Income before income taxes 264 700 557 1,354 Provision for income taxes 107 286 228 555 _________ ________ _______ _______ Net income $ 157 $ 414 $ 329 $ 799 ========= ======== ======= ======= 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, 1999 1998 Cash flows from operating activities: Net income $ 329 $ 799 Adjustments to reconcile net income to net cash flows from operating activities: Equity in earnings of guarantors (208) (397) Changes in assets and liabilities: Prepaid expenses and other assets 2,073 296 Accrued liabilities (231) (375) __________ _________ Net cash flows from operating activities 1,963 323 __________ ________ Cash flows from investing activities: Principal repayments of secured project notes from Guarantors 28,918 53,469 __________ _________ Net cash flows from investing activities 28,918 53,469 ________ _________ Cash flows from financing activities: Decrease in due to affiliates (7,243) (9,907) Repayment of senior secured notes and bonds (28,918) (53,469) __________ _________ Net cash flows from financing activities (36,161) (63,376) __________ _________ Net change in cash (5,280) (9,584) Cash at the beginning of period 17,629 15,568 __________ _________ Cash at the end of period $ 12,349 $ 5,984 ========== ========= 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 June 30, 1999 and the results of operations for the three and six months ended June 30, 1999 and 1998 and cash flows for the six months ended June 30, 1999 and 1998. The results of operations for the three and six months ended June 30, 1999 and 1998 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, 1998. The Funding Corporation was formed on June 20, 1995 for the sole purpose of acting as issuer of senior secured notes and bonds. 2. Disposition of power generation assets: On February 8, 1999, MidAmerican Energy Holdings Company, the successor to CalEnergy Company, Inc. ("MidAmerican") created a new subsidiary, CE Generation LLC ("CE Generation") and subsequently transferred its interest in the power generation assets in the Imperial Valley to CE Generation. On March 3, 1999, MidAmerican closed the sale of 50% of its ownership interests in CE Generation to an affiliate of El Paso Energy Corporation. 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, 1999, and the related combined statements of operations for the three and six month periods ended June 30, 1999 and 1998 and cash flows for the six month periods ended June 30, 1999 and 1998. 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. We have previously audited, in accordance with generally accepted auditing standards, the combined balance sheet of the Salton Sea Guarantors as of December 31, 1998, 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 28, 1999, (March 3, 1999 as to Note 6), 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, 1998 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 26, 1999 SALTON SEA GUARANTORS COMBINED BALANCE SHEETS (Dollars in Thousands) June 30, December 31, 1999 1998 __________ _________ (unaudited) ASSETS Restricted cash $ 49,348 $ 71,673 Accounts receivable 20,258 15,957 Prepaid expenses and other assets 10,390 12,410 Property, plant, contracts and equipment, net 500,131 480,293 Excess of cost over fair value of net assets acquired, net 47,530 48,182 _________ _________ $ 627,657 $ 628,515 ======== ======== LIABILITIES AND GUARANTORS' EQUITY Liabilities: Accounts payable $ 560 $ 504 Accrued liabilities 9,043 7,166 Due to affiliates 27,172 30,688 Senior secured project note 301,992 310,030 _________ _________ Total liabilities 338,767 348,388 Total Guarantors' equity 288,890 280,127 _________ _________ $ 627,657 $ 628,515 ========= ========= 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 ___________ ___________ 1999 1998 1999 1998 ________ ________ ________ _______ Revenues: Sales of electricity $ 19,546 $ 27,612 $ 37,818 $ 47,797 Interest and other income 651 7 1,443 22 _______ _______ _______ _______ Total revenues 20,197 27,619 39,261 47,819 _______ _______ _______ _______ Expenses: Operating, general and administration 6,227 7,800 13,535 14,547 Depreciation and amortization 4,421 3,726 8,443 7,440 Interest expense 6,095 5,199 12,171 10,459 Less capitalized interest (1,947) (1,280) (3,651) (2,612) _______ _______ _______ _______ Total expenses 14,796 15,445 30,498 29,834 _______ _______ _______ _______ Net income $ 5,401 $ 12,174 $ 8,763 $ 17,985 ======= ======= ======= ======= 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, ____________________ 1999 1998 Cash flows from operating activities: Net income $ 8,763 $ 17,985 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 8,443 7,440 Changes in assets and liabilities: Accounts receivable (4,301) (3,789) Prepaid expenses and other assets 2,020 1,897 Accounts payable and accrued liabilities 1,933 (1,152) _________ _________ Net cash flows from operating activities 16,858 22,381 _________ _________ Cash flows from investing activities: Capital expenditures (27,629) (3,610) Decrease in restricted cash 22,325 --- _________ _________ Net cash flows from investing activities (5,304) (3,610) Cash flows from financing activities: Increase (decrease) in due to affiliates (3,516) 954 Repayments of senior secured project note (8,038) (19,725) __________ _________ Net cash flows from financing activities (11,554) (18,771) _________ _________ 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 combined financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of June 30, 1999 and the results of operations for the three and six months ended June 30, 1999 and 1998 and cash flows for the six months ended June 30, 1999 and 1998. The results of operations for the three and six months ended June 30, 1999 and 1998 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, 1998. The combined financial statements include the accounts of the partnerships in which the Guarantors have a 100% interest. 2. Disposition of power generation assets: On February 8, 1999, MidAmerican Energy Holdings Company, the successor to CalEnergy Company, Inc. ("MidAmerican") created a new subsidiary, CE Generation LLC ("CE Generation") and subsequently transferred its interest in the power generation assets in the Imperial Valley to CE Generation. On March 3, 1999, MidAmerican closed the sale of 50% of its ownership interests in CE Generation to an affiliate of El Paso Energy Corporation. 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, 1999, and the related combined statements of operations for the three and six month periods ended June 30 1999 and 1998 and cash flows for the six month periods ended June 30, 1999 and 1998. 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. We have previously audited, in accordance with generally accepted auditing standards, the combined balance sheet of the Partnership Guarantors as of December 31, 1998, 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 28, 1999, (March 3, 1999 as to Note 10), 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, 1998 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 26, 1999 PARTNERSHIP GUARANTORS COMBINED BALANCE SHEETS (Dollars in Thousands) June 30, December 31, 1999 1998 (unaudited) ASSETS Restricted cash $ 128,352 $ 164,983 Accounts receivable 24,710 33,404 Prepaid expenses and other assets 23,516 23,088 Due from affiliates 119,803 121,130 Property, plant, contracts and equipment, net 446,636 399,817 Management fee 71,041 71,596 Excess of cost over fair value of net assets acquired, net 129,776 131,558 _________ _________ $ 943,834 $ 945,576 ========= ========= LIABILITIES AND GUARANTORS' EQUITY Liabilities: Accounts payable $ 3,686 $ 1,879 Accrued liabilities 55,687 53,647 Senior secured project notes 277,394 293,576 Deferred income taxes 101,772 97,641 _________ _________ Total liabilities 438,539 446,743 Commitments and Contingencies (Note 3) Guarantors' equity: Common stock 3 3 Additional paid-in capital 387,663 387,663 Retained earnings 117,629 111,167 _________ _________ Total Guarantors' equity 505,295 498,833 _________ _________ $ 943,834 $ 945,576 ========= ========= 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, 1999 1998 1999 1998 _________ _________ _________ _________ Revenues: Sales of electricity $ 24,222 $ 39,574 $ 46,252 $ 73,671 Interest and other income 2,155 1,298 4,474 2,032 _________ _________ _________ _________ Total revenues 26,377 40,872 50,726 75,703 _________ _________ _________ _________ Expenses: Operating, general and administration 11,858 15,694 23,065 29,784 Depreciation and amortization 6,262 14,011 12,480 24,166 Interest expense 5,641 2,456 11,335 5,753 Less capitalized interest (4,314) (2,425) (6,747) (4,887) _________ _________ _________ _________ Total expenses 19,447 29,736 40,133 54,816 _________ _________ _________ _________ Income before income taxes 6,930 11,136 10,593 20,887 Provision for income taxes 3,014 4,357 4,131 8,158 _________ _________ _________ _________ Net income $ 3,916 $ 6,779 $ 6,462 $ 12,729 ========= ========= ========= ========= 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, 1999 1998 _________ _________ Cash flows from operating activities: Net income $ 6,462 $ 12,729 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 12,480 24,166 Deferred income taxes 4,131 8,158 Changes in assets and liabilities: Accounts receivable 8,694 (10,280) Prepaid expenses and other assets (428) (3,197) Accounts payable and accrued liabilities 3,847 (1,348) _________ _________ Net cash flows from operating activities 35,186 30,228 _________ _________ Cash flows from investing activities: Capital expenditures (56,111) (19,671) Decrease in restricted cash 36,631 --- Management fee (851) (1,479) _________ _________ Net cash flows from investing activities (20,331) (21,150) _________ _________ Cash flows from financing activities: Repayments of senior secured project notes (16,182) (25,881) Decrease in due from affiliates 1,327 16,803 _________ _________ Net cash flows from financing activities (14,855) (9,078) _________ _________ 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 June 30, 1999 and the results of operations for the three and six months ended June 30, 1999 and 1998 and cash flows for the six months ended June 30, 1999 and 1998. The results of operations for the three and six months ended June 30, 1999 and 1998 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, 1998. The combined financial statements include the proportionate share of the accounts of the partnerships in which the Guarantors have an interest. 2. Disposition of power generation assets: On February 8, 1999, MidAmerican Energy Holdings Company, the successor to CalEnergy Company, Inc. ("MidAmerican") created a new subsidiary, CE Generation LLC ("CE Generation") and subsequently transferred its interest in the power generation assets in the Imperial Valley to CE Generation. On March 3, 1999, MidAmerican closed the sale of 50% of its ownership interests in CE Generation to an affiliate of El Paso Energy Corporation. 3. Contingencies: On February 26, 1998, Del Ranch and Elmore initiated an action against Edison in Imperial County Superior Court for payment for energy delivered to Edison pursuant to long term power sale agreements at the escalated rate of 14.6 cents for 1998. For the Elmore and Del Ranch partnerships, Edison has asserted that prices should not be escalated for 1998 and made payments for energy deliveries at 13.6 cents per kWh in 1998. That action is in the early discovery stages and the Del Ranch and Elmore partnerships intend to vigorously prosecute all available claims. 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 Company as of June 30, 1999, and the related statements of operations for the three and six month periods ended June 30, 1999 and 1998 and cash flows for the six month periods ended June 30, 1999 and 1998. These financial statements are the responsibility of the Salton Sea Royalty 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. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet of the Salton Sea Royalty Company as of December 31, 1998, and the related statements of operations, equity, and cash flows for the year then ended (not presented herein); and in our report dated January 28, 1999, (March 3, 1999 as to Note 5), 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, 1998 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 26, 1999 SALTON SEA ROYALTY COMPANY BALANCE SHEETS (Dollars in Thousands, Except per Share Amounts) June 30, December 31, 1999 1998 ___________ ___________ (unaudited) ASSETS Due from affiliates $ 51,182 $ 50,928 Royalty stream, net 18,489 22,932 Excess of cost over fair value of net assets acquired, net 32,734 33,188 Prepaid expenses and other assets 374 513 __________ __________ $ 102,779 $ 107,561 ========== ========== LIABILITIES AND EQUITY Liabilities: Accrued liabilities $ 35,668 $ 39,584 Senior secured project note 18,512 23,210 Deferred income taxes 5,014 6,769 __________ __________ Total liabilities 59,194 69,563 Equity: Common stock, par value $.01 per share; 100 share authorized, issued and outstanding - - Additional paid-in capital 1,561 1,561 Retained earnings 42,024 36,437 __________ __________ Total equity 43,585 37,998 __________ __________ $ 102,779 $ 107,561 ========== ========== The accompanying notes are an integral part of these financial statements. SALTON SEA ROYALTY COMPANY STATEMENTS OF OPERATIONS (Dollars in Thousands) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ___________________ _________________ 1999 1998 1999 1998 _______ _______ _______ _______ Revenues: Royalty income $ 3,770 $12,642 $17,229 $24,680 Expenses: Operating, general and administrative expenses 1,046 2,032 2,154 3,891 Amortization of royalty stream and goodwill 2,448 2,448 4,897 4,897 Interest expense 446 739 914 1,515 ________ ________ ________ ________ Total expenses 3,940 5,219 7,965 10,303 ________ ________ ________ ________ Income (loss) before income taxes (170) 7,423 9,264 14,377 Provision for (benefit from) income taxes (113) 2,791 3,677 5,416 ________ ________ ________ ________ Net income (loss) $ (57) $ 4,632 $ 5,587 $ 8,961 ======== ======== ======== ======== The accompanying notes are an integral part of these financial statements. SALTON SEA ROYALTY COMPANY STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) Six Months Ended June 30, _______ _______ 1999 1998 _______ _______ Cash flows from operating activities: Net income $ 5,587 $ 8,961 Adjustments to reconcile net income to net cash flows from operating activities: Amortization of royalty stream and goodwill 4,897 4,897 Changes in assets and liabilities: Prepaid expenses and other assets 139 234 Accrued liabilities and deferred income taxes (5,671) 11,047 Net cash flows from operating activities 4,952 25,139 Net cash flows from financing activities: Increase in due from affiliates (254) (17,276) Repayment of senior secured project note (4,698) (7,863) _________ _________ Net cash flows from financing activities (4,952) (25,139) 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 COMPANY NOTES TO FINANCIAL STATEMENTS (in thousands) ____________________ 1. General: In the opinion of management of the Salton Sea Royalty Company (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, 1999 and the results of operations for the three and six months ended June 30, 1999 and 1998 and cash flows for the six months ended June 30, 1999 and 1998. The results of operations for the three and six months ended June 30, 1999 and 1998 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, 1998. 2. Disposition of power generation assets: On February 8, 1999, MidAmerican Energy Holdings Company, the successor to CalEnergy Company, Inc. ("MidAmerican") created a new subsidiary, CE Generation LLC ("CE Generation") and subsequently transferred its interest in the power generation assets in the Imperial Valley to CE Generation. On March 3, 1999, MidAmerican closed the sale of 50% of its ownership interests in CE Generation to an affiliate of El Paso Energy Corporation. 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 Company'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 Company 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. Energy is sold at increasing scheduled rates for the first ten years of each plants operations and thereafter at Edison's Avoided Cost of Energy. 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 extend until December 1999 for the Leathers Partnership. For 1999, Vulcan, Hoch and Elmore are receiving Edison's Avoided Cost of Energy pursuant to their respective SO4 Agreements. The SO4 Agreement for Leathers provides for energy rates of 15.6 cents per kWh in 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 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 six months ended June 30, 1999. 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 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 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 six months ended June 30, 1999, Edison's average Avoided Cost of Energy was 2.7 cents per kWh which is substantially below the contract energy prices earned for the six months ended June 30, 1999. Estimates of Edison's future Avoided Cost of Energy vary substantially from year to year. 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 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, _____________________ __________________ 1999 1998 1999 1998 ________ ________ ______ _______ Overall capacity factor 93.3% 98.0% 88.6% 90.2% Capacity (NMW) (average) 119.4 119.4 119.4 119.4 kWh produced (in thousands) 243,300 258,000 459,300 467,900 The overall capacity factor for the Salton Sea Projects decreased marginally for the six months ended June 30, 1999 compared to the same period in 1998 due to reduced production at Region I. 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, ____________________ _________________ 1999 1998 1999 1998 ________ _________ ________ _______ Overall capacity factor 94.6% 93.5% 100.7% 95.9% Capacity (NMW) (average) 148 148 148 148 kWh produced (in thousands) 305,900 302,100 647,400 616,600 The overall capacity factor for the Partnership Projects increased for the six months ended June 30, 1999 compared to the same period in 1998 due to scheduled overhauls at Leathers and Elmore in 1998. 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) Revenues: The Salton Sea Guarantors' sales of electricity decreased to $19,546 for the three months ended June 30, 1999 from $27,612 for the same period in 1998, a 29.2% decrease. For the six months ended June 30, 1999, revenues decreased to $37,818 from $47,797 in 1998, a 20.9% decrease. These decreases were primarily due to the expiration of the fixed price period at Salton Sea Unit III in February, 1999. The Partnership Guarantors' sales of electricity decreased to $24,222 for the three months ended June 30, 1999 from $39,574 for the same period in 1998, a 38.8% decrease. For the six month period ended June 30, 1999, sales of electricity decreased to $46,252 from $73,671 in 1998, a 37.2% decrease. These decreases were due to the expiration of the scheduled price period at Elmore and Del Ranch at December 31, 1998. The Royalty Guarantor revenue decreased to $3,770 for the three months ended June 30, 1999 from $12,642 for the same period last year. For the six month period ended June 30, 1999, revenue decreased to $17,229 from $24,680 in 1998. 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 Del Ranch and Elmore due to lower revenue. Operating Expenses: The Salton Sea Guarantors' operating expenses, which include royalty, operating, and general and administrative expenses, decreased to $6,227, for the three months ended June 30, 1999 from $7,800 for the same period in 1998. For the six month period ended June 30, 1999, operating expenses decreased to $13,535 from $14,547 in 1998. These decreases were 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 $11,858 for the three months ended June 30, 1999 from $15,694 for the same period in 1998. For the six month period ended June 30, 1999, operating expenses decreased to $23,065 from $29,784 in 1998, a 22.6% decrease. These decreases were primarily due to a reduction in royalty expenses due to the lower revenues. The Royalty Guarantors' operating expenses decreased to $1,046 for the three months ended June 30, 1999 from $2,032 for the same period in 1998, a 48.5% decrease. For the six month period ended June 30, 1999, operating expenses decreased to $2,154 from $3,891 in 1998, a 44.6% decrease. These decreases were due to lower royalty costs due to the end of the scheduled price period at Del Ranch and Elmore. Depreciation and Amortization: The Salton Sea Guarantors' depreciation and amortization increased to $4,421 for the three months ended June 30, 1999 from $3,726 for the same period of 1998, an 18.7% increase. For the six month period ended June 30, 1999, depreciation and amortization increased to $8,443 from $7,440 in 1998. The increase was due to an increase in step up depreciation charges. 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' depreciation and amortization decreased to $6,262 for the three months ended June 30, 1999 from $14,011 for the same period in 1998. For the six month period ended June 30, 1999, depreciation and amortization decreased to $12,480 from $24,166 in 1998. The decrease was due primarily to lower step up depreciation amortization after the end of the scheduled price period at Del Ranch and Elmore. The Royalty Guarantors' amortization was $2,448 for the three months ended June 30, 1999 compared to $2,448 for the same period of 1998. For the six month period ended June 30, 1999, amortization was $4,897 compared to $4,897 in 1998. Interest Expense: The Salton Sea Guarantors' interest expense, net of capitalized amounts, increased to $4,148 for the three months ended June 30, 1999 from $3,919 for the same period in 1998, a 5.8% increase. For the six month period ended June 30, 1999, interest expense, net of capitalized amounts, increased to $8,520 from $7,847 in 1998. The increases were primarily due to increased indebtedness from the issuance of the Series F notes in October 1998. The Partnership Guarantors' interest expense, net of capitalized amounts, increased to $1,327 for the three months ended June 30, 1999 from $31 for the same period in 1998. For the six month period ended June 30, 1999, interest expense, net of capitalized amounts, increased to $4,588 from $866. The increases were primarily due to increased indebtedness from the issuance of the Series F notes in October 1998. The Royalty Guarantors' interest expense decreased to $446 for the three months ended June 30, 1999 from $739 from the same period in 1998. For the six month period ended June 30, 1999, interest expense decreased to $914 from $1,515 in 1998. 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 $2,297 for the three months ended June 30, 1999 from $4,357 for the same period in 1998, a 47.3% decrease. For the six month period ended June 30, 1999, the provision for income taxes decreased to $3,414 from $8,158 in 1998. 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 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 Royalty Guarantor's income tax benefit was $113 for the three months ended June 30, 1999 compared to an income tax provision of $2,791 for the same period in 1998. For the six month period ended June 30, 1999, income tax provision decreased to $3,677 from $5,416 in 1998. These decreases were primarily due to lower pre-tax income. Tax obligations of the Royalty Guarantor will be remitted to the parent company only to the extent of cash flows available after operating expenses and debt service. Net Income: The Salton Sea Funding Corporation's net income for the three months ended June 30, 1999 decreased to $161 compared to $414 for the same period in 1998. For the six month period ended June 30, 1999, net income decreased to $333 from $799 in 1998. 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 $5,401 for the three months ended June 30, 1999 compared to $12,174 for the same period of 1998. For the six month period ended June 30, 1999, net income decreased to $8,763 compared to $17,985 in 1998. The Partnership Guarantors' net income decreased to $4,633 for the three months ended June 30, 1999 compared to $6,779 for the same period of 1998. For the six month period ended June 30, 1999, net income decreased to $7,179 from $12,729 in 1998. The Royalty Guarantors' net loss was $57 for the three months ended June 30, 1999 compared to net income of $4,632 for the same period of 1998. For the six month period ended June 30, 1999, net income decreased to $5,587 from $8,961 in 1998. Liquidity and Capital Resources: CalEnergy 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 the 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. The zinc produced by the Zinc Recovery Project is expected to be sold primarily to U.S. West Coast customers such as steel companies, alloyers and galvanizers. 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 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"). Kvaerner is a wholly- owned indirect subsidiary of Kvaerner ASA, an internationally recognized engineering and construction firm experienced in the metals, mining and processing industries. Total project costs of the Zinc Recovery Project are expected to be approximately $200,900. Minerals LLC has incurred approximately $43,200 of such costs through June 30, 1999. Salton Sea Power LLC, a Salton Sea Guarantor, is constructing Salton Sea V. Salton Sea V will be 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"). 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"). SWEC is one of the world's leading engineering and construction firms for the construction of electric power plants and, in particular, geothermal power plants. 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. Salton Sea Power LLC has incurred approximately $32,400 of such costs through June 30, 1999. 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. The Partnership Projects are upgrading 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 and the Region 2 Brine Facilities Construction are being constructed by SWEC pursuant to a date certain, fixed price, turnkey engineering, procurement and construction contract (the "Region 2 Upgrade EPC Contract"). The obligations of SWEC are guaranteed by Stone & Webster, Incorporated. The CE Turbo Project is scheduled to commence initial operations in mid-2000 and the Region 2 Brine Facilities Construction is scheduled to be completed in early-2000. 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 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. What is generally known as the year 2000 ("Y2K") computer issue arose because many existing computer programs and embedded systems use only the last two digits to refer to a year. Therefore, those computer programs do not properly distinguish between a year that begins with "20" instead of "19". If not corrected, many computer applications could fail or create erroneous results. The failure to correct a material Y2K item could result in an interruption in, or a failure of, certain normal business activities or operations including the generation, distribution, and supply of electricity. Such failures could materially and adversely affect the Company's results of operations, liquidity and financial condition. The Y2K issue creates uncertainty for the Company from potential issues with its own computer systems and from third parties with whom the Company deals on transactions worldwide. The Company's operations utilize systems and equipment provided by other organizations. As a result, Y2K readiness of suppliers, vendors, service providers or customers could impact the Company's operations. The Company is assessing the readiness of such constituent entities and the impacts on those entities that rely upon the Company's services. The Company is unable to determine at this time whether the consequences of Y2K failures of third parties will have a material impact on the Company's results of operations, liquidity or financial condition. The Company has commenced, for all of its information systems, a Y2K date conversion project to address all necessary code changes, testing and implementation in order to resolve the Y2K issue. The Company created a Y2K project team to identify, assess and correct all of its information technology (IT) and non- IT systems, as well as, identify and assess third party systems. The Company has identified and assessed substantially all of its IT and non-IT systems and is currently in the process of repairing or replacing those systems which it believes are not year 2000 compliant. Through June 30, 1999, the Company is approximately 100% complete in repairing or replacing those systems. 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) Total Y2K expenditures, for both repairing or replacing non- compliant systems, are expected to total approximately $100. The Company has renovated or replaced several non-compliant systems to gain enhanced functionalities. The cost of these types of renovations and replacements is not reported herein since their development and installation were not driven by Y2K concerns. The Company is not aware of any additional material costs needed to be incurred to bring all of its systems into compliance; however, there is no assurance that additional costs will not be incurred. A contingency plan identifying credible worst-case scenarios is being developed. The contingency plan is comprised of both mitigation and recovery aspects. Mitigation entails planning to reduce the impact of unresolved year 2000 problems, and recovery entails planning to restore services in the event that year 2000 problems occur. It is expected that the contingency plan will be complete by mid-year 1999. Although management believes that the Y2K project will be substantially complete before January 1, 2000, any unforeseen failures of the Company's and/or third parties' computer systems could have a material impact on the Company's ability to conduct its business. 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 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 except those described in Footnote 3 of the Partnership Guarantors financial statements. 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 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 12, 1999 /s/ Patrick J. Goodman Patrick J. Goodman Senior Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit Page No. No. _______ ______ 27 Financial Data Schedule 36 EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1,000 6-MOS DEC-31-1999 JUN-30-1999 12,349 0 0 0 0 0 0 0 623,274 0 597,898 0 0 0 12,267 623,274 0 24,319 0 0 403 0 23,359 557 228 329 0 0 0 329 0 0
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