SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
______________________
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended
March 31, 1995
Commission File No. 1-9874
CALIFORNIA ENERGY COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2213782
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
302 South 36th Street, Suite 400, Omaha, NE 68131
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (402) 341-4500
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
Former name, former address and former fiscal year, if changed
since last report. N/A
49,934,321 shares of Common Stock, $0.0675 par value were
outstanding as of March 31, 1995.
CALIFORNIA ENERGY COMPANY, INC.
Form 10-Q
March 31, 1995
_____________
C O N T E N T S
PART I: FINANCIAL INFORMATION
Page
Item 1. Financial Statements
Report of Independent Accountants 3
Consolidated Balance Sheets, March 31, 1995
and December 31, 1994 4
Consolidated Statements of Operations for the Three
Months Ended March 31, 1995 and 1994 5
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1995 and 1994 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 30
Item 2. Changes in Securities 30
Item 3. Defaults on Senior Securities 30
Item 4. Submission of Matters to a Vote of
Security Holders 30
Item 5. Other Information 30
Item 6. Exhibits and Reports on Form 8-K 30
Signatures 32
Exhibit Index 33
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Stockholders
California Energy Company, Inc.
Omaha, Nebraska
We have reviewed the accompanying consolidated balance sheet of
California Energy Company, Inc. and subsidiaries as of March 31,
1995, and the related consolidated statements of operations and
cash flows for the three month periods ended March 31, 1995 and
1994. 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 consolidated 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 consolidated balance sheet of California
Energy Company, Inc. and subsidiaries as of December 31, 1994, and
the related consolidated statements of operations, stockholders'
equity, and cash flows for the year then ended (not presented
herein), and in our report dated February 3, 1995, we expressed an
unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying
consolidated balance sheet as of December 31, 1994 is fairly
stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
April 25, 1995
CALIFORNIA ENERGY COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
________________________________
March 31 December 31
1995 1994
(unaudited)
ASSETS
Cash and investments $ 140,419 $ 254,004
Joint venture cash and investments 53,216 54,087
Restricted cash and investments 118,972 131,775
Short-term investments 81,800 50,000
Accounts receivable 54,741 28,272
Due from joint ventures 5,057 -
Properties and plants, net (Note 3) 1,479,218 556,992
Equipment, net of depreciation 4,540 4,651
Notes receivable - joint ventures 13,021 12,627
Excess of cost over fair
value of net assets acquired, net 305,112 -
Other investments 2,097 7,688
Deferred charges and other assets 81,655 31,049
Total assets $2,339,848 $1,131,145
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 4,385 $ 1,679
Other accrued liabilities 68,738 42,658
Project loans 384,133 233,080
Construction loans 53,028 31,503
Due to Joint Ventures - 269
Senior Discount Notes (Note 4) 442,879 431,946
Merger loan (Note 8) 500,000 -
Convertible debt (Note 5) 64,850 -
Convertible subordinated debentures 100,000 100,000
Deferred income taxes 216,809 26,568
Total liabilities 1,834,822 867,703
Deferred income 19,623 19,851
Redeemable preferred stock (Note 5) - 63,600
Commitments and contingencies
Stockholders' equity:
Preferred stock - authorized 2,000
shares, no par value - -
Common stock - authorized 80,000 shares,
par value $0.0675 per share, issued and
outstanding 49,934 and 31,849 shares at
March 31, 1995 and December 31, 1994,
respectively (Note 9) 3,378 2,407
Additional paid in capital 332,358 100,421
Retained earnings 151,257 142,937
Treasury stock - 102 and 3,800 common
shares at March 31, 1995 and
December 31, 1994, respectively,
at cost (1,590) (65,774)
Total stockholders' equity 485,403 179,991
Total liabilities and
stockholders' equity $2,339,848 $1,131,145
The accompanying notes are an integral part of these financial
statements.
CALIFORNIA ENERGY COMPANY, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
________________________________
Three Months Ended
March 31
1995 1994
(unaudited)
Revenues:
Sales of electricity and steam $ 72,978 $ 30,819
Royalties 3,917 -
Interest and other income 9,790 4,591
Total revenues 86,685 35,410
Costs and expenses:
Plant operations 18,426 6,149
General and administration 6,426 3,379
Royalties 4,414 1,997
Depreciation and amortization 14,183 4,798
Interest expense 29,562 9,233
Less interest capitalized (4,484) (2,803)
Total costs and expenses 68,527 22,753
Income before income taxes 18,158 12,657
Provision for income taxes 5,540 4,050
Income before minority interest
and extraordinary item 12,618 8,607
Minority interest 3,005 -
Income before extraordinary item 9,613 8,607
Extraordinary item (less applicable
income taxes of $945) (Note 7) - (2,007)
Net income 9,613 6,600
Preferred dividends
(paid in kind)* 1,080 1,200
Net income attributable to
common shares $ 8,533 $ 5,400
Income per share before extraordinary
item $ .21 $ .20
Extraordinary item (Note 7) - (.06)
Net income per share $ 0.21 $ 0.14
Average number of common and
common equivalent shares
outstanding 41,341 37,739
The accompanying notes are an integral part of these financial
statements.
* Reflects dividends on the Company's Series C Redeemable
Convertible Preferred Stock, which are payable in kind.
CALIFORNIA ENERGY COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
March 31
1995 1994
(unaudited) Cash flows
from operating activities:
Net income $ 9,613 $ 6,600
Adjustments to reconcile net cash flow from
operating activities:
Depreciation and amortization 12,927 4,798
Amortization of excess of cost over
fair value of net assets acquired 1,256 -
Amortization of original issue discount 10,933 671
Amortization of deferred financing costs 2,713 497
Provision for deferred income taxes 4,272 404
Changes in other items:
Accounts receivable 3,381 (184)
Accounts payable and accrued liabilities 912 (2,895)
Deferred income (228) (169)
Income tax payable - (2,300)
Net cash flows from operating activities 45,779 7,422
Cash flows from investing activities:
Capital expenditures relating to power plants
and development for existing projects (1,699) (3,707)
Acquisition of equipment (31) (52)
Purchase of Magma, net of cash acquired (906,226) -
Upper Mahiao construction (19,886) -
Mahanagdong construction (3,291) -
Malitbog construction (11,167) -
Other international development (1,601) -
Salton Sea expansion in progress (10,277) -
Yuma - construction in progress - (5,054)
Pacific Northwest, Nevada and Utah (337) (2,983)
Decrease in restricted cash 12,803 2,514
Decrease (increase) in other investments
and assets (28,488) 586
Net cash flows from investing activities (913,224) (8,696)
Cash flows from financing activities:
Proceeds and net benefits from sale of common
and treasury stock and exercise of options 299,548 307
Repayment of project finance loans (37,992) -
Construction loan 21,525 -
Merger loan 500,000 -
Deferred financing costs - Merger loan (22,782) -
Deferred financing costs -
Senior Discount Notes - (11,201)
Proceeds from issue of Senior Discount Notes - 400,000
Defeasance of Senior Notes - (35,730)
Increase in amounts due from joint ventures (5,720) (64)
Purchase of treasury stock (1,590) (20,990)
Net cash flows from financing activities 752,989 332,322
Net increase (decrease) in cash and
cash equivalents (114,456) 331,048
Cash and cash equivalents at beginning
of period 308,091 142,699
Cash and cash equivalents at end
of period $ 193,635 $ 473,747
Supplemental disclosures
Interest paid, net of amount capitalized $ 22,644 $ 5,593
Income taxes paid $ 240 $ 5,000
The accompanying notes are an integral part of these financial
statements.
CALIFORNIA ENERGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts and per kWh amounts)
________________________________
1. General:
In the opinion of management of California Energy Company, Inc.
(the "Company"), the accompanying unaudited consolidated financial
statements contain all adjustments (consisting only of normal
recurring accruals) necessary to present fairly the financial
position as of March 31, 1995 and the results of operations for the
three months ended March 31, 1995 and 1994, and cash flows for the
three months ended March 31, 1995 and 1994.
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, and its proportionate
share of the accounts of the partnerships and joint ventures in
which it has invested. The March 31, 1995 financial statements
reflect the acquisition of Magma Power Company (See Note 8).
The results of operations for the three months ended March 31, 1995
and 1994 are not necessarily indicative of the results to be
expected for the full year.
Certain amounts in the 1994 financial statements and supporting
footnote disclosures have been reclassified to conform to the 1995
presentation. Such reclassification did not impact previously
reported net income or retained earnings.
2. Other Footnote Information:
Reference is made to the Company's most recently issued annual
report that included information necessary or useful to the
understanding of the Company's business and financial statement
presentations. In particular, the Company's significant accounting
policies and practices were presented as Note 2 to the consolidated
financial statements included in that report.
CALIFORNIA ENERGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts and per kWh amounts)
---------------------
3. Properties and Plants:
Properties and plants comprise the following:
March 31 December 31
1995* 1994
(unaudited)
Project costs:
Power plants and gathering systems $ 953,307 $ 314,027
Wells and resource development 264,959 174,651
1,218,266 488,678
Less accumulated depreciation
and amortization (103,273) (90,457)
Net facilities 1,114,993 398,221
Wells and resource construction
in progress 434 434
Total project costs 1,115,427 398,655
Upper Mahiao construction 68,440 48,554
Mahanagdong construction 24,734 21,443
Malitbog construction 84,956 -
Other international development 4,046 2,445
Salton Sea expansion 95,383 -
Pacific Northwest 47,464 46,620
Nevada and Utah properties costs 38,768 39,275
Total $ 1,479,218 $ 556,992
* Property and plant costs include allocated purchase price.
4. Senior Discount Notes:
In March 1994, the Company issued $400,000 of 10 1/4% Senior
Discount Notes which accrete to an aggregate principal amount of
$529,640 at maturity in 2004. The original issue discount (the
difference between $400,000 and $529,640) will be amortized from
issue date through January 15, 1997, during which time no cash
interest will be paid on the Senior Discount Notes. Commencing
July 15, 1997, cash interest on the Senior Discount Notes will be
payable
semiannually on January 15 and July 15 of each year. The Senior
Discount Notes are redeemable at any time on or after January 15,
1999. The redemption prices commencing in the twelve month period
beginning January 15, 1999 (expressed in percentages of the
principal amount) are 105.125%, 103.417%, 101.708%, and 100% for
CALIFORNIA ENERGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share and per kWh data)
__________________
4. Senior Discount Notes: (continued)
1999, 2000, 2001, and 2002, respectively, plus accrued interest
through the redemption date in each case. The Senior Discount
Notes are unsecured senior obligations of the Company.
5. Conversion of Preferred Stock:
On November 19, 1991, the Company sold one thousand shares of
convertible preferred stock, Series C, at $50,000 per share to
Kiewit Energy, in a private placement. Each share of the Series C
preferred stock is convertible at any time at $18.375 per common
share into two thousand seven hundred and twenty-one shares of
common stock subject to customary adjustments. The Series C
preferred stock has a dividend rate of 8.125%, commencing March 15,
1992 through conversion date or December 15, 2003. The dividends,
which are cumulative, are payable quarterly in convertible
preferred stock, Series C, through March 15, 1995 and in cash on
subsequent dividend dates.
Pursuant to the terms of the Securities Purchase Agreement, the
Company exercised its rights to exchange the preferred stock,
Series C, on March 15, 1995 for $64,850 principal amount 9.5%
convertible subordinated debentures of the Company due 2003.
6. Income Taxes:
The Company's effective tax rate continues to be less than the
statutory rate primarily due to the depletion deduction and the
generation of energy tax credits in 1995. The significant
components of the deferred tax liability are the temporary
differences between the financial reporting basis and income tax
basis of the power plant and the well and resource development
costs, and in addition, the offsetting benefits of operating loss
carryforwards and investment and geothermal energy tax credits.
The income tax provision for the three months ended March 31, 1995,
is approximately 23% current tax expense and 77% deferred tax
expense.
CALIFORNIA ENERGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share and per kWh data)
__________________
7. Extraordinary Item:
In conjunction with the Company's Senior Discount Note offering
(See Note 4), the 12% Senior Notes were defeased. This resulted in
an extraordinary item in the amount of $2,007, after the income tax
effect of $945. The extraordinary item represents the amount
necessary to defease the interest payments on the $35,730 Senior
Notes and the unamortized portion of the deferred financing costs.
The 1994 contingent interest component of these Senior Notes,
calculated by reference to the Company's share of available cash
flow from the Coso Project, remained undefeased and outstanding
through the end of the calculation period, December 31, 1994.
8. Purchase of Magma Power Company:
On January 10, 1995, the Company acquired approximately 51% of the
outstanding shares of common stock of Magma Power Company (the
"Magma Common Stock") through a cash tender offer (the "Magma
Tender Offer") and completed the Magma Acquisition on February 24,
1995 by acquiring the approximately 49% of the outstanding shares
of Magma common stock not owned by the Company through a merger.
Magma Power Company ("Magma") is engaged in independent power
operations similar to those of the Company. The transaction was
accounted for as a purchase. The results of operations of the
Company include the results of operations of Magma from January 10,
1995, to March 31, 1995 adjusted for the Company's percentage
ownership during that time period. Goodwill recorded in connection
with the Magma Acquisition will be amortized using the straight
line method over 40 years. The Magma Tender Offer was financed
with a $245,600 facility from Credit Suisse (the "Tender
Facility"). Loans under the Tender Facility were made to the
Company on a non-recourse basis, secured by the Magma stock
acquired, and the Company lent the proceeds of such loans to Magma
in exchange for a secured term note of Magma (the "Tender Note").
The loans under the Tender Facility were repaid from funds received
from the Merger Facilities, described below.
A total of approximately $957,000 was required to refinance the
Tender Facilities and to complete the Magma Acquisition. Up to
CALIFORNIA ENERGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share and per kWh data)
___________________
8. Purchase of Magma Power Company: (continued)
$500,000 in secured bank financing was provided by Credit Suisse
(the "Merger Facilities") on specified terms and subject to
customary conditions. Such funds, together with the net proceeds
of a public equity offering (see Note 9) and general corporate
funds of the Company, were used to complete the Magma Acquisition.
The Merger Facilities consist of (i) a $350 million principal
amount term loan maturing on October 31, 2000 to be amortized in
semi-annual payments beginning on April 30, 1995 ("Term Loan A"),
(ii) a $75 million principal amount term loan maturing on October
31, 2001 to be amortized in semi-annual payments beginning April
30, 2001 ("Term Loan B") and (iii) a $75 million principal amount
term loan maturing on October 31, 2002 to be amortized in semi-
annual payments beginning April 30, 2002 ("Term Loan C"). As of
April 30, 1995, the outstanding principal amount on Term Loan A,
Term Loan B and Term Loan C was $350 million, $75 million and $75
million, respectively. Credit Suisse is the agent bank in
connection with the Merger Facilities. Loans under the Merger
Facilities were made to the Company on a non-recourse basis, and
the Company loaned the proceeds of such loans to Magma in exchange
for a secured note. Loans under the Merger Facilities are secured
by an assignment and pledge by the Company of such note and 100% of
the capital stock of Magma.
The Company may, subject to certain terms and conditions, elect to
have the term loans bear interest based on either the Eurodollar
Rate or the Base Rate (as defined in the Merger Facilities).
Interest on the term loans is payable at spreads of 2.50% above the
Eurodollar Rate or 1.50% above the Base Rate for Term Loan A and
3.50% above the Eurodollar Rate or 2.50% above the Base Rate for
Term Loan B and Term Loan C. As of March 31, 1995, Term Loan A
bore interest at the rate of 8.656% per annum and Term Loan B and
Term Loan C each bore interest at the rate of 9.656% per annum.
The Merger Facilities contain affirmative and negative covenants
customary for similar non-recourse credit facilities. Such
covenants include a negative pledge of all stock and unencumbered
CALIFORNIA ENERGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share and per kWh data)
___________________
8. Purchase of Magma Power Company: (continued)
assets of Magma; a limitation on guaranties by Magma; a limitation
on mergers and sales of assets by Magma; a limitation on
investments in other persons by Magma; a prohibition on dividends
and other payments by Magma to the Company unless the proceeds are
used to pay down the Merger Facilities; a prohibition on the sale
of ownership interests in Magma; a limitation on the incurrence of
additional debt by Magma; and a restriction on a change in the
nature of the business of the Company and Magma.
The Merger Facilities also contain financial covenants and
customary events of default, including events of default based on
breaches of certain representations, warranties and covenants;
cross defaults with respect to certain debt of the Company and
Magma; bankruptcy and similar events; the failure to pay certain
final judgments; the failure to make a payment with respect to the
Merger Facilities when due; and the failure of the pledge agreement
to be in full force and effect.
Unaudited proforma combined revenue, net income and earnings per
share of the Company and Magma for the quarter ended March 31, 1995
as if the acquisition had occurred at the beginning of the quarter
after giving effect to certain proforma adjustments related to the
acquisition were $88,610, $8,545 and $0.16, respectively, compared
to $73,714, $6,599 and $0.12 for the same period last year.
9. Equity Offering:
Simultaneous with the acquisition of the remaining equity interest
of Magma on February 24, 1995, the Company completed a public
offering (the "Offering") of 18,170 shares of common stock, which
amount includes a direct sale by the Company to Peter Kiewit Sons,
Inc. of 1,500 shares and the exercise of underwriter over-allotment
options of 1,500 shares, at a price of $17.00 per share. The
Company received net proceeds of $300,388 from the Offering.
CALIFORNIA ENERGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share and per kWh data)
___________________
10. Proposed Debt Offerings:
The Company intends to modify all or a portion of the Magma
acquisition debt with potentially longer term financing effected
through a public and/or private offering of Company and project
level debt.
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Results of Operations:
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial
condition and results of operations during the periods included in
the accompanying statement of operations.
For purposes of consistent financial presentation, plant capacity
factors are based upon a capacity amount of 88 gross MW/80 net MW
for each plant at the Coso Project. Plant capacity factors for the
Imperial Valley Project, consisting of the Vulcan, Del Ranch,
Elmore, Leathers, Salton Sea I and II, and Salton Sea III plants,
are based on contract nameplate amounts of 34, 38, 38, 38, 30, and
49.8 net MW respectively. Each plant possesses an operating margin
which periodically allows for production in excess of the amount
listed above. Utilization of this operating margin is based upon
a variety of factors and can be expected to vary between calendar
quarters, under normal operating conditions.
Sales of electricity and steam increased to $72,978 in the first
quarter of 1995 from $30,819 in the first quarter of 1994, a 136.8%
increase. This improvement was primarily due to the addition of
production from the Imperial Valley Project as a result of the
acquisition of Magma Power Company in the first quarter of 1995,
the commencement of commercial operations of the Yuma Project in
the second quarter of 1994, an increase in the Coso Project's
electric kilowatt hour sales to 571.1 million kWh from 529.1
million kWh and an increased price per kWh in accordance with the
SO4 Agreements.
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Results of Operations: (continued)
The following operating data represent the aggregate capacity and
electricity production of the Coso Project:
Three Months Ended
March 31 Fiscal Year
1995 1994 1994
Overall capacity
factor 110.2% 102.1% 106.5%
kWh produced 571,100,000 529,100,000 2,238,600,000
Installed capacity
NMW (average) 240 240 240
The Navy I plant capacity factor was 113.4% in the first quarter of
1995 compared to 116.3% in the first quarter of 1994. The Navy II
plant capacity factor was 112.1% in the first quarter of 1995
compared to 91.2% in the first quarter of 1994. Navy II output in
the first quarter of 1994 was reduced due to the scheduled overhaul
of its three turbines. The BLM plant capacity factor was 105.0% in
the first quarter of 1995 compared to 98.7% in the first quarter of
1994. Technology enhancements to the BLM plant in the third
quarter of 1994 have allowed it to process its existing steam more
efficiently.
The Coso Project sells all electricity generated by the respective
plants pursuant to three long-term SO4 Agreements between the Navy
I Partnership, the BLM Partnership, and the Navy II Partnership,
respectively, and SCE. These SO4 Agreements provided for capacity
payments, capacity bonus payments and energy payments. SCE makes
fixed annual capacity payments to the Coso Partnerships, 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
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Results of Operations: (continued)
Agreements. Energy is sold at increasing fixed rates for the first
ten years of each contract and thereafter at SCE's Avoided Cost of
Energy. The fixed price periods of the SO4 Agreements extend until
August 1997, March 1999 and January 2000 for each of the Navy I,
BLM and Navy II Partnerships, respectively, at rates ranging from
11.0 cents per kWh in 1994 to 14.6 cents in 2000.
The following operating data represent the aggregate capacity and
electricity production of the Imperial Valley Project:
Three Months Ended
March 31 Fiscal Year
1995 1994 1994
Overall capacity
factor 96.9% 96.7% 99.3%
kWh produced 476,700,000 475,900,000 1,980,900,000
Installed capacity
NMW (average) 227.8 227.8 227.8
The overall plant capacity factor in the first quarter of 1995 for
the Partnership Projects, consisting of the Vulcan, Del Ranch,
Elmore, Leathers plants, was 102.3%. The overall plant capacity
factor for the Salton Sea Project was 86.8%. The overall plant
capacity factors for the Partnership Projects and the Salton Sea
Project in the first quarter of 1994 was 100.1% and 90.5%,
respectively. Salton Sea I and II output was reduced in the first
quarter of 1995 due to scheduled turbine overhauls.
The Partnership Projects sell all electricity generated by the
respective plants pursuant to four long-term SO4 Agreements between
the Vulcan Partnership, the Del Ranch Partnership, the Elmore
Partnership and the Leathers Partnership, respectively, and SCE.
These SO4 Agreements provide for capacity payments, capacity bonus
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Results of Operations: (continued)
payments and energy payments. SCE makes fixed annual capacity
payments to the Partnerships, 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. Energy is sold at
increasing fixed rates for the first ten years of each contract and
thereafter at SCE's Avoided Cost of Energy. The fixed price
periods of the SO4 Agreements extend until February 1996, December
1988, December 1998, and December 1999 for each of the Vulcan, Del
Ranch, Elmore and Leathers Partnerships, respectively, at rates
ranging from 10.9 cents per kWh in 1994 to 15.6 cents per kWh in
1999.
The Salton Sea I Project sells electricity to SCE pursuant to a 30-
year negotiated power purchase agreement, as amended (the "Salton
Sea I PPA"), which provides for capacity and energy payments. The
initial contract capacity and contract nameplate are each 10 MW.
The capacity payment is based on the firm capacity price which is
currently $123.61/kW-year. The contract capacity payment adjusts
quarterly based on a basket of energy indices for the term of the
Salton Sea I PPA. The energy payment is calculated using a Base
Price (defined as the initial value of the energy payment 4.701
cents per kWh for the second quarter of 1992)), which is subject to
quarterly adjustments based on a basket of indices. The time
period weighted average energy payment for Unit 1 was 5.1 cents per
kWh during 1994. As the Salton Sea I PPA is not an SO4 Agreement,
the energy payments do not revert to SCE's Avoided Cost of Energy.
The Salton Sea II Project sells electricity to SCE pursuant to a
30-year modified SO4 Agreement that commenced on April 15, 1990.
The contract capacity and contract nameplate are 15 MW and 18 MW,
respectively. The contract requires SCE to make 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 Agreement. The energy payments for
the first ten year period, which period expires April 4, 2000, are
levelized at a time period weighted average of 10.6 cents per kWh.
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Results of Operations: (continued)
Thereafter, the monthly energy payments will be SCE's Avoided Cost
of Energy. For the period April 1, 1994 through March 31, 2004,
SCE is entitled to receive, at no cost, 5% of all energy delivered
in excess of 80% of contract capacity. The Salton Sea III Project
sells electricity to SCE pursuant to a 30 year modified SO4
Agreement that commenced on April 15, 1990. The contract capacity
is 47.5 MW and the contract nameplate is 49.8 MW. The SO4 Agreement
requires SCE to make capacity payments, capacity bonus payments and
energy payments for the life of the SO4 Agreement. The price for
contract capacity is fixed. The energy payments for the first ten
year period, which period expires on February 13, 1999, are
levelized at a time period weighted average of 9.8 cents per kWh.
Thereafter, the monthly energy payments will be SCE's Avoided Cost
of Energy.
Roosevelt Hot Springs steam field supplied 100% of customer power
plant steam requirements in the first quarter of 1995. The Company
has approximately 70% interest in the Roosevelt Hot Springs field.
The Desert Peak power plant operated at 95% of its nine net
megawatt capacity in the first quarter of 1995. The Yuma power
plant operated at 102% of its 50 net MW plant capacity.
Interest and other income increased in the first quarter of 1995 to
$9,790 from $4,591 for the same period in 1994. The increase
reflects higher average cash balances.
The Company received royalty income of $3,917 in the first quarter
of 1995. The increase is a result of the acquisition of Magma
Power Company which receives royalty income from the Partnership
Projects, East Mesa Project and the Mammoth Project.
Plant operations, general and administration, royalties,
depreciation and net interest expense all increased due primarily
to the addition of Magma's results of operations in the first
quarter of 1995. In addition, Yuma commenced operations in June of
1994 and its operating results are included in the three months
ended March 31, 1995.
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Results of Operations: (continued)
The Company's expenses as a percentage of sales of electricity and
steam were as follows:
Three Months Ended
March 31
1995 1994
Plant operations (net of Company's
operator fees and Yuma fuel cost) 21.6% 16.3%
General and administration 8.8% 11.0%
Royalties 6.0% 6.5%
Depreciation and amortization* 19.4% 15.6%
Interest (less amounts
capitalized)** 34.4% 20.9%
90.2% 70.3%
* Depreciation and amortization in 1995 includes amortization of
allocated purchase price.
** Interest in 1995 includes original issue discount on the
Senior Discount Notes and interest expense on the Tender and Merger
facilities.
Plant operations costs for the plants the Company owned in 1994
remained relatively constant. As a result of addition of Magma and
the commencement of the Yuma Project (including fuel purchases)
plant operations costs increased to $18,426 in the first quarter of
1995 from $6,149 in the first quarter of 1994, a 199.7% increase.
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Results of Operations: (continued)
General and administrative costs increased as a result of the
addition of Magma to $6,426 in the first quarter of 1995 from
$3,379 in the first quarter of 1994, a 90.2% increase. In April
1995, the Magma corporate offices were closed and administrative
functions were incorporated into the Company's corporate office.
Royalty costs increased to $4,414 in the first quarter of 1995 from
$1,997 in the first quarter of 1994, a 121.0% increase. The
increases are due to increased revenues from the plants the Company
owned in 1994, scheduled royalty increases associated with such
plants, and the addition of Magma plants.
Depreciation and amortization increased as a result of the addition
of Magma and the commencement of the Yuma Project to $14,183 in the
first quarter of 1995 from $4,798 in the first quarter of 1994, a
195.6% increase.
Interest expense, less amounts capitalized, increased to $25,078 in
the first quarter of 1995 from $6,430 in the first quarter of 1994.
The increase was primarily due to the original issue discount
amortization on the Senior Discount Notes issued in late March 1994
and the interest expense on the Tender Note and Merger facilities
used to finance the Magma Acquisition.
The provision for income taxes increased to $5,540 in the first
quarter of 1995 from $4,050 in the first quarter of 1994. The
increases are due to higher income before taxes. The Company's
effective tax rate continues to be less than the expected statutory
rate primarily due to the percentage depletion deduction and energy
tax credits generated in the current year.
Income before minority interest and extraordinary item increased to
$12,618 from $8,607, a 46.6% increase. Net income available to
common shareholders was $8,533 or $0.21 per share for the first
quarter of 1995. Net income after the extraordinary item of $2,007
was $5,400 or $.14 per share for the first quarter of 1994.
Without the effect of the extraordinary item, net income available
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Liquidity and Capital Resources:
to common shareholders for the first quarter of 1994 would have
been $.20 per common share.
The Company's cash and investments were $140,419 at March 31, 1995
as compared to $254,004 at December 31, 1994. In addition, the
Company's share of Coso and Magma retained cash and investments in
project control accounts at March 31, 1995 and December 31, 1994
was $53,216 and $54,087, respectively. Distributions out of the
Coso Project control account are made monthly to the Company for
operation and maintenance and capital costs and semiannually to
each Coso Joint Venture partner for profit sharing under a
prescribed calculation subject to mutual agreement by the partners.
Similarly, distributions out of the Magma Project control accounts
are made monthly for management fees, royalties and reimbursement
of operating costs and semi-annually to each Magma joint venture
partner for profit sharing. In addition, the Company recorded
separately restricted cash and investments of $118,972 and $131,775
at March 31, 1995 and December 31, 1994, respectively. The
restricted balances were comprised primarily of amounts deposited
in restricted accounts from which the Company will source its
equity contribution requirements relating to the Upper Mahiao,
Mahanagdong and Malitbog projects and of its proportionate share of
Coso Project cash reserves for a debt service reserve fund. The
Coso Project established these reserves in conjunction with the
refinancing of its previous bank debt.
Simultaneous with the acquisition of the remaining equity interest
of Magma on February 24, 1995, the Company completed a public
offering (the "Offering") of 18,170 shares of common stock, which
amount includes a direct sale by the Company to Peter Kiewit Sons,
Inc. of 1,500 shares and the exercise of underwriter over-allotment
options of 1,500 shares, at a price of $17.00 per share. The
Company received proceeds of $300,388 from the Offering.
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Liquidity and Capital Resources: (continued)
Proceeds from the sale of common and treasury stock and from
options for shares of common and treasury stock exercised in the
three months ended March 31, 1995 aggregated approximately
$299,548.
As of March 31, 1995 the Company has repurchased 102 shares of its
common stock at a cost of $1,590. This repurchase provides shares
for issuance under the Company's employee stock option and share
purchase plans and other outstanding convertible securities. The
shares may also be used for any future convertible securities or
employee benefit plans.
The Company has acquired all of the outstanding equity interest in
Magma Power Company ("Magma") in a two-step transaction accounted
for as a purchase according to the terms of a merger agreement
whereby on January 10, 1995, the Company acquired approximately 51%
of the outstanding shares of Magma common stock (the "Magma Common
Stock") through a cash tender offer (the "Magma Tender Offer") and
on February 24, 1995 the Company acquired the remaining 49% of
Magma Common Stock not owned by the Company through a merger (the
"Merger"). Each outstanding share of Magma Common Stock (other
than shares of Magma Common Stock held by the Company, CE
Acquisition Company, Inc., a wholly owned subsidiary of the
Company, or any other direct or indirect subsidiary of the Company
and shares of Magma Common Stock held in the treasury of Magma) was
converted into the right to receive an average of approximately
$38.75 per share of Magma Common Stock. The Company paid the
Merger consideration solely in cash, funded with the net proceeds
of a public common stock offering of 15,170 shares (the "Offering")
and the proceeds of a direct sale of 1,500 shares to Peter Kiewit
Sons', Inc. (the "Direct Sale") at $17.00 per share which together
netted $275,653, over-allotment proceeds of a $24,735 on the sale
of 1,500 shares, borrowings of $500,000 under bank credit
facilities, and general corporate funds of the Company. Magma is
engaged in independent geothermal power operations similar to those
of the Company.
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Liquidity and Capital Resources: (continued)
The Magma Tender Offer was financed with a $245,600 facility from
Credit Suisse (the "Tender Facility"). Loans under the Tender
Facility were made to the Company on a non-recourse basis, secured
by the Magma stock acquired, and the Company lent the proceeds of
such loans to Magma. The loans under the Tender Facility were
repaid from funds received from the Merger Facilities.
A total of approximately $957,000 was required to refinance the
Tender Facilities and to complete the Magma Acquisition. Up to
$500,000 in secured bank financing was provided by Credit Suisse
(the "Merger Facilities") on specified terms and subject to
customary conditions. Such funds, together with the net proceeds
of the Offering and over-allotment, the proceeds of the Direct Sale
and general corporate funds of the Company, were used to complete
the Magma Acquisition.
The Merger Facilities consist of (i) a $350 million principal
amount term loan maturing on October 31, 2000 to be amortized in
semi-annual payments beginning on April 30, 1995 ("Term Loan A"),
(ii) a $75 million principal amount term loan maturing on October
31, 2001 to be amortized in semi-annual payments beginning April
30, 2001 ("Term Loan B") and (iii) a $75 million principal amount
term loan maturing on October 31, 2002 to be amortized in semi-
annual payments beginning April 30, 2002 ("Term Loan C"). As of
April 30, 1995, the outstanding principal amount on Term Loan A,
Term Loan B and Term Loan C was $350 million, $75 million and $75
million, respectively. Credit Suisse is the agent bank in
connection with the Merger Facilities. Loans under the Merger
Facilities were made to the Company on a non-recourse basis, and
the Company loaned the proceeds of such loans to Magma in exchange
for a secured note. Loans under the Merger Facilities are secured
by an assignment and pledge by the Company of such note and 100% of
the capital stock of Magma.
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Liquidity and Capital Resources: (continued)
The Company may, subject to certain terms and conditions, elect to
have the term loans bear interest based on either the Eurodollar
Rate or the Base Rate (as defined in the Merger Facilities).
Interest on the term loans is payable at spreads of 2.50% above the
Eurodollar Rate or 1.50% above the Base Rate for Term Loan A and
3.50% above the Eurodollar Rate or 2.50% above the Base Rate for
Term Loan B and Term Loan C. As of March 31, 1995, Term Loan A
bore interest at the rate of 8.656% per annum and Term Loan B and
Term Loan C each bore interest at the rate of 9.656% per annum.
The Merger Facilities contain affirmative and negative covenants
customary for similar non-recourse credit facilities. Such
covenants include a negative pledge of all stock and unencumbered
assets of Magma; a limitation on guaranties by Magma; a limitation
on mergers and sales of assets by Magma; a limitation on
investments in other persons by Magma; a prohibition on dividends
and other payments by Magma to the Company unless the proceeds are
used to pay down the Merger Facilities; a prohibition on the sale
of ownership interests in Magma; a limitation on the incurrence of
additional debt by Magma; and a restriction on a change in the
nature of the business of the Company and Magma.
The Merger Facilities also contain financial covenants and
customary events of default, including events of default based on
breaches of certain representations, warranties and covenants;
cross defaults with respect to certain debt of the Company and
Magma; bankruptcy and similar events; the failure to pay certain
final judgments; the failure to make a payment with respect to the
Merger Facilities when due; and the failure of the pledge agreement
with respect to the capital stock of Magma and the Magma Note to be
in full force and effect.
The Company is actively seeking to develop, construct, own and
operate new power projects utilizing geothermal and other
technologies, both domestically and internationally, the completion
of any of which is subject to substantial risk. Development can
require the Company to expend significant sums for preliminary
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Liquidity and Capital Resources: (continued)
engineering, field development, permitting, legal and other
financing. The Company's future growth is dependent, in large
part, upon the demand for significant amounts of additional
electrical generating capacity and the Company's ability to obtain
contracts to supply portions of this capacity. There can be no
assurance that development efforts on any particular project, or
the Company's efforts generally, will be successful.
The Company believes that the international independent power
market holds the majority of new opportunities for financially
attractive private power development in the next several years. The
financing and development of projects outside the United States
entail significant political and financial risks (including,
without limitation, uncertainties associated with first time
privatization efforts in the countries involved, currency exchange
rate fluctuations, currency repatriation restrictions, political
instability, civil unrest and expropriation) and other structuring
issues that have the potential to cause substantial delays or
material impairment of value to the project being developed, which
the Company may not be fully capable of insuring against. The
uncertainty of the legal environment in certain foreign countries
in which the Company may develop or acquire projects could make it
more difficult for the Company to enforce its rights under
agreements relating to such projects. In addition, the laws and
regulations of certain countries may limit the ability of the
Company to hold a majority interest in some of the projects that
it may develop or acquire. The Company's international projects
may, in certain cases, be terminated by a government.
In April 1994, the Company closed the financing for the 128 GMW
Upper Mahiao geothermal power project located in the Philippines.
The total project cost for the facility is approximately $218,000.
The Company will supply approximately $56,000 of equity and project
debt financing will constitute the balance of approximately
$162,000. A syndicate of international commercial banks is
providing the construction financing. The Export-Import Bank of
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Liquidity and Capital Resources: (continued)
the U.S. ("Ex-Im Bank") is providing political risk insurance to
the commercial banks on the construction loan and will provide the
preponderance of project term financing upon satisfaction of
conditions associated with commercial operation. As of March 31,
1995, draws on the construction loan totalled $39,948, and the
Company has invested $18,381. The Overseas Private Investment
Corporation ("OPIC") is providing political risk insurance on the
equity investment by the Company in this project. The Upper Mahiao
project commenced construction in April of 1994, and is expected to
be in service by July of 1996. The project is structured as a ten
year Build-Own-Operate-Transfer ("BOOT"), in which the Company's
subsidiary CE Cebu Geothermal Power Company, Inc., the project
company, will be responsible for implementing construction of the
geothermal power plant and, as owner, for providing operations and
maintenance during the ten year BOOT period. The electricity
generated by the Upper Mahiao geothermal power plant will be sold
to the Philippine National Oil Company - Energy Development
Corporation ("PNOC-EDC"), which is also responsible for supplying
the facility with the geothermal steam. After a ten year
cooperation period, and the recovery by the Company of its capital
investment plus incremental return, the plant will be transferred
to PNOC-EDC at no cost. Ormat Inc. of Sparks, Nevada is the
turnkey contractor for the project.
In August 1994, the Company closed the financing for the 180 GMW
Mahanagdong project located in the Philippines. The total project
cost for the facility is approximately $320 million. The capital
structure consists of a term loan of $240 million and approximately
$80 million in equity contributions. OPIC and a consortium of
commercial lenders led by Bank of America NT&SA is providing the
construction debt financing facility. The debt provided by the
commercial lenders is insured against political risk by the Ex-Im
Bank. Ten-year term debt financing (which will replace the
construction debt) will be provided by Ex-Im Bank and by OPIC. The
Mahanagdong project has commenced construction and as of March 31,
1995, the Company's proportionate share of draws on the
construction loan totalled $13,079 and equity investments made by
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Liquidity and Capital Resources: (continued)
a subsidiary of the Company totaled $8,261. OPIC is providing
political risk insurance on the equity. The Mahanagdong project
has begun construction and is targeted for service in July, 1997.
The Mahanagdong project will be built, owned and operated by CE
Luzon Geothermal Power Company, a Philippine corporation, that is
expected to be owned post-completion as follows: 45% by the
Company, 45% by Kiewit, and up to 10% by another industrial
company. The turnkey contractor consortium consists of Kiewit
Construction Group, Inc. (with an 80% interest) and The Ben Holt
Co., a wholly owned subsidiary of the Company (with a 20%
interest).
In December 1994, financing was closed and construction commenced
on the Malitbog Project, a 231 gross MW geothermal project, which
will also be located on the island of Leyte. The Malitbog Project
will be built, owned and operated by Visayas Geothermal Power
Company ("VGPC"), a Philippine general partnership that is wholly
owned, indirectly, by the Company. VGPC will sell 100% of its
capacity on substantially the same basis as described above for the
Upper Mahiao Project to PNOC-EDC, which will in turn sell the power
to NAPOCOR.
The Malitbog Project has a total project cost of approximately $280
million, including interest during construction and project
contingency costs. Credit Suisse and OPIC have provided a total of
$210 million of construction and term loan facilities, the $135
million international commercial bank portion of which is supported
by political risk insurance from OPIC. As of March 31, 1995,
equity investments made by subsidiaries of the Company totalled
$46,153. The Company's equity contribution to VGPC of $70 million
is covered by political risk insurance from OPIC and the
Multilateral Investment Guarantee Agency ("MIGA"). As with the
Upper Mahiao project, the Malitbog project is structured as a ten-
year Build-Own-Operate-Transfer ("BOOT"), in which the Company will
be responsible for implementing construction of the geothermal
power plant and, as owner, for providing operations and maintenance
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Liquidity and Capital Resources: (continued)
for the ten year BOOT period. After a ten year cooperation period,
and the recovery by the Company of its capital investment plus
incremental return, the plant will be transferred to PNOC-EDC at no
cost.
The Malitbog Project is being constructed by Sumitomo Corporation
pursuant to a fixed-price, date-certain, turnkey supply and
construction contract. Construction of the facility has begun,
with commercial operation of Unit 1 scheduled to commence in July
1996 and commercial operation of Unit 2 and Unit 3 scheduled to
commence in July 1997.
Magma is seeking new long-term final SO4 power purchase agreements
in southern California through the bidding process adopted by the
CPUC under its 1992 Biennial Resource Plan Update ("BRPU"). In its
1992 BRPU, the CPUC cited the need for an additional 9,600 MW of
power production through 1999 among California's three investor-
owned utilities, SCE, SDG&E and Pacific Gas and Electric Company
(collectively, the "IOUs"). Of this amount, 275 MW was set aside
for bidding by independent power producers (such as Magma)
utilizing renewable resources. Pursuant to an order of the CPUC
dated June 22, 1994 (confirmed on December 21, 1994), Magma was
awarded 163 MW for sale to SCE (69 MW) and SDG&E (94 MW), with in-
service dates in 1997 and 1998. However, the IOUs have to date
challenged and may continue to challenge the order and there can be
no assurance that power sales contracts will be executed or that
any such projects will be completed.
In light of the regulatory uncertainty concerning the BRPU awards
resulting from such IOU challenges, in March 1995 Magma entered
into a buyout and capacity option agreement with SCE relating to
the 69 MW of capacity awarded to Magma as a winning bidder in the
BRPU solicitation. The agreement (which is subject to CPUC
approval) provides for three lump sum termination payments in lieu
of signing a power sales contract with SCE for the 69 MW of BRPU
capacity. The amount of the termination payments is subject to a
CALIFORNIA ENERGY COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per share and per kWh data)
___________________
Liquidity and Capital Resources: (continued)
confidentiality agreement but provides SCE's ratepayers with very
significant savings when compared to payments that would otherwise
be made to Magma over the life of the proposed BRPU power sales
contract.
The agreement also provides SCE with an option, which can be
exercised at any time prior to February 2, 2002, to negotiate a
power sales contract for 69 MW of geothermal capacity and energy on
commercially reasonable prices and terms, without giving effect to
termination payments previously paid.
The Company has commenced construction of an additional 39 MW
electric generating facility (the "Salton Sea Expansion") in the
Imperial Valley pursuant to an amended and restated 30-year power
purchase agreement with SCE. The Salton Sea Expansion has a target
completion date of July 1996 and an estimated construction cost of
$115,000. As of March 31, 1995, the Company has invested $4,520 in
the Salton Sea Expansion.
CALIFORNIA ENERGY COMPANY, INC.
PART II - OTHER INFORMATION
Item 1 - Legal proceedings.
See Note 14 to the 1994 Annual Consolidated Financial
Statements.
Item 2 - Changes in Securities.
Not applicable.
Item 3 - Defaults on Senior Securities.
Not applicable.
Item 4 - Submission of Matters to a Vote of Security Holders.
The following matters were submitted to a vote of security
holders through the solicitation of proxies for a special meeting
of stockholders held on February 10, 1995:
(i) amendment of the Company's Restated Certificate
of Incorporation to increase by 20,000,000 the number of shares of
common stock of the Company authorized to be issued from 60,000,000
to 80,000,000 ("Proposal 1") and
(ii) approval of the issuance of up to 17,700,000
shares of common stock of the Company to holders of common stock of
Magma Power Company in connection with the then pending acquisition
of Magma by the Company ("Proposal 2").
With respect to Proposal 1, 27,775,005 votes were cast for
the proposal, 71,236 against and 42,117 abstained. With respect
to Proposal 2, 27,780,674 votes were cast for the proposal,
65,746 against and 42,738 abstained.
Item 5 - Other Information.
Not applicable.
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit 11 - Calculation of earnings per share.
Exhibit 15 - Awareness letter of Independent Accountants.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
During the quarter ended March 15, 1995, the Company filed
the following:
(i) Form 8-K dated January 6, 1995 reporting the filing
with the Securities and Exchange Commission of an S-3 registration
statement for the planned offering of an underwritten public
offering of 16,670,000 shares of the Company's Common Stock.
(ii) Form 8-K dated January 25, 1995 reporting the
promotion of Thomas R. Mason to President and Chief Operating
Officer.
(iii) Form 8-K dated February 10, 1995 reporting the
approval by the Company's stockholders of two proposals: (1) An
amendment to the Company's Restated Certificate of Incorporation to
increase by 20,000,000 the number of shares of Common Stock to be
issued from 60,000,000 to 80,000,000, and (2) to issue up to
17,000,000 shares of Common Stock to the holders of common stock of
Magma Power Company ("Magma") in connection with the pending
acquisition of Magma by the Company.
(iv) Form 8-K dated February 24, 1995 reporting the
completion of the merger with Magma Power Company and the
consummation of the public offering of 16,670,000 shares of the
Company's Common Stock.
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.
CALIFORNIA ENERGY COMPANY, INC.
/s/ John G. Sylvia
Date: May 12, 1994
John G. Sylvia
Senior Vice President and
Chief Financial Officer
/s/ Gregory E. Abel
Gregory E. Abel
Vice President, Controller and
Chief Accounting Officer
EXHIBIT INDEX
Exhibit Page
No. No.
11 Calculation of Earnings Per Share 34
15 Awareness Letter of Independent
Accountants 35
27 Financial Data Schedule 36
</TEXT></DOCUMENT>
<DOCUMENT>
<TYPE>EX-11
<SEQUENCE>2
<TEXT>
Exhibit 11
CALIFORNIA ENERGY COMPANY, INC.
CALCULATION OF EARNINGS PER SHARE IN ACCORDANCE
WITH INTERPRETIVE RELEASE NO. 34-9083
(dollars in thousands, except per share amounts)
___________________
Three Months Ended
March 31
1995 1994
Actual weighted average shares
outstanding for the period 38,827,607 34,954,703
Dilutive stock options and warrants
using average market prices 2,513,422 2,784,330
Total number of shares based on shares
outstanding and the assumption that
dilutive stock options will be exercised
at average stock market prices 41,341,029 37,739,033
Additional dilutive stock options
using ending market price - -
Total shares based on shares outstanding
and the assumption that dilutive stock
options will be exercised at ending
market price if more dilutive 41,341,029 37,739,033
Income before extraordinary item $ 9,613 $ 8,607
Extraordinary item (2,007)
Net income 9,613 6,600
Less Series C preferred stock dividends 1,080 1,200
Net income available for common shares $ 8,533 $ 5,400
Primary earnings per share before
extraordinary item $ .21 $ .20
Extraordinary item per share - (.06)
Primary earnings per share $ .21 $ .14
Fully diluted earnings per share based
on SEC interpretive release No. 34-9083 $ .21 $ .14
</TEXT></DOCUMENT>
<DOCUMENT>
<TYPE>EX-15
<SEQUENCE>3
<TEXT>
Exhibit 15
California Energy Company, Inc.
Omaha, Nebraska
We have made a review, in accordance with standards established by
the American Institute of Certified Public Accountants, of the
unaudited interim financial information of California Energy
Company, Inc. for the three month periods ended March 31, 1995 and
1994 as indicated in our report dated April 25, 1995; because we
did not perform an audit, we expressed no opinion on that
information.
We are aware that our report referred to above, which is included
in your Quarterly Report on Form 10-Q for the quarter ended March
31, 1995, is incorporated by reference in Registration Statements
No. 33-41152 and No. 33-52147 on Form S-8 and Registration
Statement No. 35-51363 on Form S-3.
We also are aware that the aforementioned report, pursuant to Rule
436(c) under the Securities Act, is not considered a part of a
Registration Statement prepared or certified by an accountant or a
report prepared or certified by an accountant within the meaning of
Section 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
May 15, 1995
</TEXT></DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>4
<FLAWED>
<TEXT>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
Exhibit 27
Financial Data Schedule
Item 601(c) of Regulation S-K Commercial
and Industrial Companies Article 5 of Regulation S-X
(dollar in thousands, except per share amounts)
March 31,
Item Number Item Description 1995
5-02(1) cash and cash items 140,419
5-02(1) cash and cash items-joint ventures 53,216
5-02(1) cash and cash items-restricted 118,972
5-02(2) marketable securities and short-term
investments 81,800
5-02(3) (a)(6) notes and accounts receivable-trade 54,741
5-02(4) allowances for doubtful accounts N/A
5-02(6) inventory N/A
5-02(9) total current assets N/A
5-02(13) property-power plant 1,582,491
5-02(13) property-equipment 9,705
5-02(14) accumulated depreciation-plant 103,273
5-02(14) accumulated depreciation-equipment 5,165
5-02(18) total assets 2,339,848
5-02(21) total current liabilities N/A
5-02(22) bonds and mortgages and similar debt
- senior discount notes 442,879
5-02(22) bonds and mortgages and similar debt
- convertible debentures 100,000
5-02(22) bonds and mortgages and similar debt
- convertible debt 64,850
5-02(22) bonds and mortgages and similar debt
- merger loan 500,000
5-02(29) preferred stock-no mandatory redemption
N/A 5-02(30) common stock 3,378
5-02(31) other stockholders' equity-additional
paid-in capital 332,358
5-02(31) other stockholders' equity-retained
earnings 151,257
5-02(32) total liabilities and stockholders'
equity 2,339,848
5-03(b) 1 (a) net sales of tangible products 72,978
5-03(b) 1 total revenues 86,685
5-03(b) 2 (a) costs of tangible goods sold N/A
5-03(b) 2 total costs and expenses applicable to
sales and revenues-plant operation 18,426
5-03(b) 3 other costs and expenses-general and
administration 6,246
5-03(b) 3 other costs-royalties 4,414
5-03(b) 5 provision for doubtful accounts
and notes N/A
5-03(b) (8) interest and amortization of debt
discount 29,562
5-03(b) (8) interest and amortization-capitalized (4,484)
5-03(b) (10) income before taxes and other items 18,158
5-03(b) (11) income tax expense 5,540
5-03(b) (14) income continuing operations 9,613
5-03(b) (19) net income 8,533
5-03(b) (20) earnings per share primary .21
5-03(b) (20) earnings per share fully diluted .21