FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended March 31, 2002
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or
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from _______________to________________
Commission File Number: 333-83815
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Caithness Coso Funding Corp.
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(Exact name of registrant as specified in its charter)
Delaware 94-3328762
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Coso Finance Partners California 68-0133679
Coso Energy Developers California 94-3071296
Coso Power Developers California 94-3102796
--------------------- ---------- ----------
(Exact names of Registrants (State or other (I.R.S. Employer
as specified in their charters) jurisdiction of Identification No.)
incorporation or
organization)
565 Fifth Avenue, 29th Floor, New York, New York 10017-2478
- ------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(212) 921-9099
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former
fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
300 shares in Caithness Coso Funding Corp. as of May 7, 2002
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CAITHNESS COSO FUNDING CORP.
Form 10-Q
For the Quarter Ended March 31, 2002
PART I. FINANCIAL INFORMATION Page No.
ITEM 1. Financial Statements
Caithness Coso Funding Corp.
Unaudited condensed balance sheets at March 31, 2002 and
December 31, 2001 4
Unaudited condensed statements of operations for the three-
months ended March 31, 2002 and the three-months ended
March 31, 2001 5
Unaudited condensed statements of cash flows for the three-
months ended March 31, 2002 and the three-months ended
March 31, 2001 6
Notes to the unaudited condensed financial statements 7
Coso Finance Partners
Unaudited condensed balance sheets at March 31, 2002 and
December 31, 2001 8
Unaudited condensed statements of operations for the three-
months ended March 31, 2002 and the three-months ended
March 31, 2001 9
Unaudited condensed statements of cash flows for the three-
months ended March 31, 2002 and the three-months ended
March 31, 2001 10
Notes to the unaudited condensed financial statements 11
Coso Energy Developers
Unaudited condensed balance sheets at March 31, 2002 and
December 31, 2001 12
Unaudited condensed statements of operations for the three-
months March 31, 2002 and the three-months ended
March 31, 2001 13
Unaudited condensed statements of cash flows for the three-
months ended March 31, 2002 and the three-months ended
March 31, 2001 14
Notes to the unaudited condensed financial statements 15
Coso Power Developers
Unaudited condensed balance sheets at March 31, 2002 and
December 31, 2001 16
Unaudited condensed statements of operations for the three-
months ended March 31, 2002 and the three-months ended
March 31, 2001 17
Unaudited condensed statements of cash flows for the three-
months ended March 31, 2002 and the three-months ended
March 31, 2001 18
Notes to the unaudited condensed financial statements 19
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 20
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 29
ITEM 2. Change in Securities and Use of Proceeds 29
ITEM 3. Defaults upon Senior Securities 29
ITEM 4. Submission of Matters to a Vote of Security Holders 29
ITEM 5. Other Information 29
Supplemental condensed combined financial information for the
Coso Partnerships
Unaudited condensed combined balance sheets at March 31, 2002
and December 31, 2001 31
Unaudited condensed combined statements of operations for the
three-months ended March 31, 2002 and the three-months ended
March 31, 2001 32
Unaudited condensed combined statements of cash flows for the
three-months ended March 31, 2002 and the three-months ended
March 31, 2001 33
Notes to the unaudited condensed combined financial statements 34
ITEM 6. Exhibits and Reports on Form 8-K 35
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
2002 2001
(Note)
Assets:
Accrued interest receivable....................... $ 8,079 $ 1,225
Project loan to Coso Finance Partners............ 122,550 122,550
Project loan to Coso Energy Developers........... 96,250 96,250
Project loan to Coso Power Developers............ 84,200 84,200
------- -------
$ 311,079 $ 304,225
======= =======
Liabilities and Stockholders' Equity:
Senior secured notes:
Accrued interest payable........................ $ 8,079 $ 1,225
9.05% notes due 2009............................ 303,000 303,000
------- -------
311,079 304,225
Stockholders' equity................................. --- ---
------- -------
$ 311,079 $ 304,225
======= =======
Note: The condensed balance sheet at December 31, 2001 has been derived from
the audited financial statements at that date but does not include all
of the information and footnotes required by accounting principles
generally accepted in the United States of America for complete
financial statements.
See accompanying notes to the unaudited condensed financial statements
4
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2002 2001
Interest income................. $ 6,854 $ 8,601
Interest expense................ (6,854) (8,601)
------- -------
Net income................. $ --- $ ---
======= =======
See accompanying notes to the unaudited condensed financial statements
5
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2002 2001
Net cash provided by (used in) investing activities....... $ 6,854 $ (8,601)
Net cash provided by (used in) financing activities....... (6,854) 8,601
------- -------
Net change in cash and cash equivalents................... $ --- $ ---
======= =======
See accompanying notes to the unaudited condensed financial statements
6
CAITHNESS COSO FUNDING CORP.
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(1) Organization and Operations
Caithness Coso Funding Corp. (Funding Corp.), which was incorporated on April
22, 1999, is a single-purpose Delaware corporation formed to issue senior
secured notes (Notes) for its own account and as an agent acting on behalf of
Coso Finance Partners (CFP), Coso Energy Developers (CED), and Coso Power
Developers (CPD), collectively, the "Partnerships." The Partnerships are
California general Partnerships.
On May 28, 1999, Funding Corp. sold $413,000 of senior secured notes. Pursuant
to separate credit agreements between Funding Corp. and each Partnership, the
net proceeds from the offering of $110,000 of 6.80% senior secured notes due
2001 and $303,000 of 9.05% senior secured notes due 2009 were loaned to the
Partnerships, and the Partnerships have jointly and severally guaranteed
repayment on a senior basis. Payment of the Notes is provided for by payments
made by the Partnerships under their respective project loans.
Funding Corp. has no material assets other than the loans, and the accrued
interest thereon, that have been made to the Partnerships. Also, Funding Corp.
does not conduct any business, other than issuing the senior secured notes and
making the loans to the Partnerships.
(2) Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information. Accordingly, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules. Management
believes that the disclosures are adequate to make the information presented not
misleading when read in conjunction with the financial statements and the notes
thereto in the audited financial statements for the year ended December 31,
2001.
The financial information herein presented reflects all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair statement of the results for interim periods presented. The
results for the interim periods are not necessarily indicative of results to be
expected for the full year.
7
COSO FINANCE PARTNERS
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
2002 2001
(Note)
Assets:
Cash and cash equivalents................................................. $ 14,992 $ 264
Restricted cash and investments........................................... 23,766 21,325
Accounts receivable, net.................................................. 4,758 3,454
Prepaid expenses & other assets........................................... 680 650
Amounts due from related parties.......................................... 2,104 9,362
Property, plant & equipment, net.......................................... 138,231 140,437
Power purchase agreement, net............................................. 10,806 11,093
Investment in New CLPSI Company, LLC...................................... 3,981 4,005
Deferred financing costs, net............................................. 2,445 2,524
------- -------
$ 201,763 $ 193,114
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities.................................. $ 17,268 $ 17,578
Amounts due to related parties............................................ 3,367 561
Project loans............................................................. 122,550 122,550
------- -------
143,185 140,689
Partners' capital........................................................... 58,578 52,425
-------- -------
$ 201,763 $ 193,114
======= =======
Note: The condensed balance sheet at December 31, 2001 has been derived from
the audited financial statements at that date but does not include all
of the information and footnotes required by accounting principles
generally accepted in the United States of America for complete
financial statements.
See accompanying notes to the unaudited condensed financial statements
8
COSO FINANCE PARTNERS
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2002 2001
Revenue:
Energy revenues........................................................... $ 42,350 $ 5,977
Capacity revenues......................................................... 3,148 76
Interest and other income................................................. 474 135
------ ------
Total revenue...................................................... 45,972 6,188
Operating expenses:
Plant operating expenses.................................................. 2,307 1,762
Royalty expense........................................................... 2,212 3,770
Depreciation and amortization............................................. 2,536 2,499
------ ------
Total operating expenses........................................... 7,055 8,031
Operating income (loss)............................................ 38,917 (1,843)
Other expenses:
Interest expense.......................................................... 2,775 2,984
Amortization of deferred financing costs.................................. 79 130
------ ------
Total other expenses............................................... 2,854 3,114
Net income (loss).................................................. $ 36,063 $ (4,957)
====== ======
See accompanying notes to the unaudited condensed financial statements
9
COSO FINANCE PARTNERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2002 2001
Net cash provided by (used in) operating activities.......................... $ 47,122 $ (2,470)
Net cash provided by (used in) investing activities.......................... (2,484) (18)
Net cash provided by (used in) financing activities.......................... (29,910) ---
-------- -------
Net change in cash and cash equivalents...................................... $ 14,728 $ (2,488)
======== =======
See accompanying notes to the unaudited condensed financial statements
10
COSO FINANCE PARTNERS
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(1) Organization and Operation
Coso Finance Partners (CFP), a general Partnership, is engaged in the operation
of a 80 MW power generation facility located at the China Lake Naval Air Weapons
Station, China Lake California. CFP sells all electricity produced to Southern
California Edison under a 24-year power purchase contract expiring in 2011.
(2) Basis of Presentation
The accompanying unaudited condensed combined financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information. Accordingly, certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted pursuant to such rules.
Management believes that the disclosures are adequate to make the information
presented not misleading when read in conjunction with the financial statements
and the notes thereto in the audited financial statements for the year ended
December 31, 2001.
The financial information herein presented reflects all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair statement of the results for interim periods presented. The
results for the interim periods are not necessarily indicative of results to be
expected for the full year. CFP has experienced significant quarterly
fluctuations in operating results and it expects that these fluctuations in
energy revenues, expenses and net income will continue.
(3) Accounts Receivable and Revenue Recognition
Due to the uncertainty surrounding Edison's ability to make payment on past due
amounts, collection was not reasonably assured and CFP had not recognized
revenue from Edison for energy delivered during the period November 1, 2000
through March 26, 2001. The provision for doubtful accounts previously recorded
by CFP of $25.8 million for the three-months ended March 31, 2001, has been
reclassified as a reduction of revenue to conform with the 2002 presentation.
On March 1, 2002, Edison reached certain financing milestones and paid CFP for
revenue generated, but not recognized for the period November 1, 2000 through
March 26, 2001. For the three-month period ended March 31, 2002, CFP recognized
revenue for energy delivered from November 1, 2000 through March 26, 2001 of
$37.3 million.
(4) Reclassifications
Certain other reclassifications have been made to the 2001 statements of
operations to conform to the 2002 presentation.
11
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
2002 2001
(Note)
Assets:
Cash and cash equivalents................................................. $ 10,233 $ ---
Restricted cash and investments........................................... 8,551 7,368
Accounts receivable, net.................................................. 4,132 2,939
Prepaid expenses and other assets......................................... 526 849
Amounts due from related parties.......................................... 409 401
Property, plant and equipment, net........................................ 145,012 148,417
Power purchase agreement, net............................................. 18,169 18,437
Investment in Coso Transmission Line Partners............................. 2,710 2,738
Investment in New CLPSI Company, LLC...................................... 738 789
Deferred financing costs, net............................................. 1,976 2,040
------- -------
$ 192,456 $ 183,978
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities.................................. $ 3,090 $ 7,699
Amounts due to related parties............................................ 27,898 27,267
Project loans............................................................. 96,250 96,250
------- -------
127,238 131,216
Partners' capital......................................................... 65,218 52,762
------- -------
$ 192,456 $ 183,978
======= =======
Note: The condensed balance sheet at December 31, 2001 has been derived
from the audited financial statements at that date but does not
include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for
complete financial statements.
See accompanying notes to the unaudited condensed financial statements
12
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2002 2001
Revenue:
Energy revenues........................................................... $ 40,429 $ 756
Capacity revenues......................................................... 3,051 69
Interest and other income................................................. 642 620
------ ------
Total revenue...................................................... 44,122 1,445
Operating expenses:
Plant operating expenses.................................................. 2,605 2,361
Royalty expense........................................................... 11 2,868
Depreciation and amortization............................................. 4,059 3,946
------ ------
Total operating expenses........................................... 6,675 9,175
Operating income (loss)............................................ 37,447 (7,730)
Other expenses:
Interest expense.......................................................... 2,180 2,257
Amortization of deferred financing costs.................................. 64 79
------ ------
Total other expenses............................................... 2,244 2,336
Net income (loss)................................................. $ 35,203 $ (10,066)
====== ======
See accompanying notes to the unaudited condensed financial statements
13
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2002 2001
Net cash provided by (used in) operating activities.......................... $ 34,552 $ 947
Net cash provided by (used in) investing activities.......................... (1,569) (2,045)
Net cash provided by (used in) financing activities.......................... (22,750) ---
-------- ------
Net change in cash and cash equivalents...................................... $ 10,233 $ (1,098)
======= =======
See accompanying notes to the unaudited condensed financial statements
14
COSO ENERGY DEVELOPERS
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(1) Organization and Operation
Coso Energy Developers (CED), a general Partnership, is engaged in the operation
of a 80 MW power generation facility located at the Coso Hot Springs, China Lake
California. CED sells all electricity produced to Southern California Edison
under a 30-year power purchase contract expiring in 2019.
(2) Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information. Accordingly, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules. Management
believes that the disclosures are adequate to make the information presented not
misleading when read in conjunction with the financial statements and the notes
thereto in the audited financial statements for the year ended December 31,
2001.
The financial information herein presented reflects all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair statement of the results for interim periods presented. The
results for the interim periods are not necessarily indicative of results to be
expected for the full year. CED has experienced significant quarterly
fluctuations in operating results and it expects that these fluctuations in
energy revenues, expenses and net income will continue.
(3) Accounts Receivable and Revenue Recognition
Due to the uncertainty surrounding Edison's ability to make payment on past due
amounts, collection was not reasonably assured and CED had not recognized
revenue from Edison for energy delivered during the period November 1, 2000
through March 26, 2001. The provision for doubtful accounts previously recorded
by CED of $26.0 million for the three-months ended March 31, 2001, has been
reclassified as a reduction of revenue to conform with the 2002 presentation.
On March 1, 2002, Edison reached certain financing milestones and paid CED for
revenue generated, but not recognized for the period November 1, 2000 through
March 26, 2001. For the three-month period ended March 31, 2002, CED recognized
revenue for energy delivered from November 1, 2000 through March 26, 2001 of
$37.1 million.
(4) Reclassifications
Certain other reclassifications have been made to the 2001 statements of
operations to conform to the 2002 presentation.
15
COSO POWER DEVELOPERS
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
2002 2001
(Note)
Assets:
Cash and cash equivalents................................................. $ 13,187 $ ---
Restricted cash and investments........................................... 5,556 5,517
Accounts receivable, net.................................................. 4,648 3,210
Prepaid expenses and other assets......................................... 431 660
Amounts due from related parties.......................................... 5,559 6,139
Property, plant and equipment, net........................................ 121,603 124,665
Power purchase agreement, net............................................. 22,122 22,820
Investment in Coso Transmission Line Partners............................. 3,365 3,398
Investment in New CLPSI Company, LLC...................................... 1,890 1,913
Deferred financing costs, net............................................. 1,682 1,736
------- ------
$ 180,043 $ 170,058
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities.................................. $ 7,377 $ 15,860
Amounts due to related parties............................................ 3,710 7,778
Project loans............................................................. 84,200 84,200
------- -------
95,287 107,838
Partners' capital............................................................ 84,756 62,220
------- -------
$ 180,043 $ 170,058
======= =======
Note: The condensed balance sheet at December 31, 2001 has been derived from
the audited financial statements at that date but does not include all
of the information and footnotes required by accounting principles
generally accepted in the United States of America for complete
financial statements.
See accompanying notes to the unaudited condensed financial statements
16
COSO POWER DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2002 2001
Revenue:
Energy revenues........................................................... $ 41,371 $ (2,623)
Capacity revenues......................................................... 3,051 69
Interest and other income................................................. 482 358
------ -------
Total revenue...................................................... 44,904 (2,196)
Operating expenses:
Plant operating expenses.................................................. 1,971 1,975
Royalty expense........................................................... 1,057 3,712
Depreciation and amortization............................................. 3,829 3,753
------ -------
Total operating expenses........................................... 6,857 9,440
Operating income (loss)............................................ 38,047 (11,636)
Other expenses:
Interest expense.......................................................... 1,908 2,075
Amortization on deferred financing costs.................................. 54 192
------ -------
Total other expenses............................................... 1,962 2,267
Net income (loss).................................................. $ 36,085 $ (13,903)
====== =======
See accompanying notes to the unaudited condensed financial statements
17
COSO POWER DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2002 2001
Net cash provided by (used in) operating activities.......................... $ 26,844 $ (911)
Net cash provided by (used in) investing activities.......................... (107) 366
Net cash provided by (used in) financing activities.......................... (13,550) ---
-------- ------
Net change in cash and cash equivalents...................................... $ 13,187 $ (545)
======== ======
See accompanying notes to the unaudited condensed financial statements
18
COSO POWER DEVELOPERS
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(1) Organization and Operation
Coso Power Developers (CPD), a general Partnership, is engaged in the operation
of a 80 MW power generation facility located at the Coso Hot Springs, China Lake
California. CPD sells all electricity produced to Southern California Edison
under a 20-year power purchase contract expiring in 2010.
(2) Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information. Accordingly, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules. Management
believes that the disclosures are adequate to make the information presented not
misleading when read in conjunction with the financial statements and the notes
thereto in the audited financial statements for the year ended December 31,
2001.
The financial information herein presented reflects all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair statement of the results for interim periods presented. The
results for the interim periods are not necessarily indicative of results to be
expected for the full year. CPD has experienced significant quarterly
fluctuations in operating results and it expects that these fluctuations in
energy revenues, expenses and net income will continue.
(3) Accounts Receivable and Revenue Recognition
Due to the uncertainty surrounding Edison's ability to make payment on past due
amounts, collection was not reasonably assured and CPD had not recognized
revenue from Edison for energy delivered during the period November 1, 2000
through March 26, 2001. The provision for doubtful accounts previously recorded
by CPD of $27.0 million for the three-months ended March 31, 2001, has been
reclassified as a reduction of revenue to conform with the 2002 presentation.
On March 1, 2002, Edison reached certain financing milestones and paid CPD for
revenue generated but not recognized for the period November 1, 2000 through
March 26, 2001. For the three-month period ended March 31, 2002, CPD recognized
revenue for energy delivered from November 1, 2000 through March 26, 2001 of
$38.0 million.
(4) Reclassifications
Certain other reclassifications have been made to the 2001 statements of
operations to conform to the 2002 presentation.
19
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Except for historical financial information contained herein, the matters
discussed in this quarterly report may be considered forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, and subject to
the safe harbor created by the Securities Litigation Reform Act of 1995. Such
statements include declarations regarding the intent, belief or current
expectations of Caithness Coso Funding Corp. ("Funding Corp."), Coso Finance
Partners ("the Navy I Partnership"), Coso Energy Developers ("the BLM
Partnership"), and Coso Power Developers ("the Navy II Partnerships"),
collectively, (the "Coso Partnerships") and their respective management. Any
such forward-looking statements are not guarantees of future performance and
involve a number of risks and uncertainties; actual results could differ
materially from those indicated by such forward-looking statements. Among the
important factors that could cause actual results to differ materially from
those indicated by such forward-looking statements are: (i) risks relating to
the uncertainties in the California energy market, (ii) the financial viability
of Southern California Edison, ("Edison"), (iii) the information is of a
preliminary nature and may be subject to further adjustment, (iv) risks related
to the operation of power plants (v) the impact of avoided cost pricing, (vi)
general operating risks, including resource availability and regulatory
oversight, (vii) the dependence on third parties, (viii) changes in government
regulation, (ix) the effects of competition, (x) the dependence on senior
management, and (xi) fluctuations in quarterly results due in part to
seosanality.
General
The Coso Partnerships consist of three 80MW geothermal power plants, which
are referred to as Navy I, BLM and Navy II, and their transmission lines, wells,
gathering systems and other related facilities. The Coso Partnerships are
located near one another at the United States Naval Air Weapons Center at China
Lake, California. The Navy I Partnership owns Navy I and its related facilities.
The BLM Partnership owns BLM and its related facilities. The Navy II Partnership
owns Navy II and its related facilities. Affiliates of Caithness Corporation and
CalEnergy Company, Inc. ("CalEnergy"), which is now known as MidAmerican Energy
Holdings Company, formed the Coso Partnerships in the 1980s to develop,
construct, own and operate the Coso Partnerhips. On February 25, 1999 Caithness
Acquisition Company, LLC, (CAC) purchased all of CalEnergy's interests in the
Coso Partnerships for $205.0 million in cash, plus the assumption of CalEnergy's
and its affiliates' share of debt outstanding at the Coso Partnerships which
then totaled approximately $67.0 million.
Each Coso Partnership sells 100% of the electrical energy generated at its
plant to Edison under a long-term Standard Offer No.4 power purchase agreement.
Each power purchase agreement expires after the final maturity date of the 6.8%
Series B Senior Secured Notes and the 9.05% Series B Senior Secured Notes issued
by Funding Corp.
Each Coso Partnership is entitled to the following payments under its power
purchase agreement:
* Capacity payments for being able to produce electricity at certain
levels. Capacity payments are fixed throughout the life of each power
purchase agreement;
* Capacity bonus payments if the Coso Partnership is able to produce
electricity above a specified higher level. The maximum annual
capacity bonus payment available is also fixed throughout the life of
each power purchase agreement; and
20
* Energy payments which are based on the amount of electricity the Coso
Partnership's plant actually produces.
Energy payments were fixed for the first ten years of firm operation under
each power purchase agreement. After the first ten years of firm operation and
until a Coso Partnership's power purchase agreement expires, Edison makes energy
payments to the Coso Partnership based on Edison's avoided cost of energy.
Edison's avoided cost of energy is Edison's cost to generate electricity if
Edison were to produce it itself or buy it from another power producer rather
than buy it from the Coso Partnerships. The power purchase agreement for the
Navy I Partnership will expire in August 2011, the power purchase agreement for
the BLM Partnership will expire in March 2019, and the power purchase agreement
for the Navy II Partnership will expire in January 2010. The fixed energy price
period expired in August 1997 for the Navy I Partnership, in March 1999 for the
BLM Partnership and in January 2000 for the Navy II Partnership.
For the three-months ended March 31, 2002, the Coso Partnerships elected to
receive from Edison a fixed avoided cost of energy rate of 3.25 cents per kWh.
During that period, Edison's annual average avoided cost of energy was 2.87
cents per kWh as compared to 15.1 cents per kWh for the three-months ended March
31, 2001.
Edison entered into an agreement ("Agreement") with the Coso Partnerships
on June 19, 2001 that addressed renewable energy pricing and issues concerning
California's energy crisis. The Agreement, which was amended on November 30,
2001, established May 1, 2002, as the date when the Coso Partnerships will begin
receiving a fixed avoided cost of energy rate of 5.37 cents per kWh for five (5)
years. Subsequent to the five year period, Edison will be required to make
energy payments to the Coso Partnerships based on its avoided cost of energy
until each partnership power purchase agreement expires. Estimates of Edison's
future avoided cost of energy may vary significantly and no one can predict the
likely level of future avoided cost of energy prices.
In 1994, the Coso Partnerships implemented a steam-sharing program, under
the Coso Geothermal Exchange Agreement. The purpose of the steam-sharing program
is to enhance the management of the Coso geothermal resource and to optimize the
resource's overall benefits to the Coso Partnerships by transferring steam among
the Coso Partnerships. Under the steam sharing program, the partnership
receiving the steam transfer splits revenue earned from electricity generated
with the partnership that transferred the steam.
The Coso Partnerships are required to make royalty payments to the U.S.
Navy and the Bureau of Land Management. The Navy I Partnership pays a royalty
for Unit I through reimbursement of electricity supplied to the U.S. Navy by
Edison from electricity generated at the Navy I plant. The reimbursement is
based on a pricing formula that is included in the U.S. Navy Contract. This
formula is largely based upon the tariff rates charged by Edison, which have
recently been increased by the California Public Utilities Commission (CPUC).
Discussions with the U.S. Navy are continuing to re-adjust the formula to
reflect recent activity in the local energy market. In November 2001, a
modification to the calculation of the reimbursement pricing formula was made to
the U.S. Navy Contract resulting in a reduction of accrued royalties of $6.5
million. For Units 2 and 3, the Navy I Partnership's royalty expense paid to the
U.S. Navy is a fixed percentage of electricity sales at 15% of revenue received
by the Navy I Partnership through 2003 and will increase to 20% from 2004
through 2009. In addition, the Navy I Partnership is required to pay the U.S.
Navy $25.0 million in December 2009, the date their contract expires. The
payment is secured by funds placed on deposit monthly, which funds plus accrued
interest will aggregate $25.0 million. Currently, the monthly amount deposited
is approximately $60,000. The BLM Partnership pays a 10% royalty to the Bureau
of Land Management based on the net value of steam produced. The Navy II
Partnership pays a royalty to the U.S. Navy based on a fixed percentage of
electricity sales to Edison. The royalty rate was 10% of electricity sales
through 1999, and increased to 18% for 2000 through 2004 and will increase to
20% from 2005 through the end of the contract term. The Coso Partnerships also
pay other royalties, at various rates which in the aggregate are not material.
21
Funding Corp is a special purpose corporation and a wholly owned subsidiary
of the Coso Partnerships. It was formed for the purpose of issuing the senior
secured notes on behalf of the Coso Partnerships who have jointly, severally,
and unconditionally guaranteed repayment of the senior secured notes.
On May 28, 1999, Funding Corp. issued $110.0 million of 6.80% senior
secured notes, which were paid off on December 15, 2001, and $303.0 million of
9.05% senior secured notes, which have payments due at various dates through
December 15, 2009. The proceeds from the notes were loaned to the Coso
Partnerships and are payable to Funding Corp from payments of principal and
interest on the notes. Funding Corp. does not conduct any other operations apart
from issuing the notes.
Under the depository agreement with the trustee for the notes, the Coso
Partnerships established accounts with a depository and pledged those accounts
as security for the benefit of the holders of the senior secured notes. All
amounts deposited with the depository are, at the direction of the Coso
Partnerships, invested by the depository in permitted investments. All revenues
or other proceeds actually received by the Coso Partnerships are deposited in a
revenue account and withdrawn upon receipt by the depository of a certificate
from the relevant Coso Partnerships detailing the amounts to be paid from funds
in its respective revenue account.
Periodic increases in natural gas prices and imbalances between supply and
demand, among other factors, have at times led to significant increases in
wholesale electricity prices in California. During those periods, Edison had
fixed tariffs with their retail customers that were significantly below the
wholesale prices it paid in California. This resulted in significant
under-recoveries by Edison of its electricity purchase costs. On January 16,
2001 Edison announced that it was temporarily suspending payments for energy
provided, including the energy provided by the Coso Partnerships, pending a
permanent solution to its liquidity crisis. This cash flow shortfall has
adversely affected Edison's liquidity and in turn it did not pay the Coso
Partnerships for energy delivered from November 2000 through March 26, 2001. As
of December 31, 2001, the Coso Partnerships were unable to determine the time
frame during which any future payments would be received. Due to the uncertainty
surrounding Edison's ability to make payment on past due amounts, collection was
not reasonably assured and the Navy I, BLM and Navy II Partnerships did not
recognize revenue from Edison for energy delivered during the period November 1,
2000 through March 26, 2001. The provision for doubtful accounts previously
recorded by the Navy I, BLM and Navy II Partnerships of $25.8 million, $26.0
million and $27.0 million, respectively, for the three-months ended March 31,
2001, has been reclassified as a reduction of revenue to conform with the 2002
presentation.
Pursuant to a CPUC order, Edison resumed making payments to the Coso
Partnerships beginning with power generated on March 27, 2001. Edison also made
a payment equal to 10% of the unpaid balance for power generated from November
1, 2000 to March 26, 2001, and continued to pay interest on the outstanding
amount at 7% per annum. That payment was made pursuant to the Agreement between
Edison and the Coso Partnerships described above. On March 1, 2002, Edison
reached certain financing milestones and paid the Coso Partnerships for energy
generated between November 1, 2000 and March 26, 2001 for which no revenue was
recognized during that period. For the three-month period ended March 31, 2002,
the Navy I, BLM and Navy II Partnerships recognized revenue for energy delivered
from November 1, 2000 through March 26, 2001 of $37.3 million, $37.1 million and
$38.0 million, respectively.
22
Capacity Utilization
For purposes of consistency in financial presentation, the plant capacity
factor for each of the Coso Partnerships is based on a nominal capacity amount
of 80MW (240MW in the aggregate). The Coso Partnerships have a gross operating
capacity that allows for the production of electricity in excess of their
nominal capacity amounts. Utilization of this operating margin is based upon a
number of factors and can be expected to vary throughout the year under normal
operating conditions.
The following data includes the operating capacity factor, capacity and
electricity production (in kWh) for each Coso Partnership on a stand-alone
basis:
Three-Months Ended
March 31,
2002 2001
---- ----
Navy I Partnership (stand alone)
Operating capacity factor 106.6% 109.6%
Capacity (MW) (average) 85.30 87.70
kWh produced (000s) 184,240 189,422
BLM Partnership (stand alone)
Operating capacity factor 92.7% 102.2%
Capacity (MW) (average) 74.15 81.72
kWh produced (000s) 160,161 176,524
Navy II Partnership (stand alone)
Operating capacity factor 109.0% 106.5%
Capacity (MW) (average) 87.23 85.22
kWh produced (000s) 188,414 184,067
Total energy production for the BLM Partnership was 160.2 million kWh for
the three-months ended March 31, 2002, as compared to 176.5 million kWh for the
same period in 2001, a decrease of 9.2%. The decrease in energy production was
primarily due to a decline in low pressure steam which is being remediated
through well maintenance and capital improvements and a reduction in 2002 of
steam transfers from the Navy II Partnership.
Results of Operations for the three-months ended March 31, 2002 and 2001
The following discusses the results of operations of the Coso Partnerships
for the three-months ended March 31, 2002 and 2001 (dollar amounts in tables are
in thousands, except per kWh data):
23
Revenue
Three-Months Three-Months
Ended Ended
March 31, 2002 March 31, 2001
$ Cents/kWh $ Cents/kWh
- --------- - ---------
Total Operating Revenues
Navy I Partnership 45,498 24.7 6,053 3.2
BLM Partnership 43,480 27.1 825 0.5
Navy II Partnership 44,422 23.6 (2,554) (1.4)
Capacity & Capacity Bonus Revenues
Navy I Partnership 3,148 1.7 76 0.0
BLM Partnership 3,051 1.9 69 0.0
Navy II Partnership 3,051 1.6 69 0.0
Energy Revenues
Navy I Partnership 42,350 23.0 5,977 3.2
BLM Partnership 40,429 25.2 756 0.4
Navy II Partnership 41,371 22.0 (2,623) (1.4)
Total operating revenues for the Navy I, BLM and Navy II Partnerships,
which consist of capacity payments, capacity bonus payments and energy payments,
were $45.5 million, $43.5 million and $44.4 million, respectively, for the
three-months ended March 31, 2002, as compared to $6.1 million, $.8 million and
a loss of $2.6 million, respectively, for the same period in 2001, increases of
$39.4 million, $42.7 million and $47.0 million, respectively. Capacity and
capacity bonus revenues for each of the Navy I, BLM and Navy II Partnerships
were $3.1 million for the three-months ended March 31, 2002, as compared to $0.1
million for the same period in 2001, each increased by $3.0 million. Total
energy revenues for the Navy I, BLM and Navy II Partnerships were $42.4 million,
$40.4 million and $41.4 million, respectively, for the three-months ended March
31, 2002, as compared to $6.0 million, $0.8 million and a loss of $2.6 million,
respectively, for the same period in 2001, increases of $36.4 million $39.6
million and $44.0 million, respectively. Each Coso Partnership's increase in
capacity and capacity bonus and energy revenues for the three-months ended March
31, 2002, as compared to the same period in 2001, was due to Edison's payment,
on March 1, 2002, for revenue generated but not recognized for the period
November 1, 2000 through March 26, 2001 discussed above. The Navy I, BLM and
Navy II Partnerships had not recognized revenues of $22.0 million, $21.8 million
and $22.7 million, respectively, for the three-month period ended March 31,
2001. Revenues generated but not recognized for the period November 1, 2000
through March 1, 2002 for the Navy I, BLM and Navy II Partnerships of $37.3
million, $37.1 million and $38.0 million, respectively, were paid and recognized
during the three-months ended March 31, 2002.
24
Interest and Other Income
Three-Months Three-Months
Ended Ended
March 31, 2002 March 31, 2001
$ Cents/kWh $ Cents/kWh
- --------- - ---------
Navy I Partnership 474 0.3 135 0.1
BLM Partnership 642 0.4 620 0.4
Navy II Partnership 482 0.3 358 0.2
The Navy I Partnership's interest and other income was $474,000 for the
three-months ended March 31, 2002, as compared to $135,000 for the same period
in 2001, an increase of $339,000. The Navy II Partnership's interest and other
income was $482,000 for the three-months ended March 31, 2002 as compared to
$358,000 for the same period in 2001, an increase of 34.6%. These increases for
the three-months ended March 31, 2002, as compared to the same period in 2001,
were primarily due to interest on amounts in arrears owed by Edison in 2002.
Plant Operations
Three-Months Three-Months
Ended Ended
March 31, 2002 March 31, 2001
$ Cents/kWh $ Cents/kWh
- --------- - ---------
Navy I Partnership 2,307 1.3 1,762 0.9
BLM Partnership 2,605 1.6 2,360 1.3
Navy II Partnership 1,971 1.0 1,975 1.1
The Navy I Partnership's operating expenses, including operating and
general and administrative expenses, were $2.3 million for the three-months
ended March 31, 2002 as compared to $1.8 million for the same period in 2001, an
increase of 27.8%. The increase for the three-months ended March 31, 2002, as
compared to the same period in 2001 was primarily due to increased repair and
maintenance projects, which had been deferred during the same period in 2001 due
to the Edison's non-payment for energy delivered during the period from November
1, 2000 through March 26, 2001 discussed above.
The BLM Partnership's operating expenses, including operating and general
and administrative expenses, were $2.6 million for the three-months ended March
31, 2002, as compared to $2.4 million for the same period in 2001, an increase
of 8.3%. The increase for the three-months ended March 31, 2002, as compared to
the same period in 2001 was primarily due to an increased repair and maintenance
projects, which had been deferred during the same period in 2001 due to the
Edison's non-payment for energy delivered during the period from November 1,
2000 through March 26, 2001 discussed above.
25
Royalty Expense
Three-Months Three-Months
Ended Ended
March 31, 2002 March 31, 2001
$ Cents/kWh $ Cents/kWh
- --------- - ---------
Navy I Partnership 2,212 1.2 3,770 2.0
BLM Partnership 11 0.0 2,868 1.6
Navy II Partnership 1,057 0.6 3,712 2.0
The Navy I Partnership's royalty expenses were $2.2 million for the
three-months ended March 31, 2002, as compared to $3.8 million for the same
period in 2001, a decrease of 42.1%. The BLM Partnership's royalty expenses were
$11,000 for the three-months ended March 31, 2002, as compared to $2.9 million
for the same period in 2001, a decrease of $2.9 million. The Navy II
Partnership's royalty expenses were $1.1 million for the three-months ended
March 31, 2002, as compared to $3.7 million for the same period in 2001, a
decrease of 70.3%. These decreases in royalty expense for the Navy I, BLM and
Navy II Partnerships for the three-months ended March 31, 2002 as compared to
the same period in 2001, were due to a decrease in the avoided cost of energy
from 15.1 cents per kWh for the three-month period ended March 31, 2001 to 3.25
cents per kWh for the three-month period ended March 31, 2002. The decrease in
royalty cost for the Navy I Partnership was partially offset by an increased
royalty for Unit 1 based on the royalty reimbursement formula.
Depreciation and Amortization
Three-Months Three-Months
Ended Ended
March 31, 2002 March 31, 2001
$ Cents/kWh $ Cents/kWh
- --------- - ---------
Navy I Partnership 2,536 1.4 2,499 1.3
BLM Partnership 4,059 2.5 3,946 2.2
Navy II Partnership 3,829 2.0 3,753 2.0
Depreciation and Amortization expenses for the three-months ended March 31, 2002
as compared to the same period in 2001, remained consistent over the two
periods.
Interest Expense
Three-Months Three-Months
Ended Ended
March 31, 2002 March 31, 2001
$ Cents/kWh $ Cents/kWh
- --------- - ---------
Navy I Partnership 2,775 1.5 2,984 1.6
BLM Partnership 2,180 1.4 2,257 1.3
Navy II Partnership 1,908 1.0 2,075 1.1
26
The Navy I Partnership's interest expense was $2.8 million for the
three-months ended March 31, 2002, as compared to $3.0 million for the same
period in 2001, a decrease of 6.7%. The Navy II Partnership's interest expense
was $1.9 million for the three-months ended March 31, 2002, as compared to $2.1
million for the same period in 2001, a decrease of 9.5%. These decreases in
interest expense for the three-months ended March 31, 2002, as compared to the
same period in 2001 were due to reductions in the principal amount of the
project loan from Funding Corp.
Liquidity and Capital Resources
Each of the Navy I Partnership, the BLM Partnership and the Navy II
Partnership derive substantially all of their cash flow from Edison under their
power purchase agreements and from interest income earned on funds on deposit.
As of December 2001, the 6.8% notes were repaid, subsequently leaving the Coso
Partnerships with increased annual cash flow. The Coso Partnerships have used
their cash primarily for capital expenditures for power plant improvements,
resource and operating costs, distributions to partners and payments with
respect to the project debt.
The Coso Partnerships ability to meet their obligations as they come due
will depend upon the ability of Edison to meet its obligations under the terms
of the standard offer No. 4 power purchase agreements. Edison's shortfall in
collections, coupled with its near term capital requirements, materially and
adversely affected its liquidity. In resolution of that issue, Edison settled
with the CPUC on October 2, 2001, enabling it to recover in retail electric
rates its historical shortfall in electric purchase costs. Immediately after
this settlement, Edison and each of the Coso Partnerships entered into an
amendment of their respective Agreement (referenced above) pertaining to partial
payment and interest payments relating to Edison's past due obligations for the
period from November 2000 through March 26, 2001. The Agreement, as amended, was
approved by CPUC in January of 2002, and established the fixed energy rates
discussed above and set payment terms for the past due amounts owed to the Coso
Partnerships by Edison. Edison's failure to pay its future obligations may have
a material adverse effect on the Coso Partnerships ability to make debt service
payments to Funding Corp. as they come due under the Funding Corp. notes.
On March 1, 2002, Edison reached certain financing milestones and paid the
Coso Partnerships for revenue generated but not recognized for the period
November 1, 2000 through March 26, 2001. In the first quarter of 2002 the Navy
I, BLM and Navy II Partnerships recognized revenue for energy delivered during
that period of $37.3 million. $37.1 million and $38.0 million, respectively.
The following table sets forth a summary of each Coso Partnership's cash
flows for the three-months ended March 31, 2002 and March 31, 2001.
Three-Months Three-Months
Ended Ended
March 31, 2002 March 31, 2001
Navy I Partnership (stand alone)
Net cash provided by (used in) operating activities $ 47,122 $ (2,470)
Net cash provided by (used in) investing activities (2,484) (18)
Net cash provided by (used in) financing activities (29,910) ---
-------- -------
Net change in cash and cash equivalents $ 14,728 $ (2,488)
======== =======
27
BLM Partnership (stand alone)
Net cash provided by operating activities $ 34,552 $ 947
Net cash provided by (used in) investing activities (1,569) (2,045)
Net cash provided by (used in) financing activities (22,750) ---
-------- -------
Net change in cash and cash equivalents $ 10,233 $ (1,098)
======== =======
Navy II Partnership (stand alone)
Net cash provided by (used in) operating activities $ 26,844 $ (911)
Net cash provided by (used in) investing activities (107) 366
Net cash provided by (used in) financing activities (13,550) ---
-------- -------
Net change in cash and cash equivalents $ 13,187 $ 545
======== =======
The Navy I Partnership's cash flows from operating activities increased by
$49.6 million for the three-months ended March 31, 2002, as compared to the same
period in 2001, primarily due to the increase in net income from the cash
received for Edison's payment for revenue generated but not recognized for the
period November 1, 2000 through March 26, 2001.
Cash used in investing activities at the Navy I Partnership increased by
$2.5 million for the three-months ended March 31, 2002, as compared to the same
period in 2001, primarily due to an increase in restricted cash requirements
associated with the project loan from Funding Corp.
The Navy I Partnership's cash used in financing activities increased by
$29.9 million for the three-months ended March 31, 2002, as compared to the same
period in 2001, due to increased partner distributions paid during that period
in 2002.
The BLM Partnership's cash flows from operating activities increased by
$33.6 million for the three-months ended March 31, 2002, as compared to the same
period in 2001, primarily due to the increase in net income from the cash
received for Edison's payment for revenue generated but not recognized for the
period November 1, 2000 through March 26, 2001.
Cash used in investing activities at the BLM Partnership decreased by $0.5
million for the three-months ended March 31, 2002, as compared to the same
period in 2001, primarily due to a decrease in capital expenditures partially
offset by an increase in restricted cash requirements associated with the
project loan from Funding Corp.
The BLM Partnership's cash used in financing activities increased by $22.8
million for the three-months ended March 31, 2002, as compared to the same
period in 2001, due to increased partner distributions paid during that period
in 2002.
The Navy II Partnership's cash flows from operating activities increased by
$27.8 million for the three-months ended March 31, 2002, as compared to the same
period in 2001, primarily due to the increase in net income from the cash
received for Edison's payment for revenue generated but not recognized for the
period November 1, 2000 through March 26, 2001.
Cash from investing activities at the Navy II Partnership decreased by $0.5
million for the three-months ended March 31, 2002, as compared to the same
period in 2001, primarily due to an increase in restricted cash requirements
associated with the project loan from Funding Corp.
The Navy II Partnership's cash used in financing activities increased by
$13.6 million for the three-months ended March 31, 2002, as compared to the same
period in 2001, due to increased partner distributions paid during that period
in 2002.
28
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
General
The Coso Partnerships are currently parties to various items of litigation
relating to day-to-day operations, none of which, if determined adversely, would
be material to the financial condition and results of operations of the Coso
Partnerships, either individually or taken as a whole.
ITEM 2. Change in Securities and Use of Proceeds
None.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
29
ITEM 5. Other Information
Supplemental Condensed Combined Financial Information for the Coso Partnerships
The following information presents unaudited condensed combined financial
statements of the Coso Partnerships. These financial statements represent a
combination of the financial statements of Caithness Coso Funding Corp., Coso
Finance Partners, Coso Energy Developers and Coso Power Developers for the
periods indicated. This supplemental financial information is not required by
accounting principles generally accepted in the United States of America and has
been provided to facilitate a more comprehensive understanding of the financial
position, operating results and cash flows of the Coso Partnerships as a whole,
which jointly and severally guarantee the repayment of Caithness Coso Funding
Corp's senior notes. The unaudited condensed combined financial statements
should be read in conjunction with each individual Coso Partnership's financial
statements and their accompanying notes.
The financial information herein presented reflects all adjustments,
consisting only of normal recurring adjustments, which are, in the opinion of
management, necessary for a fair statement of the results for interim periods
presented. The results for the interim periods are not necessarily indicative of
results to be expected for the full year.
30
COSO PARTNERSHIPS
UNAUDITED CONDENSED COMBINED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
2002 2001
Assets:
Cash and cash equivalents................................................. $ 38,412 $ 264
Restricted cash and investments........................................... 37,873 34,210
Accounts receivable, net.................................................. 13,538 9,603
Prepaid expenses and other assets......................................... 1,637 2,159
Amounts due from related parties.......................................... 6,118 6,488
Property, plant and equipment, net........................................ 404,846 413,519
Power purchase agreement, net............................................. 51,097 52,350
Investments............................................................... 12,684 12,843
Deferred financing costs, net............................................. 6,103 6,300
------- ------
$ 572,308 $ 537,736
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities.................................. $ 35,814 $ 42,362
Amounts due to related parties............................................ 24,942 24,967
Project loans............................................................. 303,000 303,000
------- -------
363,756 370,329
Partners' capital............................................................ 208,552 167,407
------- -------
$ 572,308 $ 537,736
======= =======
See accompanying notes to the unaudited condensed combined financial statements
31
COSO PARTNERSHIPS
UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2002 2001
Revenue:
Energy revenues........................................................... $ 124,150 $ 4,110
Capacity revenues......................................................... 9,250 214
Interest and other income................................................. 1,598 1,113
------- ------
Total revenue...................................................... 134,998 5,437
Operating expenses:
Plant operating expenses.................................................. 6,883 6,907
Royalty expense........................................................... 3,280 10,351
Depreciation and amortization............................................. 10,424 10,198
------- ------
Total operating expenses........................................... 20,587 26,646
Operating income (loss)............................................ 114,411 (21,209)
Other expenses:
Interest expense.......................................................... 6,863 7,316
Amortization of deferred financing costs.................................. 197 401
------- ------
Total other expenses............................................... 7,060 7,717
Net income (loss)................................................. $ 107,351 $ (28,926)
======= =======
See accompanying notes to the unaudited condensed combined financial statements
32
COSO PARTNERSHIPS
UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2002 2001
Net cash provided by (used in) operating activities.......................... $ 108,518 $ (2,434)
Net cash provided by (used in) investing activities.......................... (4,160) (1,697)
Net cash provided by (used in) financing activities.......................... (66,210) ---
-------- -------
Net change in cash and cash equivalents...................................... $ 38,148 $ (4,131)
======== =======
See accompanying notes to the unaudited condensed combined financial statements.
33
COSO PARTNERSHIPS
NOTES TO THE UNAUDITED CONDENSED COMBINED
FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying unaudited condensed combined financial statements were derived
from the stand alone unaudited condensed financial statements of Caithness Coso
Funding Corp., Coso Finance Partners, Coso Energy Developers and Coso Power
Developers ("the Coso Partnerships"). All intercompany accounts and transactions
were eliminated. This financial information has been provided to facilitate a
more comprehensive understanding of the financial position, operating results
and cash flows of the Coso Partnerships as a whole. The unaudited condensed
combined financial statements should be read in conjunction with each individual
Partnership's unaudited condensed financial statements.
(2) Accounts Receivable and Revenue Recognition
Due to the uncertainty surrounding Edison's ability to make payment on past due
amounts, collection was not reasonably assured and the Coso Partnerships had not
recognized revenue from Edison for energy delivered during the period November
1, 2000 through March 26, 2001. The provision for doubtful accounts previously
recorded by the Coso Partnerships of $78.8 million for the three-months ended
March 31, 2001, has been reclassified as a reduction of revenue to conform with
the 2002 presentation.
On March 1, 2002, Edison reached certain financing milestones and paid the Coso
Partnerships for revenue generated but not recognized for the period November 1,
2000 through March 26, 2001. For the three-month period ended March 31, 2002,
the Coso Partnerships recognized revenue for energy delivered from November 1,
2000 through March 26, 2001 of $112.4 million.
(3) Reclassifications
Certain other reclassifications have been made to the 2001 statements of
operations to conform to the 2002 presentation.
34
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule--Form SX--Caithness Coso Funding Corp.
27.2 Financial Data Schedule--Form SX--Coso Finance Partners
27.3 Financial Data Schedule--Form SX--Coso Energy Developers
27.4 Financial Data Schedule--Form SX--Coso Power Developers
(b) Reports on Form 8-K
None
35
EXHIBIT 27.1
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: CAITHNESS COSO FUNDING CORP.
----------------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
other than 1 (one)? --- ----
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 3 - MOS
-- ---- -- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec-31-2001 DEC-31-2002
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD START
(example: JAN-01-1997) Jan-01-2001 JAN-01-2002
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD END
(example: SEP-30-1997) Dec-31-2001 MAR-31-2002
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS
---- ----- ---
CASH 0 0
SECURITIES 0 0
RECEIVABLES 304,225 311,079
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETDS 1,225 8,079
PP&E 0 0
DEPRECIATION 0 0
TOTAL ASSETS 304,225 311,079
CURRENT LIABILITIES 1,225 8,079
BONDS 303,000 303,000
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 304,225 311,079
SALES 0 0
TOTAL REVENUES 28,820 6,854
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 0 0
LOSS PROVISION 0 0
INTEREST EXPENSES 28,820 6,854
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 0
NET INCOME 0 0
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.2
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: COSO FINANCE PARTNERS
---------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
other than 1 (one)? --- ----
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 3 - MOS
-- ---- -- ----
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec-31-2001 DEC-31-2002
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD START
(example: JAN-01-1997) Jan-01-2001 JAN-01-2002
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD END
(example: SEP-30-1997) Dec-31-2001 MAR-31-2002
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS
---- -----
CASH 264 14,992
SECURITIES 21,325 23,766
RECEIVABLES 12,816 6,862
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 13,730 22,534
PP&E 229,084 229,112
DEPRECIATION 88,647 90,881
TOTAL ASSETS 193,114 201,763
CURRENT LIABILITIES 18,139 20,635
BONDS 122,550 122,550
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 193,114 201,763
SALES 75,419 45,498
TOTAL REVENUES 78,347 45,972
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 51,201 7,055
LOSS PROVISION 0 0
INTEREST EXPENSES 12,437 2,854
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 0
NET INCOME 14,709 36,063
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.3
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: COSO ENERGY DEVELOPERS
----------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
other than 1 (one)? --- ----
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 3 - MOS
-- ---- -- ----
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec-31-2001 DEC-31-2002
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD START
(example: JAN-01-1997) Jan-01-2001 JAN-01-2002
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD END
(example: SEP-30-1997) Dec-31-2001 MAR-31-2002
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS
---- -----
CASH 0 10,233
SECURITIES 7,368 8,551
RECEIVABLES 3,340 4,541
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 4,189 15,300
PP&E 247,203 247,547
DEPRECIATION 98,786 102,535
TOTAL ASSETS 183,978 192,456
CURRENT LIABILITIES 34,966 30,988
BONDS 96,250 96,250
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 183,978 192,456
SALES 65,830 43,480
TOTAL REVENUES 69,596 44,122
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 53,185 6,675
LOSS PROVISION 0 0
INTEREST EXPENSES 9,398 2,244
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 0
NET INCOME 7,013 35,203
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.4
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: COSO POWER DEVELOPERS
---------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
other than 1 (one)? --- ----
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 3 - MOS
-- ---- -- ----
YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec-31-2001 DEC-31-2002
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD START
(example: JAN-01-1997) Jan-01-2001 JAN-01-2002
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD END
(example: SEP-30-1997) Dec-31-2001 MAR-31-2002
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS
---- -----
CASH 0 13,187
SECURITIES 5,517 5,556
RECEIVABLES 9,349 10,207
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 10,009 23,825
PP&E 209,652 209,664
DEPRECIATION 84,987 88,061
TOTAL ASSETS 170,058 180,043
CURRENT LIABILITIES 23,638 11,087
BONDS 84,200 84,200
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 170,058 180,043
SALES 59,122 44,422
TOTAL REVENUES 62,005 44,904
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 57,141 6,857
LOSS PROVISION 0 0
INTEREST EXPENSES 9,247 1,962
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 0
NET INCOME (4,383) 36,085
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 7, 2002 CAITHNESS COSO FUNDING CORP.,
a Delaware corporation
By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
COSO FINANCE PARTNERS
a California General Partnership
By: New CLOC Company, LLC,
its Managing General Partner
By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
COSO ENERGY DEVELOPERS
a California General Partnership
By: New CHIP Company, LLC,
its Managing General Partner
By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
COSO POWER DEVELOPERS
a California General Partnership
By: New CTC Company, LLC,
its Managing General Partner
By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)