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 September 30, 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
-------- ----------
(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 November 12, 2002
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CAITHNESS COSO FUNDING CORP.
Form 10-Q
For the Quarter Ended September 30, 2002
PART I. FINANCIAL INFORMATION Page No.
ITEM 1. Financial Statements
Caithness Coso Funding Corp.
Unaudited condensed balance sheets at September 30, 2002 and
December 31, 2001 4
Unaudited condensed statements of operations for the three-months
ended September 30, 2002, the three-months ended September 30,
2001, the nine-months ended September 30, 2002, and the nine-
months ended September 30, 2001 5
Unaudited condensed statements of cash flows for the nine-months
ended September 30, 2002, and the nine-months ended
September 30, 2001 6
Notes to the unaudited condensed financial statements 7
Coso Finance Partners
Unaudited condensed balance sheets at September 30, 2002 and
December 31, 2001 8
Unaudited condensed statements of operations for the three-months
ended September 30, 2002, the three-months ended September 30,
2001, the nine-months ended September 30, 2002, and the nine-
months ended September 30, 2001 9
Unaudited condensed statements of cash flows for the nine-months
ended September 30, 2002, and the nine-months ended
September 30, 2001 10
Notes to the unaudited condensed financial statements 11
Coso Energy Developers
Unaudited condensed balance sheets at September 30, 2002 and
December 31, 2001 12
Unaudited condensed statements of operations for the three-months
ended September 30, 2002, the three-months ended September 30,
2001, the nine-months ended September 30, 2002, and the nine-
months ended September 30, 2001 13
Unaudited condensed statements of cash flows for the nine-months
ended September 30, 2002, and the nine-months ended
September 30, 2001 14
Notes to the unaudited condensed financial statements 15
2
Coso Power Developers
Unaudited condensed balance sheets at September 30, 2002 and
December 31, 2001 16
Unaudited condensed statements of operations for the three-months
ended September 30, 2002, the three-months ended September 30,
2001, the nine-months ended September 30, 2002, and the nine-
months ended September 30, 2001 17
Unaudited condensed statements of cash flows the nine-months
ended September 30, 2002, and the nine-months ended
September 30, 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 30
ITEM 2. Change in Securities and Use of Proceeds 30
ITEM 3. Defaults upon Senior Securities 30
ITEM 4. Submission of Matters to a Vote of Security Holders 30
ITEM 5. Other Information 30
Supplemental condensed combined financial information for the
Coso Partnerships
Unaudited condensed combined balance sheets at September 30,
2002 and December 31, 2001 31
Unaudited condensed combined statements of operations for the
three-months ended September 30, 2002, the three-months ended
September 30, 2001, the nine-months ended September 30, 2002,
and the nine-months ended September 30, 2001 32
Unaudited condensed combined statements of cash flows for the
nine-months ended September 30, 2002, and the nine-months
ended September 30, 2001 33
Notes to the unaudited condensed combined financial statements 34
ITEM 6. Exhibits and Reports on Form 8-K 35
3
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
September 30, December 31,
2002 2001
(Note)
Assets:
Accrued interest receivable....................... $ 7,883 $ 1,225
Project loan to Coso Finance Partners............. 117,911 122,550
Project loan to Coso Energy Developers............ 93,700 96,250
Project loan to Coso Power Developers............. 82,680 84,200
------- -------
$ 302,174 $ 304,225
======= =======
Liabilities and Stockholders' Equity:
Senior secured notes:
Accrued interest payable........................ $ 7,883 $ 1,225
9.05% notes due 2009............................ 294,291 303,000
------- -------
302,174 304,225
Stockholders' Equity................................ --- ---
------- -------
$ 302,174 $ 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 Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
Interest income................ $ 6,659 $ 7,105 $ 20,369 $ 21,703
Interest expense............... (6,659) (7,105) (20,369) (21,703)
------- ------- -------- --------
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)
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2002 2001
Net cash provided by (used in) investing activities....... $ 2,051 $ 4,136
Net cash provided by (used in) financing activities....... (2,051) (4,136)
------ ------
Net change in cash and cash equivalents.................. $ --- $ ---
====== ======
Supplemental cash flow disclosure:
Cash paid for interest................................. $ 13,710 $ 14,631
====== ======
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 Notes. Pursuant to separate
credit agreements between Funding Corp. and each partnership, the net proceeds
from the offering of $110,000 of 6.80% Notes due 2001 and $303,000 of 9.05%
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)
September 30, December 31,
2002 2001
(Note)
Assets:
Cash and cash equivalents................................................ $ 10,011 $ 264
Restricted cash and investments.......................................... 24,239 21,325
Accounts receivable, net................................................. 12,108 3,454
Prepaid expenses & other assets.......................................... 1,546 650
Amounts due from related parties......................................... 2,023 9,362
Property, plant & equipment, net......................................... 134,804 140,437
Power purchase agreement, net............................................ 10,232 11,093
Investment in New CLPSI Company, LLC..................................... 3,960 4,005
Deferred financing costs, net............................................ 2,287 2,524
----- -----
$ 201,210 $ 193,114
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities................................. $ 17,714 $ 17,578
Amounts due to related parties........................................... 3,198 561
Project loans............................................................ 117,911 122,550
------- -------
138,823 140,689
62,387 52,425
------- -------
Partners' capital........................................................... $ 201,210 $ 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 Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
Revenue:
Energy revenues.............................. $ 11,571 $ 7,666 $ 64,683 $ 33,746
Capacity revenues............................ 8,190 8,190 14,904 11,955
Interest and other income.................... 136 977 1,655 2,155
------ ------ ------ ------
Total revenue......................... 19,897 16,833 81,242 47,856
Operating expenses:
Plant operating expenses..................... 2,811 2,055 7,379 6,629
Royalty expense.............................. 5,762 7,005 11,393 13,759
Depreciation and amortization................ 3,049 2,647 8,126 7,687
------ ------ ------ ------
Total operating expenses.............. 11,622 11,707 26,898 28,075
Operating income...................... 8,275 5,126 54,344 19,781
Other expenses:
Interest expense............................. 2,668 2,896 8,216 8,851
Amortization of deferred financing costs..... 79 130 237 390
------ ------ ------ ------
Total other expenses.................. 2,747 3,026 8,453 9,241
Net income............................ $ 5,528 $ 2,100 $ 45,891 $ 10,540
====== ====== ====== ======
See accompanying notes to the unaudited condensed financial statements
9
COSO FINANCE PARTNERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2002 2001
Net cash provided by (used in) operating activities.... $ 54,861 $ 20,461
Net cash provided by (used in) investing activities.... (4,546) (1,867)
Net cash provided by (used in) financing activities.... (40,568) (8,381)
------ ------
Net change in cash and cash equivalents................ $ 9,747 $ 10,213
====== ======
Supplemental cash flow disclosure:
Cash paid for interest.......................... $ 5,545 $ 5,968
====== ======
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 (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 $21.6 million for the nine-months ended September 30, 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 nine-month period ended September 30, 2002, CFP
recognized revenue for energy delivered from November 1, 2000 through March 26,
2001 of $37.3 million.
(4) Reclassifications
Certain 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)
September 30, December 31,
2002 2001
(Note)
Assets:
Cash and cash equivalents.............................................. $ 10,416 $ ---
Restricted cash and investments........................................ 8,420 7,368
Accounts receivable, net............................................... 11,172 2,939
Prepaid expenses and other assets...................................... 1,946 849
Amounts due from related parties....................................... 426 401
Property, plant and equipment, net..................................... 137,708 148,417
Power purchase agreement, net.......................................... 17,633 18,437
Investment in Coso Transmission Line Partners........................ 2,701 2,738
Investment in New CLPSI Company, LLC................................... 665 789
Deferred financing costs, net.......................................... 1,849 2,040
------- -------
$ 192,936 $ 183,978
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities............................... $ 2,164 $ 7,699
Amounts due to related parties........................................ 28,391 27,267
Project loans.......................................................... 93,700 96,250
------ ------
124,255 131,216
68,681 52,762
Partners' capital......................................................... ------ ------
$ 192,936 $ 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 Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
Revenue:
Energy revenues.............................. $ 8,589 $ 6,053 $ 56,724 $ 25,510
Capacity revenues............................ 8,002 8,002 14,537 11,682
Interest and other income.................... 267 1,040 1,169 2,877
------ ------ ------ ------
Total revenue......................... 16,858 15,095 72,430 40,069
Operating expenses:
Plant operating expenses..................... 3,328 2,384 8,581 7,592
Royalty expense.............................. 1,482 967 2,157 4,993
Depreciation and amortization................ 3,903 4,009 12,135 11,884
------ ------ ------ ------
Total operating expenses.............. 8,713 7,360 22,873 24,469
Operating income...................... 8,145 7,735 49,557 15,600
Other expenses:
Interest expense............................. 2,120 2,225 6,477 6,733
Amortization of deferred financing costs..... 64 79 191 238
------ ------ ------ ------
Total other expenses.................. 2,184 2,304 6,668 6,971
Net income............................ $ 5,961 $ 5,431 $ 42,889 $ 8,629
====== ====== ====== ======
See accompanying notes to the unaudited condensed financial statements
13
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2002 2001
Net cash provided by (used in) operating activities.... $ 41,610 $ 21,413
Net cash provided by (used in) investing activities.... (1,674) (3,174)
Net cash provided by (used in) financing activities.... (29,520) (5,885)
------ ------
$ 10,416 $ 12,354
Net change in cash and cash equivalents................ ====== ======
Supplemental cash flow disclosure:
Cash paid for interest............................ $ 4,355 $ 4,514
====== ======
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
(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 $21.8 million for the nine-months ended September 30, 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 nine-month period ended September 30, 2002, CED
recognized revenue for energy delivered from November 1, 2000 through March 26,
2001 of $37.1 million.
(4) Reclassifications
Certain 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)
September 30, December 31,
2002 2001
(Note)
Assets:
Cash and cash equivalents................................................ $ 7,026 $ ---
Restricted cash and investments.......................................... 6,251 5,517
Accounts receivable, net................................................. 11,486 3,210
Prepaid expenses and other assets........................................ 1,648 660
Amounts due from related parties......................................... 6,352 6,139
Property, plant and equipment, net....................................... 117,856 124,665
Power purchase agreement, net............................................ 20,725 22,820
Investment in Coso Transmission Line Partners............................ 3,316 3,398
Investment in New CLPSI Company, LLC..................................... 1,903 1,913
Deferred financing costs, net............................................ 1,573 1,736
----- -----
$ 178,136 $ 170,058
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities................................. $ 2,842 $ 15,860
Amounts due to related parties........................................... 3,828 7,778
Project loans............................................................ 82,680 84,200
------ ------
89,350 107,838
Partners' capital........................................................... 88,786 62,220
------ ------
$ 178,136 $ 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 Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
Revenue:
Energy revenues................................. $ 7,791 $ 5,006 $ 55,428 $ 17,991
Capacity revenues............................... 8,047 8,047 14,603 11,745
Interest and other income....................... 237 881 888 2,135
------ ------ ------ ------
Total revenue............................ 16,075 13,934 70,919 31,871
Operating expenses:
Plant operating expenses........................ 2,918 2,360 7,408 7,210
Royalty expense................................. 2,588 2,316 5,337 8,209
Depreciation and amortization................... 1,848 3,870 9,507 11,454
------ ------ ------ ------
Total operating expenses................. 7,354 8,546 22,252 26,873
Operating income......................... 8,721 5,388 48,667 4,998
Other expenses:
Interest expense................................ 1,870 2,003 5,683 6,140
Amortization of deferred financing costs........ 55 192 163 577
------ ------ ------ ------
Total other expenses..................... 1,925 2,195 5,846 6,717
Net income (loss)........................ $ 6,796 $ 3,193 $ 42,821 $ (1,719)
====== ====== ====== ======
See accompanying notes to the unaudited condensed financial statements
17
COSO POWER DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2002 2001
Net cash provided by (used in) operating activities............. $ 26,138 $ 19,184
Net cash provided by (used in) investing activities............. (1,337) (817)
Net cash provided by (used in) financing activities............. (17,775) (14,762)
------ ------
Net change in cash and cash equivalents......................... $ 7,026 $ 3,605
====== ======
Supplemental cash flow disclosure:
Cash paid for interest..................................... $ 3,810 $ 4,149
====== ======
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
(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 $22.7 million for the nine-months ended September 30, 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 nine-month period ended September 30, 2002, CPD
recognized revenue for energy delivered from November 1, 2000 through March 26,
2001 of $38.0 million.
(4) Reclassifications
Certain 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 Partnership"),
collectively, (the "Coso Partnerships") and their respective management. Such
statements may be identified by terms such as expected, anticipated, may, will,
believe or other terms or variations of such words. 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 include but are not limited to: (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 along
with other pricing variables, (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, (xi) fluctuations in quarterly results due
in part to seasonality, (xii) affects of September 11, 2001, including U.S. Navy
activity and (xiii) the alleged manipulation of the California energy market.
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 Partnerships. 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 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. This avoided cost has now been fixed for
a set period as described below. The power purchase agreements will expire as
follows: Navy I Partnership in August 2011, the BLM Partnership in March 2019,
and the Navy II Partnership 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.
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 the Coso Partnerships receive 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's
power purchase agreement expires. Estimates of Edison's future avoided cost of
energy may vary significantly and it is not possible to predict with accuracy
the likely level of future avoided cost of energy prices.
From January 1, 2002 through April 30, 2002, the Coso Partnerships elected
to receive from Edison a fixed avoided cost of energy rate of 3.25 cents per
kWh. Starting, May 1, 2002 the Coso Partnerships received 5.37 cents per kWh,
pursuant to the agreement discussed above. The average avoided cost of energy
paid to the Coso Partnerships for the nine-month period ended September 30, 2002
was 4.43 cents per kWh, as compared to 8.94 cents per kWh for the nine-months
ended September 30, 2001.
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),
and is subject to future revision. The Navy I Partnership Unit 1 contract energy
pricing has remained unchanged for several years based on a mutual agreement
between the U.S. Navy and the Navy I Partnership since one of indecies utilized
in the calculation no longer existed. Discussions with the U.S. Navy are
continuing to re-adjust the formula for subsequent periods. 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, which was agreed to by the U.S. Navy. The parties have now agreed to a
replacement index and a true-up calculation has been developed in favor of the
Navy I Partnership. 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 are anticipated to aggregate $25.0 million by the expiration
date of the contract. Currently, the monthly amount deposited is approximately
21
$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.
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 material
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 Partnership 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 from
November 1, 2000 through March 26, 2001. The provision for doubtful accounts
previously recorded by the Navy I, BLM and Navy II Partnerships of $21.6
million, $21.8 million and $22.7 million, respectively, for the nine-months
ended September 30, 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, which was received during the nine-months
ended September 30, 2001, was made pursuant to the Agreement between Edison and
the Coso Partnerships described above and was also reclassified as additional
revenue to conform with the 2002 presentation. On March 1, 2002, Edison reached
certain financing milestones and paid the Coso Partnerships in full for energy
generated between November 1, 2000 and March 26, 2001 for which no revenue was
recognized during that period. For the nine-month period ended September 30,
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
On September 23, 2002, the United States Court of Appeals for the Ninth
Circuit issued an opinion and order on appeal from a district court's stipulated
judgment which affirmed the stipulated judgment in part and referred questions
based on California state law to the Supreme Court of California. The appeals
court stated that if the settlement Agreement violated California state law,
then the appeals court would be required to void the stipulated judgment.
Pending a response from the California Supreme Court the settlement Agreement
remains in full force and effect.
On March 27, 2001, the CPUC instituted a new formula to measure Edison's
short run avoided costs ("SRAC"), which is the basis for a portion of the
payments that Edison makes to the Coso Partnerships under their respective power
purchase agreement. In a decision dated September 4, 2002, the California Court
of Appeal ruled that the CPUC erred in not considering the possible retroactive
application of the revised SRAC formula to deliveries beginning on December 1,
2000. The California Court of Appeal remanded the matter back to the CPUC to
make such a consideration.
Edison filed a petition for a writ of review of the January 2001 CPUC
decision, claiming that the "floor" line loss factor of 0.95 for renewable
generators violated the Public Utility Regulatory Policies Act of 1978 (PURPA).
Subsequently, the California Court of Appeal issued a decision on August 20,
2002 in response to the writs affirming the January 2001 CPUC decision except
for the 0.95 "floor", which it rejected as an abuse of discretion by the CPUC.
The Coso Partnerships plan to appeal this decision in the California Court of
Appeal.
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 Nine-Months
Ended Ended
September 30 September 30
2002 2001 2002 2001
---- ---- ---- ----
Navy I Partnership (stand alone)
Operating capacity factor 104.8% 110.1% 104.6% 107.9%
Capacity (MW) (average) 83.81 88.10 83.69 86.29
kWh produced (000s) 185,058 194,525 548,312 565,345
BLM Partnership (stand alone)
Operating capacity factor 92.6% 99.3% 93.5% 103.2%
Capacity (MW) (average) 74.09 79.45 74.83 82.55
kWh produced (000s) 163,586 175,417 490,280 540,837
Navy II Partnership (stand alone)
Operating capacity factor 96.4% 102.0% 99.8% 103.5%
Capacity (MW) (average) 77.13 81.64 79.86 82.83
kWh produced (000s) 170,295 180,257 523,261 542,677
23
The declines in total energy production for the Navy I Partnership for the
three and nine-months ended September 30, 2002 as compared to the same periods
in 2001, were not significant. Total energy production for the BLM Partnership
was 163.6 million kWh and 490.3 million kWh for the three and nine-months ended
September 30, 2002, respectively, as compared to 175.4 million kWh and 540.8
million kWh for the same periods in 2001, decreases of 6.7% and 9.3%
respectively. Total energy production for the Navy II Partnership was 170.3
million kWh for the three-months ended September 30, 2002 as compared to 180.3
million kWh for the same period in 2001, a decrease of 5.5%. These decreases in
energy production for the Navy I, BLM and Navy II Partnerships were primarily
due to a decline in steam which they are attempting to remediate through well
maintenance and capital improvements.
Results of Operations for the three and nine-months ended September 30, 2002 and
2001
The following discusses the results of operations of the Coso Partnerships
for the three and nine-months ended September 30, 2002 and 2001 (dollar amounts
in tables are in thousands, except per kWh data):
Revenue
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Total Operating Revenues
Navy I Partnership 19,761 10.7 15,856 8.1 79,587 14.5 45,701 8.1
BLM Partnership 16,591 10.2 14,055 8.1 71,261 14.6 37,192 6.9
Navy II Partnership 15,838 9.3 13,053 7.3 70,031 13.4 29,736 5.5
Capacity & Capacity Bonus
Revenues
Navy I Partnership 8,190 4.4 8,190 4.2 14,904 2.7 11,955 2.1
BLM Partnership 8,002 4.9 8,002 4.6 14,537 3.0 11,682 2.2
Navy II Partnership 8,047 4.7 8,047 4.5 14,603 2.8 11,745 2.2
Energy Revenues
Navy I Partnership 11,571 6.3 7,666 3.9 64,683 11.8 33,746 6.0
BLM Partnership 8,589 5.3 6,053 3.5 56,724 11.6 25,510 4.7
Navy II Partnership 7,791 4.6 5,006 2.8 55,428 10.6 17,991 3.3
Total operating revenues for the Navy I, BLM and Navy II Partnerships,
which consist of capacity payments, capacity bonus payments and energy payments,
were $19.8 million, $16.6 million and $15.8 million, respectively, for the
three-months ended September 30, 2002, as compared to $15.9 million, $14.1
million and $13.1 million, respectively, for the same period in 2001, increases
of 24.5%, 17.7%, and 20.6%, respectively. Total energy revenues for the Navy I,
BLM and Navy II Partnerships were $11.6 million, $8.6 million and $7.8 million,
respectively, for the three-months ended September 30, 2002, as compared to $7.7
million, $6.1 million and $5.0 million, respectively, for the same period in
2001, increases of 50.6%, 41.0%, and 56.0%, respectively. Each Coso
Partnership's increase in energy revenues for the three-months ended September
30, 2002, as compared to the same period in 2001, was primarily due to an
increase in the average avoided cost of energy of 5.37 cents per kWh paid during
the three-months ended September 30, 2002, as compared to 3.60 cents per kWh
paid for the three-months ended September 30, 2001. The increase in price was,
partially offset by a decrease in production.
Total operating revenues for the Navy I, BLM and Navy II Partnerships,
which consist of capacity payments, capacity bonus payments and energy payments,
were $79.6 million, $71.3 million and $70.0 million, respectively, for the
nine-months ended September 30, 2002, as compared to $45.7 million, $37.2
million and $29.7 million, respectively, for the same period in 2001, increases
of $33.9 million, $34.1 million and $40.3 million, respectively. Capacity and
capacity bonus revenues for each of the Navy I, BLM and Navy II Partnerships
24
were $14.9 million, $14.5 million and $14.6 million, respectively, for the
nine-months ended September 30, 2002, as compared to $12.0 million, $11.7
million and $11.7 million, respectively, for the same period in 2001, increases
of 24.2%, 23.9%, and 24.8%, respectively. Energy revenues for the Navy I, BLM
and Navy II Partnerships were $64.7 million, $56.7 million and $55.4 million,
respectively, for the nine-months ended September 30, 2002, as compared to
$33.7million, $25.5 million and $18.0 million, respectively, for the same period
in 2001, increases of $31.0 million, $31.2 million and $37.4 million,
respectively. Each Coso Partnership's increase in capacity, capacity bonus and
energy revenues for the nine-months ended September 30, 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 from November 1, 2000 through March
26, 2001 discussed above. The Navy I, BLM and Navy II Partnerships had not
recognized revenues of $21.6 million, $21.8 million and $22.7 million,
respectively, for the nine-months ended September 30, 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 nine-months ended
September 30, 2002. These increases were partially offset by a decrease in
production during the nine-months ended September 30, 2002 as compared to the
same period in 2001.
Interest and Other Income
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, 2002 September 30, 2001 September 30, 2002 September 30, 2001
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 136 0.1 977 0.5 1,655 0.3 2,155 0.4
BLM Partnership 267 0.2 1,040 0.6 1,169 0.2 2,877 0.5
Navy II Partnership 237 0.1 881 0.5 888 0.2 2,135 0.4
Interest and other income for the Navy I, BLM and Navy II Partnerships were
$.1 million, $.3 million and $.2 million, respectively, for the three-months
ended September 30, 2002, as compared to $1.0 million, $1.0 million and $.9
million, respectively for the same period in 2001, decreases of $.9 million, $.7
million and $.7 million, respectively. Each Coso Partnership's decrease in
interest and other income for the three-months ended September 30, 2002, as
compared to the same period in 2001, was primarily due to interest on amounts in
arrears that were settled and paid by Edison on March 1, 2002.
The Navy I Partnership's interest and other income was $1.7 million for the
nine-months ended September 30, 2002, as compared to $2.2 million for the same
period in 2001, a decrease of 22.7%. The decrease in interest and other income
for the nine-months ended September 30, 2002, as compared to the same period in
2001, was primarily due to interest on amounts in arrears that were settled and
paid by Edison on March 1, 2002, partially offset by the collection of $0.8
million of insurance proceeds in 2002 for lost revenue in 1999 caused by
equipment failure.
The BLM and Navy II Partnerships interest and other income were $1.2
million and $.9 million for the nine-months ended September 30, 2002,
respectively, as compared to $2.9 million and $2.1 million, respectively for the
same periods in 2001, decreases of 58.6% and 57.1%, respectively. The decreases
for the BLM and Navy II Partnerships in interest and other income for the
nine-month period ended September 30, 2002, as compared to the same period in
2001, were primarily due to interest on amounts in arrears that were settled and
paid by Edison on March 1, 2002.
25
Plant Operations
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, 2002 September 30, 2001 September 30, 2002 September 30, 2001
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 2,811 1.5 2,055 1.1 7,379 1.3 6,629 1.1
BLM Partnership 3,328 2.0 2,384 1.4 8,581 1.8 7,592 1.4
Navy II Partnership 2,918 1.7 2,360 1.3 7,408 1.4 7,210 1.3
Plant operating expenses, including operating and general and
administrative for the Navy I, BLM and Navy II Partnerships were $2.8 million,
$3.3 million and $2.9 million, respectively, for the three-months ended
September 30, 2002, as compared to $2.1 million, $2.4 million and $2.4 million,
respectively, for the same period in 2001, increases of 33%, 37.5% and 20.8%,
respectively. Plant operating expenses, including operating and general and
administrative for the Navy I, BLM and Navy II Partnerships were $7.4 million,
$8.6 million and $7.4 million, respectively, for the nine-months ended September
30, 2002, as compared to $6.6 million, $7.6 million and $7.2 million,
respectively, for the same period in 2001, increases of 12.1%, 13.2% and 2.8%,
respectively. Each Coso Partnership's increase in operating expenses, including
operating and general and administrative for the three and nine-month periods
ended September 30, 2002, as compared to the same periods in 2001, were due to
increases in insurance costs, property taxes and repair and maintenance projects
that had been deferred in 2001 due to Edison's non-payment, partially offset by
a reduction in legal costs. The increased property taxes for Navy I, BLM and
Navy II Partnerships primarily resulted from a correction to their 2001
assessment of $670,000, $720,000 and $610,000, respectively, billed to each Coso
Partnership in 2002.
Royalty Expense
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, 2002 September 30, 2001 September 30, 2002 September 30, 2001
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 5,762 3.1 7,005 3.6 11,393 2.1 13,759 2.4
BLM Partnership 1,482 0.9 967 0.6 2,157 0.4 4,993 0.9
Navy II Partnership 2,588 1.5 2,316 1.3 5,337 1.0 8,209 1.5
The Navy I Partnership's royalty expenses were $5.8 million for the
three-months ended September 30, 2002, as compared to $7.0 million for the same
period in 2001, a decrease of 17.1%. The decrease in royalty expenses for the
Navy I Partnership for the three-months ended September 30, 2002, as compared to
the same period in 2001, was primarily due to an adjustment booked in 2001 that
increased prior period royalty expense for Unit 1 by $1.8 million, partially
offset by current period increases in Units 2 and 3 royalty expenses due to an
increase in avoided cost of energy from 3.60 cents per kWh for the three months
ending September 30, 2001 to 5.37 cents per kWh for the same period in 2002.
The Navy I Partnership's royalty expenses were $11.4 million for the
nine-months ended September 30, 2002, as compared to $13.8 for the same period
in 2001, a decrease of 17.4%. The decrease in royalty expense for the Navy I
Partnership for the nine-month period ended September 30, 2002, as compared to
the same period in 2001, was primarily due to the decrease in the avoided cost
of energy from 8.94 cents per kWh for the nine-months ended September 30, 2001
to 4.43 cents per kWh for the same period in 2002, partially offset by the
increase in Unit 1 royalty expense in 2001 discussed above.
26
The BLM Partnership's royalty expenses were $1.5 million and $2.2 million
for the three and nine-months ended September 30, 2002, respectively, as
compared to $1.0 million and $5.0 million for the same periods in 2001, an
increase of 50.0% and a decrease of 56.0% respectively. The Navy II
Partnership's royalty expenses were $2.6 million and $5.3 million for the three
and nine-months ended September 30, 2002, respectively, as compared to $2.3
million and $8.2 million for the same periods in 2001, an increase of 13.0% and
a decrease of 35.4%, respectively. The increases in royalty expense for the
three-month period ended September 30, 2002 as compared to the same period in
2001 were due to the increase in avoided cost of energy from 3.60 cents per kWh
or the three months ending September 30, 2001 to 5.37 cents per kWh for the same
period in 2002. The decreases in the nine-month period ended September 30, 2002
as compared to the same period in 2001 were due to a decrease in the avoided
cost of energy from 8.94 cents per kWh for the nine-months ended September 30,
2001 to 4.43 cents per kWh for the same period in 2002.
Depreciation and Amortization
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, 2002 September 30, 2001 September 30, 2002 September 30, 2001
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 3,049 1.6 2,647 1.4 8,126 1.5 7,687 1.4
BLM Partnership 3,903 2.4 4,009 2.3 12,135 2.5 11,884 2.2
Navy II Partnership 1,848 1.1 3,870 2.1 9,507 1.8 11,454 2.1
The Navy I Partnership's depreciation and amortization expenses were $3.0
million and $8.1 million, respectively for the three and nine-months ended
September 30, 2002, as compared to $2.6 million and $7.7 million for the same
period in 2001, increases of 15.4% and 5.2%, respectively. These increases were
due to an increase in capitalized assets during the three and nine-month periods
ended September 30, 2002.
The Navy II Partnership's depreciation and amortization expense were $1.8
million and $9.5 million, respectively for the three and nine-months ended
September 30, 2002, as compared to $3.9 million and $11.5 million for the same
period in 2001, decreases of 53.8% and 17.4%, respectively. These decreases were
due to certain wells being fully depreciated during the three and nine-month
periods ending September 30, 2002.
Interest Expense
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, 2002 September 30, 2001 September 30, 2002 September 30, 2001
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 2,668 1.4 2,896 1.5 8,216 1.5 8,851 1.6
BLM Partnership 2,120 1.3 2,225 1.3 6,477 1.3 6,733 1.2
Navy II Partnership 1,870 1.1 2,003 1.1 5,683 1.1 6,140 1.1
The Navy I Partnership's interest expense was $2.7 million and $8.2 million
for the three and nine-months ended September 30, 2002, respectively, as
compared to $2.9 million and $8.9 million for the same periods in 2001,
decreases of 6.9% and 7.9% respectively. The Navy II Partnership's interest
27
expense was $1.9 million and $5.7 million for the three and nine-months ended
September 30, 2002, respectively, as compared to $2.0 million and $6.1 million
for the same periods in 2001, decreases of 5.0% and 6.6% respectively. The
decreases in interest expense for the Navy I and Navy II Partnerships for the
three and nine-month periods ended September 30, 2002, as compared to the same
periods 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 and resource
improvements, 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. On September 23,
2002, the United States Court of Appeals for the Ninth Circuit issued an opinion
and order on appeal from the district court's stipulated judgment which affirmed
the stipulated judgment in part and referred questions based on California state
law to the Supreme Court of California. The appeals court stated that if the
Agreement violated California state law then the appeals court would be required
to void the stipulated judgment. Pending a response from the California Supreme
Court the Agreement remains in full force and effect. 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 from
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 nine-months ended September 30, 2002 and September 30, 2001.
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2002 2001
Navy I Partnership (stand alone)
Net cash provided by (used in) operating activities $ 54,861 $ 20,461
Net cash provided by (used in) investing activities (4,546) (1,867)
Net cash provided by (used in) financing activities (40,568) (8,381)
------ ------
Net change in cash and cash equivalents $ 9,747 $ 10,213
====== ======
28
BLM Partnership (stand alone)
Net cash provided by (used in) operating activities $ 41,610 $ 21,413
Net cash provided by (used in) investing activities (1,674) (3,174)
Net cash provided by (used in) financing activities (29,520) (5,885)
------ ------
Net change in cash and cash equivalents $ 10,416 $ 12,354
====== ======
Navy II Partnership (stand alone)
Net cash provided by (used in) operating activities $ 26,138 $ 19,184
Net cash provided by (used in) investing activities (1,337) (817)
Net cash provided by (used in) financing activities (17,725) (14,762)
------ ------
Net change in cash and cash equivalents $ 7,026 $ 3,605
====== ======
The Navy I Partnership's cash flows from operating activities increased by
$34.4 million for the nine-months ended September 30, 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 from November 1, 2000 through March 26, 2001.
Cash used in investing activities at the Navy I Partnership increased by
$2.7 million for the nine-months ended September 30, 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. and increases
in capital expenditures.
The Navy I Partnership's cash used in financing activities increased by
$32.2 million for the nine-months ended September 30, 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
$20.2 million for the nine-months ended September 30, 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 from November 1, 2000 through March 26, 2001.
Cash used in investing activities at the BLM Partnership decreased by $1.5
million for the nine-months ended September 30, 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 $23.6
million for the nine-months ended September 30, 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
$7.0 million for the nine-months ended September 30, 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 from November 1, 2000 through March 26, 2001.
Cash used in investing activities at the Navy II Partnership increased by
$.5 million for the nine-months ended September 30, 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. and increases
in capital expenditures.
The Navy II Partnership's cash used in financing activities increased by
$3.0 million for the nine-months ended September 30, 2002, as compared to the
same period in 2001, due to increased partner distributions paid during that
period in 2002.
29
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.
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)
September 30, December 31,
2002 2001
Assets:
Cash and cash equivalents.................................................... $ 27,453 $ 264
Restricted cash and investments.............................................. 38,910 34,210
Accounts receivable, net..................................................... 34,766 9,603
Prepaid expenses and other assets............................................ 5,140 2,159
Amounts due from related parties............................................. 6,648 6,488
Property, plant and equipment, net........................................... 390,368 413,519
Power purchase agreement, net................................................ 48,590 52,350
Investments.................................................................. 12,545 12,843
Deferred financing costs, net................................................ 5,709 6,300
------- -------
$ 570,129 $ 537,736
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities..................................... $ 22,720 $ 42,362
Amounts due to related parties............................................... 33,266 24,967
Project loans................................................................ 294,289 303,000
------- -------
350,275 370,329
Partners' capital............................................................... 219,854 167,407
------- -------
$ 570,129 $ 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 Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
Revenue:
Energy revenues.................................. $ 27,951 $ 18,725 $ 176,835 $ 77,233
Capacity revenues................................ 24,239 24,239 44,044 35,396
Interest and other income........................ 640 2,898 3,712 7,167
------ ------ ------ ------
Total revenue............................. 52,830 45,862 224,591 119,796
Operating expenses:
Plant operating expenses......................... 9,057 6,799 23,368 21,431
Royalty expense.................................. 9,832 10,288 18,887 26,961
Depreciation and amortization.................... 8,800 10,526 29,768 31,025
------ ------ ------ ------
Total operating expenses.................. 27,689 27,613 72,023 79,417
Operating income.......................... 25,141 18,249 152,568 40,379
Other expenses:
Interest expense................................. 6,658 7,124 20,376 21,724
Amortization of deferred financing costs......... 198 401 591 1,205
------ ------ ------ ------
Total other expenses...................... 6,856 7,525 20,967 22,929
Net income................................. $ 18,285 $ 10,724 $ 131,601 $ 17,450
====== ====== ======= ======
See accompanying notes to the unaudited condensed combined financial statements.
32
COSO PARTNERSHIPS
UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2002 2001
Net cash provided by (used in) operating activities... $ 122,607 $ 61,058
Net cash provided by (used in) investing activities... (7,557) (5,858)
Net cash provided by (used in) financing activities... (87,861) (29,028)
------ ------
Net change in cash and cash equivalents............... $ 27,189 $ 26,172
====== ======
Supplemental cash flow disclosure:
Cash paid for interest............................ $ 13,710 $ 14,631
====== ======
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
The Coso Partnerships sell all electricity produced to Southern California
Edison (Edison) under long-term power purchase contracts. 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 $66.1 million for the nine-months ended September 30, 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 nine-month period ended September 30, 2002,
the Coso Partnerships recognized revenue for energy delivered from November 1,
2000 through March 26, 2001 of $112.4 million.
(3) Reclassifications
Certain 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
Certification of Chief Executive Officer
Certification of Chief Financial Officer
99.1 Certification of Chief Executive Officer
99.2 Certification of Chief Financial Officer
(b) Reports on Form 8-K
The Coso Partnerships filed a current report on Form 8-K dated September 23,
2002 reporting issues surrounding the settlement agreement between Edison and
the CPUC, the court of appeals decision on line loss factors, and the court of
appeals decision regarding retroactive application of SRAC rates.
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 9 - 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 SEP-30-2002
----------- -----------
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 9 MOS
---- ----- ---
CASH 0 0
SECURITIES 0 0
RECEIVABLES 304,225 302,174
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETDS 1,225 7,883
PP&E 0 0
DEPRECIATION 0 0
TOTAL ASSETS 304,225 302,174
CURRENT LIABILITIES 1,225 7,883
BONDS 303,000 294,291
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 304,225 302,174
SALES 0 0
TOTAL REVENUES 28,820 20,369
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 0 0
LOSS PROVISION 0 0
INTEREST EXPENSES 28,820 20,369
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 9 - 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 SEP-30-2002
----------- -----------
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 9 MOS
---- -----
CASH 264 10,011
SECURITIES 21,325 24,239
RECEIVABLES 12,816 14,131
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 13,730 25,688
PP&E 229,084 230,664
DEPRECIATION 88,647 95,860
TOTAL ASSETS 193,114 201,210
CURRENT LIABILITIES 18,139 20,912
BONDS 122,550 117,911
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 193,114 201,210
SALES 53,400 79,587
TOTAL REVENUES 56,328 81,242
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 29,182 26,898
LOSS PROVISION 0 0
INTEREST EXPENSES 12,437 8,453
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 45,891
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 9 - 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 SEP-30-2002
----------- -----------
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 9 MOS
---- -----
CASH 0 10,416
SECURITIES 7,368 8,420
RECEIVABLES 3,340 11,598
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 4,189 23,960
PP&E 247,203 247,708
DEPRECIATION 98,786 110,000
TOTAL ASSETS 183,978 192,936
CURRENT LIABILITIES 34,966 30,555
BONDS 96,250 93,700
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 183,978 192,936
SALES 44,041 71,261
TOTAL REVENUES 47,807 72,430
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 31,396 22,873
LOSS PROVISION 0 0
INTEREST EXPENSES 9,398 6,668
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 42,889
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 9 - 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 SEP-30-2002
----------- -----------
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 9 MOS
---- -----
CASH 0 7,026
SECURITIES 5,517 6,251
RECEIVABLES 9,349 17,838
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 10,009 26,512
PP&E 209,652 210,103
DEPRECIATION 84,987 92,247
TOTAL ASSETS 170,058 178,136
CURRENT LIABILITIES 23,638 6,670
BONDS 84,200 82,680
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 170,058 178,136
SALES 36,389 70,031
TOTAL REVENUES 39,272 70,919
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 34,408 22,252
LOSS PROVISION 0 0
INTEREST EXPENSES 9,247 5,846
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) 42,821
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)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, James D. Bishop, Sr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Caithness Coso
Funding Corp.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 12, 2002 Caithness Coso Funding Corp.
a Delaware Corporation
By: /S/ JAMES D. BISHOP, SR.
------------------------
James D. Bishop, Sr.
Director, Chairman &
Chief Executive Officer
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Christopher T. McCallion, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Caithness Coso
Funding Corp.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 12, 2002 Caithness Coso Funding Corp.
a Delaware Corporation
By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President
& Chief Financial Officer
Principal Financial &
Accounting Officer
Exhibit 99.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Caithness Coso Funding Corp. (the
Company) on Form 10-Q for the period ending September 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, James
D. Bishop, Sr., Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
Date: November 12, 2002 Caithness Coso Funding Corp.
a Delaware Corporation
By: /S/ JAMES D. BISHOP, SR.
------------------------
James D. Bishop, Sr.
Director, Chairman &
Chief Executive Officer
Exhibit 99.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Caithness Coso Funding Corp. (the
Company) on Form 10-Q for the period ended September 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I,
Christopher T. McCallion, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
Date: November 12, 2002 Caithness Coso Funding Corp.
a Delaware Corporation
By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial &
Accounting Officer)
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: November 12, 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)