FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended March 31, 2003
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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.
----------------------------
(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 May 13, 2003
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CAITHNESS COSO FUNDING CORP.
Form 10-Q
For the Quarter Ended March 31, 2003
PART I. FINANCIAL INFORMATION Page No.
ITEM 1. Financial Statements
Caithness Coso Funding Corp.
Unaudited condensed balance sheets at March 31, 2003 and
December 31, 2002 4
Unaudited condensed statements of operations for the three-months
ended March 31, 2003 and the three-months ended March 31, 2002 5
Unaudited condensed statements of cash flows for the three-months
ended March 31, 2003 and the three-months ended March 31, 2002 6
Notes to the unaudited condensed financial statements 7
Coso Finance Partners
Unaudited condensed balance sheets at March 31, 2003 and
December 31, 2002 8
Unaudited condensed statements of operations for the three-months
ended March 31, 2003 and the three-months ended March 31, 2002 9
Unaudited condensed statements of cash flows for the three-months
ended March 31, 2003 and the three-months ended March 31, 2002 10
Notes to the unaudited condensed financial statements 11
Coso Energy Developers
Unaudited condensed balance sheets at March 31, 2003 and
December 31, 2002 13
Unaudited condensed statements of operations for the three-months
ended March 31, 2003 and the three-months ended March 31, 2002 14
Unaudited condensed statements of cash flows for the three-months
ended March 31, 2003 and the three-months ended March 31, 2002 15
Notes to the unaudited condensed financial statements 16
Coso Power Developers
Unaudited condensed balance sheets at March 31, 2003 and
December 31, 2002 18
Unaudited condensed statements of operations for the three-months
ended March 31, 2003 and the three-months ended March 31, 2002 19
Unaudited condensed statements of cash flows for the three-months
ended March 31, 2003 and the three-months ended March 31, 2002 20
Notes to the unaudited condensed financial statements 21
2
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 23
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 33
ITEM 2. Change in Securities and Use of Proceeds 33
ITEM 3. Defaults upon Senior Securities 33
ITEM 4. Submission of Matters to a Vote of Security Holders 33
ITEM 5. Other Information 33
Supplemental condensed combined financial information for the
Coso Partnerships
Unaudited condensed combined balance sheets at March 31, 2003
and December 31, 2002 34
Unaudited condensed combined statements of operations for the
three-months ended March 31, 2003 and the three-months ended
March 31, 2002 35
Unaudited condensed combined statements of cash flows for the
three-months ended March 31, 2003 and the three-months
ended March 31, 2002 36
Notes to the unaudited condensed combined financial statements 37
ITEM 6. Exhibits and Reports on Form 8-K 38
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
2003 2002
(Note)
Assets:
Accrued interest receivable....................... $ 7,424 $ 1,130
Project loan to Coso Finance Partners............. 110,955 110,955
Project loan to Coso Energy Developers............ 89,875 89,875
Project loan to Coso Power Developers............. 80,401 80,401
------- -------
$ 288,655 $ 282,361
======= =======
Liabilities and Stockholders' Equity:
Senior secured notes:
Accrued interest payable....................... $ 7,424 $ 1,130
9.05% notes due 2009........................... 281,231 281,231
------- -------
288,655 282,361
Stockholders' equity................................ -- --
------- -------
$ 288,655 $ 282,361
======= =======
Note: The condensed balance sheet at December 31, 2002 has been derived
from the audited financial statements at that date but does not
include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for
complete financial statements.
See accompanying notes to the unaudited condensed financial statements
4
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
Interest income....................... $ 6,294 $ 6,854
Interest expense...................... (6,294) (6,854)
------- -------
Net income........................ $ -- $ --
======= =======
See accompanying notes to the unaudited condensed financial statements
5
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
Net cash provided by (used in) investing activities....... $ 6,294 $ 6,854
Net cash provided by (used in) financing activities....... (6,294) (6,854)
------- -------
Net change in cash and cash equivalents.................. $ -- $ --
======= =======
See accompanying notes to the unaudited condensed financial statements
6
CAITHNESS COSO FUNDING CORP.
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
(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,
2002.
The financial information herein presented reflects all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair statement of the results for interim periods presented. The
results for the interim periods are not necessarily indicative of results to be
expected for the full year.
7
COSO FINANCE PARTNERS
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
2003 2002
(Note)
Assets:
Cash and cash equivalents................................................. $ 6,777 $ 4,215
Restricted cash and investments........................................... 29,012 28,692
Accounts receivable, net.................................................. 6,888 7,431
Prepaid expenses & other assets........................................... 605 1,068
Amounts due from related parties.......................................... 1,504 1,190
Property, plant & equipment, net.......................................... 136,140 136,313
Power purchase agreement, net............................................. 9,658 9,945
Advances to New CLPSI Company, LLC........................................ 4,109 4,010
Deferred financing costs, net............................................. 2,129 2,208
----- -----
$ 196,822 $ 195,072
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities.................................. $ 1,925 $ 5,764
Amounts due to related parties............................................ 2,991 467
Other liabilities......................................................... 14,783 12,478
Project loans............................................................. 110,955 110,955
------- -------
130,654 129,664
66,168 65,408
Partners' capital............................................................ ------- -------
$ 196,822 $ 195,072
======= =======
Note: The condensed balance sheet at December 31, 2002 has been derived
from the audited financial statements at that date but does not
include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for
complete financial statements.
See accompanying notes to the unaudited condensed financial statements
8
COSO FINANCE PARTNERS
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
Revenue:
Energy revenues............................. $ 11,298 $ 42,350
Capacity revenues........................... 1,255 3,148
------ ------
Total revenue........................ 12,553 45,498
Operating expenses:
Plant operating expenses.................... 2,267 2,307
Royalty expense............................. 2,681 2,212
Depreciation and amortization............... 2,562 2,536
----- -----
Total operating expenses............. 7,510 7,055
Operating income..................... 5,043 38,443
Other (income)/expenses:
Interest and other income.................. (59) (474)
Interest expense........................... 2,483 2,775
Amortization of deferred financing costs... 79 79
----- -----
Total other expenses................. 2,503 2,380
----- -----
Income before cumulative effect of
change in accounting principle............. 2,540 36,063
Cumulative effect of change in
accounting principle....................... 1,780 --
----- ------
Net income.......................... $ 760 $ 36,063
===== ======
See accompanying notes to the unaudited condensed financial statements
9
COSO FINANCE PARTNERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
Net cash provided by (used in) operating activities..... $ 4,674 $ 47,122
Net cash provided by (used in) investing activities..... (2,112) (2,484)
Net cash provided by (used in) financing activities..... -- (29,910)
----- ------
Net change in cash and cash equivalents................. $ 2,562 $ 14,728
===== ======
See accompanying notes to the unaudited condensed financial statements
10
COSO FINANCE PARTNERS
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
(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 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,
2002.
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. On March 1, 2002, Edison reached certain financing
milestones and paid CFP for revenue generated, but not recognized for the period
November 1, 2000 through March 26, 2001. For the three-month period ended March
31, 2002, CFP recognized revenue for energy delivered from November 1, 2000
through March 26, 2001 of $37.3 million.
(4) Reclassifications
Certain balances in prior years have been reclassified to conform to the
presentation adopted in the current year.
(5) New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations. This Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs and amends SFAS No. 19, Financial Accounting
and Reporting by Oil and Gas Producing Companies. The Statement requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred if a reasonable estimate of a fair value
can be made, and that the associated asset retirement costs be capitalized as
part of the carrying amount of the long-lived asset. The Statement is effective
for financial statements issued for fiscal years beginning after June 15, 2002.
11
As a result of the adoption of SFAS No. 143, the Partnership was required to
recognize a liability of $2,039, a net asset of $259 and a loss from the
cumulative effect of a change in accounting principle of $1,780 as of January 1,
2003. In 2003 additional depreciation and accretion expense resulting from
adoption of SFAS No. 143 is estimated to be $218.
12
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
2003 2002
(Note)
Assets:
Cash and cash equivalents...................................... $ 8,268 $ 1,423
Restricted cash and investments................................ 6,664 6,646
Accounts receivable, net....................................... 6,435 6,681
Prepaid expenses and other assets.............................. 747 1,370
Amounts due from related parties............................... 430 421
Property, plant and equipment, net............................. 135,543 135,853
Power purchase agreement, net.................................. 17,097 17,365
Investment in Coso Transmission Line Partners.................. 2,625 2,653
Advances to New CLPSI Company, LLC............................. 688 674
Deferred financing costs, net.................................. 1,721 1,785
------- -------
$ 180,218 $ 174,871
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities........................ $ 2,414 $ 1,644
Amounts due to related parties.................................. 28,230 26,317
Other liabilities............................................... 1,582 432
Project loans................................................... 89,875 89,875
------ ------
122,101 118,268
Partners' capital.................................................. 58,117 56,603
------- -------
$ 180,218 $ 174,871
======= =======
Note: The condensed balance sheet at December 31, 2002 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
13
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
Revenue:
Energy revenues................................. $ 8,107 $ 40,429
Capacity revenues............................... 1,227 3,051
----- ------
Total revenue............................ 9,334 43,480
Operating expenses:
Plant operating expenses........................ 2,738 2,605
Royalty expense................................. 25 11
Depreciation and amortization................... 2,340 4,059
----- -----
Total operating expenses................. 5,103 6,675
Operating income......................... 4,231 36,805
Other (income)/expenses:
Interest and other income...................... (282) (642)
Interest expense............................... 2,011 2,180
Amortization of deferred financing costs....... 64 64
----- -----
Total other expenses..................... 1,793 1,602
----- -----
Income before cumulative effect of change in
accounting principle........................... 2,438 35,203
Cumulative effect of change in
accounting principle........................... 924 --
----- ------
Net income.............................. $ 1,514 $ 35,203
===== ======
See accompanying notes to the unaudited condensed financial statements
14
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
Net cash provided by (used in) operating activities.... $ 8,371 $ 34,552
Net cash provided by (used in) investing activities.... (1,526) (1,569)
Net cash provided by (used in) financing activities.... -- (22,750)
----- ------
Net change in cash and cash equivalents................ $ 6,845 $ 10,233
===== ======
See accompanying notes to the unaudited condensed financial statements
15
COSO ENERGY DEVELOPERS
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
(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,
2002.
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. On March 1, 2002, Edison reached certain financing
milestones and paid CED for revenue generated, but not recognized for the period
November 1, 2000 through March 26, 2001. For the three-month period ended March
31, 2002, CED recognized revenue for energy delivered from November 1, 2000
through March 26, 2001 of $37.1 million.
(4) Reclassifications
Certain balances in prior years have been reclassified to conform to the
presentation adopted in the current year.
(5) New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations. This Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs and amends SFAS No. 19, Financial Accounting
and Reporting by Oil and Gas Producing Companies. The Statement requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred if a reasonable estimate of a fair value
16
can be made, and that the associated asset retirement costs be capitalized as
part of the carrying amount of the long-lived asset. The Statement is effective
for financial statements issued for fiscal years beginning after June 15, 2002.
As a result of the adoption of SFAS No. 143 the Partnership was required to
recognize a liability of $1,122, a net asset of $198 and a loss from the
cumulative effect of a change in accounting principle of $924 as of January 1,
2003. In 2003 additional depreciation and accretion expense resulting from
adoption of SFAS No. 143 is estimated to be $120.
17
COSO POWER DEVELOPERS
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
2003 2002
(Note)
Assets:
Cash and cash equivalents............................................ $ 5,917 $ 824
Restricted cash and investments...................................... 10,883 10,855
Accounts receivable, net............................................. 6,762 7,234
Prepaid expenses and other assets.................................... 617 1,111
Amounts due from related parties..................................... 6,287 5,902
Property, plant and equipment, net................................... 115,591 116,192
Power purchase agreement, net........................................ 19,327 20,026
Investment in Coso Transmission Line Partners........................ 3,227 3,260
Advances to New CLPSI Company, LLC................................... 1,924 1,911
Deferred financing costs, net........................................ 1,465 1,519
----- -----
$ 172,000 $ 168,834
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities............................. $ 1,987 $ 1,948
Amounts due to related parties....................................... 3,335 758
Other liabilities.................................................... 2,550 366
Project loans........................................................ 80,401 80,401
------ ------
88,273 83,473
Partners' capital....................................................... 83,727 85,361
------ ------
$ 172,000 $ 168,834
======= =======
Note: The condensed balance sheet at December 31, 2002 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
18
COSO POWER DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
Revenue:
Energy revenues...................................... $ 7,278 $ 41,371
Capacity revenues.................................... 1,234 3,051
----- ------
Total revenue................................. 8,512 44,422
Operating expenses:
Plant operating expenses............................. 2,355 1,971
Royalty expense...................................... 1,472 1,057
Depreciation and amortization........................ 2,768 3,829
----- -----
Total operating expenses...................... 6,595 6,857
Operating income.............................. 1,917 37,565
Other (income)/expenses:
Interest and other income........................... (79) (482)
Interest expense.................................... 1,799 1,908
Amortization on deferred financing costs............ 54 54
----- -----
Total other expenses.......................... 1,774 1,480
----- -----
Income before cumulative effect of change in
accounting principle................................ 143 36,085
Cumulative effect of change in
accounting principle................................ 1,777 --
----- ------
Net (loss) income............................ $ (1,634) $ 36,085
===== ======
See accompanying notes to the unaudited condensed financial statements
19
COSO POWER DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
Net cash provided by (used in) operating activities.... $ 6,149 $ 26,844
Net cash provided by (used in) investing activities.... (1,056) (107)
Net cash provided by (used in) financing activities.... -- (13,550)
----- ------
Net change in cash and cash equivalents................ $ 5,093 $ 13,187
===== ======
See accompanying notes to the unaudited condensed financial statements
20
COSO POWER DEVELOPERS
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
(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,
2002.
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. On March 1, 2002, Edison reached certain financing
milestones and paid CPD for revenue generated but not recognized for the period
November 1, 2000 through March 26, 2001. For the three-month period ended March
31, 2002, CPD recognized revenue for energy delivered from November 1, 2000
through March 26, 2001 of $38.0 million.
(4) Reclassifications
Certain balances in prior years have been reclassified to conform to the
presentation adopted in the current year.
(5) New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations. This Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs and amends SFAS No. 19, Financial Accounting
and Reporting by Oil and Gas Producing Companies. The Statement requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred if a reasonable estimate of a fair value
21
can be made, and that the associated asset retirement costs be capitalized as
part of the carrying amount of the long-lived asset. The Statement is effective
for financial statements issued for fiscal years beginning after June 15, 2002.
As a result of the adoption of SFAS No. 143 the Partnership was required to
recognize a liability of $2,131, a net asset of $354 and a loss from the
cumulative effect of a change in accounting principle of $1,777 as of January 1,
2003. In 2003 additional depreciation and accretion expense resulting from
adoption of SFAS No. 143 is estimated to be $334.
22
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Except for financial information contained herein, the matters discussed in
this annual 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 including public and private entities, (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 projects 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.
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 level. The maximum annual capacity bonus
payment available is also fixed throughout the life of each power purchase
agreement; and
* Energy payments which are based on the amount of electricity the Coso
partnership's plant actually produces.
23
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 Partnerships based on Edison's avoided cost of energy.
Edison's avoided cost of energy is Edison's cost to generate electricity if
Edison were to produce it itself or buy it from another power producer rather
than buy it from the Coso Partnerships. The power purchase agreement for the
Navy I partnership will expire in August 2011, the power purchase agreement for
the BLM partnership will expire in March 2019, and the power purchase agreement
for the Navy II partnership will expire in January 2010. The fixed energy price
period expired in August 1997 for the Navy I partnership, in March 1999 for the
BLM partnership and in January 2000 for the Navy II partnership.
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 began receiving
a fixed energy rate of 5.37 cents per kWh for five (5) years in lieu of the rate
calculated based on the avoided cost of energy. 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 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.
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 as
amended. This formula is primarily based on the tariff rates charged by Edison,
which were increased in 2001 by the California Public Utilities Commission
(CPUC), and is subject to future revision. Indices utilized in the calculation
of the Navy I partnership Unit 1 contract energy pricing remained unchanged
historically based on an agreement between the U.S. Navy and the Navy I
partnership. In October 2002 and November 2001, modifications to the calculation
of the reimbursement pricing formula were made to the U.S. Navy Contract
resulting in a reduction of accrued royalties of $1.3 million and $6.5 million,
respectively, which was agreed to by the U.S. Navy. The parties have currently
agreed to a replacement index and true-up calculation 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 its 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 $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 (Notes) on behalf of the Coso Partnerships who have jointly,
severally, and unconditionally guaranteed repayment of the Notes.
24
On May 28, 1999, Funding Corp. issued $110.0 million of 6.80% Notes that
were due in 2001, and were paid off on December 15, 2001, and $303.0 million of
9.05% Notes due in 2009. The proceeds from the notes were loaned to the Coso
Partnerships and are payable to Funding Corp from payments of principal and
interest on the Notes. Funding Corp. does not conduct any other operations apart
from issuing the Notes.
Under the depository agreement with the trustee for the Notes, the Coso
Partnerships established accounts with a depository and pledged those accounts
as security for the benefit of the holders of the Notes. All amounts deposited
with the depository are, at the direction of the Coso Partnerships, invested by
the depository in permitted investments. All revenues or other proceeds actually
received by the Coso Partnerships are deposited in a revenue account and
withdrawn upon receipt by the depository of a certificate from the relevant Coso
Partnerships detailing the amounts to be paid from funds in its respective
revenue account.
Periodic increases in natural gas prices and imbalances between supply and
demand, among other factors, have at times led to significant increases in
wholesale electricity prices in California. During those periods, Edison had
fixed tariffs with their retail customers that were significantly below the
wholesale prices it paid in California. This resulted in significant
under-recoveries by Edison of its electricity purchase costs. On January 16,
2001, Edison announced that it was temporarily suspending payments for energy
provided, including the energy provided by the Coso Partnerships, pending a
permanent solution to its liquidity crisis. This cash flow shortfall 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 had not
recognized revenue of $22.0 million, $21.8 million and $22.7 million,
respectively, from Edison for Energy delivered during the period January 1, 2001
through March 26, 2001.
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 paid interest on the outstanding amount at 7% per
annum. That payment was made pursuant to the Agreement between Edison and the
Coso Partnerships described above. On March 1, 2002, Edison reached certain
financing milestones and paid Navy I, BLM and Navy II $37.3 million, $37.1
million and $38.0 million, respectively, for revenue generated but not
recognized for the period November 1, 2000 through March 26, 2001.
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 California Supreme Court. The appeals court
stated that if the Agreement violated California state law, then the appeals
court would be required to void the stipulated judgment. The California Supreme
Court has accepted the Ninth Circuit Court of Appeals request to address the
issues referred to it in the September 23, 2002 ruling. Pending the findings of
the California Supreme Court on matters relating to state law, the Agreement
remains in full force and effect.
Edison filed a petition for a writ of review of a 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 Appeals 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.
While this matter was appealed to the California Supreme Court, the petition for
review was denied. The Coso Partnerships are currently evaluating potential
actions to redress this issue. The Coso Partnerships' Agreements set a 1.0 line
loss factor for all energy sold between May 2002 through April 2007. After April
2007, the Coso Partnerships will have a line loss factor of less than 1.0, if
Edison's challenge to the CPUC ruling stands.
25
The Coso Partnerships cannot predict whether any subsequent action regarding
this matter will be successful.
Capacity Utilization
For purposes of consistency in financial presentation, the plant capacity
factor for each of the Coso Partnerships is based on a nominal capacity amount
of 80MW (240MW in the aggregate). The Coso Partnerships have a gross operating
capacity that allows for the production of electricity in excess of their
nominal capacity amounts. Utilization of this operating margin is based upon a
number of factors and can be expected to vary throughout the year under normal
operating conditions.
The following data includes the operating capacity factor, capacity and
electricity production (in kWh) for each Coso Partnership on a stand-alone
basis:
Three-Months
Ended
March 31
2003 2002
---- ----
Navy I Partnership (stand alone)
Operating capacity factor 100.5% 106.6%
Capacity (MW)(average) 80.42 85.30
kWh produced (000s) 173,706 184,240
BLM Partnership (stand alone)
Operating capacity factor 88.6% 92.7%
Capacity (MW) (average) 70.92 74.15
kWh produced (000s) 153,177 160,161
Navy II Partnership (stand alone)
Operating capacity factor 98.3% 109.0%
Capacity (MW) (average) 78.61 87.23
kWh produced (000s) 169,795 188,414
Total energy production for the Navy I Partnership was 173.7 million kWh
for the three-months ended March 31, 2003, as compared to 184.2 million kWh for
the same period in 2002, a decrease of 5.7%. Total energy production for the
Navy II Partnership was 169.8 million kWh for the three-months ended March 31,
2003, as compared to 188.4 million kWh for the same period in 2002, a decrease
of 9.9%. The decrease in energy production for the Navy I and Navy II
Partnerships was primarily due to a decline in steam which management is
attempting to remediate through well maintenance and capital improvements. The
decline in total energy production for the BLM Partnership was not significant
for the period March 31, 2003 as compared to March 31, 2002. In an effort to
increase production, the Coso Partnerships have implemented a capital program
including drilling two new productions wells and performing workovers on three
existing wells to regain production currently limited due to wellbore
obstructions. The Coso Partnerships expect to enhance the steam utilization and
efficiency of the projects through a turbine enhancement and modifications to
wellfield piping and gas removal systems. With respect to the reservoir, an
injection augmentation program, aimed at improving reservoir pressure and
minimizing resource decline, is currently in the engineering design phase.
26
Results of Operations for the three-months ended March 31, 2003 and 2002
The following discusses the results of operations of the Coso Partnerships
for the three-months ended March 31, 2003 and 2002 (dollar amounts in tables are
in thousands, except per kWh data):
Revenue
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
$ Cents/kWh $ Cents/kWh
- --------- - ---------
Total Operating Revenues
Navy I Partnership 12,553 7.2 45,498 24.7
BLM Partnership 9,334 6.1 43,480 27.1
Navy II Partnership 8,512 5.0 44,422 23.6
Capacity & Capacity Bonus
Revenues
Navy I Partnership 1,255 0.7 3,148 1.7
BLM Partnership 1,227 0.8 3,051 1.9
Navy II Partnership 1,234 0.7 3,051 1.6
Energy Revenues, net
of steam transfers
Navy I Partnership 11,298 6.5 42,350 23.0
BLM Partnership 8,107 5.3 40,429 25.2
Navy II Partnership 7,278 4.3 41,371 22.0
Total operating revenues for the Navy I, BLM and Navy II Partnerships,
which consist of capacity payments, capacity bonus payments, energy payments,
were $12.6 million, $9.3 million and $8.5 million, respectively, for the
three-months ended March 31, 2003, as compared to $45.5 million, $43.5 million
and of $44.4 million, respectively, for the same period in 2002, decreases of
$32.9 million, $34.2 million and $35.9 million, respectively. Capacity and
capacity bonus revenues for each of the Navy I, BLM and Navy II Partnerships
were $1.3 million, $1.2 million and $1.2 million, respectively, for the
three-months ended March 31, 2003, as compared to $3.1 million for each of the
Partnerships for the same period in 2002, decreases of $1.8 million, $1.9
million and $1.9 million respectively. Total energy revenues for the Navy I, BLM
and Navy II Partnerships were $11.3 million, $8.1 million and $7.3 million,
respectively, for the three-months ended March 31, 2003, as compared to $42.4
million, $40.4 million and of $41.4 million, respectively, for the same period
in 2002, decreases of $31.1 million $32.3 million and $34.1 million,
respectively. Each of the Coso Partnerships' decreases in operating revenues,
capacity and capacity bonus revenues and energy revenues for the three-months
ended March 31, 2003, as compared to the same period in 2002, were primarily due
to the recognition of revenues generated but not recognized for the period from
November 1, 2000 through March 26, 2001 discussed above. On March 1, 2002, the
Navy I, BLM and Navy II Partnerships received payment and recognized revenue of
$37.3 million, $37.1 million and $38.0 million, respectively. These decreases
were partially offset by an increase in the fixed rate of energy to 5.37 cents
per kWh paid during the three-months ended March 31, 2003 as compared to 3.25
cents per kWh for the same period in 2002, also discussed above.
27
Plant Operations
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
$ Cents/kWh $ Cents/kWh
- --------- - ---------
Navy I Partnership 2,267 1.3 2,307 1.3
BLM Partnership 2,738 1.8 2,605 1.6
Navy II Partnership 2,355 1.4 1,971 1.0
The Navy II Partnership's operating expenses, including operating and
general and administrative expenses, were $2.4 million for the three-months
ended March 31, 2003 as compared to $2.0 million for the same period in 2002, an
increase of 20.0%. The increase for the three-months ended March 31, 2003, as
compared to the same period in 2002 was primarily due to increased insurance
costs and property tax. The Navy I and BLM Partnerships operating expenses,
including operating and general and administrative expenses for the three-months
ended March 31, 2003 as compared to the same period in 2002 had insignificant
changes over the two periods. The increased insurance costs and property taxes
for the Navy I and BLM Partnerships for the three-month period ended March 31,
2003 were insignificant, due to increased drilling and maintenance costs
incurred during the same period in 2002.
Royalty Expense
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
$ Cents/kWh $ Cents/kWh
- --------- - ---------
Navy I Partnership 2,681 1.5 2,212 1.2
BLM Partnership 25 0.0 11 0.0
Navy II Partnership 1,472 0.9 1,057 0.6
The Navy I Partnership's royalty expenses were $2.7 million for the
three-months ended March 31, 2003, as compared to $2.2 million for the same
period in 2002, an increase of 22.7%. The BLM Partnership's royalty expenses
were $25,000 for the three-months ended March 31, 2003, as compared to $11,000
for the same period in 2002, an increase of $14,000. The Navy II Partnership's
royalty expenses were $1.5 million for the three-months ended March 31, 2003, as
compared to $1.1 million for the same period in 2002, an increase of 36.4%.
These increases in royalty expense for the Navy I, BLM and Navy II Partnerships
for the three-months ended March 31, 2003 as compared to the same period in
2002, were due to an increase in the fixed rate of energy to 5.37 cents per kWh
for the three-month period ended March 31, 2003 from 3.25 cents per kWh for the
three-month period ended March 31, 2002 discussed above.
28
Depreciation and Amortization
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
$ Cents/kWh $ Cents/kWh
- --------- - ---------
Navy I Partnership 2,562 1.5 2,536 1.4
BLM Partnership 2,340 1.5 4,059 2.5
Navy II Partnership 2,768 1.6 3,829 2.0
The BLM Partnership's depreciation and amortization expense was $2.3
million for the three-months ended March 31, 2003, as compared to $4.1 million
for the same period in 2002, a decrease of 43.9%. The Navy II Partnership's
depreciation and amortization expense was $2.8 million for the three-months
ended March 31, 2003, as compared to $3.8 million for the same period in 2002, a
decrease of 26.3%. These decreases in depreciation and amortization expense for
the three-months ended March 31, 2003 as compared to the same period in 2002,
were due to older wells being fully depreciated during the second half of 2002.
Interest and Other Income
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
$ Cents/kWh $ Cents/kWh
- --------- - ---------
Navy I Partnership 59 0.0 474 0.3
BLM Partnership 282 0.2 642 0.4
Navy II Partnership 79 0.0 482 0.3
Interest and other income for the Navy I, BLM and Navy II Partnerships were
$59,000, $282,000 and $79,000, respectively, for the three-months ended March
31, 2003, as compared to $474,000, $642,000 and $482,000, respectively, for the
same period in 2002, decreases of $415,000, $360,000 and $403,000, respectively.
These decreases for the three-months ended March 31, 2003, as compared to the
same period in 2002, were primarily due to interest on amounts in arrears, owed
by Edison in 2001, that were settled and paid by Edison on March 1, 2002.
Interest Expense
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
$ Cents/kWh $ Cents/kWh
- --------- - ---------
Navy I Partnership 2,483 1.4 2,775 1.5
BLM Partnership 2,011 1.3 2,180 1.4
Navy II Partnership 1,799 1.1 1,908 1.0
The Navy I Partnership's interest expense was $2.5 million for the
three-months ended March 31, 2003, as compared to $2.8 million for the same
period in 2002, a decrease of 10.7%. The BLM Partnership's interest expense was
$2.0 million for the three-months ended March 31, 2003, as compared to $2.2
million for the same period in 2002, a decrease of 9.1%. The Navy II
Partnership's interest expense was $1.8 million for the three-months ended March
31, 2003, as compared to $1.9 million for the same period in 2002, a decrease of
5.3%. These decreases in interest expense for the three-months ended March 31,
2003, as compared to the same period in 2002 were due to reductions in the
principal amount of the project loan from Funding Corp.
29
Change in Accounting Principle
The Navy I, BLM and Navy II Partnerships recorded a loss on the cumulative
effect of change in accounting principle in the amounts of $1.8 million, $0.9
million and $1.8 million, respectively for the three-months ended March 31,
2003. This loss was due to adoption of SFAS No. 143 as described in the notes to
the financial statements.
Liquidity and Capital Resources
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 more cash flow annually. The Coso Partnerships have used their
cash primarily for capital expenditures for power plant improvements, resource
and operating costs, distributions to partners and payments with respect to the
project debt.
The Coso Partnerships ability to meet their obligations as they come due
will depend upon the ability of Edison to meet its obligations under the terms
of the standard offer No. 4 power purchase agreements and ability to continue to
generate electricity. Edison's shortfall in collections, coupled with its near
term capital requirements, materially and adversely affected its liquidity
during 2000 and 2001. 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
Edison-CPUC 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 1, 2000 through March 26, 2001. The Agreement, as amended,
was approved by the 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 three-months ended March 31, 2003 and March 31, 2002.
30
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
Navy I Partnership (stand alone)
Net cash provided by (used in) operating activities $ 4,674 $ 47,122
Net cash provided by (used in) investing activities (2,112) (2,484)
Net cash provided by (used in) financing activities -- (29,910)
----- ------
Net change in cash and cash equivalents $ 2,562 $ 14,728
===== ======
BLM Partnership (stand alone)
Net cash provided by operating activities $ 8,371 $ 34,552
Net cash provided by (used in) investing activities (1,526) (1,569)
Net cash provided by (used in) financing activities -- (22,750)
----- ------
Net change in cash and cash equivalents $ 6,845 $ 10,233
===== ======
Navy II Partnership (stand alone)
Net cash provided by (used in) operating activities $ 6,149 $ 26,844
Net cash provided by (used in) investing activities (1,056) (107)
Net cash provided by (used in) financing activities -- (13,550)
----- ------
Net change in cash and cash equivalents $ 5,093 $ 13,187
===== ======
The Navy I Partnership's cash flows from operating activities decreased by
$42.4 million for the three-months ended March 31, 2003, as compared to the same
period in 2002, primarily due to the increase in net income resulting from
Edison's payment received on March 1, 2002 for revenue generated but not
recognized for the period November 1, 2000 through March 26, 2001 and a decrease
in amounts due from related parties.
Cash used in investing activities at the Navy I Partnership decreased by
$0.4 million for the three-months ended March 31, 2003, as compared to the same
period in 2002, primarily due to an decrease in restricted cash requirements
associated with the project loan from Funding Corp. partially offset by an
increase in capital expenditures during that period in 2003.
The Navy I Partnership's cash used in financing activities decreased by
$29.9 million for the three-months ended March 31, 2003, as compared to the same
period in 2002, due to decreased partner distributions paid during that period
in 2003.
The BLM Partnership's cash flows from operating activities decreased by
$26.2 million for the three-months ended March 31, 2003, as compared to the same
period in 2002, primarily due to the increase in net income resulting from
Edison's payment received on March 1, 2002 for revenue generated but not
recognized for the period November 1, 2000 through March 26, 2001 partially
offset by a decrease in trade payables.
Cash used in investing activities at the BLM Partnership for the
three-months ended March 31, 2003, as compared to the same period in 2002
decreased by an insignificant amount over the two periods.
The BLM Partnership's cash used in financing activities decreased by $22.8
million for the three-months ended March 31, 2003, as compared to the same
period in 2002, due to decreased partner distributions paid during that period
in 2003.
The Navy II Partnership's cash flows from operating activities decreased by
$20.7 million for the three-months ended March 31, 2003, as compared to the same
period in 2002, primarily due to the increase in net income resulting from
Edison's payment received on March 1, 2002 for revenue generated but not
recognized for the period November 1, 2000 through March 26, 2001 partially
offset by increases in trade payables and amounts due to related parties.
31
Cash used in investing activities at the Navy II Partnership increased by
$0.9 million for the three-months ended March 31, 2003, as compared to the same
period in 2002, primarily due to an increase in capital expenditures during that
period in 2003.
The Navy II Partnership's cash used in financing activities decreased by
$13.6 million for the three-months ended March 31, 2003, as compared to the same
period in 2002, due to decreased partner distributions paid during that period
in 2003.
32
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.
33
COSO PARTNERSHIPS
UNAUDITED CONDENSED COMBINED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
2003 2002
Assets:
Cash and cash equivalents.............................................. $ 20,962 $ 6,462
Restricted cash and investments........................................ 46,559 46,193
Accounts receivable, net............................................... 20,085 21,346
Prepaid expenses and other assets...................................... 1,969 3,549
Amounts due from related parties....................................... 7,803 6,516
Property, plant and equipment, net..................................... 387,274 388,358
Power purchase agreement, net.......................................... 46,082 47,336
Investments and advances............................................... 12,573 12,508
Deferred financing costs, net.......................................... 5,315 5,512
------- -------
$ 548,622 $ 537,780
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities............................... $ 6,326 $ 10,486
Amounts due to related parties......................................... 34,138 25,415
Other liabilities...................................................... 18,915 13,276
Project loans.......................................................... 281,231 281,231
------- -------
340,610 330,408
Partners' capital......................................................... 208,012 207,372
------- -------
$ 548,622 $ 537,780
======= =======
See accompanying notes to the unaudited condensed combined financial statements.
34
COSO PARTNERSHIPS
UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
Revenue:
Energy revenues................................ $ 26,683 $ 124,150
Capacity revenues.............................. 3,716 9,250
------ -------
Total revenue........................... 30,399 133,400
Operating expenses:
Plant operating expenses....................... 7,360 6,883
Royalty expense................................ 4,178 3,280
Depreciation and amortization.................. 7,670 10,424
----- ------
Total operating expenses................ 19,208 20,587
Operating income........................ 11,191 112,813
Other (income)/expenses:
Interest and other income...................... (420) (1,598)
Interest expense............................... 6,293 6,863
Amortization of deferred financing costs....... 197 197
----- -----
Total other expenses.................... 6,070 5,462
----- -----
Income before cumulative effect of change
in accounting principle........................ 5,121 107,351
Cumulative effect of change in
accounting principle........................... 4,481 --
----- -------
Net income............................. $ 640 $ 107,351
===== =======
See accompanying notes to the unaudited condensed combined financial statements.
35
COSO PARTNERSHIPS
UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2003 2002
Net cash provided by (used in) operating activities... $ 19,194 $ 108,518
Net cash provided by (used in) investing activities... (4,694) (4,160)
Net cash provided by (used in) financing activities... -- (66,210)
------ ------
Net change in cash and cash equivalents............... $ 14,500 $ 38,148
====== ======
See accompanying notes to the unaudited condensed combined financial statements.
36
COSO PARTNERSHIPS
NOTES TO THE UNAUDITED CONDENSED COMBINED
FINANCIAL STATEMENTS
(Dollars in thousands)
(1) Basis of Presentation
The accompanying unaudited condensed combined financial statements were derived
from the stand alone unaudited condensed financial statements of Caithness Coso
Funding Corp., Coso Finance Partners, Coso Energy Developers and Coso Power
Developers ("the Coso Partnerships"). All intercompany accounts and transactions
were eliminated. This financial information has been provided to facilitate a
more comprehensive understanding of the financial position, operating results
and cash flows of the Coso Partnerships as a whole. The unaudited condensed
combined financial statements should be read in conjunction with each individual
Partnership's unaudited condensed financial statements.
(2) Accounts Receivable and Revenue Recognition
Due to the uncertainty surrounding Edison's ability to make payment on past due
amounts, collection was not reasonably assured and the Coso Partnerships had not
recognized revenue from Edison for energy delivered during the period November
1, 2000 through March 26, 2001. On March 1, 2002, Edison reached certain
financing milestones and paid the Coso Partnerships for revenue generated, but
not recognized for the period November 1, 2000 through March 26, 2001. For the
three-month period ended March 31, 2002, the Coso Partnerships recognized
revenue for energy delivered from November 1, 2000 through March 26, 2001 of
$112.4 million.
(3) Reclassifications
Certain balances in prior years have been reclassified to conform to the
presentation adopted in the current year.
(4) New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations. This Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs and amends SFAS No. 19, Financial Accounting
and Reporting by Oil and Gas Producing Companies. The Statement requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred if a reasonable estimate of a fair value
can be made, and that the associated asset retirement costs be capitalized as
part of the carrying amount of the long-lived asset. The Statement is effective
for financial statements issued for fiscal years beginning after June 15, 2002.
As a result of the adoption of SFAS No. 143 the Partnership was required to
recognize a liability of $5,292, a net asset of $811 and a loss from a
cumulative effect of a change in accounting principle of $4,481 as of January 1,
2003. In 2003 an additional depreciation and accretion expense resulting from
adoption of SFAS No. 143 is estimated to be $675.
37
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
None
38
EXHIBIT 27.1
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: CAITHNESS COSO FUNDING CORP.
----------------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
--- ----
other than 1 (one)?
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 3 - MOS
--- --- --- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec - 31 - 2002 DEC - 31 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD START
(example: JAN-01-1997) Jan - 01 - 2002 JAN - 01 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD END
(example: SEP-30-1997) Dec - 31 - 2002 MAR - 31 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS
---- -----
CASH 0 0
SECURITIES 0 0
RECEIVABLES 282,361 288,655
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETDS 1,130 7,424
PP&E 0 0
DEPRECIATION 0 0
TOTAL ASSETS 282,361 288,655
CURRENT LIABILITIES 1,130 7,424
BONDS 281,231 281,231
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 282,361 288,655
SALES 0 0
TOTAL REVENUES 26,931 6,294
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 0 0
LOSS PROVISION 0 0
INTEREST EXPENSES 26,931 6,294
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 0
NET INCOME 0 0
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.2
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: COSO FINANCE PARTNERS
---------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
--- ----
other than 1 (one)?
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 3 - MOS
--- --- --- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec - 31 - 2002 DEC - 31 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD START
(example: JAN-01-1997) Jan - 01 - 2002 JAN - 01 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD END
(example: SEP-30-1997) Dec - 31 - 2002 MAR - 31 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS
---- -----
CASH 4,215 6,777
SECURITIES 28,692 29,012
RECEIVABLES 8,621 8,392
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 13,904 15,774
PP&E 234,442 236,706
DEPRECIATION 98,129 100,566
TOTAL ASSETS 195,072 196,822
CURRENT LIABILITIES 6,231 4,916
BONDS 110,955 110,955
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 195,072 196,822
SALES 92,065 12,553
TOTAL REVENUES 93,639 12,612
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 33,376 7,510
LOSS PROVISION 0 0
INTEREST EXPENSES 11,151 2,562
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 1,780
NET INCOME 49,112 760
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.3
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: COSO ENERGY DEVELOPERS
----------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
--- ----
other than 1 (one)?
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 3 - MOS
--- --- --- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec - 31 - 2002 DEC - 31 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD START
(example: JAN-01-1997) Jan - 01 - 2002 JAN - 01 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD END
(example: SEP-30-1997) Dec - 31 - 2002 MAR - 31 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS
---- -----
CASH 1,423 8,268
SECURITIES 6,646 6,664
RECEIVABLES 7,102 6,865
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 9,895 15,880
PP&E 247,912 249,748
DEPRECIATION 112,059 114,205
TOTAL ASSETS 174,871 180,190
CURRENT LIABILITIES 27,961 30,644
BONDS 89,875 89,875
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 174,871 180,190
SALES 81,252 9,334
TOTAL REVENUES 82,707 9,616
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 28,526 5,103
LOSS PROVISION 0 0
INTEREST EXPENSES 8,822 2,075
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 924
NET INCOME 45,359 1,514
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.4
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: COSO POWER DEVELOPERS
---------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
--- ----
other than 1 (one)?
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 3 - MOS
--- --- --- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec - 31 - 2002 DEC - 31 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD START
(example: JAN-01-1997) Jan - 01 - 2002 JAN - 01 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD END
(example: SEP-30-1997) Dec - 31 - 2002 MAR - 31 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS
---- -----
CASH 824 5,917
SECURITIES 10,855 10,883
RECEIVABLES 13,136 13,049
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 15,071 19,583
PP&E 210,548 212,231
DEPRECIATION 94,356 96,640
TOTAL ASSETS 168,834 172,000
CURRENT LIABILITIES 2,706 5,322
BONDS 80,401 80,401
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 168,834 172,000
SALES 79,592 8,512
TOTAL REVENUES 80,486 8,591
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 29,428 6,595
LOSS PROVISION 0 0
INTEREST EXPENSES 7,755 1,853
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 1,777
NET INCOME 43,303 (1,634)
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 PURSUANT TO SECTION
302(a) OF THE SARBANES-OXLEY ACT OF 2002
I, James D. Bishop, Sr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Caithness Coso
Funding Corp., Coso Finance Partners, Coso Energy Developers, and Coso
Power Developers (collectively, the "Registrant");
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 and 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 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: May 13, 2003 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 PURSUANT TO SECTION
302(a) OF THE SARBANES-OXLEY ACT OF 2002
I, Christopher T. McCallion, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Caithness Coso
Funding Corp., Coso Finance Partners, Coso Energy Developers, and Coso
Power Developers (collectively, the "Registrant");
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 and 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 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: May 13, 2003 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., Coso
Finance Partners, Coso Energy Developers, and Coso Power Developers
(collectively, the "Registrant") on Form 10-Q for the period ending March 31,
2003 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, James D. Bishop, Sr., Chief Executive Officer of the
Registrant, certify, to the best of my knowledge and belief, 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: May 13, 2003 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 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., Coso
Finance Partners, Coso Energy Developers, and Coso Power Developers
(collectively, the "Registrant") on Form 10-Q for the period ending March 31,
2003 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, James D. Bishop, Sr., Chief Executive Officer of the
Registrant, certify, to the best of my knowledge and belief, 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: May 13, 2003 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.
CAITHNESS COSO FUNDING CORP.,
a Delaware corporation
Date: May 13, 2003 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
Date: May 13, 2003 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
Date: May 13, 2003 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
Date: May 13, 2003 By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)