FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended September 30, 2004
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from _______________to________________
Commission File Number: 333-83815
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Caithness Coso Funding Corp.
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(Exact name of registrant as specified in its charter)
Delaware 94-3328762
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Coso Finance Partners California 68-0133679
Coso Energy Developers California 94-3071296
Coso Power Developers California 94-3102796
--------------------- ---------- ----------
(Exact names of Registrants (State or other (I.R.S. Employer
as specified in their charters) jurisdiction of Identification No.)
incorporation or
organization)
565 Fifth Avenue, 29th Floor, New York, New York 10017-2478
- ------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(212) 921-9099
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former
fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
300 shares in Caithness Coso Funding Corp. as of November 12, 2004
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CAITHNESS COSO FUNDING CORP.
Form 10-Q
For the Quarter Ended September 30, 2004
PART I. FINANCIAL INFORMATION Page No.
ITEM 1. Financial Statements
Caithness Coso Funding Corp.
Unaudited balance sheets at September 30, 2004 and December 31, 2003 4
Unaudited statements of operations for the three-months ended
September 30, 2004, the three-months ended September 30, 2003,
the nine-months ended September 30, 2004 and the nine-months
ended September 30, 2003 5
Unaudited condensed statements of cash flows for the nine-months ended
September 30, 2004 and the nine-months ended September 30, 2003 6
Notes to the unaudited financial statements 7
Coso Finance Partners and Subsidiary
Unaudited consolidated balance sheets at September 30, 2004 and
December 31, 2003 8
Unaudited consolidated statements of operations for the three-months
ended September 30, 2004, the three-months ended September 30, 2003,
the nine-months ended September 30, 2004 and the nine-months ended
September 30, 2003 9
Unaudited consolidated condensed statements of cash flows for the
nine-months ended September 30, 2004 and the nine-months ended
September 30, 2003 10
Notes to the unaudited consolidated financial statements 11
Coso Energy Developers
Unaudited balance sheets at September 30, 2004 and December 31, 2003 13
Unaudited statements of operations for the three-months ended
September 30, 2004, the three-months ended September 30, 2003,
the nine-months ended September 30, 2004 and the nine-months ended
September 30, 2003 14
Unaudited condensed statements of cash flows for the nine-months
ended September 30, 2004 and the nine-months ended
September 30, 2003 15
Notes to the unaudited financial statements 16
Coso Power Developers and Subsidiary
Unaudited consolidated balance sheets at September 30, 2004 and
December 31, 2003 17
Unaudited consolidated statements of operations for the three-months
ended September 30, 2004, the three-months ended September 30, 2003,
the nine-months ended September 30, 2004 and the nine-months ended
September 30, 2003 18
2
Unaudited consolidated condensed statements of cash flows for the
nine-months ended September 30, 2004 and the nine-months ended
September 30, 2003 19
Notes to the unaudited consolidated financial statements 20
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 21
ITEM 3. Control and Procedures 27
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 28
ITEM 2. Change in Securities and Use of Proceeds 28
ITEM 3. Defaults upon Senior Securities 28
ITEM 4. Submission of Matters to a Vote of Security Holders 28
ITEM 5. Other Information 28
Supplemental consolidated and combined financial information
for the Coso Partnerships and Subsidiaries
Unaudited consolidated and combined balance sheets at September
30, 2004 and December 31, 2003 29
Unaudited consolidated and combined statements of operations for
the three-months ended September 30, 2004, three-months ended
September 30, 2003, the nine-months ended September 30, 2004 and
the nine-months ended September 30, 2003 30
Unaudited consolidated, combined and condensed statements of
cash flows for the nine-months ended September 30, 2004 and
the nine-months ended September 30, 2003 31
Notes to the consolidated unaudited combined financial statements 32
ITEM 6. Exhibits and Reports on Form 8-K 34
3
CAITHNESS COSO FUNDING CORP.
UNAUDITED BALANCE SHEETS
(Dollars in thousands)
September 30, December 31,
2004 2003
Assets:
Current Assets:
Accrued interest receivable................................................ $ 6,378 $ 1,008
Current portion of project loan from Coso Finance Partners................. 12,456 10,694
Current portion of project loan from Coso Energy Developers................ 9,425 9,920
Current portion of project loan from Coso Power Developers................. 11,110 10,718
------ ------
Total current assets 39,369 32,340
Project loan from Coso Finance Partners...................................... 80,811 86,853
Project loan from Coso Energy Developers..................................... 71,427 74,901
Project loan from Coso Power Developers...................................... 55,848 60,528
------ ------
Total assets $ 247,455 $ 254,622
======= =======
Liabilities and Stockholders' Equity:
Current Liabilities:
Senior secured notes:
Accrued interest payable.................................................. $ 6,378 $ 1,008
Current portion on project loans.......................................... 32,991 31,332
------ ------
Total current liabilities 39,369 32,340
9.05% notes due December 15, 2009............................................ 208,086 222,282
Stockholders' equity......................................................... - -
------- -------
Total liabilities & stockholders' equity $ 247,455 $ 254,622
======= =======
See accompanying notes to the unaudited financial statements
4
CAITHNESS COSO FUNDING CORP.
UNAUDITED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
Interest income................. $ 5,482 $ 6,144 $ 16,846 $ 18,761
Interest expense................ (5,482) (6,144) (16,846) (18,761)
------- ------- -------- --------
Net income................ $ - $ - $ - $ -
======= ======= ======== ========
See accompanying notes to the unaudited financial statements
5
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2004 2003
Cash flows from investing activities - repayment of project loans...... $ 7,167 $ 5,044
Cash flows from financing activities - repayment of 9.05% notes........ (7,167) (5,044)
----- -----
Net changes in cash.................................................... $ - $ -
====== ======
Supplemental cash flow disclosure:
Cash paid for interest............................................. $ 11,476 $ 12,726
====== ======
See accompanying notes to the unaudited condensed financial statements
6
CAITHNESS COSO FUNDING CORP.
NOTES TO THE UNAUDITED 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 Notes were loaned to the Partnerships. 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 project loans, and
does not conduct any operations apart from having issued the Notes and making
the project 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 31,2003.
The preparation of unaudited financial statements in accordance with accounting
principles generally accepted in the United States requires Funding Corp. to
make certain estimates and assumptions for the reporting periods covered by the
financial statements. These estimates and assumptions affect the reported
amounts of assets, liabilities, income and expenses during the reporting period.
Actual results could differ from these estimates. 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
AND SUBSIDIARY
UNAUDITED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30, December 31,
2004 2003
Assets:
Current Assets:
Cash and cash equivalents.................................................. $ 9,921 $ 1,454
Restricted cash and cash equivalents....................................... 10,737 11,408
Accounts receivable, net................................................... 12,180 6,925
Prepaid expenses & other assets............................................ 1,105 872
Inventory.................................................................. 5,346 5,270
Amounts due from related parties........................................... 1,449 1,525
------ ------
Total current assets 40,738 27,454
Restricted cash and cash equivalents.......................................... 14,667 13,249
Property, plant & equipment, net.............................................. 132,091 135,871
Purchase power contract, net.................................................. 7,936 8,798
Deferred financing costs, net................................................. 1,656 1,893
------- -------
Total assets $ 197,088 $ 187,265
======= =======
Liabilities and Partners' Capital:
Current Liabilities:
Accounts payable and accrued liabilities................................... $ 4,943 $ 4,503
Amounts due to related parties............................................. 2,493 474
Current portion of project loan............................................ 12,456 10,694
------ ------
Total current liabilities 19,892 15,671
Other liabilities............................................................ 16,915 15,603
Project loan................................................................. 80,811 86,853
------- -------
Total liabilities 117,618 118,127
Minority interest............................................................ 2,397 2,462
Partners' capital............................................................ 77,073 66,676
------- -------
Total liabilities & partners' capital $ 197,088 $ 187,265
======= =======
See accompanying notes to the unaudited consolidated financial statements
8
COSO FINANCE PARTNERS
AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
Revenue:
Energy revenues................................ $ 11,657 $ 11,643 $ 34,559 $ 34,698
Capacity revenues.............................. 8,190 8,190 12,982 13,011
------ ------ ------ ------
Total revenue........................... 19,847 19,833 47,541 47,709
Operating expenses:
Plant operating expenses....................... 3,019 2,291 8,528 6,875
Royalty expense................................ 5,547 4,982 10,574 11,603
Depreciation and amortization.................. 2,859 2,731 8,557 8,015
------ ------ ------ ------
Total operating expenses................ 11,425 10,004 27,659 26,493
Operating income........................ 8,422 9,829 19,882 21,216
Other (income)/expenses:
Interest and other income...................... (768) (103) (979) (326)
Interest expense............................... 2,122 2,402 6,494 7,376
Noncash interest expense....................... 135 130 405 390
----- ----- ----- -----
Total other expenses.................... 1,489 2,429 5,920 7,440
----- ----- ----- -----
Income before cumulative effect of change
in accounting principle........................ 6,933 7,400 13,962 13,776
Cumulative effect of change in
accounting principle........................... - - - 1,780
----- ----- ------ ------
Net income.............................. $ 6,933 $ 7,400 $ 13,962 $ 11,996
===== ===== ====== ======
See accompanying notes to the unaudited consolidated financial statements
9
COSO FINANCE PARTNERS
AND SUBSIDIARY
UNAUDITED CONSOLIDATED AND CONDENSED
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2004 2003
Net cash provided by (used in) operating activities.... $ 21,041 $ 19,196
Net cash provided by (used in) investing activities.... (4,662) (6,072)
Net cash provided by (used in) financing activities.... (7,912) (5,552)
----- -----
Net change in cash and cash equivalents................ $ 8,467 $ 7,572
===== =====
Supplemental cash flow disclosure:
Cash paid for interest...................... $ 4,414 $ 5,021
===== =====
See accompanying notes to the unaudited consolidated and condensed financial statements
10
COSO FINANCE PARTNERS
AND SUBSIDIARY
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
(Dollars in thousands)
(1) Organization and Operation
Coso Finance Partners (CFP), a general partnership, is engaged in the operation
of an 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,
2003.
The preparation of unaudited financial statements in accordance with accounting
principles generally accepted in the United States of America requires CFP to
make certain estimates and assumptions for the reporting periods covered by the
financial statements. These estimates and assumptions affect the reported
amounts of assets, liabilities, revenues and expenses during the reporting
period. Actual results could differ from these estimates. 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.
The data for the consolidated balance sheets presented herein for September 30,
2004 and December 31, 2003 were derived from CFP's financial statements for the
interim period and fiscal year then ended and includes the effect of
consolidating New CLPSI Company, LLC (CLPSI), but does not include all
disclosures required by accounting principles generally accepted in the United
States of America.
(3) New Accounting Pronouncements
The consolidated financial statements of CFP include the accounts of CPLSI, as a
result of the adoption of Financial Accounting Standards Board (FASB)
Interpretation No. 46. (FIN 46) (Consolidation of Variable Interest Entities),
an interpretation of Accounting Research Bulletin No. 51. FIN 46 required
certain variable interest entities to be consolidated by the primary beneficiary
of the entity even though the equity investors do not have the characteristics
of a controlling financial interest, or do not have sufficient equity at risk
for the entity to finance its activities without additional subordinated
financial support from other parties. In December 2003, the FASB issued FIN 46
(R), which clarified and replaced FIN 46 that required all variable interest
entities, regardless of when they were created to be evaluated under FIN 46 (R)
no later than the period ending March 15, 2004. An entity is subject to
consolidation according to the provisions of FIN 46 (R) if, by design, the
following conditions exist. As a group, the holders of the equity investment at
11
risk lack any one of the following three characteristics of a controlling
financial interest: (1) the direct or indirect ability to make decisions about
an entity's activities through voting rights or similar rights; (2) the
obligation to absorb the expected losses of the entity if they occur; or (3) the
right to receive the expected residual returns of the entity if they occur. CFP
believes that CLPSI, the entity that holds the inventory for Coso Power
Developers, Coso Energy Developer and CFP is a variable interest entity and
under FIN 46 (R) should be consolidated. The inventory, related physical assets,
and payables have been recorded as CFP's assets and liabilities. The impact to
CFP's future consolidated statement of operations will be increased
depreciation, partially offset by other income.
The consolidated financial statements related to prior periods have been
restated to consolidate the accounts of CLPSI as a direct result of the adoption
of FIN 46 (R). There was no cumulative effect recorded upon the adoption of the
Interpretation.
(4) Accounts Receivable and Revenue Recognition
Accounts receivable primarily consist of receivables from Edison for electricity
delivered and sold under a power purchase contract. Operating revenues are
recognized as income during the period in which electricity is delivered to
Edison.
(5) Reclassifications
Certain balances in prior years have been reclassified to conform to the
presentation adopted in the current year.
12
COSO ENERGY DEVELOPERS
UNAUDITED BALANCE SHEETS
(Dollars in thousands)
September 30, December 31,
2004 2003
Assets:
Current Assets:
Cash and cash equivalents............................................. $ 9,088 $ 603
Restricted cash and cash equivalents.................................. 9,861 10,013
Accounts receivable, net.............................................. 10,749 6,830
Prepaid expenses and other assets..................................... 1,564 1,094
Amounts due from related parties...................................... 480 442
------ ------
Total current assets 31,742 18,982
Restricted cash.......................................................... 142 142
Investment in Coso Transmission Line Partners............................ 2,459 2,542
Advances to New CLPSI Company, LLC....................................... 476 548
Property, plant and equipment, net....................................... 124,917 130,519
Power purchase agreement, net............................................ 15,489 16,293
Deferred financing costs, net............................................ 1,339 1,530
------- -------
Total assets $ 176,564 $ 170,556
======= =======
Liabilities and Partners' Capital:
Current Liabilities:
Accounts payable and accrued liabilities.............................. $ 1,413 $ 2,114
Amounts due to related parties........................................ 3,394 1,473
Current portion of project loan....................................... 9,425 9,920
------ ------
Total current liabilities 14,232 13,507
Other liabilities and related parties.................................... 27,688 27,331
Project loan............................................................. 71,427 74,901
------ ------
Total liabilities 113,347 115,739
Partners' capital........................................................ 63,217 54,817
------- -------
Total liabilities & partners' capital $ 176,564 $ 170,556
======= =======
See accompanying notes to the unaudited financial statements
13
COSO ENERGY DEVELOPERS
UNAUDITED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
Revenue:
Energy revenues................................. $ 7,491 $ 8,246 $ 22,913 $ 24,479
Capacity revenues............................... 7,976 7,976 12,687 12,687
------ ------ ------ ------
Total revenue............................ 15,467 16,222 35,600 37,166
Operating expenses:
Plant operating expenses........................ 2,746 3,467 10,906 9,323
Royalty expense................................. 1,318 1,339 1,971 2,028
Depreciation and amortization................... 2,237 2,343 6,952 6,971
----- ----- ------ ------
Total operating expenses................. 6,301 7,149 19,829 18,322
Operating income......................... 9,166 9,073 15,771 18,844
Other (income)/expenses:
Interest and other income....................... (1,140) (282) (1,681) (887)
Interest expense................................ 1,839 1,998 5,640 6,032
Noncash interest expense........................ 95 92 284 275
----- ----- ----- -----
Total other expenses..................... 794 1,808 4,243 5,420
----- ----- ----- -----
Income before cumulative effect of change
in accounting principle......................... 8,372 7,265 11,528 13,424
Cumulative effect of change in
accounting principle............................ - - - 924
----- ----- ------ ------
Net income............................... $ 8,372 $ 7,265 $ 11,528 $ 12,500
===== ===== ====== ======
See accompanying notes to the unaudited financial statements
14
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2004 2003
Net cash provided by (used in) operating activities..... $ 15,893 $ 19,381
Net cash provided by (used in) investing activities..... (311) (3,131)
Net cash provided by (used in) financing activities..... (7,097) (2,022)
----- -----
Net change in cash and cash equivalents................. $ 8,485 $ 14,228
===== ======
Supplemental cash flow disclosure:
Cash paid for interest......................... $ 3,838 $ 4,067
===== =====
See accompanying notes to the unaudited condensed financial statements
15
COSO ENERGY DEVELOPERS
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
(Dollars in thousands)
(1) Organization and Operation
Coso Energy Developers (CED), a general partnership, is engaged in the operation
of an 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,
2003.
The preparation of unaudited financial statements in accordance with accounting
principles generally accepted in the United States of America requires CED to
make certain estimates and assumptions for the reporting periods covered by the
financial statements. These estimates and assumptions affect the reported
amounts of assets, liabilities, revenues and expenses during the reporting
period. Actual results could differ from these estimates. 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
Accounts receivable primarily consist of receivables from Edison for electricity
delivered and sold under a power purchase contract. Operating revenues are
recognized as income during the period in which electricity is delivered to
Edison.
(4) Reclassifications
Certain balances in prior years have been reclassified to conform to the
presentation adopted in the current year.
16
COSO POWER DEVELOPERS
AND SUBSIDIARY
UNAUDITED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30, December 31,
2004 2003
Assets:
Current Assets:
Cash and cash equivalents............................................. $ 9,674 $ 78
Restricted cash and cash equivalents.................................. 9,727 8,146
Accounts receivable, net.............................................. 12,300 7,985
Prepaid expenses and other assets..................................... 992 830
Amounts due from related parties...................................... 6,605 6,412
------ ------
Total current assets 39,298 23,451
Restricted cash....................................................... 135 135
Advances to New CLPSI Company, LLC.................................... 1,920 1,914
Property, plant and equipment, net.................................... 115,092 120,509
Power purchase agreement, net......................................... 15,136 17,232
Deferred financing costs, net......................................... 1,139 1,302
------- -------
Total assets $ 172,720 $ 164,543
======= =======
Liabilities and Partners' Capital:
Current Liabilities:
Accounts payable and accrued liabilities.............................. $ 2,636 $ 1,891
Amounts due to related parties........................................ 2,538 1,191
Current portion of project loan....................................... 11,110 10,718
------ ------
Total current liabilities 16,284 13,800
Other liabilities........................................................ 2,520 2,589
Project loan............................................................. 55,848 60,528
------ ------
Total liabilities 74,652 76,917
Minority interest........................................................ 2,458 2,542
Partners' capital........................................................ 95,610 85,084
------- -------
Total liabilities & partners' capital $ 172,720 $ 164,543
======= =======
See accompanying notes to the unaudited consolidated financial statements
17
COSO POWER DEVELOPERS
AND SUBSIDARY
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
Revenue:
Energy revenues................................ $ 9,046 $ 8,465 $ 25,407 $ 23,064
Capacity revenues.............................. 8,048 8,048 12,786 12,786
------ ------ ------ ------
Total revenue........................... 17,094 16,513 38,193 35,850
Operating expenses:
Plant operating expenses....................... 2,014 2,451 7,145 7,336
Royalty expense................................ 3,002 2,655 6,608 5,830
Depreciation and amortization.................. 2,562 2,534 7,680 7,809
----- ----- ------ ------
Total operating expenses................ 7,578 7,640 21,433 20,975
Operating income........................ 9,516 8,873 16,760 14,875
Other (income)/expenses:
Interest and other income...................... (813) (155) (1,081) (446)
Interest expense............................... 1,523 1,746 4,712 5,351
Noncash interest expense....................... 113 108 339 323
----- ----- ----- -----
Total other expenses.................... 823 1,699 3,970 5,228
----- ----- ----- -----
Income before cumulative effect of change
in accounting principle........................ 8,693 7,174 12,790 9,647
Cumulative effect of change in
accounting principle........................... - - - 1,777
----- ----- ------ -----
Net income.............................. $ 8,693 $ 7,174 $ 12,790 $ 7,870
===== ===== ====== =====
See accompanying notes to the unaudited consolidated financial statements
18
COSO POWER DEVELOPERS
AND SUBSIDIARY
UNAUDITED CONSOLIDATED AND CONDENSED
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2004 2003
Net cash provided by (used in) operating activities...... $ 17,981 $ 15,647
Net cash provided by (used in) investing activities...... (1,748) (3,171)
Net cash provided by (used in) financing activities...... (6,637) (3,763)
----- -----
Net change in cash and cash equivalents.................. 9,596 8,713
===== =====
Supplemental cash flows disclosure:
Cash paid for interest................... $ 3,224 $ 3,638
===== =====
See accompanying notes to the unaudited consolidated and condensed financial statements
19
COSO POWER DEVELOPERS
AND SUBSIDIARY
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
(Dollars in thousands)
(1) Organization and Operation
Coso Power Developers (CPD), a general partnership, is engaged in the operation
of an 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,
2003.
The preparation of unaudited financial statements in accordance with accounting
principles generally accepted in the United States of America requires CPD to
make certain estimates and assumptions for the reporting periods covered by the
financial statements. These estimates and assumptions affect the reported
amounts of assets, liabilities, revenues and expenses during the reporting
period. Actual results could differ from these estimates. 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.
The data for the consolidated balance sheets presented herein for September 30,
2004 and December 31, 2003 were derived from CPD's financial statements for the
interim period and fiscal year then ended and includes the effect of
consolidating Coso Transmission Line Partners (CTLP), but does not include all
disclosures required by accounting principles generally accepted in the United
States of America.
(3) New Accounting Pronouncements
The consolidated financial statements of CPD include the accounts of CTLP, as a
result of the adoption of Financial Accounting Standards Board (FASB)
Interpretation No. 46. (FIN 46) (Consolidation of Variable Interest Entities),
an interpretation of Accounting Research Bulletin No. 51. FIN 46 required
certain variable interest entities to be consolidated by the primary beneficiary
of the entity even though the equity investors do not have the characteristics
of a controlling financial interest, or do not have sufficient equity at risk
for the entity to finance its activities without additional subordinated
financial support from other parties. In December 2003, the FASB issued FIN 46
(R), which clarified and replaced FIN 46 that required all variable interest
entities, regardless of when they were created to be evaluated under FIN 46 (R)
no later than the period ending March 15, 2004. An entity is subject to
20
consolidation according to the provisions of FIN 46 (R) if, by design, the
following conditions exist. As a group, the holders of the equity investment at
risk lack any one of the following three characteristics of a controlling
financial interest: (1) the direct or indirect ability to make decisions about
an entity's activities through voting rights or similar rights; (2) the
obligation to absorb the expected losses of the entity if they occur; or (3) the
right to receive the expected residual returns of the entity if they occur. CPD
believes that CTLP, the entity that holds additional transmission equipment for
Coso Energy Developers and CPD is a variable interest entity and under FIN 46
(R) should be consolidated. The additional transmission equipment will be
recorded as CPD's assets. The impact to CPD's future statement of operations
will be increased depreciation, partially offset by other income.
The consolidated financial statements related to prior periods have been
restated to consolidate the accounts of CTLP as a direct result of the adoption
of FIN 46 (R). There was no cumulative effect recorded upon the adoption of the
Interpretation.
(4) Accounts Receivable and Revenue Recognition
Accounts receivable primarily consist of receivables from Edison for electricity
delivered and sold under a power purchase contract. Operating revenues are
recognized as income during the period in which electricity is delivered to
Edison.
(5) Reclassifications
Certain balances in prior years have been reclassified to conform to the
presentation adopted in the current year.
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 quarterly report may be considered forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and subject to the safe
harbor created by the Securities Litigation Reform Act of 1995. Such statements
include declarations regarding the intent, belief or current expectations of
Caithness Coso Funding Corp. (Funding Corp.), Coso Finance Partners and
Subsidiary (the Navy I Partnership), Coso Energy Developers (the BLM
Partnership), and Coso Power Developers and Subsidiary (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 future operating results to differ materially
from those anticipated 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) risks related to the operation of
power plants including terrorism (iv) the impact of avoided cost pricing along
with other pricing variables, (v) general operating risks, including variability
of resource and regulatory oversight, (vi) changes in government regulation,
(vii) the effects of competition and (viii) the alleged manipulation of the
California energy market.
21
General
Each Coso Partnership owns an 80MW geothermal power plant, and its
respective transmission lines, wells, gathering systems and other related
facilities. The Coso Partnerships are located near one another at the United
States Naval Air Weapons Center at China Lake, California. The Navy I
Partnership owns Navy I and its related facilities. The BLM Partnership owns BLM
and its related facilities. The Navy II Partnership owns Navy II and its related
facilities.
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 (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.
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 January 1, 2002, Edison made energy payments to the Coso Partnerships
based on its 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 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. This Agreement was challenged in
the federal courts. The California State Supreme Court found that no state laws
were violated, and the United States Court of Appeals for the Ninth Circuit
(Ninth Circuit) affirmed this judgment. As a result of the Ninth Circuit's
decision, the Agreements remain in full force and effect. No appeal was filed in
this matter.
After the five year period expires in April 2007, 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. 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 California Public Utilities Commission (CPUC) has initiated a hearing
to re-evaluate the methodology of calculating the avoided cost of energy in the
future. It is not possible to predict with accuracy the likely level of future
avoided cost of energy prices.
22
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. Their Agreements set the line loss factor at 1.0
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, effectively
decreasing revenues if Edison's challenge to the CPUC ruling stands. The Coso
Partnerships cannot predict whether any subsequent action regarding this matter
will be successful.
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. On November 1, 2004 the Navy I and Navy
II Partnerships entered into a new agreement ("New Contract") with the United
States Navy terminating the existing contract that were due to expire on
December 31, 2009. The New Contract extends the Navy I and Navy II Partnerships
exclusive right to explore, develop and use certain geothermal resources on U.S.
Navy lands through October 31, 2034. The New Contract and termination of the
existing contracts were disclosed in the Form 8-K filed on November 2, 2004.
Under the terms of the New Contract, the royalty paid to the U.S. Navy was
restructured so that the Navy I and Navy II Partnerships pay at a rate of 15% of
gross revenues received up to an annual base revenue amount. Beyond the annual
base revenue amount, the U.S. Navy and the Navy I and Navy II Partnerships will
split the additional revenues, on a 50/50 basis, until the U.S. Navy receives a
maximum of 20% of all gross revenue.
Under the terminated contract with the U. S. Navy, the Navy I Partnership
was obligated to pay royalties for Units 2 and 3 at 20% of gross revenue through
2009 and the Navy II Partnership was obligated to pay royalties at 18% of gross
revenue through 2004, then due to increase to 20% through 2009. Additionally,
the Navy I Partnership was obligated to pay a royalty for Unit I consisting of
the payment of the U.S. Navy's electric bill for the China Lake Weapons
Facility, subject to an indexed reimbursement from the U.S. Navy. The
reimbursement was based on a pricing formula for tariff rates charged by Edison,
which were increased in 2001 by the CPUC. On July 10, 2003, the CPUC adopted a
settlement between Edison and other parties to lower retail electric rates
effective as of August 1, 2003. Those rates were in effect for one year, after
which new rates would have been established in accordance with CPUC guidelines
and while Edison has filed for new rates, they are not currently effective.
Additionally, under the terms of the terminated agreement, the Navy was
compensated annually for any savings in electrical usage at the China Lake
Facility below a baseline amount ("Conserved Power"). Upon termination of the
Navy Contract, the Navy was paid $1.2 million for Conserved Power from January
1, 2004 through October 31, 2004.The terminated contract also obligated the Navy
I Partnership to fund an escrow account so that the Navy I Partnership would pay
the U.S. Navy $25 million on December 31, 2009. That provision was also
terminated and a new escrow arrangement was entered into and the amount the Navy
I Partnership owes the U.S. Navy is now $18 million. That payment is secured by
the existing funds on deposit so that funds plus accrued interest are expected
to aggregate $18.0 million by December 31, 2009. Accordingly, $111,000 was
deposited monthly through October 31, 2004. Finally, in the terminated contracts
the U.S. Navy had the right to terminate the contracts at any time for their
convenience. Under the New Contract that right was eliminated.
23
The BLM Partnerships geothermal lease initially had a term of ten years
ending in 1998 with automatic extensions until October 31, 2035, so long as
geothermal steam is commercially produced. The royalty paid to the Bureau of
Land Management is 10% of the net value of steam produced based on a calculation
known as the netback which is estimated and paid monthly with an annual true-up
after year-end.
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.
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 serving as the issuer of 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.
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 Nine-Months Ended
September 30 September 30
2004 2003 2004 2003
---- ---- ---- ----
Navy I Partnership (stand alone)
Operating capacity factor 104.8% 102.6% 100.7% 102.4%
Capacity (MW) (average) 83.80 82.05 80.52 81.93
kWh produced (000s) 185,032 181,165 529,503 536,809
24
BLM Partnership (stand alone)
Operating capacity factor 84.0% 88.2% 86.0% 88.5%
Capacity (MW) (average) 67.19 70.59 68.81 70.76
kWh produced (000s) 148,352 155,865 452,511 463,627
Navy II Partnership (stand alone)
Operating capacity factor 107.7% 106.9% 106.3% 100.6%
Capacity (MW) (average) 86.19 85.53 85.07 80.47
kWh produced (000s) 190,307 188,849 559,436 527,250
Total energy production for the Navy II Partnership increased for the
nine-month period ended September 30, 2004, as compared to the same periods in
2003, due to the successful effort to increase production through well
maintenance and capital improvements, including the enhancement of existing
production wells, plant efficiency improvements, and additional steam-field
piping modifications. In an effort to increase production overall, the Coso
Partnerships are working to enhance the reservoir through an injection
augmentation program, which is currently in the engineering design phase, aimed
at improving reservoir pressure and minimizing resource decline. The funds
necessary to implement the capital improvement program are available from
reserves established under the Notes and from excess cash flow generated after
debt service.
Results of Operations for the Three and Nine-months ended September 30, 2004 and
2003
The following discusses the results of operations of the Coso Partnerships
for the three and nine-month periods ended September 30, 2004 and 2003 (dollar
amounts in tables are in thousands, except per kWh data):
Revenue
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Total Operating Revenues
including steam transfers
Navy I Partnership 19,847 10.7 19,833 10.9 47,541 9.0 47,709 8.9
BLM Partnership 15,467 10.4 16,222 10.4 35,600 7.9 37,166 8.0
Navy II Partnership 17,094 9.0 16,513 8.7 38,193 6.8 35,850 6.8
The Coso Partnerships sell all electricity generated to Edison under their
respective power purchase agreement. Total operating revenues consist of
capacity payments, capacity bonus payments, and energy payments, including steam
transfers discussed above.
Total operating revenues for the Navy II Partnership increased for the
nine-month period ended September 30, 2004, as compared to the same periods in
2003, primarily due to the increase in production discussed above.
25
Plant Operating Expense
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 3,019 1.6 2,291 1.3 8,528 1.6 6,875 1.3
BLM Partnership 2,746 1.9 3,467 2.2 10,906 2.4 9,323 2.0
Navy II Partnership 2,014 1.1 2,451 1.3 7,145 1.3 7,336 1.4
Plant operating expense consists of labor and related expenses, supplies
and maintenance, property taxes, insurance, well workovers and administrative
expense. The increases in plant operating expense for the Navy I Partnership for
the three and nine-months ended September 30, 2004, and for the BLM Partnership
for the nine-months ended September 30, 2004, as compared to the same periods in
2003, were primarily due to increased well workovers in 2004 to assist in
remediating declines in steam production. The decreases in plant operating
expenses for the BLM and Navy II Partnerships for the three-months ended
September 30, 2004, as compared to the same period in 2003, were primarily due
to decreases in property taxes and well workover activities during that period
in 2004. The decrease in property taxes affected each of the Coso Partnerships
during the three and nine-months ended September 30, 2004, as compared to the
same periods in 2003.
Royalty Expense
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 5,547 3.0 4,982 2.7 10,574 2.0 11,603 2.2
BLM Partnership 1,318 0.9 1,339 0.9 1,971 0.4 2,028 0.4
Navy II Partnership 3,002 1.6 2,655 1.4 6,608 1.2 5,830 1.1
Royalty expense for the Navy I Partnership increased for the three-months
ended September 30, 2004, as compared to the same period in 2003, primarily due
to increased royalties from Units 2 and 3 resulting from the scheduled increase
in royalty rate discussed above. The increase in royalties from Units 2 and 3
was partially offset by a decrease in Unit 1 royalty, resulting from reduced
tariff rates charged by Edison. The decrease in the Unit 1 royalty resulted in
the decrease for the nine-month period ended September 30, 2004, as compared to
the same period in 2003. Royalty expense for the Navy II Partnership increased
for the three and nine-months ended September 30, 2004, as compared to the same
periods in 2003, due to the increase in production discussed above.
Depreciation and Amortization
Depreciation and amortization expense for the Coso Partnerships for the
three and nine-months ended September 30, 2004, as compared to the same periods
in 2003, remains comparable as older wells and plant overhauls being fully
depreciated during 2003 were replaced with new capital additions in 2004.
26
Interest and Other Income
Interest and other income for the Coso Partnerships increased for the three
and nine-months ended September 30, 2004, as compared to the same periods in
2003, due to the receipt of a refund of prior years' property taxes in 2004.
Interest Expense
Interest expense for the Coso Partnerships decreased for the three and
nine-months ended September 30, 2004, as compared to the same periods in 2003,
due to the reduction in the principal amount of the project loan from Funding
Corp.
Liquidity and Capital Resources
Each of the Navy I Partnership, the BLM Partnership and the Navy II
Partnership derive substantially all of their cash flow from Edison under their
power purchase agreements and from interest income earned on funds on deposit.
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 loan.
The Coso Partnerships cash flow obligations over the next several years
consist of debt service payments to Funding Corp., as they come due under the
Notes. The Coso Partnerships expect to be able to meet these obligations from
operating cash flow. Historically, any excess cash after debt service has either
been reserved for capital improvements or distributed to the partners.
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 the Coso Partnerships'
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. California Supreme
Court accepted the Ninth Circuit Court of Appeals request to address the issues
referred to it in the September 23, 2002 ruling, and subsequently found that the
stipulated judgment did not violate state laws. Consequently, the Agreement
remains in full force and effect and it is unknown if any additional appeals are
planned. Immediately after this settlement, Edison and each of the Coso
Partnerships entered into an amendment of their respective Agreement (referenced
above) pertaining to past due obligations. The Agreement, as amended, was
approved by CPUC in January of 2002, and established the fixed energy rates
discussed above and set payment terms for the past due amounts owed to the Coso
Partnerships by Edison. Edison's failure to pay its future obligations may have
a material adverse effect on the Coso Partnerships ability to make debt service
payments to Funding Corp., as they come due under the Notes.
Net cash from operating activities for the Navy I Partnership increased for
the nine-months ended September 30, 2004, as compared to the same period in
2003, primarily due to increased net income and trade payables during 2004. Net
cash from operating activities for the BLM Partnership decreased for the
27
nine-months ended September 30, 2004, as compared to the same period in 2003,
primarily due to decreased net income and trade payables during 2004. Net cash
from operating activities for the Navy II Partnership increased for the
nine-months ended September 30, 2004, as compared to the same period in 2003,
primarily due to increased net income during 2004. Net cash used in investing
activities for the Coso Partnerships decreased for the nine-months ended
September 30, 2004, as compared to the same period in 2003, due to reduced
capital expenditures partially offset by higher restricted cash requirements
associated with the Notes for the Navy I and Navy II Partnerships during 2004.
Net cash used in financing activities for the Coso Partnerships increased for
the nine-months ended September 30, 2004, as compared to the same period in
2003, primarily due to increased distributions to partners.
Item 3. Control and Procedures
The Registrant's Chief Executive Officer and Chief Financial Officer (the
Registrant's principal executive officer and principal financial officer,
respectively) have concluded, based on their evaluation as of September 30,
2004, that the design and operation of the Registrant's "disclosure controls and
procedures" (as defined in Rules 13a-15(e) under the Securities Exchange Act of
1934, as amended (Exchange Act)) are effective to ensure that information
required to be disclosed by the Registrant in the reports filed or submitted by
the Registrant under the Exchange Act is accumulated, recorded, processed,
summarized and reported to the Registrant's management, including the
Registrant's principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding whether or not disclosure is
required.
During the quarter ended September 30, 2004, there were no changes in the
Registrant's "internal controls over financial reporting" (as defined in Rule
13a-15(f) under the Exchange Act) that have materially affected, or are
reasonably likely to materially affect, the Registrant's internal controls over
financial reporting.
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.
28
ITEM 5. Other Information
Supplemental Consolidated and Combined Financial Information
for the Coso Partnerships and Subsidiaries
The following information presents unaudited consolidated and combined
financial statements of the Coso Partnerships and Subsidiaries. These financial
statements represent a consolidated and combination of the financial statements
of Caithness Coso Funding Corp., Coso Finance Partners, Coso Energy Developers,
Coso Power Developers, New CLPSI Company, LLC and Coso Transmission Line
Partners 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 and Subsidiaries as a whole, which jointly and severally guarantee
the repayment of the Notes. The unaudited consolidated and combined financial
statements should be read in conjunction with each individual Coso Partnership's
and Subsidiaries 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.
29
COSO PARTNERSHIPS
UNAUDITED CONSOLIDATED AND COMBINED BALANCE SHEETS
(Dollars in thousands)
September 30, December 31,
2004 2003
Assets:
Current Assets:
Cash and cash equivalents............................................. $ 28,683 $ 2,135
Restricted cash and cash equivalents.................................. 30,325 29,567
Accounts receivable, net.............................................. 35,229 21,740
Prepaid expenses and other............................................ 3,661 2,796
Inventory............................................................. 5,346 5,270
Amounts due from related parties...................................... 6,966 6,829
------- ------
110,210 68,337
Total current assets
Restricted cash and cash equivalents..................................... 14,944 13,526
Property, plant and equipment, net....................................... 372,100 386,899
Power purchase agreement, net............................................ 38,561 42,323
Deferred financing costs, net............................................ 4,134 4,725
------- -------
$ 539,949 $ 515,810
======= =======
Total assets
Liabilities and Partners' Capital:
Current Liabilities:
Accounts payable and accrued liabilities.............................. $ 8,992 $ 8,508
Amounts due to related parties........................................ 6,857 1,588
Current portion of project loans...................................... 32,991 31,332
------ ------
48,840 41,428
Total current liabilities
Other liabilities........................................................ 47,123 45,523
Project loan............................................................. 208,086 222,282
------- -------
304,049 309,233
Total liabilities
Partners' capital........................................................ 235,900 206,577
------- -------
Total liabilities & partners' capital $ 539,949 $ 515,810
======= =======
See accompanying notes to the unaudited consolidated and combined financial statements.
30
COSO PARTNERSHIPS
UNAUDITED CONSOLIDATED AND COMBINED
STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
Revenue:
Energy revenues.................................. $ 28,194 $ 28,354 $ 82,879 $ 82,241
Capacity revenues................................ 24,214 24,214 38,455 38,484
------ ------ ------- -------
Total revenue............................. 52,408 52,568 121,334 120,725
Operating expenses:
Plant operating expenses......................... 7,695 8,145 26,372 23,406
Royalty expense.................................. 9,867 8,976 19,153 19,461
Depreciation and amortization.................... 7,658 7,608 23,189 22,795
------ ------ ------ ------
Total operating expenses.................. 25,220 24,729 68,714 65,662
Operating income ......................... 27,188 27,839 52,620 55,063
Other (income)/expenses:
Interest and other income........................ (2,637) (476) (3,534) (1,531)
Interest expense................................. 5,484 6,146 16,846 18,759
Noncash interest expense......................... 343 330 1,028 988
----- ----- ------ ------
Total other expenses...................... 3,190 6,000 14,340 18,216
----- ----- ------ ------
Income before cumulative effect of change in
accounting principle............................. 23,998 21,839 38,280 36,847
Cumulative effect of change in accounting
principle........................................ - - - 4,481
------ ------ ------ ------
Net income................................ $ 23,998 $ 21,839 $ 38,280 $ 32,366
====== ====== ====== ======
See accompanying notes to the unaudited consolidated and combined financial statements.
31
COSO PARTNERSHIPS
UNAUDITED CONSOLIDATED,
COMBINED AND CONDENSED
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2004 2003
Net cash provided by (used in) operating activities..... $ 54,915 $ 54,224
Net cash provided by (used in) investing activities..... (6,721) (12,374)
Net cash provided by (used in) financing activities..... (21,646) (11,337)
------ ------
Net change in cash and cash equivalents................. $ 26,548 $ 30,513
====== ======
Supplemental cash flow disclosure:
Cash paid for interest.......................... $ 11,476 $ 12,726
====== ======
See accompanying notes to the unaudited consolidated, combined and condensed financial statements.
32
COSO PARTNERSHIPS
NOTES TO THE UNAUDITED
CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS
(Dollars in thousands)
(1) Basis of Presentation
The accompanying unaudited consolidated and combined financial statements were
derived from the stand alone unaudited financial statements of Caithness Coso
Funding Corp., Coso Finance Partners and Subsidiary, Coso Energy Developers and
Coso Power Developers and Subsidiary (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 consolidated and combined financial statements should be read in
conjunction with each individual Partnership's unaudited financial statements.
The preparation of unaudited financial statements in accordance with accounting
principles generally accepted in the United States requires the Coso
Partnerships to make certain estimates and assumptions for the reporting periods
covered by the financial statements. These estimates and assumptions affect the
reported amounts of assets, liabilities, revenues and expenses during the
reporting period. Actual results could differ from these estimates. 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. The Coso Partnerships have experienced significant
quarterly fluctuations in operating results and it expects that these
fluctuations in energy revenues, expenses and net income will continue.
The data for the consolidated and combined balance sheets presented herein for
September 30, 2004 and December 31, 2003 were derived from the Coso
Partnership's financial statements for the interim period and fiscal year then
ended and includes the effect of consolidating New CLPSI Company, LLC (CLPSI)
and Coso Transmission Line Partners (CTLP), but does not include all disclosures
required by accounting principles generally accepted in the United States.
(2) New Accounting Pronouncements
The consolidated financial statements of the Coso Partnerships include the
accounts of CPLSI and CTLP, as a result of the adoption of Financial Accounting
Standards Board (FASB) Interpretation No. 46. (FIN 46) (Consolidation of
Variable Interest Entities), an interpretation of Accounting Research Bulletin
No. 51. FIN 46 required certain variable interest entities to be consolidated by
the primary beneficiary of the entity even though the equity investors do not
have the characteristics of a controlling financial interest, or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. In December 2003,
the FASB issued FIN 46 (R), which clarified and replaced FIN 46 that required
all variable interest entities, regardless of when they were created to be
evaluated under FIN 46 (R) no later than the period ending March 15, 2004. An
entity shall be subject to consolidation according to the provisions of FIN 46
(R) if, by design, the following conditions exist. As a group, the holders of
the equity investment at risk lack any one of the following three
characteristics of a controlling financial interest: (1) the direct or indirect
ability to make decisions about an entity's activities through voting rights or
similar rights; (2) the obligation to absorb the expected losses of the entity
if they occur; or (3) the right to receive the expected residual returns of the
entity if they occur. The Coso Partnerships believe that CLPSI and CTLP, the
entities that holds the inventory and transmission assets are variable interest
entities and under FIN 46 (R) should be consolidated. The inventory, related
33
physical assets, and payables will be recorded as the Coso Partnership's assets
and liabilities. The impact to the Coso Partnership's future statement of
operations will be increased depreciation, partially offset by other income.
The consolidated and combined financial statements related to prior periods have
been restated to consolidate the accounts of CLPSI and CTLP as a direct result
of the adoption of FIN 46 (R). There was no cumulative effect recorded upon the
adoption of the Interpretation.
(3) Accounts Receivable and Revenue Recognition
Accounts receivable primarily consist of receivables from Edison for electricity
delivered and sold under a power purchase contract. Operating revenues are
recognized as income during the period in which electricity is delivered to
Edison.
(4) Reclassifications
Certain balances in prior years have been reclassified to conform to the
presentation adopted in the current year.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule--Form SX--Caithness Coso Funding Corp.
27.2 Financial Data Schedule--Form SX--Coso Finance Partners
27.3 Financial Data Schedule--Form SX--Coso Energy Developers
27.4 Financial Data Schedule--Form SX--Coso Power Developers
Certification of Chief Executive Officer
Certification of Chief Financial Officer
99.1 Certification of Chief Executive Officer
99.2 Certification of Chief Financial Officer
(b) Reports on Form 8-K
The Coso Partnerships filed a current report on Form 8-K dated
November 2, 2004 reporting a new contract entered into with the United
States Navy which terminated their existing contracts.
34
EXHIBIT 27.1
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: CAITHNESS COSO FUNDING CORP.
----------------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
--- ----
other than 1 (one)?
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 9 - MOS
--- --- --- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec - 31 - 2003 DEC - 31 - 2004
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD START
(example: JAN-01-1997) Jan - 01 - 2003 JAN - 01 - 2004
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD END
(example: SEP-30-1997) Dec - 31 - 2003 SEP - 30 - 2004
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 9 MOS
---- -----
CASH 0 0
SECURITIES 0 0
RECEIVABLES 254,622 247,455
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETDS 32,340 39,369
PP&E 0 0
DEPRECIATION 0 0
TOTAL ASSETS 254,622 247,455
CURRENT LIABILITIES 32,340 39,369
BONDS 253,614 241,077
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 254,622 247,455
SALES 0 0
TOTAL REVENUES 24,828 16,846
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 0 0
LOSS PROVISION 0 0
INTEREST EXPENSES 24,828 16,846
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 AND SUBSIDIARY
------------------------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
--- ----
other than 1 (one)?
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 9 - MOS
--- --- --- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec - 31 - 2003 DEC - 31 - 2004
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD START
(example: JAN-01-1997) Jan - 01 - 2003 JAN - 01 - 2004
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD END
(example: SEP-30-1997) Dec - 31 - 2003 SEP - 30 - 2004
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 9 MOS
---- -----
CASH 1,454 9,921
SECURITIES 24,657 25,404
RECEIVABLES 8,996 14,175
ALLOWANCES 546 546
INVENTORY 0 0
CURRENT ASSETS 27,454 40,738
PP&E 247,215 251,130
DEPRECIATION 111,344 119,039
TOTAL ASSETS 187,265 197,088
CURRENT LIABILITIES 15,671 19,892
BONDS 97,547 93,267
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 187,265 197,088
SALES 59,792 47,541
TOTAL REVENUES 61,416 48,520
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 33,675 27,659
LOSS PROVISION 0 0
INTEREST EXPENSES 10,257 6,899
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 1,780 0
NET INCOME 15,704 13,962
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.3
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: COSO ENERGY DEVELOPERS
----------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
--- ----
other than 1 (one)?
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 9 - MOS
--- --- --- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec - 31 - 2003 DEC - 31 - 2004
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD START
(example: JAN-01-1997) Jan - 01 - 2003 JAN - 01 - 2004
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD END
(example: SEP-30-1997) Dec - 31 - 2003 SEP - 30 - 2004
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 9 MOS
---- -----
CASH 603 9,088
SECURITIES 10,155 10,003
RECEIVABLES 7,272 11,229
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 18,982 31,742
PP&E 250,930 251,475
DEPRECIATION 120,411 126,558
TOTAL ASSETS 170,556 176,564
CURRENT LIABILITIES 13,507 14,232
BONDS 84,821 80,852
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 170,556 176,564
SALES 46,869 35,600
TOTAL REVENUES 48,010 37,281
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 24,820 19,829
LOSS PROVISION 0 0
INTEREST EXPENSES 8,385 5,924
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 924 0
NET INCOME 13,881 11,528
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 AND SUBSIDIARY
------------------------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
--- ----
other than 1 (one)?
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 9 - MOS
--- --- --- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec - 31 - 2003 DEC - 31 - 2004
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD START
(example: JAN-01-1997) Jan - 01 - 2003 JAN - 01 - 2004
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD END
(example: SEP-30-1997) Dec - 31 - 2003 SEP - 30 - 2004
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 9 MOS
---- -----
CASH 78 9,674
SECURITIES 8,281 9,862
RECEIVABLES 14,479 18,987
ALLOWANCES 82 82
INVENTORY 0 0
CURRENT ASSETS 23,451 39,298
PP&E 225,873 226,041
DEPRECIATION 105,364 110,949
TOTAL ASSETS 164,543 172,720
CURRENT LIABILITIES 13,800 16,284
BONDS 71,246 66,958
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 164,543 172,720
SALES 46,149 38,193
TOTAL REVENUES 46,575 39,274
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 27,410 21,433
LOSS PROVISION 0 0
INTEREST EXPENSES 7,500 5,051
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 1,777 0
NET INCOME 9,888 12,790
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 and Subsidiary, Coso Energy
Developers, and Coso Power Developers and Subsidiary (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: November 12, 2004 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 and Subsidiary, Coso Energy
Developers, and Coso Power Developers and Subsidiary (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: November 12, 2004 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 and Subsidiary, Coso Energy Developers, and Coso Power
Developers and Subsidiary (collectively, the Registrant) on Form 10-Q for the
period ending September 30, 2004 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. ss. 1350, as adopted pursuant to ss. 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 Registrant.
Date: November 12, 2004 Caithness Coso Funding Corp.
a Delaware Corporation
By: /S/ JAMES D. BISHOP, SR.
------------------------
James D. Bishop, Sr.
Director, Chairman &
Chief Executive Officer
Exhibit 99.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Caithness Coso Funding Corp., Coso
Finance Partners and Subsidiary, Coso Energy Developers, and Coso Power
Developers and Subsidiary (collectively, the Registrant) on Form 10-Q for the
period ending September 30, 2004 as filed with the Securities and Exchange
Commission on the date hereof (the Report), I, Christopher T. McCallion, Chief
Financial Officer of the Registrant, certify, to the best of my knowledge and
belief, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 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 Registrant.
Date: November 12, 2004 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: November 12, 2004 By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
COSO FINANCE PARTNERS AND SUBSIDIARY
a California general Partnership
By: New CLOC Company, LLC,
its Managing General Partner
Date: November 12, 2004 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: November 12, 2004 By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
COSO POWER DEVELOPERS AND SUBSIDIARY
a California general Partnership
By: New CTC Company, LLC,
its Managing General Partner
Date: November 12, 2004 By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)