FORM 10-Q -- QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITES EXCHANGE ACT OF 1934
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended March 31, 2001
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from ________________to_______________
Commission File Number: 333-83815
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Caithness Coso Funding Corp.
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(Exact name of registrant as specified in its charter)
Delaware 94-3328762
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Coso Finance Partners California 68-0133679
Coso Energy Developers California 94-3071296
Coso Power Developers California 94-3102796
--------------------- ---------- -----------
(Exact names of Registrants (State or other (I.R.S. Employer
as specified in their charters) jurisdiction of Identification No.)
incorporation or
organization)
1114 Avenue of the Americas, 41st Floor, New York, New York 10036-7790
- ----------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(212) 921-9099
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former
fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [ X ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
300 shares in Caithness Coso Funding Corp. as of May 10, 2001
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CAITHNESS COSO FUNDING CORP.
Form 10-Q
For the Quarter Ended March 31, 2001
PART I. FINANCIAL INFORMATION Page No.
ITEM 1. Financial Statements
Caithness Coso Funding Corp
Unaudited condensed balance sheet at March 31, 2001 and
December 31, 2000 4
Unaudited condensed statement of operations for the three-
months ended March 31, 2001 and the three-months ended
March 31, 2000 5
Unaudited condensed statement of cash flows for the three-
months ended March 31, 2001 and the three-months ended
March 31, 2000 6
Notes to the unaudited condensed financial statements 7
Coso Finance Partners
Unaudited condensed balance sheets at March 31, 2001 and
December 31, 2000 8
Unaudited condensed statements of operations for the three-
months ended March 31, 2001 and the three-months ended
March 31,2000 9
Unaudited condensed statements of cash flows for the three-
months ended March 31, 2001 and the three-months ended
March 31, 2000. 10
Notes to the unaudited condensed financial statements 11
Coso Energy Developers
Unaudited condensed balance sheets at March 31, 2001 and
December 31, 2000 12
Unaudited condensed statements of operations for the three-
months ended March 31, 2001 and the three-months ended
March 31, 2000 13
Unaudited condensed statements of cash flows for the three-
months ended March 31, 2001 and the three-months ended
March 31, 2000. 14
Notes to the unaudited condensed financial statements 15
Coso Power Developers
Unaudited condensed balance sheets at March 31, 2001 and
December 31, 2000 16
Unaudited condensed statements of operations for the three-
months ended March 31, 2001 and the three-months ended
March 31, 2000 17
Unaudited condensed statements of cash flows for the three-
months ended March 31, 2001 and the three-months ended
March 31, 2000. 18
Notes to the unaudited condensed financial statements 19
2
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 20
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 condensed combined financial information for the
Coso Partnerships
Unaudited condensed combined balance sheets at March 31, 2001
and December 31, 2000 30
Unaudited condensed combined statements of operations for the
three-months ended March 31, 2001, and the three-months ended
March 31, 2000 31
Unaudited condensed combined statements of cash flows for the
three-months ended March 31, 2001, and the three-months ended
March 31, 2000 32
Notes to the unaudited condensed combined financial statements 33
ITEM 6. Exhibits and Reports on Form 8-K 34
3
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED BALANCE SHEET
(Dollars in thousands)
March 31, December 31,
2001 2000
(Note)
Assets:
Accrued interest receivable....................... $ 8,601 $ 1,286
Project loan to Coso Finance Partners............. 134,984 134,984
Project loan to Coso Energy Developers............ 100,907 100,907
Project loan to Coso Power Developers............. 94,176 94,176
------- -------
$ 338,668 $ 331,353
======= =======
Liabilities and Stockholders' Equity:
Senior secured notes:
Accrued interest payable....................... $ 8,601 $ 1,286
6.80% notes due 2001........................... 27,067 27,067
9.05% notes due 2009........................... 303,000 303,000
------- -------
338,668 331,353
Stockholders' equity................................. --- ---
------- -------
$ 338,668 $ 331,353
======= =======
Note: The condensed balance sheet at December 31, 2000 has been derived
from the audited financial statements at that date but does not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
See accompanying notes to the unaudited condensed financial statements
4
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED STATEMENT OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2001 2000
Interest income.......... $ 8,601 $ 9,221
Interest expense......... (8,601) (9,221)
------- -------
Net income.......... $ --- $ ---
======= =======
See accompanying notes to the unaudited condensed financial statements
5
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2001 2000
Cash flows from investing activities...... $ (8,601) $ 52,665
Cash flows from financing activities...... 8,601 (52,665)
------- --------
Net change in cash and cash equivalents... $ --- $ ---
======= ========
See accompanying notes to the unaudited condensed financial statements
6
CAITHNESS COSO FUNDING CORP.
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(1) Organization and Operations
Caithness Coso Funding Corp. (Funding Corp.), which was incorporated on April
22, 1999, is a single-purpose Delaware corporation formed to issue senior
secured notes (Notes) for its own account and as an agent acting on behalf of
Coso Finance Partners (CFP), Coso Energy Developers (CED), and Coso Power
Developers (CPD), collectively, the "Partnerships." The Partnerships are
California general partnerships.
On May 28, 1999, Funding Corp. sold $413,000 of senior secured notes. Pursuant
to separate credit agreements between Funding Corp. and each partnership, the
net proceeds from the offering of $110,000 of 6.80% senior secured notes due
2001 and $303,000 of 9.05% senior secured notes due 2009 were loaned to the
Partnerships, and the Partnerships have jointly and severally guaranteed
repayment on a senior basis. Payment of the Notes is provided for by payments
made by the Partnerships under their respective project loans.
Funding Corp. has no material assets other than the loans, and the accrued
interest thereon, that have been made to the Partnerships. Also, Funding Corp.
does not conduct any business, other than issuing the senior secured notes and
making the loans to the Partnerships.
(2) Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles 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, 2000.
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.
(3) New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Financial
Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and
Hedging Activities." The statement establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. The statement
requires the changes in the derivative' s fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Funding Corp. has
adopted FAS 133, and assessed that it has no material effect on it's financial
statements.
7
COSO FINANCE PARTNERS
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
2001 2000
(Note)
Assets:
Cash and cash equivalents.................................................. $ 1,018 $ 3,506
Restricted cash and investments............................................ 22,461 22,996
Accounts receivable, net................................................... 1,491 521
Prepaid expenses & other assets............................................ 432 809
Amounts due from related parties........................................... 7,792 1,960
Property, plant & equipment, net........................................... 147,416 149,076
Power purchase agreement, net.............................................. 11,953 12,240
Investment in China Lake Plant Services, Inc............................... 4,062 4,072
Deferred financing costs, net.............................................. 3,100 3,229
------- -------
$ 199,725 $ 198,409
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities................................... $ 18,650 $ 15,857
Amounts due to related parties............................................. 4,177 697
Project loans.............................................................. 134,984 134,984
------- -------
157,811 151,538
Partners' capital............................................................. 41,914 46,871
------- -------
$ 199,725 $ 198,409
======= =======
Note: The condensed balance sheet at December 31, 2000 has been derived
from the audited financial statements at that date but does not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
See accompanying notes to the unaudited condensed financial statements
8
COSO FINANCE PARTNERS
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2001 2000
Revenue:
Energy revenues............................................................ $ 30,615 $ 7,725
Capacity................................................................... 1,255 1,255
Interest and other income 135 323
------ -----
Total revenue......................................................... 32,005 9,303
Operating expenses:
Plant operating expenses................................................... 1,762 2,072
Royalty expense............................................................ 3,770 1,189
Provision for doubtful accounts............................................ 25,817 --
Depreciation and amortization.............................................. 2,499 2,353
------ -----
Total operating expenses.............................................. 33,848 5,614
Operating income (loss)............................................... (1,843) 3,689
Other expenses:
Interest expense........................................................... 2,984 3,173
Amortization on deferred financing......................................... 130 130
------ -----
Total other expenses.................................................. 3,114 3,303
Net income (loss)..................................................... $ (4,957) $ 386
====== =====
See accompanying notes to the unaudited condensed financial statements
9
COSO FINANCE PARTNERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2001 2000
Net cash provided by (used in) operating activities........................... $ (2,470) $ 8,624
Net cash provided by (used in) investing activities........................... (18) 2,445
Net cash provided by (used in) financing activities........................... --- (5,556)
------- -------
Net change in cash and cash equivalents....................................... $ (2,488) $ 5,513
======= =======
See accompanying notes to the unaudited condensed financial statements
10
COSO FINANCE PARTNERS
NOTES TO THE UNAUDITED CONDENSED
FINANCIAL STATEMENTS
(1) Organization and Operation
Coso Finance Partners (CFP), a general partnership, is engaged in the operation
of a 80 MW power generation facility located at the China Lake Naval Air Weapons
Station, China Lake California. CFP sells all electricity produced to Southern
California Edison under a 24-year power purchase contract expiring in 2011.
(2) Basis of Presentation
The accompanying unaudited condensed combined financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles 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, 2000.
The financial information herein presented reflects all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair statement of the results for interim periods presented. The
results for the interim periods are not necessarily indicative of results to be
expected for the full year. CFP has experienced significant quarterly
fluctuations in operating results and it expects that these fluctuations in
energy revenues, expenses and net income will continue.
(3) New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Financial
Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and
Hedging Activities." The statement establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. The statement
requires the changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. CFP has adopted FAS
133, and assessed that it has no material effect on it's financial statements.
11
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
2001 2000
(Note)
Assets:
Cash and cash equivalents............................................... $ 4,764 $ 5,862
Restricted cash and investments......................................... 12,514 14,502
Accounts receivable, net................................................ 1,539 40
Prepaid expenses and other assets....................................... 534 1,013
Amounts due from related parties........................................ 374 365
Property, plant and equipment, net...................................... 153,972 153,618
Power purchase agreement, net........................................... 19,242 19,510
Investment in Coso Transmission Line Partners........................... 2,871 2,871
Investment in China Lake Plant Services, Inc............................ 949 1,051
Deferred financing costs, net........................................... 2,401 2,480
------- -------
$ 199,160 $ 201,312
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities................................ $ 10,779 $ 6,839
Amounts due to related parties.......................................... 28,293 24,321
Project loans........................................................... 100,907 100,907
------- -------
139,979 132,067
Partners' capital....................................................... 59,181 69,245
------- -------
$ 199,160 $ 201,312
======= =======
Note: The condensed balance sheet at December 31, 2000 has been derived from
the audited financial statements at that date but does not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See accompanying notes to the unaudited condensed financial statements
12
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED STATEMENT OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2001 2000
Revenue:
Energy revenues............................................................ $ 25,547 $ 5,953
Capacity................................................................... 1,228 1,227
Interest and other income.................................................. 620 5,315
------- ------
Total revenue........................................................... 27,395 12,495
Operating expenses:
Plant operating expenses................................................... 2,361 2,539
Royalty expense............................................................ 2,868 65
Provisions for doubtful accounts........................................... 25,950 --
Depreciation and amortization.............................................. 3,946 3,876
------- ------
Total operating expenses................................................ 35,125 6,480
Operating income (loss)................................................. (7,730) 6,015
Other expenses:
Interest expense........................................................... 2,257 2,308
Amortization on deferred financing......................................... 79 80
------- ------
Total other expenses.................................................... 2,336 2,388
Net income (loss)....................................................... $ (10,066) $ 3,627
======= ======
See accompanying notes to the unaudited condensed financial statements
13
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2001 2000
Net cash provided by operating activities..................................... $ 947 $ 9,651
Net cash provided by (used in) investing activities........................... (2,045) 2,968
Net cash provided by (used in) financing activities........................... --- (4,105)
------- -------
Net change in cash and cash equivalents....................................... $ (1,098) $ 8,514
======= =======
See accompanying notes to the unaudited condensed financial statements
14
COSO ENERGY DEVELOPERS
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(1) Organization and Operation
Coso Energy Developers (CED), a general partnership, is engaged in the operation
of a 80 MW power generation facility located at the Coso Hot Springs, China Lake
California. CED sells all electricity produced to Southern California Edison
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 generally accepted accounting principles for interim financial
information. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles 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, 2000.
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) New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Financial
Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and
Hedging Activities." The statement establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. The statement
requires the changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. CED has adopted FAS
133, and assessed that it has no material effect on it's financial statements.
15
COSO POWER DEVELOPERS
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
2001 2000
(Note)
Assets:
Cash and cash equivalents............................................... $ 7,196 $ 7,741
Restricted cash and investments......................................... 9,458 10,214
Accounts receivable, net................................................ 1,449 29
Prepaid expenses and other assets....................................... 450 849
Amounts due from related parties........................................ 5,822 5,953
Property, plant and equipment, net...................................... 134,282 136,947
Power purchase agreement, net........................................... 24,916 25,614
Investment in Coso Transmission Line Partners........................... 3,528 3,528
Investment in China Lake Plant Services, Inc............................ 1,981 1,963
Deferred financing costs, net........................................... 2,663 2,855
------- -------
$ 191,745 $ 195,693
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities................................ 15,138 12,278
Amounts due to related parties.......................................... 8,911 1,816
Project loans........................................................... 94,176 94,176
------- -------
118,225 108,270
Partners' capital.......................................................... 73,520 87,423
------- -------
$ 191,745 $ 195,693
======= =======
Note: The condensed balance sheet at December 31, 2000 has been derived from
the audited financial statements at that date but does not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See accompanying notes to the unaudited condensed financial statements
16
COSO POWER DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2001 2000
Revenues:
Energy revenues............................................................ $ 23,211 $ 8,554
Capacity................................................................... 1,233 1,234
Interest and other income.................................................. 358 529
------- ------
Total revenue........................................................... 24,802 10,317
Operating expenses:
Plant operating expenses................................................... 1,975 2,105
Royalty expense............................................................ 3,712 1,775
Provision for doubtful accounts............................................ 26,998 --
Depreciation and amortization.............................................. 3,753 3,698
------- ------
Total operating expenses................................................ 36,438 7,578
Operating income (loss)................................................. (11,636) 2,739
Other expenses:
Interest expense........................................................... 2,075 2,354
Amortization on deferred financing......................................... 192 192
------- ------
Total other expenses.................................................... 2,267 2,546
Net income (loss)....................................................... $ (13,903) $ 193
======= ======
See accompanying notes to the unaudited condensed financial statements
17
COSO POWER DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2001 2000
Net cash provided by (used in) operating activities........................... $ (911) $ 16,815
Net cash provided by (used in) investing activities........................... 366 42,822
Net cash provided by (used in) financing activities........................... --- (43,004)
----- -------
Net change in cash and cash equivalents....................................... $ (545) $ 16,633
===== ========
See accompanying notes to the unaudited condensed financial statements
18
COSO POWER DEVELOPERS
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(1) Organization and Operation
Coso Power Developers (CPD), a general partnership, is engaged in the operation
of a 80 MW power generation facility located at the Coso Hot Springs, China Lake
California. CPD sells all electricity produced to Southern California Edison
under a 20-year power purchase contract expiring in 2010.
(2) Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles 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, 2000.
The financial information herein presented reflects all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair statement of the results for interim periods presented. The
results for the interim periods are not necessarily indicative of results to be
expected for the full year. CPD has experienced significant quarterly
fluctuations in operating results and it expects that these fluctuations in
energy revenues, expenses and net income will continue.
(3) New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Financial
Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and
Hedging Activities." The statement establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. The statement
requires the changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. CPD has adopted FAS
133, and assessed that it has no material effect on it's financial statements.
19
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Except for historical financial information contained herein, the matters
discussed in this quarterly report may be considered forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, and subject to
the safe harbor created by the Securities Litigation Reform Act of 1995. Such
statements include declarations regarding the intent, belief or current
expectations of Caithness Coso Funding Corp. ("Funding Corp."), Coso Finance
Partners ("the Navy I Partnership"), Coso Energy Developers ("the BLM
Partnership"), and Coso Power Developers ("the Navy II Partnership"),
respectively, (the "Coso Partnerships") or collectively ("Coso") and their
respective management. Any such forward-looking statements are not guarantees of
future performance and involve a number of risks and uncertainties; actual
results could differ materially from those indicated by such forward-looking
statements. Among the important factors that could cause actual results to
differ materially from those indicated by such forward-looking statements are:
(i) risks relating to the uncertainties in the California energy market, (ii)
the financial viability of Southern California Edison, ("Edison"), (iii) that
the information is of a preliminary nature and may be subject to further
adjustment, (iv) risks related to the operation of power plants (v) the impact
of avoided cost pricing, (vi) general operating risks, (vii) the dependence on
third parties, (viii) changes in government regulation, (ix) the effects of
competition, (x) the dependence on senior management, (xi) fluctuations in
quarterly results and (xii) seasonality.
General
The Coso projects consist of three 80MW geothermal power plants, which are
referred to as Navy I, BLM and Navy II, and their transmission lines, wells,
gathering systems and other related facilities. The Coso projects are located
near one another at the United States Naval Air Weapons Center at China Lake,
California. The Navy I partnership owns Navy I and its related facilities. The
BLM partnership owns BLM and its related facilities. The Navy II partnership
owns Navy II and its related facilities. Affiliates of Caithness Corporation and
CalEnergy Company, Inc. ("CalEnergy"), which is now known as MidAmerican Energy
Holdings Company, formed the Coso partnerships in the 1980s to develop,
construct, own and operate the Coso projects. On February 25, 1999 Caithness
Acquisition Company, LLC, (CAC) purchased all of CalEnergy's interests in the
Coso projects for $205.0 million in cash, plus the assumption of CalEnergy's and
its affiliates share of debt outstanding at the Coso projects which then totaled
approximately $67.0 million.
Each Coso partnership sells 100% of the electrical energy generated at its
plant to Edison under a long-term Standard Offer No.4 power purchase agreement.
Each power purchase agreement expires after the final maturity date of the 6.8%
Senior Secured Notes and the 9.05% Senior Secured Notes issued by Funding Corp.
Each Coso partnership is entitled to the following payments under its power
purchase agreement:
* Capacity payments for being able to produce electricity at certain
levels. Capacity payments are fixed throughout the life of each power
purchase agreement;
* Capacity bonus payments if the Coso partnership is able to produce
electricity above a specified higher level. The maximum annual
capacity bonus payment available is also fixed throughout the life of
each power purchase agreement; and
20
* Energy payments which are based on the amount of electricity the Coso
partnership's plant actually produces.
Energy payments were fixed for the first ten years of firm operation under
each power purchase agreement. After the first ten years of firm operation and
until a Coso partnership's power purchase agreement expires, Edison makes energy
payments to the Coso partnership based on Edison's "avoided cost of energy".
Edison's avoided cost of energy is Edison's cost to generate electricity if
Edison were to produce it itself or buy it from another power producer rather
than buy it from the Coso partnerships. The power purchase agreement for the
Navy I partnership will expire in August 2011, the power purchase agreement for
the BLM partnership will expire in March 2019, and the power purchase agreement
for the Navy II partnership will expire in January 2010. The fixed energy price
period expired in August 1997 for the Navy I partnership, in March 1999 for the
BLM partnership and in January 2000 for the Navy II partnership.
For the three-months ended March 31, 2001, Edison's average avoided cost of
energy paid to the Coso Partnerships was 15.1 cents per kWh, as compared to 9.3
cents per kWh for the three-months ended December 31, 2000. Estimates of
Edison's future avoided cost of energy may vary significantly, and no one can
predict the likely level of future avoided cost of energy prices.
The Coso Partnerships implemented a steam-sharing program, which they
established under the Coso Geothermal Exchange Agreement they entered into in
1994. 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 projects. Under the
steam sharing program, the partnership receiving the steam transfer splits
revenue earned from electricity generated with the partnership that transferred
the steam.
The Coso Partnerships are required to make royalty payments to the U.S.
Navy and the Bureau of Land Management. The Navy I Partnership pays a royalty
for Unit I through reimbursement of electricity supplied to the U.S. Navy by
Edison from electricity generated at the Navy I plant. The Reimbursement is
based on a pricing formula that is included in the U.S. Navy Contract. For Units
2 and 3, the Navy I Partnership's royalty expense paid to the U.S. Navy is a
fixed percentage of electricity sales at 15% of revenue received by the Navy I
Partnership through 2003 and will increase to 20% from 2004 through 2009. The
BLM Partnership pays a 10% royalty to the Bureau of Land Management based on the
value of steam produced. The Navy II Partnership pays a royalty to the U.S. Navy
based on a fixed percentage of electricity sales to Edison. The royalty rate was
10% of electricity sales through 1999, and increased to 18% for 2000 through
2004 and will increase to 20% from 2005 through the end of the contract term.
The Coso Partnerships also pay other royalties at various rates.
Funding Corp is a special purpose corporation and a wholly owned subsidiary
of the Coso partnerships. It was formed for the purpose of issuing the senior
secured notes on behalf of the Coso partnerships who have jointly, severally,
and unconditionally guaranteed repayment of the senior secured notes.
On May 28, 1999, Funding Corp. issued $110.0 million of 6.80% senior
secured notes due in 2001 and $303.0 million of 9.05% senior secured notes due
in 2009. The proceeds from the notes were loaned to the Coso partnerships and
are payable to Funding Corp from payments of principal and interest on the
notes. Funding Corp. does not conduct any other operations apart from issuing
the notes.
Under the depositary agreement, the Coso partnerships established accounts
with a depositary and pledged those accounts as security for the benefit of the
holders of the senior secured notes. All amounts deposited with the depositary
are, at the direction of the Coso partnerships, invested by the depositary 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 depositary of a certificate from the relevant Coso partnerships detailing
the amounts to be paid from funds in its respective revenue account.
21
Increases in natural gas prices and an imbalance between supply and demand,
among other factors, has lead to significant increases in wholesale electricity
prices in California. Edison had previously agreed to fixed tariffs with their
retail customers that were significantly below the wholesale prices it pays in
California. This resulted in significant under-recoveries by Edison of it's
electricity purchase costs. On January 16, 2001 Edison announced that it was
temporarily suspending payments for energy provided, including the energy
provided by the Coso partnerships, pending a permanent solution to its liquidity
crisis. Edison has not made payments to the Coso partnerships for power
generated from November 2000 through March 26, 2001. The Coso partnerships have
billed but uncollected receivables from Edison of $45,824 for November and
December of 2000 and $78,765 for the first quarter of 2001.
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 capacity is based upon a
number of factors and can be expected to vary throughout the year under normal
operating conditions.
The following data includes the operating capacity factor, capacity and
electricity production (in kWh) for each Coso partnership on a stand alone
basis:
Three-Months Ended
March 31,
2001 2000
---- ----
Navy I Partnership (stand alone)
Operating capacity factor 109.6% 113.3%
Capacity (MW) (average) 87.70 90.62
kWh produced (000s) 189,422 197,916
BLM Partnership (stand alone)
Operating capacity factor 102.2% 106.3%
Capacity (MW) (average) 81.72 85.06
kWh produced (000s) 176,524 185,858
Navy II Partnership (stand alone)
Operating capacity factor 106.5% 113.9%
Capacity (MW) (average) 85.22 91.08
kWh produced (000s) 184,067 198,906
The Navy I Partnership's energy production was 189.4 million kWh for the
three-months ended March 31, 2001, as compared to 197.9 million kWh for the same
period in 2000, a decrease of 4.3%. The BLM Partnership's energy production was
176.5 million kWh for the three-months ended March 31, 2001, as compared to
185.9 million kWh for the same period in 2000, a decrease of 5.1%. The decrease
in production for the BLM Partnership was due to a scheduled outage for turbine
overhauls during that period in 2001, which did not occur during the same period
in 2000. The Navy II Partnership's energy production was 184.1 million kWh for
the three-months ended March 31, 2001, as compared to 198.9 million kWh for the
same period in 2000, a decrease of 7.4%. That decrease in production in 2001 was
due to increased steam transfers while the Navy II Partnership received 14.6
cents per kWh for energy delivered during that period in 2000.
22
Results of Operations for the three-months ended March 31, 2001 and 2000
The following discusses the results of operations of the Coso Partnerships
for the three-months ending March 31, 2001 and 2000 (dollar amounts in tables
are in thousands, except per kWh data):
Revenue
Three-Months Three-Months
Ended Ended
March 31, 2001 March 31, 2000
$ cents/kWh $ cents/kWh
- --------- - ---------
Total Operating Revenues
Navy I Partnership 31,870 16.8 8,980 4.5
BLM Partnership 26,775 15.2 7,180 3.9
Navy II Partnership 24,444 13.3 9,788 4.9
Capacity & Capacity Bonus Revenues
Navy I Partnership 1,255 0.7 1,255 0.6
BLM Partnership 1,228 0.7 1,227 0.7
Navy II Partnership 1,233 0.7 1,234 0.6
Energy Revenues
Navy I Partnership 30,615 16.2 7,725 3.9
BLM Partnership 25,547 14.5 5,953 3.2
Navy II Partnership 23,211 12.6 8,554 4.3
Total operating revenues for the Navy I Partnership, which consist of
capacity payments, capacity bonus payments and energy payments, were $31.9
million for the three-months ended March 31, 2001, as compared to $9.0 million
for the same period in 2000, an increase of $22.9 million. The Navy I
Partnership's energy revenues were $30.6 million for the three-months ended
March 31, 2001, as compared to $7.7 million for the same period in 2000, an
increase of $22.9 million. Total operating revenues for the BLM Partnership,
which consist of capacity payments, capacity bonus payments and energy payments,
were $26.8 million for the three-months ended March 31, 2001, as compared to
$7.2 million for the same period in 2000, an increase of $19.6 million. The BLM
Partnership's energy revenues were $25.5 million for the three-months ended
March 31, 2001, as compared to $6.0 million for the same period in 2000, an
increase of $19.5 million. Total operating revenues for the Navy II Partnership,
which consist of capacity payments, capacity bonus payments and energy payments,
were $24.4 million for the three-months ended March 31, 2001, as compared to
$9.8 million for the same period in 2000, an increase of $14.6 million. The Navy
II Partnership's energy revenues were $23.2 million for the three-months ended
March 31, 2001, as compared to $8.6 million for the same period in 2000, an
increase of $14.6 million. These increases in operating and energy revenues for
the three-month period ended March 31, 2001, as compared to the same period in
2000, were due to the increase in average avoided cost of energy from 3.25 cents
per kWh for the three-month period in 2000, to 15.1 cents per kWh for three
month period in 2001. Estimates of Edison's future avoided cost of energy, which
fluctuate with the price of natural gas, may vary significantly, and no one can
predict the likely level of future avoided cost of energy prices.
23
Interest and Other Income
Three-Months Three-Months
Ended Ended
March 31, 2001 March 31, 2000
$ cents/kWh $ cents/kWh
- --------- - ---------
Navy I Partnership 135 0.1 323 0.2
BLM Partnership 620 0.4 5,315 2.9
Navy II Partnership 358 0.2 529 0.3
The Navy I Partnership's interest and other income was $135,000 for the
three-months ended March 31, 2001, as compared to $323,000 for the same period
in 2000, a decrease of 58.2%. The decrease for the three-months ended March 31,
2001, as compared to the same period in 2000, was primarily due to lower average
cash balances resulting from Edison's non-payment for delivered energy. The BLM
Partnership's interest and other income was $620,000 for the three-months ended
March 31, 2001, as compared to $5.3 million for the same period in 2000, a
decrease of $4.7 million. The decrease for the three-months ended March 31,
2001, as compared to the same period in 2000 was primarily due to a legal
settlement of $5 million with Dow Chemical Company paid to the BLM Partnership
in January of 2000 and lower average cash balances in 2001 resulting from
Edison's non-payment for delivered energy. The Navy II Partnership's interest
and other income was $358,000 for the three-months ended March 31, 2001, as
compared to $529,000 for the same period in 2000, a decrease of 32.3%. The
decrease for the three-months ended March 31, 2001, as compared to the same
period in 2000, was primarily due to lower average cash balances resulting from
Edison's non-payment for energy delivered during the three-month period ended
March 31, 2001.
Plant Operations
Three-Months Three-Months
Ended Ended
March 31, 2001 March 31, 2000
$ cents/kWh $ cents/kWh
- --------- - ---------
Navy I Partnership 1,762 0.9 2,072 1.0
BLM Partnership 2,361 1.3 2,539 1.4
Navy II Partnership 1,975 1.1 2,105 1.1
The Navy I Partnership's operating expenses, including operating and
general and administrative expenses, were $1.8 million for the three-months
ended March 31, 2001, as compared to $2.1 million for the same period in 2000, a
decrease of 14.3%. The BLM Partnership's operating expenses, including operating
and general and administrative expenses, were $2.4 million for the three-months
ended March 31, 2001, as compared to $2.5 million for the same period in 2000, a
decrease of 4.0%. The Navy II Partnership's operating expenses, including
operating and general and administrative expenses, were $2.0 million for the
three-months ended March 31, 2001, as compared to $2.1 million for the same
period in 2000, a decrease of 4.8%. The decreases for each of the Coso
Partnerships for the three-months ended March 31, 2001, as compared to the same
period in 2000, were primarily due to the implementation of management's ongoing
plan to reduce operating costs, which began in March of 2000.
24
Royalty Expense
Three-Months Three-Months
Ended Ended
March 31, 2001 March 31, 2000
$ cents/kWh $ cents/kWh
- --------- - ---------
Navy I Partnership 3,770 2.0 1,189 0.6
BLM Partnership 2,868 1.6 65 0.0
Navy II Partnership 3,712 2.0 1,775 0.9
The Navy I Partnership's royalty expense was $3.8 million for the
three-months ended March 31, 2001, as compared to $1.2 million for the same
period in 2000, an increase of $2.6 million. The BLM Partnership's royalty
expense was $2.9 million for the three-months ended March 31, 2001, as compared
to $65,000 for the same period in 2000, an increase of $2.8 million. The Navy II
Partnership's royalty expense was $3.7 million for the three-months ended March
31, 2001, as compared to $1.8 million for the same period in 2000, an increase
of $1.9 million. Each Coso Partnership's increase in royalty expense for the
three-months ended March 31, 2001, as compared to the same period in 2000, was
directly related to the increase in average avoided cost of energy from 3.25
cents per kWh for the three-month period ended March 31, 2000 to 15.1 cents per
kWh for the three-month period ended March 31, 2001.
Depreciation and Amortization
Three-Months Three-Months
Ended Ended
March 31, 2001 March 31, 2000
$ cents/kWh $ cents/kWh
- --------- - ---------
Navy I Partnership 2,499 1.3 2,353 1.2
BLM Partnership 3,946 2.2 3,876 2.1
Navy II Partnership 3,753 2.0 3,698 2.0
Depreciation and amortization expenses for the three-months ended March 31,
2001 as compared to the same period in 2000, remained consistent over these
periods.
Interest Expense
Three-Months Three-Months
Ended Ended
March 31, 2001 March 31, 2000
$ cents/kWh $ cents/kWh
- --------- - ---------
Navy I Partnership 2,984 1.6 3,173 1.6
BLM Partnership 2,257 1.3 2,308 1.2
Navy II Partnership 2,075 1.1 2,354 1.2
The Navy I Partnership's interest expense was $3.0 million for the
three-months ended March 31, 2001, as compared to $3.2 million for the same
period in 2000, a decrease of 6.3%. The Navy II Partnership's interest expense
was $2.1 million for the three-months ended March 31, 2001, as compared to $2.4
million for the same period in 2000, a decrease of 12.5%. These decreases for
the three-months ended March 31, 2001, as compared to the same period in 2000
were due to reductions in the principal amount of the project loan from Funding
Corp.
25
Provision for Doubtful Accounts
In recent months, Edison has experienced significant cash flow problems due
in part to the difference between revenues received from its customers through
currently frozen electric rates and the cost of producing service to its
customers, including the cost to acquire electricity. This cash flow shortfall
has adversely affected Edison's liquidity and in turn it has not paid the Coso
Partnerships for the energy delivered from November 2000 through March 26, 2001.
Despite extensive and continuing negotiations with Edison, the Coso Partnerships
have been unable to secure from Edison a firm indication of the time frame
during which they can expect payment for the remainder of the first quarter 2001
receivables, nor the amount, if any, that Edison is prepared to pay. Therefore,
the Coso Partnerships increased the allowance for uncollectible amounts by
$25,817, $25,950 and $26,998 for Navy I, BLM and Navy II, respectively, for the
three-month period ended March 31, 2001.
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 debt.
The Coso Partnership's ability to meet their obligations as they come due
will depend upon the ability of Edison to meet its obligations under the terms
of the standard offer No. 4 power purchase agreements. Edison's increasing
under-collections, coupled with its near term capital requirements has
materially and adversely affected its liquidity. Unless actions are taken to
restore Edison's financial condition, there is uncertainty of collection of
receivables owed to the Coso Partnerships for revenues generated during the
first quarter of 2001 and forward. Edison's failure to pay its obligations will
have a material adverse effect on the Coso Partnership's ability to make debt
service payments as they come due under the Funding Corp. notes.
On March 27, 2001 the California Public Utility Commission ("CPUC") ordered
Edison to resume paying qualifying facilities such as the Coso Partnerships at
rates stipulated by the CPUC. For the month of April, the CPUC ordered Edison to
prepay by mid-month for April generation. On April 19, 2001 the Coso
Partnerships recieved the payment which was based on historical output. On April
30, 2001 a second payment was recieved for generation sold in the last five days
of March.
The following table sets forth a summary of each Coso Partnership's cash
flows for the three-months ended March 31, 2001 and March 31, 2000.
Three-Months Three-Months
Ended Ended
March 31, 2001 March 31, 2000
Navy I Partnership (stand alone)
Net cash provided by (used in) operating activities $ (2,470) $ 8,624
Net cash provided by (used in) investing activities (18) 2,445
Net cash provided by (used in) financing activties -- (5,556)
------- -------
Net change in cash and cash equivalents $ (2,488) $ 5,513
======= =======
BLM Partnership (stand alone)
Net cash provided by operating activities $ 947 $ 9,651
Net cash provided by (used in) investing activities (2,045) 2,968
Net cash provided by (used in) financing activities --- (4,105)
------- -------
Net change in cash and cash equivalents $ (1,098) $ 8,514
======= =======
26
Navy II Partnership (stand alone)
Net cash provided by (used in) operating activities $ (911) $ 16,815
Net cash provided by (used in) investing activities 366 42,822
Net cash provided by (used in) financing activities --- (43,004)
------- -------
Net change in cash and cash equivalents $ 545 $ 16,633
======= =======
The Navy I Partnership's cash flows from operating activities decreased by
$11.1 million for the three-months ended March 31, 2001, as compared to the same
period in 2000, primarily due to increases in receivables as a result of
Edison's non-payment for energy delivered.
Cash used in investing activities at the Navy I Partnership increased by
$2.5 million for the three-months ended March 31, 2001, as compared to the same
period in 2000, primarily due to a decrease in restricted cash requirements
associated with the project loan from Funding Corp.
The Navy I Partnership's cash flows from financing activities increased by
$5.6 million for the three-months ended March 31, 2001, as compared to the same
period in 2000, due to a payment on the project loan from Funding Corp. in
January of 2000.
The BLM Partnership's cash flows from operating activities decreased by
$8.7 million for the three-months ended March 31, 2001, as compared to the same
period in 2000, primarily due to increases in receivables as a result of
Edison's non-payment for energy delivered.
Cash used in investing activities at the BLM Partnership increased by $5.0
million for the three-months ended March 31, 2001, as compared to the same
period in 2000, primarily due to a decrease in restricted cash requirements
associated with the project loan from Funding Corp. for the three-month period
ended March 31, 2000.
The BLM Partnership's cash flows from financing activities increased by
$4.1 million for the three-months ended March 31, 2001, as compared to the same
period in 2000, due to a payment on the project loan from Funding Corp. in
January of 2000.
The Navy II Partnership's cash flows from operating activities decreased by
$17.7 million for the three-months ended March 31, 2001, as compared to the same
period in 2000, primarily due to increases in receivables as a result of
Edison's non-payment for energy delivered.
Cash flows from investing activities at the Navy II Partnership decreased
by $42.5 million for the three-months ended March 31, 2001, as compared to the
same period in 2000, primarily due to a decrease in restricted cash requirements
associated with the project loan from Funding Corp. for the three-month period
ended March 31, 2000
The Navy II Partnership's cash flows from financing activities increased by
$43.0 million for the three-months ended March 31, 2001, as compared to the same
period in 2000, due to a payment on the project loan from Funding Corp. in
January of 2000.
27
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Financial
Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and
Hedging Activities." The statement establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. The statement
requires the changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. The Coso
Partnerships have adopted FAS 133, and assessed that it has no material effect
on their financial statements.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Settlement of Litigation
In February 2000, Navy I, Navy II, and BLM reached a settlement with
Edison, subject to the approval of California Public Utilities Commission, which
was received in December 2000. The case has not yet been dismissed pending
completion of certain obligations of the Coso Partnerships under the settlement
agreements. The cost of the settlement was allocated among the Coso
Partnerships.
General
Except as otherwise described above, the Coso Partnerships are currently
parties to various minor items of litigation, none of which, if determined
adversely, would be material to the financial condition and results of
operations of the Coso Partnerships, either individually or taken as a whole.
ITEM 2. Change in Securities and Use of Proceeds
None.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5. Other information
Supplemental Condensed Combined Financial Information for the Coso Partnerships
The following information presents unaudited condensed combined financial
statements of the Coso Partnerships. These financial statements represent a
compilation of the financial statements of Caithness Coso Funding Corp., Coso
Finance Partners, Coso Energy Developers and Coso Power Developers for the
periods indicated. This supplemental financial information is not required by
Generally Accepted Accounting Principles and has been provided to facilitate a
more comprehensive understanding of the financial position, operating results
and cash flows of the Coso Partnerships as a whole, which jointly and severally
guarantee the repayment of Caithness Coso Funding Corp's senior notes. The
unaudited condensed combined financial statements should be read in conjunction
with each individual Coso partnership's financial statements and their
accompanying notes.
28
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 CONDENSED COMBINED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
2001 2000
Assets:
Cash and cash equivalents............................................... $ 12,978 $ 17,109
Restricted cash and investments......................................... 44,433 47,712
Accounts receivable, net................................................ 4,479 590
Prepaid expenses and other assets....................................... 1,416 2,671
Amounts due from related parties........................................ 5,964 6,191
Property, plant and equipment, net...................................... 435,670 439,641
Power purchase agreement, net........................................... 56,111 57,364
Investments............................................................. 13,391 13,485
Deferred financing costs, net........................................... 8,164 8,564
------- -------
$ 582,606 $ 593,327
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities................................ $ 53,168 $ 36,260
Amounts due to related parties.......................................... 24,756 23,460
Project loans........................................................... 330,067 330,067
------- -------
407,991 389,787
Partners' capital.......................................................... 174,615 203,540
------- -------
$ 582,606 $ 593,327
======= =======
See accompanying notes to the unaudited condensed combined financial statements
30
COSO PARTNERSHIPS
UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2001 2000
Revenue:
Energy revenues............................................................ $ 79,372 $ 22,232
Capacity................................................................... 3,717 3,716
Interest and other income.................................................. 1,113 6,167
-------- ------
Total revenue....................................................... 84,202 32,115
Operating expenses:
Plant operating expenses................................................... 6,097 6,716
Royalty expense............................................................ 10,351 3,029
Provision for doubtful accounts............................................ 78,765 --
Depreciation and amortization.............................................. 10,198 9,927
-------- ------
Total operating expenses............................................ 105,411 19,672
Operating income (loss)............................................. (21,209) 12,443
Other expenses:
Interest expense........................................................... 7,316 7,835
Amortization on deferred financing......................................... 401 402
-------- ------
Total other expenses................................................ 7,717 8,237
Net income (loss)................................................... $ (28,926) $ 4,206
======== ======
See accompanying notes to the unaudited condensed combined financial statements
31
COSO PARTNERSHIPS
UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three-Months Three-Months
Ended Ended
March 31, March 31,
2001 2000
Net cash provided by (used in) operating activities........................... $ (2,435) $ 35,090
Net cash provided by (used in) investing activities........................... (1,696) 48,235
Net cash provided by (used in) financing activities........................... --- (52,665)
------- --------
Net change in cash and cash equivalents....................................... $ (4,131) $ 30,660
======= ========
See accompanying notes to the unaudited condensed combined financial statements
32
COSO PARTNERSHIPS
NOTES TO THE UNAUDITED CONDENSED COMBINED
FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying unaudited condensed combined financial statements were derived
from the stand alone unaudited condensed financial statements of Caithness Coso
Funding Corp., Coso Finance Partners, Coso Energy Developers and Coso Power
Developers (the Coso Partnerships). All intercompany accounts and transactions
were eliminated. This financial information has been provided to facilitate a
more comprehensive understanding of the financial position, operating results
and cash flows of the Coso Partnerships as a whole. The unaudited condensed
combined financial statements should read in conjunction with each individual
partnership's unaudited condensed financial statements.
(2) New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Financial
Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and
Hedging Activities." The statement establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. The statement
requires the changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. The Coso
Partnerships have adopted FAS 133, and assessed that it has no material effect
on their financial statements.
33
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule-Form SX-Caithness Coso Funding Corp.
27.2 Financial Data Schedule-Form SX-Coso Finance Partners
27.3 Financial Data Schedule-Form SX-Coso Energy Developers
27.4 Financial Data Schedule-Form SX-Coso Power Developers
(b) Reports on Form 8-K
The Coso Partnerships filed current reports on Form 8-K dated January
18, 2001 reporting Moodys Investor Services downgrade of Funding
Corp's notes on January 17, 2001 to "Caa2" reflecting their recent
downgrade of Edison to a similar rating.
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 3 - MOS
-- ---- -- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec-31-2000 DEC-31-2001
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD START
(example: JAN-01-1997) Jan-01-2000 JAN-01-2001
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD END
(example: SEP-30-1997) Dec-31-2000 MAR-31-2001
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS
---- ----- ---
CASH 0 0
SECURITIES 0 0
RECEIVABLES 331,353 338,668
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETDS 1,286 8,601
PP&E 0 0
DEPRECIATION 0 0
TOTAL ASSETS 331,353 338,668
CURRENT LIABILITIES 1,286 8,601
BONDS 300,067 330,067
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 331,353 338,668
SALES 0 0
TOTAL REVENUES 30,799 8,601
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 0 0
LOSS PROVISION 0 0
INTEREST EXPENSES 30,799 8,601
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 0
NET INCOME 0 0
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.2
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: COSO FINANCE PARTNERS
---------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
other than 1 (one)? --- ----
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 3 - MOS
-- ---- -- ----
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec-31-2000 DEC-31-2001
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD START
(example: JAN-01-1997) Jan-01-2000 JAN-01-2001
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD END
(example: SEP-30-1997) Dec-31-2000 MAR-31-2001
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS
---- -----
CASH 3,506 1,018
SECURITIES 22,996 22,461
RECEIVABLES 17,715 50,334
ALLOWANCES 15,234 41,051
INVENTORY 0 0
CURRENT ASSETS 6,796 10,733
PP&E 228,718 229,410
DEPRECIATION 79,642 81,994
TOTAL ASSETS 198,409 199,725
CURRENT LIABILITIES 16,554 22,827
BONDS 134,984 134,984
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 198,409 199,725
SALES 67,653 31,870
TOTAL REVENUES 70,159 32,005
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 44,358 33,848
LOSS PROVISION 0 0
INTEREST EXPENSES 13,013 3,114
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 0
NET INCOME 12,788 (4,957)
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.3
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: COSO ENERGY DEVELOPERS
----------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
other than 1 (one)? --- ----
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 3 - MOS
-- ---- -- ----
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec-31-2000 DEC-31-2001
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD START
(example: JAN-01-1997) Jan-01-2000 JAN-01-2001
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD END
(example: SEP-30-1997) Dec-31-2000 MAR-31-2001
--------------- -----------
mmm-dd-yyyy mmm-dd-yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS
---- -----
CASH 5,862 4,764
SECURITIES 14,502 12,514
RECEIVABLES 15,684 43,142
ALLOWANCES 15,279 41,229
INVENTORY 0 0
CURRENT ASSETS 7,280 7,211
PP&E 238,244 242,313
DEPRECIATION 84,626 88,341
TOTAL ASSETS 201,312 199,160
CURRENT LIABILITIES 31,160 39,072
BONDS 100,907 100,907
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 201,312 199,160
SALES 57,453 26,775
TOTAL REVENUES 65,578 27,395
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 46,693 35,125
LOSS PROVISION 0 0
INTEREST EXPENSES 9,492 2,336
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 0
NET INCOME 9,393 (10,066)
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.4
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: COSO POWER DEVELOPERS
---------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
other than 1 (one)? --- ----
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 3 - MOS
-- ---- -- ----
YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec-31-2000 DEC-31-2001
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD START
(example: JAN-01-1997) Jan-01-2000 JAN-01-2001
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
PERIOD END
(example: SEP-30-1997) Dec-31-2000 MAR-31-2001
----------- -----------
mmm-dd-yyyy mmm-dd-yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 3 MOS
---- -----
CASH 7,741 7,196
SECURITIES 10,214 9,458
RECEIVABLES 21,294 49,581
ALLOWANCES 15,312 42,310
INVENTORY 0 0
CURRENT ASSETS 14,572 14,917
PP&E 209,605 210,095
DEPRECIATION 72,658 75,813
TOTAL ASSETS 195,693 191,745
CURRENT LIABILITIES 14,094 24,049
BONDS 94,176 94,176
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 195,639 191,745
SALES 58,366 24,444
TOTAL REVENUES 61,234 24,802
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 49,895 36,438
LOSS PROVISION 0 0
INTEREST EXPENSES 9,899 2,267
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 0
NET INCOME 1,440 (13,903)
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 10, 2001 CAITHNESS COSO FUNDING CORP.,
a Delaware corporation
By: /S/ CHRISTOPHER T. MCCALLION
-----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
COSO FINANCE PARTNERS
a California corporation
By: /S/ CHRISTOPHER T. MCCALLION
-----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
COSO ENERGY DEVELOPERS
a California corporation
By: /S/ CHRISTOPHER T. MCCALLION
-----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
COSO POWER DEVELOPERS
a California corporation
By: /S/ CHRISTOPHER T. MCCALLION
-----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)