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 June 30, 2003
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from _______________to________________
Commission File Number: 333-83815
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Caithness Coso Funding Corp.
----------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-3328762
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Coso Finance Partners California 68-0133679
Coso Energy Developers California 94-3071296
Coso Power Developers California 94-3102796
--------------------- ---------- ----------
(Exact names of Registrants (State or other (I.R.S. Employer
as specified in their charters) jurisdiction of Identification No.)
incorporation or
organization)
565 Fifth Avenue, 29th Floor, New York, New York 10017-2478
- ------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(212) 921-9099
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former
fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
300 shares in Caithness Coso Funding Corp. as of August 14, 2003
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CAITHNESS COSO FUNDING CORP.
Form 10-Q
For the Quarter Ended June 30, 2003
PART I. FINANCIAL INFORMATION Page No.
ITEM 1. Financial Statements
Caithness Coso Funding Corp.
Unaudited condensed balance sheets at June 30, 2003 and
December 31,2002 4
Unaudited condensed statements of operations for the three-months
ended June 30, 2003, the three-months ended June 30, 2002,
the six-months ended June 30, 2003, and the six-months
ended June 30, 2002 5
Unaudited condensed statements of cash flows for the six-months
ended June 30, 2003, and the six-months ended June 30, 2002 6
Notes to the unaudited condensed financial statements 7
Coso Finance Partners
Unaudited condensed balance sheets at June 30, 2003 and
December 31, 2002 8
Unaudited condensed statements of operations for the three-months
ended June 30, 2003, the three-months ended June 30, 2002,
the six-months ended June 30, 2003, and the six-months
ended June 30, 2002 9
Unaudited condensed statements of cash flows for the six-months
ended June 30, 2003, and the six-months ended June 30, 2002 10
Notes to the unaudited condensed financial statements 11
Coso Energy Developers
Unaudited condensed balance sheets at June 30, 2003 and
December 31, 2002 12
Unaudited condensed statements of operations for the three-months
ended June 30, 2003, the three-months ended June 30, 2002,
the six-months ended June 30, 2003, and the six-months
ended June 30, 2002 13
Unaudited condensed statements of cash flows for the six-months
ended June 30, 2003, and the six-months ended June 30, 2002 14
Notes to the unaudited condensed financial statements 15
Coso Power Developers
Unaudited condensed balance sheets at June 30, 2003 and
December 31, 2002 16
Unaudited condensed statements of operations for the three-months
ended June 30, 2003, the three-months ended June 30, 2002,
the six-months ended June 30, 2003, and the six-months
ended June 30, 2002 17
Unaudited condensed statements of cash flows the six-months
ended June 30, 2003, and the six-months ended June 30, 2002 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 30
ITEM 2. Change in Securities and Use of Proceeds 30
ITEM 3. Defaults upon Senior Securities 30
ITEM 4. Submission of Matters to a Vote of Security Holders 30
ITEM 5. Other Information 30
Supplemental condensed combined financial information for the
Coso Partnerships
Unaudited condensed combined balance sheets at June 30, 2003
and December 31, 2002 31
Unaudited condensed combined statements of operations for the
three-months ended June 30, 2003, the three-months ended
June 30, 2002, the six-months ended June 30, 2003, and the
six-months ended June 30, 2002 32
Unaudited condensed combined statements of cash flows for the
six-months ended June 30, 2003, and the six-months ended
June 30, 2002 33
Notes to the unaudited condensed combined financial statements 34
ITEM 6. Exhibits and Reports on Form 8-K 35
3
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
June 30, December 31,
2003 2002
(Note)
Assets:
Accrued interest receivable....................... $ 1,021 $ 1,130
Project loan to Coso Finance Partners............. 105,560 110,955
Project loan to Coso Energy Developers............ 87,854 89,875
Project loan to Coso Power Developers............. 76,739 80,401
------ ------
$ 271,174 $ 282,361
======= =======
Liabilities and Stockholders' Equity:
Senior secured notes:
Accrued interest payable....................... $ 1,021 $ 1,130
9.05% notes due 2009........................... 270,153 281,231
------- -------
271,174 282,361
- -
Stockholders' equity................................. ------- -------
$ 271,174 $ 282,361
======= =======
Note:The condensed balance sheet at December 31, 2002 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.
See accompanying notes to the unaudited condensed financial statements
4
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months Six-Months Six-Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
Interest income................ $ 6,323 $ 6,856 $ 12,617 $ 13,710
Interest expense............... (6,323) (6,856) (12,617) (13,710)
------- ------- -------- --------
Net income............. $ -- $ -- $ -- $ --
======= ======= ======== ========
See accompanying notes to the unaudited condensed financial statements
5
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Six-Months Six-Months
Ended Ended
June 30, June 30,
2003 2002
Net cash provided by (used in) investing activities...... $ 11,187 $ 8,710
Net cash provided by (used in) financing activities...... (11,187) (8,710)
-------- -------
Net change in cash and cash equivalents.................. $ --- $ ---
======== =======
Supplemental cash flow disclosure:
Cash paid for interest................................ $ 12,726 $ 13,710
======== =======
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 "Coso Partnerships." The Coso Partnerships
are California general partnerships.
On May 28, 1999, Funding Corp. sold $413,000 of Notes. Pursuant to separate
credit agreements between Funding Corp. and each partnership, the net proceeds
from the offering of $110,000 of 6.80% Notes due 2001 and $303,000 of 9.05%
Notes due 2009 were loaned to the Coso Partnerships, and the Coso Partnerships
have jointly and severally guaranteed repayment on a senior basis. Payment of
the Notes is provided for by payments made by the Coso 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 Coso Partnerships. Also, Funding
Corp. does not conduct any business, other than issuing the senior secured notes
and making the loans to the Coso 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 audited financial statements and
the notes thereto for the year ended December 31, 2002.
The financial information herein presented reflects all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair statement of the results for interim periods presented. The
results for the interim periods are not necessarily indicative of results to be
expected for the full year.
7
COSO FINANCE PARTNERS
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
June 30, December 31,
2003 2002
(Note)
Assets:
Cash and cash equivalents.............................................. $ 2,144 $ 4,215
Restricted cash and investments........................................ 31,399 28,692
Accounts receivable, net............................................... 9,671 7,431
Prepaid expenses & other assets........................................ 251 1,068
Amounts due from related parties....................................... 1,535 1,190
Property, plant & equipment, net....................................... 133,855 136,313
Power purchase agreement, net.......................................... 9,371 9,945
Advances to New CLPSI Company, LLC..................................... 4,152 4,010
Deferred financing costs, net.......................................... 2,051 2,208
------- -------
$ 194,429 $ 195,072
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities............................... $ 3,276 $ 5,764
Amounts due to related parties......................................... 488 467
Other liabilities...................................................... 15,102 12,478
Project loans.......................................................... 105,558 110,955
------- -------
124,424 129,664
Partners' capital......................................................... 70,005 65,408
------- -------
$ 194,429 $ 195,072
======= =======
Note: The condensed balance sheet at December 31, 2002 has been derived from
the audited financial statements at that date but does not include all
of the information and footnotes required by accounting principles
generally accepted in the United States of America for complete
financial statements.
See accompanying notes to the unaudited condensed financial statements
8
COSO FINANCE PARTNERS
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months Six-Months Six-Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
Revenue:
Energy revenues................................ $ 11,757 $ 10,762 $ 23,055 $ 53,112
Capacity revenues.............................. 3,566 3,566 4,821 6,714
------ ------ ------ ------
Total revenue........................... 15,323 14,328 27,876 59,826
Operating expenses:
Plant operating expenses....................... 2,317 2,261 4,584 4,568
Royalty expense................................ 3,940 3,419 6,621 5,631
Depreciation and amortization.................. 2,715 2,541 5,277 5,077
------ ------ ------ ------
Total operating expenses................ 8,972 8,221 16,482 15,276
Operating income........................ 6,351 6,107 11,394 44,550
Other (income)/expenses:
Interest and other income..................... (55) (1,045) (114) (1,519)
Interest expense.............................. 2,491 2,773 4,974 5,548
Amortization of deferred financing costs...... 79 79 158 158
------ ------ ------ ------
Total other expenses.................... 2,515 1,807 5,018 4,187
------ ------ ------ ------
Income before cumulative effect of change
in accounting principle....................... 3,836 4,300 6,376 40,363
Cumulative effect of change in
accounting principle.......................... --- --- 1,780 ---
------ ------ ------ ------
Net income............................. $ 3,836 $ 4,300 $ 4,596 $ 40,363
====== ====== ====== ======
See accompanying notes to the unaudited condensed financial statements
9
COSO FINANCE PARTNERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Six-Months Six-Months
Ended Ended
June 30, June 30,
2003 2002
Net cash provided by (used in) operating activities..... $ 8,390 $ 44,724
Net cash provided by (used in) investing activities..... (5,064) (2,835)
Net cash provided by (used in) financing activities..... (5,397) (40,570)
------- --------
Net change in cash and cash equivalents................. $ (2,071) $ 1,319
======= ========
Supplemental cash flow disclosure:
Cash paid for interest.............................. $ 5,021 $ 5,545
======= ========
See accompanying notes to the unaudited condensed financial statements
10
COSO FINANCE PARTNERS
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(1) Organization and Operation
Coso Finance Partners (CFP), a general partnership, is engaged in the operation
of a 80 MW power generation facility located at the China Lake Naval Air Weapons
Station, China Lake California. CFP sells all electricity produced to Southern
California Edison (Edison) under a power purchase contract that expires in 2011.
(2) Basis of Presentation
The accompanying unaudited condensed combined financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information. Accordingly, certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted pursuant to such rules.
Management believes that the disclosures are adequate to make the information
presented not misleading when read in conjunction with the audited financial
statements and the notes thereto for the year ended December 31, 2002.
The financial information herein presented reflects all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair statement of the results for interim periods presented. The
results for the interim periods are not necessarily indicative of results to be
expected for the full year. CFP has experienced significant quarterly
fluctuations in operating results and it expects that these fluctuations in
energy revenues, expenses and net income will continue.
(3) Accounts Receivable and Revenue Recognition
Due to the uncertainty surrounding Edison's ability to make payment on past due
amounts, collection was not reasonably assured and CFP had not recognized
revenue from Edison for energy delivered during the period November 1, 2000
through March 26, 2001. On March 1, 2002, Edison reached certain financing
milestones and paid CFP for revenue generated, but not recognized for the period
November 1, 2000 through March 26, 2001. During the six-months ended June 30,
2002, CFP recognized revenue for energy delivered from November 1, 2000 through
March 26, 2001 of $37.3 million.
(4) Reclassifications
Certain balances in prior years have been reclassified to conform to the
presentation adopted in the current year.
(5) New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations. This Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs and amends SFAS No. 19, Financial Accounting
and Reporting by Oil and Gas Producing Companies. The Statement requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred if a reasonable estimate of fair value can
be made, and that the associated asset retirement costs be capitalized as part
of the carrying amount of the long-lived asset. The Statement is effective for
financial statements issued for fiscal years beginning after June 15, 2002. As a
result of the adoption of SFAS No. 143, CFP was required to recognize a
liability of $2,039, a net asset of $259 and a loss from the cumulative effect
of a change in accounting principle of $1,780 as of January 1, 2003. Annual
depreciation and accretion expense resulting from adoption of SFAS No. 143 is
estimated to be $218.
11
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
June 30, December 31,
2003 2002
(Note)
Assets:
Cash and cash equivalents.............................................. $ 6,650 $ 1,423
Restricted cash and investments........................................ 7,573 6,646
Accounts receivable, net............................................... 9,084 6,681
Prepaid expenses and other assets...................................... 228 1,370
Amounts due from related parties....................................... 431 421
Property, plant and equipment, net..................................... 133,784 135,853
Power purchase agreement, net.......................................... 16,829 17,365
Investment in Coso Transmission Line Partners.......................... 2,597 2,653
Advances to New CLPSI Company, LLC..................................... 592 674
Deferred financing costs, net.......................................... 1,657 1,785
------- -------
$ 179,425 $ 174,871
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities............................... $ 1,636 $ 1,644
Amounts due to related parties......................................... 26,488 26,317
Other liabilities...................................................... 1,610 432
Project loans.......................................................... 87,853 89,875
------- -------
117,587 118,268
Partners' capital......................................................... 61,838 56,603
------- -------
$ 179,425 $ 174,871
======= =======
Note: The condensed balance sheet at December 31, 2002 has been derived from
the audited financial statements at that date but does not include all
of the information and footnotes required by accounting principles
generally accepted in the United States of America for complete
financial statements.
See accompanying notes to the unaudited condensed financial statements
12
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months Six-Months Six-Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
Revenue:
Energy revenues.............................. $ 8,126 $ 7,706 $ 16,233 $ 48,135
Capacity revenues............................ 3,484 3,484 4,711 6,535
------ ------ ------ ------
Total revenue......................... 11,610 11,190 20,944 54,670
Operating expenses:
Plant operating expenses..................... 3,026 2,648 5,764 5,253
Royalty expense.............................. 664 664 689 675
Depreciation and amortization................ 2,344 4,173 4,684 8,232
------ ------ ------ ------
Total operating expenses.............. 6,034 7,485 11,137 14,160
Operating income...................... 5,576 3,705 9,807 40,510
Other (income)/expenses:
Interest and other income.................... (231) (260) (513) (902)
Interest expense............................. 2,023 2,177 4,034 4,357
Amortization of deferred financing costs..... 63 63 127 127
------ ------ ------ ------
Total other expenses.................. 1,855 1,980 3,648 3,582
------ ------ ------ ------
Income before cumulative effect of change
in accounting principle...................... 3,721 1,725 6,159 36,928
Cumulative effect of change in
accounting principle......................... --- --- 924 ---
------ ------ ------ ------
Net income........................... $ 3,721 $ 1,725 $ 5,235 $ 36,928
====== ====== ====== ======
See accompanying notes to the unaudited condensed financial statements
13
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Six-Months Six-Months
Ended Ended
June 30, June 30,
2003 2002
Net cash provided by (used in) operating activities.......... $ 10,303 $ 31,657
Net cash provided by (used in) investing activities.......... (3,054) (1,747)
Net cash provided by (used in) financing activities.......... (2,022) (29,519)
------- --------
Net change in cash and cash equivalents...................... 5,227 391
======= ========
Supplemental cash flow disclosure:
Cash paid for interest................................... $ 4,067 $ 4,355
======= ========
See accompanying notes to the unaudited condensed financial statements
14
COSO ENERGY DEVELOPERS
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(1) Organization and Operation
Coso Energy Developers (CED), a general partnership, is engaged in the operation
of a 80 MW power generation facility located at the Coso Hot Springs, China Lake
California. CED sells all electricity produced to Southern California Edison
(Edison) under a power purchase contract that expires 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 audited financial statements and
the notes thereto for the year ended December 31, 2002.
The financial information herein presented reflects all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair statement of the results for interim periods presented. The
results for the interim periods are not necessarily indicative of results to be
expected for the full year. CED has experienced significant quarterly
fluctuations in operating results and it expects that these fluctuations in
energy revenues, expenses and net income will continue.
(3) Accounts Receivable and Revenue Recognition
Due to the uncertainty surrounding Edison's ability to make payment on past due
amounts, collection was not reasonably assured and CED had not recognized
revenue from Edison for energy delivered during the period November 1, 2000
through March 26, 2001. On March 1, 2002, Edison reached certain financing
milestones and paid CED for revenue generated, but not recognized for the period
November 1, 2000 through March 26, 2001. During the six-months ended June 30,
2002, CED recognized revenue for energy delivered from November 1, 2000 through
March 26, 2001 of $37.1 million.
(4) Reclassifications
Certain balances in prior years have been reclassified to conform to the
presentation adopted in the current year.
(5) New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations. This Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs and amends SFAS No. 19, Financial Accounting
and Reporting by Oil and Gas Producing Companies. The Statement requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred if a reasonable estimate of fair value can
be made, and that the associated asset retirement costs be capitalized as part
of the carrying amount of the long-lived asset. The Statement is effective for
financial statements issued for fiscal years beginning after June 15, 2002. As a
result of the adoption of SFAS No. 143, CED was required to recognize a
liability of $1,122, a net asset of $198 and a loss from the cumulative effect
of a change in accounting principle of $924 as of January 1, 2003. Annual
depreciation and accretion expense resulting from adoption of SFAS No. 143 is
estimated to be $120.
15
COSO POWER DEVELOPERS
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
June 30, December 31,
2003 2002
(Note)
Assets:
Cash and cash equivalents................................................ $ 599 $ 824
Restricted cash and investments.......................................... 10,545 10,855
Accounts receivable, net................................................. 9,293 7,234
Prepaid expenses and other assets........................................ 229 1,111
Amounts due from related parties......................................... 6,293 5,902
Property, plant and equipment, net....................................... 116,747 116,192
Power purchase agreement, net............................................ 18,629 20,026
Investment in Coso Transmission Line Partners............................ 3,194 3,260
Advances to New CLPSI Company, LLC....................................... 1,884 1,911
Deferred financing costs, net............................................ 1,410 1,519
------- -------
$ 168,823 $ 168,834
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities................................. $ 1,959 $ 1,948
Amounts due to related parties........................................... 1,465 758
Other liabilities........................................................ 2,604 366
Project loans............................................................ 76,739 80,401
------- -------
82,767 83,473
Partners' capital........................................................... 86,056 85,361
------- -------
$ 168,823 $ 168,834
======= =======
Note:The condensed balance sheet at December 31, 2002 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.
See accompanying notes to the unaudited condensed financial statements
16
COSO POWER DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months Six-Months Six-Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
Revenue:
Energy revenues................................ $ 7,321 $ 6,266 $ 14,599 $ 47,637
Capacity revenues.............................. 3,504 3,505 4,738 6,556
------ ------ ------ ------
Total revenue........................... 10,825 9,771 19,337 54,193
Operating expenses:
Plant operating expenses....................... 2,493 2,519 4,848 4,490
Royalty expense................................ 1,703 1,692 3,715 2,749
Depreciation and amortization.................. 2,492 3,830 5,260 7,659
------ ------ ------ ------
Total operating expenses................ 6,688 8,041 13,283 14,898
Operating income........................ 4,137 1,730 6,054 39,295
Other (income)/expenses:
Interest and other income...................... (54) (169) (133) (651)
Interest expense............................... 1,806 1,905 3,605 3,813
Amortization of deferred financing costs....... 55 54 109 108
------ ------ ------ ------
Total other expenses.................... 1,807 1,790 3,581 3,270
------ ------ ------ ------
Income before cumulative effect of change
in accounting principle....................... 2,330 (60) 2,473 36,025
Cumulative effect of change in
accounting principle.......................... --- --- 1,777 ---
------ ------ ------ ------
Net income (loss)...................... $ 2,330 $ (60) $ 696 $ 36,025
====== ======= ====== ======
See accompanying notes to the unaudited condensed financial statements
17
COSO POWER DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Six-Months Six-Months
Ended Ended
June 30, June 30,
2003 2002
Net cash provided by (used in) operating activities............. $ 7,707 $ 18,948
Net cash provided by (used in) investing activities............. (4,270) (1,041)
Net cash provided by (used in) financing activities............. (3,662) (17,776)
------- --------
Net change in cash and cash equivalents......................... $ (225) $ 131
======= ========
Supplemental cash flow disclosure:
Cash paid for interest...................................... $ 3,638 $ 3,810
======= ========
See accompanying notes to the unaudited condensed financial statements
18
COSO POWER DEVELOPERS
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(1) Organization and Operation
Coso Power Developers (CPD), a general partnership, is engaged in the operation
of a 80 MW power generation facility located at the Coso Hot Springs, China Lake
California. CPD sells all electricity produced to Southern California Edison
(Edison) under a power purchase contract that expires 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 audited financial statements and
the notes thereto for the year ended December 31, 2002.
The financial information herein presented reflects all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair statement of the results for interim periods presented. The
results for the interim periods are not necessarily indicative of results to be
expected for the full year. CPD has experienced significant quarterly
fluctuations in operating results and it expects that these fluctuations in
energy revenues, expenses and net income will continue.
(3) Accounts Receivable and Revenue Recognition
Due to the uncertainty surrounding Edison's ability to make payment on past due
amounts, collection was not reasonably assured and CPD had not recognized
revenue from Edison for energy delivered during the period November 1, 2000
through March 26, 2001. On March 1, 2002, Edison reached certain financing
milestones and paid CPD for revenue generated, but not recognized for the period
November 1, 2000 through March 26, 2001. During the six-months ended June 30,
2002, CPD recognized revenue for energy delivered from November 1, 2000 through
March 26, 2001 of $38.0 million.
(4) Reclassifications
Certain balances in prior years have been reclassified to conform to the
presentation adopted in the current year.
(5) New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations. This Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs and amends SFAS No. 19, Financial Accounting
and Reporting by Oil and Gas Producing Companies. The Statement requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred if a reasonable estimate of fair value can
be made, and that the associated asset retirement costs be capitalized as part
of the carrying amount of the long-lived asset. The Statement is effective for
financial statements issued for fiscal years beginning after June 15, 2002. As a
result of the adoption of SFAS No. 143, CPD was required to recognize a
liability of $2,131, a net asset of $354 and a loss from the cumulative effect
of a change in accounting principle of $1,777 as of January 1, 2003. Annual
depreciation and accretion expense resulting from adoption of SFAS No. 143 is
estimated to be $334.
19
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Except for financial information contained herein, the matters discussed in
this annual report may be considered forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and subject to the safe
harbor created by the Securities Litigation Reform Act of 1995. Such statements
include declarations regarding the intent, belief or current expectations of
Caithness Coso Funding Corp. ("Funding Corp."), Coso Finance Partners ("the Navy
I Partnership"), Coso Energy Developers ("the BLM Partnership"), and Coso Power
Developers ("the Navy II Partnership"), collectively, (the "Coso Partnerships")
and their respective management. Such statements may be identified by terms such
as expected, anticipated, may, will, believe or other terms or variations of
such words. Any such forward-looking statements are not guarantees of future
performance and involve a number of risks and uncertainties; actual results
could differ materially from those indicated by such forward-looking statements.
Among the important factors that could cause actual results to differ materially
from those indicated by such forward-looking statements include but are not
limited to: (i) risks relating to the uncertainties in the California energy
market, (ii) the financial viability of Southern California Edison, ("Edison"),
(iii) the information is of a preliminary nature and may be subject to further
adjustment, (iv) risks related to the operation of power plants (v) the impact
of avoided cost pricing along with other pricing variables, (vi) general
operating risks, including resource availability and regulatory oversight, (vii)
the dependence on third parties including public and private entities, (viii)
changes in government regulation, (ix) the effects of competition, (x) the
dependence on senior management, (xi) fluctuations in quarterly results due in
part to seasonality, (xii) affects of September 11, 2001, including U.S. Navy
activity and (xiii) the alleged manipulation of the California energy market.
General
Each Coso Partnership owns an 80MW geothermal power plant, and it's
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. Affiliates of Caithness Corporation and CalEnergy Company, Inc.
("CalEnergy"), which is now known as MidAmerican Energy Holdings Company, formed
the Coso Partnerships in the 1980s to develop, construct, own and operate the
Coso Partnerships. On February 25, 1999 Caithness Acquisition Company, LLC,
(CAC) purchased all of CalEnergy's interests in the Coso Partnerships.
Each Coso partnership sells 100% of the electrical energy generated at its
plant to Edison under a long-term Standard Offer No.4 power purchase agreement.
Each power purchase agreement expires after the final maturity date of the 9.05%
Series B Senior Secured Notes issued by Funding Corp.
Each Coso partnership is entitled to the following payments under its power
purchase agreement:
* Capacity payments for being able to produce electricity at certain levels.
Capacity payments are fixed throughout the life of each power purchase
agreement;
* Capacity bonus payments if the Coso partnership is able to produce
electricity above a specified level. The maximum annual capacity bonus
payment available is also fixed throughout the life of each power purchase
agreement; and
* Energy payments which are based on the amount of electricity the Coso
Partnership's plant actually produces.
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
20
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. Subsequent to the five-year
period, Edison will be required to make energy payments to the Coso Partnerships
based on its avoided cost of energy until each partnership's power purchase
agreement expires. 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. Estimates of Edison's future avoided
cost of energy may vary significantly and it is not possible to predict with
accuracy the likely level of future avoided cost of energy prices.
From January 1, 2002 through April 30, 2002, the Coso Partnerships elected
to receive from Edison a fixed energy rate of 3.25 cents per kWh. Starting May
1, 2002, the Coso Partnerships received 5.37 cents per kWh, pursuant to the
agreement discussed above.
In 1994, the Coso Partnerships implemented a steam-sharing program, under
the Coso Geothermal Exchange Agreement. The purpose of the steam-sharing program
is to enhance the management of the Coso geothermal resource and to optimize the
resource's overall benefits to the Coso Partnerships by transferring steam among
the Coso Partnerships. Under the steam sharing program, the partnership
receiving the steam transfer splits revenue earned from electricity generated
with the partnership that transferred the steam.
The Coso Partnerships are required to make royalty payments to the U.S.
Navy and the Bureau of Land Management. The Navy I Partnership pays a royalty
for Unit I through reimbursement of electricity supplied to the U.S. Navy by
Edison from electricity generated at the Navy I plant. The reimbursement is
based on a pricing formula that is included in the U.S. Navy Contract as
amended. This formula is primarily based on the tariff rates charged by Edison,
which were increased in 2001 by the California Public Utilities Commission
(CPUC), and is subject to future revision. 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. These rates are in effect for one year, after
which new rates will be established in accordance with CPUC guidelines. Indices
utilized in the calculation of the royalties under the Navy I Partnership Unit 1
contract remained unchanged historically based on an agreement between the U.S.
Navy and the Navy I Partnership. In November 2001 and October 2002,
modifications to the calculation of the reimbursement pricing formula were made
to the U.S. Navy Contract resulting in a reduction of accrued royalties of $6.5
million and $1.3 million, respectively, which was agreed to by the U.S. Navy.
The parties have currently agreed to a replacement index and true-up calculation
in favor of the Navy I Partnership. For Units 2 and 3, the Navy I Partnership's
royalty expense paid to the U.S. Navy is a fixed percentage of electricity sales
at 15% of revenue received by the Navy I Partnership through 2003 and will
increase to 20% from 2004 through 2009. In addition, the Navy I Partnership is
required to pay the U.S. Navy $25.0 million in December 2009, the date its
contract expires. The payment is secured by funds placed on deposit monthly,
which funds plus accrued interest are anticipated to aggregate $25.0 million by
the expiration date of the contract. Currently, the monthly amount deposited is
approximately $60,000. The BLM Partnership pays a 10% royalty to the Bureau of
Land Management based on the net value of steam produced. The Navy II
partnership pays a royalty to the U.S. Navy based on a fixed percentage of
electricity sales to Edison. The royalty rate was 10% of electricity sales
through 1999, and increased to 18% for 2000 through 2004 and will increase to
20% from 2005 through the end of the contract term. The Coso Partnerships also
pay other royalties, at various rates which in the aggregate are not material.
Funding Corp is a special purpose corporation and a wholly owned subsidiary
of the Coso Partnerships. It was formed for the purpose of issuing the senior
secured notes (Notes) on behalf of the Coso Partnerships who have jointly,
severally, and unconditionally guaranteed repayment of the Notes.
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
21
Partnerships and are payable to Funding Corp from payments of principal and
interest on the Notes. Funding Corp. does not conduct any other operations apart
from issuing the Notes.
Under the depository agreement with the trustee for the Notes, the Coso
Partnerships established accounts with a depository and pledged those accounts
as security for the benefit of the holders of the Notes. All amounts deposited
with the depository are, at the direction of the Coso Partnerships, invested by
the depository in permitted investments. All revenues or other proceeds actually
received by the Coso Partnerships are deposited in a revenue account and
withdrawn upon receipt by the depository of a certificate from the relevant Coso
Partnerships detailing the amounts to be paid from funds in its respective
revenue account.
Periodic increases in natural gas prices and imbalances between supply and
demand, among other factors, have at times led to significant increases in
wholesale electricity prices in California. During those periods, Edison had
fixed tariffs with their retail customers that were significantly below the
wholesale prices it paid in California. This resulted in significant
under-recoveries by Edison of its electricity purchase costs. On January 16,
2001, Edison announced that it was temporarily suspending payments for energy
provided, including the energy provided by the Coso Partnerships, pending a
permanent solution to its liquidity crisis. This cash flow shortfall adversely
affected Edison's liquidity and in turn it did not pay the Coso Partnerships for
energy delivered from November 2000 through March 26, 2001. As of December 31,
2001, the Coso Partnerships were unable to determine the time frame during which
any future payments would be received. Due to the uncertainty surrounding
Edison's ability to make payment on past due amounts, collection was not
reasonably assured and the Navy I, BLM and Navy II Partnerships had not
recognized revenue of $22.0 million, $21.8 million and $22.7 million,
respectively, from Edison for Energy delivered during the period January 1, 2001
through March 26, 2001.
Pursuant to a CPUC order, Edison resumed making payments to the Coso
Partnerships beginning with power generated on March 27, 2001. Edison also made
a payment equal to 10% of the unpaid balance for power generated from November
1, 2000 to March 26, 2001, and paid interest on the outstanding amount at 7% per
annum. That payment was made pursuant to the Agreement between Edison and the
Coso Partnerships described above. On March 1, 2002, Edison reached certain
financing milestones and paid Navy I, BLM and Navy II $37.3 million, $37.1
million and $38.0 million, respectively, for revenue generated but not
recognized for the period November 1, 2000 through March 26, 2001.
On September 23, 2002, the United States Court of Appeals for the Ninth
Circuit issued an opinion and order on appeal from a district court's stipulated
judgment, which affirmed the stipulated judgment in part and referred questions
based on California state law to the California Supreme Court. The appeals court
stated that if the Agreement violated California state law, then the appeals
court would be required to void the stipulated judgment. The California Supreme
Court has accepted the Ninth Circuit Court of Appeals request to address the
issues referred to it in the September 23, 2002 ruling. On May 27, 2003 the
California Supreme Court heard oral arguments related to state law on this
matter. Pending the findings of the California Supreme Court, the Agreement
remains in full force and effect.
Edison filed a petition for a writ of review of a January 2001 CPUC
decision, claiming that the "floor" line loss factor of 0.95 for renewable
generators violated the Public Utility Regulatory Policies Act of 1978 (PURPA).
Subsequently, the California Court of Appeals issued a decision on August 20,
2002 in response to the writs affirming the January 2001 CPUC decision, except
for the 0.95 "floor", which it rejected as an abuse of discretion by the CPUC.
While this matter was appealed to the California Supreme Court, the petition for
review was denied. The Coso Partnerships are currently evaluating potential
actions to redress this issue. The Coso Partnerships' Agreements set a 1.0 line
loss factor for all energy sold between May 2002 through April 2007. After April
2007, the Coso Partnerships will have a line loss factor of less than 1.0,
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.
22
Capacity Utilization
For purposes of consistency in financial presentation, the plant capacity
factor for each of the Coso Partnerships is based on a nominal capacity amount
of 80MW (240MW in the aggregate). The Coso Partnerships have a gross operating
capacity that allows for the production of electricity in excess of their
nominal capacity amounts. Utilization of this operating margin is based upon a
number of factors and can be expected to vary throughout the year under normal
operating conditions.
The following data includes the operating capacity factor, capacity and
electricity production (in kWh) for each Coso Partnership on a stand-alone
basis:
Three-Months Ended Six-Months Ended
June 30 June 30
2003 2002 2003 2002
---- ---- ---- ----
Navy I Partnership (stand alone)
Operating capacity factor 104.1% 102.5% 102.3% 104.5%
Capacity (MW) (average) 83.30 81.97 81.87 83.62
kWh produced (000s) 181,938 179,014 355,644 363,254
BLM Partnership (stand alone)
Operating capacity factor 88.5% 95.3% 88.6% 94.0%
Capacity (MW) (average) 70.78 76.25 70.85 75.21
kWh produced (000s) 154,585 166,533 307,762 326,694
Navy II Partnership (stand alone)
Operating capacity factor 96.5% 94.2% 97.4% 101.6%
Capacity (MW) (average) 77.20 75.34 77.90 81.25
kWh produced (000s) 168,606 164,552 338,401 352,966
Total energy production for the BLM Partnership was 154.6 million kWh and
307.8 million kWh for the three and six-months ended June 30, 2003,
respectively, as compared to 166.5 million kWh and 326.7 million kWh for the
same periods in 2002, decreases of 7.1% and 5.8%, respectively. The decrease in
energy production was primarily due to a decline in steam, which management is
attempting to remediate through well maintenance and capital improvements
including the addition of a new production well during the third quarter of
2003. In an effort to increase production overall, the Coso Partnerships have
implemented a capital program including drilling two new productions wells and
performing workovers on various existing wells to regain production limited by
wellbore obstructions. These efforts, along with modifications to wellfield
piping and gas removal systems, improved production at the Navy I and Navy II
Partnerships during the second quarter of 2003. The Coso Partnerships expect to
further enhance the steam utilization and efficiency of the projects through a
turbine enhancement program and additional wellfield piping modifications. With
respect to the reservoir, an injection augmentation program, aimed at improving
reservoir pressure and minimizing resource decline, is currently in the
engineering design phase. The funds necessary to implement the well maintenance
and capital improvement programs are available from reserves established under
the Notes and from excess cash flow generated after debt service during the
six-month period ending June 30, 2003.
Results of Operations for the three and six-months ended June 30, 2003 and 2002
The following discusses the results of operations of the Coso Partnerships
for the three and six-months ended June 30, 2003 and 2002 (dollar amounts in
tables are in thousands, except per kWh data):
23
Revenue
Three-Months Three-Months Six-Months Six-Months
Ended Ended Ended Ended
June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Total Operating Revenues
Navy I Partnership 15,323 8.4 14,328 8.0 27,876 7.8 59,826 16.5
BLM Partnership 11,610 7.5 11,190 6.7 20,944 6.8 54,670 16.7
Navy II Partnership 10,825 6.4 9,771 5.9 19,337 5.7 54,193 15.4
Capacity & Capacity Bonus
Revenues
Navy I Partnership 3,566 2.0 3,566 2.0 4,821 1.4 6,714 1.8
BLM Partnership 3,484 2.3 3,484 2.1 4,711 1.5 6,535 2.0
Navy II Partnership 3,505 2.1 3,505 2.1 4,738 1.4 6,556 1.9
Energy Revenues, net
of steam transfers
Navy I Partnership 11,757 6.5 10,762 6.0 23,055 6.5 53,112 14.6
BLM Partnership 8,126 5.3 7,706 4.6 16,233 5.3 48,135 14.7
Navy II Partnership 7,320 4.3 6,266 3.8 14,599 4.3 47,637 13.5
Total operating revenues for the Navy I, BLM and Navy II Partnerships,
which consist of capacity payments, capacity bonus payments and energy payments,
were $15.3 million, $11.6 million and $10.8 million, respectively, for the
three-months ended June 30, 2003, as compared to $14.3 million, $11.2 million
and $9.8 million, respectively, for the same period in 2002, increases of 7.0%,
3.6% and 10.2%, respectively. Total energy revenues, net of steam transfer for
the Navy I, BLM and Navy II Partnerships were $11.8 million, $8.1 million and
$7.3 million, respectively, for the three-months ended June 30, 2003, as
compared to $10.8 million, $7.7 million and $6.3 million, respectively, for the
same period in 2002, increases of 9.3%, 5.2% and 15.9%, respectively. Each Coso
Partnership's increase in operating revenues, and energy revenues for the
three-months ended June 30, 2003, as compared to the same period in 2002, were
primarily due to the increase in the fixed energy rate of 5.37 cents per kWh
during the three-months ended June 30, 2003, as compared to the average fixed
energy rate of 4.66 cents per kWh paid for the same period in 2002.
Total operating revenues for the Navy I, BLM and Navy II Partnerships,
which consist of capacity payments, capacity bonus payments and energy payments,
were $27.9 million, $20.9 million and $19.3 million, respectively, for the
six-months ended June 30, 2003, as compared to $59.8 million, $54.7 million and
$54.2 million, respectively, for the same period in 2002, decreases of 53.3%,
61.8% and 64.4%, respectively. Capacity and capacity bonus revenues for each of
the Navy I, BLM and Navy II Partnerships were $4.8 million, $4.7 million and
$4.7 million, respectively, for the six-months ended June 30, 2003, as compared
to $6.7 million, $6.5 million and $6.6 million, respectively, for the same
period in 2002, decreases of 28.4%, 27.7% and 28.8%, respectively. Total energy
revenues, net of steam transfer for the Navy I, BLM and Navy II Partnerships
were $23.1 million, $16.2 million and $14.6 million, respectively, for the
six-months ended June 30, 2003, as compared to $53.1 million, $48.1 million and
$47.6 million, respectively, for the same period in 2002, decreases of 56.5%,
66.3% and 69.3%, respectively. Each of the Coso Partnerships' decreases in
operating revenues, capacity and capacity bonus revenues and energy revenues for
the six-months ended June 30, 2003, as compared to the same period in 2002, were
primarily due to the recognition of revenues generated but not recognized for
the period from November 1, 2000 through March 26, 2001 discussed above. On
March 1, 2002, the Navy I, BLM and Navy II Partnerships received payment and
recognized revenue of $37.3 million, $37.1 million and $38.0 million,
respectively. These decreases were partially offset by the increase in the fixed
energy rate to 5.37 cents per kWh paid during the six-months ended June 30, 2003
as compared to the average fixed energy rate of 3.96 cents per kWh for the same
period in 2002.
24
Plant Operations
Three-Months Three-Months Six-Months Six-Months
Ended Ended Ended Ended
June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 2,317 1.3 2,261 1.3 4,584 1.3 4,568 1.3
BLM Partnership 3,026 2.0 2,648 1.6 5,764 1.9 5,253 1.6
Navy II Partnership 2,493 1.5 2,519 1.5 4,848 1.4 4,490 1.3
The BLM Partnership's operating expenses, including operating and general
and administrative expenses, were $3.0 million and $5.8 million for the three
and six-months ended June 30, 2003, respectively, as compared to $2.6 million
and $5.3 million for the same periods in 2002, increases of 15.4% and 9.4%,
respectively. The increase in the BLM Partnership's operating expenses were
primarily due to increased property taxes and maintenance costs incurred during
the three and six-month periods ended June 30, 2003, as compared to the same
period in 2002.
The Navy II Partnership's operating expenses, including operating and
general and administrative expenses, were $4.8 million for the six-months ended
June 30, 2003, as compared to $4.5 million for the same period in 2002, and
increase of 6.7%. The increase in the Navy II Partnership's operating expenses
were due to increased property taxes and well maintenance cost incurred during
the six-month period ended June 30, 2003 as compared to the same period in 2002.
The change in the Navy II Partnerships operating expenses, including operating
and general and administrative expenses were insignificant for the three-months
ended June 30, 2003 due to the increased property taxes being partially offset
by decreased maintenance costs during that period as compared to 2002.
The change in the Navy I Partnership's operating expenses, including
operating and general and administrative expenses were insignificant for the
three and six-months ended June 30, 2003 due to the increased property tax costs
being partially offset by decreased drilling costs during that period as
compared to 2002.
Royalty Expense
Three-Months Three-Months Six-Months Six-Months
Ended Ended Ended Ended
June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 3,940 2.2 3,419 1.9 6,621 1.9 5,631 1.6
BLM Partnership 664 0.4 664 0.4 689 0.2 675 0.2
Navy II Partnership 1,703 1.0 1,692 1.0 3,175 0.9 2,749 0.8
The Navy I Partnership's royalty expenses were $3.9 million and $6.6
million for the three and six-months ended June 30, 2003, respectively, as
compared to $3.4 million and $5.6 million for the same periods in 2002,
increases of 14.7% and 17.9%, respectively. The increase in royalty expense for
the Navy I Partnership for the three and six-months ended June 30, 2003, as
compared to the same periods in 2002, were primarily due to the increase in the
fixed energy rate to 5.37 cents per kWh for the three and six-months ended June
30, 2003 from 4.66 cents per kWh and 3.96 cents per kWh, respectively, for the
three and six-months ended June 30, 2002.
The change in the BLM Partnership's royalty expenses was insignificant, for
the three and six-months ended June 30, 2003, as compared to the same periods in
2002.
The Navy II Partnership's royalty expense was $3.2 million for the
six-months ended June 30, 2003 as compared to $2.7 million for the same period
in 2002, an increase of 18.5%. The increase in royalty expense for the Navy II
Partnerships for the six-months ended June 30, 2003, as compared to the same
25
period in 2002 was primarily due to the increase in the fixed energy rate to
5.37 cents per kWh for the six-months ended June 30, 2003 from 3.96 cents per
kWh for the six-months ended June 30, 2002. The change in Navy II Partnership's
royalty expenses were insignificant for the three-months ended June 30, 2003, as
compared to the same period in 2002.
Depreciation and Amortization
Three-Months Three-Months Six-Months Six-Months
Ended Ended Ended Ended
June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 2,715 1.5 2,541 1.4 5,277 1.5 5,077 1.4
BLM Partnership 2,344 1.5 4,173 2.5 4,684 1.5 8,232 2.5
Navy II Partnership 2,492 1.5 3,830 2.3 5,260 1.6 7,659 2.2
The Navy I Partnership's depreciation and amortization expenses was $2.7
million for the three-months ended June 30, 2003, as compared to $2.5 million
for the same period in 2002, an increase of 8.0%. The increase in depreciation
and amortization for the three-months ended June 30, 2003, as compared to the
same period in 2002, was due to an increase in capitalized assets during that
period in 2002.
The BLM Partnership's depreciation and amortization expenses were $2.3
million and $4.7 million, respectively, for the three and six-months ended June
30, 2003 as compared to $4.2 million and $8.2 million, for the same periods in
2002, decreases of 45.2% and 42.7% respectively. The Navy II Partnership's
depreciation and amortization expenses were $2.5 million and $5.3 million,
respectively, for the three and six-months ended June 30, 2003 as compared to
$3.8 million and $7.7 million, for the same periods in 2002, decreases of 34.2%
and 31.2%, respectively. These decreases in the BLM and Navy II Partnerships
depreciation and amortization expense for the three and six-months ended June
30, 2003, as compared to the same period in 2002 were due to older wells being
fully depreciated during the second half of 2002.
Interest and Other Income
Three-Months Three-Months Six-Months Six-Months
Ended Ended Ended Ended
June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 55 0.0 1,045 0.6 114 0.0 1,519 0.4
BLM Partnership 231 0.1 260 0.2 513 0.2 902 0.3
Navy II Partnership 54 0.0 169 0.1 133 0.0 651 0.2
The Navy I Partnership's interest and other income was $0.1 million for the
three-months ended June 30, 2003, as compared to $1.0 million for the same
period in 2002, a decrease of 90.0%. The decrease was primarily due to the
collection of $0.8 million of insurance proceeds for lost revenue in 1999 caused
by equipment failure during the three-months ended June 30, 2002, as well as a
decrease in the rate of return on investments due to lower market rates for
fixed income investments during that period in 2003.
26
The BLM Partnership's interest and other income was $0.2 million for the
three-months ended June 30, 2003, as compared to $0.3 million for the same
period in 2002, a decrease of 33.3%. The Navy II Partnership's interest and
other income was $0.1 million for the three-months ended June 30, 2003, as
compared to $0.2 million for the same period in 2002, a decrease of 50.0%. The
decreases in interest and other income for the BLM and Navy II Partnerships for
the three-months ended June 30, 2003 were primarily due to a decrease in the
rate of return on investments due to lower market rates for fixed income
investments during that period in 2003.
The Navy I, BLM and Navy II Partnerships' interest and other income were
$0.1 million, $0.5 million and $0.1 million, respectively, for the six-months
ended June 30, 2003 as compared to $1.5 million, $0.9 million and $0.7 million,
for the same period in 2002, decreases of 93.3%, 44.4% and 85.7%, respectively.
The decreases in interest and other income for the Navy I, BLM and Navy II
Partnerships were primarily due to interest on amounts in arrears, owed by
Edison in 2001, that were settled and paid by Edison on March 1, 2002.
Interest Expense
Three-Months Three-Months Six-Months Six-Months
Ended Ended Ended Ended
June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 2,491 1.4 2,773 1.5 4,974 1.4 5,548 1.5
BLM Partnership 2,023 1.3 2,177 1.3 4,034 1.3 4,357 1.3
Navy II Partnership 1,807 1.1 1,905 1.2 3,605 1.1 3,813 1.1
The Navy I Partnership's interest expense was $2.5 million and $5.0 million
for the three and six-months ended June 30, 2003, respectively, as compared to
$2.8 million and $5.5 million for the same periods in 2002, decreases of 10.7%
and 9.1%, respectively. The BLM Partnership's interest expense was $2.0 million
and $4.0 million for the three and six-months ended June 30, 2003, respectively,
as compared to $2.2 million and $4.4 million for the same periods in 2002,
decreases of 9.1% and 9.1%, respectively. The Navy II Partnership's interest
expense was $1.8 million and $3.6 million for the three and six-months ended
June 30, 2003, respectively, as compared to $1.9 million and $3.8 million for
the same periods in 2002, decreases of 5.3% and 5.3%, respectively. The
decreases in interest expense for the Navy I, BLM and Navy II Partnerships for
the three and six-months ended June 30, 2003, as compared to the same periods in
2002, were due to reductions in the principal amount of the project loan from
Funding Corp.
Change in Accounting Principle
On January 1, 2003, as a result of the adoption of SFAS No. 143 as
described in the notes to the financial statements, the Navy I, BLM and Navy II
Partnerships recorded a loss on the cumulative effect of change in accounting
principle in the amounts of $1.8 million, $0.9 million and $1.8 million,
respectively.
Liquidity and Capital Resources
Each of the Navy I Partnership, the BLM Partnership and the Navy II
Partnership derive substantially all of their cash flow from Edison under their
power purchase agreements and from interest income earned on funds on deposit.
As of December 2001, the 6.8% notes were repaid, subsequently leaving the Coso
Partnerships with more cash flow annually. The Coso Partnerships have used their
27
cash primarily for capital expenditures for power plant improvements, resource
and operating costs, distributions to partners and payments with respect to the
project debt.
The Coso Partnerships ability to meet their obligations as they come due
will depend upon the ability of Edison to meet its obligations under the terms
of the standard offer No. 4 power purchase agreements and ability to continue to
generate electricity. Edison's shortfall in collections, coupled with its near
term capital requirements, materially and adversely affected its liquidity
during 2000 and 2001. In resolution of that issue, Edison settled with the CPUC
on October 2, 2001, enabling it to recover in retail electric rates its
historical shortfall in electric purchase costs. On September 23, 2002, the
United States Court of Appeals for the Ninth Circuit issued an opinion and order
on appeal from the district court's stipulated judgment, which affirmed the
stipulated judgment in part and referred questions based on California state law
to the Supreme Court of California. The appeals court stated that if the
Agreement violated California state law then the appeals court would be required
to void the stipulated judgment. The California Supreme Court has accepted the
Ninth Circuit Court of Appeals request to address the issues referred to it in
the September 23, 2002 ruling. On May 27, 2003 the California Supreme Court
heard oral arguments related to state law on this matter. Pending the findings
of the California Supreme Court, the Agreement remains in full force and effect.
It is unclear what effect an adverse ruling would have on the Coso Partnerships,
but could result in a modification to the Agreement.
Immediately after this Edison-CPUC settlement, Edison and each of the Coso
Partnerships entered into an amendment of their respective Agreement (referenced
above) pertaining to partial payment and interest payments relating to Edison's
past due obligations for the period from November 1, 2000 through March 26,
2001. The Agreement, as amended, was approved by the CPUC in January of 2002,
and established the fixed energy rates discussed above and set payment terms for
the past due amounts owed to the Coso Partnerships by Edison. Edison's failure
to pay its future obligations may have a material adverse effect on the Coso
Partnerships ability to make debt service payments to Funding Corp., as they
come due under the Funding Corp. notes.
On March 1, 2002, Edison reached certain financing milestones and paid the
Coso Partnerships for revenue generated but not recognized for the period from
November 1, 2000 through March 26, 2001. In the first quarter of 2002, the Navy
I, BLM and Navy II Partnerships recognized revenue for energy delivered during
that period of $37.3 million, $37.1 million and $38.0 million, respectively.
The following table sets forth a summary of each the Coso Partnership's
cash flows for the six-months ended June 30, 2003 and June 30, 2002.
Six-Months Six-Months
Ended Ended
June 30, 2003 June 30, 2002
Navy I Partnership (stand alone)
Net cash provided by (used in) operating activities $ 8,390 $ 44,722
Net cash provided by (used in) investing activities (5,064) (2,835)
Net cash provided by (used in) financing activities (5,397) (40,568)
------- --------
Net change in cash and cash equivalents $ (2,071) $ 1,319
======= ========
BLM Partnership (stand alone)
Net cash provided by (used in) operating activities $ 10,303 $ 31,657
Net cash provided by (used in) investing activities (3,054) (1,747)
Net cash provided by (used in) financing activities (2,022) (29,519)
------- --------
Net change in cash and cash equivalents $ 5,227 $ 391
======= ========
Navy II Partnership (stand alone)
Net cash provided by (used in) operating activities $ 7,707 $ 18,948
Net cash provided by (used in) investing activities (4,270) (1,041)
Net cash provided by (used in) financing activities (3,662) (17,776)
------- --------
Net change in cash and cash equivalents $ (225) $ 131
======= ========
28
The Navy I Partnership's cash flows from operating activities decreased by
$36.3 million for the six-months ended June 30, 2003, as compared to the same
period in 2002, primarily due to the increase in net income in 2002 resulting
from Edison's payment received on March 1, 2002 for revenue generated but not
recognized for the period November 1, 2000 through March 26, 2001 and a decrease
in amounts due from related parties.
Cash used in investing activities at the Navy I Partnership increased by
$2.3 million for the six-months ended June 30, 2003, as compared to the same
period in 2002, primarily due to an increase in capital expenditures during that
period in 2003.
The Navy I Partnership's cash used in financing activities decreased by
$35.2 million for the six-months ended June 30, 2003, as compared to the same
period in 2002, due to decreased partner distributions paid during that period
in 2003.
The BLM Partnership's cash flows from operating activities decreased by
$21.4 million for the six-months ended June 30, 2003, as compared to the same
period in 2002, primarily due to the increase in net income resulting from
Edison's payment received on March 1, 2002 for revenue generated but not
recognized for the period November 1, 2000 through March 26, 2001, partially
offset by an increase in trade payables.
Cash used in investing activities at the BLM Partnership increased by $1.4
million for the six-months ended June 30, 2003, as compared to the same period
in 2002, primarily due to an increase in capital expenditures during that period
in 2003.
The BLM Partnership's cash used in financing activities decreased by $27.5
million for the six-months ended June 30, 2003, as compared to the same period
in 2002, due to decreased partner distributions paid during that period in 2003.
The Navy II Partnership's cash flows from operating activities decreased by
$11.2 million for the six-months ended June 30, 2003, as compared to the same
period in 2002, primarily due to the increase in net income resulting from
Edison's payment received on March 1, 2002 for revenue generated but not
recognized for the period November 1, 2000 through March 26, 2001, partially
offset by an increase in trade payables.
Cash used in investing activities at the Navy II Partnership increased by
$3.3 million for the six-months ended June 30, 2003, as compared to the same
period in 2002, primarily due to an increase in capital expenditures partially
offset by a decrease in restricted cash requirements associated with the project
loan from Funding Corp. during 2003.
The Navy II Partnership's cash used in financing activities decreased by
$14.1 million for the six-months ended June 30, 2003, as compared to the same
period in 2002, due to decreased partner distributions paid during that period
in 2003.
29
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
General
The Coso Partnerships are currently parties to various items of litigation
relating to day-to-day operations, none of which, if determined adversely, would
be material to the financial condition and results of operations of the Coso
Partnerships, either individually or taken as a whole.
ITEM 2. Change in Securities and Use of Proceeds
None.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5. Other Information
Supplemental Condensed Combined Financial Information for the Coso Partnerships
The following information presents unaudited condensed combined financial
statements of the Coso Partnerships. These financial statements represent a
combination of the financial statements of Caithness Coso Funding Corp., Coso
Finance Partners, Coso Energy Developers and Coso Power Developers for the
periods indicated. This supplemental financial information is not required by
accounting principles generally accepted in the United States of America and has
been provided to facilitate a more comprehensive understanding of the financial
position, operating results and cash flows of the Coso Partnerships as a whole,
which jointly and severally guarantee the repayment of Caithness Coso Funding
Corp's senior notes. The unaudited condensed combined financial statements
should be read in conjunction with each individual Coso Partnership's financial
statements and their accompanying notes.
The financial information herein presented reflects all adjustments,
consisting only of normal recurring adjustments, which are, in the opinion of
management, necessary for a fair statement of the results for interim periods
presented. The results for the interim periods are not necessarily indicative of
results to be expected for the full year.
30
COSO PARTNERSHIPS
UNAUDITED CONDENSED COMBINED BALANCE SHEETS
(Dollars in thousands)
June 30, December 31,
2003 2002
Assets:
Cash and cash equivalents.................................................... $ 9,393 $ 6,462
Restricted cash and investments.............................................. 49,517 46,193
Accounts receivable, net..................................................... 28,048 21,346
Prepaid expenses and other assets............................................ 708 3,549
Amounts due from related parties............................................. 8,259 6,516
Property, plant and equipment, net........................................... 384,386 388,358
Power purchase agreement, net................................................ 44,829 47,336
Investments and advances..................................................... 12,419 12,508
Deferred financing costs, net................................................ 5,118 5,512
------- -------
$ 542,677 $ 537,780
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities..................................... $ 6,871 $ 10,486
Amounts due to related parties............................................... 28,441 25,415
Other liabilities............................................................ 19,316 13,276
Project loans................................................................ 270,150 281,231
------- -------
324,778 330,408
Partners' capital............................................................... 217,899 207,372
------- -------
$ 542,677 $ 537,780
======= =======
See accompanying notes to the unaudited condensed combined financial statements.
31
COSO PARTNERSHIPS
UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months Six-Months Six-Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
Revenue:
Energy revenues.................................. $ 27,204 $ 24,734 $ 53,887 $ 148,884
Capacity revenues................................ 10,554 10,555 14,270 19,805
------ ------ ------ -------
Total revenue............................. 37,758 35,289 68,157 168,689
Operating expenses:
Plant operating expenses......................... 7,836 7,428 15,196 14,311
Royalty expense.................................. 6,307 5,775 10,485 9,055
Depreciation and amortization.................... 7,551 10,544 15,221 20,968
------ ------ ------ -------
Total operating expenses.................. 21,694 23,747 40,902 44,334
Operating income.......................... 16,064 11,542 27,255 124,355
Other (income)/expenses:
Interest and other income........................ (340) (1,474) (760) (3,072)
Interest expense................................. 6,321 6,855 12,613 13,718
Amortization of deferred financing costs......... 196 196 394 393
------ ------ ------ -------
Total other expenses...................... 6,177 5,577 12,247 11,039
------ ------ ------ -------
Income before cumulative effect of change in
accounting principle............................. 9,887 5,965 15,008 113,316
Cumulative effect of change in accounting
principle........................................ --- --- 4,481 ---
------ ------ ------ -------
Net income............................... $ 9,887 $ 5,965 $ 10,527 $ 113,316
====== ====== ====== =======
See accompanying notes to the unaudited condensed combined financial statements.
32
COSO PARTNERSHIPS
UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Six-Months Six-Months
Ended Ended
June 30, June 30,
2003 2002
Net cash provided by (used in) operating activities... $ 26,400 $ 95,329
Net cash provided by (used in) investing activities... (12,388) (5,623)
Net cash provided by (used in) financing activities... (11,081) (87,865)
-------- --------
Net change in cash and cash equivalents............... $ 2,931 $ 1,841
======== ========
Supplemental cash flow disclosure:
Cash paid for interest............................. $ 12,726 $ 13,710
======== ========
See accompanying notes to the unaudited condensed combined financial statements.
33
COSO PARTNERSHIPS
NOTES TO THE UNAUDITED CONDENSED COMBINED
FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying unaudited condensed combined financial statements were derived
from the stand alone unaudited condensed financial statements of Caithness Coso
Funding Corp., Coso Finance Partners, Coso Energy Developers and Coso Power
Developers ("the Coso Partnerships"). All intercompany accounts and transactions
were eliminated. This financial information has been provided to facilitate a
more comprehensive understanding of the financial position, operating results
and cash flows of the Coso Partnerships as a whole. The unaudited condensed
combined financial statements should be read in conjunction with each individual
Partnership's unaudited condensed financial statements.
(2) Accounts Receivable and Revenue Recognition
Due to the uncertainty surrounding Edison's ability to make payment on past due
amounts, collection was not reasonably assured and the Coso Partnerships had not
recognized revenue from Edison for energy delivered during the period November
1, 2000 through March 26, 2001. On March 1, 2002, Edison reached certain
financing milestones and paid the Coso Partnerships for revenue generated, but
not recognized for the period November 1, 2000 through March 26, 2001. For the
six-months ended June 30, 2002, the Coso Partnerships recognized revenue for
energy delivered from November 1, 2000 through March 26, 2001 of $112.4 million.
(3) Reclassifications
Certain balances in prior years have been reclassified to conform to the
presentation adopted in the current year.
(4) New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations. This Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs and amends SFAS No. 19, Financial Accounting
and Reporting by Oil and Gas Producing Companies. The Statement requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred if a reasonable estimate of fair value can
be made, and that the associated asset retirement costs be capitalized as part
of the carrying amount of the long-lived asset. The Statement is effective for
financial statements issued for fiscal years beginning after June 15, 2002. As a
result of the adoption of SFAS No. 143, the Partnership was required to
recognize a liability of $5,292, a net asset of $811 and a loss from the
cumulative effect of a change in accounting principle of $4,481 as of January 1,
2003. In 2003 additional depreciation and accretion expense resulting from
adoption of SFAS No. 143 is estimated to be $675.
34
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule--Form SX--Caithness Coso Funding Corp.
27.2 Financial Data Schedule--Form SX--Coso Finance Partners
27.3 Financial Data Schedule--Form SX--Coso Energy Developers
27.4 Financial Data Schedule--Form SX--Coso Power Developers
Certification of Chief Executive Officer
Certification of Chief Financial Officer
99.1 Certification of Chief Executive Officer
99.2 Certification of Chief Financial Officer
(b) Reports on Form 8-K
None
35
EXHIBIT 27.1
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: CAITHNESS COSO FUNDING CORP.
----------------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
--- ----
other than 1 (one)?
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 6 - MOS
--- --- --- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec - 31 - 2002 DEC - 31 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD START
(example: JAN-01-1997) Jan - 01 - 2002 JAN - 01 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD END
(example: SEP-30-1997) Dec - 31 - 2002 JUN - 30 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 6 MOS
---- -----
CASH 0 0
SECURITIES 0 0
RECEIVABLES 282,361 271,174
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 1,130 1,021
PP&E 0 0
DEPRECIATION 0 0
TOTAL ASSETS 282,361 271,174
CURRENT LIABILITIES 1,130 1,021
BONDS 281,231 270,153
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 282,361 271,174
SALES 0 0
TOTAL REVENUES 26,931 12,617
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 0 0
LOSS PROVISION 0 0
INTEREST EXPENSES 26,931 12,617
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 6 - MOS
--- --- --- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec - 31 - 2002 DEC - 31 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD START
(example: JAN-01-1997) Jan - 01 - 2002 JAN - 01 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD END
(example: SEP-30-1997) Dec - 31 - 2002 JUN - 30 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 6 MOS
---- -----
CASH 4,215 2,144
SECURITIES 28,692 31,399
RECEIVABLES 8,621 11,206
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 13,904 13,601
PP&E 234,442 236,799
DEPRECIATION 98,129 102,944
TOTAL ASSETS 195,072 194,429
CURRENT LIABILITIES 6,231 3,764
BONDS 110,955 105,558
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 195,072 194,429
SALES 92,065 27,876
TOTAL REVENUES 93,639 27,990
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 33,376 16,482
LOSS PROVISION 0 0
INTEREST EXPENSES 11,151 5,132
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 1,780
NET INCOME 49,112 4,596
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 6 - MOS
--- --- --- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec - 31 - 2002 DEC - 31 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD START
(example: JAN-01-1997) Jan - 01 - 2002 JAN - 01 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD END
(example: SEP-30-1997) Dec - 31 - 2002 JUN - 30 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 6 MOS
---- -----
CASH 1,423 6,650
SECURITIES 6,646 7,573
RECEIVABLES 7,102 9,515
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 9,895 16,393
PP&E 247,912 250,039
DEPRECIATION 112,059 116,255
TOTAL ASSETS 174,871 179,425
CURRENT LIABILITIES 27,961 28,124
BONDS 89,875 87,853
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 174,871 179,425
SALES 81,252 20,944
TOTAL REVENUES 82,707 21,457
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 28,526 11,137
LOSS PROVISION 0 0
INTEREST EXPENSES 8,822 4,161
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 924
NET INCOME 45,359 5,235
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 6 - MOS
--- --- --- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec - 31 - 2002 DEC - 31 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD START
(example: JAN-01-1997) Jan - 01 - 2002 JAN - 01 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
PERIOD END
(example: SEP-30-1997) Dec - 31 - 2002 JUN - 30 - 2003
--------------- ---------------
mmm - dd - yyyy mmm - dd - yyyy
EXCHANGE RATE EXCHANGE RATE: EXCHANGE RATE:
Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
Yes X No
--- ---
PERIOD TYPE Year PERIOD TYPE 6 MOS
---- -----
CASH 824 599
SECURITIES 10,855 10,545
RECEIVABLES 13,136 15,586
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 15,071 16,414
PP&E 210,548 215,128
DEPRECIATION 94,356 98,381
TOTAL ASSETS 168,834 168,823
CURRENT LIABILITIES 2,706 3,424
BONDS 80,401 76,739
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 168,834 168,823
SALES 79,592 19,337
TOTAL REVENUES 80,486 19,470
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 29,428 13,283
LOSS PROVISION 0 0
INTEREST EXPENSES 7,755 3,714
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 1,777
NET INCOME 43,303 696
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION
302(a) OF THE SARBANES-OXLEY ACT OF 2002
I, James D. Bishop, Sr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Caithness Coso
Funding Corp., Coso Finance Partners, Coso Energy Developers, and Coso
Power Developers (collectively, the "Registrant");
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in this
quarterly report;
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Registrant's auditors and the audit
committee of Registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have
identified for the Registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal
controls; and
6. The Registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: August 14, 2003 Caithness Coso Funding Corp.
a Delaware Corporation
By: /S/ JAMES D. BISHOP, SR.
------------------------
James D. Bishop, Sr.
Director, Chairman &
Chief Executive Officer
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION
302(a) OF THE SARBANES-OXLEY ACT OF 2002
I, Christopher T. McCallion, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Caithness Coso
Funding Corp., Coso Finance Partners, Coso Energy Developers, and Coso
Power Developers (collectively, the "Registrant");
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in this
quarterly report;
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Registrant's auditors and the audit
committee of Registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have
identified for the Registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal
controls; and
6. The Registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: August 14, 2003 Caithness Coso Funding Corp.
a Delaware Corporation
By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial &
Accounting Officer)
Exhibit 99.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Caithness Coso Funding Corp., Coso
Finance Partners, Coso Energy Developers, and Coso Power Developers
(collectively, the "Registrant") on Form 10-Q for the period ending June 30,
2003 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, James D. Bishop, Sr., Chief Executive Officer of the
Registrant, certify, to the best of my knowledge and belief, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of
the Registrant.
Date: August 14, 2003 Caithness Coso Funding Corp.
a Delaware Corporation
By: /S/ JAMES D. BISHOP, SR.
------------------------
James D. Bishop, Sr.
Director, Chairman &
Chief Executive Officer
Exhibit 99.2
CERTIFICATION OF CHIEF 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, Coso Energy Developers, and Coso Power Developers
(collectively, the "Registrant") on Form 10-Q for the period ending June 30,
2003 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. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of
the Registrant.
Date: August 14, 2003 Caithness Coso Funding Corp.
a Delaware Corporation
By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial &
Accounting Officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAITHNESS COSO FUNDING CORP.,
a Delaware corporation
Date: August 14, 2003 By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
COSO FINANCE PARTNERS
a California general Partnership
By: New CLOC Company, LLC,
its Managing General Partner
Date: August 14, 2003 By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
COSO ENERGY DEVELOPERS
a California general Partnership
By: New CHIP Company, LLC,
its Managing General Partner
Date: August 14, 2003 By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
COSO POWER DEVELOPERS
a California general Partnership
By: New CTC Company, LLC,
its Managing General Partner
Date: August 14, 2003 By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)