FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended September 30, 2003
------------------
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
---------
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
--------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name, former address and former
fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
300 shares in Caithness Coso Funding Corp. as of November 13, 2003
------------------------------------------------------------------
CAITHNESS COSO FUNDING CORP.
Form 10-Q
For the Quarter Ended September 30, 2003
PART I. FINANCIAL INFORMATION Page No.
ITEM 1. Financial Statements
Caithness Coso Funding Corp.
Unaudited condensed balance sheets at September 30, 2003 and
December 31, 2002 4
Unaudited condensed statements of operations for the three-months
ended September 30, 2003, the three-months ended September 30,
2002, the nine-months ended September 30, 2003, and the nine-
months ended September 30, 2002 5
Unaudited condensed statements of cash flows for the nine-months
ended September 30, 2003, and the nine-months ended
September 30, 2002 6
Notes to the unaudited condensed financial statements 7
Coso Finance Partners
Unaudited condensed balance sheets at September 30, 2003 and
December 31, 2002 8
Unaudited condensed statements of operations for the three-months
ended September 30, 2003, the three-months ended September 30,
2002, the nine-months ended September 30, 2003, and the nine-
months ended September 30, 2002 9
Unaudited condensed statements of cash flows for the nine-months
ended September 30, 2003, and the nine-months ended
September 30, 2002 10
Notes to the unaudited condensed financial statements 11
Coso Energy Developers
Unaudited condensed balance sheets at September 30, 2003 and
December 31, 2002 13
Unaudited condensed statements of operations for the three-months
ended September 30, 2003, the three-months ended September 30,
2002, the nine-months ended September 30, 2003, and the nine-
months ended September 30, 2002 14
Unaudited condensed statements of cash flows for the nine-months
ended September 30, 2003, and the nine-months ended
September 30, 2002 15
Notes to the unaudited condensed financial statements 16
2
Coso Power Developers
Unaudited condensed balance sheets at September 30, 2003 and
December 31, 2002 18
Unaudited condensed statements of operations for the three-months
ended September 30, 2003, the three-months ended September 30,
2002, the nine-months ended September 30, 2003, and the nine-
months ended September 30, 2002 19
Unaudited condensed statements of cash flows for the nine-months
ended September 30, 2003, and the nine-months ended
September 30, 2002 20
Notes to the unaudited condensed financial statements 21
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 22
ITEM 3. Controls and Procedures 32
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 32
ITEM 2. Change in Securities and Use of Proceeds 32
ITEM 3. Defaults upon Senior Securities 32
ITEM 4. Submission of Matters to a Vote of Security Holders 33
ITEM 5. Other Information 33
Supplemental condensed combined financial information for the
Coso Partnerships
Unaudited condensed combined balance sheets at September 30,
2003 and December 31, 2002 34
Unaudited condensed combined statements of operations for the
three-months ended September 30, 2003, the three-months ended
September 30, 2002, the nine-months ended September 30, 2003,
and the nine-months ended September 30, 2002 35
Unaudited condensed combined statements of cash flows for the
nine-months ended September 30, 2003, and the nine-months
ended September 30, 2002 36
Notes to the unaudited condensed combined financial statements 37
ITEM 6. Exhibits and Reports on Form 8-K 39
3
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
September 30, December 31,
2003 2002
(Note)
Assets:
Accrued interest receivable....................... $ 7,165 $ 1,130
Project loan to Coso Finance Partners............. 105,560 110,955
Project loan to Coso Energy Developers............ 87,853 89,875
Project loan to Coso Power Developers............. 76,739 80,401
------ ------
$ 277,317 $ 282,361
======= =======
Liabilities and Stockholders' Equity:
Senior secured notes:
Accrued interest payable....................... $ 7,165 $ 1,130
9.05% notes due 2009........................... 270,152 281,231
------- -------
277,317 282,361
Stockholders' equity................................. --- ---
------- -------
$ 277,317 $ 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 Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2003 2002 2003 2002
Interest income................ $ 6,144 $ 6,659 $ 18,761 $ 20,369
Interest expense............... (6,144) (6,659) (18,761) (20,369)
------- ------- -------- --------
Net income................. $ --- $ --- $ --- $ ---
======= ======= ======== ========
See accompanying notes to the unaudited condensed financial statements
5
CAITHNESS COSO FUNDING CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2003 2002
Net cash provided by (used in) investing activities....... $ 5,044 $ 2,051
Net cash provided by (used in) financing activities....... (5,044) (2,051)
----- -----
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
(Dollars in thousands)
(1) Organization and Operations
Caithness Coso Funding Corp. (Funding Corp.), which was incorporated on April
22, 1999, is a single-purpose Delaware corporation formed to issue senior
secured notes (Notes) for its own account and as an agent acting on behalf of
Coso Finance Partners (CFP), Coso Energy Developers (CED), and Coso Power
Developers (CPD), collectively, the "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)
September 30, December 31,
2003 2002
(Note)
Assets:
Cash and cash equivalents.................................................. $ 11,786 $ 4,215
Restricted cash and investments............................................ 27,094 28,692
Accounts receivable, net................................................... 11,978 7,431
Prepaid expenses & other assets............................................ 1,276 1,068
Amounts due from related parties........................................... 1,169 1,190
Property, plant & equipment, net........................................... 137,237 136,313
Power purchase agreement, net.............................................. 9,084 9,945
Advances to New CLPSI Company, LLC......................................... 4,099 4,010
Deferred financing costs, net.............................................. 1,971 2,208
----- -----
$ 205,694 $ 195,072
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities................................... $ 4,294 $ 5,764
Amounts due to related parties............................................. 3,162 467
Other liabilities.......................................................... 15,274 12,478
Project loans.............................................................. 105,560 110,955
------- -------
128,290 129,664
Partners' capital............................................................. 77,404 65,408
------- -------
$ 205,694 $ 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 Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2003 2002 2003 2002
Revenue:
Energy revenues................................ $ 11,643 $ 11,571 $ 34,698 $ 64,683
Capacity revenues.............................. 8,190 8,190 13,011 14,904
----- ----- ------ ------
Total revenue........................... 19,833 19,761 47,709 79,587
Operating expenses:
Plant operating expenses....................... 2,291 2,811 6,875 7,379
Royalty expense................................ 4,982 5,762 11,603 11,393
Depreciation and amortization.................. 2,720 3,049 7,997 8,126
----- ----- ----- -----
Total operating expenses................ 9,993 11,622 26,475 26,898
Operating income........................ 9,840 8,139 21,234 52,689
Other (income)/expenses:
Interest and other income...................... (41) (136) (155) (1,655)
Interest expense............................... 2,402 2,668 7,376 8,216
Amortization of deferred financing costs....... 79 79 237 237
----- ----- ----- -----
Total other expenses.................... 2,440 2,611 7,458 6,798
----- ----- ----- -----
Income before cumulative effect of change
in accounting principle........................ 7,400 5,528 13,776 45,891
Cumulative effect of change in
accounting principle........................... --- --- 1,780 ---
----- ----- ------ ------
Net income.............................. $ 7,400 $ 5,528 $ 11,996 $ 45,891
===== ===== ====== ======
See accompanying notes to the unaudited condensed financial statements
9
COSO FINANCE PARTNERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2003 2002
Net cash provided by (used in) operating activities .......... $ 19,017 $ 54,861
Net cash provided by (used in) investing activities .......... (6,051) (4,546)
Net cash provided by (used in) financing activities........... (5,395) (40,568)
----- ------
Net change in cash and cash equivalents ...................... $ 7,571 $ 9,747
===== ======
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
(Dollars in thousands)
(1) Organization and Operation
Coso Finance Partners (CFP), a general partnership, is engaged in the operation
of a 80 MW power generation facility located at the China Lake Naval Air Weapons
Station, China Lake California. CFP sells all electricity produced to Southern
California Edison (Edison) under a 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 nine-months ended September
30, 2002, CFP recognized revenue for energy delivered from November 1, 2000
through March 26, 2001 of $37.3 million.
(4) Reclassifications
Certain 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 (FASB) 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
11
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.
In January 2003, the FASB issued Interpretation No. 46, (FIN 46) Consolidation
of Variable Interest Entities, an interpretation of ARB No. 51. This
Interpretation addresses the consolidation by business enterprises of variable
interest entities as defined in the Interpretation. The Interpretation was
originally intended to be applied immediately to variable interests in variable
interest entities created after January 31, 2003, and in the first fiscal year
or interim period beginning after June 15, 2003 to enterprises that hold a
variable interest in variable interest entities created before February 1, 2003.
On September 17, 2003, the FASB instructed the FASB staff to prepare a FASB
Staff Position to defer the effective date of Interpretation 46 until the end of
the first interim or annual period ending after December 15, 2003, for certain
interests held by a public entity in certain variable interest entities. At that
FASB meeting, the FASB also decided to address proposed modifications to FIN 46
in an Interpretation of that document. Those modifications would alter how
companies identify variable interest entities and modify the determination of
which party should consolidate them (the primary beneficiary). The effect of the
application of this Interpretation on CFP's financial statements is currently
being evaluated and the expected impact has not yet been determined.
12
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
September 30, December 31,
2003 2002
(Note)
Assets:
Cash and cash equivalents ................................ $ 15,651 $ 1,423
Restricted cash and investments .......................... 7,244 6,646
Accounts receivable, net ................................. 10,947 6,681
Prepaid expenses and other assets ........................ 1,613 1,370
Amounts due from related parties ......................... 437 421
Property, plant and equipment, net ....................... 132,402 135,853
Power purchase agreement, net ............................ 16,561 17,365
Investment in Coso Transmission Line Partners............. 2,584 2,653
Advances to New CLPSI Company, LLC ....................... 556 674
Deferred financing costs, net ............................ 1,594 1,785
------- -------
$ 189,589 $ 174,871
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities.................. $ 2,037 $ 1,644
Amounts due to related parties............................ 28,958 26,317
Other liabilities......................................... 1,638 432
Project loans............................................. 87,853 89,875
------- -------
120,486 118,268
Partners' capital............................................ 69,103 56,603
------ ------
$ 189,589 $ 174,871
======= =======
Note:The condensed balance sheet at December 31, 2002 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.
See accompanying notes to the unaudited condensed financial statements
13
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2003 2002 2003 2002
Revenue:
Energy revenues.................................. $ 8,220 $ 8,589 $ 24,453 $ 56,724
Capacity revenues................................ 8,002 8,002 12,713 14,537
------ ------ ------ ------
Total revenue............................. 16,222 16,591 37,166 71,261
Operating expenses:
Plant operating expenses......................... 3,421 3,328 9,185 8,581
Royalty expense.................................. 1,339 1,482 2,028 2,157
Depreciation and amortization.................... 2,371 3,903 7,055 12,135
----- ----- ------ ------
Total operating expenses.................. 7,131 8,713 18,268 22,873
Operating income.......................... 9,091 7,878 18,898 48,388
Other (income)/expenses:
Interest and other income........................ (236) (267) (749) (1,169)
Interest expense................................. 1,998 2,120 6,032 6,477
Amortization of deferred financing costs......... 64 64 191 191
----- ----- ----- -----
Total other expenses...................... 1,826 1,917 5,474 5,499
----- ----- ----- -----
Income before cumulative effect of change
in accounting principle.......................... 7,265 5,961 13,424 42,889
Cumulative effect of change in
accounting principle............................. --- --- 924 ---
----- ----- ------ ------
Net income............................... $ 7,265 $ 5,961 $ 12,500 $ 42,889
===== ===== ====== ======
See accompanying notes to the unaudited condensed financial statements
14
COSO ENERGY DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2003 2002
Net cash provided by (used in) operating activities..... $ 19,366 $ 41,610
Net cash provided by (used in) investing activities..... (3,116) (1,674)
Net cash provided by (used in) financing activities..... (2,022) (29,520)
------ ------
Net change in cash and cash equivalents................. $ 14,228 $ 10,416
====== ======
Supplemental cash flow disclosure:
Cash paid for interest............................. $ 4,067 $ 4,355
====== ======
See accompanying notes to the unaudited condensed financial statements
15
COSO ENERGY DEVELOPERS
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
(1) Organization and Operation
Coso Energy Developers (CED), a general partnership, is engaged in the operation
of a 80 MW power generation facility located at the Coso Hot Springs, China Lake
California. CED sells all electricity produced to Southern California Edison
(Edison) under a 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 nine-months ended September
30, 2002, CED recognized revenue for energy delivered from November 1, 2000
through March 26, 2001 of $37.1 million.
(4) Reclassifications
Certain 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 (FASB) 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.
16
In January 2003, the FASB issued Interpretation No. 46, (FIN 46) Consolidation
of Variable Interest Entities, an interpretation of ARB No. 51. This
Interpretation addresses the consolidation by business enterprises of variable
interest entities as defined in the Interpretation. The Interpretation was
originally intended to be applied immediately to variable interests in variable
interest entities created after January 31, 2003, and in the first fiscal year
or interim period beginning after June 15, 2003 to enterprises that hold a
variable interest in variable interest entities created before February 1, 2003.
On September 17, 2003, the FASB instructed the FASB staff to prepare a FASB
Staff Position to defer the effective date of Interpretation 46 until the end of
the first interim or annual period ending after December 15, 2003, for certain
interests held by a public entity in certain variable interest entities. At that
FASB meeting, the FASB also decided to address proposed modifications to FIN 46
in an Interpretation of that document. Those modifications would alter how
companies identify variable interest entities and modify the determination of
which party should consolidate them (the primary beneficiary). The effect of the
application of this Interpretation on CED's financial statements is currently
being evaluated and the expected impact has not yet been determined.
17
COSO POWER DEVELOPERS
UNAUDITED CONDENSED BALANCE SHEETS
(Dollars in thousands)
September 30, December 31,
2003 2002
(Note)
Assets:
Cash and cash equivalents................................................ $ 9,537 $ 824
Restricted cash and investments.......................................... 9,492 10,855
Accounts receivable, net................................................. 12,177 7,234
Prepaid expenses and other assets........................................ 1,214 1,111
Amounts due from related parties......................................... 6,251 5,902
Property, plant and equipment, net....................................... 115,550 116,192
Power purchase agreement, net............................................ 17,930 20,026
Investment in Coso Transmission Line Partners............................ 3,177 3,260
Advances to New CLPSI Company, LLC....................................... 1,870 1,911
Deferred financing costs, net............................................ 1,356 1,519
------- -------
$ 178,554 $ 168,834
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities................................. $ 3,158 $ 1,948
Amounts due to related parties........................................... 3,135 758
Other liabilities........................................................ 2,291 366
Project loans............................................................ 76,739 80,401
------ ------
85,323 83,473
Partners' capital........................................................... 93,231 85,361
------ ------
$ 178,554 $ 168,834
======= =======
Note:The condensed balance sheet at December 31, 2002 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.
See accompanying notes to the unaudited condensed financial statements
18
COSO POWER DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2003 2002 2003 2002
Revenue:
Energy revenues.................................. $ 8,466 $ 7,791 $ 23,064 $ 55,428
Capacity revenues................................ 8,047 8,047 12,786 14,603
------ ------ ------ ------
Total revenue............................. 16,513 15,838 35,850 70,031
Operating expenses:
Plant operating expenses......................... 2,401 2,918 7,249 7,408
Royalty expense.................................. 2,655 2,588 5,830 5,337
Depreciation and amortization.................... 2,527 1,848 7,787 9,507
----- ----- ------ ------
Total operating expenses.................. 7,583 7,354 20,866 22,252
Operating income.......................... 8,930 8,484 14,984 47,779
Other (income)/expenses:
Interest and other income........................ (44) (237) (177) (888)
Interest expense................................. 1,745 1,870 5,351 5,683
Amortization of deferred financing costs......... 55 55 163 163
----- ----- ----- -----
Total other expenses...................... 1,756 1,688 5,337 4,958
----- ----- ----- -----
Income before cumulative effect of change
in accounting principle......................... 7,174 6,796 9,647 42,821
Cumulative effect of change in
accounting principle............................. --- --- 1,777 ---
----- ----- ----- ------
Net income................................ $ 7,174 $ 6,796 $ 7,870 $ 42,821
===== ===== ===== ======
See accompanying notes to the unaudited condensed financial statements
19
COSO POWER DEVELOPERS
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2003 2002
Net cash provided by (used in) operating activities............. $ 15,547 $ 26,138
Net cash provided by (used in) investing activities............. (3,172) (1,337)
Net cash provided by (used in) financing activities............. (3,662) (17,775)
----- ------
Net change in cash and cash equivalents......................... $ 8,713 $ 7,026
===== ======
Supplemental cash flow disclosure:
Cash paid for interest................................... $ 3,638 $ 3,810
===== ======
See accompanying notes to the unaudited condensed financial statements
20
COSO POWER DEVELOPERS
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
(1) Organization and Operation
Coso Power Developers (CPD), a general partnership, is engaged in the operation
of a 80 MW power generation facility located at the Coso Hot Springs, China Lake
California. CPD sells all electricity produced to Southern California Edison
(Edison) under a 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 nine-months ended September
30, 2002, CPD recognized revenue for energy delivered from November 1, 2000
through March 26, 2001 of $38.0 million.
(4) Reclassifications
Certain 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 (FASB) 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.
21
In January 2003, the FASB issued Interpretation No. 46, (FIN 46) Consolidation
of Variable Interest Entities, an interpretation of ARB No. 51. This
Interpretation addresses the consolidation by business enterprises of variable
interest entities as defined in the Interpretation. The Interpretation was
originally intended to be applied immediately to variable interests in variable
interest entities created after January 31, 2003, and in the first fiscal year
or interim period beginning after June 15, 2003 to enterprises that hold a
variable interest in variable interest entities created before February 1, 2003.
On September 17, 2003, the FASB instructed the FASB staff to prepare a FASB
Staff Position (FSP) to defer the effective date of Interpretation 46 until the
end of the first interim or annual period ending after December 15, 2003, for
certain interests held by a public entity in certain variable interest entities.
At that FASB meeting, the FASB also decided to address proposed modifications to
FIN 46 in an Interpretation of that document. Those modifications would alter
how companies identify variable interest entities and modify the determination
of which party should consolidate them (the primary beneficiary). The effect of
the application of this Interpretation on CPD's financial statements is
currently being evaluated and the expected impact has not yet been determined.
22
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Except for financial information contained herein, the matters discussed in
this quarterly report may be considered forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and subject to the safe
harbor created by the Securities Litigation Reform Act of 1995. Such statements
include declarations regarding the intent, belief or current expectations of
Caithness Coso Funding Corp. ("Funding Corp."), Coso Finance Partners ("the Navy
I Partnership"), Coso Energy Developers ("the BLM Partnership"), and Coso Power
Developers ("the Navy II Partnership"), collectively, (the "Coso Partnerships")
and their respective management. Such statements may be identified by terms such
as expected, anticipated, may, will, believe or other terms or variations of
such words. Any such forward-looking statements are not guarantees of future
performance and involve a number of risks and uncertainties; actual results
could differ materially from those indicated by such forward-looking statements.
Among the important factors that could cause actual results to differ materially
from those indicated by such forward-looking statements include but are not
limited to: (i) risks relating to the uncertainties in the California energy
market, (ii) the financial viability of Southern California Edison, ("Edison"),
(iii) the information is of a preliminary nature and may be subject to further
adjustment, (iv) risks related to the operation of power plants (v) the impact
of avoided cost pricing along with other pricing variables, (vi) general
operating risks, including resource availability and regulatory oversight, (vii)
the dependence on third parties 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) effects 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 its
respective transmission lines, wells, gathering systems and other related
facilities. The Coso Partnerships are located near one another at the United
States Naval Air Weapons Center at China Lake, California. The Navy I
Partnership owns Navy I and its related facilities. The BLM Partnership owns BLM
and its related facilities. The Navy II Partnership owns Navy II and its related
facilities. 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
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.
23
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 for those periods, 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
Partnerships and are payable to Funding Corp from payments of principal and
interest on the Notes. Funding Corp. does not conduct any other operations apart
from serving as the issuer of the Notes.
24
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. The California Supreme
Court found that the stipulated judgment did not violate state laws.
Consequently, the Agreement remains in full force and effect and it is unknown
if any additional appeals are planned.
Edison filed a petition for a writ of review of a January 2001 CPUC
decision, claiming that the "floor" line loss factor of 0.95 for renewable
generators violated the Public Utility Regulatory Policies Act of 1978 (PURPA).
Subsequently, the California Court of Appeals issued a decision on August 20,
2002 in response to the writs affirming the January 2001 CPUC decision, except
for the 0.95 "floor", which it rejected as an abuse of discretion by the CPUC.
While this matter was appealed to the California Supreme Court, the petition for
review was denied. The Coso Partnerships are currently evaluating potential
actions to redress this issue. Their Agreements set the line loss factor at 1.0
for all energy sold between May 2002 through April 2007. After April 2007, the
Coso Partnerships will have a line loss factor of less than 1.0, effectively
decreasing revenues if Edison's challenge to the CPUC ruling stands.
The Coso Partnerships cannot predict whether any subsequent action
regarding this matter will be successful.
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.
25
The following data includes the operating capacity factor, capacity and
electricity production (in kWh) for each Coso Partnership on a stand-alone
basis:
Three-Months Ended Nine-Months Ended
September 30 September 30
2003 2002 2003 2002
---- ---- ---- ----
Navy I Partnership (stand alone)
Operating capacity factor 102.6% 104.8% 102.4% 104.6%
Capacity (MW) (average) 82.05 83.81 81.93 83.69
kWh produced (000s) 181,165 185,058 536,809 548,312
BLM Partnership (stand alone)
Operating capacity factor 88.2% 92.6% 88.5% 93.5%
Capacity (MW) (average) 70.59 74.09 70.76 74.83
kWh produced (000s) 155,865 163,586 463,627 490,280
Navy II Partnership (stand alone)
Operating capacity factor 106.9% 96.4% 100.6% 99.8%
Capacity (MW) (average) 85.53 77.13 80.47 79.86
kWh produced (000s) 188,849 170,295 527,250 523,261
Total energy production for the Navy II Partnership for the three-months
ended September 30, 2003, as compared to the same period in 2002, increased
10.9%. The increase was from an effort to increase production overall, in which
the Coso Partnerships have implemented a capital program including well
workovers on various wells to regain production limited by wellbore
obstructions. These efforts, along with modifications to steam-field piping and
gas removal systems, improved production at the Navy II Partnership during the
second and third quarters of 2003.
Total energy production for the BLM Partnership for the nine-months ended
September 30, 2003, as compared to the same period in 2002, decreased 5.4%. The
decrease 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 and additional steam-field piping
modifications. The BLM Partnership along with the Navy I and Navy II
Partnerships expect to further enhance the steam utilization and efficiency of
the projects through a turbine enhancement program and additional steam-field
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 capital improvement program is available from reserves established under the
Notes and from excess cash flow generated after debt service during the
nine-month period ending September 30, 2003.
Results of Operations for the three and nine-months ended September 30, 2003 and
2002
The following discusses the results of operations of the Coso Partnerships
for the three and nine-months ended September 30, 2003 and 2002 (dollar amounts
in tables are in thousands, except per kWh data):
26
Revenue
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Total Operating Revenues
Navy I Partnership 19,833 10.9 19,761 10.7 47,709 8.9 79,587 14.5
BLM Partnership 16,222 10.4 16,591 10.1 37,166 8.0 71,261 14.5
Navy II Partnership 16,513 8.7 15,838 9.3 35,850 6.8 70,031 13.4
Capacity & Capacity Bonus
Revenues
Navy I Partnership 8,190 4.5 8,190 4.4 13,011 2.4 14,904 2.7
BLM Partnership 8,002 5.1 8,002 4.9 12,713 2.7 14,537 3.0
Navy II Partnership 8,047 4.3 8,047 4.7 12,786 2.4 14,603 2.8
Energy Revenues,
including steam transfers
Navy I Partnership 11,643 6.4 11,571 6.3 34,698 6.5 64,683 11.8
BLM Partnership 8,220 5.3 8,589 5.3 24,453 5.3 56,724 11.6
Navy II Partnership 8,466 4.5 7,791 4.6 23,064 4.4 55,428 10.6
Total energy revenues, including steam transfers for the Navy II
Partnership for the three-months ended September 30, 2003, as compared to the
same period in 2002, increased 9.0%. The increase was primarily due to the
increase in energy production discussed above.
Total operating revenues, including steam transfers, for the Navy I, BLM
and Navy II Partnerships, which consist of capacity payments, capacity bonus
payments and energy payments for the nine-months ended September 30, 2003, as
compared to the same period in 2002, decreased 40.1%, 47.8% and 48.7%,
respectively. Capacity and capacity bonus revenues for each of the Navy I, BLM
and Navy II Partnerships for the nine-months ended September 30, 2003, as
compared to for the same period in 2002, decreased 12.8%, 12.4% and 12.3%,
respectively. Total energy revenues including steam transfers, for the Navy I,
BLM and Navy II Partnerships for the nine-months ended September 30, 2003, as
compared to the same period in 2002, decreased 46.4%, 56.8% and 58.3%,
respectively. Each of the Coso Partnership's decreases 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 nine-months ended September 30, 2003, as compared to the
average fixed energy rate of 4.43 cents per kWh for the same period in 2002.
Plant Operations
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 2,291 1.3 2,811 1.5 6,875 1.3 7,379 1.3
BLM Partnership 3,421 2.2 3,328 2.0 9,185 2.0 8,581 1.8
Navy II Partnership 2,401 1.3 2,918 1.7 7,249 1.4 7,408 1.4
27
The Navy I Partnership's operating expenses, including operating and
general and administrative expenses for the three and nine-months ended
September 30, 2003, as compared to the same periods in 2002, decreased 17.9% and
6.8%, respectively. The decrease was primarily due to decreased property taxes
and well maintenance costs partially offset by increased plant maintenance
costs.
The BLM Partnership's operating expenses, including operating and general
and administrative expenses for the nine-months ended September 30, 2003, as
compared to the same period in 2002, increased 7.0%. The increase was primarily
due to increased well workover and plant maintenance costs, partially offset by
decreased property taxes.
The Navy II Partnership's operating expenses, including operating and
general and administrative expenses for the three-months ended September 30,
2003, as compared to the same period in 2002, decreased 17.2%. The decrease was
due to decreased property taxes partially offset by increased well maintenance
costs.
Royalty Expense
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 4,982 2.7 5,762 3.1 11,603 2.2 11,393 2.1
BLM Partnership 1,339 0.9 1,482 0.9 2,028 0.4 2,157 0.4
Navy II Partnership 2,655 1.4 2,588 1.5 5,830 1.1 5,337 1.0
The Navy I Partnership's royalty expenses for the three-months ended
September 30, 2003, as compared to the same period in 2002, decreased 13.8%. The
decrease was primarily due to decreased royalties paid for Unit I resulting from
lower retail electric rates paid to Edison by the U.S. Navy discussed above.
The BLM Partnership's royalty expenses for the three and nine-months ended
September 30, 2003, as compared to the same periods in 2002, decreased 13.3% and
9.1%, respectively. The decreases were primarily due to decreased production
partially offset by an increase in the fixed energy rate to 5.37 cents per kWh
for the nine-months ended September 30, 2003 from 4.43 cents per kWh for the
nine-months ended September 30, 2002.
The Navy II Partnership's royalty expenses for the nine-months ended
September 30, 2003 as compared to the same period in 2002, increased 9.4%. The
increase was primarily due to increased production and the increase in the fixed
energy rate to 5.37 cents per kWh for the nine-months ended September 30, 2003
from 4.43 cents per kWh for the nine-months ended September 30, 2002.
Depreciation and Amortization
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 2,720 1.5 3,049 1.6 7,997 1.5 8,126 1.5
BLM Partnership 2,371 1.5 3,903 2.4 7,055 1.5 12,135 2.5
Navy II Partnership 2,527 1.3 1,848 1.1 7,787 1.5 9,507 1.8
28
The Navy I Partnership's depreciation and amortization expense for the
three-months ended September 30, 2003, as compared to the same period in 2002,
decreased 10.0%. The decrease was primarily due to plant overhauls costs being
fully depreciated.
The BLM Partnership's depreciation and amortization expense for the three
and nine-months ended September 30, 2003, as compared to the same periods in
2002, decreased 38.5% and 41.3%, respectively. The decreases were primarily due
to older well costs being fully depreciated during the second half of 2002.
The Navy II Partnership's depreciation and amortization expenses for the
three and nine-months ended September 30, 2003 as compared to the same periods
in 2002, increased 38.9% and decreased 17.9%, respectively. The increase was
primarily due to an increase in capitalized assets during that period. The
decrease was due to older wells being fully depreciated during the second half
of 2002, partially offset by the increase in capitalized assets.
Interest and Other Income
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 41 0.0 136 0.1 155 0.0 1,655 0.3
BLM Partnership 236 0.2 267 0.2 749 0.2 1,169 0.2
Navy II Partnership 44 0.0 237 0.1 177 0.0 888 0.2
The Navy I Partnership's interest and other income for the three and
nine-months ended September 30, 2003, as compared to the same periods in 2002,
decreased 60.0% and 88.2%, respectively. The BLM Partnership's interest and
other income for the three and nine-months ended September 30, 2003, as compared
to the same periods in 2002, decreased 33.3% and 41.7% respectively. The Navy II
Partnership's interest and other income for the three and nine-months ended
September 30, 2003, as compared to the same periods in 2002, decreased 80.0% and
77.8%, respectively. These decreases were primarily due to a decrease in the
rate of return on investments due to lower market rates for fixed income
investments during those periods in 2003 and decreased interest income 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 Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002
$ Cents/kWh $ Cents/kWh $ Cents/kWh $ Cents/kWh
- --------- - --------- - --------- - ---------
Navy I Partnership 2,402 1.3 2,668 1.4 7,376 1.4 8,216 1.5
BLM Partnership 1,998 1.3 2,120 1.3 6,032 1.3 6,477 1.3
Navy II Partnership 1,745 0.9 1,870 1.1 5,351 1.0 5,683 1.1
The Navy I Partnership's interest expense for the three and nine-months
ended September 30, 2003, as compared to the same periods in 2002, decreased
11.1% and 9.8%, respectively. The BLM Partnership's interest expense for the
three and nine-months ended September 30, 2003, as compared to the same periods
in 2002, decreased 4.8% and 7.7%, respectively. The Navy II Partnership's
interest expense for the three and nine-months ended September 30, 2003, as
compared to the same periods in 2002, decreased 10.5% and 5.3%, respectively.
These decreases were due to reductions in the principal amount outstanding of
the project loan from Funding Corp.
29
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.
The Coso Partnerships have used their cash primarily for capital expenditures
for power plant improvements, resource and operating costs, distributions to
partners and payments with respect to the project debt.
The Coso Partnerships ability to meet their obligations as they come due
will depend upon the ability of Edison to meet its obligations under the terms
of the standard offer No. 4 power purchase agreements and the Coso Partnership's
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 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. The California Supreme Court
found that the stipulated judgment did not violate state laws. Consequently, the
Agreement remains in full force and effect and it is unknown if any additional
appeals are planned.
Immediately after the 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.
Since, March 27, 2001 Edison has been current with payments for revenue
generated.
The following table sets forth a summary of each the Coso Partnership's
cash flows for the nine-months ended September 30, 2003 and September 30, 2002.
30
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2003 2002
Navy I Partnership (stand alone)
Net cash provided by (used in) operating activities $ 19,017 $ 54,861
Net cash provided by (used in) investing activities (6,051) (4,546)
Net cash provided by (used in) financing activities (5,395) (40,568)
----- ------
Net change in cash and cash equivalents $ 7,571 $ 9,747
===== ======
BLM Partnership (stand alone)
Net cash provided by (used in) operating activities $ 19,366 $ 41,610
Net cash provided by (used in) investing activities (3,116) (1,674)
Net cash provided by (used in) financing activities (2,022) (29,520)
----- ------
Net change in cash and cash equivalents $ 14,228 $ 10,416
====== ======
Navy II Partnership (stand alone)
Net cash provided by (used in) operating activities $ 15,547 $ 26,138
Net cash provided by (used in) investing activities (3,172) (1,337)
Net cash provided by (used in) financing activities (3,662) (17,725)
----- ------
Net change in cash and cash equivalents $ 8,713 $ 7,076
===== ======
The Navy I Partnership's cash flows from operating activities decreased by
$35.8 million for the nine-months ended September 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
$1.5 million for the nine-months ended September 30, 2003, as compared to the
same period in 2002, primarily due to an increase in capital expenditures during
that period in 2003, partially offset by a decrease in restricted cash
requirements associated with the project loan from Funding Corp.
The Navy I Partnership's cash used in financing activities decreased by
$35.2 million for the nine-months ended September 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
$22.2 million for the nine-months ended September 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.
Cash used in investing activities at the BLM Partnership increased by $1.4
million for the nine-months ended September 30, 2003, as compared to the same
period in 2002, primarily due to an increase in capital expenditures during that
period in 2003 partially offset by a decrease in restricted cash requirements
associated with the project loan from Funding Corp.
The BLM Partnership's cash used in financing activities decreased by $27.5
million for the nine-months ended September 30, 2003, as compared to the same
period in 2002, due to decreased partner distributions paid during that period
in 2003.
31
The Navy II Partnership's cash flows from operating activities decreased by
$10.6 million for the nine-months ended September 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 a decrease in trade payables.
Cash used in investing activities at the Navy II Partnership increased by
$1.8 million for the nine-months ended September 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.
The Navy II Partnership's cash used in financing activities decreased by
$14.1 million for the nine-months ended September 30, 2003, as compared to the
same period in 2002, due to decreased partner distributions paid during that
period in 2003.
Item 3. Control and Procedures
The Registrant's Chief Executive Officer and Chief Financial Officer (the
Registrant's principal executive officer and principal financial officer,
respectively) have concluded, based on their evaluation as of September 30,
2003, that the design and operation of the Registrant's "disclosure controls and
procedures" (as defined in Rules 13a-15(e) under the Securities Exchange Act of
1934, as amended ("Exchange Act") are effective to ensure that information
required to be disclosed by the Registrant in the reports filed or submitted by
the Registrant under the Exchange Act is accumulated, recorded, processed,
summarized and reported to the Registrant's management, including the
Registrant's principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding whether or not disclosure is
required.
During the quarter ended September 30, 2003, there were no changes in the
Registrant's "internal controls over financial reporting" (as defined in Rule
13a-15(f) under the Exchange Act) that have materially affected, or are
reasonably likely to materially affect, the Registrant's internal controls over
financial reporting.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
General
The Coso Partnerships are currently parties to various items of litigation
relating to day-to-day operations, none of which, if determined adversely, would
be material to the financial condition and results of operations of the Coso
Partnerships, either individually or taken as a whole.
ITEM 2. Change in Securities and Use of Proceeds
None.
ITEM 3. Defaults Upon Senior Securities
None.
32
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5. Other Information
Supplemental Condensed Combined Financial Information for the Coso
Partnerships
The following information presents unaudited condensed combined financial
statements of the Coso Partnerships. These financial statements represent a
combination of the financial statements of Caithness Coso Funding Corp., Coso
Finance Partners, Coso Energy Developers and Coso Power Developers for the
periods indicated. This supplemental financial information is not required by
accounting principles generally accepted in the United States of America and has
been provided to facilitate a more comprehensive understanding of the financial
position, operating results and cash flows of the Coso Partnerships as a whole,
which jointly and severally guarantee the repayment of Caithness Coso Funding
Corp's senior notes. The unaudited condensed combined financial statements
should be read in conjunction with each individual Coso Partnership's financial
statements and their accompanying notes.
The financial information herein presented reflects all adjustments,
consisting only of normal recurring adjustments, which are, in the opinion of
management, necessary for a fair statement of the results for interim periods
presented. The results for the interim periods are not necessarily indicative of
results to be expected for the full year.
33
COSO PARTNERSHIPS
UNAUDITED CONDENSED COMBINED BALANCE SHEETS
(Dollars in thousands)
September 30, December 31,
2003 2002
Assets:
Cash and cash equivalents.................................................... $ 36,974 $ 6,462
Restricted cash and investments.............................................. 43,830 46,193
Accounts receivable, net..................................................... 35,102 21,346
Prepaid expenses and other assets............................................ 4,103 3,549
Amounts due from related parties............................................. 6,308 6,516
Property, plant and equipment, net........................................... 385,189 388,358
Power purchase agreements, net............................................... 43,575 47,336
Investments and advances..................................................... 12,286 12,508
Deferred financing costs, net................................................ 4,921 5,512
------- -------
$ 572,288 $ 537,780
======= =======
Liabilities and Partners' Capital:
Accounts payable and accrued liabilities..................................... $ 9,489 $ 10,486
Amounts due to related parties............................................... 33,706 25,415
Other liabilities............................................................ 19,203 13,276
Project loans................................................................ 270,152 281,231
------- -------
332,550 330,408
Partners' capital............................................................... 239,738 207,372
------- -------
$ 572,288 $ 537,780
======= =======
See accompanying notes to the unaudited condensed combined financial statements.
34
COSO PARTNERSHIPS
UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Three-Months Three-Months Nine-Months Nine-Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2003 2002 2003 2002
Revenue:
Energy revenues.................................... $ 28,329 $ 27,951 $ 82,215 $ 176,835
Capacity revenues.................................. 24,239 24,239 38,510 44,044
------ ------ ------- -------
Total revenue............................... 52,568 52,190 120,725 220,879
Operating expenses:
Plant operating expenses........................... 8,113 9,057 23,309 23,368
Royalty expense.................................... 8,976 9,832 19,461 18,887
Depreciation and amortization...................... 7,618 8,800 22,839 29,768
----- ------ ------ ------
Total operating expenses.................... 24,707 27,689 65,609 72,023
Operating income............................ 27,861 24,501 55,116 148,856
Other (income)/expenses:
Interest and other income.......................... (321) (640) (1,081) (3,712)
Interest expense................................... 6,145 6,658 18,759 20,376
Amortization of deferred financing costs........... 198 198 591 591
----- ----- ------ ------
Total other expenses........................ 6,022 6,216 18,269 17,255
----- ----- ------ ------
Income before cumulative effect of change in
accounting principle............................... 21,839 18,285 36,847 131,601
Cumulative effect of change in accounting
principle.......................................... --- --- 4,481 ---
------ ------ ------ -------
Net income.................................. $ 21,839 $ 18,285 $ 32,366 $ 131,601
====== ====== ====== =======
See accompanying notes to the unaudited condensed combined financial statements.
35
COSO PARTNERSHIPS
UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine-Months Nine-Months
Ended Ended
September 30, September 30,
2003 2002
Net cash provided by (used in) operating activities.... $ 53,930 $ 122,607
Net cash provided by (used in) investing activities.... (12,339) (7,557)
Net cash provided by (used in) financing activities.... (11,079) (87,861)
------ ------
Net change in cash and cash equivalents................ $ 30,512 $ 27,189
====== ======
Supplemental cash flow disclosure:
Cash paid for interest............................ $ 12,726 $ 13,710
====== ======
See accompanying notes to the unaudited condensed combined financial statements.
36
COSO PARTNERSHIPS
NOTES TO THE UNAUDITED CONDENSED COMBINED
FINANCIAL STATEMENTS
(Dollars in thousands)
(1) Basis of Presentation
The accompanying unaudited condensed combined financial statements were derived
from the stand alone unaudited condensed financial statements of Caithness Coso
Funding Corp., Coso Finance Partners, Coso Energy Developers and Coso Power
Developers ("the Coso Partnerships"). All intercompany accounts and transactions
were eliminated. This financial information has been provided to facilitate a
more comprehensive understanding of the financial position, operating results
and cash flows of the Coso Partnerships as a whole. The unaudited condensed
combined financial statements should be read in conjunction with each individual
Partnership's unaudited condensed financial statements.
(2) Accounts Receivable and Revenue Recognition
Due to the uncertainty surrounding Edison's ability to make payment on past due
amounts, collection was not reasonably assured and the Coso Partnerships had not
recognized revenue from Edison for energy delivered during the period November
1, 2000 through March 26, 2001. On March 1, 2002, Edison reached certain
financing milestones and paid the Coso Partnerships for revenue generated, but
not recognized for the period November 1, 2000 through March 26, 2001. For the
nine-months ended September 30, 2002, the Coso Partnerships recognized revenue
for energy delivered from November 1, 2000 through March 26, 2001 of $112.4
million.
(3) Reclassifications
Certain 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 Coso Partnerships 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.
In January 2003, the FASB issued Interpretation No. 46, (FIN 46) Consolidation
of Variable Interest Entities, an interpretation of ARB No. 51. This
Interpretation addresses the consolidation by business enterprises of variable
interest entities as defined in the Interpretation. The Interpretation was
originally intended to be applied immediately to variable interests in variable
interest entities created after January 31, 2003, and in the first fiscal year
or interim period beginning after June 15, 2003 to enterprises that hold a
variable interest in variable interest entities created before February 1, 2003.
On September 17, 2003, the FASB instructed the FASB staff to prepare a FASB
Staff Position to defer the effective date of Interpretation 46 until the end of
the first interim or annual period ending after December 15, 2003, for certain
interests held by a public entity in certain variable interest entities.
37
At that FASB meeting, the FASB also decided to address proposed modifications to
FIN 46 in an Interpretation of that document. Those modifications would alter
how companies identify variable interest entities and modify the determination
of which party should consolidate them (the primary beneficiary). The effect of
the application of this Interpretation on Coso Partnership's financial
statements is currently being evaluated and the expected impact has not yet been
determined.
38
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
39
EXHIBIT 27.1
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: CAITHNESS COSO FUNDING CORP.
----------------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
--- ----
other than 1 (one)?
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 9 - MOS
--- --- --- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec - 31 - 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 SEP - 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 9 MOS
---- -----
CASH 0 0
SECURITIES 0 0
RECEIVABLES 282,361 277,317
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETDS 1,130 7,165
PP&E 0 0
DEPRECIATION 0 0
TOTAL ASSETS 282,361 277,317
CURRENT LIABILITIES 1,130 7,165
BONDS 281,231 270,152
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 282,361 277,317
SALES 0 0
TOTAL REVENUES 26,931 18,761
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 0 0
LOSS PROVISION 0 0
INTEREST EXPENSES 26,931 18,761
INCOME PRETAX 0 0
INCOME TAX 0 0
INCOME CONTINUING 0 0
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 0
NET INCOME 0 0
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.2
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: COSO FINANCE PARTNERS
---------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
--- ----
other than 1 (one)?
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 9 - MOS
--- --- --- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec - 31 - 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 SEP - 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 9 MOS
---- -----
CASH 4,215 11,786
SECURITIES 28,692 27,094
RECEIVABLES 8,621 13,147
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 13,904 26,209
PP&E 234,442 242,563
DEPRECIATION 98,129 105,326
TOTAL ASSETS 195,072 205,694
CURRENT LIABILITIES 6,231 7,456
BONDS 110,955 105,560
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 195,072 205,694
SALES 92,065 47,709
TOTAL REVENUES 93,639 47,864
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 33,376 26,475
LOSS PROVISION 0 0
INTEREST EXPENSES 11,151 7,613
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 11,996
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.3
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: COSO ENERGY DEVELOPERS
----------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
--- ----
other than 1 (one)?
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 9 - MOS
--- --- --- ---
X YEAR YEAR
--- ---
(for annual report filings)
OTHER OTHER
---- ----
FISCAL YEAR END
(example: DEC-31-1997) Dec - 31 - 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 SEP - 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 9 MOS
---- -----
CASH 1,423 15,651
SECURITIES 6,646 7,244
RECEIVABLES 7,102 11,384
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 9,895 28,648
PP&E 247,912 250,732
DEPRECIATION 112,059 118,330
TOTAL ASSETS 174,871 189,589
CURRENT LIABILITIES 27,961 30,995
BONDS 89,875 87,853
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 174,871 189,589
SALES 81,252 37,166
TOTAL REVENUES 82,707 37,915
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 28,526 18,268
LOSS PROVISION 0 0
INTEREST EXPENSES 8,822 6,223
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 12,500
EPS BASIC 0 0
(Value may contain up to 3 decimal places)
EPS DILUTED 0 0
(Value may contain up to 3 decimal places)
Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
EXHIBIT 27.4
Form S-X
Commercial and Industrial Companies
Financial Data Schedule Worksheet for: COSO POWER DEVELOPERS
---------------------
Review the following list of tags for Article 5 and fill in the correct data in
the column(s) provided. Generally, only one column of information will be
required, however, two columns are provided if required in the Financial Data
Schedule.
Unless otherwise noted, all tags are required. A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated. Values not provided will be entered as "0" (zero). Missing dates
will be entered as "TO COME". Please be sure to verify all information in the
EDGARized exhibit.
To include a footnote, place a number in parentheses next to the value and
provide the text of each corresponding footnote at the end of the worksheet
form.
Do you wish to include a LEGEND? This schedule contains summary financial
Yes X No information extracted from *_____________
--- --- and is equalified in its entirety by
reference to such financial statements.
*Identify the financial statement(s) to
be referenced in the legend:
RESTATED
Are your financials being "restated" (NO VALUE REQUIRED)
from a previously file period?
Yes X No
--- ---
CIK Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT CIK:
NAME Use this section only for coregistrant
Does this data apply to a coregistrant filings.
Yes X No
--- --- COREGISTRANT NAME:
MULTIPLIER
Do the financials require a multiplier X 1,000 1,000,000,000
--- ----
other than 1 (one)?
X Yes No 1,000,000 1,000,000,000,000
--- --- --- ----
CURRENCY CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
Yes X No
--- ---
PERIOD TYPE - MOS X 9 - MOS
--- --- --- ---
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 SEP - 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 9 MOS
---- -----
CASH 824 9,537
SECURITIES 10,855 9,492
RECEIVABLES 13,136 18,428
ALLOWANCES 0 0
INVENTORY 0 0
CURRENT ASSETS 15,071 29,179
PP&E 210,548 215,706
DEPRECIATION 94,356 100,156
TOTAL ASSETS 168,834 178,554
CURRENT LIABILITIES 2,706 6,293
BONDS 80,401 76,739
PREFERRED MANDATORY 0 0
PREFERRED 0 0
COMMON 0 0
OTHER SE 0 0
TOTAL LIABILITY AND EQUITY 168,834 178,554
SALES 79,592 35,850
TOTAL REVENUES 80,486 36,027
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 29,428 20,866
LOSS PROVISION 0 0
INTEREST EXPENSES 7,755 5,514
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 7,870
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: November 13, 2003 Caithness Coso Funding Corp.
a Delaware Corporation
By: /S/ JAMES D. BISHOP, SR.
------------------------
James D. Bishop, Sr.
Director, Chairman &
Chief Executive Officer
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION
302(a) OF THE SARBANES-OXLEY ACT OF 2002
I, Christopher T. McCallion, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Caithness Coso
Funding Corp., Coso Finance Partners, Coso Energy Developers, and Coso
Power Developers (collectively, the "Registrant");
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in this
quarterly report;
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Registrant's auditors and the audit
committee of Registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have
identified for the Registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal
controls; and
6. The Registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 13, 2003 Caithness Coso Funding Corp.
a Delaware Corporation
By: /S/CHRISTOPHER T. MCCALLION
---------------------------
Christopher T. McCallion
Executive Vice President
& Chief Financial Officer
Principal Financial &
Accounting Officer
Exhibit 99.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Caithness Coso Funding Corp., Coso
Finance Partners, Coso Energy Developers, and Coso Power Developers
(collectively, the "Registrant") on Form 10-Q for the period ending September
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. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of
the Registrant.
Date: November 13, 2003 Caithness Coso Funding Corp.
a Delaware Corporation
By: /S/ JAMES D. BISHOP, SR.
------------------------
James D. Bishop, Sr.
Director, Chairman &
Chief Executive Officer
Exhibit 99.2
CERTIFICATION OF CHIEF 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 September
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. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of
the Registrant.
Date: November 13, 2003 Caithness Coso Funding Corp.
a Delaware Corporation
By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President
& Chief Financial Officer
Principal Financial &
Accounting Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAITHNESS COSO FUNDING CORP.,
a Delaware corporation
Date: November 13, 2003 By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
COSO FINANCE PARTNERS
a California general Partnership
By: New CLOC Company, LLC,
its Managing General Partner
Date: November 13, 2003 By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
COSO ENERGY DEVELOPERS
a California general Partnership
By: New CHIP Company, LLC,
its Managing General Partner
Date: November 13, 2003 By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
COSO POWER DEVELOPERS
a California general Partnership
By: New CTC Company, LLC,
its Managing General Partner
Date: November 13, 2003 By: /S/ CHRISTOPHER T. MCCALLION
----------------------------
Christopher T. McCallion
Executive Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)