SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Annual Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1999
Commission File No. 33-95538
SALTON SEA FUNDING CORPORATION
(Exact name of registrant as specified in its charter)
47-0790493
(IRS Employer Identification No.)
Salton Sea Brine Processing L.P. California 33-0601721
Salton Sea Power Generation L.P. California 33-0567411
Fish Lake Power LLC Delaware 33-0453364
Vulcan Power Company Nevada 95-3992087
CalEnergy Operating Corporation Delaware 33-0268085
Salton Sea Royalty LLC Delaware 47-0790492
VPC Geothermal LLC Delaware 91-1244270
San Felipe Energy Company California 33-0315787
Conejo Energy Company California 33-0268500
Niguel Energy Company California 33-0268502
Vulcan/BN Geothermal Power Company Nevada 33-3992087
Leathers, L.P. California 33-0305342
Del Ranch, L.P. California 33-0278290
Elmore, L.P. California 33-0278294
(Exact name of Registrants (State or other (I.R.S.Employer
as specified in their charters) jurisdiction of Identification No.)
incorporation or organization)
302 S. 36th Street, Suite 400-A, Omaha, NE 68131
(Address of principal executive offices and Zip Code of Salton
Sea Funding Corporation)
Salton Sea Funding Corporation's telephone number, including area
code: (402) 231-1641
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:
Yes X No
All common stock of Salton Sea Funding Corporation is indirectly
held by Magma Power Company. 100 shares of Common Stock were
outstanding on March 31, 1999.
<PAGE>
SALTON SEA FUNDING CORPORATION
Form 10-Q
March 31, 1999
_____________
C O N T E N T S
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements Page
SALTON SEA FUNDING CORPORATION
Independent Accountants' Report 4
Balance Sheets, March 31, 1999 and December 31, 1998 5
Statements of Operations for the Three Months Ended
March 31, 1999 and 1998 6
Statements of Cash Flows for the Three Months Ended
March 31, 1999 and 1998 7
Notes to Financial Statements 8
SALTON SEA GUARANTORS
Independent Accountants' Report 9
Combined Balance Sheets, March 31, 1999 and December 31, 199810
Combined Statements of Operations for the Three Months Ended
March 31, 1999 and 1998 11
Combined Statements of Cash Flows for the Three Months Ended
March 31, 1999 and 1998 12
Notes to Combined Financial Statements 13
<PAGE>
PARTNERSHIP GUARANTORS
Independent Accountants' Report 14
Combined Balance Sheets, March 31, 1999 and December 31, 199815
Combined Statements of Operations for the Three Months Ended
March 31, 1999 and 1998 16
Combined Statements of Cash Flows for the Three Months Ended
March 31, 1999 and 1998 17
Notes to Combined Financial Statements 18
SALTON SEA ROYALTY COMPANY
Independent Accountants' Report 19
Balance Sheets, March 31, 1999 and December 31, 1998 20
Statements of Operations for the Three Months Ended
March 31, 1999 and 1998 21
Statements of Cash Flows for the Three Months Ended
March 31, 1999 and 1998 22
Notes to Financial Statements 23
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 24
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 34
Item 2. Changes in Securities 34
Item 3. Defaults on Senior Securities 34
Item 4. Submission of Matters to a Vote of
Security Holders 34
Item 5. Other Information 34
Item 6. Exhibits and Reports on Form 8-K 34
Signatures 35
Exhibit Index 36
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Stockholder
Salton Sea Funding Corporation
Omaha, Nebraska
We have reviewed the accompanying balance sheet of the Salton Sea
Funding Corporation as of March 31, 1999, and the related
statements of operations and cash flows for the three month
periods ended March 31, 1999 and 1998. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and of making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to such financial statements
for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet of Salton Sea Funding
Corporation as of December 31, 1998, and the related statements
of operations, stockholder's equity, and cash flows for the year
then ended (not presented herein); and in our report dated
January 28, 1999, (March 3, 1999 as to Note 4) we expressed an
unqualified opinion on those financial statements. In our
opinion, the information set forth in the accompanying balance
sheet as of December 31, 1998 is fairly stated, in all material
respects, in relation to the balance sheet from which it has been
derived.
DELOITTE & TOUCHE LLP
Omaha, Nebraska
April 28, 1999
<PAGE>
SALTON SEA FUNDING CORPORATION
BALANCE SHEETS
(Dollars in Thousands, Except per Share Amounts)
March 31, December 31,
1999 1998
___________ __________
(unaudited)
ASSETS
Cash $ 41,990 $ 17,629
Prepaid expenses and other assets 17,129 6,768
Secured project notes from Guarantors 626,816 626,816
Investment in 1% of net assets of
Guarantors 8,240 8,124
__________ __________
$ 694,175 $ 659,337
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Accrued liabilities $ 15,708 $ 3,971
Due to affiliates 39,541 16,612
Senior secured notes and bonds 626,816 626,816
__________ __________
Total liabilities 682,065 647,399
Stockholder's equity:
Common stock--authorized 1,000
shares, par value $.01 per share;
issued and outstanding 100 shares --- ---
Additional paid-in capital 5,366 5,366
Retained earnings 6,744 6,572
__________ __________
Total stockholder's equity 12,110 11,938
__________ __________
$ 694,175 $ 659,337
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
SALTON SEA FUNDING CORPORATION
STATEMENTS OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
Three Months Ended
March 31,
1999 1998
Revenues:
Interest income $ 12,129 $ 8,990
Equity in earnings of Guarantors 116 161
_ ____ ________
Total revenues 12,245 9,151
_________ ________
Expenses:
General and administrative expenses 215 238
Interest expense 11,737 8,259
_________ ________
Total expenses 11,952 8,497
_________ ________
Income before income taxes 293 654
Provision for income taxes 121 269
_________ ________
Net income $ 172 $ 385
========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
SALTON SEA FUNDING CORPORATION
STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Three Months Ended
March 31,
1999 1998
Cash flows from operating activities:
Net income $ 172 $ 385
Adjustments to reconcile net income to net
cash flow from operating activities:
Equity in earnings of guarantors (116) (161)
Changes in assets and liabilities:
Prepaid expenses and other assets (10,361) (8,583)
Accrued liabilities 11,737 8,298
__________ _________
Net cash flows from operating activities 1,432 (61)
__________ _________
Cash flows from investing activities:
Principal repayments of secured project notes
from Guarantors --- ---
__________ _________
Net cash flows from investing activities --- ---
__________ _________
Cash flows from financing activities:
Increase in due to affiliates 22,929 54,648
Repayment of senior secured notes and bonds --- ---
__________ _________
Net cash flows from financing activities 22,929 54,648
__________ _________
Net change in cash 24,361 54,587
Cash at the beginning of period 17,629 15,568
__________ _________
Cash at the end of period $ 41,990 $ 70,155
========== =========
Supplemental disclosures:
Interest paid $ --- $ ---
=========== =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
SALTON SEA FUNDING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(in thousands)
_____________________
1. General:
In the opinion of management of the Salton Sea Funding
Corporation (the "Funding Corporation"), the accompanying
unaudited financial statements contain all adjustments
(consisting only of normal recurring accruals) necessary to
present fairly the financial position as of March 31, 1999 and
the results of operations for the three months ended March 31,
1999 and 1998 and cash flows for the three months ended March 31,
1999 and 1998. The results of operations for the three months
ended March 31, 1999 and 1998 are not necessarily indicative of
the results to be expected for the full year.
The unaudited financial statements shall be read in conjunction
with the financial statements included in the Funding
Corporation's annual report on Form 10-K for the year ended
December 31, 1998.
The Funding Corporation was formed on June 20, 1995 for the sole
purpose of acting as issuer of senior secured notes and bonds.
2. Disposition of power generation assets:
On February 8, 1999, MidAmerican Energy Holdings Company, the
successor to CalEnergy Company, Inc. ("MidAmerican") created a
new subsidiary, CE Generation LLC ("CE Generation") and
subsequently transferred its interest in the power generation
assets in the Imperial Valley to CE Generation. On March 3,
1999, MidAmerican closed the sale of 50% of its ownership
interests in CE Generation to an affiliate of El Paso Energy
Corporation.
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Stockholder
Magma Power Company
Omaha, Nebraska
We have reviewed the accompanying combined balance sheet of the
Salton Sea Guarantors as of March 31, 1999, and the related
combined statements of operations and cash flows for the three
month period ended March 31, 1999 and 1998. These financial
statements are the responsibility of the Salton Sea Guarantors'
management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and of making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to such combined financial
statements for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the combined balance sheet of the Salton Sea
Guarantors as of December 31, 1998, and the related combined
statements of operations, Guarantors' equity, and cash flows for
the year then ended (not presented herein); and in our report
dated January 28, 1999, (March 3, 1999 as to Note 6), we
expressed an unqualified opinion on those combined financial
statements. In our opinion, the information set forth in the
accompanying combined balance sheet as of December 31, 1998 is
fairly stated, in all material respects, in relation to the
combined balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Omaha, Nebraska
April 28, 1999
<PAGE>
SALTON SEA GUARANTORS
COMBINED BALANCE SHEETS
(Dollars in Thousands)
March 31, December 31,
1999 1998
__________ _________
(unaudited)
ASSETS
Restricted cash $ 63,913 $ 71,673
Accounts receivable 10,269 15,957
Prepaid expenses and other assets 11,199 12,410
Property, plant, contracts and
equipment, net 486,389 480,293
Excess of cost over fair value of
net assets acquired, net 47,856 48,182
_________ _________
$ 619,626 $ 628,515
======== ========
LIABILITIES AND GUARANTORS' EQUITY
Liabilities:
Accounts payable $ 371 $ 504
Accrued liabilities 12,476 7,166
Due to affiliates 13,260 30,688
Senior secured project note 310,030 310,030
_________ _________
Total liabilities 336,137 348,388
Total Guarantors' equity 283,489 280,127
_________ _________
$ 619,626 $ 628,515
========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
SALTON SEA GUARANTORS
COMBINED STATEMENTS OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
Three Months Ended
March 31
_____________________
1999 1998
________ ________
Revenues:
Sales of electricity $ 18,272 $ 20,185
Interest and other income 792 15
_______ _______
Total revenues 19,064 20,200
_______ _______
Expenses:
Operating, general and
administration 7,308 6,747
Depreciation and amortization 4,022 3,714
Interest expense 6,076 5,260
Less capitalized interest (1,704) (1,332)
_______ _______
Total expenses 15,702 14,389
_______ _______
Net income $ 3,362 $ 5,811
======= =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
SALTON SEA GUARANTORS
COMBINED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Three Months Ended
March 31,
___________________
1999 1998
_________ _________
Cash flows from operating activities:
Net income $ 3,362 $ 5,811
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 4,022 3,714
Changes in assets and liabilities:
Accounts receivable 5,688 3,200
Prepaid expenses and other assets 1,211 866
Accounts payable and accrued
liabilities 5,177 5,052
_________ _________
Net cash flows from operating activities 19,460 18,643
_________ _________
Cash flows from investing activities:
Capital expenditures (9,792) (1,498)
Decrease in restricted cash 7,760 ---
_________ _________
Net cash flows from investing activities (2,032) (1,498)
Cash flows from financing activities:
Decrease in due to affiliates (17,428) (17,145)
Repayments of senior secured project note --- ---
___________________
Net cash flows from financing activities (17,428) (17,145)
_________ _________
Net change in cash --- ---
Cash at beginning of period --- ---
_________ _________
Cash at end of period $ --- $ ---
========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
SALTON SEA GUARANTORS
NOTES TO COMBINED FINANCIAL STATEMENTS
(in thousands)
____________________
1. General:
In the opinion of management of the Salton Sea Guarantors (the
"Guarantors"), the accompanying unaudited financial statements
contain all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the financial position as
of March 31, 1999 and the results of operations for the three
months ended March 31, 1999 and 1998 and cash flows for the three
months ended March 31, 1999 and 1998. The results of operations
for the three months ended March 31, 1999 and 1998 are not
necessarily indicative of the results to be expected for the full
year.
The unaudited financial statements shall be read in conjunction
with the financial statements included in the Funding
Corporation's annual report on Form 10-K for the year ended
December 31, 1998.
The combined financial statements include the accounts of the
partnerships in which the Guarantors have a 100% interest.
2. Disposition of power generation assets:
On February 8, 1999, MidAmerican Energy Holdings Company, the
successor to CalEnergy Company, Inc. ("MidAmerican") created a
new subsidiary, CE Generation LLC ("CE Generation") and
subsequently transferred its interest in the power generation
assets in the Imperial Valley to CE Generation. On March 3,
1999, MidAmerican closed the sale of 50% of its ownership
interests in CE Generation to an affiliate of El Paso Energy
Corporation.
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Stockholder
Magma Power Company
Omaha, Nebraska
We have reviewed the accompanying combined balance sheet of the
Partnership Guarantors as of March 31, 1999, and the related
combined statements of operations and cash flows for the three
month periods ended March 31, 1999 and 1998. These financial
statements are the responsibility of the Partnership Guarantors'
management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and of making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to such combined financial
statements for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the combined balance sheet of the Partnership
Guarantors as of December 31, 1998, and the related combined
statements of operations, Guarantors' equity and cash flows for
the year then ended (not presented herein); and in our report
dated January 28, 1999, (March 3, 1999 as to Note 10), we
expressed an unqualified opinion on those combined financial
statements. In our opinion, the information set forth in the
accompanying combined balance sheet as of December 31, 1998 is
fairly stated, in all material respects, in relation to the
combined balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Omaha, Nebraska
April 28, 1999
<PAGE>
PARTNERSHIP GUARANTORS
COMBINED BALANCE SHEETS
(Dollars in Thousands)
March 31, December 31,
1999 1998
(unaudited)
ASSETS
Restricted cash $ 154,403 $ 164,983
Accounts receivable 21,245 33,404
Prepaid expenses and other assets 22,898 23,088
Due from affiliates 141,599 121,130
Property, plant, contracts and
equipment, net 412,761 399,817
Management fee 71,277 71,596
Excess of cost over fair value of net
assets acquired, net 130,667 131,558
_________ _________
$ 954,850 $ 945,576
========= =========
LIABILITIES AND GUARANTORS' EQUITY
Liabilities:
Accounts payable $ 2,647 $ 1,879
Accrued liabilities 58,490 53,647
Senior secured project notes 293,576 293,576
Deferred income taxes 98,758 97,641
_________ _________
Total liabilities 453,471 446,743
Commitments and Contingencies (Note 3)
Guarantors' equity:
Common stock 3 3
Additional paid-in capital 387,663 387,663
Retained earnings 113,713 111,167
_________ _________
Total Guarantors' equity 501,379 498,833
_________ _________
$ 954,850 $ 945,576
========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
PARTNERSHIP GUARANTORS
COMBINED STATEMENTS OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
Three Months Ended
March 31,
1999 1998
_________ _________
Revenues:
Sales of electricity $ 22,030 $ 34,097
Interest and other income 2,319 734
_________ _________
Total revenues 24,349 34,831
_________ _________
Expenses:
Operating, general and
administration 11,207 14,090
Depreciation and amortization 6,218 10,155
Interest expense 5,694 3,297
Less capitalized interest (2,433) (2,462)
_________ _________
Total expenses 20,686 25,080
_________ _________
Income before income taxes 3,663 9,751
Provision for income taxes 1,117 3,801
_________ _________
Net income $ 2,546 $ 5,950
========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
PARTNERSHIP GUARANTORS
COMBINED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Three Months Ended
March 31,
1999 1998
_________ _________
Cash flows from operating activities:
Net income $ 2,546 $ 5,950
Adjustments to reconcile net income to net
cash flow from operating activities:
Depreciation and amortization 6,218 10,155
Deferred income taxes 1,117 3,801
Changes in assets and liabilities:
Accounts receivable 12,159 20
Prepaid expenses and other assets 190 1,168
Accounts payable and accrued
liabilities 5,611 2,432
_________ _________
Net cash flows from operating activities 27,841 23,526
_________ _________
Cash flows from investing activities:
Capital expenditures (17,568) (10,675)
Decrease in restricted cash 10,580 ---
Management fee (384) (705)
_________ _________
Net cash flows from investing activities (7,372) (11,380)
_________ _________
Cash flows from financing activities:
Repayments of senior secured project notes --- ---
Increase in due from affiliates (20,469) (12,146)
_________ _________
Net cash flows from financing activities (20,469) (12,146)
_________ _________
Net change in cash --- ---
Cash at beginning of period --- ---
_________ _________
Cash at end of period $ --- $ ---
========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
PARTNERSHIP GUARANTORS
NOTES TO COMBINED FINANCIAL STATEMENTS
(in thousands)
____________________
1. General:
In the opinion of management of the Partnership Guarantors (the
"Guarantors"), the accompanying unaudited combined financial
statements contain all adjustments (consisting only of normal
recurring accruals) necessary to present fairly the financial
position as of March 31, 1999 and the results of operations for
the three months ended March 31, 1999 and 1998 and cash flows for
the three months ended March 31, 1999 and 1998. The results of
operations for the three months ended March 31, 1999 and 1998 are
not necessarily indicative of the results to be expected for the
full year.
The unaudited financial statements shall be read in conjunction
with the financial statements included in the Funding
Corporation's annual report on Form 10-K for the year ended
December 31, 1998.
The combined financial statements include the proportionate share
of the accounts of the partnerships in which the Guarantors have
an interest.
2. Disposition of power generation assets:
On February 8, 1999, MidAmerican Energy Holdings Company, the
successor to CalEnergy Company, Inc. ("MidAmerican") created a
new subsidiary, CE Generation LLC ("CE Generation") and
subsequently transferred its interest in the power generation
assets in the Imperial Valley to CE Generation. On March 3,
1999, MidAmerican closed the sale of 50% of its ownership
interests in CE Generation to an affiliate of El Paso Energy
Corporation.
3. Contingencies:
On February 26, 1998, Del Ranch and Elmore initiated an action
against Edison in Imperial County Superior Court for payment for
energy delivered to Edison pursuant to long term power sale
agreements at the escalated rate of 14.6 cents for 1998. For the
Elmore and Del Ranch partnerships, Edison has asserted that
prices should not be escalated for 1998 and made payments for
energy deliveries at 13.6 cents per kWh in 1998. That action is
in the early discovery stages and the Del Ranch and Elmore
partnerships intend to vigorously prosecute all available claims.
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Stockholder
Magma Power Company
Omaha, Nebraska
We have reviewed the accompanying balance sheet of the Salton Sea
Royalty Company as of March 31, 1999, and the related statements
of operations and cash flows for the three month periods ended
March 31, 1999 and 1998. These financial statements are the
responsibility of the Salton Sea Royalty Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and of making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to such financial statements
for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet of the Salton Sea Royalty
Company as of December 31, 1998, and the related statements of
operations, equity, and cash flows for the year then ended (not
presented herein); and in our report dated January 28, 1999,
(March 3, 1999 as to Note 5), we expressed an unqualified opinion
on those financial statements. In our opinion, the information
set forth in the accompanying balance sheet as of December 31,
1998 is fairly stated, in all material respects, in relation to
the balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Omaha, Nebraska
April 28, 1999
SALTON SEA ROYALTY COMPANY
BALANCE SHEETS
(Dollars in Thousands, Except per Share Amounts)
March 31, December 31,
1999 1998
___________ ___________
(unaudited)
ASSETS
Due from affiliates $ 53,961 $ 50,928
Royalty stream, net 20,710 22,932
Excess of cost over fair value of net assets
acquired, net 32,961 33,188
Prepaid expenses and other assets 443 513
__________ __________
$ 108,075 $ 107,561
========== ==========
LIABILITIES AND EQUITY
Liabilities:
Accrued liabilities $ 35,332 $ 39,584
Senior secured project note 23,210 23,210
Deferred income taxes 5,891 6,769
__________ __________
Total liabilities 64,433 69,563
Equity:
Common stock, par value $.01 per share; 100
share authorized, issued and outstanding - -
Additional paid-in capital 1,561 1,561
Retained earnings 42,081 36,437
__________ __________
Total equity 43,642 37,998
__________ __________
$ 108,075 $ 107,561
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
SALTON SEA ROYALTY COMPANY
STATEMENTS OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
Three Months Ended
March 31,
_____________________
1999 1998
_______ _______
Revenues:
Royalty income $ 13,459 $ 12,038
Expenses:
Operating, general and
administrative expenses 1,108 1,859
Amortization of royalty stream
and goodwill 2,449 2,449
Interest expense 468 776
_________ __________
Total expenses 4,025 5,084
_________ __________
Income before income taxes 9,434 6,954
Provision for income taxes 3,790 2,625
_________ __________
Net income $ 5,644 $ 4,329
========= ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
SALTON SEA ROYALTY COMPANY
STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Three Months Ended
March 31,
_____________________
1999 1998
_________ ________
Cash flows from operating activities:
Net income $ 5,644 $ 4,329
Adjustments to reconcile net income to net
cash flow from operating activities:
Amortization of royalty stream and goodwill 2,449 2,449
Changes in assets and liabilities:
Prepaid expenses and other assets 70 117
Accrued liabilities and deferred income
taxes (5,130) 6,125
Net cash flows from operating activities 3,033 13,020
Net cash flows from financing activities:
Increase in due from affiliates (3,033) (13,020)
Repayment of senior secured project note --- ---
_________ _________
Net cash flows from financing activities (3,033) (13,020)
Net change in cash --- ---
Cash at beginning of period --- ---
_________ _________
Cash at end of period $ --- $ ----
========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
SALTON SEA ROYALTY COMPANY
NOTES TO FINANCIAL STATEMENTS
(in thousands)
____________________
1. General:
In the opinion of management of the Salton Sea Royalty Company
(the "Company"), the accompanying unaudited financial statements
contain all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the financial position as
of March 31, 1999 and the results of operations for the three
months ended March 31, 1999 and 1998 and cash flows for the three
months ended March 31, 1999 and 1998. The results of operations
for the three months ended March 31, 1999 and 1998 are not
necessarily indicative of the results to be expected for the full
year.
The unaudited financial statements shall be read in conjunction
with the financial statements included in the Funding
Corporation's annual report on Form 10-K for the year ended
December 31, 1998.
2. Disposition of power generation assets:
On February 8, 1999, MidAmerican Energy Holdings Company, the
successor to CalEnergy Company, Inc. ("MidAmerican") created a
new subsidiary, CE Generation LLC ("CE Generation") and
subsequently transferred its interest in the power generation
assets in the Imperial Valley to CE Generation. On March 3,
1999, MidAmerican closed the sale of 50% of its ownership
interests in CE Generation to an affiliate of El Paso Energy
Corporation.
<PAGE>
THE SALTON SEA FUNDING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per kwh data)
_________________________________
Results of Operations:
The following is management's discussion and analysis of certain
significant factors which have affected the Salton Sea Funding
Corporation's (the "Funding Corporation") and the Salton Sea
Guarantors, the Partnership Guarantors and the Salton Sea Royalty
Company's (collectively, the "Guarantors") financial condition
and results of operations during the periods included in the
accompanying statements of operations.
Funding Corporation was organized for the sole purpose of acting
as issuer of senior secured notes and bonds (the "Securities").
The Securities are payable from the proceeds of payments made of
principal and interest on the senior secured project notes by the
Guarantors to the Funding Corporation. The Securities are
guaranteed on a joint and several basis by the Guarantors. The
guarantees of the Partnership Guarantors and Salton Sea Royalty
Company are limited to available cash flow. The Funding
Corporation does not conduct any operations apart from the
Securities.
The Vulcan, Leathers, Del Ranch and Elmore partnerships
(collectively, the "Partnership Projects") sell all electricity
generated by the respective plants pursuant to four long-term SO4
Agreements between the projects and Southern California Edison
Company ("Edison"). These SO4 Agreements provide for capacity
payments, capacity bonus payments and energy payments. Edison
makes fixed annual capacity payments to the projects and, to the
extent that capacity factors exceed certain benchmarks, is
required to make capacity bonus payments. The price for capacity
and capacity bonus payments is fixed for the life of the SO4
Agreements and the capacity payments are significantly higher in
the months of June through September. Energy is sold at
increasing scheduled rates for the first ten years of each plants
operations and thereafter at Edison's Avoided Cost of Energy.
The scheduled energy price periods of the Partnership Project SO4
Agreements extended until February 1996 for the Vulcan
Partnership, December 1998, for the Hoch (Del Ranch) and Elmore
Partnerships, and extend until December 1999 for the Leathers
Partnership.
For 1999, Vulcan, Hoch and Elmore are receiving Edison's Avoided
Cost of Energy pursuant to their respective SO4 Agreements. The
SO4 Agreement for Leathers provides for energy rates of 15.6
cents per kWh in 1999.
<PAGE>
THE SALTON SEA FUNDING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per kwh data)
_________________________________
Results of Operations: (continued)
The Salton Sea I Project sells electricity to Edison pursuant to
a 30-year negotiated power purchase agreement, as amended (the
"Salton Sea I PPA"), which provides for capacity and energy
payments. The energy payment is calculated using a Base Price
which is subject to quarterly adjustments based on a basket of
indices. The time period weighted average energy payment for
Salton Sea I was 5.4 cents per kWh during the three months ended
March 31, 1999. As the Salton Sea I PPA is not an SO4 Agreement,
the energy payments do not revert to Edison's Avoided Cost of
Energy.
The Salton Sea II and Salton Sea III Projects sell electricity to
Edison pursuant to 30-year modified SO4 Agreements that provide
for capacity payments, capacity bonus payments and energy
payments. The price for contract capacity and contract capacity
bonus payments is fixed for the life of the modified SO4
Agreements. The energy payments for the first ten year period,
which expires April 4, 2000 for Salton Sea II and expired on
February 13, 1999 for Salton Sea III, are levelized at a time
period weighted average of 10.6 cents per kWh and 9.8 cents per
kWh for Salton Sea II and Salton Sea III, respectively.
Thereafter, the monthly energy payments will be at Edison's
Avoided Cost of Energy. For Salton Sea II only, Edison is
entitled to receive, at no cost, 5% of all energy delivered in
excess of 80% of contract capacity through March 31, 2004.
The Salton Sea IV Project sells electricity to Edison pursuant to
a modified SO4 agreement which provides for contract capacity
payments on 34 MW of capacity at two different rates based on the
respective contract capacities deemed attributable to the
original Salton Sea PPA option (20 MW) and to the original Fish
Lake PPA (14 MW). The capacity payment price for the 20 MW
portion adjusts quarterly based upon specified indices and the
capacity payment price for the 14 MW portion is a fixed levelized
rate. The energy payment (for deliveries up to a rate of 39.6
MW) is at a fixed price for 55.6% of the total energy delivered
by Salton Sea IV and is based on an energy payment schedule for
44.4% of the total energy delivered by Salton Sea IV. The
contract has a 30-year term but Edison is not required to
purchase the 20 MW of capacity and energy originally attributable
to the Salton Sea I PPA option after September 30, 2017, the
original termination date of the Salton Sea I PPA.
For the three months ended March 31, 1999, Edison's average
Avoided Cost of Energy was 2.6 cents per kWh which is
substantially below the contract energy prices earned for the
three months ended March 31, 1999. Estimates of Edison's future
Avoided Cost of Energy vary substantially from year to year.
<PAGE>
THE SALTON SEA FUNDING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per kwh data)
_________________________________
Results of Operations: (continued)
The Company cannot predict the likely level of Avoided Cost of
Energy prices under the SO4 Agreements and the modified SO4
Agreements at the expiration of the scheduled payment periods.
The revenues generated by each of the projects operating under
such Agreements will likely decline significantly after the
expiration of the respective scheduled payment periods.
The following data includes the aggregate capacity and
electricity production of Salton Sea Units I, II, III and IV:
Three Months Ended
March 31,
_____________________
1999 1998
________ _________
Overall capacity factor 83.8% 81.4%
Capacity (NMW) (average) 119.4 119.4
kWh produced (in thousands) 216,000 209,900
The overall capacity factor for the Salton Sea Projects increased
for the three months ended March 31, 1999 compared to the same
period in 1998 due to scheduled overhauls in February 1998.
The following data includes the aggregate capacity and
electricity production of Vulcan, Del Ranch, Elmore and Leathers:
Three Months Ended
March 31,
_____________________
1999 1998
________ _________
Overall capacity factor 106.8% 98.4%
Capacity (NMW) (average) 148 148
kWh produced (in thousands) 341,500 314,500
The overall capacity factor for the Partnership Projects
increased for the three months ended March 31, 1999 compared to
the same period in 1998 due to scheduled overhauls at Leathers
and Elmore in 1998.
<PAGE>
THE SALTON SEA FUNDING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per kwh data)
_________________________________
Results of Operations: (continued)
Revenues:
The Salton Sea Guarantors' sales of electricity decreased to
$18,272 for the three months ended March 31, 1999 from $20,185
for the same period in 1998, a 9.5% decrease. This decrease was
primarily due to the expiration of the scheduled price period at
Salton Sea Unit III in February, 1999.
The Partnership Guarantors' sales of electricity decreased to
$22,030 for the three months ended March 31, 1999 from $34,097
for the same period in 1998, a 35.4% decrease. This decrease was
due to the expiration of the fixed price period at Elmore and Del
Ranch at December 31, 1998.
The Royalty Guarantor revenue increased to $13,459 for the three
months ended March 31, 1999 from $12,038 for the same period last
year. This increase was due primarily to an increase in East Mesa
royalty income related to a royalty settlement.
Operating Expenses:
The Salton Sea Guarantors' operating expenses, which include
royalty, operating, and general and administrative expenses,
increased to $7,308, for the three months ended March 31, 1999
from $6,747 for the same period in 1998.
The Partnership Guarantors' operating expenses, which include
royalty, operating, and general and administrative expenses,
decreased to $11,207 for the three months ended March 31, 1999
from $14,090 for the same period in 1998. The decrease was due to
a reduction in royalty expenses due to the lower revenues.
The Royalty Guarantors' operating expenses decreased to $1,108
for the three months ended March 31, 1999 from $1,859 for the
same period in 1998, a 40.4% decrease. This decrease was due to
lower royalty costs due to the end of the scheduled price period
at Del Ranch and Elmore.
Depreciation and Amortization:
The Salton Sea Guarantors' depreciation and amortization
increased to $4,022 for the three months ended March 31, 1999
from $3,714 for the same period of 1998, an 8.3% increase.
<PAGE>
THE SALTON SEA FUNDING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per kwh data)
_________________________________
Results of Operations: (continued)
The Partnership Guarantors' depreciation and amortization
decreased to $6,218 for the three months ended March 31, 1999
from $10,155 for the same period in 1998. The decrease was due
primarily to lower step up depreciation amortization after the
end of the scheduled price period at Del Ranch and Elmore.
The Royalty Guarantors' amortization was $2,449 for the three
months ended March 31, 1999 compared to $2,449 for the same
period of 1998.
Interest Expense:
The Salton Sea Guarantors' interest expense, net of capitalized
amounts, increased to $4,372 for the three months ended March 31,
1999 from $3,928 for the same period in 1998, a 11.3% increase.
The increase was due to increased indebtedness from the issuance
of the Series F notes in October 1998.
The Partnership Guarantors' interest expense, net of capitalized
amounts, increased to $3,261 for the three months ended March 31,
1999 from $835 for the same period in 1998. The increase was due
to increased indebtedness from the issuance of the Series F notes
in October 1998.
The Royalty Guarantors' interest expense decreased to $468 for
the three months ended March 31, 1999 from $776 from the same
period in 1998. The decrease was due to reduced indebtedness.
Income Tax Provision:
The Salton Sea Guarantors are comprised of partnerships. Income
taxes are the responsibility of the partners and Salton Sea
Guarantors have no obligation to provide funds to the partners
for payment of any tax liabilities. Accordingly, the Salton Sea
Guarantors have no tax obligations.
The Partnership Guarantors income tax provision decreased to
$1,117 for the three months ended March 31, 1999 from $3,801 for
the same period in 1998, a 70.6% decrease. This decrease was
primarily due to a lower pre-tax income. Income taxes will be
paid by the parent of the Guarantors from distributions to the
parent company by the Guarantors which occur after operating
expenses and debt service.
<PAGE>
THE SALTON SEA FUNDING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per kwh data)
_________________________________
Results of Operations: (continued)
The Royalty Guarantor's income tax provision was $3,790 for the
three months ended March 31, 1999 compared to $2,625 for the same
period in 1998. This increase was primarily due to higher pre-tax
income. Tax obligations of the Royalty Guarantor will be
remitted to the parent company only to the extent of cash flows
available after operating expenses and debt service.
Net Income:
The Salton Sea Funding Corporation's net income for the three
months ended March 31, 1999 was $172 compared to $385 for the
same period in 1998. The net income primarily represents interest
income and expense, net of applicable tax, and the Salton Sea
Funding Corporation's 1% equity in earnings of the Guarantors.
The Salton Sea Guarantors' net income decreased to $3,362 for the
three months ended March 31, 1999 compared to $5,811 for the same
period of 1998.
The Partnership Guarantors' net income decreased to $2,546 for
the three months ended March 31, 1999 compared to $5,950 for the
same period of 1998.
The Royalty Guarantors' net income increased to $5,644 for the
three months ended March 31, 1999 compared to $4,329 for the same
period of 1998.
Liquidity and Capital Resources:
Salton Sea Minerals LLC, a Partnership Guarantor ("Minerals LLC")
developed and owns the rights to proprietary processes for the
extraction of zinc from elements in solution in the geothermal
brine and fluids utilized at its Imperial Valley plants (the
"Zinc Recovery Project") as well as the production of power to be
used in the extraction process. A pilot plant has successfully
produced commercial quality zinc at the Company's Imperial Valley
Project.
Minerals LLC is constructing the Zinc Recovery Project which will
recover zinc from the geothermal brine (the "Zinc Recovery
Project"). Four facilities will be installed near Imperial
Valley Project sites to extract a zinc chloride solution from the
brine through an ion exchange process. This solution will be
transported to a central processing plant where zinc ingots will
be produced through solvent extraction, electrowinning and
casting processes. The Zinc Recovery Project is designed to have
a capacity of approximately 30,000 metric tonnes per year and is
scheduled to commence commercial operation in mid-2000.
<PAGE>
THE SALTON SEA FUNDING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per kwh data)
_________________________________
Liquidity and Capital Resources: (continued)
The zinc produced by the Zinc Recovery Project is expected to be
sold primarily to U.S. West Coast customers such as steel
companies, alloyers and galvanizers.
The Zinc Recovery Project is being constructed by Kvaerner U.S.
Inc. ("Kvaerner") pursuant to a date certain, fixed-price,
turnkey engineering, procurement and construction contract (the
"Zinc Recovery Project EPC Contract"). Kvaerner is a wholly-
owned indirect subsidiary of Kvaerner ASA, an internationally
recognized engineering and construction firm experienced in the
metals, mining and processing industries. Total project costs of
the Zinc Recovery Project are expected to be approximately
$200,900. The Company has incurred $31,500 of such costs through
March 31, 1999.
Salton Sea Power LLC, a Salton Sea Guarantor, is constructing
Salton Sea V. Salton Sea V will be a 49 net MW geothermal power
plant which will sell approximately one-third of its net output
to the Zinc Recovery Project. The remainder will be sold through
the California Power Exchange ("PX").
Salton Sea V is being constructed pursuant to a date certain,
fixed price, turn-key engineering, procurement and construction
contract (the "Salton Sea V EPC Contract") by Stone & Webster
Engineering Corporation ("SWEC"). SWEC is one of the world's
leading engineering and construction firms for the construction
of electric power plants and, in particular, geothermal power
plants. Salton Sea V is scheduled to commence commercial
operation in mid-2000. Total project costs of Salton Sea V are
expected to be approximately $119,100.
CE Turbo LLC, a Partnership Guarantor, is constructing the CE
Turbo Project. The CE Turbo Project will have a capacity of 10
net MW. The net output of the CE Turbo Project will be sold to
the Zinc Recovery Project or sold through the PX.
The Partnership Projects are upgrading the geothermal brine
processing facilities at the Vulcan and Del Ranch Projects with
the Region 2 Brine Facilities Construction. In addition to
incorporating the pH modification process, which has reduced
operating costs at the Salton Sea Projects, the new, more
efficient facilities will achieve economies through improved
brine processing systems and the utilization of more modern
equipment. The Partnership Projects expect these improvements
will reduce brine-handling operating costs at the Vulcan Project
and the Del Ranch Project.
<PAGE>
THE SALTON SEA FUNDING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per kwh data)
_________________________________
Liquidity and Capital Resources: (continued)
The CE Turbo Project and the Region 2 Brine Facilities
Construction are being constructed by SWEC pursuant to a date
certain, fixed price, turnkey engineering, procurement and
construction contract (the "Region 2 Upgrade EPC Contract"). The
obligations of SWEC will be guaranteed by Stone & Webster,
Incorporated. The CE Turbo Project is scheduled to commence
initial operations in mid-2000 and the Region 2 Brine Facilities
Construction is scheduled to be completed in early-2000. Total
project costs for both the CE Turbo Project and the Region 2
Brine Facilities Construction are expected to be approximately
$63,700.
Total equity funding for these projects is expected to be
approximately $122,500.
The operating Salton Sea Guarantors' only source of revenue is
payments received pursuant to long term power sales agreements
with Edison, other than interest earned on funds on deposit. The
operating Partnership Guarantors' primary source of revenue is
payments received pursuant to long term power sales agreements
with Edison. The Royalty Guarantor's only source of revenue is
Royalties received pursuant to resource lease agreements with the
Partnership Projects and the East Mesa Project. These payments,
for each of the Guarantors, are expected to be sufficient to fund
operating and maintenance expenses, payments of interest and
principal on the Securities, projected capital expenditures and
debt service reserve fund requirements.
What is generally known as the year 2000 ("Y2K") computer issue
arose because many existing computer programs and embedded
systems use only the last two digits to refer to a year.
Therefore, those computer programs do not properly distinguish
between a year that begins with "20" instead of "19". If not
corrected, many computer applications could fail or create
erroneous results. The failure to correct a material Y2K item
could result in an interruption in, or a failure of, certain
normal business activities or operations including the
generation, distribution, and supply of electricity. Such
failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition.
The Y2K issue creates uncertainty for the Company from potential
issues with its own computer systems and from third parties with
whom the Company deals on transactions worldwide. The Company's
operations utilize systems and equipment provided by other
organizations. As a result, Y2K readiness of suppliers, vendors,
service providers or customers could impact the Company's
operations.
<PAGE>
THE SALTON SEA FUNDING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per kwh data)
_________________________________
Liquidity and Capital Resources: (continued)
The Company is assessing the readiness of such constituent
entities and the impacts on those entities that rely upon the
Company's services. The Company is unable to determine at this
time whether the consequences of Y2K failures of third parties
will have a material impact on the Company's results of
operations, liquidity or financial condition.
The Company has commenced, for all of its information systems, a
Y2K date conversion project to address all necessary code
changes, testing and implementation in order to resolve the Y2K
issue. The Company created a Y2K project team to identify,
assess and correct all of its information technology (IT) and non-
IT systems, as well as, identify and assess third party systems.
The Company has identified and assessed substantially all of its
IT and non-IT systems and is currently in the process of
repairing or replacing those systems which it believes are not
year 2000 compliant. Through March 31, 1999, the Company is
approximately 99% complete in repairing or replacing those
systems. The Company expects to be 100% complete of correcting,
testing, and compliance of those systems by June, 1999.
Total Y2K expenditures, for both repairing or replacing non-
compliant systems, are expected to total approximately $100. The
Company has renovated or replaced several non-compliant systems
to gain enhanced functionalities. The cost of these types of
renovations and replacements is not reported herein since their
development and installation were not driven by Y2K concerns.
The Company is not aware of any additional material costs needed
to be incurred to bring all of its systems into compliance;
however, there is no assurance that additional costs will not be
incurred.
A contingency plan identifying credible worst-case scenarios is
being developed. The contingency plan is comprised of both
mitigation and recovery aspects. Mitigation entails planning to
reduce the impact of unresolved year 2000 problems, and recovery
entails planning to restore services in the event that year 2000
problems occur. It is expected that the contingency plan will be
complete by mid-year 1999.
Although management believes that the Y2K project will be
substantially complete before January 1, 2000, any unforeseen
failures of the Company's and/or third parties' computer systems
could have a material impact on the Company's ability to conduct
its business.
Inflation has not had a significant impact on the Guarantors'
operating revenue and costs.
<PAGE>
THE SALTON SEA FUNDING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands, except per kwh data)
_________________________________
Liquidity and Capital Resources: (continued)
Certain information included in this report contains forward-
looking statements made pursuant to the Private Securities
Litigation Reform Act of 1995 ("Reform Act"). Such statements
are based on current expectations and involve a number of known
and unknown risks and uncertainties that could cause the actual
results and performance of the Company to differ materially from
any expected future results or performance, expressed or implied,
by the forward-looking statements. In connection with the safe
harbor provisions of the Reform Act, the Company has identified
important factors that could cause actual results to differ
materially from such expectations, including development
uncertainty, operating uncertainty, acquisition uncertainty,
uncertainties relating to doing business outside of the United
States, uncertainties relating to geothermal resources,
uncertainties relating to domestic and international economic and
political conditions and uncertainties regarding the impact of
regulations, changes in government policy, industry deregulation
and competition. Reference is made to all of the Company's SEC
filings, incorporated herein by reference, for a description of
such factors. The Company assumes no responsibility to update
forward-looking information contained herein.
<PAGE>
SALTON SEA FUNDING CORPORATION
PART II - OTHER INFORMATION
Item 1 - Legal proceedings.
Neither the Salton Sea Funding Corporation nor the
Guarantors are parties to any material legal matters except
those described in Footnote 3 of the Partnership Guarantors
financial statements.
Item 2 - Changes in Securities.
Not applicable.
Item 3 - Default on Senior Securities.
Not applicable.
Item 4 - Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5 - Other Information.
Not applicable.
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) Report on Form 8-K:
Not applicable.
<PAGE>
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.
SALTON SEA FUNDING CORPORATION
Date: May 13, 1999 /s/ Patrick J. Goodman
Patrick J. Goodman
Senior Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit Page
No. No.
27 Financial Data Schedule 37
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 41,990
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 694,175
<CURRENT-LIABILITIES> 0
<BONDS> 626,816
0
0
<COMMON> 0
<OTHER-SE> 12,110
<TOTAL-LIABILITY-AND-EQUITY> 694,175
<SALES> 0
<TOTAL-REVENUES> 12,245
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 215
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,737
<INCOME-PRETAX> 293
<INCOME-TAX> 121
<INCOME-CONTINUING> 172
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 172
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
