Cogentrix Energy Inc · 10-K405 · For 12/31/00

Filed On 4/2/01 5:07pm ET   ·   SEC File 33-74254   ·   Accession Number 950144-1-4690

Annual Report -- [X] Reg. S-K Item 405   ·   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K405     Cogentrix Energy Inc                                  83    502K 
 2: EX-10.14(F)  Amendment #9/Contract Csxt-C-03951                    1      7K 
 3: EX-10.41(A)  Amendment/Employment Agreement/Miller                 5     21K 
 4: EX-10.42(A)  Amendment/Employment Agreement/Alexander              2     11K 
 5: EX-10.43(A)  Amendment/Employment Agreement/Pagano                 2     12K 
 6: EX-10.62    Executive Employment Agreement/Schwartz                7     19K 
 7: EX-21.1     Subsidiaries                                           3     16K 

10-K405   ·   Cogentrix Energy Inc
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------- 
FORM 10-K 

                                                                [Download Table]
                                                                             
(MARK ONE)                                                                   
      [X]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF           
                  THE SECURITIES EXCHANGE ACT OF 1934                        

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000                

                                               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: 33-74254

COGENTRIX ENERGY, INC.
(Exact name of registrant as specified in its charter)

                                                                [Download Table]
                                                                             
             NORTH CAROLINA                                    56-1853081    
    (State or other jurisdiction of                         (I.R.S. Employer 
     incorporation or organization)                       Identification No.)

       9405 ARROWPOINT BOULEVARD                               28273-8110    
       CHARLOTTE, NORTH CAROLINA                               (Zip Code)    
(Address of principal executive offices)                                     

Registrant's telephone number, including area code: (704) 525-3800

Securities registered pursuant to Section 12(b) of Act: 
NONE
Securities registered pursuant to Section 12(g) of Act: 
NONE

Indicate by checkmark 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                    

   Indicate by checkmark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information          
statements incorporated by reference in Part III of this Form 10-K or any       
amendment to this Form 10-K. [X]                                                

  Number of shares of Common Stock, no par value, outstanding at March 30,
2001:       282,000                                                             

DOCUMENTS INCORPORATED BY REFERENCE:

NONE
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COGENTRIX ENERGY, INC.

INDEX TO ANNUAL REPORT ON FORM 10-K 

                                                                [Download Table]

                                                                           PAGE
                                                                           ----
                                                                               
PART I                                                                         
Item 1:      Business....................................................    3 
Item 2:      Properties..................................................   23 
Item 3:      Legal Proceedings...........................................   23 
Item 4:      Submission of Matters to a Vote of Security Holders.........   23 

PART II                                                                        
Item 5:      Market for the Registrant's Common Stock and Related              
             Shareholder Matters.........................................   24 
Item 6:      Selected Consolidated Financial Data........................   25 
Item 7:      Management's Discussion and Analysis of Financial Condition       
             and Results of Operations...................................   26 
Item 8:      Financial Statements and Supplementary Data.................   34 
Item 9:      Changes in and Disagreements with Accountants on Accounting       
             and Financial Disclosure....................................   66 

PART III                                                                       
Item 10:     Directors and Executive Officers of the Registrant..........   66 
Item 11:     Executive Compensation......................................   69 
Item 12:     Security Ownership of Certain Beneficial Owners and               
             Management..................................................   73 
Item 13:     Certain Relationships and Related Transactions..............   73 

PART IV                                                                        
Item 14:     Exhibits, Financial Statement Schedules and Reports on Form       
             8-K.........................................................   74 
Signatures...............................................................   83 

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PART I

ITEM 1.  BUSINESS                                                               

INTRODUCTION                                                                    

   Cogentrix Energy is an independent power producer that through its direct
and indirect subsidiaries acquires, develops, owns and operates electric        
generating plants, principally in the United States. We derive most of our      
revenue from the sale of electricity, but we also produce and sell steam. We    
sell the electricity we generate to regulated electric utilities and power      
marketers, primarily under long-term power purchase agreements. We sell the     
steam we produce to industrial customers with manufacturing or other facilities 
located near our electric generating plants. We were one of the early           
participants in the market for electric power generated by independent power    
producers that developed as a result of energy legislation the United States    
Congress enacted in 1978. We believe we are one of the larger independent power 
producers in the United States based on our total project megawatts in          
operation.                                                                      

We currently own -- entirely or in part -- a total of 22 electric     
generating facilities in the United States. Our 22 plants are designed to       
operate at a total production capability of approximately 3,914 megawatts. After
taking into account our part interests in the 16 plants that are not            
wholly-owned by us, that range from 1.6% to approximately 74.2%, our net        
ownership interests in the total production capability of our 22 electric       
generating facilities is approximately 1,754 megawatts. We currently operate    
nine of our facilities, seven of which we developed and constructed.            

We also have ownership interests in and will operate four facilities  
currently under construction in Louisiana, Oklahoma, Idaho and the Dominican    
Republic. Once these facilities begin operation, we will have ownership         
interests in a total of 25 domestic -- and one international -- electric        
generating facilities that are designed with a total production capability of   
approximately 6,110 megawatts. Our net equity interest in the total production  
capability of those 26 facilities will be approximately 3,305 megawatts.        

   Unless the context requires otherwise, references in this report to "we,"
"us," "our," or "Cogentrix" refer to Cogentrix Energy, Inc. and its             
subsidiaries, including subsidiaries that hold investments in other corporations
or partnerships whose financial results are not consolidated with ours. The term
"Cogentrix Energy" refers only to Cogentrix Energy, Inc., which is a development
and management company that conducts its business primarily through             
subsidiaries. Cogentrix Energy's subsidiaries that are engaged in the           
development, ownership or operation of cogeneration facilities are sometimes    
referred to individually as a "project subsidiary" and collectively as Cogentrix
Energy's "project subsidiaries." The unconsolidated affiliates of Cogentrix     
Energy that are engaged in the ownership and operation of electric generating   
facilities and in which we have less than a majority interest are sometimes     
referred to individually as a "project affiliate" or collectively as "project   
affiliates."                                                                    

OUR STRATEGY                                                                    

    We intend to remain among the leaders in the independent power industry by
developing and constructing or acquiring -- entirely or in part -- electric     
generating facilities in the United States and in foreign countries where the   
political climate is conducive to increased foreign investment.                 

We have targeted three market segments for our future development and 
acquisition activities:                                                         

    - Developing New Electric Generating Plants.  We intend to pursue domestic
     development of new, highly-efficient, low-cost plants, concentrating on
    facilities that use natural gas as fuel. We expect these facilities to
enter into long-term contractual arrangements with fuel suppliers,
   electric utilities or power marketers. These contractual arrangements
    will provide us a scheduled and/or indexed payment for electricity and
      result in the fuel supplier, electric utility or power marketer assuming
   the risks associated with fuel and energy price fluctuations. We also
   intend to pursue international project development opportunities on a
      highly selective basis. We expect to do so only in those countries where
       demand for power is growing rapidly, private investment is encouraged and
favorable financing conditions exist.                             

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    - Acquiring Interests in Existing Domestic Electric Generating Plants.  We
intend to generally focus our future acquisition opportunities on 
projects that already have entered into power sales contracts with
       electric utilities or other customers whose senior unsecured debt carries
       investment-grade credit ratings. We may also seek to acquire interests in
    electric generating facilities that do not have contracts in place but
are nonetheless highly efficient, low-cost providers that can take
       advantage of opportunities in a rapidly deregulating energy market. If we
   do, we intend to protect Cogentrix against the risk of changes in the
    market price for electricity by entering into contracts at the time of
       acquisition with fuel suppliers, utilities or power marketers that reduce
      or eliminate our exposure to this risk by establishing future prices and
   quantities for the electricity produced independent of the short-term
market.                                                           

- Developing New or Managing Existing Plants for Industrial           
  Companies.  Many large, industrial companies with significant energy
       needs own on-site facilities for generating the electricity and producing
the steam they require for their manufacturing, refining or other 
       operations. We believe that cogenerating facilities with state-of-the-art
     technology developed by us could replace or upgrade existing facilities
employing older technology that many of these industrial companies
currently operate themselves. We also expect that many industrial 
      companies choosing not to replace their existing facilities will seek to
contract with companies like Cogentrix to manage and operate their
existing facilities.                                              

   We seek to manage the risks associated with owning and operating electric
generating facilities by emphasizing diversification and balance among our      
investments in terms of the following criteria:                                 

- geographic location of the facilities in which we have an ownership 
interest;                                                         

- electric utility or power marketing customers for the electricity we
generate and the industrial customers for the steam we produce;   

- technology we employ to generate electricity and produce steam; and 

- coal, gas and other fuel suppliers to our plants.                   

INDUSTRY TRENDS CREATING MARKET OPPORTUNITIES                                   

Increasing Competition in the Domestic Electric Generating Industry         

In response to increasing customer demand for access to low-cost      
electricity and enhanced services, new regulatory initiatives are currently     
being adopted or considered at both state and federal levels to increase        
competition in the domestic electric generating industry. We believe that these 
regulatory initiatives may lead to the transformation of the existing regulated,
utility dominated market, that sells to a captive customer base and is based    
upon cost-of-service pricing, to a more competitive market in which end users   
may purchase electricity from a variety of suppliers, including non-utility     
generators, power marketers, public utilities and others at competitive prices. 
Our management believes that these market trends will create significant new    
business opportunities for us because we have demonstrated our ability to       
construct and operate efficient, low-cost electric generating facilities.       

Growing Market for Sale of Electric Generating Assets                       

   Regulatory initiatives to restructure the United States electric industry
have led to the development of a growing market for the sale of electric        
generating assets principally by utilities, but also by independent power       
producers and industrial companies. In addition to regulatory pressure, the     
management of some utilities have decided, for strategic reasons, to sell some  
or all of their generating assets and to concentrate on the transmission and    
distribution segments of the power supply market. If this trend continues, it   
may create additional investment opportunities for us. In connection with       
acquiring -- entirely or in part -- any additional electric generating assets,  
we expect to reduce our exposure to electric market price risk by entering into 
contractual arrangements with fuel suppliers, utilities and/or power marketers  
under which they would assume some or all of the risks associated with          
fluctuations in fuel and energy prices.                                         

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Expanded Options Resulting from Passage of the Energy Policy Act            

 The passage of the Energy Policy Act in 1992 significantly expanded the
options available to independent power producers, particularly with respect to  
siting a generating facility. Among other things, the Energy Policy Act enables 
independent power producers to obtain an order from the Federal Energy          
Regulatory Commission requiring an intermediary utility to give access to its   
transmission lines to transmit or "wheel" electric power from a generating      
facility to its utility purchaser. The availability of wholesale transmission   
"wheeling" could be an important aspect in the development of new projects. For 
example, we may be able to develop a project in one utility's service territory 
and "wheel" the electric power produced by the project through the transmission 
lines of that utility to a second utility or another wholesale purchaser. The   
Energy Policy Act also created a new class of generator -- exempt wholesale     
generators -- that, unlike qualifying facilities, are not required to use       
alternative or renewable fuels or to have useful thermal energy output. Finally,
the Energy Policy Act created another new class of utility-foreign utility      
companies -- which may own and operate foreign utility assets without U.S.      
regulation consequences. See "Regulation -- Energy Regulations" herein.         

PROJECT AGREEMENTS, FINANCING AND OPERATING ARRANGEMENTS FOR OUR OPERATING      
FACILITIES                                                                      

Project Agreements                                                          

     Our facilities have long-term power sales agreements to sell electricity to
electric utilities and power marketers. A facility's revenue from a power sales 
agreement usually consists of two components: variable payments, which vary in  
accordance with the amount of energy the facility produces, and fixed payments  
that are received in the same amounts whether or not the facility is producing  
energy. Variable payments, which are generally intended to cover the costs of   
actually generating electricity, such as fuel costs, if supplied by the         
operating facility, and variable operation and maintenance expense, are based on
a facility's net electrical output measured in kilowatt hours. Variable payment 
rates are either scheduled or indexed to the fuel costs of the electricity      
purchaser and/or an inflationary index.                                         

   Fixed payments, that are intended to compensate us for the costs incurred
by the project subsidiary whether or not it is generating electricity, such as  
debt service on the project financing, are more complex and are calculated based
on a declared production capability of a facility. Declared production          
capability is the electric generating capability of a plant in megawatts that   
the project subsidiary contractually agrees to make available to the electricity
purchaser. It is generally less than 100% of the facility's design production   
capability dictated by its equipment and design specifications. Fixed payments  
are based either on a facility's net electrical output and paid on a            
kilowatt-hour basis or on the facility's declared production capability and can 
be adjusted if actual production capability varies significantly from declared  
production capability.                                                          

    Many power sales agreements permit the electricity purchaser to direct the
facility to deliver a variable amount of electrical output within limited       
parameters. This means the purchaser may, within those parameters, direct the   
facility to reduce or suspend the delivery of electricity. The power sales      
agreements of substantially all of our facilities provide the electricity       
purchaser with the right to reduce or suspend their purchases of electricity    
whenever they determine that they can obtain lower cost power either by         
generating power at their own plants or by purchasing electricity in bulk from  
others. The power sales agreements for these facilities are structured in a     
manner such that when the amount of electrical output is reduced, the facility  
continues to receive the fixed payments, that cover fixed operating costs and   
debt service requirements and provide substantially all of the project          
subsidiary's profits. The variable payments, that cover the operating,          
maintenance and fuel costs incurred by the project subsidiary to generate       
electricity, are received only for each kilowatt hour delivered.                

Many of our facilities produce process steam for use by an industrial 
customer that has a manufacturing or other facility located nearby. Our         
industrial customers, that include textile manufacturing companies,             
pharmaceutical manufacturing companies, chemical producers and synthetic fiber  
plants, use the process steam in their manufacturing processes. Our steam sales 
contracts with these industrial customers generally are long-term contracts that
provide payment on a per thousand pound basis for steam delivered.              

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With the exception of facilities in which the electricity purchaser is
responsible for providing the fuel, each of our facilities purchases fuel under 
long-term supply agreements. Substantially all fuel supply contracts are        
structured so that the scheduled increases in the fuel cost are generally       
matched by increases in the variable payments received by the project subsidiary
for electricity under its power sales agreement. This matching is typically     
affected by having the fuel prices escalate as a function of the solid fuel     
index of the purchasing utility. The matching is sometimes affected by          
contracting for scheduled increases in the variable payments under our power    
sales agreements designed to offset scheduled increases in fuel prices.         

Project Financing                                                           

 Each facility is financed primarily under financing arrangements at the
project subsidiary or project affiliate level that, except as noted below,      
require the loans to be repaid solely from the project subsidiary's or project  
affiliate's revenues. They also generally provide that the repayment of the     
loans and payment of interest is secured solely by the physical assets,         
agreements, cash flow and, in certain cases, the capital stock of or partnership
interests in that project subsidiary or project affiliate. This type of         
financing is generally referred to as "project financing."                      

Project financing transactions are generally structured so that all   
revenues of a project are deposited directly with a bank or other financial     
institution acting as escrow or security deposit agent. These funds are then    
payable in a specified order of priority to assure that, to the extent          
available, they are used first to pay operating expenses, senior debt service   
and taxes and to fund reserve accounts. Then, subject to satisfying debt service
coverage ratios and other conditions, any available funds may be disbursed to   
Cogentrix Energy and its other partners in the case of jointly-owned facilities 
in the form of management fees, dividends, or distributions.                    

     Our facilities are financed using a high proportion of debt to equity. This
leveraged financing permits our project subsidiaries and project affiliates to  
develop projects with a limited equity base but also increases the risk that a  
reduction in revenues could adversely affect a particular project's ability to  
meet its debt or lease obligations. The lenders to each project subsidiary or   
project affiliate have security interests covering some or all of the aspects of
the project, including the facility, related facility support agreements, the   
stock or partnership interest of our project subsidiaries or project affiliates,
licenses and permits necessary to operate the facility and the cash flow derived
from the facility. In the event of a foreclosure after a default, the project   
subsidiary or project affiliate would only retain an interest in the property   
remaining, if any, after all debts and obligations were paid.                   

     In addition, the debt of each operating project may reduce the liquidity of
our interest in such project since any sale or transfer of its interest would,  
in most cases, be subject both to a lien securing such project debt and to      
transfer restrictions in the relevant financing agreements. Also, our ability to
transfer or sell our interest in some of our projects is restricted by purchase 
options or rights of first refusal we have granted in favor of our power and    
steam purchasers.                                                               

     Because the project debt is "non-recourse", the lenders under these project
financing structures cannot look to Cogentrix Energy or its other projects for  
repayment unless Cogentrix Energy or another project subsidiary expressly agrees
to undertake liability. Cogentrix Energy has agreed to undertake limited        
financial support for certain of its project subsidiaries in the form of limited
obligations and contingent liabilities. These obligations and contingent        
liabilities take the form of guarantees, indemnities, capital infusions, support
agreements and agreements to pay debt service deficiencies. To the extent       
Cogentrix Energy becomes liable under such guarantees and other agreements with 
respect to a particular project, distributions received by Cogentrix Energy from
other projects may be used to satisfy these obligations. To the extent of these 
obligations, the lenders to a project may look to Cogentrix Energy and the      
distributions it receives from other projects for repayment. The aggregate      
contractual liability of Cogentrix Energy to its project lenders is, in each    
case, a small portion of the aggregate project debt. Thus, the project financing
structures are generally described throughout this report as being              
"non-recourse" to Cogentrix Energy and its other projects.                      

   In addition, Cogentrix, Inc., an indirect subsidiary of Cogentrix Energy,
has guaranteed two project subsidiaries' obligations to the purchasing utility  
under three power sales agreements. Because these project                       
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subsidiaries' obligations do not by their terms stipulate a maximum dollar      
amount of liability, the aggregate amount of potential exposure under these     
guarantees cannot be quantified. Although we believe it is unlikely that        
Cogentrix, Inc. will have to honor either of these guarantees, if we or our     
subsidiary were required to satisfy all of these guarantees and other           
obligations at the same time, it could have a material adverse effect on our    
financial condition and results of operations.                                  

Two of our wholly-owned subsidiaries, which were formed to hold our   
interests in the electric generating facilities we acquired in 1999 and 1998,   
maintain their own credit agreements with banks that provide in the aggregate   
$92.5 million of revolving credit availability. Distributions received by these 
subsidiaries from the project subsidiaries or project affiliates they own or    
hold an interest in may be used by these subsidiaries to satisfy any outstanding
obligations under these revolving credit facilities.                            

   Our facilities are insured in accordance with covenants in each project's
debt financing agreements. Coverages for each plant include workers'            
compensation, commercial general liability, supplemented by primary and excess  
umbrella liability, and a master property insurance program including property, 
boiler and machinery and business interruption.                                 

Operating Arrangements                                                      

    We operate nine of our facilities. When we operate a facility, our project
subsidiary employs directly the persons required to operate the facility. We    
invest in training our operating personnel and structure our facility bonus     
program to reward safe, efficient and cost-effective operation of the           
facilities. Our management meets and conducts, several times a year, on-site    
facility performance reviews with each facility manager.                        

   We have established a strong record of safety, efficiency and reliability
in operating our electric generating plants, which reliability is measured in   
the industry by a generating plant's "availability" to generate and sell        
electricity. The table below shows the average "availability" of the plants we  
operated during the periods indicated.                                          

                                                                [Download Table]

PERIOD                                                       AVERAGE AVAILABILITY
------                                                       --------------------
                                                                                 
Year ended December 31, 2000................................        94.9%        
Year ended December 31, 1999................................         95.6        
Year ended December 31, 1998................................         96.4        

 We provide, to the facilities we operate, administrative and management
services for a periodic fee, that in some cases is adjusted annually by an      
inflation factor. The ability of a project subsidiary to pay these management   
fees is contingent upon the continuing compliance by the project subsidiary with
covenants under its project financing agreements and may be subordinated to the 
payment of obligations under those agreements. We have earned and will continue 
to earn incentive compensation from our Hopewell facility, in which Cogentrix   
Energy holds a 50% general partnership interest and is, through a subsidiary,   
the managing general partner, if the facility achieves the contractually        
specified net income levels.                                                    

Ash Removal                                                                 

  Project subsidiaries owning seven of our coal-fired plants contract with
our subsidiary, ReUse Technology, Inc., to remove coal combustion by-products   
generated by such facilities. ReUse constructs structural fills with these coal 
combustion by-products on property owned by itself and others and provides coal 
combustion by-products to others for use in manufacturing and producing various 
products for resale.                                                            

FACILITIES UNDER CONSTRUCTION                                                   

We currently have four new "greenfield" electric generating facilities
under construction. A brief description of each of these facilities follows with
an estimate of the dates we expect them to commence commercial operations.      

     - Ouachita Parish, Louisiana Facility.  In August 2000, we closed financing
   and commenced construction on an 816-megawatt combined-cycle, natural
gas-fired electric generating facility near Sterlington,          

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     Louisiana. Dynegy Power Marketing, Inc. will deliver natural gas to and
  purchase electricity produced by this facility under a 15-year power
purchase agreement. Subsequent to December 31, 2000, we sold a 50%
    interest in the facility to an indirect subsidiary of General Electric
    Capital Corporation. We continue to own a 50% interest in the facility
       and will operate and manage it when it commences commercial operations in
mid-2002.                                                         

   - Dominican Republic Facility.  In April 2000, a partnership, in which we
  own a 65% interest, closed financing and commenced construction on a
      300-megawatt combined-cycle, fuel oil-fired electric generating facility
  in the Dominican Republic. We will sell electricity produced by this
facility under a 20-year power purchase agreement to Corporacion  
     Dominicana de Electricidad, that is supported by a Dominican government
guarantee of the payment obligations. This facility, which we will
   operate and manage, is scheduled to commence commercial operations in
early 2002.                                                       

    - Rathdrum, Idaho Facility.  In March 2000, a partnership, in which we own
a 51% interest, closed financing and commenced construction on a  
270-megawatt combined-cycle, natural gas-fired electric generating
  facility in Rathdrum, Idaho. Avista Turbine Power, Inc. will deliver
       natural gas to and purchase electricity produced by this facility under a
    25-year power purchase agreement. This facility, which we will operate
      and manage, is scheduled to commence commercial operations in late 2001.

- Jenks, Oklahoma Facility.  In December 1999, we closed financing and
   commenced construction on a wholly-owned 810-megawatt combined-cycle,
     natural gas-fired electric generating facility in Jenks, Oklahoma. PECO
      Energy's Power Team will deliver natural gas to and purchase electricity
      produced by this facility under a 20-year power purchase agreement. This
  facility, which we will operate and manage, is scheduled to commence
commercial operations in early 2002.                              

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FACILITIES IN OPERATION                                                         

Our facilities described below rely on power sales agreements for the 
majority of their revenues. During the fiscal year ended December 31, 2000, two 
regulated utility customers accounted for approximately 58% of our consolidated 
revenues. The failure of either of these utility customers to fulfill its       
contractual obligations for a prolonged period of time would have a material    
adverse effect on our primary source of revenues. Both of these utilities have  
senior, unsecured debt outstanding that nationally recognized credit rating     
agencies have rated investment grade. As a result of recent growth, our future  
operations will be more diverse with regard to both geography and fuel source   
and less dependent on any single project or customer.                           

                                                        [Enlarge/Download Table]

                                                                                          OUR                                
                                                                              OUR     NET EQUITY                             
                                                                            PERCENT   INTEREST IN                            
                                                                  PLANT    OWNERSHIP     PLANT               POWER           
FACILITY                     LOCATION               FUEL        MEGAWATTS  INTEREST    MEGAWATTS       PURCHASING UTILITY    
--------              -----------------------  ---------------  ---------  ---------  -----------  --------------------------
                                                                                                                             
Richmond............. Richmond, VA             Coal                 240      100.0        240.0    Virginia Power            
Indiantown........... Martin County, FL        Coal                 380       50.0        190.0    Florida Power & Light     
Whitewater........... Whitewater, WI           Natural Gas          245       74.2        181.8    Wisconsin Electric Power  
                                                                                                     Corporation             
Cottage Grove........ Cottage Grove, MN        Natural Gas          245       73.2        179.3    Northern States Power     
                                                                                                     Company                 
Birchwood............ King George, VA          Coal                 240       50.0        120.0    Virginia Power            
Portsmouth........... Portsmouth, VA           Coal                 120      100.0        120.0    Virginia Power            
Rocky Mount.......... Rocky Mount, NC          Coal                 120      100.0        120.0    Virginia Power            
Southport............ Southport, NC            Coal                 120      100.0        120.0    CP&L*                     
Logan................ Logan Township, NJ       Coal                 218       50.0        109.0    Atlantic City Electric    
Hopewell............. Hopewell, VA             Coal                 120       50.0         60.0    Virginia Power            
Roxboro.............. Roxboro, NC              Coal                  60      100.0         60.0    CP&L*                     
Northampton.......... Northampton County, PA   Waste coal           110       50.0         55.0    Metropolitan Edison       
Cedar Bay............ Jacksonville, FL         Coal                 260       16.0         41.6    Florida Power & Light     
Kenansville.......... Kenansville, NC          Coal                  35      100.0         35.0    CP&L*                     
Carneys Point........ Carneys Point, NJ        Coal                 262       10.0         26.2    Atlantic City Electric    
Selkirk.............. Albany, NY               Natural Gas          396        5.1         20.2    Consolidated Edison &     
                                                                                                     Niagara Mohawk          
Pittsfield........... Pittsfield, MA           Natural Gas          173       10.9         18.9    New England Power         
Scrubgrass........... Scrubgrass Township, PA  Waste coal            85       20.0         17.0    Pennsylvania Electric     
Gilberton............ Frackville, PA           Waste coal            82       19.6         16.1    Pennsylvania Power & Light
Panther Creek........ Carbon County, PA        Waste coal            83       12.2         10.1    Metropolitan Edison       
Morgantown........... Morgantown, WV           Coal/Waste coal       62       15.0          9.3    Monongahela Power         
Mass Power........... Springfield, MA          Natural Gas          258        1.6          4.1    Boston Edison             
                                                                  -----                 -------                              
        Totals.......                                             3,914                 1,753.6                              
                                                                  =====                 =======                              

---------------                                                                 

* Commonly-used acronym for Carolina Power & Light Company                      

DESCRIPTION OF FACILITIES IN WHICH WE OWN A SIGNIFICANT ECONOMIC INTEREST       

Richmond, Virginia Facility                                                 

     Our 240-megawatt stoker coal-fired cogeneration plant in Richmond, Virginia
provides 209 megawatts of declared production capability to Virginia Power under
two 25-year power sales agreements expiring in 2017. Our Richmond facility also 
provides steam to E. I. DuPont de Nemours & Company.                            

 Each of the power sales agreements provides that in the event the state
utilities commission prohibits Virginia Power from recovering from its customers
payments made by Virginia Power to our project subsidiary, our subsidiary would 
recognize a reduction in payments received under such power sales agreements    
after the 18th anniversary of commencement of commercial operations of the      
facility to the extent necessary to repay the amount of the disallowed payments 
to Virginia Power with interest.                                                

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    If the number of days in any year in which the Richmond facility is unable
to generate electricity in an amount equal to its declared production capability
is more than the greater of 25 days or ten percent of the total number of days  
the facility was required by Virginia Power to operate, the fixed payments under
the contract for that period will be reduced by four percent for each excess    
day. In the event testing indicates that the facility's dependable production   
capability is less than 90% of the declared production capability, our          
subsidiary will be obligated to pay annual liquidated damages to Virginia Power.
Our project subsidiary has posted letters of credit in favor of Virginia Power  
to secure its obligations to perform under the power sales agreements.          

Indiantown, Florida Facility                                                

     A Delaware limited partnership owns this 380-megawatt pulverized coal-fired
cogeneration facility located in Martin County, Florida. An indirect,           
wholly-owned subsidiary of PG&E National Energy Group, Inc. ("PG&E") owns a 50% 
general partnership interest in the partnership, and we own a 50% general       
partnership interest. The Indiantown facility began operation in December 1995  
and sells steam to Caulkins Indiantown Citrus Company.                          

The Indiantown facility provides 330 megawatts of declared production 
capability to Florida Power & Light Company under a power sales agreement that  
expires in 2025. Fixed payments by Florida Power & Light are subject to         
adjustment on the basis of the Indiantown facility's actual production          
capability.                                                                     

Currently, Florida Power & Light is permitted full recovery from its  
customers of payments made under the power sales agreement. The power sales     
agreement contains a provision that provides if Florida Power & Light at any    
time is denied authorization to recover from its customers any payments to be   
made under the power sales agreement, Florida Power & Light may, in its sole    
discretion, adjust payments under the power sales agreement to the amount it is 
authorized to recover from its customers. The utility may also require the      
partnership that owns the facility to return payments subsequently disallowed by
the regulatory agency. If the obligations of Florida Power & Light and the      
partnership that owns the facility are materially altered due to the operation  
of this provision in the agreement, the partnership may terminate the power     
sales agreement upon 60 days' notice. The partnership and Florida Power & Light 
must then, in good faith, attempt to negotiate a new power sales agreement or   
any agreement for transmission of the Indiantown facility's capacity and energy 
to another investor-owned, municipal, or cooperative electric utility           
interconnected with Florida Power & Light in Florida.                           

  An affiliate of PG&E provides operation and maintenance services for the
Indiantown facility pursuant to an operating agreement that expires in 2025.    
PG&E manages and administers the business of the partnership that owns the      
facility pursuant to a management service agreement that expires in 2029.       

Whitewater, Wisconsin Facility                                              

     Our Whitewater facility is a 245-megawatt combined-cycle, natural gas-fired
cogeneration facility in Whitewater, Wisconsin. One of our wholly-owned indirect
subsidiaries is the sole general partner of the general partnership that owns   
the facility with a 1% general partnership interest. Another wholly-owned       
indirect subsidiary of ours owns an approximate 73.2% limited partnership       
interest. An affiliate of Tomen Power Corporation owns the remaining approximate
25.8% limited partnership interest.                                             

    The Whitewater facility provides approximately 236.5 megawatts of declared
production capability to Wisconsin Electric Power Corporation under a power     
sales agreement that expires in 2022. The Whitewater facility may also sell to  
third parties up to 12 megawatts of electric production capability and any      
energy that the utility does not dispatch. Fixed payments from the utility are  
subject to adjustment on the basis of performance-based factors that reflect the
Whitewater facility's semiannually tested production capability and average and 
on-peak availability for the preceding contract year.                           

   The fixed payments from the utility may be reduced to the extent that the
utility's senior debt is downgraded by any two of Standard & Poor's Corporation,
Moody's Investors Services, Inc. and Duff & Phelps as a result of the utility's 
long-term power purchase obligations under the power purchase agreement         

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for the Whitewater facility. So long as the partnership's first mortgage bonds  
issued to finance construction of the facility are outstanding, the reduction   
may not exceed the level necessary to cause the partnership's debt service      
coverage ratio to be less than 1.4 in any one month, with such ratio calculated 
on a rolling average of the four fiscal quarters immediately preceding the      
proposed adjustment. After the partnership's first mortgage bonds have been     
repaid, the reduction may not exceed 50% of the partnership's revenues minus    
expenses. Reductions precluded by application of these limitations are          
accumulated in a tracking account with interest accruing at a specified rate.   
Tracking account balances are to be repaid when possible, subject to the        
limitations described above, or may be applied to the price of the utility's    
option to purchase the Whitewater facility at the expiration of the power sales 
agreement.                                                                      

     Currently, Wisconsin Electric Power Company is permitted full recovery from
its customers of payments made under the power sales agreement. The power sales 
agreement provides, however, if at any time the utility is denied rate recovery 
from its customers of any payment to be made under the power sales agreement by 
an applicable regulatory authority, the utility's payments may be               
correspondingly reduced, subject to contractually specified limitations. While  
the partnership's first mortgage bonds are outstanding, the fixed payments may  
be reduced by the annual regulatory disallowance provided that the reduction may
not cause the partnership's debt service coverage ratio to be less than 1.4 in  
any month calculated on a rolling average of the four fiscal quarters preceding 
the proposed adjustment. After the outstanding first mortgage bonds are repaid, 
reductions may not exceed 50% of the Whitewater facility's revenues minus       
expenses. Reductions precluded by these restrictions are accumulated in a       
tracking account with repayment subject to the same provisions as for bond      
downgrading adjustments discussed above.                                        

The Whitewater facility sells steam to the University of              
Wisconsin-Whitewater under a steam supply agreement expiring in 2005. The       
facility also sells hot water to a greenhouse located adjacent to the facility. 
FloriCulture, Inc., an affiliate of the partnership that owns the Whitewater    
facility, has entered into an operational services agreement pursuant to which  
FloriCulture provides all services necessary to produce, market and sell        
horticulture products and to operate and maintain the greenhouse facility.      

 We manage and administer the partnership's business with respect to the
Whitewater facility, and provide management and administrative services to the  
general partner of the partnership. Also, one of our wholly-owned subsidiaries  
operates the facility pursuant to an O&M Agreement with the partnership.        

Cottage Grove, Minnesota Facility                                           

Our Cottage Grove facility is a 245-megawatt combined-cycle, natural  
gas-fired cogeneration facility in Cottage Grove, Minnesota. One of our         
wholly-owned indirect subsidiaries is the sole general partner of the           
partnership that owns the facility with a 1% partnership interest. Another      
wholly-owned indirect subsidiary of ours owns an approximate 72.2% limited      
partnership interest in Cottage Grove. An affiliate of Tomen Power Corporation  
owns the remaining approximate 26.8% limited partnership interest.              

  The Cottage Grove facility provides 245 megawatts of declared production
capability to Northern States Power Company measured at summer conditions and   
262 megawatts of declared production capability measured at winter conditions   
under a power sales agreement that expires in 2027. Fixed payments are subject  
to adjustment on the basis of performance-based factors that reflect the Cottage
Grove facility's semiannually tested production capability and its rolling      
12-month average and on-peak availability. Fixed payments are also adjusted for 
transmission losses or gains relative to a reference plant. The Cottage Grove   
facility, also sells steam to Minnesota Mining and Manufacturing Company.       

  Currently, Northern States Power Company is permitted full recovery from
its customers of payments made under the power sales agreement. The power sales 
agreement provides, however, that following the tenth anniversary of the        
commercial operation date, if Northern States Power Company fails to obtain or  
is denied authorization by any governmental authority having jurisdiction over  
its retail rates and charges, granting it the right to recover from its         
customers any payments made under the power sales agreement, the disallowed     
amounts will be monitored in a tracking account and the unpaid balance in the   
tracking account shall accrue interest. Within 30 days after the first mortgage 
bonds issued to finance the construction of the facility have been fully        
retired, Northern States Power, Company may begin reducing payments to the      
partnership that                                                                
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owns the facility to ensure the payments are in line with Minnesota Public      
Utility Commission rates and begin amortizing the balance in the tracking       
account. Should Northern States Power Company exercise its right to reduce      
payments, the maximum reduction is 75% of the payment otherwise due for the     
period.                                                                         

 We manage and administer the partnership's business with respect to the
Cottage Grove facility, and provide certain management and administrative       
services to the general partner of the partnership. Also, one of our            
wholly-owned subsidiaries operates the facility pursuant to an O&M Agreement    
with the partnership.                                                           

Birchwood, Virginia Facility                                                

  Through an indirect, wholly-owned subsidiary we have a 50% interest in a
partnership that owns a 240-megawatt pulverized coal-fired cogeneration facility
in King George, Virginia. A subsidiary of The Southern Company, a public utility
holding company, owns the remaining 50% of the facility. The 36-acre greenhouse 
located adjacent to the facility, which is jointly owned by us and a subsidiary 
of The Southern Company, uses steam from the facility. An affiliate of The      
Southern Company manages and operates the Birchwood facility.                   

The Birchwood facility provides 218 megawatts of declared production  
capability to Virginia Power measured at summer conditions and 222 megawatts of 
declared production capability measured at winter conditions under a power sales
agreement that expires in 2021. The power sales agreement provides that in the  
event the state utilities commission prohibits Virginia Power from recovering   
from its customers payments made by Virginia Power to our project affiliate, the
partnership that owns the facility would recognize a reduction in payments      
received under the power sales agreement after the 20th anniversary of          
commencement of commercial operations of the facility to the extent necessary to
repay the amount of the disallowed payments to Virginia Power with interest.    
During June 2000, the Birchwood facility signed a separate agreement with       
Virginia Power to sell up to 20 megawatts of supplemental capacity and energy,  
with an initial term expiring in 2003..                                         

    If this facility is unable to operate within the parameters established by
Virginia Power under the power sales agreement, the fixed payments under the    
agreement for the period the facility is not able to do so are subject to       
reduction. In the event testing indicates that the facility's dependable        
production capability is less than 90% of the declared production capability,   
the partnership will be obligated to pay annual liquidated damages to Virginia  
Power. The partnership has posted a letter of credit in favor of Virginia Power 
to secure its obligations to perform under the power sales agreement.           

Portsmouth, Virginia Facility                                               

Our facility located in Portsmouth, Virginia is a 120-megawatt stoker 
coal-fired cogeneration facility. The Portsmouth facility provides Virginia     
Power declared production capability of up to 115 megawatts under a power sales 
agreement that expires in June 2008. The Portsmouth facility also sells process 
steam to BASF Corporation and Celanese Chemical, Inc.                           

   If the power sales agreement for this facility is terminated prior to the
end of its initial or any subsequent term, other than due to a default by       
Virginia Power, then our project subsidiary must pay a penalty to Virginia      
Power. The amount of the penalty is the difference between payments for         
production capability already made and those that would have been allowable     
under the applicable "avoided cost" schedules of Virginia Power plus interest.  

Rocky Mount, North Carolina Facility                                        

 Our facility located near Rocky Mount, North Carolina is a 120-megawatt
stoker coal-fired cogeneration plant. Under a power sales agreement with North  
Carolina Power Company, a division of Virginia Power, the Rocky Mount facility  
provides declared production capability of 115.5 megawatts of electricity for an
initial term expiring in October 2015. In addition, steam from the Rocky Mount  
facility is sold to Abbott Laboratories.                                        

    The power sales agreement for this facility provides that in the event the
state utility commission prohibits North Carolina Power from recovering from its
customers payments made by North Carolina Power                                 
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under the power sales agreement to our project subsidiary, our project          
subsidiary would recognize a reduction in payments received under the power     
sales agreement after the 18th anniversary of commencement of commercial        
operations of the facility to the extent necessary to repay North Carolina Power
the amount disallowed by the utility commission with interest. In light of this 
provision in the power sales agreement, the project lender for the Rocky Mount  
facility has established a reserve account, which is required to be funded at   
any time a disallowance of payments occurs or, from and after January 1, 2004,  
any meritorious filing with the utility commission challenging the pass-through 
of payments made by the utility under the power sales agreement is made.        

     If a disallowance event occurs through 2002, then 25% of cash flow from the
facility must be deposited to the regulatory disallowance reserve account until 
the balance of such account is equal to the amount required to be funded. If a  
disallowance event occurs during the period from 2003 through 2013, then 100% of
the cash flow from the facility must be deposited to the reserve account until  
the balance of the reserve account is equal to the amount required to be funded.
The amount required to be funded in such account is an amount equal to the      
lesser of:                                                                      

    - the projected reduction in cash flows from 2009 through 2013 as a result
of the disallowance of payments made by the utility, or           

    - the amount of our project subsidiary's debt outstanding at September 30,
2008.                                                             

If the number of days in any year in which the Rocky Mount facility is
unable to generate electricity in an amount equal to its declared production    
capability is more than the greater of 25 days or ten percent of the total      
number of days the facility was required by North Carolina Power to operate,    
then the fixed payments under the contract for that period will be reduced by   
four percent for each excess day. In the event testing indicates that the Rocky 
Mount facility's dependable production capability is less than 90% of the       
declared production capability, our project subsidiary will be obligated to pay 
annual liquidated damages to North Carolina Power. A letter of credit has been  
posted by our project subsidiary in favor of North Carolina Power to secure its 
obligations to perform under the power sales agreement.                         

Roxboro and Southport, North Carolina Facilities                            

Our subsidiary, Cogentrix of North Carolina, Inc., operates two stoker
coal-fired cogeneration plants in Roxboro and Southport, North Carolina, that   
are owned by another wholly-owned project subsidiary of Cogentrix Energy.       

    The Roxboro and Southport facilities sell electricity under separate power
sales agreements with CP&L, each having an initial term expiring in December    
2002. The 60-megawatt Roxboro facility may operate at a declared production     
capability of up to 56 megawatts and the 120-megawatt Southport facility may    
operate at a declared production capability of up to 107 megawatts. Cogentrix,  
Inc., has guaranteed the performance of our project subsidiary under the power  
sales agreements. Collins & Aikman Corporation purchases process steam for its  
textile manufacturing facility from the Roxboro facility and                    
ArcherDaniels-Midland Company purchases steam for its pharmaceutical and        
chemical manufacturing company from the Southport facility.                     

  Each of the power sales agreements provide that in the event our project
subsidiary desires to terminate the power sales agreement or abandons the       
Roxboro or Southport facility, our project subsidiary must pay the utility a    
termination charge. Such termination charge will be equal to the sum of the     
following:                                                                      

     - the depreciated installed cost of the interconnection facilities relating
to the plant,                                                     

 - the cost incurred by the utility to replace the production capability
  provided by the Roxboro or Southport facility in excess of the fixed
  payments that would have been made to our project subsidiary for the
Roxboro or Southport facility, and                                

    - a carrying charge equal to the overall pretax cost of capital allowed to
       the utility by the retail rate order of the state utilities commission in
effect during the time the energy credits were received.          

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Logan, New Jersey Facility                                                  

A Delaware limited partnership owns the Logan facility, a 218-megawatt
pulverized coal-fired cogeneration plant located on the Delaware River in Logan 
Township, New Jersey. The partnership leases the Logan facility to another      
Delaware limited partnership. Our indirect, wholly-owned subsidiary, owns a 50% 
general partnership interest in each of the first limited partnership and each  
of the partners of the second limited partnership. PG&E is the sole limited     
partner in each of the first partnership and the partners of the second limited 
partnership, owning a 1% limited partnership interest. The PG&E subsidiary also 
owns a 49% general partnership interest in each of the first partnership and    
each of the partners of the second limited partnership.                         

     The Logan facility, which began operation in September 1994, provides up to
203 megawatts of declared production capability to Atlantic City Electric       
Company under a power sales agreement that expires in 2024. The Logan facility  
has the capability to provide up to approximately 15 megawatts of excess        
production capability and energy to third parties. The Logan facility sells     
steam to Solutia, Inc.                                                          

  If the net deliverable production capability of the Logan facility falls
below 190,000 kilowatts, then the partnership that owns the facility must pay   
liquidated damages to the utility in an amount calculated using a formula that  
reflects both the amount of the deficiency and the rate those mid-Atlantic      
electric utilities who are members of a mid-Atlantic regional power pool and    
fail to satisfy their capacity obligations to the pool must pay to the other    
members to make up the deficiency.                                              

  An affiliate of PG&E provides operation and maintenance services for the
Logan facility pursuant to an operation and maintenance agreement with an       
initial term expiring in 2004. PG&E provides management services pursuant to a  
management services agreement that expires in 2027.                             

Hopewell, Virginia Facility                                                 

Our facility, located in Hopewell, Virginia, is a 120-megawatt stoker 
coal-fired cogeneration facility owned and operated by a general partnership, in
which a 50% general partnership interest is owned by one of our subsidiaries.   
The remaining 50% partnership interest is owned by Capistrano Cogeneration      
Company, a subsidiary of Edison Mission Energy.                                 

     The Hopewell facility provides declared production capability of up to 92.5
megawatts to Virginia Power under a power sales agreement that expires in       
January 2008. If the power sales agreement is terminated prior to the end of its
initial or any subsequent term other than due to a default by Virginia Power,   
the project partnership must pay a penalty to Virginia Power. The amount of the 
penalty is the difference between payments for production capability already    
made and those that would have been allowable under the applicable "avoided     
cost" schedules of the utility plus interest. Honeywell International, formerly 
known as Allied-Signal Corporation, purchases steam from the Hopewell facility. 

Northampton, Pennsylvania Facility                                          

A Delaware limited partnership owns this 110-megawatt anthracite waste
coal-fired electric generating facility in Northampton County, Pennsylvania. Our
indirect, wholly-owned subsidiary owns a 50% general partnership interest in    
this partnership. An indirect, wholly-owned subsidiary of PG&E owns an aggregate
50% equity interest in the partnership owning this project, that consists of a  
48% general partnership interest and 2% limited partnership interest.           

     The Northampton facility, which began operation in September 1995, provides
electric energy to Metropolitan Edison Company pursuant to a power sales        
agreement that expires in 2020. Capacity in excess of 89 megawatts may be sold  
to third parties, but no energy from the Northampton facility may be sold to any
entity other than Metropolitan Edison.                                          

 The Northampton facility is not directly interconnected to Metropolitan
Edison's electric system and accordingly requires an electric utility that is   
interconnected with Metropolitan Edison's electric system to transmit the       
Northampton facility's output to Metropolitan Edison. Pursuant to a transmission
service agreement (that expires in 2020) with Pennsylvania Power & Light        
Company, that utility transmits the Northampton Facility's net electric energy  
to Metropolitan Edison's existing electric system.                              

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In the event the Northampton facility's annual average delivery of    
electricity for any year following the commercial operation date during on-peak 
hours is less than 85% of the Northampton facility's annual average delivery of 
electricity during the on-peak hours for the prior three years, the partnership 
that owns the facility is obligated to make a penalty payment to Metropolitan   
Edison. During the first 11 years of the power sales agreement commencing with  
the commercial operation date, the penalty payment will equal the difference    
between 85% of the annual average on-peak electricity delivered in the prior    
three years and the actual on-peak electricity delivered in the year to which   
the penalty relates times 3.40 cents per kWh. After the eleventh year of the    
power sales agreement, the penalty payment will be calculated as above, except  
that the rate of 3.40 cents per kWh shall be adjusted annually according to     
changes in the Gross Domestic Product Implicit Price Deflator.                  

  An affiliate of PG&E provides operation and maintenance services for the
Northampton facility pursuant to an operation and maintenance agreement with an 
initial term expiring in 2020. PG&E provides management and administration      
services for the Northampton facility pursuant to a management services         
agreement with an initial term expiring in 2020.                                

In addition to the partners' original equity contributions to the     
partnership that owns the Northampton facility, the partners have posted letters
of credit or corporate guarantees in an aggregate amount of $9 million as a     
standby equity commitment to be used for certain fuel-related costs. They have  
also posted a letter of credit in the amount of $2.2 million as a standby equity
commitment to be used solely to establish the bank debt service reserve fund for
the exclusive benefit of the banks. Cogentrix provides letters of credit for 50%
of those standby equity commitments.                                            

Cedar Bay, Florida Facility                                                 

A Delaware limited partnership owns this 260-megawatt coal-fired      
cogeneration facility located in Jacksonville, Florida. An indirect subsidiary  
of PG&E owns an approximate 62% general partnership interest and an approximate 
2% limited interest in the partnership, and we own an approximate 16% general   
partnership interest. The remaining approximate 20% general partnership interest
is owned by a group of equity companies consisting mainly of bank and financial 
institutions. The Cedar Bay facility began operation in January 1994, and sells 
steam to Stone Container Corporation.                                           

The Cedar Bay facility provides an annual average of 250 megawatts of 
production capability to Florida Power & Light under a power sales agreement    
that expires in 2024. Fixed payments by Florida Power & Light are subject to    
adjustment on the basis of the Cedar Bay facility's actual production           
capability.                                                                     

Currently, Florida Power & Light is permitted full recovery from its  
customers of payments made under the power sales agreement. The power sales     
agreement contains a provision that provides if Florida Power & Light at any    
time is denied authorization to recover from its customers any payments to be   
made under the power sales agreement, Florida Power & Light may, in its sole    
discretion, adjust payments under the power sales agreement to the amount it is 
authorized to recover from its customers. The utility may also require the      
partnership that owns the facility to return payments subsequently disallowed by
the regulatory agency. If the obligations of Florida Power & Light and the      
partnership that owns the facility are materially altered due to the operation  
of this provision in the agreement, the partnership may terminate the power     
sales agreement upon 60 days' notice. The partnership and Florida Power & Light 
must then, in good faith, attempt to negotiate a new power sales agreement or   
any agreement for transmission of the Cedar Bay facility's capacity and energy  
to another investor-owned, municipal, or cooperative electric utility           
interconnected with Florida Power & Light in Florida.                           

  An affiliate of PG&E provides operation and maintenance services for the
Cedar Bay facility pursuant to an operating agreement that expires in 2024. PG&E
manages and administers the business of the partnership that owns the facility  
pursuant to a management service agreement that also expires in 2024.           

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Kenansville, North Carolina Facility                                        

Our subsidiary, Cogentrix Eastern Carolina, LLC, owns and operates a  
35-megawatt stoker coal-fired cogeneration plant in Kenansville, North Carolina.
The Kenansville facility provides declared production capability of up to       
approximately 33 megawatts to CP&L under a power sales agreement with an initial
term expiring in September 2001. Another subsidiary, Cogentrix, Inc., has       
guaranteed the performance of the Kenansville facility under the power sales    
agreement. Guilford Mills, Inc. purchases steam from the Kenansville facility   
for use in its textile manufacturing plant.                                     

     The power sales agreement provides that in the event of a termination prior
to the expiration of the initial term of the power sales agreement, our project 
subsidiary must pay CP&L a termination charge. In the event of a material breach
by the utility, our project subsidiary may terminate the power sales agreement  
prior to its expiration without incurring the termination charge. The           
termination charge is an amount equal to the excess paid for capacity and energy
over what would have been paid to our project subsidiary under the state        
utilities commission's published rates plus interest.                           

If the average production capability or electricity generated or made 
available during any 12-month period falls below 80% of the established contract
level, a special charge will be imposed by CP&L equal to a percentage of the    
termination charge described above. In addition, if our project subsidiary      
desires to terminate the power sales agreement prior to its expiration and a    
substitute operator satisfactory to the utility is not secured, our project     
subsidiary must pay to the utility the termination charge described above plus  
an amount equal to the depreciated installed cost of the interconnection        
facilities relating to the plant.                                               

Carneys Point, New Jersey Facility                                          

     A Delaware limited partnership owns this 262-megawatt pulverized coal-fired
cogeneration facility located within the grounds of the DuPont Chamber Works, a 
chemical complex in Carneys Point, New Jersey. The partnership leases the       
Carneys Point facility to a partnership of wholly-owned subsidiaries of PG&E.   
Lease payments are structured to equal project cash flow, and the lessee        
partnership derives no net cash flow or benefit from the lease. We own a 10%    
general partnership interest in the limited partnership that owns the facility. 
The other general partner is an indirect, wholly-owned subsidiary of PG&E, that 
owns a 50% general partnership interest. The sole limited partner is an         
indirect, wholly-owned subsidiary of General Electric Capital Corporation, which
owns a 40% limited partnership interest.                                        

The Carneys Point facility began operation in March 1994. The facility
provides Atlantic City Electric Company with 187.6 megawatts in the summer      
months and 173.2 megawatts in the winter months for an annual average of 180.4  
megawatts. If the actual available production capability falls below 95% of the 
respective production capability requirement for the winter or summer period,   
the partnership that owns the facility must make a deficiency payment to the    
utility until actual production capability for such period reaches 95% of the   
production capability requirements for the period.                              

    Under an energy services agreement, the Carneys Point facility sells steam
and up to 40 megawatts of electricity to DuPont. The Carneys Point facility has 
the capability to sell an average of approximately 30 megawatts of excess       
production capability and energy to third parties.                              

  An affiliate of PG&E provides operation and maintenance services for the
Carneys Point facility under an operation and maintenance agreement with an     
initial term expiring in 2004. PG&E provides management services for the        
facility pursuant to a management services agreement with a term expiring in    
2018.                                                                           

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PRINCIPAL CUSTOMERS                                                             

Electric utility customers accounting for more than ten percent of our
consolidated revenue for the fiscal years ended December 31, 2000, 1999 and 1998
were as follows:                                                                

                                                                [Download Table]

                                                                  YEAR ENDED    
                                                                 DECEMBER 31,   
                                                              ------------------
                                                              2000   1999   1998
                                                              ----   ----   ----
                                                                                
CP&L........................................................   15%    17%    19%
Virginia Power..............................................   43     47     50 

As a result of our acquisitions and our projects currently under      
construction, our operations are now and will be even more diverse in the future
with regard to both geography and fuel source and less dependent on any single  
project or customer.                                                            

REGULATION                                                                      

Our facilities are subject to federal, state and local energy and     
environmental laws and regulations applicable to the development, ownership and 
operation of electric generating facilities. Federal laws and regulations govern
transactions, as well as types of fuel utilized, the type of energy produced and
power plant ownership for some plants. State regulatory commissions may approve 
the rates and, in some instances, other terms under which utilities purchase    
electricity from independent producers. These state commissions may have broad  
jurisdiction over non-utility owned power plants. Power plants also are subject 
to laws and regulations governing environmental emissions and other substances  
produced by a plant, along with the geographical location, zoning, land use and 
operation of a plant. Applicable federal environmental laws typically have state
and local enforcement and implementation provisions. These environmental laws   
and regulations generally require that a wide variety of permits and other      
approvals be obtained before construction or operation of a power plant         
commences and that the power plant operates in compliance with them. We strive  
to comply with all environmental laws, regulations, permits and licenses but,   
despite such efforts, at times we have been in non-compliance.                  

Energy Regulations                                                          

    QFs under the Public Utility Regulatory Policies Act of 1978.  Most of our
current operating facilities are classified as a qualifying facility ("QF")     
under the Public Utility Regulatory Policies Act of 1978 ("PURPA"). QFs are     
relieved of compliance with extensive federal, state and local regulations that 
control the development, financial structure and operation of power plants and  
cost-of-service based ratemaking to determine the prices at which electric      
generating facilities sell energy. In order to be a QF, a cogeneration facility 
must sequentially produce both electricity and useful thermal energy for        
non-mechanical or non-electrical uses in specified proportions to the facility's
total useful energy output. A QF utilizing oil or natural gas as fuel also must 
meet energy efficiency standards. A small power production facility may be a QF 
if it uses alternative fuels as its primary energy input, subject to limitations
on fossil fuel input and size for the facility. Finally, a QF must not be       
controlled or more than 50% owned by an electric utility or by an electric      
utility holding company, or a subsidiary of either or any combination thereof.  

PURPA exempts QFs from the Public Utility Holding Company Act of 1935 
("PUHCA"), most provisions of the Federal Power Act (the "FPA") and, except     
under limited circumstances, state rate and financial regulations. These        
exemptions are important to us and our competitors.                             

In the absence of a power sales agreement, regulations adopted by the 
Federal Energy Regulatory Commission ("FERC") require utilities to purchase     
electricity generated by QFs at a price based on the purchasing utility's full  
"avoided cost," and that the utility sell back-up power to the QF on a          
nondiscriminatory basis. Avoided costs are the incremental costs to a utility of
electric energy or capacity, or both, that, but for the purchase from QFs, the  
utility would generate for itself or purchase from another source. Due to       
increasing competition for utility contracts, the current practice is for most  
power sales agreements to be awarded below avoided cost.                        

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    We endeavor to minimize the risk of our facilities losing their QF status.
The occurrence of events outside our control, such as loss of a steam customer, 
could jeopardize QF status. While the facilities usually would be able to react 
in a manner to avoid the loss of QF status by, for example, replacing the steam 
customer or finding another use for the steam that meets PURPA's requirements,  
there is no certainty that the alternative implemented would be practicable or  
economic.                                                                       

  If one of our facilities were to lose its status as a QF, the subsidiary
may lose its exemptions from PUHCA and the FPA and from state laws and          
regulations. This could subject the subsidiary to regulation under the FPA and  
may result in Cogentrix Energy inadvertently becoming a public utility holding  
company. Our other facilities could in turn lose their QF status. Moreover, loss
of QF status could result in utility customers terminating their power sales    
agreement with the non-qualifying facility. If loss of QF status were threatened
for a facility, we could avoid holding company status and thereby protect the QF
status of our other facilities by applying to the FERC to obtain exempt         
wholesale generator ("EWG") status for the owner of the non-qualifying facility.
See "EWGs under the Energy Policy Act of 1992" herein. Alternatively, the FERC  
may grant a limited waiver to the QF that would provide continued exemption     
under PUHCA, provided the facility's rates were regulated under the FPA.        

     EWGs under the Energy Policy Act of 1992.  The passage of the Energy Policy
Act has significantly expanded the options available to independent power       
producers with respect to their regulatory status. In addition to or in lieu of 
QF status, an independent power producer selling exclusively at wholesale now   
can also apply to the FERC to be granted status as an EWG. Except for existing  
cost-of-service based facilities for which state consents are required, any     
owner of a facility may apply for status as an EWG without prior condition. An  
EWG, like a QF, is exempt from regulation under PUHCA. However, EWG status does 
not exempt a facility from FERC and state public utility commission ("PUC")     
regulatory reviews, which may be more expansive than those applicable to QFs.   
Several of Cogentrix Energy's facilities that are QFs have also been determined 
to be EWGs. In addition, several project subsidiaries developing new generating 
facilities have also been determined to be EWGs.                                

     Foreign Investments under the Energy Policy Act.  The Energy Policy Act has
also expanded the options for companies that wish to invest in foreign          
enterprises that own power production facilities outside the United States.     
Amendments to PUHCA in the Energy Policy Act provide that a domestic company    
making such an investment may avoid "holding company" status or other regulation
under PUHCA, if the foreign enterprise obtains EWG status or files a notice with
the Securities and Exchange Commission that it is a foreign utility company     
("FUCO").                                                                       

   PUHCA.  Under PUHCA, any entity owning or controlling ten percent or more
of the voting securities of a "public utility company" is a "holding company"   
and is subject to registration with the Securities and Exchange Commission and  
regulation under PUHCA, unless eligible for an exemption. Under the Energy      
Policy Act and PURPA, EWGs, FUCOs, and owners and operators of QFs are deemed   
not to be public utility companies under PUHCA. Momentum is growing in Congress 
for the repeal of PUHCA, as more legislators adopt the view that this statute   
has outlived its purpose. Elimination of PUHCA would enable more companies to   
consider owning generating, transmission and distribution assets, would permit  
"single state" utility systems to expand beyond their state borders, and would  
permit companies that are currently in registered holding company systems to    
diversify their investments to a greater extent than now permitted. This could  
attract more competitors to the power development and power marketing business. 
We believe that we are well positioned, however, to meet stronger competition   
and, indeed, may be able to pursue more investment opportunities made available 
by the repeal of PUHCA.                                                         

FPA.  The FPA grants the FERC exclusive rate-making jurisdiction over 
wholesale sales of electricity in interstate commerce, including ongoing as well
as initial rate jurisdiction, that enables the FERC to revoke or modify         
previously approved rates. While QFs under PURPA typically are exempt from the  
traditional rate-making and certain other provisions of the FPA, projects not   
qualifying for QF status, for example, most EWGs, are subject to the FPA and to 
FERC rate making jurisdiction. Power marketers are also subject to FERC review  
of their wholesale rates, and to FERC oversight of various business dealings    
such as corporate reorganizations. Pursuant to the FPA, our power marketing     
subsidiary has filed its wholesale electric power                               

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rates with the FERC and obtained authorization to sell electric power at rates  
set by supply and demand in the marketplace. In addition, the Logan facility and
certain other facilities in which Cogentrix Energy owns a small interest have   
filed their rates with the FERC and obtained authorization to sell all of their 
power pursuant to those rates. Several of our projects under development or in  
construction have also filed and obtained from FERC market-based rates for sales
of power from these facilities.                                                 

 State Regulation.  PUCs regulate retail rates of electric utilities. In
addition, states have been delegated the authority to determine utilities'      
avoided costs under PURPA. PUCs often will pre-approve agreements with prices   
that do not exceed avoided costs, because such contracts often have been        
acquired through a competitive or market-based process. Recognizing the         
competitive nature of the acquisition process, many PUCs will permit utilities  
to "pass through" expenses associated with a power sales agreement with an      
independent power producer. In addition, retail sales of electricity or steam by
an independent power producer may be subject to PUC regulation, depending on    
state law.                                                                      

EWGs may be subject to broad regulation by PUCs, ranging from the     
requirement of certificates of public convenience and necessity to regulation of
organizational, accounting, financial and other corporate matters. In addition, 
states may assert jurisdiction over the siting and construction of EWGs (as well
as QFs) and over the issuance of securities and the sale or other transfer of   
assets by these facilities. Many state utility commissions and state            
legislatures are actively seeking ways to lower electric power costs at the     
retail level, including options that would permit or compel competition at the  
retail level. An opening of the retail market would create tremendous           
opportunities for companies that have until now been limited to the wholesale   
market. At the same time, state commissions are pressuring the utilities they   
regulate to cut purchased power costs through strict enforcement of existing    
contracts with QFs, many of which are considered to be overpriced. State        
commissions are also encouraging efforts by utilities to buy out or buy down    
such contracts.                                                                 

    Proposed Legislation.  The state commissions or state legislatures of many
states are considering, or have considered, whether to open the retail electric 
power market to competition. These initiatives are generally called "retail     
access" or "customer choice". Such "customer choice" plans typically allow      
customers to choose their electricity suppliers by a certain date. Retail       
competition is possible when a customer's local utility agrees, or is required, 
to "unbundle" its distribution service, that is, the delivery of electric power 
to retail customers through its local distribution lines, from its transmission 
and generating service.                                                         

    The competitive price environment that will result from retail competition
may cause utilities to experience revenue shortfalls and deteriorating          
creditworthiness. However, most, if not all, state plans will insure that       
utilities receive sufficient revenues, through a distribution surcharge if      
necessary, to pay their obligations under existing long-term power purchase     
contracts with QFs and EWGs, including the above market rates, or "stranded     
investment" costs, provided for in such contracts. Many states will also provide
that the stranded investment costs will be "securitized" through new financial  
instruments. On the other hand, QFs and EWGs may be subject to pressure to lower
their contract prices or to renegotiate contracts in an effort to reduce the    
"stranded investment" costs of their utility customers.                         

    Retail access programs may provide Cogentrix with additional opportunities
to provide power from our projects to industrial users or power marketers.      

  Transmission and Wheeling -- Under the FPA, the FERC generally regulates
the rates, terms and conditions for electricity transmission in interstate      
commerce. The FERC's authority under the FPA to require electric utilities to   
provide transmission service to OFs and EWGs was significantly expanded by the  
Energy Policy Act. The new provisions of the Energy Policy Act and actions taken
by the FERC under the FPA have improved transmission access and pricing for     
independent power producers like us.                                            

     In April 1996, the FERC issued a rulemaking order under the FPA, Order 888,
requiring all jurisdictional public utilities to file "open access" transmission
tariffs. Compliance with Order 888 has been virtually universal. FERC has also  
mandated that utilities with open access transmission tariffs provide           
interconnection service to generators as a separate component of transmission   
service.                                                                        

  The FERC is also encouraging the voluntary restructuring of transmission
operations through the use of independent system operators and regional         
transmission groups. Such entities may create efficiencies for                  
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traditional utilities and may eliminate the assessment of multiple rates (i.e., 
parcel rates) to wheel power through a region.                                  

Environmental Regulations -- United States                                  

  The following discussion includes forward-looking statements relating to
environmental protection compliance measures and the possible future impact on  
us of increasingly stringent environmental regulations. This information        
reflects current estimates that we periodically evaluate and revise. Our        
estimates are subject to a number of assumptions and uncertainties, including   
future Federal and state energy and environmental policy, other changing laws   
and regulations, the ultimate outcome of complex factual investigations, changes
in emission control technology, and selection of compliance alternatives.       

   The construction and operation of power projects are subject to extensive
environmental protection and land use regulation in the United States. Those    
regulations applicable to Cogentrix primarily involve the discharge of emissions
into the water and air and the use of water, but can also include wetlands      
preservation, endangered species, waste disposal and noise regulation. These    
laws and regulations often require a lengthy and complex process of obtaining   
and renewing licenses, permits and approvals from federal, state and local      
agencies. If such laws and regulations are changed and our facilities are not   
grandfathered, extensive modifications to power project technologies and        
facilities could be required.                                                   

We expect that environmental regulations will continue to become more 
stringent as environmental legislation previously passed is implemented, new    
laws are enacted and existing regulations are re-evaluated. Accordingly, we plan
to continue a strong emphasis on implementation of environmental controls and   
procedures to minimize the environmental impact of energy generation at our     
facilities.                                                                     

   Clean Air Act and the 1990 Amendments.  In late 1990, Congress passed the
Clean Air Act Amendments of 1990 (the "1990 Amendments") that affect existing   
facilities -- including facilities exempt from regulation under the Clean Air   
Act of 1970 -- as well as new project development. All of the facilities we     
operate are currently in compliance with federal performance standards mandated 
for such facilities under the Clean Air Act and the 1990 Amendments.            

   The 1990 Amendments create a marketable commodity called a sulfur dioxide
("SO2") "allowance." All non-exempt facilities over 25 megawatts that emit SO2  
including independent power plants, must obtain allowances in order to operate  
after 2000. Each allowance gives the owner the right to emit one ton of SO2. The
1990 Amendments exempt from the SO2 allowance provisions all independent power  
projects that were operating, under construction or with power sales agreements 
or letters of intent as of November 15, 1990, as well as facilities outside the 
contiguous 48 states. As a result, most of the facilities we operate are exempt.
The non-exempt facilities we operate have determined their need for allowances  
and have accounted for these requirements in their operating budgets and        
financial forecasts. Most of the facilities we have developed in recent years   
and expect to develop in the future rely on natural gas technology. The         
additional costs of obtaining the number of allowances needed for our future    
projects should not materially affect our ability to develop new projects.      

 The 1990 Amendments also contain other provisions that could affect our
projects. Provisions dealing with geographical areas the EPA has designated as  
being in "nonattainment" with national ambient air quality standards require    
that each new or expanded source of air pollutants in nonattainment areas must  
obtain emissions reductions from existing sources that more than offset the     
emissions from the new or expanded source. While the "offset" requirements may  
hamper new project development in certain geographical areas, development of new
projects has continued, and management expects will likely continue,            
particularly as markets for "offsets" develop.                                  

    The 1990 Amendments also provide an extensive new operating permit program
for existing sources called the Title V permitting program. Because all of the  
facilities we operate were permitted under the Prevention of Significant        
Deterioration New Source Review Process, the permitting impact to Cogentrix     
under the 1990 Amendments at those facilities is expected to be minimal. The    
costs of applying for and maintaining operating air permits are not anticipated 
to be significant.                                                              

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   The 1990 Amendments also regulate certain hazardous air pollutant ("HAP")
emissions. Although the HAP provisions of the 1990 Amendments exclude electric  
steam generating facilities, they direct the EPA to prepare a study on HAP      
emissions from power plants. The EPA has conducted agreed studies and is        
expected to regulate mercury emissions from power plants on or before December  
15, 2004. If it is determined that mercury emissions from power plants should be
regulated, the use of "maximum achievable control technology" could be required,
which could require additional control equipment on some or all of our          
facilities.                                                                     

   The EPA continues to conduct an industry-wide investigation of coal-fired
electric power generators to determine compliance with environmental            
requirements under the Clean Air Act associated with repairs, maintenance,      
modifications and operational changes made to the facilities over the years. The
EPA's focus is on whether any of the changes made were subject to new source    
review or new performance standards, and whether best available control         
technology was or should have been used. Cogentrix has not received any notices 
of violation from the EPA relating to any of its facilities as a result of this 
industry-wide investigation. The Portsmouth Plant has received and responded to 
a Section 114 Request from EPA Region III to "provide information reasonably    
required for the purpose of determining whether that person is in violation of, 
among other things, any requirements of the State Implementation Plan (SIP), New
Source Performance Standards (NSPS) and Review of New Sources and modifications 
(NSR)." The EPA conducted its site visit to the Portsmouth Plant on March 7,    
2001. Management believes that Cogentrix would have a meritorious defense to any
action brought by the EPA relating to any of its facilities.                    

EPA Initiatives.  In July 1997, the EPA promulgated more restrictive  
ambient air quality standards for ozone and for particulate matter. These new   
standards were affirmed by the Supreme Court in February 2001 and when finally  
promulgated by the EPA will likely increase the number of nonattainment areas   
for both ozone and particulate matter. If our facilities are in these new       
nonattainment areas, further emission reduction requirements, which states will 
be required to adopt, could require us to install additional control technology 
for oxides of nitrogen ("NO(x)") emissions and other ozone precursors.          

In October 1998, the EPA issued a final rule addressing the regional  
transport of ground-level ozone across state boundaries to the eastern United   
States through NO(x) emissions reduction. The rule focuses on such reductions in
the eastern United States, requiring 22 states and the District of Columbia to  
submit revised "state implementation plans" (SIPs) by September 1999 and have   
NO(x) emission controls in place by May 2003 (the "NO(x) SIP call"). In March   
2000, a federal appeals court upheld the NO(x) SIP call rule. In March 2001, the
Supreme Court declined to hear an appeal of this ruling.                        

 In a related action, the EPA in December 1999 granted petitions of four
northeastern states seeking to reduce transport of ozone across state boundaries
by requiring reductions in NO(x) emissions from sources in 30 states and the    
District of Columbia. As a result, 392 facilities, including those operated by  
our project subsidiaries in North Carolina and Virginia, will have to reduce    
NO(x) emissions or take other steps to meet these NO(x) emission reduction      
requirements. These facilities must implement controls or use emission          
allowances to achieve required NO(x) emission reductions by May 2003.           

    We are evaluating the NO(x) emission reductions that these EPA initiatives
and state regulations will require us to meet. We expect we will need to install
additional or new control equipment and continuous emissions monitoring         
equipment at several of the facilities operated by our project subsidiaries in  
North Carolina and Virginia. The costs of the additional equipment should not be
material to the operations of these facilities. In addition to installing new   
control equipment, we may need, or decide to purchase NO(x) "allowances".       

The 1990 Amendments expand the enforcement authority of the federal   
government by increasing the range of civil and criminal penalties for          
violations of the Clean Air Act, enhancing administrative civil penalties, and  
adding a citizen suit provision. These enforcement provisions also include      
enhanced monitoring, recordkeeping and reporting requirements for existing and  
new facilities. On February 13, 1997, the EPA issued a regulation providing for 
the use of "any credible evidence or information" in lieu of, or in addition to,
the test methods prescribed by regulation to determine the compliance status of 
permitted sources of air                                                        

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pollution. This rule may effectively make emission limits previously established
for many air pollution sources, including the Facilities, more stringent.       

   The Kyoto Protocol.  In 1998, the Kyoto Protocol regarding greenhouse gas
emissions and global warming was signed by the U.S., committing to reductions in
greenhouse gas emissions of at least 7% below 1990 levels to be achieved by     
2008 -- 2012. The U.S. Senate must ratify the agreement for the protocol to take
effect. In March 2001, the EPA announced that the United States would not be    
implementing the Kyoto Protocol in its present form. Future initiatives on this 
issue and the effects on Cogentrix are unknown at this time.                    

Clean Water Act.  Our facilities are subject to a variety of state and
federal regulations governing existing and potential water/wastewater and       
stormwater discharges from the facilities. Generally, federal regulations       
promulgated through the Clean Water Act govern overall water/wastewater and     
stormwater discharges through National Pollutant Discharge Elimination System   
permits. Under current provisions of the Clean Water Act, existing permits must 
be renewed every five years, at which time permit limits are under extensive    
review and can be modified to account for more stringent regulations. In        
addition, the permits have re-opener clauses that can be used to modify a permit
at anytime, and the states are required to establish total maximum daily load   
limits for water bodies that are impaired. Several of the facilities we operate 
have either recently gone through permit renewal or will be renewed within the  
next few years. Based upon recent renewals, we do not anticipate significantly  
more stringent monitoring or treatment requirements for any of the facilities we
operate. We believe that the plants we operate are in material compliance with  
applicable discharge requirements under the Clean Water Act.                    

    Emergency Planning and Community Right-to-Know Act.  In April of 1997, the
EPA expanded the list of industry groups required to report the Toxic Release   
Inventory under Section 313 of the Emergency Planning and Community             
Right-to-Know Act to include electric utilities. Our operating facilities are   
required to complete a toxic chemical inventory release form for each listed    
toxic chemical manufactured, processed or otherwise used in excess of threshold 
levels. The purpose of this requirement is to inform the EPA, states, localities
and the public about releases of toxic chemicals to the air, water and land that
can pose a threat to the community.                                             

     Comprehensive Environmental Response, Compensation, and Liability Act.  The
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,  
as amended ("CERCLA" or "Superfund"), requires cleanup of sites from which there
has been a release or threatened release of hazardous substances and authorized 
the EPA to take any necessary response action at Superfund sites, including     
ordering potentially responsible parties ("PRPs") liable for the release to take
action or pay for such actions by others. PRPs are broadly defined under CERCLA 
to include past and present owners and operators of sites, as well as generators
of wastes sent to a site. At present, we are not subject to liability for any   
Superfund matters and take measures to assure that CERCLA will not apply to     
properties we own or lease. However, we do generate certain wastes in the       
operation of our plants, including small amounts of hazardous wastes, and send  
certain wastes to third-party waste disposal sites. As a result, there can be no
assurance that we will not incur liability under CERCLA in the future.          

Resource Conservation and Recovery Act ("RCRA").  RCRA regulates the  
generation, treatment, storage, handling, transportation and disposal of        
hazardous wastes. We are exempt from the solid waste requirements under RCRA    
regarding coal combustion by-products. We are classified as a conditionally     
exempt small quantity generator of hazardous wastes at all of our facilities. We
will continue to monitor regulations under this rule and will strive to maintain
the exempt status.                                                              

Environmental Regulations -- International                                  

Although the type of environmental laws and regulations applicable to 
independent power producers and developers varies widely from country to        
country, many foreign countries have laws and regulations relating to the       
protection of the environment and land use that are similar to those found in   
the United States. Laws applicable to the construction and operation of electric
generating facilities in foreign countries generally regulate discharges and    
emissions into water and air and also regulate noise levels.                    
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  Air pollution laws in foreign jurisdictions often limit the emissions of
particulates, dust, smoke, carbon monoxide, sulfur dioxide, nitrogen oxide and  
other pollutants. Water pollution laws in foreign countries generally limit     
wastewater discharges into municipal sewer systems and require treatment of     
wastewater that does not meet established standards. New projects and           
modifications to existing projects are also subject, in many cases, to land use 
and zoning restrictions imposed in the foreign country. In addition, developers 
of foreign independent power projects often conduct environmental impact        
assessments of proposed projects pursuant to existing legislative requirements. 
Lenders to international development projects may impose their own requirements 
relating to the protection of the environment.                                  

 We believe that the level of environmental awareness and enforcement is
growing in most countries, including most of the countries in which we intend to
develop and operate new projects. As a result, plants built overseas will likely
include pollution control equipment that is required in the United States.      
Therefore, based on current trends, we believe that the nature and level of     
environmental regulation that we are subject to will become increasingly        
stringent, whether we undertake new projects in foreign countries or in the     
United States.                                                                  

EMPLOYEES                                                                       

    At December 31, 2000, we employed 541 people, none of whom is covered by a
collective bargaining agreement.                                                

ITEM 2.  PROPERTIES                                                             

    In addition to our properties listed and described in the section entitled
"Business -- Facilities in Operation," we lease our principal executive office, 
a single 61,024 square foot building, located at 9405 Arrowpoint Boulevard in   
Charlotte, North Carolina. We lease the building and related land from a        
partnership comprised of four shareholders of Cogentrix Energy. The building    
lease has an initial term ending in 2004, with optional renewals through 2047.  
The term of the land lease extends through 2047. See "Certain Relationships and 
Related Transactions -- Leases and Real Property Transactions."                 

     We also lease office space in Prince George, Virginia and Portland, Oregon.

We believe that our facilities and properties have been satisfactorily
maintained, are in good condition, and are suitable for our operations.         

ITEM 3.  LEGAL PROCEEDINGS                                                      

Claims and Litigation                                                       

    One of our indirect, wholly-owned subsidiaries is party to certain product
liability claims related to the sale of coal combustion by-products for use in  
various construction projects. Management cannot currently estimate the range of
possible loss, if any, we will ultimately bear as a result of these claims.     
However, our management believes -- based on its knowledge of the facts and     
legal theories applicable to these claims, after consultations with various     
counsel retained to represent the subsidiary in the defense of such claims, and 
considering all claims resolved to date -- that the ultimate resolution of these
claims should not have a material adverse effect on our consolidated financial  
position or results of operations or on Cogentrix Energy's ability to generate  
sufficient cash flow to service its outstanding debt.                           

    In addition to the litigation described above, we experience other routine
litigation in the normal course of business. Our management is of the opinion   
that none of this routine litigation will have a material adverse impact on our 
consolidated financial position or results of operations.                       

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                    

None.                                                                 

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PART II 

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER       
MATTERS                                                                         

(a) Market Information -- There is no established market for our common stock,  
which is closely held.                                                          

(b) Principal Shareholders -- All of the issued and outstanding shares of common
stock of Cogentrix Energy are beneficially owned by the five persons listed in  
Item 12 of this report.                                                         

(c) Dividends -- For the year ended December 31, 2000, our board of directors   
declared a dividend on our outstanding common stock of $10.3 million, which was 
paid in March 2001. Our board of directors declared a dividend on our           
outstanding common stock of $8.7 million for the fiscal year ended December 31, 
1999, which was paid in March 2000. The board of directors has adopted a policy,
which is subject to change at any time, of maintaining a dividend payout ratio  
of no more than 20% of our net income for the immediately preceding fiscal year.
In addition, under the terms of the indentures under which Cogentrix Energy has 
senior debt outstanding and the corporate credit facility agreement, our ability
to pay dividends and make other distributions to our shareholders is restricted.

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ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA                                   

     The following table sets forth certain selected consolidated financial data
as of and for the five years ended December 31, 2000, which should be read in   
conjunction with our consolidated financial statements and related notes thereto
and with "Management's Discussion and Analysis of Financial Condition and       
Results of Operations." The selected consolidated financial data as of and for  
each of the five years in the period ended December 31, 2000 set forth below has
been derived from our audited consolidated financial statements.                

                                                        [Enlarge/Download Table]

                                                           YEARS ENDED DECEMBER 31,               
                                             ---------------------------------------------------- 
                                               2000       1999       1998       1997       1996   
                                             --------   --------   --------   --------   -------- 
                                                            (DOLLARS IN THOUSANDS)                
                                                                                                  
STATEMENT OF OPERATIONS DATA:                                                                     
Total operating revenues.................... $551,095   $447,563   $408,693   $349,914   $388,845 
Operating expenses:                                                                               
  Operating costs...........................  258,247    195,142    185,567    190,098    232,199 
  General, administrative and development...   42,286     39,014     36,490     41,650     31,245 
  Depreciation and amortization.............   50,698     43,713     42,535     41,844     37,455 
  Loss on impairment and cost of removal of                                                       
     cogeneration facilities................       --         --         --         --     65,628 
                                             --------   --------   --------   --------   -------- 
          Total operating expenses..........  351,231    277,869    264,592    273,592    366,527 
                                             --------   --------   --------   --------   -------- 
Operating income............................  199,864    169,694    144,101     76,322     22,318 
Other income (expense):                                                                           
  Interest expense.......................... (105,242)   (94,956)   (74,949)   (53,864)   (56,950)
  Other, net................................  (10,400)    (3,747)    (6,506)     3,579      3,186 
                                             --------   --------   --------   --------   -------- 
Income (loss) before income taxes and                                                             
  extraordinary loss........................   84,222     70,991     62,646     26,037    (31,446)
Benefit (provision) for income taxes........  (32,678)   (27,576)   (24,914)    (9,754)    11,273 
                                             --------   --------   --------   --------   -------- 
Income (loss) before extraordinary loss.....   51,544     43,415     37,732     16,283    (20,173)
Extraordinary loss on early extinguishment                                                        
  of debt, net..............................       --         --       (743)    (1,502)      (703)
                                             --------   --------   --------   --------   -------- 
Net income (loss)........................... $ 51,544   $ 43,415   $ 36,989   $ 14,781   $(20,876)
                                             ========   ========   ========   ========   ======== 
OTHER FINANCIAL DATA (UNAUDITED)(1):                                                              
Parent EBITDA............................... $113,534   $ 96,982   $ 63,884   $ 38,980   $ 55,413 
Parent Fixed Charges........................   36,447     32,548     14,217      8,607      8,472 
Parent EBITDA/Parent Fixed Charges..........     3.12x      2.98x      4.49x      4.53x      6.54x

                                                        [Enlarge/Download Table]

                                                             AS OF DECEMBER 31,                    
                                         ----------------------------------------------------------
                                            2000         1999         1998        1997       1996  
                                         ----------   ----------   ----------   --------   --------
                                                                                                   
BALANCE SHEET DATA:                                                                                
Total assets............................ $2,307,224   $1,637,133   $1,499,851   $822,974   $865,941
Project financing debt(2)...............  1,357,810      945,383      877,653    567,705    620,885
Parent debt(3)..........................    455,000      355,000      355,000    100,000    100,000
Total shareholders' equity..............    162,678      121,451       87,863     58,298     50,631

---------------                                                                 

(1) Parent EBITDA represents cash flow to Cogentrix Energy prior to debt service
and income taxes of Cogentrix Energy. Parent Fixed Charges include cash 
payments made by Cogentrix Energy related to outstanding indebtedness of
 Cogentrix Energy and the cost of funds associated with Cogentrix Energy's
guarantees of some of its subsidiaries' indebtedness. Our management    
   believes Parent EBITDA is a useful measure of Cogentrix Energy's ability to
service debt. Parent EBITDA should not be construed, however, as an     
   alternative to operating income or to cash flows from operating activities.
(2) Project financing debt with respect to each of our facilities is            
"substantially non-recourse" to Cogentrix Energy and its other project  
   subsidiaries. For a discussion of the term "non-recourse," see "Business --

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Project Agreements, Financing and Operating Arrangements for Our Operating      
Facilities -- Project Financing" herein.                                        
(3) Parent debt represents obligations of Cogentrix Energy only and does not    
  include non-recourse obligations of our project subsidiaries or letters of
credit outstanding on Cogentrix Energy's corporate credit facility.     

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS                                                                   

 In addition to discussing and analyzing our recent historical financial
results and condition, the following "Management's Discussion and Analysis of   
Financial Condition and Results of Operations" includes statements concerning   
certain trends and other forward-looking information affecting or relating to   
Cogentrix which are intended to qualify for the protections afforded            
"Forward-Looking Statements" under the Private Securities Litigation Reform Act 
of 1995, Public Law 104-67. The forward-looking statements made herein and      
elsewhere in this Form 10-K are inherently subject to risks and uncertainties   
which could cause the actual results to differ materially from the              
forward-looking statements. See cautionary statements appearing under the       
Business section above and elsewhere in this Form 10-K for a discussion of the  
important factors affecting the realization of those results.                   

TRENDS AFFECTING OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS              

Termination of Five of our Power Sales Agreements                           

     The power sales agreements at two of our project subsidiaries terminated in
the year ended December 31, 2000. The power sales agreements at three of our    
other project subsidiaries will terminate in years 2001 through 2002 and the    
power sales agreements at two of our other project subsidiaries provide for a   
significant reduction in fixed payments received under such agreements after    
2002. Accordingly, revenues recognized by us under these power sales agreements 
have and will be eliminated or significantly reduced. Our management believes,  
however, that our remaining project subsidiaries and project affiliates will    
generate sufficient cash flow to allow them to pay management fees and dividends
to Cogentrix Energy periodically in sufficient amounts to allow Cogentrix Energy
to pay all required debt service on our outstanding senior notes and our        
corporate credit facility, fund a significant portion of our development        
activities and permit Cogentrix Energy to meet its other obligations.           

Legislative Proposals to Restructure the Electric Generating Industry       

The domestic electric generating industry is currently going through a
period of significant change as many states are implementing or considering     
regulatory initiatives designed to increase competition. We cannot predict the  
final form or timing of the proposed restructurings and the impact, if any, that
such restructurings would have on our existing business or consolidated results 
of operations. Because these restructuring proposals have generally included a  
grandfathering provision for contracts entered into prior to repeal of existing 
legislation, we believe that any such restructuring would not have a material   
adverse effect on our power sales agreements. Accordingly, we believe that our  
existing business and results of consolidated operations would not be materially
adversely affected, although there can be no assurance in this regard.          

Acquisitions, Development and Other Changes in our Portfolio of Generating  
Plants                                                                          

    Our growth has substantially increased our electric production capability.
The acquisition of ownership interests in the Cottage Grove and Whitewater      
facilities in March 1998, whose power sales agreements are accounted for as     
"sales-type" capital leases, has resulted in the recognition of lease and       
service revenues, as well as cost of services under "sales-type" leases. The    
acquisition of ownership interests in twelve electric generating facilities has 
significantly impacted the amount of income recognized from unconsolidated power
projects. These acquisitions were financed with debt and as a result, have      
impacted the interest expense reported in our results of operations. Our        
facilities under construction will not have a significant impact on our results 
of operations until they begin commercial operations, at which time, we will    
experience an increase in operating revenues, operating expenses and interest   
expense.                                                                        

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RESULTS OF OPERATIONS                                                           

                                                        [Enlarge/Download Table]

                                                         YEAR ENDED DECEMBER 31,                
                                          ----------------------------------------------------- 
                                               2000               1999               1998       
                                          ---------------    ---------------    --------------- 
                                                                                                
Total operating revenues................. $551,095    100%   $447,563    100%   $408,693    100%
Operating expenses.......................  258,247     47     195,142     44     185,567     45 
General, administrative and                                                                     
  development............................   42,286      8      39,014      9      36,490      9 
Depreciation and amortization............   50,698      9      43,713     10      42,535     10 
                                          --------           --------           --------        
Operating income......................... $199,864     36%   $169,694     38%   $144,101     35%
                                          ========           ========           ========        

YEAR ENDED DECEMBER 31, 2000 AS COMPARED TO YEAR ENDED DECEMBER 31, 1999        

Operating Revenues                                                          

 Total operating revenues increased 23.1% to $551.1 million for the year
ended December 31, 2000 as compared to $447.6 million for the year ended        
December 31, 1999 as a result of the following:                                 

     - Electric revenue increased approximately $38.6 million as a result of the
   initial recognition of electric revenue generated from the Batesville
      facility, which commenced commercial operation in August 2000 (see Other
       Significant Events, below), and an increase in megawatt hours sold to the
     purchasing utilities at most of our electric generating facilities. The
increase in electric revenue was partially offset by a decrease in
electric revenue at three of our facilities as the result of the  
 termination or sale of their power purchase agreements during 2000.

   - Service revenue increased approximately $19.4 million as a result of an
      increase in the variable energy rate charged to the purchasing utilities
 at our Cottage Grove and Whitewater facilities. The increase in the
variable energy rate was a direct result of an overall increase in
     natural gas prices during the year. The increase in service revenue was
     partially offset by a decrease in megawatt hours sold to the purchasing
utility at these facilities.                                      

- Income from unconsolidated investments in power projects increased  
     approximately $18.5 million primarily as a result of increased megawatt
hours sold to the purchasing utility at the Logan and Northampton 
     facilities. The increase was also a result of recognizing a full year's
 income in 2000 on our 50% interest in the Indiantown facility. To a
       lesser extent, the increase was a result of a reduction of major overhaul
expenses at four project affiliates.                              

    - Other operating revenues increased approximately $23.6 million primarily
      as a result of the sale of our power purchase agreement at the Ringgold,
    Pennsylvania facility on which we recorded a net gain of approximately
     $13.3 million. In conjunction with this sale, we discontinued operation
     of the facility. The increase was also attributable to sales of certain
      assets and rights to projects we had under development for $4.8 million.

Operating Expenses                                                          

 Total operating expenses increased 32.3% to $258.2 million for the year
ended December 31, 2000 as compared to $195.1 million for the year ended        
December 31, 1999 as a result of the following:                                 

- Fuel expense increased approximately $32.7 million as a result of an
    increase in megawatt hours sold to the purchasing utilities at most of
       our project subsidiaries. The increase was partially offset by a decrease
     in fuel expense at our Ringgold facility as a result of the sale of the
power purchase agreement.                                         

   - Operations and maintenance costs increased $12.9 million primarily as a
   result of the commencement of commercial operations at the Batesville
  facility in August 2000. To a lesser extent, the increase was also a
     result of planned maintenance costs incurred at several of our electric
generating facilities during 2000.                                

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  - Cost of services increased $17.5 million as a result of an increase in
     fuel costs at our Cottage Grove and Whitewater facilities. The increase
   in fuel costs resulted from an overall increase in natural gas prices
during the year.                                                  

- Depreciation and amortization increased approximately $7.0 million  
primarily from the commencement of commercial operations of the   
Batesville facility.                                              

General, Administrative and Development Expenses                            

  General, administrative and development expenses increased 8.5% to $42.3
million for the year ended December 31, 2000 as compared to $39.0 million for   
the year ended December 31, 1999. This increase is primarily due to an increase 
in compensation expense related to an increase in the number of corporate       
employees and an increase in incentive compensation expense related to our      
increased profitability. The increase in general, administrative and development
expenses was partially offset by a decrease in information system consulting    
costs in 2000 resulting from the implementation of various new core business    
systems in 1999.                                                                

Interest Expense                                                            

Interest expense increased 10.7% to $105.2 million for the year ended 
December 31, 2000 as compared to $95.0 million for the year ended December 31,  
1999. The increase in interest expense is primarily related to incremental      
interest expense from the inclusion of long-term debt from the Batesville       
facility which began commercial operations in August 2000, additional borrowings
of approximately $25.2 million at our Richmond facility in June 2000, and the   
issuance of an additional $100.0 million of our 2008 senior notes in September  
2000. The increase in interest expense was offset by a reduction in interest    
expense at several of our project subsidiaries due to scheduled repayments and  
retirements of outstanding project financing debt.                              

Other Expense, Net                                                          

   Other expense, net, increased primarily as a result of a charge to reduce
the carrying value of a note receivable to its estimated net realizable value,  
as a result of uncertainties with respect to collectibility.                    

YEAR ENDED DECEMBER 31, 1999 AS COMPARED TO YEAR ENDED DECEMBER 31, 1998        

Operating Revenues                                                          

Total operating revenues increased 9.5% to $447.6 million for the year
ended December 31, 1999 as compared to $408.7 million for the year ended        
December 31, 1998 as a result of the following:                                 

- Lease and service revenue increased $19.4 million as a result of    
      recognizing a full year's income from the power sales agreements for the
     Cottage Grove and Whitewater facilities, interests we acquired in March
1998.                                                             

    - Income from unconsolidated investments in power projects increased $19.0
       million as a result of recognizing a full year's income from interests in
12 electric generating facilities we acquired in October 1998. The
      increase was also impacted by the purchase of an additional 40% interest
in the Indiantown facility during 1999.                           

Operating Expenses                                                          

Total operating expenses increased 5.1% to $195.1 million for the year
ended December 31, 1999 as compared to $185.6 million for the year ended        
December 31, 1998 as a result of the following:                                 

     - Cost of services increased $9.9 million as a result of recognizing a full
       year's expenses from the power sales agreements for the Cottage Grove and
Whitewater facilities, interests we acquired in March 1998.       

     - Fuel expense increased $3.4 million as a result of an overall increase in
megawatt hours sold to the purchasing utilities at our project    
     subsidiaries, the amortization of our fuel litigation settlement with a

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coal supplier and an increase in fuel sold to third parties at the Cottage Grove
and Whitewater facilities.                                                      

   - The increase in total operating expenses was partially offset by a $4.6
   million decrease in operation and maintenance expenses due to routine
   maintenance expenses incurred at several of our facilities during the
year ended December 31, 1998.                                     

General, Administrative and Development Expenses                            

  General, administrative and development expenses increased 6.8% to $39.0
million for the year ended December 31, 1999 as compared to $36.5 million for   
the year ended December 31, 1998. Compensation expense increased as a result of 
an increase in the number of corporate employees, an increase in incentive      
compensation expense related to our increased profitability, and expense related
to the buyout of an executive's participation in an incentive compensation plan.
To a lesser extent, information system consulting costs increased as a result of
the implementation of various new core business systems. These increases were   
partially offset by the capitalization of development costs related to certain  
project development efforts during the year ended December 31, 1999 and a       
decrease in travel and other development costs related to international         
development activity.                                                           

Interest Expense                                                            

Interest expense increased 26.8% to $95.0 million for the year ended  
December 31, 1999 as compared to $74.9 million for the year ended December 31,  
1998. Our average long-term debt increased to $1.2 billion, with a weighted     
average interest rate of 7.62% for the year ended December 31, 1999 as compared 
to average long-term debt of $1.0 billion, with a weighted average interest rate
of 7.25% for the year ended December 31, 1998. The increases in interest expense
and weighted average debt outstanding were related to the inclusion of the      
project debt of the Cottage Grove and Whitewater facilities acquired in March   
1998, the issuance of $255 million of 8.75% senior notes during the fourth      
quarter of 1998, and borrowings incurred during the year under revolving credit 
facilities at some project subsidiaries related to acquisitions made during the 
year. The increase in average long-term debt outstanding was also impacted, to a
lesser extent, by an outstanding construction loan of approximately $70 million 
in December 1999, for the project under construction in Jenks, Oklahoma.        

Minority Interest                                                           

     The increase in minority interest in income for the year ended December 31,
1999, as compared to the year ended December 31, 1998, related to the inclusion 
of a full twelve months of operations for the Cottage Grove and Whitewater      
facilities in the year ended December 31, 1999, as compared to only nine months 
in the year ended December 31, 1998, and the settlement of the construction     
contract on the Whitewater and Cottage Grove facilities.                        

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LIQUIDITY AND CAPITAL RESOURCES                                                 

Consolidated Information                                                    

 The primary components of cash flows from operations for the year ended
December 31, 2000, were as follows (dollars in millions):                       

                                                                [Download Table]
                                                                    
Net income..................................................  $51.5 
Depreciation and amortization...............................   44.9 
Deferred income taxes.......................................   31.5 
Equity in net income of unconsolidated affiliates, net of           
  dividends.................................................   (9.0)

 Total cash flows from operations of $154.6, proceeds from borrowings of
$643.9 and funds released from escrow of $18.1 were used primarily to (dollars  
in millions):                                                                   

                                                                [Download Table]
                                                                    
Purchase property, plant and equipment and to fund project          
  development costs and turbine deposits....................  $532.6
Invest in unconsolidated subsidiaries.......................     1.7
Repay project financing borrowings..........................   131.2
Pay deferred financing costs................................    36.0
Pay dividends...............................................     8.7

As of December 31, 2000, we had long-term debt (including the current 
portion thereof) of approximately $1.8 billion. With the exception of the $455.0
million of senior notes outstanding as of December 31, 2000, substantially all  
such indebtedness is project financing debt, the majority of which is           
non-recourse to Cogentrix Energy. The project financing debt generally requires 
the extensions of credit to be repaid solely from the project's revenues and    
provide that the repayment of the extensions of credit (and interest thereon) is
secured solely by the physical assets, agreements, cash flow and, in certain    
cases, the capital stock of or the partnership interest in that project         
subsidiary. Future annual maturities of long-term debt range from $42.4 million 
to $144.7 million in the five-year period ending December 31, 2005. We believe  
that our project subsidiaries and project affiliates will generate sufficient   
cash flow to pay all required debt service on their project financing debt and  
to allow them to pay management fees, dividends or distributions to Cogentrix   
Energy periodically in sufficient amounts to allow Cogentrix Energy to pay all  
required debt service, fund a significant portion of its development activities 
and meet its other obligations.                                                 

The ability of our project subsidiaries and project affiliates to pay 
dividends, distributions and management fees periodically to Cogentrix Energy is
subject to certain limitations in our respective financing documents. Such      
limitations generally require that: (1) debt service payments be current, (2)   
debt service coverage ratios be met, (3) all debt service and other reserve     
accounts be funded at required levels and (4) there be no default or event of   
default under the relevant financing documents. There are also additional       
limitations that are adapted to the particular characteristics of each project  
subsidiary and project affiliate. Management does not believe that such         
restrictions or limitations will adversely affect Cogentrix Energy's ability to 
meet its debt obligations.                                                      

Credit Facilities                                                           

    We amended our corporate credit facility during 2000, increasing available
commitments to $250.0 million and modifying certain covenants. The credit       
facility has been extended through October 2003 and is unsecured. The corporate 
credit facility provides direct advances to, or the issuance of letters of      
credit for, our benefit in an amount up to $250.0 million. Currently, we have   
utilized approximately $122.2 million of the credit available primarily for     
letters of credit issued in connection with projects we have under construction 
in Idaho, Oklahoma and the Dominican Republic (see discussion below). The       
balance of the commitments under the corporate credit facility is available,    
subject to any limitations imposed by the covenants contained therein and in the
indentures, to be drawn upon by us to repay other outstanding indebtedness or   
for general corporate purposes, including equity investments in new projects or 
acquisitions of existing electric generating facilities or those under          
development.                                                                    

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   Two of our wholly-owned subsidiaries, Cogentrix Eastern America, Inc. and
Cogentrix Mid-America, Inc. ("Mid-America"), formed to hold interests in        
electric generating facilities acquired in 1999 and 1998, maintain credit       
agreements with banks to provide for $67.5 million and $25.0 million of         
revolving credit, respectively. Both credit facilities provide for credit in the
form of direct advances, and the Mid-America facility provides for issuances of 
letters of credit. Including the credit facilities described above, and the     
revolving credit facility at one of our project subsidiaries, we maintain       
revolving credit that is non-recourse to Cogentrix Energy, with aggregate       
commitments of $135.3 million. As of December 31, 2000, we had approximately    
$33.5 million available under these facilities. The aggregate commitments on    
these facilities will decrease to $105.4 million by December 31, 2001.          

Facilities Under Construction                                               

  We currently have four "greenfield" electric generating facilities under
construction. The construction of each facility is being funded under each      
project subsidiary's separate financing agreements and equity contribution      
commitments by Cogentrix and/or our partners. Our equity contribution           
commitments for the Dominican Republic, Rathdrum and Jenks facilities are       
supported by letters of credit provided under Cogentrix Energy's corporate      
credit facility. The equity commitments will be contributed upon the earliest to
occur of (1) an event of default under the project subsidiary's financing       
agreements, (2) the incurrence of construction costs after all project financing
has been expended, or (3) the mandatory equity contribution date. Summarized    
information regarding each of the facilities under construction follows (dollars
in millions):                                                                   

                                                        [Enlarge/Download Table]

                                          OUACHITA,    DOMINICAN  RATHDRUM,   JENKS, 
                                         LOUISIANA(A)  REPUBLIC     IDAHO    OKLAHOMA
                                         ------------  ---------  ---------  --------
                                                                                     
OWNERSHIP PERCENTAGE....................    50%          65%        51%        100%  
FINANCIAL CLOSE DATE....................  August        April      March     December
                                           2000          2000       2000       1999  
PROJECT FUNDING:                                                                     
  Total Project Financing Commitment....    $460.0     $  232.5    $ 126.0   $  350.0
  Total Project Equity Commitment.......      61.6         76.9       32.7       48.7
                                            ------     --------    -------   --------
                                            $521.6     $  309.4    $ 158.7   $  398.7
                                            ======     ========    =======   ========
COGENTRIX EQUITY COMMITMENT:                                                         
  Total Commitment......................    $  5.3     $   50.0    $  16.7   $   48.7
  Contributions through December 31,                                                 
     2000...............................        --           --         --         --
                                            ------     --------    -------   --------
  Remaining Commitment..................    $  5.3     $   50.0    $  16.7   $   48.7
                                            ======     ========    =======   ========
  Mandatory Equity Contribution Date....   June        February   December     June  
                                           2002          2003       2002       2002  

---------------                                                                 

(a) See additional discussion under Other Significant Events                    

Any project we develop in the future, and those electric generating   
facilities we may seek to acquire, are likely to require substantial capital    
investment. Our ability to arrange financing on a non-recourse basis and the    
cost of such capital are dependent on numerous factors. In order to access      
capital on a non-recourse basis in the future, we may have to make larger equity
investments in, or provide more financial support for, the project entity.      

Other Significant Events                                                    

  On September 1, 2000, we received approximately $18.0 million related to
the utility customer's buy back of our Ringgold, Pennsylvania facility's power  
purchase agreement. A portion of the proceeds was used to retire the entire     
amount of the Ringgold facility's outstanding debt. In conjunction with this buy
back, we discontinued operation of the facility.                                

In September 2000, we issued an additional $100.0 million of our 8.75%
unsecured senior notes due 2008. We issued these notes at a discount resulting  
in an effective interest rate of approximately 8.86%. The                       

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proceeds received, net of transaction costs, from the sale of these notes were  
approximately $97.7 million. A portion of the net proceeds was utilized to      
prepay in full approximately $37.1 million of project subsidiary debt at our    
Roxboro and Southport, North Carolina facilities.                               

During January 2001, our wholly-owned subsidiary sold a 50% membership
interest in our Ouachita Parish, Louisiana facility currently under             
construction. In exchange, we received $48.3 million in cash and were relieved  
of our original equity commitment up to approximately $56.3 million that was    
previously supported by a letter of credit. We will continue to own 50% of this 
facility and we will operate the facility upon commercial operations.           

   During March 2001, we sold our 51.37% interest in the Batesville facility
to NRG Energy, Inc. for $64.0 million in cash. In connection with the sale, we  
also assigned our responsibility for the operation and maintenance of the       
Batesville facility from us to NRG Energy, Inc.                                 

We currently have commitments with a turbine supplier to purchase a   
specified number of turbines with specified delivery dates. We have made        
approximately $50.0 million in non-refundable deposits related to these         
commitments. We expect to make additional progress payments of $89.5 million in 
2001. The aggregate amount of these deposits will be repaid or funded from      
proceeds of project financings we anticipate closing during 2001.               

For the fiscal year ended December 31, 2000, our board of directors   
declared a dividend on our outstanding common stock of $10.3 million. The       
dividend was paid in March 2001. The board of directors' policy, that is subject
to change at any time, provides for a dividend payout ratio of no more than 20% 
of our net income for the immediately preceding fiscal year. In addition, under 
the terms of the indentures for the Company's outstanding senior notes and the  
corporate credit facility, our ability to pay dividends and make other          
distributions to our shareholders is restricted.                                

IMPACT OF ENERGY PRICE CHANGES, INTEREST RATES AND INFLATION                    

  Energy prices are influenced by changes in supply and demand, as well as
general economic conditions, and therefore tend to fluctuate significantly. We  
protect against the risk of changes in the market price for electricity by      
entering into contracts with fuel suppliers, utilities or power marketers that  
reduce or eliminate our exposure to this risk by establishing future prices and 
quantities for the electricity produced independent of the short-term market.   
Through various hedging mechanisms, we have attempted to mitigate the impact of 
changes on the results of operations of most of our projects. The hedging       
mechanism against increased fuel and transportation costs for most of our       
currently operating facilities is to provide contractually for matching         
increases in the energy payments our project subsidiaries receive from the      
utility purchasing the electricity generated by the facility.                   

Under the power sales agreements for certain of our facilities, energy
payments are indexed, subject to certain caps, to reflect the purchasing        
utility's solid fuel cost of producing electricity or provide periodic,         
scheduled increases in energy prices that are designed to match periodic,       
scheduled increases in fuel and transportation costs that are included in the   
fuel supply and transportation contracts for the facilities.                    

Most of our facilities currently under construction have tolling      
arrangements in place to minimize the impact of fluctuating fuel prices. Under  
these tolling arrangements, each customer is typically obligated to supply and  
pay for fuel necessary to generate the electrical output expected to be         
dispatched by the customer.                                                     

     Changes in interest rates could have a significant impact on our results of
operations because they affect the cost of capital needed to construct projects 
as well as interest expense of existing project financing debt. As with fuel    
price escalation risk, we attempt to hedge against the risk of fluctuations in  
interest rates by arranging either fixed-rate financing or variable-rate        
financing with interest rate swaps or caps on a portion of our indebtedness.    

    Although hedged to a significant extent, our financial results will likely
be affected to some degree by fluctuations in energy prices, interest rates and 
inflation. The effectiveness of the hedging techniques implemented by us is     
dependent, in part, on each counterparty's ability to perform in accordance with
the                                                                             

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provisions of the relevant contracts. We have sought to reduce this risk by     
entering into contracts with creditworthy organizations.                        

Interest Rate Sensitivity                                                   

 The following tables provide information about our derivative financial
instruments and other financial instruments that are sensitive to changes in    
interest rates, including interest rate swaps, interest rate caps and debt      
obligations.                                                                    

  The table below contains information on the interest rate sensitivity of
our debt portfolio. This table presents principal cash flows and related        
weighted average interest rates by expected maturity dates for all of our debt  
obligations as of December 31, 2000. This table does not reflect scheduled      
future interest rate adjustments. The weighted average interest rates disclosed 
in the table are calculated based on interest rates as of December 31, 2000.    
Future interest rates are likely to vary from those disclosed in the table.     

                                                        [Enlarge/Download Table]

                                                          EXPECTED MATURITY DATE                          
                                 -------------------------------------------------------------------------
                                  2001      2002      2003      2004      2005     THEREAFTER     TOTAL   
                                 -------   -------   -------   -------   -------   ----------   ----------
                                                          (DOLLARS IN THOUSANDS)                          
                                                                                                          
LONG-TERM DEBT:                                                                                           
  Fixed Rate.................... $35,064   $90,229   $32,472   $54,934   $19,724    $764,767    $  997,190
    Weighted average interest                                                                             
      rate......................    7.54%     7.67%     7.47%     7.47%     7.40%       8.24%             
  Variable Rate................. $34,419   $54,480   $17,503   $20,776   $22,626    $646,457       796,261
                                                                                                ----------
    Weighted average interest                                                                             
      rate......................    7.68%     7.68%     7.68%     7.68%     7.68%       7.97%             
                                                                                                $1,793,451
                                                                                                ==========

   The following tables contain information regarding interest rate swap and
interest rate cap agreements entered into by some of our project subsidiaries to
manage interest rate risk on their variable-rate project financing debt. The    
notional amounts of debt covered by these agreements as of December 31, 2000,   
was $125,967,981. These agreements effectively changed the interest rate,       
including applicable margins, on the portion of debt covered by the notional    
amounts from a weighted average variable rate of 7.88% to a weighted average    
effective rate of 7.28% at December 31, 2000.                                   

FIXED RATE PAY/VARIABLE RATE RECEIVE INTEREST RATE SWAPS

                                                                [Download Table]

  HEDGED                             FIXED    VARIABLE      FAIR    
 NOTIONAL     EFFECTIVE   MATURITY   RATE       RATE       MARKET   
  AMOUNT        DATE        DATE      PAY    RECEIVE(1)     VALUE   
-----------   ---------   --------   -----   ----------   --------- 
                                                                    
$34,000,000    2/12/98    12/31/02   5.688%     6.680%    $  75,265 
 58,639,000    4/28/00     1/31/06   6.078      6.885      (395,637)
  2,328,981    1/15/98     3/07/01   5.585      6.680         6,355 
                                                          --------- 
                                                          $(314,017)
                                                          ========= 

INTEREST RATE CAPS

                                                                [Download Table]

  HEDGED                             MAXIMUM     ACTUAL     FAIR 
 NOTIONAL     EFFECTIVE   MATURITY   INTEREST   INTEREST   MARKET
  AMOUNT        DATE        DATE       RATE     RATE(1)    VALUE 
-----------   ---------   --------   --------   --------   ------
                                                                 
$31,000,000    7/31/00    7/31/02      9.00%      6.88%     $478 
                                                            ==== 

---------------                                                                 

(1) The "variable rate receive" and "actual interest rate" are based on the     
interest rates in effect as of December 31, 2000. Interest rates in the 
future are likely to vary from those disclosed in the tables above.     

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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                            

INDEX 

                                                                [Download Table]

                                                              PAGE
                                                              ----
                                                                  
Report of Independent Public Accountants....................   35 
Consolidated Financial Statements:                                
     Consolidated Balance Sheets at December 31, 2000 and         
      1999..................................................   36 
     Consolidated Statements of Income For the Years Ended        
      December 31, 2000, 1999 and 1998......................   37 
     Consolidated Statements of Changes in Shareholders'          
      Equity For the Years Ended December 31, 2000, 1999 and      
      1998..................................................   38 
     Consolidated Statements of Cash Flows For the Years          
      Ended December 31, 2000, 1999 and 1998................   39 
Notes to Consolidated Financial Statements..................   40 
Financial Statement Schedules:                                    
Schedule I -- Condensed Financial Information of the              
  Registrant................................................   61 

   Schedules other than those listed above have been omitted, since they are
not required, are not applicable or are unnecessary due to the presentation of  
the required information in the financial statements or notes thereto.          
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO COGENTRIX ENERGY, INC.:                                                      

   We have audited the accompanying consolidated balance sheets of Cogentrix
Energy, Inc. (a North Carolina corporation) and subsidiary companies as of      
December 31, 2000 and 1999, and the related consolidated statements of income,  
changes in shareholders' equity and cash flows for each of the three years in   
the period ended December 31, 2000. These financial statements are the          
responsibility of the Company's management. Our responsibility is to express an 
opinion on these financial statements based on our audits.                      

 We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform 
the audit to obtain reasonable assurance about whether the financial statements 
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An 
audit also includes assessing the accounting principles used and significant    
estimates made by management, as well as evaluating the overall financial       
statement presentation. We believe that our audits provide a reasonable basis   
for our opinion.                                                                

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cogentrix Energy, Inc. and  
subsidiary companies as of December 31, 2000 and 1999 and the results of their  
operations and their cash flows for each of the three years in the period ended 
December 31, 2000, in conformity with accounting principles generally accepted  
in the United States.                                                           

 Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of      
financial statements is presented for purposes of complying with the Securities 
and Exchange Commission's rules and is not part of the basic financial          
statements. This schedule has been subjected to the auditing procedures applied 
in the audit of the basic financial statements and, in our opinion, fairly      
states in all material respects the financial data required to be set forth     
therein in relation to the basic financial statements taken as a whole.         

                       ARTHUR ANDERSEN LLP

Charlotte, North Carolina,                                                      
March 9, 2001 (except with respect                                              
to the matter discussed in the second                                           
paragraph of Note 15 as to which                                                
the date is March 30, 2001)                                                     

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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES 
CONSOLIDATED BALANCE SHEETS 
DECEMBER 31, 2000 AND 1999
(DOLLARS IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                   DECEMBER 31,       
                                                              ----------------------- 
                                                                 2000         1999    
                                                              ----------   ---------- 
                                                                                      
                                       ASSETS                                         
CURRENT ASSETS:                                                                       
  Cash and cash equivalents.................................  $  131,834   $   80,139 
  Restricted cash...........................................      10,269       28,361 
  Accounts receivable.......................................      68,460       59,099 
  Inventories...............................................      15,050       20,137 
  Net assets held for sale..................................      53,747           -- 
  Other current assets......................................       3,284        1,359 
                                                              ----------   ---------- 
          Total current assets..............................     282,644      189,095 
NET INVESTMENT IN LEASES....................................     499,774      500,195 
PROPERTY, PLANT AND EQUIPMENT, net of accumulated                                     
  depreciation of $301,825 and $262,963, respectively.......     399,832      437,483 
LAND AND IMPROVEMENTS.......................................       7,053        5,764 
CONSTRUCTION IN PROGRESS....................................     607,334       53,734 
DEFERRED FINANCING COSTS, net of accumulated amortization of                          
  $24,393 and $19,904, respectively.........................      63,823       41,216 
INVESTMENTS IN UNCONSOLIDATED AFFILIATES....................     346,794      325,504 
PROJECT DEVELOPMENT COSTS...................................       9,205        7,124 
OTHER ASSETS................................................      90,765       77,018 
                                                              ----------   ---------- 
                                                              $2,307,224   $1,637,133 
                                                              ==========   ========== 

                        LIABILITIES AND SHAREHOLDERS' EQUITY                          
CURRENT LIABILITIES:                                                                  
  Current portion of long-term debt.........................  $   69,483   $   90,114 
  Accounts payable..........................................      26,458       15,720 
  Accrued compensation......................................      10,104        8,415 
  Accrued interest payable..................................      10,336       10,363 
  Accrued dividends payable.................................      10,309        8,683 
  Other accrued liabilities.................................      89,422       16,626 
                                                              ----------   ---------- 
          Total current liabilities.........................     216,112      149,921 
LONG-TERM DEBT..............................................   1,726,915    1,192,773 
DEFERRED INCOME TAXES.......................................     105,915       72,980 
MINORITY INTERESTS..........................................      74,249       70,563 
OTHER LONG-TERM LIABILITIES.................................      21,355       29,445 
                                                              ----------   ---------- 
                                                               2,144,546    1,515,682 
                                                              ----------   ---------- 
COMMITMENTS AND CONTINGENCIES                                                         
SHAREHOLDERS' EQUITY:                                                                 
  Common stock, no par value, 300,000 shares authorized;                              
     282,000 shares issued and outstanding..................         130          130 
  Accumulated other comprehensive loss......................      (1,152)      (1,144)
  Accumulated earnings......................................     163,700      122,465 
                                                              ----------   ---------- 
                                                                 162,678      121,451 
                                                              ----------   ---------- 
                                                              $2,307,224   $1,637,133 
                                                              ==========   ========== 

The accompanying notes to consolidated financial statements 
are an integral part of these consolidated balance sheets.

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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES 
CONSOLIDATED STATEMENTS OF INCOME 
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998 
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE AND EARNINGS PER COMMON SHARE)

                                                        [Enlarge/Download Table]

                                                                 YEARS ENDED DECEMBER 31,    
                                                              ------------------------------ 
                                                                2000       1999       1998   
                                                              --------   --------   -------- 
                                                                                             
OPERATING REVENUES:                                                                          
  Electric..................................................  $332,751   $294,185   $293,083 
  Steam.....................................................    28,671     25,236     25,043 
  Lease.....................................................    44,759     44,697     34,715 
  Service...................................................    63,238     43,888     34,470 
  Income from unconsolidated investment in power projects,                                   
     net of premium amortization............................    43,987     25,464      6,474 
  Other.....................................................    37,689     14,093     14,908 
                                                              --------   --------   -------- 
                                                               551,095    447,563    408,693 
                                                              --------   --------   -------- 
OPERATING EXPENSES:                                                                          
  Fuel......................................................   114,540     81,835     78,420 
  Cost of service...........................................    63,403     45,933     36,039 
  Operations and maintenance................................    80,304     67,374     71,108 
  General, administrative and development expenses..........    42,286     39,014     36,490 
  Depreciation and amortization.............................    50,698     43,713     42,535 
                                                              --------   --------   -------- 
                                                               351,231    277,869    264,592 
                                                              --------   --------   -------- 
OPERATING INCOME............................................   199,864    169,694    144,101 
OTHER INCOME (EXPENSE):                                                                      
  Interest expense..........................................  (105,242)   (94,956)   (74,949)
  Investment income and other, net..........................     2,061     11,213      9,226 
  Equity in net loss of affiliates, net.....................        --       (208)    (3,274)
                                                              --------   --------   -------- 
INCOME BEFORE MINORITY INTERESTS IN INCOME, INCOME TAXES AND                                 
  EXTRAORDINARY LOSS........................................    96,683     85,743     75,104 
MINORITY INTERESTS IN INCOME................................   (12,461)   (14,752)   (12,458)
                                                              --------   --------   -------- 
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY LOSS...........    84,222     70,991     62,646 
PROVISION FOR INCOME TAXES..................................   (32,678)   (27,576)   (24,914)
                                                              --------   --------   -------- 
INCOME BEFORE EXTRAORDINARY LOSS............................    51,544     43,415     37,732 
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF DEBT, NET OF                                   
  INCOME TAX BENEFIT, AND MINORITY INTEREST.................        --         --       (743)
                                                              --------   --------   -------- 
NET INCOME..................................................  $ 51,544   $ 43,415   $ 36,989 
                                                              ========   ========   ======== 
EARNINGS PER COMMON SHARE:                                                                   
  Income before extraordinary loss..........................  $ 182.78   $ 153.95   $ 133.80 
  Extraordinary loss........................................        --         --      (2.63)
                                                              --------   --------   -------- 
  Net Income................................................  $ 182.78   $ 153.95   $ 131.17 
                                                              ========   ========   ======== 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING..................   282,000    282,000    282,000 
                                                              ========   ========   ======== 

The accompanying notes to consolidated financial statements 
are an integral part of these consolidated statements.

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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES 
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(DOLLARS IN THOUSANDS, EXCEPT FOR DIVIDENDS PER COMMON SHARE) 

                                                        [Enlarge/Download Table]

                                                                            ACCUMULATED             
                                                                               OTHER                
                                       COMMON  COMPREHENSIVE  ACCUMULATED  COMPREHENSIVE            
                                       STOCK      INCOME       EARNINGS    INCOME (LOSS)    TOTAL   
                                       ------  -------------  -----------  -------------  --------- 
                                                                                                    
Balance, December 31, 1997............  $130                   $ 58,142       $    26     $  58,298 
Comprehensive income                                                                                
  Net income..........................    --       36,989        36,989                             
  Other comprehensive loss, net of                                                                  
     tax:                                                                                           
     Realized gains included in net                                                                 
       income.........................                (26)                        (26)              
                                                  -------                                           
       Comprehensive income:..........            $36,963                                    36,963 
                                                  =======                                           
Common stock dividends ($26.23 per                                                                  
  common share).......................    --                     (7,398)           --        (7,398)
                                        ----                   --------       -------     --------- 
Balance, December 31, 1998............   130                     87,733            --        87,863 
Comprehensive income                                                                                
  Net income..........................    --       43,415        43,415                             
  Other comprehensive loss, net of                                                                  
     tax:                                                                                           
     Unrealized holding losses during                                                               
       year...........................             (1,144)                     (1,144)              
                                                  -------                                           
       Comprehensive income:..........            $42,271                                    42,271 
                                                  =======                                           
Common stock dividends ($30.79 per                                                                  
  common share).......................    --                     (8,683)                     (8,683)
                                        ----                   --------       -------     --------- 
Balance, December 31, 1999............   130                    122,465        (1,144)      121,451 
Comprehensive income                                                                                
  Net income..........................    --       51,544        51,544                             
  Other comprehensive loss, net of                                                                  
     tax:                                                                                           
     Unrealized holding losses during                                                               
       year...........................                 (8)                         (8)              
                                                  -------                     -------               
       Comprehensive income:..........            $51,536                                    51,536 
                                                  =======                                           
Common stock dividends ($36.56 per                                                                  
  common share).......................    --                    (10,309)                    (10,309)
                                        ----                   --------       -------     --------- 
Balance, December 31, 2000............  $130                   $163,700       $(1,152)    $ 162,678 
                                        ====                   ========       =======     ========= 

The accompanying notes to consolidated financial statements 
are an integral part of these consolidated statements.

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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998 
(DOLLARS IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                  YEAR ENDED DECEMBER 31,      
                                                             --------------------------------- 
                                                               2000        1999        1998    
                                                             ---------   ---------   --------- 
                                                                                               
CASH FLOWS FROM OPERATING ACTIVITIES:                                                          
     Net income............................................. $  51,544   $  43,415   $  36,989 
     Adjustments to reconcile net income to net cash                                           
       provided by operating activities:                                                       
       Depreciation and amortization........................    44,885      43,713      42,535 
       Deferred income taxes................................    31,474      23,933      14,182 
       Extraordinary loss on early extinguishment of debt...        --          --       2,172 
       Minority interest in income of joint venture, net of                                    
          dividends.........................................     3,665       8,462     (14,494)
       Gain on sale of investment in affiliate..............        --          --      (2,063)
       Equity in net income of unconsolidated affiliates....   (40,001)    (22,998)     (3,431)
       Dividends received from unconsolidated affiliates....    31,037      26,647      13,362 
       Minimum lease payments received......................    45,180      43,116      31,500 
       Amortization of unearned lease income................   (44,759)    (44,697)    (33,473)
       Decrease (increase) in accounts receivable...........    (9,361)      7,487      (7,278)
       Decrease (increase) in inventories...................     5,087      (1,440)     (1,029)
       Increase (decrease) in accounts payable..............    10,738      (9,791)     (4,212)
       Increase in accrued liabilities......................     3,933       6,087       5,179 
       Decrease (increase) in other, net....................    21,217     (15,920)     (5,425)
                                                             ---------   ---------   --------- 
     Net cash flows provided by operating activities........   154,639     108,014      74,514 
                                                             ---------   ---------   --------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                          
       Property, plant and equipment additions..............    (3,796)     (4,305)     (7,391)
       Construction in progress, project development costs                                     
          and turbines......................................  (528,840)    (60,697)         -- 
       Investments in unconsolidated affiliates.............    (1,675)    (76,827)   (180,292)
       Net additional investment in net assets held for                                        
          sale..............................................   (54,760)        782         231 
       Acquisition of facilities, net of cash acquired......        --          --    (155,324)
       Decrease in marketable securities....................        --          --      42,118 
       Decrease in restricted cash..........................    18,092      12,243      22,952 
                                                             ---------   ---------   --------- 
     Net cash flows used in investing activities............  (570,979)   (128,804)   (277,706)
                                                             ---------   ---------   --------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                          
       Proceeds from notes payable and long-term debt.......   643,864     191,340     384,104 
       Repayments of notes payable and long-term debt.......  (131,156)   (122,255)   (193,812)
       Increase in deferred financing costs.................   (35,990)     (8,965)     (8,586)
       Common stock dividends paid..........................    (8,683)     (7,398)     (2,140)
                                                             ---------   ---------   --------- 
     Net cash flows provided by financing activities........   468,035      52,722     179,566 
                                                             ---------   ---------   --------- 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........    51,695      31,932     (23,626)
CASH AND CASH EQUIVALENTS, beginning of year................    80,139      48,207      71,833 
                                                             ---------   ---------   --------- 
CASH AND CASH EQUIVALENTS, end of year...................... $ 131,834   $  80,139   $  48,207 
                                                             =========   =========   ========= 

The accompanying notes to consolidated financial statements 
are an integral part of these consolidated statements.

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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS                                                           

Cogentrix Energy, Inc. and subsidiary companies (collectively, the    
"Company") are principally engaged in the business of acquiring, developing,    
owning and operating independent power generating facilities (individually, a   
"Facility," or collectively, the "Facilities"). As of December 31, 2000, the    
Company owned or had interests in 25 Facilities in operation in the United      
States with an aggregate installed capacity of approximately 4,821 megawatts.   
After taking into account the partial interests in the 17 plants that are not   
wholly-owned by the Company, which range from 1.6% to 74.2%, the Company's net  
ownership interest in the total production capability of the 25 Facilities, in  
operation, is approximately 2,254 megawatts. Subsequent to December 31, 2000,   
the Company sold three Facilities with an aggregate installed capacity of 907   
megawatts and a net ownership interest of total production capability of        
approximately 500 megawatts (see Note 15). Electricity generated by each        
Facility is sold to one or two electric utilities or power marketers (the       
"Electric Customer") and steam produced by primarily all facilities is sold to  
an industrial company (the "Steam Purchaser"), all under long-term contractual  
agreements.                                                                     

As of December 31, 2000, the Company owned or had interests in four   
facilities under construction in Oklahoma, Idaho, Louisiana and the Dominican   
Republic with an expected aggregate production capability of 2,196 megawatts.   
After taking into account the part interest in two of these facilities, the     
Company's net ownership interest in the total expected production capability of 
these facilities under construction is approximately 1,959 megawatts. Subsequent
to December 31, 2000, the Company sold a partial interest in one of the four    
facilities under construction reducing its net ownership interest of the total  
production capability to 1,551 megawatts (see Note 15).                         

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                   

   Principles of Consolidation and Basis of Presentation -- The accompanying
consolidated financial statements include the accounts of Cogentrix Energy, Inc.
and its subsidiary companies. Wholly-owned and majority owned subsidiaries,     
including a 50% owned joint venture in which the Company has effective control  
through majority representation on the board of directors of the managing       
general partner, are consolidated. Less-than-majority-owned subsidiaries are    
accounted for using the equity method. Investments in unconsolidated affiliates 
in which the Company has less than a 20% interest and does not exercise         
significant influence over operating and financial policies are accounted for   
under the cost method. All material intercompany transactions and balances among
Cogentrix Energy, Inc., its subsidiary companies and its consolidated joint     
ventures have been eliminated in the accompanying consolidated financial        
statements.                                                                     

Cash and Cash Equivalents -- Cash and cash equivalents include bank   
deposits, commercial paper, government securities and certificates of deposit   
that mature within three months of their purchase. Amounts in debt service      
accounts which might otherwise be considered cash equivalents are treated as    
current restricted cash.                                                        

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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

   Inventories -- Coal inventories consist of the contract purchase price of
coal and all transportation costs incurred to deliver the coal to each Facility.
Gas inventories represent the cost of natural gas purchased as fuel reserves    
that are forecasted to be consumed during the next fiscal year. Spare parts     
inventories consist of major equipment and recurring maintenance supplies       
required to be maintained in order to facilitate routine maintenance activities 
and minimize unscheduled maintenance outages. As of December 31, 2000 and 1999, 
fuel and spare parts inventories are comprised of the following (dollars in     
thousands):                                                                     

                                                                [Download Table]

                                                                 DECEMBER 31,   
                                                              ------------------
                                                               2000       1999  
                                                              -------    -------
                                                                                
Coal........................................................  $ 5,152    $ 8,469
Natural gas.................................................    1,687      2,875
Fuel oil....................................................      917        655
Spare parts.................................................    7,294      8,138
                                                              -------    -------
                                                              $15,050    $20,137
                                                              =======    =======

   Coal inventories at certain Facilities are recorded at last-in, first-out
("LIFO") cost, with the remaining Facilities' coal inventories recorded at      
first-in, first-out ("FIFO") cost. The cost of coal inventories recorded on a   
LIFO basis was approximately $181,000 and $374,000 less than the cost of these  
inventories on a FIFO basis as of December 31, 2000 and 1999, respectively.     
Spare parts inventories are recorded at average cost.                           

    Property, Plant and Equipment -- Property, plant and equipment is recorded
at actual cost. Substantially all property, plant and equipment consists of     
cogeneration facilities which are depreciated on a straight-line basis over     
their estimated useful lives (ranging from 15 to 30 years). Other property and  
equipment is depreciated on a straight-line basis over the estimated economic or
service lives of the respective assets (ranging from 3 to 10 years). Maintenance
and repairs are charged to expense as incurred. Emergency and rotatable spare   
parts inventories are included in plant and are depreciated over the useful life
of the related components.                                                      

 Construction in Progress -- Construction progress payments, engineering
costs, insurance costs, wages, interest and other costs relating to construction
in progress are capitalized. Construction in progress balances are transferred  
to property, plant and equipment when the assets are ready for their intended   
use. Interest is capitalized on projects during the development and construction
period. For the years ended December 31, 2000 and 1999, the Company capitalized 
$26,632,000 and $1,812,000, respectively, of interest in connection with the    
development and construction of power plants. There was no interest capitalized 
in 1998.                                                                        

Deferred Financing Costs -- Financing costs, consisting primarily of  
commitment fees, legal and other direct costs incurred to obtain financing, are 
deferred and amortized over the expected financing term.                        

Investments in Unconsolidated Affiliates -- Investments in affiliates 
include investments in unconsolidated entities which own or derive revenues from
power projects currently in operation and investments in unconsolidated         
development joint venture entities. The Company's share of income or loss from  
investments in operating power projects is included in operating revenue in the 
accompanying consolidated statements of income. The Company's share of income or
loss from investments in development joint venture entities and investments     
previously held in entities which own and operate greenhouses, is included in   
other income (expense) in the accompanying consolidated statements of income.   

  Project Development Costs -- The Company capitalizes project development
costs once it is determined that it is probable that such costs will be realized
through the ultimate construction of a power plant. These costs include         
professional services, salaries, permits and other costs directly related to the
development of a new project. These costs are generally transferred to          
construction in progress when financing is obtained, or expensed when the       
Company determines that a particular project will no longer be developed.       
Capitalized costs are amortized over the estimated useful life of the project.  

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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

    Revenue Recognition -- Revenues from the sale of electricity and steam are
recorded based upon output delivered and capacity provided at rates specified   
under contract terms. Significant portions of the Company's revenues have been  
derived from certain electric utility customers. Two customers accounted for 43%
and 15% of revenues in the year ended December 31, 2000, 47% and 17% of revenues
in the year ended December 31, 1999 and 50% and 19% of revenues in the year     
ended December 31, 1998.                                                        

 Interest Rate Protection Agreements -- The Company enters into interest
rate protection agreements with major financial institutions to fix or limit the
volatility of interest rates on its long-term debt. The differential paid or    
received is recognized as an adjustment to interest expense. Any premiums       
associated with interest rate protection agreements are capitalized and         
amortized to interest expense over the effective term of the agreement.         
Unamortized premiums are included in other assets in the accompanying           
consolidated balance sheets.                                                    

   Income Taxes -- Deferred income tax assets and liabilities are recognized
for the estimated future income tax effects of temporary differences between the
tax bases of assets and liabilities and their reported amounts in the financial 
statements. Deferred tax assets are also established for the estimated future   
effect of net operating loss and tax credit carryforwards when it is more likely
than not that such assets will be realized. Deferred taxes are calculated based 
on provisions of the enacted tax law.                                           

   Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make       
estimates and assumptions that affect the reported amounts of assets and        
liabilities and disclosure of contingent assets and liabilities at the date of  
the financial statements and the reported amounts of revenues and expenses      
during the reporting period. Actual results could differ from those estimates.  

  Start-Up Activities -- Start-up activities, including initial activities
related to opening a new facility, initiating a new process in an existing      
facility and activities related to organizing a new entity (commonly referred to
as organization costs), are expensed as incurred.                               

 New Accounting Pronouncements -- In June 1998, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards     
("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging            
Activities." In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities, an amendment of SFAS No. 
133." SFAS No. 133, as amended, established accounting and reporting standards  
requiring that every derivative instrument (including certain derivative        
instruments embedded in other contracts) be recorded in the balance sheet as    
either an asset or liability measured at its fair value. SFAS No. 133 requires  
that changes in the derivative instrument's fair value be recognized currently  
in earnings unless specific hedge accounting criteria are met. Special          
accounting for qualifying hedges allows a derivative instrument's gains and     
losses to offset related results on the hedged item in the income statement, to 
the extent effective, and requires that a company must formally document,       
designate, and assess the effectiveness of transactions that receive hedge      
accounting.                                                                     

     In June 1999, the FASB issued Statement No. 137, "Accounting for Derivative
Instruments and Hedging Activities -- Deferral of the Effective Date of FASB    
Statement No. 133." SFAS No. 137 requires the adoption of SFAS No. 133, as      
amended, to be effective for fiscal years beginning after June 15, 2000.        
Cogentrix will adopt SFAS No. 133 on January 1, 2001.                           

The Company has identified all financial instruments that meet the    
definition of a derivative under SFAS No. 133, as amended. The Company has      
determined that certain interest rate protection agreements qualify for cash    
flow hedge treatment under SFAS No. 133. The Company identified various other   
financial instruments and contracts that did not meet the definition of a       
derivative under SFAS No. 133 or were excluded from the accounting treatment of 
SFAS No. 133 as a result of qualifying for the normal purchases                 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

and sales exception. The Company has determined that the adoption of SFAS No.   
133 will not have a material impact on the consolidated financial statements.   

Reclassifications -- Certain amounts included in the accompanying     
consolidated financial statements for the fiscal year ended December 31, 1999   
and 1998 have been reclassified from their original presentation to conform with
the presentation for the year ended December 31, 2000.                          

3. ACQUISITIONS                                                                 

   LS Power Acquisition -- In March 1998, the Company acquired from LS Power
Corporation an approximate 74% ownership interest in two partnerships (the "LS  
Power Acquisition") which own and operate electric generating facilities located
in Whitewater, Wisconsin (the "Whitewater Facility") and Cottage Grove,         
Minnesota (the "Cottage Grove Facility"). Each of the Cottage Grove and         
Whitewater facilities is a 245-megawatt, gas-fired, combined cycle cogeneration 
facility that sells capacity and energy under power sales contracts that expire 
in 2027 and 2022, respectively. Each of the power sales contracts has           
characteristics similar to a lease in that the agreement gives the purchasing   
utility the right to use specific property, plant and equipment. As such, each  
of the power sales contracts is accounted for as a "sales-type" capital lease in
accordance with SFAS No. 13, "Accounting for Leases" (see Note 8).              

     The aggregate purchase price, including acquisition costs, for the LS Power
Acquisition was approximately $158.0 million and was funded with a portion of   
the net proceeds of the Company's 2008 senior notes issued in 1998 (see Note 7) 
and corporate cash balances. The LS Power Acquisition has been accounted for    
using the purchase method of accounting. The purchase price has been allocated  
to the assets and liabilities acquired based on their fair market values at the 
date of consummation. An adjustment in the amount of $22.2 million was recorded 
to reflect the Company's portion of the excess of the fair value of the         
Partnerships' fixed rate debt over its historical carrying value. This fair     
value adjustment, or debt premium, will be amortized to income over the life of 
the debt acquired using the effective interest method. The historical book      
values of the remaining assets and liabilities approximated their fair values at
the date of consummation. The excess of the purchase price over the fair value  
of the net assets acquired was approximately $27.7 million. This excess is      
included in other assets on the accompanying balance sheets as of December 31,  
2000 and 1999, and is being amortized on a straight line basis over the lives of
the power purchase agreements for the two facilities. The accompanying          
consolidated statement of income for the year ended December 31, 1998 includes  
the results of operations of the acquired facilities since the acquisition date.

Batesville Acquisition -- In August 1998, the Company acquired an     
approximate 52% interest in an 837-megawatt, gas-fired electric generating      
facility (the "Batesville Facility") that was under construction in Batesville, 
Mississippi (the "Batesville Acquisition"). During 2000, the Company made an    
equity contribution to the project subsidiary of $54.0 million, which           
represented the original consideration for the Batesville Acquisition. The      
Batesville Facility commenced commercial operation in August 2000 and sells     
electricity under two separate power purchase agreements with an                
investment-grade utility and a power marketer that have initial terms of 13 and 
16 years, respectively.                                                         

  The Batesville acquisition was originally accounted for under the equity
method of accounting, as the Company originally deemed its approximate 52%      
interest to be temporary. As of December 31, 1999, the Company reassessed its   
ownership, and determined that it would maintain an approximate 51% interest in 
the project. As such, the Company consolidated the Batesville Facility in the   
accompanying consolidated financial statements beginning on December 31, 1999.  
The accompanying consolidated statements of income for the years ended December 
31, 1999 and 1998 recognized earnings from the Batesville facility under the    
equity method of accounting. Subsequent to December 31, 2000, the Company sold  
its entire interest in the Batesville facility (see Notes 6 and 15).            

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

  Bechtel Asset Acquisitions -- In October 1998, the Company acquired from
Bechtel Generating Company, Inc. ("BGCI") ownership interests in 12 electric    
generating facilities, comprising a net equity interest of approximately 365    
megawatts, and one interstate natural gas pipeline in the United States (the    
"BGCI Acquisition"). The aggregate acquisition price, including acquisition     
costs, was approximately $189.7 million. The Company utilized a portion of the  
net proceeds from the 1998 issuance of the 2008 senior notes to fund the BGCI   
Acquisition (see Note 7).                                                       

    The BGCI Acquisition resulted in the recognition of a net purchase premium
of approximately $66.5 million. The purchase premiums and discounts related to  
the BGCI Acquisition are being amortized over the remaining lives of the        
facilities or over the remaining terms of the power purchase agreements. The    
Company uses the equity method of accounting to account for its ownership       
interests in nine of these facilities and uses the cost method of accounting for
its ownership interests in the other three facilities (see Note 4).             

    During 1999, the Company purchased an additional 40% ownership interest in
the Indiantown facility, one of the twelve electric generating facilities       
included in the BGCI Acquisition. The aggregate purchase price was approximately
$76.6 million and was acquired in a three-phase transaction. The purchase       
resulted in a premium of approximately $38.0 million and is being amortized over
the remaining term of the power purchase agreement. The Company currently has a 
50% interest in the Indiantown facility and the investment is accounted for     
using the equity method of accounting.                                          

     During 2000, the Company purchased additional 1% interests in the Logan and
Northampton facilities, two of the twelve electric generating facilities        
included in the BGCI Acquisition. The Company paid approximately $1.7 million   
for these additional interests. The Company will continue to account for its 50%
interest in the Logan and Northampton facilities using the equity method.       

    The following unaudited pro forma consolidated results for the Company for
the years ended December 31, 1999 and 1998 give effect to the LS Power          
Acquisition and the BGCI Acquisitions as if these transactions had occurred on  
January 1, 1999 and January 1, 1998, respectively (dollars in thousands, except 
per share amount).                                                              

                                                        [Enlarge/Download Table]

                                                                PRO FORMA FOR THE    
                                                             YEAR ENDED DECEMBER 31, 
                                                             ------------------------
                                                                1999          1998   
                                                             ----------    ----------
                                                                                     
Revenues....................................................  $452,891      $453,566 
Net Income..................................................    43,942        37,336 
Earnings per Share..........................................    155.82        132.40 

4. INVESTMENTS IN UNCONSOLIDATED POWER PROJECTS                                 

Birchwood Power Partners, L.P.                                                

The Company owns a 50% interest in Birchwood Power Partners, L.P.     
("Birchwood Power"), a partnership which owns a 220-megawatt, coal-fired        
cogeneration facility (the "Birchwood Facility") which sells electricity to a   
utility and provides thermal energy to a 36-acre greenhouse under long-term     
contracts. The Birchwood Facility is operated by a subsidiary of The Southern   
Company under a long-term operations and maintenance agreement. The Company has 
50% representation on Birchwood Power's management committee, which must approve
all material transactions of Birchwood Power. The Company is accounting for its 
investment in Birchwood Power under the equity method. The Company's share of   
net income of Birchwood Power is recorded net of the amortization of the $36.4  
million premium paid to purchase the Company's 50% share interest in Birchwood  
Power. This premium is being amortized on a straight-line basis over the        
estimated useful life of the Birchwood Facility. The Company recognized         
approximately $5,297,000, $3,509,000 and $3,714,000 in income from              
unconsolidated investments in power projects, net of premium                    

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

amortization, in the accompanying consolidated statements of income for the     
years ended December 31, 2000, 1999 and 1998, respectively, related to its      
investment in Birchwood Power. The following table presents summarized financial
information for Birchwood Power for the dates indicated (dollars in thousands): 

                                                                [Download Table]

                                                           DECEMBER 31,      
                                                        -------------------  
                                                          2000       1999    
                                                        --------   --------  
                                                                             
BALANCE SHEET DATA:                                                          
  Current assets....................................... $ 50,793   $ 48,805  
  Noncurrent assets....................................  324,201    333,318  
                                                        --------   --------  
          Total assets................................. $374,994   $382,123  
                                                        ========   ========  
  Current liabilities.................................. $ 11,823   $  9,882  
  Noncurrent liabilities...............................  316,543    323,598  
  Partners' capital....................................   46,628     48,643  
                                                        --------   --------  
                                                        $374,994   $382,123  
                                                        ========   ========  

                                                        [Enlarge/Download Table]

                                                         FOR THE YEAR ENDED DECEMBER 31, 
                                                        ---------------------------------
                                                          2000        1999        1998   
                                                        ---------   ---------   ---------
                                                                                         
INCOME STATEMENT DATA:                                                                   
  Operating revenues................................... $ 83,472    $ 75,582    $ 71,908 
  Operating income.....................................   40,864      36,399      36,863 
  Net income...........................................   13,873       9,740       9,747 

BGCI Assets                                                                   

The Company recognized approximately $38,690,000, $21,954,000 and     
$2,760,000 in income from unconsolidated investments in power projects in the   
accompanying consolidated statements of income for the years ended December 31, 
2000 and 1999 and for the period from October 20, 1998 to December 31, 1998,    
respectively, related to its investment in the BGCI assets. Approximately       
$34,704,000, $19,488,000 and $2,760,000 of these respective amounts relates to  
the nine power projects accounted for under the equity method. The following    
table presents the Company's ownership interests at December 31, 2000 in the    
BGCI assets that are accounted for under the equity method:                     

                                                        [Enlarge/Download Table]

                                                                              NET EQUITY
                                                                    PERCENT    INTEREST 
                                                          PLANT    OWNERSHIP   IN PLANT 
PROJECT                                                 MEGAWATTS  INTEREST   MEGAWATTS 
-------                                                 ---------  ---------  ----------
                                                                                        
Indiantown.............................................    380       50.0%      190.0   
Logan..................................................    218       50.0       109.0   
Northampton............................................    110       50.0        55.0   
Cedar Bay..............................................    260       16.0        41.6   
Carneys Point..........................................    262       10.0        26.2   
Scrubgrass.............................................     85       20.0        17.0   
Gilberton..............................................     82       19.6        16.1   
Panther Creek..........................................     83       12.2        10.1   
Morgantown.............................................     62       15.0         9.3   

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

The following table presents summarized combined financial data of the
above BGCI projects accounted for under the equity method for the dates         
indicated (dollars in thousands):                                               

                                                                [Download Table]

                                                                  DECEMBER 31,      
                                                             -----------------------
                                                                2000         1999   
                                                             ----------   ----------
                                                                                    
BALANCE SHEET DATA:                                                                 
  Current assets............................................ $  167,679   $  157,396
  Noncurrent assets.........................................  2,909,379    2,988,277
                                                             ----------   ----------
     Total assets........................................... $3,077,058   $3,145,673
                                                             ==========   ==========
  Current liabilities....................................... $  242,770   $  205,667
  Noncurrent liabilities....................................  2,394,207    2,523,826
  Partners' capital.........................................    440,081      416,180
                                                             ----------   ----------
                                                             $3,077,058   $3,145,673
                                                             ==========   ==========

                                                        [Enlarge/Download Table]

                                                  FOR THE YEAR ENDED                      
                                                     DECEMBER 31,        FOR THE PERIOD   
                                                  -------------------  OCTOBER 20, 1998 TO
                                                    2000       1999     DECEMBER 31, 1998 
                                                  --------   --------  -------------------
                                                                                          
INCOME STATEMENT DATA:                                                                    
  Operating revenues............................. $706,002   $624,010        $96,622      
  Operating income...............................  325,303    258,581         51,948      
  Net income.....................................   95,568     56,818         15,071      

5. INVESTMENTS IN OTHER UNCONSOLIDATED AFFILIATES                               

The Company made investments in other joint venture partnerships whose
purpose is to develop power projects. The Company utilizes the equity method of 
accounting for those partnerships in which it holds an ownership interest       
between 20% and 50%. The Company recognized approximately $208,000 and $307,000 
in equity losses for the years ended December 31, 1999 and 1998, respectively,  
related to its investments in these partnerships. These losses are reflected in 
equity in net loss of affiliates in the accompanying consolidated statements of 
income. The Company did not recognize any income related to investments in other
joint venture partnerships for the year ended December 31, 2000.                

   The Company entered into an agreement to make investments in partnerships
which develop, construct and operate greenhouses which produce tomatoes. Through
December 1998, the Company owned a 50% interest in four limited partnerships    
which had a combined 107 acres of production capacity in operation. While the   
Company owned this interest in the greenhouse partnerships, the Company         
accounted for its investment in these partnerships under the equity method, and 
recognized approximately $2,967,000 in equity in net loss of affiliates in the  
accompanying consolidated statements of income for the year ended December 31,  
1998. In December 1998, the Company sold its 50% interest in the partnerships to
EcoScience Corporation ("EcoScience"). In return for its 50% interest, the      
Company received 1,000,000 shares of common stock of EcoScience and a note      
receivable. As of December 31, 2000, the Company's note receivable from         
EcoScience totaled approximately $15,487,000. The Company has established an    
allowance for credit losses related to the entire balance of the EcoScience note
receivable.                                                                     

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

6. NET ASSETS HELD FOR SALE                                                     

    During 2000, management formalized plans to dispose of its interest in the
Batesville facility. The assets and liabilities of this facility are included in
net assets held for sale and are summarized as follows:                         

                                                                [Download Table]

                                                                 DECEMBER 31,      
                                                             --------------------- 
                                                               2000        1999    
                                                             ---------   --------- 
                                                                                   
Cash and cash equivalents................................... $   7,083   $     205 
Restricted cash.............................................    28,578      53,286 
Other current assets........................................     8,627       1,154 
Property and equipment, net.................................   335,056     296,509 
Deferred financing charges, net.............................     9,849      10,099 
Other long-term assets......................................     8,483          -- 
Current liabilities.........................................   (17,929)    (36,266)
Long-term debt..............................................  (326,000)   (326,000)
                                                             ---------   --------- 
          Total net assets (liabilities) held for sale...... $  53,747   $  (1,013)
                                                             =========   ========= 

   Subsequent to December 31, 2000, the Company sold the Batesville facility
(see Note 15) and the net assets held for sale are recorded in current assets in
the accompanying consolidated balance sheet at December 31, 2000. These net     
liabilities held for sale at December 31, 1999 are included in other accrued    
liabilities in the accompanying consolidated balance sheet.                     

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

7. LONG-TERM DEBT                                                               

  The following long-term debt was outstanding as of December 31, 2000 and
1999, respectively (dollars in thousands):                                      

                                                        [Enlarge/Download Table]

                                                                   DECEMBER 31,       
                                                              ----------------------- 
                                                                 2000         1999    
                                                              ----------   ---------- 
                                                                                      
PROJECT FINANCING DEBT:                                                               
  HOPEWELL FACILITY:                                                                  
     Note payable to banks..................................  $   34,000   $   51,000 
  PORTSMOUTH FACILITY:                                                                
     Revolving credit facility with banks...................      20,889       41,649 
  ROCKY MOUNT FACILITY:                                                               
     Note payable to financial institution..................     116,291      120,182 
  RICHMOND FACILITY:                                                                  
     Notes payable and tax-exempt bonds.....................     181,193      171,848 
  COTTAGE GROVE AND WHITEWATER FACILITIES:                                            
     Bonds payable, due 2010 and 2016, including unamortized                          
       fair market value adjustment related to purchase of                            
       facilities of $19,359 and $20,386....................     349,037      352,386 
  JENKS FACILITY:                                                                     
     Note payable to banks..................................     226,389       70,531 
  RATHDRUM FACILITY:                                                                  
     Notes payable to banks and financial institutions......      91,585           -- 
  DOMINICAN REPUBLIC FACILITY:                                                        
     Notes payable to banks and financial institutions......     116,621           -- 
  OUACHITA FACILITY:                                                                  
     Notes payable to banks.................................     154,618           -- 
  RINGGOLD FACILITY:                                                                  
     Note payable to banks..................................          --       10,995 
  ELIZABETHTOWN, LUMBERTON AND KENANSVILLE FACILITIES:                                
     Notes payable to banks.................................          --        6,824 
  ROXBORO AND SOUTHPORT FACILITIES:                                                   
     Note payable to banks..................................          --       52,608 
  CEA CREDIT FACILITY.......................................      66,400       66,400 
  OTHER.....................................................         787          960 
                                                              ----------   ---------- 
          Total project financing debt......................   1,357,810      945,383 
SENIOR NOTES (including net unamortized gain (loss) on hedge                          
  transactions of $(16,458) and $(18,246), respectively and                           
  net bond issuance premium of $46 and $750,                                          
  respectively).............................................     438,588      337,504 
                                                              ----------   ---------- 
Total long-term debt........................................   1,796,398    1,282,887 
Less: Current portion.......................................     (69,483)     (90,114)
                                                              ----------   ---------- 
Long-term portion...........................................  $1,726,915   $1,192,773 
                                                              ==========   ========== 

Information related to each of these borrowings is as follows:        

HOPEWELL FACILITY:                                                              

     The Hopewell Facility's project debt agreement was amended in February 1998
resulting in an extension of the final maturity of the note payable by six      
months to December 31, 2002. The amended terms of the loan                      

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agreement increased outstanding borrowings by $34.6 million, the proceeds of    
which (net of transaction costs) were paid as a distribution to the partners in 
that project. The amended note payable accrues interest at an annual rate equal 
to the applicable LIBOR rate, as chosen by the Company, plus an additional      
margin of 1.00% (7.68% at December 31, 2000). The amended note payable also     
provides for a $5.0 million letter of credit to secure the project's obligation 
to pay debt service. Cogentrix Energy, Inc. ("Cogentrix Energy") has indemnified
the lenders of the note payable for any cash deficits the Hopewell Facility     
could experience as a result of incurring certain costs, subject to a cap of    
$10.6 million.                                                                  

  An extraordinary loss of $2,432,000 was recorded in the first quarter of
1998 related to the write-off of unamortized deferred financing costs from the  
original project debt and a swap termination fee on an interest rate swap       
agreement hedging the original project debt. The Company's share of this        
extraordinary loss of approximately $743,000, net of a tax benefit of           
approximately $473,000 and minority interest of $1,216,000, is shown in the     
accompanying consolidated statements of income.                                 

PORTSMOUTH FACILITY:                                                            

     The Portsmouth Facility's project debt consists of a credit facility with a
bank with available borrowings up to $42,840,000. As of December 31, 2000, the  
balance outstanding under the credit facility was approximately $20,889,000. The
banks' outstanding credit commitment under the loan agreement is reduced        
quarterly through December 2002. Interest on the revolving credit facility      
accrues at an annual rate equal to the applicable LIBOR rate, as chosen by the  
Company, plus an additional margin of 1.0% (7.68% at December 31, 2000) and is  
payable the earlier of the applicable LIBOR term or quarterly. The loan         
agreement also provides for a $6.0 million letter of credit to secure the       
project's obligations to pay debt service. Cogentrix Energy has indemnified the 
lenders of the senior credit facility for any cash deficits the Portsmouth      
Facility could experience as a result of incurring certain costs, subject to a  
cap of $30.0 million. As of December 31, 1999, the credit facility also included
a term loan. The entire balance of the term loan was repaid during 2000.        

ROCKY MOUNT FACILITY:                                                           

     The note payable to financial institution consists of a $116,291,000 senior
loan which accrues interest at a fixed annual rate of 7.58%. Payment of         
principal and interest is due quarterly through December 2013.                  

RICHMOND FACILITY:                                                              

     The Richmond Facility's project debt includes $133,193,000 of notes payable
and $48,000,000 tax-exempt industrial development bonds (the "Bonds"). The notes
payable and Bonds are part of a credit facility with a syndicate of banks that  
was amended during June 2000. The amended terms of the credit facility increased
outstanding borrowings by $25,181,000 and extended the final maturity of the    
notes payable by five months to December 31, 2007. Interest on the notes payable
accrues at an annual rate equal to the applicable LIBOR rate, as chosen by the  
Company, plus 1.13% through June 2003, 1.25% through June 2007, and 1.38%       
thereafter. Principal payments on the notes payable are due quarterly with      
interest payable the earlier of maturity of the applicable LIBOR term or        
quarterly through December 2007.                                                

 The Bonds have been issued to support the purchase of certain pollution
control and solid waste disposal equipment for the Facility. Principal and      
interest payments on the Bonds are supported by an irrevocable, direct-pay      
letter of credit provided under the Loan Agreement. The amended credit facility 
extended the irrevocable, direct-pay letter of credit through March 2010. The   
annual interest rate is the yield on the Bonds plus a 1.25% to 1.50% per annum  
fee (7.76% at December 31, 2000).                                               

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COTTAGE GROVE AND WHITEWATER FACILITIES:                                        

The project debt, excluding the fair market value adjustment, of the  
Cottage Grove and Whitewater Facilities consist of the following senior secured 
bonds as of December 31, 2000 (dollars in thousands):                           

                                                                [Download Table]
                                                                      
7.19% Senior Secured Bonds due June 30, 2010................  $103,229
8.08% Senior Secured Bonds due December 30, 2016............   226,449
                                                              --------
                                                              $329,678
                                                              ========

   Interest and principal is payable on these bonds semi-annually on June 30
and December 30 of each year. Principal payments commenced on June 30, 2000 for 
the 2010 Bonds and will commence on December 30, 2010 for the 2016 Bonds.       

   In December 1998, Cogentrix Mid-America, Inc., a wholly-owned subsidiary,
which holds the Company's interest in the Cottage Grove and Whitewater          
Facilities, entered into a credit agreement with a bank to provide for a $25.0  
million revolving credit facility available in a form of the issuance of letters
of credit to support the debt reserve requirements for the 2010 and 2016 Bonds  
which vary from $12.9 million to $28.1 million over the term of the bonds. The  
credit agreement also provides for direct advances up to the amount of any      
excess of the $25.0 million commitment over the then debt service reserve       
requirement. As of December 31, 2000, letters of credit totaling $14.5 million  
were issued and outstanding under the credit agreement.                         

JENKS FACILITY:                                                                 

   The loan agreement for the Jenks facility consists of a note payable with
available borrowings up to $350.0 million. Proceeds of the borrowings           
($226,389,000 as of December 31, 2000) are being used to construct an           
800-megawatt, combined cycle, natural gas-fired generating facility.            
Construction on the facility began in December 1999. The loan will convert to a 
term loan, due December 2006, upon commencement of commercial operations. The   
loan agreement provides for interest to accrue at an annual rate equal to the   
applicable LIBOR rate, as chosen by the Company plus 1.25% to 1.50% per annum   
(7.90% at December 31, 2000). The loan facility also provides for an $8.0       
million letter of credit to secure the project's obligation to pay debt service 
and a $28.5 million letter of credit to secure the facility's obligations under 
its conversion services agreement. This equity commitment is supported by a     
letter of credit, which is provided under Cogentrix Energy's corporate credit   
facility.                                                                       

In accordance with the terms of the project financing agreements, the 
Company is committed to provide an equity contribution to the project subsidiary
of approximately $48.7 million upon the earliest to occur of (a) an event of    
default under the project subsidiary's loan agreement, (b) the incurrence of    
construction costs after the loan has been expended or (c) June 24, 2002.       

RATHDRUM FACILITY:                                                              

     The loan agreement for the Rathdrum facility consists of a credit agreement
with a bank, as agent for a group of lending banks, and a financial institution,
which provides up to $126.0 million in borrowings and a $5.0 million debt       
service reserve letter of credit. Proceeds from the borrowings ($91,585,000 as  
of December 31, 2000) are being used to construct an approximate 270-megawatt,  
combined-cycle, natural gas-fired generating facility located in Rathdrum, Idaho
(the "Rathdrum Facility"). Construction on the facility began in March 2000. The
credit agreement provides borrowings up to $49.0 million from the financial     
institution and $77.0 million from the banks. The financial institution loans   
accrue interest at 8.56% per annum and have a term equal to the construction    
period plus 25 years and the bank loans accrue interest at the applicable LIBOR 
rate plus an applicable margin ranging from 1.25% to 2.25% (7.89% at December   
31, 2000) and will have a term equal to the construction period plus periods up 
to 18 years.                                                                    

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

In accordance with the terms of the project financing agreements, the 
Company has committed to provide an equity contribution to the project          
subsidiary of approximately $16.7 million upon the earliest to occur of (a) an  
event of default under the project subsidiary's loan agreement, (b) the         
incurrence of construction costs after the loans have been expended, or (c)     
October 1, 2002. This equity contribution commitment is supported by a letter of
credit, which is provided under Cogentrix Energy's corporate credit facility.   

DOMINICAN REPUBLIC FACILITY:                                                    

     The loan agreement for the Dominican Republic facility consists of a credit
facility with a group of lending banks and financial institutions which provide 
borrowings up to $232.5 million. Proceeds from the borrowings ($116,621,000 as  
of December 31, 2000) are being used to construct an approximate 300-megawatt,  
combined cycle oil-fired, electric generating facility located in the province  
of San Pedro de Macoris, Dominican Republic. Construction on the facility began 
in April 2000. The loans will be provided under the following facilities: a     
$72.0 million bank loan, accruing interest per annum at the applicable LIBOR    
rate plus an applicable margin ranging from 1.75% to 2.75% during the 12-year   
loan life, $83.3 million of fixed rate loans, guaranteed by certain export      
credit agencies, accruing interest per annum at fixed rates ranging from 7.71%  
to 7.78% during the 14-year loan lives, a $12.2 million unguaranteed loan       
accruing interest per annum at either a fixed rate or LIBOR rate plus an        
applicable margin, as chosen by the Company, during the 8-year life and a $65.0 
million institutional loan accruing interest at the 10-year U.S. Treasury rate  
plus 4% during the 17-year loan life.                                           

    The Company has committed to provide an equity contribution to the project
subsidiary of approximately $50.3 million upon the earliest to occur of (a) an  
event of default under the project subsidiary's loan agreement, (b) the         
incurrence of construction costs after the loans have been expended or (c)      
February 2003. This equity contribution is supported by a letter of credit,     
which is provided under Cogentrix Energy's corporate credit facility.           

OUACHITA FACILITY:                                                              

 The construction loan agreement for the Ouachita facility consists of a
credit agreement with a bank, as agent for several banks and other financial    
institutions, which provides up to $460.0 million in borrowings, a credit       
support letter of credit in the maximum amount of $30.0 million, and a $10.0    
million debt service reserve letter of credit. The proceeds of the borrowing    
($154,618,000 as of December 31, 2000) are being used to construct an           
approximate 816-megawatt, combined-cycle, natural gas-fired electric generating 
facility located near the city of Sterlington, Louisiana (the "Ouachita         
Facility"). Construction on the facility began in August 2000. The borrowings   
under the credit agreement accrue interest per annum at an annual rate equal to 
the applicable LIBOR rate plus 1.25% during the construction period. The        
construction loans convert to term loans on the earliest to occur of (a) the    
commencement of commercial operations, or (b) June 1, 2002. The term loans      
accrue interest per annum at an annual rate equal to the applicable LIBOR rate  
plus 1.30% to 1.63%. The term loans mature 5 years after the commencement of    
commercial operations.                                                          

    The Company had committed to provide an equity contribution to the project
subsidiary of approximately $61.6 million which was supported by a letter of    
credit provided under Cogentrix Energy's corporate credit facility. Subsequent  
to December 31, 2000, the Company sold a 50% interest in the Ouachita Facility  
for approximately $48.3 million and was relieved of its commitment to provide   
all but $5.3 million of the original equity commitment (see Note 15).           

RINGGOLD FACILITY:                                                              

The Company retired the entire amount of the Ringgold facility's      
outstanding debt with a portion of the proceeds received from the sale of the   
Ringgold facility's power purchase agreement during September 2000.             
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

The sale was the result of a request for proposals from the utility to buy-back 
or restructure power sales agreements issued to all major operating independent 
power producers in Pennsylvania Electric Company's territory in April 1997. The 
Ringgold facility received approximately $18.0 million as consideration for this
sale and recorded other operating income of approximately $13.3 million, net of 
transaction costs, related to this termination.                                 

ROXBORO AND SOUTHPORT FACILITIES:                                               

 The project debt agreement for the Roxboro and Southport facilities was
repaid in full with a portion of the proceeds from the Company's issuance of    
2008 Senior Notes during September 2000 (see below).                            

CEA CREDIT FACILITY:                                                            

In September 1999, one of the Company's wholly-owned subsidiaries,    
Cogentrix Eastern America, Inc., formed to hold the Company's ownership interest
for the BGCI Acquisitions, entered into a $75.0 million, three-year credit      
facility. The commitment under this facility was reduced to $67.5 million in    
September 2000 and will reduce to $60.0 million in September 2001. As of        
December 31, 2000, advances totaling $66.4 million were outstanding under this  
facility. The credit facility accrues interest at an annual rate equal to the   
applicable LIBOR plus 1.50%.                                                    

INTEREST RATE PROTECTION AGREEMENTS:                                            

The Company has entered into interest rate cap and interest rate swap 
agreements (see Note 13) to manage its interest rate risk on its variable-rate  
project financing debt. The notional amounts of debt covered by these agreements
as of December 31, 2000 and 1999 were approximately $125,968,000 and            
$263,279,000, respectively. The agreements effectively change the interest rate 
on the portion of debt covered by the notional amounts from a weighted average  
variable rate of 7.88% at December 31, 2000 to a weighted average effective rate
of 7.28%. These agreements expire at various dates through July 2006.           

SENIOR NOTES:                                                                   

On March 15, 1994, Cogentrix Energy, Inc. issued $100 million of      
registered, unsecured senior notes due 2004 (the "2004 Notes") in a public debt 
offering. The 2004 Notes were priced at par to yield 8.10%. In February 1994,   
Cogentrix Energy, Inc. entered into a forward sale of ten-year U.S. Treasury    
Notes in order to protect against a possible increase in the general level of   
interest rates prior to the completion of the 2004 Notes offering. This hedge   
transaction resulted in the recognition of a gain which has been deferred and   
included as part of the 2004 Notes on the accompanying consolidated balance     
sheets. This deferred gain will be recognized over the term of the 2004 Notes,  
reducing the effective rate of interest on the 2004 Notes to 7.50%. The 2004    
Notes require annual sinking fund payments beginning in March 2001. The impact  
of the sinking fund requirements has been reflected in the schedule of future   
maturities of long-term debt contained herein.                                  

On October 20, 1998, Cogentrix Energy, Inc. issued $220 million of    
registered, unsecured 8.75% senior notes due 2008 (the "2008 Notes"). These     
notes were issued at a discount resulting in an effective interest rate of      
approximately 8.82%. On November 25, 1998, the Company issued an additional $35 
million of the 2008 Notes at a premium. In March 1998, in anticipation of the   
offering of the 2008 Notes, the Company entered into an interest rate hedge     
agreement to protect against a possible increase in the general level of        
interest rates. The settlement costs of approximately $22.1 million related to  
this hedge agreement were deferred and are recognized over the term of the 2008 
Notes, resulting in an overall effective interest rate of approximately 9.59%.  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

    In September 2000, Cogentrix Energy issued an additional $100.0 million of
its 2008 Notes. These notes were issued at a discount resulting in an effective 
rate of approximately 8.86%.                                                    

CORPORATE CREDIT FACILITY:                                                      

   The Company executed the third amended and restated credit agreement with
Australia and New Zealand Banking Group Limited, as agent for a group of lending
banks, during September 2000 (the "Corporate Credit Facility"). The Corporate   
Credit Facility provides up to $250.0 million of revolving credit through       
October 2003 in the form of direct advances or the issuance of letters of       
credit. Borrowings bear interest at LIBOR plus an applicable margin based on the
credit rating on Cogentrix Energy's 2004 and 2008 Notes. Commitment fees related
to the Corporate Credit Facility are currently 37.5 basis points per annum, when
greater than 50% of the available commitments are utilized and 50 basis points  
per annum when less than 50% of the available commitments are utilized, payable 
each quarter on the outstanding unused portion of the Corporate Credit Facility.
As of December 31, 2000, the Company has used this credit facility to issue     
approximately $183.8 million of letters of credit in connection with investments
made in electric-generating plants, and four plants under construction (see Note
15).                                                                            

     The project financing debt is substantially non-recourse to the Company (as
parent). The project financing agreements of the Company's subsidiaries, the    
indentures for the 2004 and 2008 Senior Notes and the Corporate Credit Facility 
agreement contain certain covenants which, among other things, place limitations
on the payment of dividends, limit additional indebtedness, and restrict the    
sale of assets. The project financing agreements also require certain cash to be
held with a trustee as security for future debt service payments. In addition,  
the Facilities, as well as the long-term contracts which support them, are      
pledged as collateral for the Company's obligations under the project financing 
agreements.                                                                     

   The ability of the Company's subsidiaries to pay dividends and management
fees periodically to the Company (as parent) is subject to certain limitations  
in their respective financing documents. Such limitations generally require     
that: (i) debt service payments be current, (ii) debt service coverage ratios be
met, (iii) all debt service and other reserve accounts be funded at required    
levels, and (iv) there be no default or event of default under the relevant     
credit documents. Dividends, when permitted, are declared and paid immediately  
to the Company at the end of such period.                                       

     The Company's ability to pay dividends to its shareholders is restricted by
certain covenants of the Indentures for the 2004 and 2008 Senior Notes and the  
Corporate Credit Facility agreement. These covenants did not restrict the       
Company's ability to declare dividends of $10.3 million and $8.7 million to the 
Company's shareholders for the years ended December 31, 2000 and 1999,          
respectively.                                                                   

     Future maturities of long-term debt at December 31, 2000, excluding the net
unamortized premium on senior notes, the unamortized balance of the deferred    
gains and losses on hedge transactions and the unamortized fair market value    
adjustments are as follows (dollars in thousands):                              

                                                                [Download Table]

YEAR ENDED                                                           
DECEMBER 31,                                                         
------------                                                         
                                                                     
2001.....................................................  $   69,483
2002.....................................................     144,709
2003.....................................................      49,975
2004.....................................................      75,710
2005.....................................................      42,350
Thereafter...............................................   1,411,224
                                                           ----------
                                                           $1,793,451
                                                           ==========

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

Cash paid for interest on the Company's long-term debt amounted to    
$113,608,000, $92,228,000 and $76,358,000 for the years ended December 31, 2000,
1999 and 1998, respectively.                                                    

8. SALES TYPE CAPITAL LEASE                                                     

     The power purchase agreements acquired by the Company as a result of the LS
Power Acquisition have characteristics similar to leases in that the agreements 
confer to the purchasing utility the right to use specific property, plant and  
equipment. At the commercial operations date, the partnerships accounted for the
power purchase agreements as "sales-type" capital leases in accordance with SFAS
No. 13, "Accounting for Leases".                                                

    The components of the net investment in the leases are as follows (dollars
in thousands):                                                                  

                                                        [Enlarge/Download Table]

                                                                  DECEMBER 31,       
                                                             ----------------------- 
                                                                2000         1999    
                                                             ----------   ---------- 
                                                                                     
Gross Investment in Leases.................................. $1,052,607   $1,097,787 
Unearned Income on Leases...................................   (552,833)    (597,592)
                                                             ----------   ---------- 
Net Investment in Leases.................................... $  499,774   $  500,195 
                                                             ==========   ========== 

  Gross investment in leases represents total capacity payments receivable
over the terms of the power purchase agreements, net of executory costs, which  
are considered minimum lease payments in accordance with SFAS No. 13.           

Estimated minimum lease payments over the remaining term of the power 
purchase agreements as of December 31, 2000 are as follows (dollars in          
thousands):                                                                     

                                                                [Download Table]
                                                                     
2001.....................................................  $   45,187
2002.....................................................      47,253
2003.....................................................      49,052
2004.....................................................      50,957
2005.....................................................      51,326
Thereafter...............................................     808,832
                                                           ----------
                                                           $1,052,607
                                                           ==========

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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

9. INCOME TAXES                                                                 

   The provision (benefit) for income taxes for the years ended December 31,
2000, 1999 and 1998, consists of the following (dollars in thousands):          

                                                        [Enlarge/Download Table]

                                                       FOR THE YEARS ENDED DECEMBER 31,
                                                       --------------------------------
                                                         2000        1999        1998  
                                                       --------    --------    --------
                                                                                       
Current:                                                                               
  Federal............................................. $(1,673)    $   980     $ 6,561 
  State...............................................   2,877       2,663       3,698 
                                                       -------     -------     ------- 
                                                         1,204       3,643      10,259 
                                                       -------     -------     ------- 
Deferred:                                                                              
  Federal.............................................  31,830      22,402      13,565 
  State...............................................    (356)      1,531         617 
                                                       -------     -------     ------- 
                                                        31,474      23,933      14,182 
                                                       -------     -------     ------- 
                                                       $32,678     $27,576     $24,441 
                                                       =======     =======     ======= 
Statements of Income Captions                                                          
  Tax effect of extraordinary loss.................... $    --     $    --     $  (473)
  Provision for income taxes..........................  32,678      27,576      24,914 
                                                       -------     -------     ------- 
                                                       $32,678     $27,576     $24,441 
                                                       =======     =======     ======= 

Reconciliations between the federal statutory income tax rate and the 
Company's effective income tax rate are as follows:                             

                                                                [Download Table]

                                                              FOR THE YEARS ENDED   
                                                                  DECEMBER 31,      
                                                             ---------------------- 
                                                             2000     1999     1998 
                                                             ----     ----     ---- 
                                                                                    
Federal statutory tax rate.................................. 35.0%    35.0%    35.0%
State income taxes, net of loss carryforwards and federal                           
  tax impact................................................  4.4      4.7      3.4 
Other....................................................... (0.6)    (0.9)     1.4 
                                                             ----     ----     ---- 
Effective tax rate.......................................... 38.8%    38.8%    39.8%
                                                             ====     ====     ==== 

The net current and noncurrent components of deferred income taxes    
reflected in the accompanying consolidated balance sheets as of December 31,    
2000 and 1999 are as follows (dollars in thousands):                            

                                                                [Download Table]

                                                                DECEMBER 31,    
                                                             -------------------
                                                               2000       1999  
                                                             --------    -------
                                                                                
Net current deferred tax liability (asset).................. $ (1,241)   $   227
Net noncurrent deferred tax liability.......................  105,915     72,980
                                                             --------    -------
Net deferred tax liability.................................. $104,674    $73,207
                                                             ========    =======

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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

Deferred income taxes reflect the net tax effects of (a) temporary    
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes, and (b)        
operating loss and tax credit carryforwards. Significant components of the      
Company's net deferred tax liability as of December 31, 2000 and 1999 are as    
follows (dollars in thousands):                                                 

                                                                [Download Table]

                                                                DECEMBER 31,    
                                                             -------------------
                                                               2000       1999  
                                                             --------   --------
                                                                                
Deferred tax liabilities:                                                       
  Depreciation/amortization and book/tax basis                                  
     differences............................................ $ 72,784   $ 56,436
  Book/tax timing differences on joint venture interest.....   81,293     74,968
  Other.....................................................   44,282     21,663
                                                             --------   --------
                                                              198,359    153,067
                                                             --------   --------
Deferred tax assets:                                                            
  Depreciation/amortization and book/tax basis                                  
     differences............................................   24,375     14,687
  Operating loss carryforwards..............................   27,337     20,202
  Accrued expenses not currently deductible.................    6,885      7,220
  Alternative minimum tax credit carryforwards..............   30,111     24,002
  Other.....................................................    4,977     13,749
                                                             --------   --------
                                                               93,685     79,860
                                                             --------   --------
  Net deferred tax liability................................ $104,674   $ 73,207
                                                             ========   ========

As of December 31, 2000, the Company has a net federal operating loss 
carryforward available to offset future federal taxable income of approximately 
$30,194,000 which expires in 2020. The Company also has state net operating loss
carryforwards available to offset future state taxable income of approximately  
$209,407,000 which expire from 2007 to 2020. In addition, the Company has       
alternative minimum tax credit carryforwards of approximately $30,111,000 which 
are available to reduce future federal regular income taxes, if any, over an    
indefinite period.                                                              

     Cash paid for income taxes amounted to approximately $4,561,000, $2,142,000
and $11,367,000 for the years ended December 31, 2000, 1999 and 1998,           
respectively.                                                                   

10. LEASE COMMITMENTS                                                           

The Company leases an office building and land from Equipment Leasing 
Partners ("ELP"), a partnership formed by several of the Company's shareholders,
with remaining initial lease terms of 3 years and 47 years, respectively. The   
Company also leases certain equipment from ELP used to transport and handle coal
and ash at certain Facilities. Future minimum lease payments under the          
agreements with ELP and agreements with other equipment providers at December   
31, 2000 are as follows (dollars in thousands):                                 

                                                                [Download Table]

                                                        OTHER           
YEAR ENDED                                            EQUIPMENT         
DECEMBER 31,                                  ELP     PROVIDERS   TOTAL 
------------                                 ------   ---------   ------
                                                                        
2001.......................................  $1,551      100      $1,651
2002.......................................   1,545       --       1,545
2003.......................................   1,315       --       1,315
2004.......................................   1,257       --       1,257
2005.......................................   1,215       --       1,215
Thereafter.................................   4,958       --       4,958

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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

11. COMMITMENTS AND CONTINGENCIES                                               

Long-Term Contracts -- The Company has several long-term contractual  
commitments that comprise a significant portion of its financial obligations.   
These contractual commitments with original terms varying in length from 10 to  
35 years are the basis for a major portion of the revenue and operating expenses
recognized by the Company and provide for specific services to be provided at   
fixed or indexed prices. The major long-term contractual commitments are as     
follows:                                                                        

        (i) The Project Subsidiary is required to sell electricity generated
   by each Facility to the Electric Customers and the Electric Customers are
required to purchase this electricity or make capacity payments at    
pre-established or annually escalating prices.                        

 (ii) The Project Subsidiary is required to sell and the Steam
  Purchaser is required to purchase a minimum amount of process steam from
each Facility for each contract year. The Steam Purchaser is generally
  required to purchase its entire steam requirements from the Company. The
purchase price of steam under these contracts escalates annually or is
fixed and determinable during the term of the contracts.              

     (iii) The Company is obligated to purchase and fuel suppliers are
  required to supply all of the fuel requirements of each Facility, except
for those facilities where the Electric Customer is responsible for   
providing fuel. Fuel requirements include the quality and estimated   
    quantity of fuel required to operate the applicable Facility. The price of
 fuel escalates annually for the term of each contract. In addition, the
   Company has transportation contracts with various entities to deliver the
  fuel to the applicable Facility. These contracts also provide for annual
escalations throughout the term of the contracts.                     

     Effective September 1996, the Company amended the power sales agreements on
its Kenansville, Roxboro and Southport Facilities. These amendments provide the 
purchasing utility additional rights related to the dispatch of the Facilities  
and eliminated the purchase options which the utility held related to the       
Roxboro and Southport Facilities.                                               

  The Company has also amended the power sales agreement on its Portsmouth
Facility and Hopewell Facility, effective December 1997 and February 1998,      
respectively. These amendments provide the purchasing utility additional rights 
related to the dispatch of these Facilities. The terms of Portsmouth's amended  
power sales agreement also eliminated Portsmouth's accrued obligation to return 
previously disallowed capacity payments to the purchasing utility.              

   Under the terms of certain contracts with certain Electric Customers, the
Company is obligated to pay up to $37,350,000 in aggregate liquidated damages to
the respective electricity purchasers if the respective facility does not       
demonstrate certain operating and reliability standards. Banks have issued      
letters of credit, non-recourse to Cogentrix Energy, in favor of the Electric   
Customer which secure the Company's obligations to the Electric Customer under  
this provision of the contracts.                                                

     Under certain power sales agreements, the Electric Customer is permitted to
reduce future payments or recover certain payments previously made upon the     
occurrence of certain events, which include a state utility commission          
prohibiting the Electric Customer from recovering such payments made under such 
power sales agreement. However, in most cases, the Electric Customer is         
prohibited from reducing or recovering such payments prior to the maturity date 
of the original project financing debt.                                         

 Management Incentive Compensation Plans -- The Company has entered into
various incentive compensation plans with certain employees which provide for   
compensation to the employees (during the period of employment) equal to a      
percentage, as determined by the board of directors, of the Company's income    
before income taxes. The Company incurred expense under these plans of          
approximately $9,954,000, $8,236,000 and $5,758,000 for the years ended December
31, 2000, 1999 and 1998, respectively.                                          

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

Employee Benefit Plans -- The Company sponsors a defined contribution 
401(k) savings plan for its full-time employees. The Company matches employees' 
contributions to the plan up to specified limitations. Company contributions to 
the plan were approximately $2,103,000, $1,664,000 and $1,435,000 for the years 
ended December 31, 2000, 1999 and 1998, respectively.                           

     The Company has a non-qualified Supplemental Retirement Plan agreement with
certain directors and officers. Under the plan, the participants are able to    
elect to have up to 35% of their compensation deferred. In addition, the Company
will credit the participant's deferral account, up to specified limitations, in 
proportion to the participant deferral. The participants' account balances are  
distributable upon termination of employment or death. The Company purchases    
insurance on the participants' lives (cash surrender value of approximately     
$9,354,000 and $10,350,000 at December 31, 2000 and 1999, respectively), which  
is used to fully fund the liability under the plan on an annual basis. The      
Company is owner and beneficiary of the policies.                               

  Guarantees -- In connection with its non-recourse project financings and
certain other subsidiary contracts, the Company and its subsidiary, Cogentrix,  
Inc. have expressly undertaken certain limited obligations and commitments, most
of which will only be effective or will be terminated upon the occurrence of    
future events. These obligations and commitments include guarantees by          
Cogentrix, Inc. of a certain subsidiary's obligation capped at $1.5 million and 
certain subsidiaries' performance under their contracts with one Electric       
Customer. In addition, Cogentrix Energy has indemnified the project lenders of  
certain subsidiaries for any cash deficits such subsidiaries could experience as
a result of incurring certain costs, subject to an aggregate cap of $40.6       
million.                                                                        

   Cogentrix Delaware Holdings, Inc., a wholly-owned subsidiary of Cogentrix
Energy, has guaranteed all of the existing and future senior, unsecured         
outstanding indebtedness for borrowed money of Cogentrix Energy, Inc. This      
guarantee, provided for in the credit agreement for the Corporate Credit        
Facility, expires by its terms in 2003, unless the term of the credit agreement 
is extended. The agreement under which the guarantee was given provides that the
terms or provisions of the guarantee may be waived, amended, supplemented or    
otherwise modified at any time and from time to time by Cogentrix Delaware      
Holdings, Inc. and the agent bank for the lenders under the credit agreement.   

Rathdrum Construction Company ("RCC") has entered into a $108,000,000 
turnkey engineering, procurement and construction agreement to construct the    
Rathdrum Facility. Cogentrix Energy, Inc. has guaranteed 100% of RCC's          
obligations under this contract.                                                

     Turbine Deposits -- The Company has entered into commitments with a turbine
supplier to purchase a specified number of turbines with specified delivery     
dates. The Company has made approximately $50.0 million in non-refundable       
deposits related to these commitments through December 31, 2000. The Company    
expects to make additional deposits of approximately $89.5 million during 2001, 
which would be repaid or funded from proceeds of financing the Company          
anticipates closing.                                                            

Claims and Litigation -- One of the Company's indirect, wholly-owned  
subsidiaries is party to certain product liability claims related to the sale of
coal combustion by-products for use in various construction projects. Management
cannot currently estimate the range of possible loss, if any, the Company will  
ultimately bear as a result of these claims. However, management                
believes -- based on its knowledge of the facts and legal theories applicable to
these claims, after consultations with various counsel retained to represent the
subsidiary in the defense of such claims, and considering all claims resolved to
date -- that the ultimate resolution of these claims should not have a material 
adverse effect on its consolidated financial position or results of operations  
or on Cogentrix Energy's ability to generate sufficient cash flow to service its
outstanding debt.                                                               

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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

In addition to the litigation described above, the Company experiences
other routine litigation in the normal course of business. The Company's        
management is of the opinion that none of this routine litigation will have a   
material adverse impact on its consolidated financial position or results of    
operations.                                                                     

12. FUNDS HELD BY TRUSTEES                                                      

     The majority of revenue received by the Company is required by the terms of
various credit agreements to be deposited in accounts administered by certain   
banks (the "Trustees"). The Trustees invest funds held in these accounts at the 
direction of the Company. These accounts are established for the purpose of     
depositing all receipts and monitoring all disbursements of each Facility. In   
addition, special accounts are established to provide debt service payments and 
income taxes. The funds in these accounts are pledged as security under the     
project financing agreements of each subsidiary.                                

    Funds held by the Trustees were approximately $85,654,000 and $118,494,000
at December 31, 2000 and 1999, respectively. Debt service account balances are  
reflected as restricted cash, whereas all other accounts are classified as cash 
and cash equivalents in the accompanying consolidated balance sheets.           

13. FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISKS       

The Company invests its temporary cash balances in U.S. government    
obligations, corporate obligations and financial instruments of highly-rated    
financial institutions. A substantial portion of the Company's accounts         
receivable is from two major regulated electric utilities and the associated    
credit risks are limited.                                                       

The carrying values reflected in the accompanying consolidated balance
sheets at December 31, 2000 and 1999, approximate the fair values for cash and  
cash equivalents and variable-rate long-term debt. Investments in certificates  
of deposit and restricted investments are included in restricted cash and are   
reported at fair market value, which approximates cost, at December 31, 2000 and
1999. The fair value of the Company's fixed-rate borrowings at December 31, 2000
and 1999 is $32,289,000 higher and $30,480,000 lower than the historical        
carrying value of $997,190,000 and $807,181,000, respectively. In making such   
calculations, the Company utilized credit reviews, quoted market prices and     
discounted cash flow analyses, as appropriate.                                  

The Company is exposed to credit-related losses in the event of       
non-performance by counterparties to the Company's interest rate protection     
agreements (see Note 7). The Company does not obtain collateral or other        
security to support such agreements but continually monitors its positions with,
and the credit quality of, the counterparties to such agreements. As of December
31, 2000 and 1999, the net unrealized gain (loss) on the interest rate          
protection agreements was approximately $(551,000) and $2,325,000, respectively.

14. RELATED PARTY TRANSACTIONS                                                  

 In March 2000, Cogentrix Energy established a revolving credit facility
whereby each of its five shareholders may borrow from time to time up to        
$1,000,000 from Cogentrix Energy on a revolving basis. Shareholder borrowings   
will accrue interest at the prime rate of a major United States bank plus 1.0%, 
payable annually. Principal payments on any borrowings made under the facility  
are due in three equal annual installments on each annual shareholder dividend  
payment date following the borrowing. Upon the sale of any of a shareholder's   
shares (except a permitted transfer), the principal balance outstanding will    
become due and payable immediately. As of December 31, 2000, there was $200,000 
outstanding under this shareholder revolving credit facility. At December 31,   
1999, prior to the establishment of the revolving credit facility, the Company  
had a $1,000,000 note receivable due from a shareholder which accrued interest  
at 7.75% per annum.                                                             

The Company leases certain equipment, its principal executive office  
building and land from an affiliated entity. Payments by the Company under these
lease agreements were approximately $1,633,000, $1,887,000 and $1,694,000, for  
the years ended December 31, 2000, 1999 and 1998, respectively.                 
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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

   A shareholder, director and former executive officer was a participant in
management incentive compensation plans (see Note 11) while employed as an      
executive officer of the Company and continues to receive incentive compensation
annually pursuant to such plans equal to a percentage of net cash flow, as      
defined, of certain subsidiaries. Total compensation to the shareholder under   
the consulting agreement and incentive compensation plans was approximately     
$709,000, $290,000 and $278,000 for the years ended December 31, 2000, 1999 and 
1998, respectively.                                                             

The Company entered into a consulting agreement with a shareholder,   
director and former executive officer to provide consulting services related to 
general business matters. The agreement provided for monthly payments of $29,202
through December 31, 2000, monthly payments of $18,251 for January 2001 through 
December 2001, monthly payments of $15,644 for January 2002 through December    
2003 and monthly payments of $10,429 for January 2004 through December 2004.    

15. SUBSEQUENT EVENTS                                                           

On January 17, 2001, Ouachita Holdings, Inc. ("Ouachita Holdings"), an
indirect, wholly-owned subsidiary of the Company and sole member of Ouachita    
Power, LLC ("Ouachita Power", the owner of the Ouachita Facility), sold a 50%   
membership interest in Ouachita Power to an indirect subsidiary of General      
Electric Capital Corporation. In exchange for the membership interest, Ouachita 
Holdings received $48.3 million in cash and was relieved of $56.3 million of its
original equity contribution commitment to Ouachita Power. This equity          
commitment was previously supported by a letter of credit under the Corporate   
Credit Facility. The Company will retain a 50% membership interest in Ouachita  
Power and will continue to manage and operate the facility. The Company expects 
to record a gain of approximately $51.0 million, net of transaction costs       
related to this sale.                                                           

     On March 30, 2001, the Company sold its interest in the Batesville facility
to NRG Energy, Inc. In exchange, the Company received $64.0 million and assigned
the operation and maintenance agreement to NRG Energy, Inc. The Company expects 
to record a gain of approximately $10.0 million, net of transaction costs       
related to this sale.                                                           

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                                                                      SCHEDULE I

COGENTRIX ENERGY, INC.
CONDENSED BALANCE SHEETS OF REGISTRANT
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
(DOLLARS IN THOUSANDS)

                                                                [Download Table]

                                                               2000      1999  
                                                             --------  --------
                                                                               
                                     ASSETS                                    
CURRENT ASSETS:                                                                
  Cash and cash equivalents................................. $ 30,835  $ 35,243
  Restricted cash...........................................    5,669     7,549
  Accounts receivable.......................................    2,041       436
  Accounts receivable from affiliates, net..................   87,454    37,678
  Other current assets......................................      403       279
                                                             --------  --------
          Total current assets..............................  126,402    81,185
INVESTMENT IN SUBSIDIARIES (ON THE EQUITY METHOD)...........  489,860   428,423
EQUIPMENT, net of accumulated depreciation..................    3,578     2,257
OTHER ASSETS:                                                                  
  Income tax benefit........................................   92,027    77,981
  Deferred financing costs, net of accumulated                                 
     amortization...........................................   10,058     7,991
  Notes receivable from affiliates..........................      804     4,891
  Other.....................................................   80,717    30,619
                                                             --------  --------
          Total other assets................................  183,606   121,482
                                                             --------  --------
          Total Assets...................................... $803,446  $633,347
                                                             ========  ========
                      LIABILITIES AND SHAREHOLDERS' EQUITY                     
CURRENT LIABILITIES:                                                           
  Current portion of long-term debt......................... $ 20,000  $     --
  Accounts payable..........................................      400       167
  Accrued liabilities.......................................   82,335    65,417
  Accrued dividends.........................................   10,309     8,683
                                                             --------  --------
          Total current liabilities.........................  113,044    74,267
                                                             --------  --------
LONG-TERM LIABILITIES:                                                         
  Notes payable to affiliates...............................   82,822    76,410
  Long-term debt............................................  418,588   337,504
  Other.....................................................   25,162    22,571
                                                             --------  --------
          Total long-term liabilities.......................  526,572   436,485
                                                             --------  --------
          Total liabilities.................................  639,616   510,752
                                                             --------  --------
SHAREHOLDERS' EQUITY:                                                          
  Common stock..............................................      130       130
  Accumulated earnings......................................  163,700   122,465
                                                             --------  --------
          Total shareholders' equity........................  163,830   122,595
                                                             --------  --------
          Total Liabilities and Shareholders' Equity........ $803,446  $633,347
                                                             ========  ========

The accompanying condensed notes to condensed financial 
statements are an integral part of this schedule. 

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                                                                      SCHEDULE I

COGENTRIX ENERGY, INC.
CONDENSED STATEMENTS OF INCOME OF REGISTRANT
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(DOLLARS IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                               2000       1999       1998   
                                                             --------   --------   -------- 
                                                                                            
INCOME:                                                                                     
  Development and construction management fees.............. $  4,623   $    618   $  4,471 
  Operating management fees.................................   35,483     23,618     22,836 
                                                             --------   --------   -------- 
          Total income......................................   40,106     24,236     27,307 
                                                             --------   --------   -------- 
OPERATING EXPENSES:                                                                         
  General, administrative and development expenses..........   41,743     37,981     34,310 
  Depreciation and amortization.............................    2,486      2,115      1,467 
                                                             --------   --------   -------- 
          Total operating expenses..........................   44,229     40,096     35,777 
                                                             --------   --------   -------- 
OPERATING LOSS..............................................   (4,123)   (15,860)    (8,470)
                                                             --------   --------   -------- 
OTHER INCOME (EXPENSE):                                                                     
  Interest expense..........................................  (35,199)   (34,466)   (15,018)
  Investment and other income...............................    3,120      1,456        236 
                                                             --------   --------   -------- 
          Total other expense...............................  (32,079)   (33,010)   (14,782)
                                                             --------   --------   -------- 
LOSS BEFORE INCOME TAXES....................................  (36,202)   (48,870)   (23,252)
INCOME TAX BENEFIT..........................................   14,046     18,962      9,255 
EQUITY IN EARNINGS OF SUBSIDIARIES..........................   73,700     73,323     50,986 
                                                             --------   --------   -------- 
NET INCOME.................................................. $ 51,544   $ 43,415   $ 36,989 
                                                             ========   ========   ======== 

The accompanying condensed notes to condensed financial 
statements are an integral part of this schedule. 

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                                                                      SCHEDULE I

COGENTRIX ENERGY, INC.
CONDENSED STATEMENTS OF CASH FLOWS OF REGISTRANT
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(DOLLARS IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                               2000        1999       1998    
                                                             ---------   --------   --------- 
                                                                                              
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES............. $  38,064   $ 94,508   $  78,803 
                                                             ---------   --------   --------- 
CASH FLOWS FROM INVESTING ACTIVITIES                                                          
  Decrease in restricted investments........................        --         --         250 
  Equipment additions.......................................      (658)      (389)     (2,485)
  Investments in subsidiaries...............................  (141,809)   (88,193)   (301,077)
                                                             ---------   --------   --------- 
  Net cash flows used in investing activities...............  (142,467)   (88,582)   (303,312)
                                                             ---------   --------   --------- 
CASH FLOWS FROM FINANCING ACTIVITIES                                                          
  Proceeds from notes payable to affiliate, net.............     6,412     21,882      10,123 
  (Increase) decrease in restricted cash....................     1,880       (198)     (4,940)
  Proceeds from issuance of long term debt..................    99,359         --     233,705 
  Decrease in notes receivable from affiliates..............     4,087        910       1,325 
  Increase in deferred financing costs......................    (3,060)      (763)     (6,944)
  Dividends paid............................................    (8,683)    (7,398)     (2,140)
                                                             ---------   --------   --------- 
  Net cash flows provided by financing activities...........    99,995     14,433     231,129 
                                                             ---------   --------   --------- 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........    (4,408)    20,359       6,620 
CASH AND CASH EQUIVALENTS, beginning of year................    35,243     14,884       8,264 
                                                             ---------   --------   --------- 
CASH AND CASH EQUIVALENTS, end of year...................... $  30,835   $ 35,243      14,884 
                                                             =========   ========   ========= 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION CASH                                         
  DIVIDENDS RECEIVED........................................ $ 154,072   $141,873   $  97,605 
                                                             =========   ========   ========= 

The accompanying condensed notes to condensed financial 
statements are an integral part of this schedule

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                                                                      SCHEDULE I

COGENTRIX ENERGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS OF REGISTRANT 

1. SIGNIFICANT ACCOUNTING POLICIES                                              

   These condensed notes should be read in conjunction with the consolidated
financial statements and accompanying notes.                                    

     Accounting for Subsidiaries -- Cogentrix Energy, Inc. has accounted for its
investment in and earnings of its subsidiaries on the equity method in the      
condensed financial information.                                                

     Income Taxes -- The benefit for income taxes has been computed based on the
Company's consolidated effective income tax rate.                               

2. LONG-TERM DEBT                                                               

Senior Notes                                                                

On March 15, 1994, Cogentrix Energy, Inc. issued $100 million of      
registered, unsecured senior notes due 2004 (the "2004 Notes") in a public debt 
offering. The 2004 Notes were priced at par to yield 8.10%. In February 1994,   
Cogentrix Energy, Inc. entered into a forward sale of ten-year U.S. Treasury    
Notes in order to protect against a possible increase in the general level of   
interest rates prior to the completion of the 2004 Notes offering. This hedge   
transaction resulted in the recognition of a gain which has been deferred and   
included as part of the 2004 Notes on the accompanying condensed balance sheets 
of Registrant. This deferred gain will be recognized over the term of the 2004  
Notes, reducing the effective rate of interest on the 2004 Notes to 7.50%. The  
2004 Notes require annual sinking fund payments beginning in March 2001. The    
impact of the sinking fund requirements has been reflected in the schedule of   
future maturities of long-term debt contained herein.                           

On October 20, 1998, Cogentrix Energy, Inc. issued $220 million of    
registered, unsecured 8.75% senior notes due 2008 (the "2008 Notes"). These     
notes were issued at a discount resulting in an effective rate of approximately 
8.82%. On November 25, 1998, the Company issued an additional $35 million of the
2008 Notes at a premium. In March 1998, in anticipation of the offering of the  
2008 Notes, the Company entered into an interest rate hedge agreement to protect
against a possible increase in the general level of interest rates. The         
settlement costs of approximately $22.1 million related to this hedge agreement 
were deferred and will be recognized over the term of the 2008 Notes resulting  
in an overall effective rate of approximately 9.59%.                            

  In September 2000, Cogentrix Energy sold an additional $100.0 million of
its 2008 notes. These notes were issued at a discount resulting in an effective 
rate of approximately 8.86%.                                                    

 Future maturities of long-term debt at December 31, 2000, excluding the
unamortized balance of the net deferred hedge loss and excluding the net        
unamortized premium, are as follows (dollars in thousands):                     

                                                                [Download Table]

YEAR ENDED                                                          
DECEMBER 31,                                                        
------------                                                        
                                                                    
2001......................................................  $ 20,000
2002......................................................    20,000
2003......................................................    20,000
2004......................................................    40,000
2005......................................................        --
Thereafter................................................   355,000
                                                            --------
                                                            $455,000
                                                            ========

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COGENTRIX ENERGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS OF REGISTRANT -- (CONTINUED)

Corporate Credit Facility:                                                  

   The Company executed the third amended and restated credit agreement with
Australia and New Zealand Banking Group Limited, as agent for a group of lending
banks, during September 2000 (the "Corporate Credit Facility"). The Corporate   
Credit Facility provides up to $250.0 million of revolving credit through       
October 2003 in the form of direct advances or the issuance of letters of       
credit. Borrowings bear interest at LIBOR plus an applicable margin based on the
credit rating on Cogentrix Energy's 2004 and 2008 Notes. Commitment fees related
to the Corporate Credit Facility are 37.5 basis points per annum, when greater  
than 50% of the available commitments are utilized and 50 basis points per annum
when less than 50% of the available commitments are utilized, payable each      
quarter on the outstanding unused portion of the Corporate Credit Facility. As  
of December 31, 2000, the Company has used this credit facility to issue        
approximately $183.8 million of letters of credit in connection with investments
made in electric-generating plants, and four plants under construction (see Note
15 to the consolidated financial statements for additional discussion).         

The project financing debt of Cogentrix Energy's subsidiaries is      
substantially non-recourse to the Company (as parent). The project financing    
agreements of the Company's subsidiaries, the indentures for the 2004 and 2008  
Senior Notes and the Corporate Credit Facility agreement contain certain        
covenants which, among other things, place limitations on the payment of        
dividends, limit additional indebtedness, and restrict the sale of assets. The  
project financing agreements also require certain cash to be held with a trustee
as security for future debt service payments. In addition, the Facilities, as   
well as the long-term contracts which support them, are pledged as collateral   
for the Company's obligations under the project financing agreements.           

   Cogentrix Delaware Holdings, Inc., a wholly-owned subsidiary of Cogentrix
Energy, has guaranteed all of the existing and future senior, unsecured         
outstanding indebtedness for borrowed money of Cogentrix Energy. This guarantee,
provided for in the credit agreement for the Corporate Credit Facility, expires 
by its terms in 2003, unless the term of the credit agreement is extended. The  
agreement under which the guarantee was given provides that the terms or        
provisions of the guarantee may be waived, amended, supplemented or otherwise   
modified at any time and from time to time by Cogentrix Delaware Holdings, Inc. 
and the agent bank for the lenders under the credit agreement.                  

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ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND        
FINANCIAL DISCLOSURE                                                            

None                                                                  

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                    

The directors and executive officers of Cogentrix Energy are set forth
below.                                                                          

                                                        [Enlarge/Download Table]

NAME                                       AGE                           POSITION                      
----                                       ---                           --------                      
                                                                                                       
George T. Lewis, Jr....................... 73   Chairman Emeritus and Director                         
David J. Lewis............................ 44   Chairman of the Board, Chief Executive Officer and     
                                                  Director                                             
Mark F. Miller............................ 46   President, Chief Operating Officer and Director        
James E. Lewis............................ 37   Vice Chairman and Director                             
Dennis W. Alexander....................... 54   Group Senior Vice President, General Counsel, Secretary
                                                  and Director                                         
James R. Pagano........................... 41   Group Senior Vice President -- Development Mergers &   
                                                  Acquisitions                                         
Bruno R. Dunn............................. 50   Group Senior Vice President -- Operations              
Thomas F. Schwartz........................ 39   Group Senior Vice President -- Chief Financial Officer 
Betty G. Lewis............................ 71   Director                                               
Robert W. Lewis........................... 47   Director                                               
W.E. "Bill" Garrett....................... 70   Director                                               
John A. Tillinghast....................... 73   Director                                               

    GEORGE T. LEWIS, JR., our founder, has been a Director of Cogentrix Energy
since its formation in 1993 and was appointed Chairman Emeritus in March 1999.  
Prior to March 1999, Mr. Lewis was Chairman of the Board since December 1993,   
Chief Executive Officer and a Director of Cogentrix, Inc. from 1983 to 1993,    
Chairman of the Board of Cogentrix, Inc. since 1990 and President of Cogentrix, 
Inc. from 1983 to 1989. Mr. Lewis previously served for over 18 years with Chas 
T. Main, Inc., an engineering firm headquartered in Boston. In 1971, he became a
Senior Vice President responsible for that firm's work with the utility         
industry. From 1978 through 1980, he headed that firm's Southern District office
located in Charlotte, North Carolina and directed its involvement in the area of
coal-fired industrial power plants. In 1980, Mr. Lewis was promoted to Group    
Vice President and director and returned to Boston to assume responsibility for 
all corporate marketing and sales. George Lewis is the father of David J. Lewis,
James E. Lewis and Robert W. Lewis and the spouse of Betty G. Lewis.            

    DAVID J. LEWIS has been a Director of Cogentrix Energy since its formation
and was appointed Chairman of the Board and Chief Executive Officer in March    
1999. Prior to March 1999, Mr. Lewis was Vice Chairman of the Board and Chief   
Executive Officer since August 1995, Executive Vice President -- Marketing and  
Development, Chief Executive Officer -- Elect since June 1994, Group Senior Vice
President -- Marketing and Development with Cogentrix, Inc. since September 1993
and a Director of Cogentrix, Inc. since 1988. From 1989 until September 1993, he
was Senior Vice President -- CGX Environmental Systems and President and Chief  
Operating Officer -- CGX Environmental Systems Division of Cogentrix, Inc. From 
1987 to 1989, he was Vice President -- Administration of Cogentrix, Inc. from   
1986 to 1987, he was Resident Construction Manager and from 1985 to 1986, he was
Assistant Construction Manager. Prior to joining Cogentrix, Inc. in 1985, he was
Operations Manager with Bartex Corporation, an export management company        
headquartered in Portland, Oregon. David Lewis is a son of George T. Lewis, Jr. 
and Betty G. Lewis.                                                             

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MARK F. MILLER was appointed President, Chief Operating Officer and a 
Director of Cogentrix Energy in May 1997. Prior to joining Cogentrix Energy, Mr.
Miller was Vice President for Northrop Grumman in Bethpage, New York. He joined 
Northrop Grumman in 1982 and held successive positions in the material, law and 
contracts departments before being named Vice President, Contracts and Pricing  
at Northrop's B-2 Division in 1991. In 1993, he became Vice                     
President -- Business Management at the B-2 Division. In 1994, Northrop acquired
the Grumman Corporation and Mr. Miller was named Vice President -- Business     
Management for the newly formed Electronics and Systems Integration Division, a 
position he held until his move to Cogentrix Energy. From 1980 to 1982, he was  
an Associate with the law firm of Dolack, Hansler.                              

     JAMES E. LEWIS has been a Director of Cogentrix Energy since its formation,
and was appointed Vice Chairman in March 1999. Prior to March 1999, Mr. Lewis   
was Executive Vice President since December 1993, Executive Vice President of   
Cogentrix, Inc. since November 1992 and a Director of Cogentrix, Inc. since     
1988. From 1991 to 1992, he was Senior Vice President of Operations responsible 
for the daily operations of Cogentrix, Inc.'s facilities. From 1989 to 1991, Mr.
Lewis was Vice President -- Utility Operations. Mr. Lewis joined Cogentrix in   
1986 and in 1987, he was selected as Assistant Project Manager responsible for  
the construction of the Portsmouth facility. James Lewis is a son of George T.  
Lewis, Jr. and Betty G. Lewis.                                                  

    DENNIS W. ALEXANDER has been Group Senior Vice President, General Counsel,
Secretary and a Director since joining Cogentrix Energy in February 1994.       
Immediately prior to joining Cogentrix Energy, Mr. Alexander was Vice           
President/General Counsel of Wheelabrator Environmental Systems Inc., the waste-
to-energy and cogeneration subsidiary of Wheelabrator Technologies Inc., an     
independent power and environmental services and products company, as well as   
Director, Environmental, Health and Safety Audit Program for Wheelabrator       
Technologies Inc. From 1988 to 1990, Mr. Alexander was Vice President/General   
Counsel -- Operations of Wheelabrator Environmental Systems Inc. and from 1986  
to 1988 was Vice President/General Counsel of Wheelabrator Energy Systems, a    
cogeneration project development subsidiary. From 1984 to 1986, he served as    
Group General Counsel for The Signal Company and from 1980 to 1984 as Division  
General Counsel of Wheelabrator-Frye Inc., each a diversified public company.   

JAMES R. PAGANO has been Group Senior Vice President -- Development,  
Mergers & Acquisitions since February 1999. From May 1997 until then he was     
Group Senior Vice President -- Chief Financial Officer of Cogentrix Energy,     
prior to which he was Senior Vice President -- Project Finance since February   
1995 and Vice President -- Project Finance since Cogentrix Energy's formation.  
Previously, Mr. Pagano was Vice President -- Project Finance of Cogentrix, Inc. 
since July 1993, Vice President Legal and Finance from July 1992 to July 1993,  
and from January 1992 to July 1992, Mr. Pagano was Vice President and Assistant 
General Counsel of Cogentrix, Inc. Prior to joining Cogentrix, Inc. he was Vice 
President of The Deerpath Group, Inc., a financial advisory firm. From 1987 to  
1990, Mr. Pagano was an Associate with the law firm of Simpson Thacher &        
Bartlett.                                                                       

     BRUNO R. DUNN has been Group Senior Vice President Operations since joining
Cogentrix Energy in January 1999. Immediately prior to joining Cogentrix Energy,
Mr. Dunn was Vice President Operations of Wheelabrator Technologies, Inc., an   
independent power and environmental services and product company as well as Vice
President Operations of Wheelabrator Environmental Systems, Inc., the           
waste-to-energy and cogeneration subsidiary of Wheelabrator Technologies. From  
1988 to 1995 Mr. Dunn was Vice President Construction for Wheelabrator          
Technologies, Inc. From 1980 to 1988 Mr. Dunn was a project manager and/or      
operations manager for various Wheelabrator trash-to-energy facilities.         

THOMAS F. SCHWARTZ has been Group Senior Vice President -- Finance and
Chief Financial Officer since December 1999. From March 1997 until then he was  
Senior Vice President -- Finance and Treasurer of Cogentrix Energy, prior to    
which he was Vice President -- Finance and Treasurer since Cogentrix Energy's   
formation. Previously, Mr. Schwartz was Controller of Cogentrix, Inc. since     
April 1991. Prior to joining Cogentrix, he was an audit manager with Arthur     
Andersen LLP's Small Business Advisory Division.                                

BETTY G. LEWIS has been a Director of Cogentrix Energy since September
1994. Betty Lewis is the spouse of George T. Lewis, Jr.                         

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ROBERT W. LEWIS has been a Director of Cogentrix Energy since its     
formation, prior to which he was a Director of Cogentrix, Inc. since 1988. In   
April 1991, Mr. Lewis resigned from his positions of Vice Chairman and Secretary
of Cogentrix, Inc., which he had held since March 1991. From October 1990 to    
March 1991, Mr. Lewis was Executive Vice President and Secretary. From March    
1988 to October 1990, Mr. Lewis was Senior Vice President -- Corporate          
Development and Secretary, in which position Mr. Lewis was in charge of         
Cogentrix, Inc.'s development efforts. From March 1987 to March 1988, Mr. Lewis 
was Senior Vice President -- Administration and Secretary. From September 1983  
to March 1987, Mr. Lewis was Vice President -- Administration and Secretary. Mr.
Lewis joined Cogentrix, Inc. in April 1983 and served as Secretary through      
September 1983. Robert Lewis is a son of George T. Lewis, Jr. and Betty G.      
Lewis.                                                                          

W. E. "BILL" GARRETT has been a Director of Cogentrix Energy since its
formation and became a Director of Cogentrix, Inc. in September 1993. Mr.       
Garrett served on the staff of the National Geographic Society for 36           
years -- the last 10 as Editor-in-Chief of the magazine. As a member of the     
Board of Trustees of the National Geographic Society and its Research and       
Exploration Committee, he was instrumental in the Society's emergence as the    
world's largest educational and scientific institution. He resigned in 1990 and 
became the President of the La Ruta Maya Conservation Foundation, which is      
involved in cultural and conservation work with the Maya Indians. Mexico,       
Guatemala and Italy have honored him with prestigious awards for his work in the
region. Mr. Garrett currently serves on the boards of the National Capital      
Bicentennial Celebration, the American Land Conservancy, Partners for Livable   
Communities and the Editorial Board of Nature's Best Magazine.                  

     JOHN A. TILLINGHAST was elected a Director of Cogentrix Energy on March 19,
1998. Mr. Tillinghast served from 1994 through May 1998 as President, Chairman  
and CEO of Great Bay Power Corporation, a public utility in Portsmouth, New     
Hampshire. He also has served from 1997 through May 1998 as the President,      
Chairman and CEO of BayCorp Holdings, Ltd., the holding company for Great Bay   
Power Corporation. Since May 1998 Mr. Tillinghast has served as Chairman of     
BayCorp Holdings and Great Bay Power. Since May 2000, Mr. Tillinghast has served
as a member of the Board of BayCorp Holdings. After graduating from Columbia    
University in 1949 with BS and MS degrees in mechanical engineering, Mr.        
Tillinghast began a 30-year career with American Electric Power Company, rising 
through the engineering ranks to become Vice Chairman of the Board in charge of 
engineering and construction. Prior to his current position at Bay Corp         
Holdings, LTD., he served as Chairman of the Energy Engineering Board of the    
National Academy of Sciences, Director of the Edison Electric Institute and is a
Fellow of the American Society of Mechanical Engineers. Mr. Tillinghast is      
registered as a professional engineer in nine states and holds two U.S. and     
seven foreign patents.                                                          

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ITEM 11.  EXECUTIVE COMPENSATION                                                

 The following table sets forth information for the calendar years ended
December 31, 2000, 1999 and 1998 concerning the annual compensation paid or     
accrued by Cogentrix to or for the account of each of the following: (1) the    
only person who served as the chief executive officer of Cogentrix during the   
fiscal year ended December 31, 2000 and (2) the four most highly compensated    
executive officers of Cogentrix incumbent at December 31, 2000, other than the  
chief executive officer, for the year then ended (collectively, the "Named      
Executive Officers").                                                           

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                                ANNUAL COMPENSATION                          
NAME AND                               TWELVE-MONTH     -----------------------------------     ALL OTHER    
PRINCIPAL POSITION                     PERIOD ENDING    SALARY(1)    BONUS(2)      TOTAL     COMPENSATIONS(3)
------------------                   -----------------  ---------   ----------   ----------  ----------------
                                                                                                             
David J. Lewis...................... December 31, 2000  $650,975    $2,127,204   $2,778,179      $143,858    
  Chairman and                       December 31, 1999   641,392     1,254,585    1,895,977       120,678    
  Chief Executive Officer            December 31, 1998   633,428     1,117,302    1,750,730        62,010    
Mark F. Miller...................... December 31, 2000   407,121     1,794,633    2,201,754       216,750    
  President and Chief                December 31, 1999   387,452     1,082,227    1,469,679       195,580    
  Operating Officer                  December 31, 1998   386,412       779,057    1,165,469       127,989    
James R. Pagano..................... December 31, 2000   316,481     1,556,280    1,872,761        85,061    
  Group Senior Vice                  December 31, 1999   307,240     1,052,530    1,359,770        67,048    
  President -- Development           December 31, 1998   291,118       660,227      951,345        29,169    
  Mergers & Acquisitions                                                                                     
Dennis W. Alexander................. December 31, 2000   313,425     1,257,928    1,571,353        73,515    
  Group Senior Vice                  December 31, 1999   295,524       878,833    1,174,357        60,705    
  President and                      December 31, 1998   295,328       635,227      930,555        27,922    
  General Counsel                                                                                            
Thomas F. Schwartz.................. December 31, 2000   185,707     1,031,800    1,217,507        29,840    
  Group Senior Vice                  December 31, 1999   150,193       283,270      433,463        24,774    
  President and                      December 31, 1998   147,249       309,360      456,609        20,777    
  Chief Financial Officer                                                                                    

---------------                                                                 

(1) Amounts listed in this column include all fees for service on Cogentrix's   
board of directors.                                                     
(2) Amounts listed in this column reflect annual performance bonuses and annual 
 distributions under our profit-sharing plan and executive incentive bonus
  plan.. The amounts listed do not include the distributions made under such
  plan and agreements to the Named Executive Officers during any fiscal year
in which such distribution was earned in the previous fiscal year.      
(3) The amounts shown in this column include Cogentrix's matching contributions 
    on behalf of the Named Executive Officers to Cogentrix's 401(k) savings plan
in which all Cogentrix employees are eligible to participate and to a   
    non-qualified Supplemental Retirement Savings Plan in which approximately 51
  employees, including all of the Named Executive Officers, participate. The
amounts shown for Mark F. Miller also include compensation related to a 
company-provided life insurance policy.                                 

COMPENSATION PURSUANT TO INCENTIVE COMPENSATION PLANS                           

Profit-Sharing Plan                                                         

We have a profit-sharing plan which is a non-qualified incentive      
compensation plan for the benefit of approximately 47 employees of Cogentrix.   
Under our profit-sharing plan, we have entered into arrangements with each of   
our executive officers, which provide for annual cash compensation distribution 
awards to each participant equal to a designated percentage of our adjusted net 
income before taxes each fiscal year plus the amount of any accrual for payments
to be made under our profit-sharing plan, with the designated percentage        
determined annually at the discretion of our Chief Executive Officer or Chief   
Operating Officer based on criteria they deem appropriate. For the fiscal year  
ended December 31, 2000, David J. Lewis earned                                  

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$1,177,204, Mark F. Miller earned $847,587, James R. Pagano earned $659,234,    
Dennis W. Alexander earned $470,882, and Thomas F. Schwartz earned $282,529     
under our profit sharing plan.                                                  

     In the event a participant in our profit-sharing plan terminates his or her
employment with Cogentrix (for a reason other than death, total disability,     
retirement or termination by Cogentrix for willful misconduct), the participant 
is entitled to receive a severance benefit equal to a percentage (ranging from  
100% after six years of full-time employment to a maximum of 200% after ten     
years or more of full-time employment) of the most recent annual distribution to
which the employee is then entitled. In the event of a participant's death or   
total disability, the participant (or his or her beneficiary) is entitled to    
receive from zero to five years of annual distribution awards thereafter,       
depending upon the participant's length of service with Cogentrix.              

Executive Incentive Bonus Plan                                              

 In addition to the annual cash compensation distribution awards payable
under our profit-sharing plan, each of the Named Executive Officers, with the   
exception of David J. Lewis, may receive additional incentive cash compensation 
awards, determined on a sliding scale, if we achieve contractually specified    
levels of net income before income tax targets for a given fiscal year. For the 
fiscal year ended December 31, 2000, each of the Named Executive Officers, with 
the exception of David J. Lewis, earned $597,046 under the executive incentive  
bonus plan.                                                                     

EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS                             

David J. Lewis                                                              

  In March 1999, the board of directors elected David J. Lewis Chairman of
the Board of Cogentrix. He was previously elected Chief Executive Officer of    
Cogentrix in August 1995. George T. Lewis, Jr., the former Chief Executive      
Officer and Chairman of the Board, will serve as Chairman Emeritus. We have an  
employment agreement with David J. Lewis through August 2005 which provides for 
a base annual salary for each fiscal year at least equal to the base salary for 
the immediately preceding fiscal year. In addition to the base salary, Mr. Lewis
is entitled to participate in our profit sharing plan, at a level of no less    
than 1.25% of net income before taxes, and to receive annual incentive          
compensation in an amount determined by the board of directors, which amount,   
when combined with the base salary and profit sharing payable to him, shall be  
at least sufficient to provide him with total annual compensation that is       
competitive with total annual compensation offered by other similarly situated  
companies to their employees in comparable positions.                           

     Upon our giving notice, the employment agreement is terminable in the event
at least two-thirds of the board of directors terminates Mr. Lewis' employment  
for cause. In addition, we may terminate the agreement at any time at our option
by a vote of at least two-thirds of the directors then in office. In the event  
we terminate his employment, other than for cause, Mr. Lewis is entitled to     
continue to receive base salary, performance bonus (based on historical levels) 
and distributions under the profit sharing plan through the remainder of the    
term of this employment agreement.                                              

Mr. Lewis can terminate his employment for good reason as a result of 

- a change in control of Cogentrix,                                   

- a change in title, authority or duties, or                          

   - our failure to make any other payment to Mr. Lewis or our breach of the
employment agreement.                                             

If Mr. Lewis elects to terminate his employment for good reason, he is
entitled to continue to receive, for five years, an amount equal to the average 
annual salary, bonus and profit sharing distribution received prior to his      
termination.                                                                    

Mark F. Miller                                                              

     We have an employment agreement with Mark F. Miller through May 2007, which
we amended with his consent in February 2001, which provides a minimum base     
annual salary of $350,000, which at the beginning of each fiscal year is        
increased by an amount, if positive, that will reflect increases in the cost of 
living. He is                                                                   
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also entitled to participate in our profit sharing plan, at a level of no less  
than 0.9% of net income before taxes, our executive incentive bonus plan, and to
receive a performance bonus each fiscal year, the level of which is determined  
in the sole discretion of the Chief Executive Officer. We have the right to     
terminate Mr. Miller's employment upon sixty days written notice. In the event  
we terminate his employment, other than for cause, Mr. Miller is entitled to    
receive within 30 days of his termination, a lump sum severance payment in an   
amount equal to the total compensation (based upon historical levels) that Mr.  
Miller would have received through the remainder of the term of the employment  
agreement.                                                                      

Mr. Miller is entitled to the same severance payment in the event he  
terminates his employment for good reason as a result of                        

- a change in control of Cogentrix,                                   

- a change in title, authority or duties, or                          

    - our failure to make any other payment to Mr. Miller or our breach of the
employment agreement                                              

Dennis W. Alexander                                                         

    We have an employment agreement with Dennis W. Alexander, which we amended
with his consent in February 2001. Under the employment agreement, Mr. Alexander
is entitled to a minimum base annual salary of $180,000, subject to adjustment  
in future years. He is also entitled to participate in our profit sharing plan, 
at a level of no less than 0.3% of net income before taxes, and our executive   
incentive bonus plan. The employment agreement is for a one-year term that      
renews automatically at the end of each calendar year unless we previously      
exercise our right to terminate Mr. Alexander's employment. We have the right to
terminate Mr. Alexander's employment upon 30 days' written notice. In the event 
we terminate his employment or following a change in control Mr. Alexander      
elects to terminate his employment, Mr. Alexander is entitled to receive, within
30 days of his termination, a severance payment in an amount equal to two times 
his total compensation earned in the prior calendar year, including any fees he 
received for serving as a member of the Board of Directors.                     

James R. Pagano                                                             

    We have an employment agreement with Mr. Pagano, which we amended with his
consent in February 2001. Under the employment agreement, Mr. Pagano is entitled
to a minimum base annual salary of $306,000, subject to adjustment in future    
years. He is also entitled to participate in our profit sharing plan, at a level
of no less than 0.7% of net income before taxes, and our executive incentive    
bonus plan. The employment agreement is for a one-year term that renews         
automatically at the end of each calendar year unless we previously exercise our
right to terminate Mr. Pagano's employment. We have the right to terminate Mr.  
Pagano's employment upon 30 days' written notice. In the event we terminate his 
employment or following a change in control Mr. Pagano elects to terminate his  
employment, Mr. Pagano is entitled to receive, within 30 days of his            
termination, a severance payment in an amount equal to five times his total     
compensation earned in the prior calendar year.                                 

Thomas F. Schwartz                                                          

In February 2001, we entered into an employment agreement with Mr.    
Schwartz. Under the employment agreement, Mr. Schwartz is entitled to a minimum 
base annual salary of $230,625, subject to adjustment in future years. He is    
also entitled to participate in our profit sharing plan, at a level of no less  
than 0.3% of net income before taxes, and our executive incentive bonus plan.   
The employment agreement is for a one-year term that renews automatically at the
end of each calendar year unless we previously exercise our right to terminate  
Mr. Schwartz's employment. We have the right to terminate Mr. Schwartz's        
employment upon 30 days' written notice. In the event we terminate his          
employment or following a change in control Mr. Schwartz elects to terminate his
employment, Mr. Schwartz is entitled to receive, within 30 days of his          
termination, a severance payment in an amount equal to two times his total      
compensation earned in the prior calendar year.                                 

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DIRECTORS' COMPENSATION AND CONSULTING AGREEMENTS                               

Directors, including employee directors, receive an annual retainer of
$30,000 for service on the board of directors. In addition, for each meeting    
attended, each director receives a fee of $1,500. During the year ended December
31, 2000, there were six meetings of Cogentrix Energy's board of directors.     

We have entered into consulting agreements with Messrs. Garrett and   
Tillinghast each of which provides for payment of $15,000 annually for          
consulting services to be rendered to us.                                       

George T. Lewis, Jr.                                                        

    In August 2000, our five-year employment and noncompetition agreement with
George T. Lewis, Jr., expired. Mr. Lewis received base compensation of $424,052 
through August 2000 related to this agreement.                                  

Robert W. Lewis                                                             

While Robert W. Lewis was employed as an executive officer, Cogentrix 
entered into a non-qualified incentive compensation agreement with him similar  
to the agreements described above under "-- Facility Cash Flow Incentive        
Compensation Agreements" providing for him to receive incentive compensation    
annually equal to a designated percentage of the net cash flow for the fiscal   
year of two of our facilities. Our obligation to make such annual payments to   
him continues through June 30, 2007. We have agreed to pay him an annual minimum
payment of $200,000 regardless of whether his actual annual distribution would  
yield such amount. Robert W. Lewis must repay to Cogentrix, on or before January
31, 2008, an amount equal to the aggregate amount of minimum payments made in   
excess of the actual annual distributions which he was entitled to receive. The 
actual amount of the distribution Mr. Lewis received pursuant to his facility   
cash flow compensation agreement for the year ended December 31, 2000 was       
$726,009.                                                                       

  If at any time through June 1, 2007, Mr. Lewis sells or transfers any of
the shares of common stock of Cogentrix Energy held by him to anyone other than 
other designated members of the Lewis family without granting Cogentrix Energy a
right of first refusal with respect to the shares sold or transferred, he will  
forfeit his right to the annual distributions under his facility cash flow      
incentive compensation agreement and the right to the annual minimum payment of 
$200,000.                                                                       

James E. Lewis                                                              

  On January 1, 2000, we entered into a consulting agreement with James E.
Lewis, a shareholder, director, officer and former employee of Cogentrix. Under 
the terms of the consulting agreement, Mr. Lewis is required, subject to certain
limits, to be available during customary business hours for consultations,      
either in person or by telephone, with respect to such of our business and      
affairs as we may reasonably call on him to furnish.                            

   Pursuant to the consulting agreement, base compensation is payable to Mr.
Lewis in the following amounts for the following periods:                       

                                                                [Download Table]

                           PERIOD                             BASE COMPENSATION
                           ------                             -----------------
                                                                               
01-01-00 to 12-31-00........................................      $350,424     
01-01-01 to 12-31-01........................................       219,015     
01-01-02 to 12-31-02........................................       187,727     
01-01-03 to 12-31-03........................................       187,727     
01-01-04 to 12-31-04........................................       125,151     

  In the event of Mr. Lewis' death or inability to provide services due to
disability, we are obligated to continue making payments, when due, to him or   
his estate.                                                                     

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ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT        

All of the issued and outstanding shares of common stock of Cogentrix 
Energy are beneficially owned as follows:                                       

                                                                [Download Table]

                                                             NUMBER OF  PERCENTAGE
                            NAME                              SHARES    OWNERSHIP 
                            ----                             ---------  ----------
                                                                                  
George T. Lewis, Jr. (1)....................................  73,320        26%   
David J. Lewis, as trustee (2)..............................  73,320        26    
Robert W. Lewis as trustee (2)..............................  73,320        26    
Betty G. Lewis..............................................  73,320        26    
David J. Lewis..............................................  45,120        16    
James E. Lewis..............................................  45,120        16    
Robert W. Lewis.............................................  45,120        16    

---------------                                                                 

(1) George T. Lewis, Jr.'s shares are held of record by a revocable grantor     
 trust (the "Trust") that may be revoked by Mr. Lewis at any time prior to
   his death, in which event the shares held by the Trust would be transferred
  to him. Accordingly, he is deemed to be the beneficial owner of the shares
held by the Trust.                                                      
(2) The 73,320 shares shown as beneficially owned by Mr. David J. Lewis and Mr. 
 Robert W. Lewis are all held of record by the Trust described in Note (1)
above. Mr. David J. Lewis and Mr. Robert W. Lewis are deemed to be the  
 beneficial owners of these shares, because they are the joint trustees of
    the Trust and, as such, have the power to jointly vote and invest the shares
held by the Trust. Since George T. Lewis, Jr. is also deemed to be the  
    beneficial owner of these shares, they are also included in the amount shown
for the number of shares beneficially owned by George T. Lewis, Jr.     

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        

   The transactions described or referred to below were entered into between
related parties. In connection with the public offering of our Senior Notes     
conducted in March 1994, our board of directors adopted a policy that all       
subsequent material transactions with related parties must be on terms no less  
favorable than could be obtained from third parties and that any variance from  
this policy is subject to approval by a majority of our disinterested directors.
The indentures and the covenants of the Corporate Credit Facility place certain 
limitations on our ability to enter into material transactions with related     
parties as well.                                                                

LEASES AND REAL PROPERTY TRANSACTIONS                                           

  Equipment Leasing Partners ("ELP"), a North Carolina general partnership
consisting of four of our shareholders, George T. Lewis, Jr., David J. Lewis,   
James E. Lewis and Robert W. Lewis, owns and leases certain equipment to our    
project subsidiaries related to the operations of the plants. Each of the       
partners in ELP is a member of our board of directors. David J. Lewis is        
Chairman and Chief Executive Officer of Cogentrix. Total rent paid by us to ELP 
under such equipment leases was approximately $633,000, $901,000 and $726,000   
for the fiscal years ended December 31, 2000, 1999 and 1998, respectively.      

ELP also owns and leases to us our executive offices under a long-term
lease with an initial term expiring in 2004. Total rent paid by us to ELP under 
such lease was approximately $882,000, $868,000 and $856,000 for the fiscal     
years ended December 31, 2000, 1999 and 1998, respectively.                     

ELP leases the land on which our executive offices are located under a
long-term ground lease from an unrelated third party with an initial term       
expiring in 2047, all payments under which are guaranteed by Cogentrix. Total   
amounts paid by ELP under such lease were approximately $118,000, $118,000 and  
$112,000 for the years ended December 31, 2000, 1999 and 1998, respectively.    

FACILITY CASH FLOW INCENTIVE COMPENSATION AGREEMENTS                            

    We have entered into an agreement with one of the beneficial owners of our
outstanding shares of common stock, who is also a director, that provides for   
the receipt of annual distributions equal to a designated                       

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percentage of the net cash flow for each fiscal year of two of our facilities.  
See "Executive Compensation -- Directors' Compensation and Consulting           
Agreements" herein.                                                             

SHAREHOLDER STOCK TRANSFER AGREEMENT                                            

   In August 1994, George T. Lewis, Jr. entered into an agreement with Betty
G. Lewis ("Ms. Lewis") providing for, among other things, the transfer by George
T. Lewis, Jr. of a portion of his shares of our common stock to Ms. Lewis.      

In accordance with the agreement, if Ms. Lewis desires to transfer or 
otherwise dispose of any of her shares of common stock of Cogentrix, she must   
first offer to sell them to us at a price equal to a bona fide offer from an    
unrelated party. Any shares, the offer of sale of which is not accepted by us   
after receipt of the written offer, must be offered by Ms. Lewis at the same    
price to the other shareholders, who have the right to purchase such shares on a
pro rata basis determined in accordance with the then current stock ownership of
those shareholders. In the event neither we nor the other shareholders notify   
Ms. Lewis of its or their intention to purchase her shares within 15 days after 
receipt of the written offer, Ms. Lewis shall have the right for 90 days        
thereafter to consummate the sale of her shares with the unrelated party who    
provided the bona fide offer.                                                   

SHAREHOLDER REVOLVING CREDIT FACILITY                                           

 In March 2000, Cogentrix Energy established a revolving credit facility
whereby each of its shareholders may borrow from time to time up to $1,000,000  
from Cogentrix Energy on a revolving basis. Shareholder borrowings will accrue  
interest at the prime rate of a major United States bank plus 1.0%. Principal   
payments on any borrowings made under the facility are due in three equal annual
installments together with accrued interest on each annual shareholder dividend 
payment date following the borrowing. Upon the sale of any of a shareholder's   
shares (except a permitted transfer), the principal balance outstanding together
with accrued interest will become due and payable immediately. The largest      
aggregate amount of indebtedness outstanding exceeding $60,000 at any time      
during the last fiscal year from any shareholder and outstanding balance at     
December 31, 2000 was as follows:                                               

                                                        [Enlarge/Download Table]

                                                 LARGEST BALANCE                           
                                                OUTSTANDING DURING    OUTSTANDING BALANCE  
             SHAREHOLDER/DIRECTOR                  FISCAL 2000      AS OF DECEMBER 31, 2000
             --------------------               ------------------  -----------------------
                                                                                           
Robert W. Lewis................................     $1,000,000             $200,000        

ITEM 14.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES AND REPORTS ON 8-K         

     (a) Financial Statements, Financial Statement Schedules and Exhibits -- The
following documents are filed as part of this Form 10-K.      

  (1) Consolidated Financial Statements -- See index on page 35.

(2) Financial Statement Schedules -- See index on page 35.  

(3) Index to Exhibits                                       

                                                                [Download Table]

DESIGNATION OF                                                               
   EXHIBIT       DESCRIPTION OF EXHIBIT                                      
--------------   ----------------------                                      
                                                                             
      2.1        Purchase Agreement, dated as of March 6, 1998, between      
                 Cogentrix Energy, Inc. and Bechtel Generating Company, Inc. 
                 (10.2). (*)(13)                                             
      2.1(a)     Amendment No. 1, dated October 14, 1998, to Purchase        
                 Agreement, dated March 6, 1998, between Cogentrix Energy,   
                 Inc., a North Carolina corporation ("Buyer"), and Bechtel   
                 Generating Company, Inc., a Delaware corporation ("Seller").
                 (21)                                                        

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                                                                [Download Table]

DESIGNATION OF                                                               
   EXHIBIT       DESCRIPTION OF EXHIBIT                                      
--------------   ----------------------                                      
                                                                             
      2.2        Securities Purchase Agreement, dated March 6, 1998, by and  
                 among LS Power Corporation, a Delaware corporation, Granite 
                 Power Partners, L.P., a Delaware Limited Partnership        
                 (collectively, the "Sellers"), Cogentrix Mid-America, Inc., 
                 a Delaware corporation, Cogentrix Cottage Grove, LLC, a     
                 Delaware limited liability Company, and Cogentrix           
                 Whitewater, LLC, a Delaware limited liability company       
                 (collectively, the "Purchasers") and Cogentrix Energy, Inc. 
                 (2). (12)                                                   
      3.1        Articles of Incorporation of Cogentrix Energy, Inc. (3.1).  
                 (1)                                                         
      3.2        Amended and Restated Bylaws of Cogentrix Energy, Inc., as   
                 amended (3.2). (11)                                         
      4.1        Indenture, dated as of March 15, 1994, between Cogentrix    
                 Energy, Inc. and First Union National Bank of North         
                 Carolina, as Trustee, including form of 8.10% 2004 Senior   
                 Note (4.1). (3)                                             
      4.2        Indenture, dated as of October 20, 1998, between Cogentrix  
                 Energy, Inc. and First Union National Bank, as Trustee,     
                 including form of 8.75% Senior Note (4.2). (14)             
      4.3        First Supplemental Indenture, dated as of October 20, 1998, 
                 between Cogentrix Energy, Inc. and First Union National     
                 Bank, as Trustee (4.3). (14)                                
      4.4        Registration Agreement, dated as of September 22, 2000, by  
                 and among Cogentrix Energy, Inc., Salomon Smith Barney Inc. 
                 and CIBC World Markets Corp (4.4). (30)                     
      4.5        Registration Agreement, dated as of November 25, 1998,      
                 between Cogentrix Energy, Inc. and Salomon Smith Barney,    
                 Inc. (4.5). (15)                                            
      4.6        Amendment No. 1 to the First Supplemental Indenture, dated  
                 as of November 25, 1998, between Cogentrix Energy, Inc. and 
                 First Union National Bank, as Trustee (4.6). (15)           
     10.1        Third Amendment and Restatement of the Power Purchase and   
                 Operating Agreement, dated December 5, 1997, between        
                 Cogentrix Virginia Leasing Corporation and Virginia Electric
                 and Power Company (Portsmouth Facility) (10.7 (a)). (11)    
     10.2        Power Purchase and Operating Agreement, dated as of January 
                 24, 1989, between Cogentrix of Rocky Mount, Inc. and        
                 Virginia Electric and Power Company, doing business in North
                 Carolina as North Carolina Power, as amended (Rocky Mount   
                 Facility) (10.8). (1)                                       
     10.3        Power Purchase and Operating Agreement, dated as of January 
                 24, 1989, between Cogentrix of Richmond, Inc. (formerly     
                 named Cogentrix of Petersburg, Inc.) and Virginia Electric  
                 and Power Company, as amended. (Richmond Facility, Unit 1)  
                 (10.10). (1)                                                
     10.4        Power Purchase and Operating Agreement, dated as of January 
                 24, 1989, between WV Hydro, Inc. and Virginia Electric and  
                 Power Company, as amended (assigned to and assumed by       
                 Cogentrix of Richmond, Inc.) (Richmond Facility, Unit 11)   
                 (10.11). (1)                                                
     10.5        Steam Purchase Agreement, dated as of December 31, 1985,    
                 between Cogentrix Virginia Leasing Corporation and          
                 Hoechst-Celanese Corporation (successor to Virginia         
                 Chemicals Inc.) (Portsmouth Facility) (10.19). (*)(2)       
     10.6        Steam Purchase Agreement, dated as of November 15, 1988,    
                 between Cogentrix of Rocky Mount, Inc. and Abbott           
                 Laboratories, as amended (Rocky Mount Facility) (10.20). (*)
                 (2)                                                         
     10.7        Steam Purchase Agreement, dated as of May 18, 1990, between 
                 Cogentrix of Richmond, Inc. and E.I. du Pont de Nemours and 
                 Company, as amended (Richmond Facility) (10.22). (*) (2)    
     10.8        Coal Sales Agreement, dated as of December 15, 1986, among  
                 AgipCoal Sales USA, Inc. (formerly named Enoxy Coal Sales,  
                 Inc.), AgipCoal USA, Inc. (formerly named Enoxy Coal, Inc.) 
                 and Cogentrix Virginia Leasing Corporation (Portsmouth      
                 Facility) (10.27). (*) (2)                                  

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DESIGNATION OF                                                               
   EXHIBIT       DESCRIPTION OF EXHIBIT                                      
--------------   ----------------------                                      
                                                                             
     10.8(a)     First Amendment to Coal Sales Agreement, dated September 29,
                 1995, by and between Arch Coal Sales Company, Inc., and     
                 Cogentrix Virginia Leasing Corporation (Portsmouth Facility)
                 (10.1). (6)                                                 
     10.8(b)     Second Amendment, dated as of April 20, 1999, to Coal Sales 
                 Agreement, dated as of December 15, 1986, by and. between   
                 Cogentrix Virginia Leasing Corporation and Arch Coal Sales  
                 Company (Portsmouth Facility) (10.1). (*) (25)              
     10.9        Coal Sales Agreement, dated as of October 1, 1989, among    
                 Agip Coal Sales USA, Inc., Laurel Creek Co., Inc. and       
                 Cogentrix of Rocky Mount, Inc., as amended (Rocky Mount     
                 Facility) (10.28). (*) (2)                                  
    10.10        Coal Sales Agreement, dated as of February 15, 1990, among  
                 Electric Fuels Corporation, Kentucky May Coal Company, Inc. 
                 and Cogentrix of Richmond, Inc., as amended (Richmond       
                 Facility, Unit 1) (10.31). (*) (2)                          
    10.10(a)     Fourth Amendment to Coal Sales Agreement, dated as of July  
                 1, 1998, among Electric Fuels Corporation, Kentucky May Coal
                 Company, Inc. and Cogentrix of Richmond, Inc. (Richmond     
                 Facility, Unit 1) (10.10(a)). (*) (22)                      
    10.11        Coal Sales Agreement, dated as of January 1, 1990, between  
                 Coastal Coal Sales, Inc., and Cogentrix of Richmond, Inc.,  
                 as amended (Richmond Facility, Unit 11) (10.32). (*) (2)    
    10.12        Railroad Transportation Contract, dated as of December 22,  
                 1986, between Cogentrix Virginia Leasing Corporation, and   
                 Norfolk Southern Railway Company, as amended (Portsmouth    
                 Facility) (10.39). (*) (2)                                  
    10.13        Barge Transportation Contract, dated as of December 23,     
                 1986, between Cogentrix Virginia Leasing Corporation and    
                 McAllister Brothers, Inc., as amended (Portsmouth Facility) 
                 (10.40). (1)                                                
    10.14        Railroad Transportation Contract, dated as of September 26, 
                 1989, between Cogentrix of Rocky Mount, Inc. and CSX        
                 Transportation, Inc., as amended (Rocky Mount Facility)     
                 (10.41). (*) (2)                                            
    10.14(a)     Fourth Amendment, dated as of August 23, 1995, to the       
                 Railroad Transportation Contract, dated as of September 26, 
                 1989, between Cogentrix of Rocky Mount, Inc. and CSX        
                 Transportation, Inc. (Rocky Mount Facility) (10.41 (a)). (5)
    10.14(b)     Fifth Amendment, dated as of January 1, 1996, to the        
                 Railroad Transportation Contract, dated as of September 26, 
                 1989, between Cogentrix of Rocky Mount, Inc. and CSX        
                 Transportation, Inc. (Rocky Mount Facility) (10.41 (b)). (8)
    10.14(c)     Amendment No. 6 to Contract CSXT-C-03951, dated as of       
                 January 1, 1997, between Cogentrix of Rocky Mount, Inc. and 
                 CSX Transportation, Inc. (Rocky Mount Facility) (10.9). (9) 
    10.14(d)     Amendment No. 7 to Contract CSXT-C-03951, dated as of July  
                 1, 1997, between Cogentrix of Rocky Mount, Inc. and CSX     
                 Transportation, Inc. (Rocky Mount Facility) (10.47(d)). (10)
    10.14(e)     Amendment No. 8 to Contract CSXT-C-03951, dated as of       
                 January 1, 1999, between Cogentrix of Rocky Mount, Inc. and 
                 CSX Transportation, Inc. (Rocky Mount Facility) (10.14(e)). 
                 (22)                                                        
    10.14(f)     Amendment No. 9 to Contract CSXT-C-03951, dated as of       
                 January 1, 2001, between Cogentrix of Rocky Mount, Inc. and 
                 CSX Transportation, Inc. (Rocky Mount Facility)             
    10.15        Railroad Transportation Contract, dated as of March 1, 1990,
                 between Cogentrix of Richmond, Inc. and CSX Transportation, 
                 Inc., as amended (Richmond Facility, Unit I) (10.42). (*)   
                 (2)                                                         

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DESIGNATION OF                                                               
   EXHIBIT       DESCRIPTION OF EXHIBIT                                      
--------------   ----------------------                                      
                                                                             
    10.15(a)     Third Amendment to Railroad Transportation Contract, filed  
                 with the ICC on December 13, 1994, between Cogentrix of     
                 Richmond, Inc. and CSX Transportation, Inc. (Richmond       
                 Facility, Unit 1) (10.4). (4)                               
    10.16        Railroad Transportation Contract, dated as of March 1, 1990,
                 between Cogentrix of Richmond, Inc. and CSX Transportation, 
                 Inc., as amended (Richmond Facility, Unit II) (10.43). (*)  
                 (2)                                                         
    10.16(a)     Fourth Amendment to Railroad Transportation Contract, filed 
                 with the ICC on December 13, 1994, between Cogentrix of     
                 Richmond, Inc. and CSX Transportation, Inc. (Richmond       
                 Facility, Unit 11) (10.5). (4)                              
    10.16(b)     Fifth Amendment to Railroad Transportation Contract,        
                 effective as of November 16, 1995, between Cogentrix of     
                 Richmond, Inc. and CSX Transportation, Inc. (Richmond       
                 Facility, Unit 11) (10.43 (b)). (*) (8)                     
    10.16(c)     Amendment No. 6 to Railroad Transportation Contract,        
                 effective on June 9, 1998, between Cogentrix of Richmond,   
                 Inc. and CSX Transportation, Inc. (Richmond Facility). (*)  
                 (14)                                                        
    10.17        Third Amended and Restated Loan Agreement, dated as of      
                 December 22, 1997, among Cogentrix Virginia Leasing         
                 Corporation, the lenders party thereto and Credit Lyonnais, 
                 as the Agent, Issuing Bank and a Lender (Portsmouth         
                 Facility) (10.54). (11)                                     
    10.17(a)     Amendment No. 1 to the Third Amended and Restated Loan      
                 Agreement dated as of December 22, 1997 between Cogentrix   
                 Virginia Leasing Company and several banks and other        
                 financial institutions (Portsmouth Facility) (10.2). (25)   
    10.18        Amended and Restated Construction and Term Loan Agreement,  
                 dated as of December 1, 1993, among Cogentrix of Rocky      
                 Mount, Inc., the Tranche B Lenders party thereto, and The   
                 Prudential Insurance Company of America, as Credit Facility 
                 Agent (Rocky Mount Facility) (10.52). (1)                   
    10.18(a)     First Amendment, dated as of March 31, 1996, to the Amended 
                 and Restated Construction and Term Loan Agreement, dated as 
                 of December 1, 1993, among Cogentrix of Rocky Mount, Inc.,  
                 the Tranche B Lenders party thereto, and The Prudential     
                 Insurance Company of America, as Credit Facility Agent      
                 (Rocky Mount Facility) (10.4). (7)                          
    10.18(b)     Second Amendment, dated as of May 31, 1996, to the Amended  
                 and Restated Construction and Term Loan Agreement, dated as 
                 of December 1, 1993, among Cogentrix of Rocky Mount, Inc.,  
                 the Tranche B Lenders party thereto, and The Prudential     
                 Insurance Company of America, as Credit Facility Agent      
                 (Rocky Mount Facility) (10.48(b)). (8)                      
    10.18(c)     Third Amendment, dated as of December 1, 1997, to the       
                 Amended and Restated Construction and Term Loan Agreement,  
                 dated as of December 1, 1993, among Cogentrix of Rocky      
                 Mount, Inc, the Tranche B Lenders party thereto, and The    
                 Prudential Insurance Company of America, as Credit Facility 
                 Agent (Rocky Mount Facility) (10.55(c)). (11)               
    10.20        Amended and Restated Reimbursement and Loan Agreement, dated
                 as of June 28, 2000, by and among Cogentrix of Richmond,    
                 Inc. and BNP Paribas (Richmond Facility) (10.1). (28)       
    10.21        Indenture of Trust, dated as of December 1, 1990, between   
                 the Industrial Development Authority of the City of         
                 Richmond, Virginia and Sovran Bank, N.A., as Trustee,       
                 including First and Second Supplemental Indentures of Trust 
                 (Richmond Facility) (10.56). (1)                            
    10.22        Sale Agreement, dated as of December 1, 1990, between the   
                 Industrial Development Authority of the City of Richmond,   
                 Virginia and Cogentrix of Richmond, Inc., including First   
                 and Second Supplemental Sale Agreements (Richmond Facility) 
                 (10.57). (1)                                                

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DESIGNATION OF                                                               
   EXHIBIT       DESCRIPTION OF EXHIBIT                                      
--------------   ----------------------                                      
                                                                             
    10.23        Third Amended and Restated Security Deposit Agreement, dated
                 as of December 22, 1997, among Cogentrix Virginia Leasing   
                 Corporation, Credit Lyonnais, as Agent and Issuing Bank, and
                 First Union National Bank, as Security Agent (Portsmouth    
                 Facility) (10.68). (11)                                     
    10.24        Amended and Restated Security Deposit Agreement, dated as of
                 December 1, 1993, among Cogentrix of Rocky Mount, Inc., The 
                 Prudential Insurance Company of America, as Credit Facility 
                 Agent and First Union National Bank of North Carolina, as   
                 Security Agent (Rocky Mount Facility) (10.65). (1)          
    10.25        Amended and Restated Security Deposit Agreement, dated as of
                 June 28, 2000, among Cogentrix of Richmond, Inc., BNP       
                 Paribas, as Agent, and First Union National Bank, as        
                 Security Agent and Securities Intermediary (Richmond        
                 Facility) (10.2). (28)                                      
    10.26        Third Amended and Restated Pledge Agreement, dated as of    
                 December 22, 1997, made by Cogentrix, Inc., as Pledgor, and 
                 Credit Lyonnais, as Agent (Portsmouth Facility) (10.79).    
                 (11)                                                        
    10.27        Ground Lease and Easement, dated as of December 15, 1986,   
                 between Virginia Chemicals, Inc., as Lessor and Cogentrix   
                 Virginia Leasing Corporation, as Lessee (Portsmouth         
                 Facility) (10.94). (1)                                      
    10.28        Ground Lease, dated as of December 13, 1990, between        
                 Cogentrix of Richmond, Inc., as Lessee, and E.I. du Pont de 
                 Nemours and Company, as Lessor (Richmond Facility) (10.95). 
                 (1)                                                         
    10.29        Amended and Restated Land Lease Agreement, dated as of      
                 February 18, 1988, among Arrowpoint Associates Limited      
                 Partnership, as Landlord, and Cogentrix, Inc., Cl           
                 Properties, Inc. and Equipment Leasing Partners, as Tenant, 
                 as amended (assigned to and assumed by Equipment Leasing    
                 Partners, with Cogentrix, Inc., as guarantor) (Corporate    
                 Headquarters) (10.96). (1)                                  
    10.30        Amended and Restated Lease Agreement, dated as of April 30, 
                 1993, among Equipment Leasing Partners, as Landlord,        
                 Cogentrix, Inc., as Tenant, and CI Properties, Inc., as     
                 amended (Corporate Headquarters) (10.97). (1)               
    10.31        Letter Agreement, dated May 25, 1989, among Cogentrix, Inc.,
                 Cogentrix of Richmond, Inc. (formerly named Cogentrix of    
                 Petersburg, Inc.), and WV Hydro, Inc., as amended (Richmond 
                 Facility) (10.98). (1)                                      
    10.32        Consulting Agreement, dated as of September 27, 1991,       
                 between Robert W. Lewis and Cogentrix, Inc., as amended     
                 (assigned to and assumed by Cogentrix Energy, Inc.) (10.99).
                 (1)                                                         
    10.33        Consulting Agreement, dated as of September 30, 1993,       
                 between Cogentrix, Inc. and W.E. Garrett (assigned to and   
                 assumed by Cogentrix Energy, Inc.) (10.100). (1)            
    10.34        Consulting Agreement, dated as of March 19, 1998, between   
                 Cogentrix Energy and John A. Tillinghast (10.34). (29)      
    10.35        Form of Profit-Sharing Plan (I) (10.102). (1)               
    10.36        Form of Profit-Sharing Plan (II) (10.103). (1)              
    10.37        Executive Incentive Bonus Plan (10.104). (2)                
    10.38        Facility Cash Flow Incentive Compensation Agreement with    
                 Robert W. Lewis (10.105). (1)                               
    10.39        Adoption of Stock Transfer Agreement dated as of December   
                 30, 1993 among Cogentrix Energy, Inc., Cogentrix Inc., David
                 J. Lewis, Robert W. Lewis and James E. Lewis (10.111). (1)  

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DESIGNATION OF                                                               
   EXHIBIT       DESCRIPTION OF EXHIBIT                                      
--------------   ----------------------                                      
                                                                             
    10.40        Employment Agreement, dated as of August 11, 2000, between  
                 David J. Lewis and Cogentrix Energy, Inc. (10.40). (30)     
    10.41        Amended and Restated Employment Agreement, dated as of May  
                 1, 1997 and amended on August 14, 2000, between Mark F.     
                 Miller and Cogentrix Energy, Inc. (10.41). (30)             
    10.41(a)     Amendment to Employment Agreement, dated as of May 1, 1997  
                 and amended on February 16, 2001, between Mark F. Miller and
                 Cogentrix Energy, Inc.                                      
    10.42        Employment Agreement, dated as of January 1, 1994, between  
                 Dennis W. Alexander and Cogentrix Energy, Inc. (10.110).    
                 (11)                                                        
    10.42(a)     Amendment to Employment Agreement, dated as of January 1,   
                 1994 and amended on February 16, 2001, between Dennis W.    
                 Alexander and Cogentrix Energy, Inc.                        
    10.43        Executive Employment Agreement, dated as of January 1, 1999,
                 Cogentrix Energy, Inc. and James R. Pagano (10.42). (22)    
    10.43(a)     Amendment to Executive Employment Agreement, dated as of    
                 January 1, 1999 and amended on February 16, 2001, between   
                 James R. Pagano and Cogentrix Energy, Inc.                  
    10.44        Supplemental Retirement Savings Plan (10.132). (5)          
    10.44(a)     Amendments to Cogentrix Energy, Inc. Supplemental Retirement
                 Savings Plan. (10.3) (26)                                   
    10.45        Trust Under Supplemental Retirement Savings Plan, dated     
                 April 17, 1995, by and between Cogentrix Energy, Inc. and   
                 Wachovia Bank of North Carolina, N.A. of Winston Salem,     
                 North Carolina, as Trustee (10.133). (5)                    
    10.46        Third Amended and Restated Credit Agreement among Cogentrix 
                 Energy, Inc. and the Several Lenders from time to time      
                 parties thereto and Australia and New Zealand Banking Group 
                 Limited as Coordinating Lead Arranger, the Bank of Nova     
                 Scotia and CitiBank N.A. as Lead Arrangers, and Australia   
                 and New Zealand Banking Group Limited as Agent and Issuing  
                 Bank, dated as of September 14, 2000 (10.46). (30)          
    10.47        Third Amended and Restated Guarantee, dated as of September 
                 14, 2000, made by Cogentrix Delaware Holdings, Inc., the    
                 Guarantor, in favor of the Borrower Creditors (10.47). (30) 
    10.48        Amended and Restated Limited Partnership Agreement, dated as
                 of June 30, 1995, among LSP-Cottage Grove, Inc., Granite    
                 Power Partners, L.P., and TPC Cottage Grove, Inc. (17)      
    10.48(a)     Amendment No. 1 to the Cottage Grove Partnership Agreement. 
                 (18)                                                        
    10.48(b)     Consent, Waiver and Amendment No. 2, dated March 20, 1998,  
                 to the Amended and Restated Limited Partnership Agreement of
                 LSP-Cottage Grove, L.P. (20)                                
    10.48(c)     Third Amendment, dated December 11, 1998, to the Amended and
                 Restated Limited Partnership Agreement of LSP-Cottage Grove,
                 L.P. (23)                                                   
    10.49        Amended and Restated Partnership Agreement, dated as of June
                 30, 1995, among LSP Whitewater I, Inc., Granite Power       
                 Partners, L.P. and TPC Whitewater, Inc. (17)                
    10.49(a)     Consent, Waiver and Amendment No. 1, dated March 20, 1998,  
                 to the Amended and Restated Limited Partnership Agreement of
                 LSP-Whitewater Limited Partnership. (20)                    
    10.49(b)     Second Amendment, dated December 11, 1998, to the Amended   
                 and Restated Limited Partnership Agreement of LSP-Whitewater
                 Limited Partnership. (23)                                   
    10.50        Power Purchase Agreement, dated as of May 9, 1994, between  
                 Northern States Power Company and LSP-Cottage Grove, L.P.   
                 (17)                                                        
    10.51        Power Purchase Agreement, dated as of December 21, 1993,    
                 between Wisconsin Electric Power Company and LSP-Whitewater 
                 Limited Partnership. (17)                                   

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DESIGNATION OF                                                               
   EXHIBIT       DESCRIPTION OF EXHIBIT                                      
--------------   ----------------------                                      
                                                                             
    10.51(a)     Amendment to Power Purchase Agreement, dated as of February 
                 10, 1994, between Wisconsin Electric Power Company and      
                 LSP-Whitewater Limited Partnership. (17)                    
    10.51(b)     Second Amendment to Power Purchase Agreement, dated as of   
                 October 5, 1994, between Wisconsin Electric Power Company   
                 and LSP-Whitewater Limited Partnership. (17)                
    10.51(c)     Third Amendment to Power Purchase Agreement, dated as of May
                 5, 1995, between Wisconsin Electric Power Company and       
                 LSP-Whitewater Limited Partnership. (17)                    
    10.51(d)     Fourth Amendment to Power Purchase Agreement, dated March   
                 18, 1997, between Wisconsin Electric Power Company and      
                 LSP-Whitewater Limited Partnership. (19)                    
    10.51(e)     Fifth Amendment to Power Purchase Agreement, dated February 
                 26, 1998, between Wisconsin Electric Power Company and      
                 LSP-Whitewater Limited Partnership. (20)                    
    10.52        Operations and Maintenance Agreement by and between         
                 LSP-Whitewater Limited Partnership as Owner and             
                 LSP-Whitewater 1, Inc. as Operator dated as of April 15,    
                 1999 (10.1). (*) (24)                                       
    10.53        Operations and Maintenance Agreement by and between         
                 LSP-Cottage Grove, L.P. as Owner and LSP-Cottage Grove, Inc.
                 as Operator dated as of April 15, 1999 (10.2). (*) (24)     
    10.54        Steam Purchase Contract, effective as of January 1, 1999, by
                 and between Celanese Chemical, Inc. and Cogentrix Virginia  
                 Leasing Corporation (Portsmouth Facility) (10.3). (25)      
    10.55        Steam Purchase Contract, effective as of January 1, 1999, by
                 and between BASF Corporation and Cogentrix Virginia Leasing 
                 Corporation (Portsmouth Facility) (10.4). (*) (25)          
    10.56        Credit Agreement, dated as of September 8, 1999, between    
                 Cogentrix Eastern America, Inc. and Dresdner Bank, AG, as   
                 administrative agent (10.1). (26)                           
    10.56(a)     First Amendment, dated as of December 17, 1999, to the      
                 Credit Agreement, dated as of September 8, 1999, between    
                 Cogentrix Eastern America, Inc. and Dresdner Bank, AG, as   
                 administrative agent. (10.58(a)). (29)                      
    10.57        Pledge Agreement, dated as of September 8, 1999, between    
                 Cogentrix Delaware Holdings, Inc. and Dresdner Bank, AG, as 
                 administrative agent (10.2). (26)                           
    10.58        Consulting Agreement, dated as of January 1, 2000, between  
                 James E. Lewis and Cogentrix Energy, Inc. (10.60). (29)     
    10.59        Guarantee, dated as of June 30, 1999, between Cogentrix     
                 Energy, Inc. in favor of Rathdrum Power, LLC (10.1). (27)   
    10.59(a)     First Amendment to Guarantee dated as of March 8, 2000      
                 between Cogentrix Energy, Inc. and Rathdrum Power, LLC      
                 (10.1a). (27)                                               
    10.60        Guaranty by Cogentrix Energy, Inc. and La Compania de       
                 Electricidad de San Pedro de Macoris, dated as of April 7,  
                 2000 (10.3). (28)                                           
    10.61        Cogentrix Contingent Equity Guarantee, dated as of April 7, 
                 2000, by and between Cogentrix Energy, Inc. in favor of La  
                 Compania de Electricidad de San Pedro de Macoris and The    
                 Bank of Nova Scotia Trust Company of New York (10.4). (28)  
    10.62        Executive Employment Agreement between Cogentrix Energy Inc.
                 and Thomas F. Schwartz, dated as of February 16, 2001.      
     21.1        Direct and Indirect Subsidiaries of Cogentrix Energy, Inc.  

---------------                                                                 

(*) Certain portions of this exhibit have been omitted pursuant to previously   
approved requests for confidential treatment.                           

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(1) Incorporated by reference to Registration Statement on Form S-1 (File No. 
     33-74254) filed January 19, 1994. The number designating the exhibit on the
     exhibit index to such previously-filed report is enclosed in parentheses at
the end of the description of the exhibit above.                      
(2) Incorporated by reference to Amendment No. 2 to Registration Statement on 
  Form S-1 (File No. 33-74254) filed March 7, 1994. The number designating
the exhibit on the exhibit index to such previously-filed report is   
     enclosed in parentheses at the end of the description of the exhibit above.
(3) Incorporated by reference to the Form 10-K (File No. 33-74254) filed      
     September 28, 1994. The number designating the exhibit on the exhibit index
  to such previously-filed report is enclosed in parentheses at the end of
the description of the exhibit above.                                 
(4) Incorporated by reference to the Form 10-Q (File No. 33-74254) filed      
    February 14, 1995. The number designating the exhibit on the exhibit index
  to such previously-filed report is enclosed in parentheses at the end of
the description of the exhibit above.                                 
(5) Incorporated by reference to the Form 10-K (File No. 33-74254) filed      
     September 28, 1995. The number designating the exhibit on the exhibit index
  to such previously-filed report is enclosed in parentheses at the end of
the description of the exhibit above.                                 
(6) Incorporated by reference to the Form 10-Q (File No. 33-74254) filed      
    November 14, 1995. The number designating the exhibit on the exhibit index
  to such previously-filed report is enclosed in parentheses at the end of
the description of the exhibit above.                                 
 (7) Incorporated by reference to the Form 10-Q (File No. 33-74254) filed May 3,
1996. The number designating the exhibit on the exhibit index to such 
previously-filed report is enclosed in parentheses at the end of the  
description of the exhibit above.                                     
(8) Incorporated by reference to the Form 10-K (File No. 33-74254) filed      
   October 10, 1996. The number designating the exhibit on the exhibit index
  to such previously-filed report is enclosed in parentheses at the end of
the description of the exhibit above.                                 
(9) Incorporated by reference to the Form 10-Q (File No. 33-74254) filed      
    February 14, 1997. The number designating the exhibit on the exhibit index
  to such previously-filed report is enclosed in parentheses at the end of
the description of the exhibit above.                                 
(10) Incorporated by reference to the Form 10-K (File No. 33-74254) filed       
     September 29, 1997. The number designating the exhibit on the exhibit index
  to such previously-filed report is enclosed in parentheses at the end of
the description of the exhibit above.                                 
(11) Incorporated by reference to the Form 10-K (File No. 33-74254) filed March 
   30, 1998. The number designating the exhibit on the exhibit index to such
previously-filed report is enclosed in parentheses at the end of the  
description of the exhibit above.                                     
(12) Incorporated by reference to the Form 8-K (File No. 33-74254) filed April  
  6, 1998. The number designating the exhibit on the exhibit index to such
previously-filed report is enclosed in parentheses at the end of the  
description of the exhibit above.                                     
(13) Incorporated by reference to the Form 10-Q (File No. 33-74254) filed May   
   15, 1998. The number designating the exhibit on the exhibit index to such
previously-filed report is enclosed in parentheses at the end of the  
description of the exhibit above.                                     
(14) Incorporated by reference to the Registration Statement on Form S-4 (File  
   No. 33-67171) filed November 12, 1998. The number designating the exhibit
on the exhibit index to such previously file report is enclosed in    
parentheses at the end of the description of the exhibit above.       
(15) Incorporated by reference to Amendment No. 1 to the Registration Statement 
on Form S-4 (File No. 33-67171) filed January 27, 1999. The number    
     designating the exhibit on the exhibit index to such previously file report
 is enclosed in parentheses at the end of the description of the exhibit
above.                                                                
(16) Incorporated by reference to Amendment No. 3 to the Registration Statement 
   on Form S-4 (File No. 33-67171) filed March 15, 1999 by Cogentrix Energy,
Inc. and Cogentrix Delaware Holdings, Inc. The number designating the 
    exhibit on the exhibit index to such previously file report is enclosed in
parentheses at the end of the description of the exhibit above.       
(17) Incorporated by reference to the Registration Statement on Form S-4 (File  
 No. 33-95928) filed on August 16, 1995, as amended, or to the Form 10-K
filed for the fiscal year ended December 31, 1995 by LS Power Funding 
Corporation, LSP-Cottage Grove, L.P. and LSP-Whitewater Limited       
Partnership.                                                          

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(18) Incorporated by reference to the Form 10-Q (File No. 33-95928) filed August
12, 1996 by LS Power Funding Corporation, LSP-Cottage Grove, L.P. and 
LSP-Whitewater Limited Partnership.                                   
(19) Incorporated by reference to the Form 10-Q (File No. 33-95928) filed May   
14, 1997 by LS Power Funding Corporation, LSP-Cottage Grove, L.P. and 
LSP-Whitewater Limited Partnership.                                   
(20) Incorporated by reference to the Form 10-K (File No. 33-95928) filed April 
15, 1998 by LS Power Funding Corporation, LSP-Cottage Grove, L.P. and 
LSP-Whitewater Limited Partnership.                                   
(21) Incorporated by reference to the Form 8-K (File No. 33-74254) filed        
   November 4, 1998. The number designating the exhibit on the exhibit index
  to such previously-filed report is enclosed in parentheses at the end of
the description of the exhibit above.                                 
(22) Incorporated by reference to the Form 10-K (File No. 33-74254) filed March 
   31, 1999. The number designating the exhibit on the exhibit index to such
previously-filed report is enclosed in parentheses at the end of the  
description of the exhibit above.                                     
(23) Incorporated by reference to the Form 10-K (File No. 33-95928) filed March 
31, 1999 by LS Power Funding Corporation, LSP-Cottage Grove, L.P. and 
LSP-Whitewater Limited Partnership.                                   
(24) Incorporated by reference to the Form 10-Q (File No. 33-95928) filed May   
17, 1999 by LS Power Funding Corporation, LSP-Cottage Grove, L.P. and 
   LSP-Whitewater Limited Partnership. The number designating the exhibit on
the exhibit index to such previously filed report is enclosed in      
parentheses at the end of the description of the exhibit above.       
(25) Incorporated by reference to the Form 10-Q (File No. 33-74254) filed August
   16, 1999. The number designating the exhibit on the exhibit index to such
previously filed report is enclosed in parentheses at the end of the  
description of the exhibit above.                                     
(26) Incorporated by reference to the Form 10-Q (File No. 33-74254) filed       
    November 15, 1999. The number designating the exhibit on the exhibit index
  to such previously filed report is enclosed in parentheses at the end of
the description of the exhibit above.                                 
(27) Incorporated by reference to the Form 10-Q (File No. 33-74254) filed May   
   15, 2000. The number designating the exhibit on the exhibit index to such
previously filed report is enclosed in parentheses at the end of the  
description of the exhibit above.                                     
(28) Incorporated by reference to the Form 10-Q (File No. 33-74254) filed August
   14, 2000. The number designating the exhibit on the exhibit index to such
previously filed report is enclosed in parentheses at the end of the  
description of the exhibit above.                                     
(29) Incorporated by reference to the Form 10-K (File No. 33-74254) filed March 
   30, 2000. The number designating the exhibit on the exhibit index to such
previously filed report is enclosed in parentheses at the end of the  
description of the exhibit above.                                     
(30) Incorporated by reference to the Registration Statement on Form S-4 (File  
   No. 333-48448) filed October 23, 2000. The number designating the exhibit
on the exhibit index to such previously filed report is enclosed in   
parentheses at the end of the description of the exhibit above.       

  82

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, as amended, Registrant has duly caused this report to be  
signed on its behalf by the undersigned, thereunto duly authorized.             

                          COGENTRIX ENERGY, INC.
                (Registrant)

Date: March 30, 2001                      By:      /s/ DAVID J. LEWIS           
                                            ------------------------------------
                                            David J. Lewis
                                            Chairman of the Board,
                                            Chief Executive Officer and Director
                                           (Principal Executive Officer)

 Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
Registrant and in the capacities and on the dates indicated.                    

                                                        [Enlarge/Download Table]

                      SIGNATURE                                     TITLE                   DATE     
                      ---------                                     -----                   ----     
                                                                                                     

                                                       Chairman Emeritus and Director  March 30, 2001
-----------------------------------------------------                                                
                George T. Lewis, Jr.                                                                 

                 /s/ DAVID J. LEWIS                    Chairman of the Board, Chief    March 30, 2001
-----------------------------------------------------    Executive Officer and                       
                   David J. Lewis                        Director                                    

                 /s/ MARK F. MILLER                    President, Chief Operating      March 30, 2001
-----------------------------------------------------    Officer and Director                        
                   Mark F. Miller                                                                    

                 /s/ BETTY G. LEWIS                    Director                        March 30, 2001
-----------------------------------------------------                                                
                   Betty G. Lewis                                                                    

                 /s/ JAMES E. LEWIS                    Vice Chairman and Director      March 30, 2001
-----------------------------------------------------                                                
                   James E. Lewis                                                                    

                 /s/ ROBERT W. LEWIS                   Director                        March 30, 2001
-----------------------------------------------------                                                
                   Robert W. Lewis                                                                   

               /s/ DENNIS W. ALEXANDER                 Group Senior Vice President,    March 30, 2001
-----------------------------------------------------    General Counsel, Secretary                  
                 Dennis W. Alexander                     and Director                                

                  /s/ W. E. GARRETT                    Director                        March 30, 2001
-----------------------------------------------------                                                
                    W. E. Garrett                                                                    

               /s/ JOHN A. TILLINGHAST                 Director                        March 30, 2001
-----------------------------------------------------                                                
                 John A. Tillinghast                                                                 

               /s/ THOMAS F. SCHWARTZ                  Group Senior Vice President,    March 30, 2001
-----------------------------------------------------    Chief Financial Officer                     
                 Thomas F. Schwartz                      (Principal Accounting                       
                                                         Officer)                                    

  83

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-K405 Filing		Date		First		Last			Other Filings
		4/30/93		78
		9/30/93		78
		12/1/93		77		78
		12/21/93		79
		12/30/93