U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For Fiscal Year Ended: December 31, 1995
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________________ to ______________
Commission file number 0-14452
Far West Electric Energy Fund, L.P.
(Name of small business issuer in its charter)
Delaware 87-0414725
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
921 Executive Park Drive, Suite B, Salt Lake City, Utah 84117
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (801) 268-4444
Securities registered under Section 12(b) of the Act: NONE
Securities registered under Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of class)
0 Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
Total pages: 57
Exhibit Index Page: 49
<PAGE>
Form 10-KSB
Check if there is no disclosure of delinquent filers pursuant
to Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year.
$ 2,674,000
The registrant is a limited partnership and has no voting
stock. At this time there is no market for trading a partnership
interest in the registrant. 93.9% of the partnership interests are
owned by non affiliates.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
PART I
Item 1. Description of Business.
Far West Electric Energy Fund L.P., a Delaware limited partner-
ship (the "Partnership"), was originally organized in September 1984
under the Uniform Limited Partnership Act of Utah as Far West
Hydroelectric Fund, Ltd. On December 20, 1988, the Partnership
changed its name to Far West Electric Energy Fund, L.P. and changed
its domicile to Delaware.
The Partnership owns a geothermal power plant, (the "Steamboat
Springs Plant") located in Nevada, and until March 16, 1995, owned a
hydroelectric plant located in Idaho (the "Crystal Springs Plant")
which was sold to Crystal Springs Hydroelectric, L.P., a Washington
limited partnership pursuant to a Purchase and Sale Agreement dated
February 28, 1995, which was attached as Exhibit (10)(aai) to Form
10-K for fiscal year ended December 31, 1994.
The principal revenue-producing activities of the Partnership
commenced as of December 31, 1985, following the completion in
November 1985 of a public offering of its Units of limited
partnership interests registered under the Securities Act of 1933.
Since 1986, the Partnership has realized revenues from its business
of selling power generated by its plants to public utilities pursuant
to the Public Utility Regulatory Policies Act ("PURPA"), and in
accordance with regulations of the Federal Energy Regulatory
Commission ("FERC") and of the state public utility commissions of
Idaho and Nevada.
Electricity has been generated by the Partnership's hydro-
electric and geothermal power plant and sold to the Idaho Power
Company and to the Sierra Pacific Power Company, pursuant to
long-term contracts for 35 and 20 years, respectively. 100% of the
power generated by the Crystal Springs Plant was sold to Idaho Power
Company and 100% of the power generated by the Steamboat Springs
Plant is sold to Sierra Pacific Power Company. Since the sale of the
Crystal Springs Plant, the Partnership is dependent upon the
continued financial stability of Sierra Pacific Power Company to
honor its power purchase contract.
In addition to its ownership of the Steamboat Springs Plant, the
Partnership owns certain piping and accessory equipment and is
entitled to receive pumping fees and a net subordinated royalty in
connection with the operation of the 1-A Plant located adjacent to
the Steamboat Springs Plant. See "Item 2. Properties."
The Partnership's two power plants were operated on a day-to-day
basis by contract operators, Ormat, Inc. ("Ormat") through October
10, 1990, and by SB GEO, Inc. thereafter in the case of the Steamboat
Springs Plant and in the case of the Crystal Springs Plant by
Bonneville Pacific Corporation ("BPC"), until December, 1991, then by
CHI until December, 1992 and by Little Mac Power Services Co. from
December 1, 1992 until sold. The Partnership has no employees, but
relies on the staff of Far West Capital, Inc. ("Far West Capital"),
a General Partner of the Partnership together with Alan O. Melchior
and Thomas A. Quinn, who are officers, directors, and 80% sharehold-
ers of Far West Capital and were also General Partners of the
Partnership until they resigned as General Partners effective January
1, 1995. The term "General Partner" as used herein, means Far West
Capital and includes Messrs. Melchior and Quinn until they resigned
as General Partners effective January 1, 1995. The Partnership also
employs outside consultants as necessary. As of the date of this
filing, Far West Capital has nine employees who have varied amounts
of responsibility for the Partnership and for other partnerships for
which Far West Capital is the General Partner.
Protection of the environment is a major priority for the
Partnership. The Partnership engages in activities within the
jurisdiction of federal, state and local regulatory agencies. Those
agencies have issued the Partnership permits for these activities
subject to air quality, water quality, and waste management laws and
regulations. The Partnership is currently in compliance with such
laws and regulations. See "Item 2. Properties."
Item 2. Description of Properties
Steamboat Springs thermal-hydroelectric plant.
The Steamboat Springs Plant is located ten miles south of Reno,
Nevada on property leased from Sierra Pacific Power Company pursuant
to a Geothermal Resource Lease in the Steamboat Known Geothermal
Resource Area. The plant has gross capacity of approximately 6.5
megawatts and consists of seven separate modules, utilizing binary
rankine cycle turbines.
In 1987 it was determined that to achieve the expected capacity
and the performance requirements specified in the Steamboat Springs
Plant's purchase contract, Ormat would have to install additional
equipment and make some modifications to existing equipment. These
corrections were made at no cost to the Partnership (although the
down-time for modifications and testing adversely impacted revenues).
The modifications and repairs were completed in the summer of 1988,
and the Partnership was informed that the plant was performing near
projected levels by the fall of 1988. However, during 1989 the plant
produced approximately 36,000,000 kwh (about the same as 1988) which
is substantially less than the 42,000,000 kwh which was the annual
production for the plant, as modified, projected by Ormat and the
43,800,000 kwh called for by the Purchase Agreement.
After reviewing the Steamboat Springs Plant performance with
independent consultants, the General Partner concluded that the
deficiencies in plant performance were attributable to both poor
operating practices employed by Ormat, the former operator, and
certain problems in plant design. Consequently, notice was given to
Ormat that the Partnership believed that Ormat was in default under
both its Operating and Purchase Agreements with the Partnership. The
General Partner replaced Ormat as plant operator on October 11, 1990,
and sought redress for plant deficiencies under the arbitration
clause of the Purchase Agreement. Arbitration proceedings began
October 29, 1990.
The claims of the petitioners as well as the counter claims of
Ormat were numerous and complex, making it difficult to summarize the
ruling of the Arbitration panel. However, in essence the panel
denied the bulk of Petitioners' claims and Ormat's counter claims.
Petitioners were awarded $175,000 for well field problems, and Ormat
was awarded $254,000 for unpaid operating and warranty service, the
payment of which had been withheld pending the completion of the
Arbitration. The Parties have all complied with and satisfied the
ruling of the Arbitrators, including payment of all awards. (See
Part IV, Item 14, Exhibits, Form 10-K dated December 31, 1992.
The present operating agreement provides for SB Geo, Inc. ("SB
GEO") to operate and maintain the plant for a period of 10 years. SB
GEO is to operate the plant on a no profit basis.
In October 1991, the Partnership assigned its 77% ownership
interest and 1-A Enterprises assigned its 23% ownership in SB GEO to
Messrs. Melchior and Quinn, who accepted the assignments and SB GEO's
liabilities. According to an independent valuation firm, SB GEO had
no value as of the transfer date due to its obligations and its cost
basis operating status. Consequently, no gain or loss was recognized
as a result of the assignment.
On October 23, 1992 Westinghouse Credit Corporation ("WCC")
gave the Partnership a notice of default with regard to the long-term
financing of the project for the Partnership allowing the reserve
account to fall below its reserve requirement without adequate
replenishment and because the Award of Arbitrators in the Ormat
Arbitration exceeded $25,000.
Crystal Springs hydroelectric plant.
The Crystal Springs Plant is located ten miles west and seven
miles north of Twin Falls, Idaho. Its leased site is located in
Cedar Draw which flows into the Snake River Canyon. Its primary
components consist of four horizontal Francis-type turbines with an
installed total capacity of 2.88 megawatts. Until March 16, 1995, it
was owned by the Partnership through Crystal Springs Hydroelectric
Company ("CSHC"), a general partnership owned by the Partnership.
The Crystal Springs Plant was placed into operation during
December, 1985, but did not generate significant revenues until the
first quarter of 1986, primarily due to seasonal water shortage
conditions. During the last quarter of 1987, the Partnership
received information which suggests that the Crystal Springs Plant
design was based on overly optimistic water flow assumptions and that
it would not be able to consistently achieve projected average annual
production figures. On July 7, 1988, the Partnership entered into a
Purchase Option Agreement, effective October 1, 1987, with Bonneville
Pacific Corp. ("BPC"), the company which sold the project to the
Partnership. In conjunction therewith, as an accommodation, the
Partnership signed refinancing loan documents ("Loan") with First
Security Bank of Utah ("Bank").
A Restated Operation and Maintenance Agreement ("O&M Agreement")
entered into as of October 1, 1987, dated July 7, 1988, between CSHC
and BPC, served to install BPC, or a representative of its choice, as
the operator of the Crystal Springs Plant. This O&M Agreement also
set forth BPC's duties as the operator. The terms of this O&M
Agreement would run through September 30, 1997, unless terminated
earlier, as provided in the O&M Agreement.
Under this O&M Agreement, BPC was responsible for the daily
operation and maintenance of the plant, maintenance of accounting
records, disbursements from available power revenues, supervision of
employees interaction with power purchasers, and maintenance of the
facility in a safe operating condition. In return, BPC was
compensated a minimum of $20,000 per year; subject to increases by an
amount equal to 10% of all profits between $0 and $20,000, plus 95%
of all profits which exceed $20,000 per year.
BPC accounted for revenues and expenses incurred by BPC in
connection with the operation and maintenance of the Crystal Springs
Plant; CSHC was responsible for insurance expenses and property tax
expenses. In view of the limited participation of CSHC in the
operations, including profits and losses, as described elsewhere
herein, operations of the project were not included in the financial
statements for the years ended December 1990, 1991, or 1992. The net
cost of the Crystal Springs Plant, related long-term debt and related
depreciation, interest, insurance, and tax expenses were included in
the financial statements of the Partnership. The debt service
payments paid by the BPC were included as other income in the
financial statements.
On December 5, 1991, BPC filed for protection under Chapter 11
of the United States Bankruptcy Laws and stopped making option
payments to the Partnership and debt service payments to the Bank.
This action terminated BPC's rights under the Purchase Option
Agreement and the O&M Agreement. BPC's failure to make debt service
payments to the Bank resulted in a default notice from the Bank.
The Partnership received such default notice from the Bank by
letter dated February 3, 1992, maintaining that CSHC was in default
of its loan obligations to the Bank.
CSHC, the Partnership and Far West filed a complaint in the
Third Judicial District Court for Salt Lake County, State of Utah,
naming the Bank as defendant and seeking a declaratory judgment that
plaintiffs were not obligated to perform the obligations under the
Loan documents because they signed them merely as accommodation
parties and seeking injunctive relief against the Bank, enjoining the
Bank from naming any of the plaintiffs in litigation seeking money
damages under the Loan documents.
The Bank subsequently filed a complaint in the District Court of
the Fifth Judicial District of the State of Idaho seeking to
foreclose on the real property security pursuant to the Mortgage.
On July 17, 1992, CSHC, the Partnership and its General Partners
("Crystal Affiliates") entered into an agreement with the Bank
whereby the parties agreed to forbear from further action on both
above complaints. Under such agreement CSHC agreed to pay to the
Bank, on or before September 30, 1992, the sum of $1,800,000. Upon
payment of this settlement sum the Bank was to release the parties
from obligations under the Bank's loan documents.
That agreement expired prior to the Partnership's ability to
refinance or sell the Crystal Springs Plant in order to pay the Bank
the agreed upon $1,800,000 amount. The parties thereafter entered
into a subsequent settlement agreement ("Agreement") effective
December 31, 1992 which provided for dismissal of each of the two
lawsuits and payment of the $1,800,000 to the Bank by December 1,
1993.
It also provided for a mutual waiver of claims between the
parties ("Mutual Release Agreement") and in addition provided for a
$50,000 line of credit for use in repair of certain items of
equipment for the Crystal Springs Plant for startup of operations in
1993 ("Repair Loan"). The Partnership also agreed therein to
exercise its best efforts to sell the Crystal Springs Plant on or
before December 1, 1993, the proceeds to be used in satisfying the
Repair Loan and the $1,800,000 payoff of the Loan to the Bank.
The Mutual Release Agreement also contemplated the execution by
the Parties of an Extension and Modification Agreement with respect
to the Loan which agreement was also entered into as of December 31,
1992 together with an Amendment to Mortgage and an Amendment to
Security Agreement which amended the original Loan documents to
provide for the issues resolved in the Mutual Release Agreement.
In addition, effective the first day of December, 1992, a new
operator of the Project, Little Mac Power Services Co., was put in
place through an Operation and Maintenance Agreement of that date.
A restated Operation and Maintenance Agreement was entered into
effective December 1, 1994.
The Partnership was unable to refinance or sell the Crystal
Springs plant by December 1, 1993 in order to pay the Bank the agreed
upon $1,800,000 amount. In order to extend the term of the loan for
an additional nine (9) months, the parties thereafter entered into a
Second Extension Agreement as of December 1, 1993. This agreement
extended the date until September 1, 1994 for Crystal affiliates to
be able to sell the Crystal Springs plant and use the proceeds to pay
off the $1,800,000 agreed upon to the Bank.
The Crystal Springs Plant was sold as described in Item 1.
above. A Third Extension and Modification Agreement was entered into
by the parties on March 15, 1995 concurrently with such sale which
provides for the Bank's consent to the sale, the Bank's accepting a
principal payment under the loan in the amount of $1,100,000 and
reducing the remaining principal balance of the note to $537,000;
extending its term for five years. It also provides that if the note
is paid in full within two years after the payment of $1,100,000, the
Lender will discount the amount of the principal due by $100,000
(requiring a principal payment of only $437,000), and if paid within
three years, the Lender will discount the amount of the principal due
by $50,000 (requiring a principal payment of only $487,000). There
will be no discount if paid ofter the third anniversary. That
agreement was attached to the December 31, 1994 Form 10-K as Exhibit
(10)(aas).
Revenues from the 1-A thermal-hydroelectric plant
The 1-A geothermal plant (the "1-A Plant") is located adjacent
to the Steamboat Springs Plant. The 1-A Plant consists of two
separate modules, utilizing binary rankine cycle turbines with a
combined net output of 1.8 megawatts.
The 1-A Plant was originally a Steamboat Springs expansion
project, but was sold in 1988 to a general partnership entitled 1-A
Enterprises which is owned 74% by Alan O. Melchior and Thomas A.
Quinn, who were also General Partners of the Partnership and
currently are officers and shareholders of Far West Capital. Use of
the geothermal resource by the 1-A Plant has no adverse effect on the
operation of the Partnership's Steamboat Springs Plant.
In a Second Amendment to Geothermal Resources Lease provision
was made to accommodate the 1-A Plant on the Steamboat Springs
Plant's lease. A Geothermal Resources Sublease was entered into
granting rights and defining terms and conditions for the siting and
operation of the 1-A Plant and setting forth a method of calculating
royalty payments to be made to the Partnership. This Sublease was
Revised and Restated on October 9, 1989.
As consideration for the sale of the 1-A Plant rights to 1-A
Enterprises, the Partnership received a royalty interest in the net
operating income of the 1-A Plant. Such royalties equal 10% in 1988
through 1992, 15% in 1993 through 1998, 40% in 1999 through 2010, and
45% in 2011, and thereafter. In addition, the Partnership is paid an
amount equivalent to the net profit that would be realized by the
Partnership if the 1-A Plant were bearing 150 KW of parasitic power
load (power consumed by the Plant itself). The net profit equivalent
is calculated as follows: 1,200,000 KWH x the rate at which power is
sold to Sierra Pacific Power Company under the power purchase
agreement applicable to the 1-A Plant, less any royalties, note
payments, or net revenue interest or other expenses associated with
or payable out of such additional revenues assuming that the 1-A
Plant produced an additional 1,200,000 KWH per annum. In 1995 the
Partnership was paid $86,905 in royalty revenues from the 1-A Project
and $58,191 in pumping charges.
Item 3. Legal Proceedings
Nevada Department of Transportation
The Department of Transportation of the State of Nevada ("NDOT")
commenced action in the Second Judicial District Court of the State
of Nevada in and for the County of Washoe against the Partnership and
others to obtain, for highway purposes, ownership of approximately
2.79 acres of the property owned by Sierra Pacific Power Company
("SPPC") at the extreme north of the land upon which the Steamboat
Springs Plant is located pursuant to the SPPC lease. The Partnership
is defending the action insofar as is necessary to protect a stand-by
injection well located on the lease in the proximity of the land
being taken and a monitoring well in an adjacent area which is being
taken. It is presently negotiating a settlement which will leave the
stand-by injection well and the Partnership's rights in and use
thereof intact and available. The Partnership has constructed a new
monitoring well and is attempting to recover the cost thereof from
the State. The Partnership has an agreement in principle with the
State relative to this reimbursement, the cost of which is
approximately $5,000. The Partnership is also attempting to obtain
a portion of the $273,500 offered and deposited into Court by NDOT as
compensation for the taking. SPPC is claiming all of such funds as
the owner of the land. The Court has granted NDOT the right to
possess and occupy the property while the amount of compensation to
be finally awarded is being contested. WCC, the Partnership's
principal creditor, has claimed that under the financing agreements
with respect to the Steamboat Springs and 1-A Plants, all funds
recovered from NDOT must be applied to reduce the principal balance
of the loans outstanding.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Common Equity and Related Stockholder
Matters.
No market exists for the Partnership's Units. As of March 15,
1996, the 10,306 outstanding Units of the Partnership were held by
1,103 investors, including 530 units owned by the General Partner.
No cash distributions were made to the Limited Partners during
the years ended December 31, 1991 through 1995.
Item 6. Management's Discussion and Analysis or Plan of
Operations.
Liquidity and Capital Resources
The sale of electricity to Sierra Pacific Power Company
("Sierra") continues to be the Partnership's primary source of
working capital. Power is sold pursuant to a long-term power
contract ("Power Purchase Agreement") (see "Item 1. Business")
which provides for purchase of all power produced by the Steamboat
Springs Plant at a fixed rate. However, in December of 1996 the
rate at which the plant will sell power goes from 7.17 cents per KW to
short-term avoided cost (which presently is believed to be
approximately 2.8 cents). The Partnership will not be able to continue
to operate the plant selling power at that rate. The General
Partner has been unsuccessful in its attempts to renegotiate the
rate at which power would be sold to Sierra Pacific Power Company
during the second 10 years of the Power Purchase Agreement
beginning in December of 1996. However, Sierra has tentatively
agreed that it will release the Partnership from its agreement to
sell power to Sierra from Steamboat 1 at short term avoided cost if
the Partnership can find a market for the Steamboat 1 output
outside to Sierra's system. To date the Partnership has not
identified such a market. If the Partnership were forced to sell
power at 2.8 cents per KW as opposed to the 7.17 cents currently being paid
it would not be able to pay debt service and operating cost and the
plant might be foreclosed by WCC.
The Steamboat Springs Plant operating revenues have, in the
past, provided cash balances to pay for operating expenses,
including repairs and maintenance of the plant, during times of
interrupted operations. However, in the event of failure of the
Steamboat Springs geothermal resource, the Partnership would be un-
protected from interruption of its revenues. Management believes
that the likelihood of this event occurring is remote.
As shown in the financial statements for the year ended
December 31, 1995, the Partnership's current liabilities exceed
current assets by $6,595,000. Of this amount, $4,563,000 relates
to the note default involving the Steamboat Springs Plant with WCC.
This is more fully described under "Item 2. Properties".
Cumulative income for the three-year period ended December 31, 1995
amounted to $883,000 before extraordinary items. The General
Partner is seeking to resolve the current liquidity concerns by
taking steps to increase future production by improving maintenance
and operation procedures and, if necessary, deferral of payment of
general and administrative expenses to the General Partner.
Partnership electric power revenue decreased in 1995 by 2% from
1994 and 14% from 1993. The general partner believes that 1995
revenues are representative of what can be expected in the future
until the rate change becomes effective in December of 1996 at
which time revenues will decrease drastically.
With the winding down of the Partnership's litigation and
administrative proceedings, professional fees and general and
administrative expenses charged by the General Partner decreased in
1995 by 21% from the preceding year, in 1994 by 45% from the
preceding year and in 1993 by 49% from 1992. The General Partner
also believes that these expenses will continue to stay at this
lower level in 1996 because of the termination of such litigation
and decreasing administrative costs.
In a report dated September 4, 1993 the General Partner
reported to the Limited Partners on its efforts to restructure the
business of the Partnership so as to be able to resume
distributions to the Limited Partners. In summary the General
Partner concluded that the Partnership would be unable to generate
significant positive cash flow or resume distributions without the
infusion of cash sufficient to make capital improvements in the
Steamboat Springs Plant and/or buy out the Westinghouse loan and
certain royalty interests at a discount. The Partnership does not
have the financial resources to accomplish these goals. At present
and in the foreseeable future the Partnership is generating taxable
income without any cash distributions to pay the tax liabilities.
Therefore, it appears to the General Partner that it may be
advantageous to the Partnership to consider a sale of all the
Partnership assets.
The General Partner has recently executed a contract on behalf
of the Partnership with U.S. Envirosystems, Inc. (a Delaware
corporation) to sell the Steamboat Springs Power Plant. The sale
is conditioned on the approval of the Limited Partners. That
Contract was attached to a draft proxy statement describing the
details of the transaction, its tax effect and an opinion as to the
fairness of the proposed transaction, which has been submitted to
the Securities and Exchange Commission for its review. See Exhibit
10(aau). It is anticipated that these materials will be mailed to
the Limited Partners for their review and vote within thirty days.
If the proposed sale of the Steamboat Springs Plant is approved the
General Partner proposes to distribute all proceeds of the sale to
limited partners (after payment of debts and accounts to third
parties) and terminate the Partnership.
Results of Operations
In 1987 the Steamboat Springs Plant produced electric power
and generated revenues at approximately 75% of expected operating
levels. The production shortfall was primarily due to shutdowns
required to effect certain equipment changes and modifications, and
to operation of that plant at a lower level than expected. It was
determined that to achieve the expected capacity and the
performance requirements specified in the plant's purchase
contract, the vendor/operator would have to install additional
equipment and make some modifications to existing equipment. These
corrections were made at no cost to the Partnership (although the
down-time for modifications and testing impacted revenues). The
modifications and repairs were completed in the summer of 1988, and
the Partnership was informed by Ormat that the plant was performing
at a level that would produce 42,000,000 KWH per year as opposed to
the 43,800,000 represented by Ormat in the original acquisition
agreement.
The Steamboat Springs Plant increased production of electric
power from 32,797,000 KWH in 1987 to 36,142,000 KWH in 1988.
Ormat, the vendor/operator of the plant, installed additional
equipment and made equipment modifications which increased the
plant's capacity and performance. These additions and
modifications were made at no additional cost to the Partnership.
In 1989 the Steamboat Springs Plant produced $2,564,000 in
gross revenues which was $448,000 and $576,000 less than would have
been received under the Ormat projected 42,000,000 and 43,800,000
kwh agreed to under the purchase agreement per year respectively.
In 1990 the plant produced $2,765,000 in gross revenues which was
an increase over 1989's revenues, but about $247,000 and $376,000
less than would have been received under the projected 42,000,000
and 43,800,000 kwh per year respectively. In 1991 the plant
produced $2,791,000 in gross revenues which was $220,000 and
$349,000 less than would have been received under the projected
42,000,000 and 43,800,000 kwh per year respectively. In 1992 the
plant produced about $2,360,000 in gross revenues which was
$651,400 and $780,460 less than would have been received under the
projected 42,000,000 and 43,800,000 kwh per year respectively. The
poor performance in 1992 was directly due to excessive equipment
failures and breakdowns which resulted in plant downtime. In 1993
the Plant produced $2,625,000 in gross revenues which was an
increase over 1992's revenues but about $386,391 and $515,451 less
than would have been received under the projected 42,000,000 and
43,800,000 kwh per year respectively. This made 1993 a better than
average year for revenues. In 1994 and 1995 revenues declined
slightly and are more indicative of what can be expected until the
rate change in December, 1996 at which time revenues will decline
drastically.
The following table shows the annual production for the
Steamboat Springs Plant:
Year $'s KWH
1987 $2,352,000 32,797,000
1988 $2,591,000 36,142,000
1989 $2,564,000 35,760,000
1990 $2,765,000 38,563,000
1991 $2,791,000 38,926,000
1992 $2,360,000 32,915,000
1993 $2,625,000 36,611,000
1994 $2,564,000 35,767,000
1995 $2,529,000 35,270,000
The Crystal Springs Plant produced power at approximately 51%
of expected levels during 1987 and 1988, about 80%, 70%, 58% and
14% during 1989, 1990, 1991 and 1992, respectively, due chiefly to
lower than normal precipitation in the Snake River Basin. In 1993
it produced a record 8,265,000 kwh for revenues of $537,000. This
was a result of increased water flow resulting from greater
precipitation and additional water released by the Twin Falls Canal
Company as a result of the agreement with it. In 1994, due to the
drought in southeastern Idaho, it was shut down for most of the
year and produced 3,101,000 kwh for revenues of $163,000.00. See
Item 2. Properties herein. The Crystal Springs Plant was sold as
described in Item 1 above.
The 1-A Plant from which the Partnership receives royalties
was put on line and began operations in December, 1988. That plant
reached full scale production levels during the first quarter of
1989. The Partnership began to receive its 10% net operating
royalty and pumping fee when the plant was accepted and
commissioned during the first quarter of 1989. A total of $95,000,
$94,000, $115,000, $102,000, $135,000, $144,000 and $145,000 in
royalties and pumping fees in the years ended December 31, 1989,
1990, 1991, 1992, 1993, 1994 and 1995 respectively, were paid to
the Partnership from this plant.
Item 7. Financial Statements.
Index to Financial Statements Page
and Supplementary Data
Independent Auditors' Report 18
Balance Sheets, December 31, 1995 and 1994 19
Statements of Income, for the Years Ended 21
December 31, 1995, 1994, and 1993
Statements of Partners' Capital, for the 22
Years Ended
December 31, 1995, 1994, and 1993
Statements of Cash Flows, for the Years ended 23
December 31, 1995, 1994, and 1993
Notes to Financial Statements 25
Schedule I, Condensed Financial Information
of Registrant (All Required Information
Reported in Financial Statements and Notes
to the Financial Statements)
Schedule II, Valuation of Qualifying Accounts
(All Required Information Reported in Note 2)
Accountants' Compilation Report 36
Unaudited Consolidated Balance Sheet of the
General Partner, Far West Capital, Inc. 37
Notes to the Unaudited Consolidated Balance Sheet
of the General Partner, Far West Capital, Inc. 39
FAR WEST ELECTRIC ENERGY FUND, L. P.
A DELAWARE LIMITED PARTNERSHIP
- : -
INDEPENDENT AUDITOR'S REPORT
DECEMBER 31, 1995 AND 1994
CONTENTS
Independent Auditor's Report . . . . . . . . . . . . . . . . . . . . . .18
Balance Sheets, December 31, 1995 and 1994 . . . . . . . . . . . . . . .19
Statements of Income, For the Years Ended
December 31, 1995, 1994, and 1993. . . . . . . . . . . . . . . . . . .21
Statements of Partners' Capital, For the Years Ended
December 31, 1995, 1994, and 1993. . . . . . . . . . . . . . . . . . .22
Statements of Cash Flows, For the Years Ended
December 31, 1995, 1994, and 1993. . . . . . . . . . . . . . . . . . .23
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . .25
Schedule I, Condensed Financial Information
of Registrant (All Required Information
Reported in Financial Statements and Notes
to the Financial Statements) . . . . . . . . . . . . . . . . . . . . .
Schedule II, Valuation of Qualifying Accounts
(All Required Information Reported in Note 2). . . . . . . . . . . . .
<PAGE>
INDEPENDENT AUDITOR'S REPORT
General Partner
Far West Electric Energy Fund, L.P.
Salt Lake City, Utah
We have audited the balance sheet of Far West Electric Energy
Fund, L.P. as of December 31, 1995 and 1994, and the related
statements of income, partners' capital and cash flows for each of
the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. 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 audit
provides 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
Far West Electric Energy Fund, L.P. as of December 31, 1995 and
1994, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
Respectfully submitted,
/S/
Certified Public Accountants
Salt Lake City, Utah
February 29, 1996
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
1995 1994
Assets
Utility Plant:
Plant in Service $15,999,000 $18,716,000
Equipment 588,000 335,000
Construction in Progress 118,000 118,000
Accumulated Depreciation (5,377,000) (6,010,000)
Net Utility Plant 11,328,000 13,159,000
Restricted Cash 1,026,000 1,145,000
Other Assets 106,000 124,000
Current Assets:
Cash and Cash Equivalents 263,000 278,000
Receivables - Trade 399,000 437,000
Receivables - Other 6,000 6,000
Receivable - Related Party 238,000 159,000
Prepaid Expenses 4,000 12,000
Total Current Assets 910,000 892,000
Total Assets $13,370,000 $15,320,000
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(Continued)
1995 1994
Partners' Capital and Liabilities
Partners' Capital:
Limited Partners - 10,306 units $ 5,148,000 $ 4,868,000
General Partner - 1 Percent (8,000) (11,000)
Total Partners' Capital 5,140,000 4,857,000
Other Liabilities - 150,000
Long-term Debt:
Notes Payable - Related Party 188,000 230,000
Notes Payable 537,000 -
Partners' Capital and Long-Term
Liabilities 5,865,000 5,237,000
Current Liabilities:
Current Portion - Long-term Debt 4,563,000 7,140,000
Note Payable - Related Party 1,159,000 1,043,000
Payable-Related Party 671,000 573,000
Accrued Liabilities
Operations 402,000 495,000
Royalties 96,000 220,000
Interest 614,000 612,000
Total Current Liabilities 7,505,000 10,083,000
Total Partners' Capital and
Liabilities $13,370,000 $15,320,000
See accompanying notes to the financial statements.
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31,
1995 1994 1993
Revenues:
Electric Power Revenues $ 2,529,000 $ 2,728,000 $ 3,162,000
Other Revenues 145,000 151,000 622,000
Total Revenues 2,674,000 2,879,000 3,784,000
Expenses:
Operations 1,755,000 1,779,000 2,163,000
Bad Debt Expense - - 31,000
General and Administrative:
Professional Services 55,000 54,000 72,000
General Partners - Related
Party 98,000 123,000 223,000
Total General and
Administrative 153,000 177,000 295,000
Total Expenses 1,908,000 1,956,000 2,489,000
Income From Operations 766,000 923,000 1,295,000
Other Income (Expense):
Interest Income 73,000 52,000 38,000
Interest Expense (744,000) (902,000) (806,000)
Gain on Sale of Property 188,000 - -
Net Other Expense (483,000) (850,000) (768,000)
Net Income (Loss)
Before Extraordinary
Item 283,000 73,000 527,000
Extraordinary Item - Early
Extinguishment of Debt - - 175,000
Net Income $ 283,000 $ 73,000 $ 702,000
Net Income Per Limited
Partnership Unit:
Income Before Extraordinary
Item 27.46 7.08 51.14
Extraordinary Item - - 16.98
Net Income $ 27.46 $ 7.08 $ 68.12
See accompanying notes to the financial statements.
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
General Partner Limited Partners
% Income Number Total
Allocation Amount of Units Amount Amount
Balances at
December 31, 1992 1 $ (18,573) 10,306 $ 4,100,573 $ 4,082,000
Net Income - 7,020 - 694,980 702,000
Balances at
December 31, 1993 1 (11,553) 10,306 4,795,553 4,784,000
Net Income - 730 - 72,270 73,000
Balances at
December 31, 1994 1 $ (10,823) 10,306 $ 4,867,823 $ 4,857,000
Net Income - 2,830 - 280,170 283,000
Balances at
December 31, 1995 1 $ (7,993) 10,306 $ 5,147,993 $ 5,140,000
See accompanying notes to the financial statements.
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
FOR THE YEARS ENDED DECEMBER 31,
1995 1994 1993
Cash Flows From Operating
Activities:
Net Income (Loss) $ 283,000 $ 73,000 $ 702,000
Adjustments to Net Income (Loss):
Depreciation and Amortization 613,000 661,000 716,000
Sale of Assets (188,000) - -
Gain on Debt Restructure - - (175,000)
(Increase) Decrease in
Receivables (41,000) (124,000) (59,000)
(Increase) Decrease in Prepaid
Insurance (1,000) - (9,000)
(Increase) Decrease in Other
Assets 18,000 18,000 18,000
Accrued Income Restricted Cash (63,000) (43,000) (31,000)
Increase (Decrease) in Accrued
Liabilities 41,000 120,000 (234,000)
Increase (Decrease) in
Amount Due to General
Partner 98,000 100,000 214,000
Total Adjustments 477,000 732,000 440,000
Net Cash Provided by
Operating Activities 760,000 805,000 1,142,000
Cash Flows From Investing
Activities:
Cash Draws Restricted Cash 181,000 - 207,000
Transfers to Restricted Cash - - (205,000)
Capital Expenditures (253,000) (139,000) (222,000)
Net Cash Provided by (Used)
in Investing Activities (72,000) (139,000) (220,000)
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(Continued)
FOR THE YEARS ENDED DECEMBER 31,
1995 1994 1993
Cash Flows From Financing
Activities:
Principal Payments on Long-
term Debt $ (815,000) $ (751,000) $(1,109,000)
Proceeds From the Issuance
of Debt 112,000 83,000 171,000
Net Cash Provided by (Used)
in Financing Activities (703,000) (668,000) (938,000)
Increase (Decrease) in Cash
and Cash Equivalents (15,000) (2,000) (16,000)
Cash and Cash Equivalents at
Beginning of Year 278,000 280,000 296,000
Cash and Cash Equivalents at
End of Year $ 263,000 $ 278,000 $ 280,000
Supplemental Disclosure of
Cash Flow Information:
Cash Paid During the Year
For Interest $ 743,000 $ 727,000 $ 755,000
Non-Cash Activities:
The Partnership reduced a contract payable for the year ended
December 31, 1993 by $13,000, and recognized income relating to option
payments not made.
An extraordinary gain of $175,000 for the year ended December 31,
1993, was recognized relating to the extinguishment and restructuring of
debt and accrued interest; see Note 4.
Notes payable and accrued interest were reduced and other income
recognized for the year ended December 31, 1993 in the amount of
$424,000, relating to offsets allowed under the performance guaranty on
the Steamboat Springs project; see Note 7.
The Partnership sold the Crystal Springs Project for $1,100,000, the
proceeds of which were paid directly to First Security Bank to pay down
the note secured by the Crystal Springs Project in accordance with the
sales agreement dated February 28, 1995. In addition, the note referred
to above was restructured as described in Note 13. A net gain on the
sale of $188,000 has been reported in net income for December 31, 1995
as other income.
See accompanying notes to the financial statements.
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are followed by Far
West Electric Energy Fund, L.P. in preparing and presenting the
financial statements, and are to assist the users in understanding the
financial statements.
Organization
Far West electric Energy Fund L.P., a Delaware limited partnership
(the "Partnership"), was originally organized in September 1984 under
the Uniform Limited Partnership Act of Utah as Far West Hydroelectric
Fund, Ltd. On December 20, 1988, the Partnership changed its name to
Far West Electric Energy Fund, L.P. and changed its domicile to
Delaware.
The Partnership owns a geothermal power plant, (the "Steamboat
Springs Plant") located in Nevada, and until March 16, 1995, owned a
hydroelectric plant located in Idaho (the "Crystal Springs Plant") which
was sold to Crystal Springs Hydroelectric, L.P., a Washington limited
partnership pursuant to a Purchase and Sale Agreement dated February 28,
1995.
Utility Plant and Equipment
Utility plants and equipment are carried at cost or adjusted cost
(see Note 2). Fixed assets are depreciated over their estimated useful
life (utility plants - thirty years, equipment - five to ten years).
Cash Equivalents
For purposes of the statement of cash flows, the Partnership's
policy is that all investments with maturities of three months or less
are considered cash equivalents.
Income Taxes
No provision for income taxes has been made since the Partnership
files partnership return under provisions for federal and state tax
laws. The assets and liabilities of the Partnership for tax purposes
are lower than the financial statements for 1995 by $8,066,000 and
$552,000; and for 1994 by $11,154,000 and $2,208,000, respectively.
Income Per Limited Partnership Unit
The income per partnership unit on income before extraordinary item
and on net income is calculated on the weighted average units
outstanding during the year. The weighted average of units outstanding
during 1995, 1994, and 1993 were 10,306.
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reclassifications
Certain amounts in 1994 and 1993 have been reclassified to conform
with financial statement presentations adopted in 1994.
NOTE 2 - UTILITY PLANT
Plant in service consists of the following at December 31, 1995 and
1994:
Estimated
1995 1994 Useful Lives
Steamboat Springs Thermal
Hydroelectric Power Plant $15,599,000 $15,599,000 30 Years
Expansion Pipeline 400,000 400,000 5 to 7 Years
Crystal Springs Hydroelectric
Power Plant - 4,738,000 30 Years
Valuation Allowance - (2,021,000)
$15,599,000 $18,716,000
The valuation allowance relates to the Crystal Springs
Hydroelectric Power Project. The valuation allowance is a result of the
rights to a purchase option being waived and a decline in the value of
the project.
NOTE 3 - OTHER ASSETS
Other assets consist of the following at December 31, 1995 and
1994:
1995 1994
Loan Origination Fees $183,000 $183,000
Organization Costs 65,000 65,000
Other Assets 35,000 35,000
Accumulated Amortization (177,000) (159,000)
Total Other Assets $106,000 $124,000
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 3 - OTHER ASSETS (Continued
The loan origination fees are being amortized on a straight-line
basis over the respective lives of the loans. Organization costs are
amortized over a five year period on a straight-line basis.
Amortization was $18,000, $18,000, $18,000 for the years ended December
31, 1995, 1994, and 1993, respectively.
NOTE 4 - LONG-TERM DEBT - NOTES PAYABLE
Long-term debt as of December 31, 1995 and 1994 consists of the
following:
1995 1994
Note Payable to Westinghouse Credit
Corp. is in default as of 10/23/92
and is immediately due and payable.
Note is secured by the Steamboat
Springs Project and all associated
rights. Interest rate is 11.5% $ 4,563,000 $5,340,000
Note Payable to a bank was due and
payable in full originally on December
1, 1993, extended to September 30,
1994 and has been modified due to the
sale of the Crystal Springs Project.
The principal amount owing after
the modification is $537,000.
Interest is due in semiannual
installments. With all remaining
principal and interest due 3/2/2000.
Interest rate is prime which was 8.75%
at year end (See Note 13 -
Sale of Crystal Springs Project). 537,000 1,800,000
5,100,000 7,140,000
Less Current Installments Due 4,563,000 7,140,000
$ 537,000 $ -
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 4 - LONG-TERM DEBT - NOTE PAYABLE (Continued)
The aggregate maturities of long-term debt for each of the five
years subsequent to December 31, 1995 are as follows:
Year Ending December 31,
1996 $ 4,563,000
1997 -
1998 -
1999 -
2000 537,000
Thereafter -
$ 5,100,000
A note payable to Ormat, Inc. was extinguished in the amount of
$175,000 in December 1993. The extinguishment was a result of
negotiations to settle litigation on the performance guaranty. The
principal note amount and related accrued interest are shown as an
extraordinary item in the statement of operations for the year ended
December 31, 1993.
During December 1992, a note payable to a bank was restructured
resulting in a reduction of principal amount, accrued interest, and a
renegotiation of terms. Interest payments relating to the reduced
note were offset to accrued interest payable. The total amount offset
against accrued interest payable in 1994 was $26,000.
NOTE 5 - RESTRICTED CASH
The Partnership is required to maintain an escrowed bank account
as security under the terms of the note payable to Westinghouse Credit
Corp. with the note payable balance as of December 31, 1995 of
$4,563,000. The reserve account was drawn down to $1,026,000 due to
insufficient operating funds needed for plant repairs of $188,000.
The note is in default due to the reserve account being drawn below
required amounts. The reserve includes the initial deposit of
$1,000,000 and requires an additional $70,000 annually for the first
seven years, interest income is also retained in the reserve account.
Disbursements from the reserve account for principal and interest
payments on the note are allowed to the extent that there are
insufficient funds in the Partnership's operating accounts.
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 6 - NOTE PAYABLE-RELATED PARTY
The Partnership had notes payable to related parties for the
years ended December 31, 1995, and 1994 as follows:
1995 1994
Notes Payable to General Partner
payable on demand, unsecured.
Interest rate is 13% $ 1,117,000 $1,005,000
Note Payable to 1-A Enterprises,
a partnership, due in quarterly
installments, including interest;
commencing April 16, 1990, re-
maining principal due January 16,
2000; unsecured. Interest rate
is 11% 230,000 268,000
1,347,000 1,273,000
Less Current Installments Due 1,159,000 1,043,000
$ 188,000 $ 230,000
NOTE 7 - PURCHASE AND OPERATING AGREEMENTS
Steamboat Springs Thermal Hydroelectric Power Plant (Steamboat
Springs)
Under the terms of the Steamboat Springs purchase agreement (the
Agreement), the Partnership is required to pay royalties to non-
affiliated parties aggregating 14.05 percent of annual gross revenues
for the life of the project plus an annual lump sum of $50,000 for the
first ten years. As of December 31, 1995 all royalty obligations were
current. For the years ended December 31, 1995, 1994, and 1993, royalty
expense related to these commitments is as follows:
1995 1994 1993
Sierra Pacific Power Company (10%) $253,000 $257,000 $263,000
Benson Schwarzhoff & Helzel (3.888%) 98,000 99,000 102,000
Geothermal Development Associates
($50,000) 50,000 50,000 50,000
G. Martin Booth (.081%) 2,000 2,000 2,000
Richard W. Harris (.081%) 2,000 2,000 2,000
Total $405,000 $410,000 $419,000
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 7 - PURCHASE AND OPERATING AGREEMENTS (Continued)
As part of the Agreement, the original developer of Steamboat
Springs (the Developer) guaranteed annual net operating revenues, as
defined (Net Operating Revenues) of $2,000,000 for a period of ten years
following the date of commissioning, March 31, 1987 (the Guarantee). In
1993, the debt and related performance guarantee with the original
developer was extinguished. Pursuant to the Guarantee and included in
other revenues in the statements of income for the years ended December
31, 1993, and 1992 are $424,000, and $387,000, respectively. Pursuant
to the contract and in accordance with FIN-39, amounts due to the
Partnership under the Guarantee are offset annually against a note
payable to the Developer, and the Bonneville corporation which
subsequently sold the project to the Partnership. The note payable to
the developer and Bonneville have been fully offset as of December 31,
1993. The following Table summarizes these transactions:
1993
Guaranteed Net Operating Revenues $2,000,000
Net Operating Revenues 1,288,000
Offset Available 712,000
Gross Debt Subject to Offset 424,000
Debt to be Offset in Future $ -
The Partnership is also required to pay the Developer annual
royalties equal to 50 percent of the first $100,000 over the guaranteed
Net Operating Revenues and 75 percent of amounts in excess of the
$100,000 each year for the first ten years following the date of
commissioning. For years 11 through 20 after commissioning, the royalty
equals 30 percent of Net Operating Revenues; principal debt service
payments incurred to finance construction or operations are not deducted
in determining the revised net operating revenues (Revised Net Operating
Revenues). For years 21 inclusive and thereafter, the royalty is equal
to 50 percent of Revised Net Operating Revenues. As revenues have not
exceeded the guaranteed net operating revenues, no royalties have been
earned and no royalties have been paid pursuant with this commitment.
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 8 - RELATED PARTY TRANSACTIONS
Under the terms of the Partnership agreement, the general partner
is allowed various fees and reimbursements of expenses incurred to
manage the Partnership. For each of the years in the three-year period
ended December 31, 1995, the Partnership expensed the following amounts
as cost reimbursements to the general partner:
1995 1994 1993
General and Administrative
Expenses $ 98,000 $123,000 $223,000
In addition, during the year ended December 31, 1993, the
Partnership paid $3,300 to a Utah partnership for private air
transportation, in the ordinary course of business, in lieu of
commercial airfare. The general partners are partners of the Utah
Partnership.
As a term of the amended and restated Partnership agreement, the
General Partner is entitled to 5 percent of the limited partnership
units (Units) as compensation.
During 1988, the Partnership assigned its rights to build an
expansion unit to Steamboat Springs to a Nevada general partnership
owned mostly by Alan O. Melchior and Thomas A. Quinn, officers and
owners of the General Partner of the Partnership. As consideration for
the rights, the Nevada general partnership deeded the Partnership rights
and title to piping and valves installed from Steamboat Springs to the
expansion unit and agreed to pay the Partnership royalties equaling 10
percent of net operating income from the expansion for the years ended
December 31, 1988 through 1992, 15 percent for 1993 through 1998, 40
percent for 1999 through 2010, 45 percent thereafter, and an annual
pumping charge. Included in other revenues in the statement of
operations for the years ended December 31, 1995, 1994 and 1993, are
$145,000, $144,000 and $135,000, respectively related to this agreement.
As of December 31, 1994 and 1993, two of the general partners held a 75
percent ownership in the Nevada general partnership.
During 1991, the Partnership assigned its 77% ownership in SB Geo,
Inc. a Utah Corporation, to Alan O. Melchior and Thomas A. Quinn, two of
the officers and owners of the General Partner of the Partnership. SB
Geo, Inc. operates the Partnership's Steamboat Springs Thermal
Hydroelectric Power Plant and a related expansion unit. At the time of
the transfer, SB Geo, Inc. had no assets and operated on a cost
reimbursement basis. No gain or loss was recognized as a result of the
assignment.
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 9 - MAJOR CUSTOMER
The Partnership has contracted with Sierra Pacific Power Company to
sell electric energy from Steamboat Springs for a term of 20 years. The
contract entitles the Partnership to a rate of 71.7 mills per kilowatt
hour for the first 10 years and a variable amount related to the short-
term cost of power to Sierra Pacific Power Company for the second 10
years. Sales to Sierra Pacific Power Company account for 100 percent of
electric power sales. The Partnership is dependent upon this customer
for the purchase of all electricity generated from this power plant.
NOTE 10 - LITIGATION
Ormat Arbitration
The arbitrators during 1993 made their award regarding the lawsuit
against Ormat alleging breach of contract on the Steamboat Springs
project and Ormat's counter-suit regarding the cancellation of the
operating agreement. The Partnership was awarded $188,000 in damages
including a portion of previously restricted cash. Ormat was awarded
$255,000 for past fixed operating fees of which the majority had been
held in an escrow account.
Subsequent to the arbitrators award the Partnership and Ormat
reached an additional agreement which cancels the note payable to Ormat
which was previously offset by the performance guaranty.
Bonneville Pacific Corporation Bankruptcy
The Partnership has filed a claim in the Chapter 11 filing of
Bonneville Pacific Corporation. The claim relates to fraud claims and
other transactions on the Crystal Springs project.
This claim is a general unsecured claim; it is unliquidated and
contingent, meaning that the amount of the claim has yet to be fixed in
the bankruptcy forum. It is estimated that the claim is no more than
$100,000.00. There is no economy for the partnership in attempting to
resolve the amount of the claim at this juncture, without certainty that
Bonneville Pacific Corporation will succeed in confirming a plan of
reorganization, since general unsecured claims cannot receive payment
absent confirmation of a plan of reorganization. If and when a plan of
reorganization is confirmed, it is expected that, post-confirmation,
there will be a claims liquidation and resolution process, during which
the claim of the partnership will be fixed by the bankruptcy court. The
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 10 - LITIGATION (Continued)
Chapter 11 reorganization proceeding of the Bonneville Pacific
Corporation has been ongoing for some years. It is a large and complex
proceeding. The success of the reorganization effort will turn in major
part upon complex litigation which the trustee in the case, Roger Segal,
has commenced against various parties in interest. Counsel for Mr.
Segal, Vernon Hopkinson, estimates at the present time that this
litigation may be concluded and a plan of reorganization proposed no
earlier than year-end, 1997. As noted above, payment on account of
general unsecured claims cannot occur unless and until a plan of
reorganization is confirmed by the bankruptcy court. Mr. Hopkinson
estimates at the present time that the size of the dividend to general
unsecured creditors could be anywhere from 20 percent to payment in
full, depending upon the outcome of the aforementioned litigation.
Nevada Department of Transportation
The Department of Transportation of the State of Nevada ("NDOT")
commenced action in the Second Judicial District Court of the State of
nevada in and for the County of Washoe against the Partnership and
others to obtain, for highway purposes, ownership of approximately 2.79
acres of the property owned by Sierra Pacific Power Company ("SPPC") at
the extreme north of the land upon which the Steamboat Springs Plant is
located pursuant to the SPPC lease. The Partnership is defending the
action insofar as is necessary to protect a stand-by injection well
located on the lease in the proximity of the land being taken and a
monitoring well in an adjacent area which is being taken. It is
presently negotiating a settlement which will leave the stand-by
injection well and the Partnership's rights in and use thereof intact
and available. The Partnership has constructed a new monitoring well
and is attempting to recover the cost thereof from the State. The
Partnership has an agreement in principle with the State relative to
this reimbursement, the cost of which is approximately $5,000. The
Partnership is also attempting to obtain a portion of the $273,500
offered and deposited into Court by NDOT as compensation for the taking.
SPPC is claiming all of such funds as the owner of the land. The Court
has granted NDOT the right to possess and occupy the property while the
amount of compensation to be finally awarded is being contested. WCC,
the Partnership's principal creditor, has claimed that under the
financing agreements with respect to the Steamboat Springs and 1-A
Plants, all funds recovered from NDOT must be applied to reduce the
principal balance of the loans outstanding.
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 11 - NOTE DEFAULTS
Due to insufficient funds being in restricted cash, the Partnership
received a notice of default as of 10/23/92 on a note to Westinghouse
Credit Corp. The balance as of December 31, 1995 and 1994 was
$4,563,000 and $5,340,000, respectively. Under the terms of the note
all principal and interest is immediately due and payable. The note is
secured by the Steamboat Springs project and related revenues and other
assets.
The Partnership was in default on a note payable to a bank as of
9/30/94. The balance as of December 31, 1994 and 1993 was $1,800,000.
Due to the sale of the Crystal Springs Project subsequent to December
31, 1994, this note has been reduced to $537,000 (see Note 13) and is no
longer in default.
NOTE 12 - LIQUIDITY
As shown in the accompanying financial statements for the year
ended December 31, 1995, current liabilities exceeded current assets by
$6,595,000. Of this amount $4,563,000 relates to the note defaults
described in Note 11.
NOTE 13 - SALE OF CRYSTAL SPRINGS PROJECT
The Partnership signed an agreement dated February 28, 1995 to sell
the Crystal Springs project. The sale included all the assets and
liabilities associated with the Crystal Springs Project except the note
payable to First Security Bank which has been modified as follows:
Upon receipt of First Security (Lender) of a principal payment
on the loan in the amount of $1,100,000, the note was modified
to provide that the remaining principal balance owed shall be
$537,000 and interest and costs on the loan shall be deemed
current.
If the note is paid in full within two years after the payment
of $1,100,000, the Lender will discount the principal amount
owing by $100,000 (requiring a principal payment of only
$437,000), and if paid within three years, the Lender will
discount the amount of the principal due by $50,000 (requiring
a principal payment of only $487,000). There will be no
discount if paid after the third anniversary.
FAR WEST ELECTRIC ENERGY FUND, L.P.
A DELAWARE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 13 - SALE OF CRYSTAL SPRINGS PROJECT (Continued)
The net gain on sale of the Crystal Springs Project of $188,000 has
been reported on the Statement of Income for the year ended December 31,
1995 as Other Income.
NOTE 14 - SUBSEQUENT EVENTS
Steamboat Springs Project
The Fund has received a cash offer to sell substantially all of the
assets of the Fund to U.S. Envirosystems, Inc. for $1,250,000. The sale
would result in the termination of the Fund and distribution of the
proceeds to limited partners of approximately $33 per limited
partnership unit.
Far West Capital, Inc.
Salt Lake City, Utah
We have complied the accompanying balance sheets of Far West
Capital, Inc. as of June 30, 1995 and 1994, in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial
statements information that is the representation of management. We
have not audited or reviewed the accompanying financial statements and,
accordingly, do not express an opinion or any other form of assurance on
them. However, we did become aware of a departure from generally
accepted accounting principles that is described in the following
paragraph.
Statements of income, retained earnings and cash flows for the
years ended June 30 1995 and 1994, have not been presented. Generally
accepted accounting principles require that such statements be presented
when financial statements purport to present financial position and
results of operations.
Respectfully submitted
/S/
Certified Public Accountants
Salt Lake City, Utah
March 27, 1996
FAR WEST CAPITAL, INC.
CONSOLIDATED BALANCE SHEETS
June 30,
1995 1994
ASSETS
Current Assets:
Cash and Cash Equivalents $ 506,368 $ 110,309
Accounts Receivable 186,043 196,006
Other Receivables 1,354,231 1,260,702
Prepaid Expenses 101,554 250,088
Total Current Assets 2,148,196 1,817,105
Restricted Cash 3,030,664 3,635,100
Fixed Assets:
Wellfield, Net of Amortization 2,975,930 3,145,983
Transportation and other Equipment,
Net of Accumulated Depreciation 411,142 230,655
Net Fixed Assets 3,387,072 3,376,638
Other Assets:
Investments in Partnerships 492,711 201,003
Deposits and Other Assets 199,977 198,110
Advances to Stockholders - 231,000
Total Other Assets 692,688 630,113
Total Assets $ 9,258,620 $ 9,458,956
FAR WEST CAPITAL, INC.
CONSOLIDATED BALANCE SHEETS
(continued)
June 30,
1995 1994
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable $ 372,744 $ 322,694
Accrued Expenses 1,170,767 906,209
Long Term Debt,
Current Portion 95,505 35,107
Retention Payable 641,625 1,711,000
Total Current Liabilities 2,280,641 2,975,010
Other Liabilities:
Notes Payable 1,958,618 2,067,198
Loans from Stockholders 15,380 15,380
Deferred Gain on Sale, Net
of Amortization 366,223 317,649
Deferred Tax Liability -
Non-Current 415,000 423,000
Total Other Liabilities 2,755,221 2,823,227
Total Liabilities 5,035,862 5,798,237
Minority Interests 177,557 118,437
Equity:
Common Stock 15 Shares authorized,
11.25 shares issued and
outstanding, no par value) 29,000 29,000
Advances to Affiliated Companies (309,287) (155,698)
Retained Earnings 4,325,488 3,668,980
Total Equity 4,045,201 3,542,282
Total Liabilities and Equity $ 9,258,620 $ 9,458,956
See Accountants' Compilation Report
The accompanying notes are an integral part of the financial statements.
FAR WEST CAPITAL, INC.
NOTES TO CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are followed by Far
West Capital, Inc. in preparing and presenting the financial statements,
and are presented to assist the users in understanding the financial
statements.
Organization
Far West Capital, Inc., a Utah corporation, was incorporated on May
9, 1983 to facilitate the financing and operation of geothermal and
hydro-electric power plants. Far West Capital owns all the common stock
of Steamboat Development Corp. (a Utah corporation), and 53% of the
partners' equity in Twin Falls Hydro, Ltd. (a Utah limited partnership).
In the accompanying financial statements, Far West Capital, Inc. and its
subsidiaries are collectively referred to as "the Company".
Consolidation
The accompanying consolidated financial statements include the
accounts of Far West Capital, Inc. and its 50% or more owned
subsidiaries. All significant intercompany accounts and transactions
have been eliminated.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company's policy
is that all investments with maturities of three months or less are
considered cash equivalents.
NOTE 2 - RESTRICTED CASH
The Company has entered into several agreements regarding the
construction, financing, and sale-leaseback of two geothermal plants.
Pursuant to these agreements monies have been set aside pending the
final completion and acceptance of the projects, and specific funding of
certain future expenditures. These funds are set aside exclusively for
specific uses and was $3,030,664 and $3,635,100 at June 30, 1995 and
1994 respectfully.
FAR WEST CAPITAL, INC.
NOTES TO CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND 1994
(Continued)
NOTE 3 - PREPAID EXPENSES
Prepaid expenses consist of the following at June 30, 1995 and
1994:
1995 1994
Prepaid Maintenance $ - $ 134,334
Prepaid Insurance 98,554 112,754
Prepaid Rent 3,000 3,000
Total Prepaid Expenses $ 101,554 $ 250,088
NOTE 4 - FIXED ASSETS
Fixed assets consist of the following at June 30, 1995 and 1994:
1995 1994
Wellfield $ 3,401,063 $ 3,401,063
Equipment 429,459 167,086
Transportation Equipment 250,252 243,634
Total Fixed Assets 4,080,774 3,811,783
Less Allowances For Depreciation
and Amortization 693,702 435,145
Net Fixed Assets $ 3,387,072 $ 3,376,638
The wellfield is being amortized over the life of the lease which is 20
years on a straight-line basis. Equipment and vehicles are depreciated
over their estimated useful lives, five to seven years, on a straight-
line basis.
FAR WEST CAPITAL, INC.
NOTES TO CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND 1994
(Continued)
NOTE 5 - LONG TERM DEBT
Long-term debt as of June 30, 1995 and 1994 consists of the
following:
1995 1994
Note payable to a corporation pay-
able in monthly payments of
interest only for six months be-
ginning October 15, 1994 and, com-
mencing April 15, 1995, payments
of $18,013, including principal
and interest, due September 15,
2009. Interest rate is 6% $ 2,054,123 $2,090,000
Note payable to a corporation in
monthly installments of $245
for the purchase of equipment,
including principal and interest,
due November 29, 1994, Interest
rate is 15.9% - 12,305
2,054,123 2,102,305
Less Current Portion 95,505 35,107
$ 1,958,618 $2,067,198
NOTE 6 - RELATED PARTY TRANSACTIONS
Under the terms of a support agreement effective December 31, 1992,
with a related corporation, the Company pays a monthly amount for the
supervision, monitoring, and administering the project. The fees
include the materials, personnel, labor, supervision, and other items
related to performing the contract. For the year ended June 30, 1995
and 1994 the Company paid for support services $451,971 and $384,536,
respectively.
The Company has entered into an Operating and Maintenance Agreement
with a related corporation to act as the operator of the project. This
agreement provides for operator to perform the duties of the operator
including operating and regular maintenance of the plant for a monthly
fee and additional fees for variable
maintenance. The Company paid $2,211,227 for the year ended June 30,
1995 and $1,804,429 for June 30, 1994.
FAR WEST CAPITAL, INC.
NOTES TO CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND 1994
(Continued)
NOTE 7 - LEASE AND OPERATING AGREEMENTS
Pursuant to a financing agreement, the Company borrowed $62,000,000
and constructed two geothermal facilities known as Steamboat II and
Steamboat III near Reno, Nevada (which contain renewable energy supply
in the form of 320 degree hot water at a depth of less than 1000 feet).
Upon completion and commercial operation of the plants, the Company
entered into a sale-leaseback arrangement with the finance company in
exchange for cancellation of the related $60,000,000 note payable. A
lease agreement was entered into with the purchaser for a period of 20
years, with basic rent to be paid monthly pursuant to a lease schedule.
Additional rent is required to be paid based on distributable cash as
defined in the escrow agreement. The lease has renewal options of five
years or the remaining period on any related agreements for power or
related geothermal agreements. The Company has entered into a power
purchase agreement for the sale of electricity to an Investor Owned
Utility for a period of 30 years. The Company has an option to purchase
the facilities on the last day of the lease term, based on the fair
market value of the property.
The leaseback has been accounted for as an operating lease. The
gain of $339,264 realized in this transaction has been deferred and will
be amortized to income in proportion to rental expense over the term of
the lease.
Based on geothermal leases, the Company pays royalties on the power
revenues generated by the facilities of between 3.5% and 4.0%.
NOTE 8 - INCOME TAXES
The provisions for income taxes consisted of the following amounts:
Year Ended June 30,
1995 1994
Current:
Federal $ 157,471 $ 337,846
Deferred:
Federal (8,000) 43,152
Total Income Tax Provision $ 149,471 $ 380,998
Deferred taxes result from temporary differences in the recognition of
income and expense for income tax reporting and financial statement
reporting purposes. Deferred benefit of $8,000 for the year ending June
30, 1995 and deferred expense of $43,152 for the year ended June 30,
FAR WEST CAPITAL, INC.
NOTES TO CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND 1994
(Continued)
NOTE 8 - INCOME TAXES (Continued)
1994 are the result of timing differences in the recording of the
deductions for intangible drilling costs and the sale of the plant. The
Company has recorded a net deferred income tax liability in the
accompanying balance sheets as follows:
June 30,
1995 1994
Net operating losses $ - $ 21,400
Future taxable temporary
differences related to
depreciation and amortization (827,600) (806,400)
Future deductible temporary
differences related to
alternative minimum tax
credit carryforward 300,400 249,800
Future deductible energy tax
credit 112,200 112,200
Net deferred income tax liability $ (415,000) $ (423,000)
The differences between the effective income tax rate and the
federal statutory income tax rate is presented below:
Year Ended June 30,
1995 1994
Provision at the federal
statutory rate of 34 percent $ 107,745 $ 258,334
Nondeductible expenses 421 402
Alternative Minimum Tax 50,210 79,110
Deferred tax expense (benefit) (8,000) 43,152
Surtax exemption (905) -
Total income tax provision $ 149,471 $ 380,998
NOTE 9 - CONTRACTS SUBJECT TO RENEGOTIATION
A contractor was hired to construct the facilities known as
Steamboat II and Steamboat III for a contracted price subject to certain
adjustments.
The terms of the contract provide that after completion and prior
to acceptance of the project the amount due and payment schedule under
the 12% subordinated note payable are subject to renegotiation.
Included in the financial statements are restricted cash, subordinated
FAR WEST CAPITAL, INC.
NOTES TO CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND 1994
(Continued)
NOTE 9 - CONTRACTS SUBJECT TO RENEGOTIATION (Continued)
note payable and retention payable which were all subject to adjustment.
On September 20, 1994 the Company entered into a settlement agreement
whereby the subordinated notepayable was converted to a 6% note payable
in monthly installments due September 15, 2009.
NOTE 10 - GAIN CONTINGENCY
A condemnation action was filed by the State of Nevada in order to
condemn approximately 15 acres of land for use as a highway and/or
interchange. The condemned 11.72 acre tract is part of a parcel of land
owned by the Guisti family on which Steamboat has a geothermal lease.
The State has paid $135,000 as compensation for its taking of the land.
Steamboat has counterclaimed against the State, asserting that the
condemnation has and will damage Steamboat in amounts exceeding
$10,000,000. Steamboat has also cross-claimed against the other
defendants for declaratory relief in order to ensure that any
compensation paid bythe State is fairly apportioned among the several
defendants. Chances for settlement appear to be good at this time, due
to recent mediation and settlement discussions in which the State has
offered to pay between $1.5 and $2 million in compensation to be divided
among all defendants. The Company is proceeding to arbitration to
determine the exact figure to be paid. An unfavorable outcome in this
case is unlikely. The amount of potential loss is zero. Following
arbitration, the remainder of the issues in the case are set for trial
beginning October 30, 1995.
<PAGE>
Item 8. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.
None
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.
The Partnership has no executive officers. Its business
affairs are managed by its General Partner, Far West Capital, and,
until they resigned as General Partners effective January 1, 1995,
the following individuals, who are also 80% shareholders of Far
West Capital:
ALAN O. MELCHIOR, Chairman and Director of Far West Capital
until March 19, 1996, age 49. Mr. Melchior was a founder of Far
West Capital, which was organized in May, 1983. He was its
President from its inception to March 19, 1996. From December,
1981 to May, 1983, he was an account executive with Westlake
Securities, Inc., of Angora Hills, California. Mr. Melchior
received a B.S. in business from Brigham Young University in 1971
and an M.B.A. degree from the University of Utah in 1974.
THOMAS A. QUINN, Vice President, General Counsel and Director
of Far West Capital, age 60. Mr. Quinn was also a founder of Far
West Capital. Since February, 1985, Mr. Quinn has been serving
full-time in his capacities with Far West Capital. From 1968 to
February, 1985, he was engaged in the private practice of law in
Salt Lake City, Utah. He received a B.S. degree in political
science from Brigham Young University in 1959, and a Juris Doctor,
with honors, from George Washington University Law School in 1963.
On January 29, 1993, a Final Judgment of Permanent Injunction
("Injunction") was entered by the United States District Court, District
of Utah, Central Division, restraining and enjoining the Partnership,
Far West Capital, Inc. and Alan O. Melchior, previously a general
partner until his resignation effective January 1, 1995, from violating
provisions of the Securities Act of 1933. A copy of the Injunction is
appended as an exhibit to Form 8-K dated January 29, 1993.
The action filed against the Partnership, Far West Capital, Inc.,
Alan O. Melchior, previously a General Partner until his resignation
effective January 1, 1995, and others on December 7, 1992 by the Arizona
Corporation Commission and reported in the December 31, 1992 Form 10-K
and the December 31, 1993 Form 10-K has been settled pursuant to a cease
and desist order without any expense to the Partnership.
Item 10. Executive Compensation.
Pursuant to the Amended and Restated Agreement of Limited Partner-
ship of Far West Electric Energy Fund, L.P., as consideration for
providing management services to the Partnership, the General Partner is
entitled to the following compensation: (i) a one percent (1%) interest
in the profits, losses, and net income of the Partnership; (ii) Units
equal to five percent (5%) of the Units outstanding, to be increased
proportionately if and as additional Units are issued in the future;
(iii) if and when Units are listed for public trading, or the Limited
Partners have received an amount equal to their capital contributions to
the Partnership (reduced by the amount of tax credits allocated to the
Limited Partners) together with a sum equal to a cumulative annual
return of 8%, the General Partner shall receive additional Units equal
to ten percent (10%) of the Units outstanding, and a total of 15% of any
new Units issued. The General Partner may receive compensation in
connection with the purchase of projects from the General Partner or its
affiliates, and provision of services to the Partnership which are
normally provided by outside consultants, provided any such payments are
competitive with charges for similar projects or services.
Following the reorganization of the Partnership in Delaware,
Units equal to 5% of the Units outstanding were issued to the
General Partner, together with a certificate evidencing a one
percent (1%) General Partner's interest in the Partnership.
The Partnership has no employees and therefore relies on the
personnel of Far West Capital and contracts with others to perform
needed management operating and professional services. Far West
Capital provides services on an hourly basis at rates competitive
with third party sources.
Far West Capital is also entitled to be reimbursed on a
monthly basis for all direct expenses it incurs on behalf of the
Partnership and for that portion of its administrative expenses
allocable to the Partnership.
For the years ended December 31, 1995, December 31, 1994 and
December 31, 1993 Far West Capital was entitled to receive $98,000,
$123,000 and $223,000 respectively as reimbursement for allocable
administrative costs and services rendered and direct expenses in
connection with the above matters. During 1995 the Partnership
paid nothing toward these amounts, leaving the amount of $671,000
still due to Far West Capital for these unpaid costs, services, and
expenses.
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
Security Ownership of Certain Beneficial Owners
The Partnership is not aware of any beneficial owner of more
than five percent interest in the Partnership other than the
General Partner. The General Partner owns 5.14% of the Partnership
in Limited Partnership Units and a 1% General Partner interest.
Security Ownership of Management
As of March 15, 1996 the General Partner owns the following
interest in the Partnership:
Name of
Title of Class Beneficial Owner Ownership %
Limited Partner- Far West Capital 530 5.14%
ship Units Limited
Partnership
Units
General Partner Far West Capital Certificate
Interest of General
Partner's
Interest 1%
Total 6.14%
Item 12. Certain Relationships and Related Transactions.
General Partner's Compensation and Reimbursement
Far West Capital is entitled to receive certain compensation
and reimbursement under the terms of the Amended and Restated
Partnership Agreement. See "Item 11. Executive Compensation" as
to amounts paid to the General Partner in 1995.
1-A Expansion to the Steamboat Springs Plant
In 1988 the Partnership sold rights to develop the 1-A
Expansion Project to the Steamboat Springs Project to an entity
owned mostly by Alan O. Melchior and Thomas A. Quinn, officers and
owners of the General Partner of the Partnership. For a discussion
of the Partnership's interest in this Project, see "Item 2.
Properties -- Revenues from the 1-A thermal- hydroelectric Plant."
As consideration for the sale of the 1-A Plant rights to 1-A
Enterprises, the Partnership received a royalty interest in the net
operating income of the 1-A Plant. Such royalties equaled 15% in
1995. This amounted to $87,000 earned by the Partnership.
In addition the Partnership is paid an amount equivalent to
the net profit that would be realized by the Partnership if the 1-A
Plant were bearing 150 KW of parasitic power load (power consumed
by the Plant itself). In 1995 this amounted to $58,000 received by
the Partnership.
$400,000 Loan
Simultaneous with its January 17, 1990 loan to the
Partnership, Westinghouse made a $3,000,000 non-recourse loan to 1-
A Enterprises on the 1-A Plant on the same terms as the loan made
to the Partnership but secured by the assets associated with the 1-
A Plant. $400,000 of the loan on the 1-A Plant has been reloaned
by 1-A Enterprises to the Partnership at 11% per annum for ten
years on a non-recourse basis.
Assignment of Ownership Interest in SB GEO
In October, 1991 the Partnership assigned its 77% ownership
interest in SB GEO to Alan O. Melchior and Thomas A. Quinn, two of
the officers and owners of the General Partner in exchange for
their assuming all outstanding liabilities of SB GEO. See "Item 2.
Properties" for further information.
Loans From General Partner
During the past 5 years the General Partner made unsecured loans to
the Partnership to help the Partnership meet its financial obligations.
The loans accrue interest at 13% and are payable upon demand. As of
December 31, 1995, 1994 and 1993 loans from General Partners totaled
$1,117,000, $1,005,000, and $922,000 respectively.
PART IV
Item 13. Exhibits and Reports on Form 10-K.
(a) 1. The following financial statements are included in Part II,
Item 7;
Page
Independent Auditors' Report 18
Financial Statements:
Balance Sheets, December 31, 1995 and 1994 19
Statements of Operations, Years ended 21
December 31, 1995, 1994, and 1993
Statements of Partners' Capital, Years ended 22
December 31, 1995, 1994, and 1993
Statements of Cash Flows, Years ended 23
December 31, 1995, 1994, and 1993
Notes to Financial Statements 25
Accountants' Compilation Report 36
Unaudited Consolidated Balance Sheet of the
General Partner, Far West Capital, Inc. 37
Notes to the Unaudited Consolidated Balance Sheet
of the General Partner, Far West Capital, Inc. 39
2. The following financial schedules for the period from January
1, 1994, to December 31, 1995, are submitted herewith.
All schedules are omitted because they are not applicable or
the required information is shown in the financial statements or
notes thereto.
3. Exhibits:
The following exhibits are included as part of this report:
SEC
Exhibit Reference
Number Number Title of Document Location
Item 3. Articles of Incorporation and Bylaws
3(a) 3 Certificate and Agreement of Limited Partner- Incorporated
ship of Far West Electric Energy Fund, L.P. by Reference
filed with the Delaware Secretary of State on
December 20, 1988 (Steamboat Springs Project).
(Incorporated by reference to Exhibit 10(ab)
filed with Form 10-K for the fiscal year ended
December 31, 1988.)
3(b) 3 Amendment to Certificate and Agreement of Incorporated
Limited Partnership of Far West Electric by Reference
Energy Fund, L.P.
Item 4. Instruments Defining the Rights of Security
Holders Incorporated
4 4 See Exhibit (3)(a) with respect to rights of by Reference
Limited Partners.
Item 10. Material Contracts
10(a) 10 Purchase Agreement (Steamboat Springs--form- Incorporated
erly "Sierra Pacific"--Project). (Incorp- by Reference
orated by reference to Exhibit 10(a) filed
with Form 8 dated June 20, 1986.)
10(b) 10 Offset Agreement (Steamboat Springs Project).
Incorporated
(Incorporated by reference to Exhibit 10(b) by Reference
filed with Form 8, dated June 20, 1986.)
10(c) 10 Agreement for the Purchase and Sale of Elec- Incorporated
tricity (Steamboat Springs Project). (In- by Reference
corporated by reference to Exhibit 10(c) filed
with Form 8 dated June 20, 1986.)
10(d) 10 Memorandum of Lease, Assignment of Lease, and Incorporated
Purchase Agreement (Steamboat Springs Project). by Reference
(Incorporated by reference to Exhibit 10(d)
filed with Form 8 dated June 20, 1986.)
10(e) 10 Operating Agreement (Steamboat Springs Pro- Incorporated
ject). (Incorporated by reference to Exhibit by Reference
10(e) filed with Form 8 dated June 20, 1986.)
10(f) 10 Demand Note (Steamboat Springs Project). Incorporated
(Incorporated by reference to Exhibit 10(f) by Reference
filed with Form 8 dated June 20, 1986.)
10(g) 10 Assignment and Security Agreement (Steamboat Incorporated
Springs Project). (Incorporated by reference by Reference
to Exhibit 10(g) filed with Form 8 dated June
20, 1986.)
10(h) 10 Accommodation Agreement (Steamboat Springs Incorporated
Project). (Incorporated by reference to by Reference
Exhibit 10(h) filed with Form 8 dated June
20, 1986.)
10(i) 10 Leasehold Trust Deed (Steamboat Springs Pro- Incorporated
ject). (Incorporated by reference to Exhibit by Reference
10(i) filed with Form 8 dated June 20, 1986.)
10(j) 10 Construction Loan Agreement (Steamboat Incorporated
Springs Project). (Incorporated by reference by Reference
to Exhibit 10(j) filed with Form 8 dated
June 20, 1986.)
10(k) 10 Consents to Assignment of Geothermal Re- Incorporated
sources Lease and Agreement for the Purchase by Reference
and Sale of Electricity (Steamboat Springs
Project). (Incorporated by reference to
Exhibit 10(k) filed with Form 8 dated
June 20, 1986.)
10(l) 10 Construction Agreement (Steamboat Springs Incorporated
Project). (Incorporated by reference to by Reference
Exhibit 10(l) filed with Form 8 dated June
20, 1986.)
10(m)10Assignment of Construction Agreement (Steam- Incorporated
boat Springs Project). (Incorporated by by Reference
reference to Exhibit 10(m) filed with Form 8
dated June 20, 1986.)
10(n) 10 Promissory Note ($7.1 Million) (Steamboat Incorporated
Springs Project). (Incorporated by reference by Reference
to Exhibit 10(n) filed with Form 8 dated
June 20, 1986.)
10(o) 10 Purchase Agreement (Steamboat Springs Pro- Incorporated
ject). (Incorporated by reference to Exhibit by Reference
10(o) filed with Form 8 dated June 20, 1986.)
10(p) 10 Amendment to Agreement for Purchase and Sale Incorporated
of Electricity Between Far West Hydroelectric by Reference
Fund, Ltd. and Sierra Pacific Power Company
(Steamboat Springs Project). (Incorporated
by reference to Exhibit 10(p) filed with Form
10-K for the fiscal year ended December 31,
1986.)
10(q) 10 Location and Occupancy Agreement (Steamboat Incorporated
Springs Project). (Incorporated by reference by Reference
to Exhibit 10(q) filed with Form 10-K for the
fiscal year ended December 31, 1986.)
10(r) 10 Insurance Policy (Steamboat Springs Project). Incorporated
(Incorporated by reference to Exhibit 10(r) by Reference
filed with Form 10-K for the fiscal year ended
December 31, 1986.)
10(s) 10 Insurance Policy (Crystal Springs Project). Incorporated
(Incorporated by reference to Exhibit 10(s) by Reference
filed with Form 10-K for the fiscal year
ended December 31, 1986.)
10(t) 10 Certificate of Insurance (Crystal Springs Incorporated
Project). (Incorporated by reference to by Reference
Exhibit 10(t) filed with Form 10-K for the
fiscal year ended December 31, 1986.)
10(u) 10 Memorandum of Agreement Regarding Crystal Incorporated
Springs Lease (Crystal Springs Project). by Reference
(Incorporated by reference to Exhibit 6.(a)(1)
filed with Form 10-Q for the quarter ended
September 30, 1987.)
10(v) 10 Steamboat Springs Geothermal Hydroelectric Incorporated
Plant Loan Agreement and Security Agreement by Reference
(Steamboat Springs Project). (Incorporated
by reference to Exhibit 6.(a)(2) filed with
Form 10-Q for the quarter ended September
30, 1987.)
10(w) 10 Letter of Intent to Purchase Steamboat Incorporated
Springs 1-A Project (Steamboat Springs by Reference
Project). (Incorporated by reference to
Exhibit 6.(a)(1) filed with Form 10-Q for
the quarter ended June 30, 1987.)
10(x) 10 Restated Operation and Maintenance Agreement, Incorporated
Purchase Option Agreement, Promissory Note, by Reference
Credit Agreement, Security Agreement, Mortgage,
Assignment of Contract Rights, and Security
Agreement, and Collateral Assignment of Water
Rights (Steamboat Springs Project). (Incorp-
orated by reference to Exhibits filed with
Form 10-Q for the quarter ended June 30, 1988.)
10(y) 10 Amendment to Steamboat Springs Geothermal Incorporated
Hydroelectric Plant Security Agreement by Reference
(Steamboat Springs Project). (Incorporated
by reference to Exhibit 6.(a)(1) filed with
Form 10-Q for the quarter ended September
30, 1988.)
10(z) 10 Agreement re Acquisition of 1-A Expansion to Incorporated
the Steamboat Nevada Geothermal Power Plant by Reference
(Steamboat Springs Project). (Incorporated
by reference to Exhibit 10(w) filed with Form
10-K for the fiscal year ended December 31,
1987.)
10(aa) 10 1-A Assignment to the Partnership of Piping Incorporated
and Valves necessary to carry Geothermal by Reference
fluids to and from the Steamboat Springs
Geothermal power plants to the 1-A Expansion
Facility, dated January 18, 1989 (Steamboat
Springs Project). (Incorporated by reference
to Exhibit 10(ac) filed with Form 10-K for
the fiscal year ended December 31, 1988.)
10(ab) 10 Second Amendment to Geothermal Resources Incorporated
Lease between Sierra Pacific Power Company by Reference
and Far West Hydroelectric Fund, Ltd.,
dated October 29, 1988 (Steamboat Springs
Project). (Incorporated by reference to
Exhibit 10(ad) filed with Form 10-K for
the fiscal year ended December 31, 1988.)
10(ac) 10 Geothermal Resources Sublease between Far Incorporated
West Hydroelectric Fund, Ltd. and Far West by Reference
Capital, Inc., dated October 28, 1988 (Steam-
boat Springs Project). (Incorporated by
reference to Exhibit 10(ae) filed with Form
10-K for the fiscal year ended December 31,
1988.)
10(ad) 10 Purchase Option Agreement between Crystal Incorporated
Springs Hydroelectric Company and BPC, dated by Reference
July 7, 1988 (Crystal Springs Project).
(Incorporated by reference to Exhibit 19(a)
filed with Form 10-K for the fiscal year
ended December 31, 1988.)
10(ae) 10 Restated Operation and Maintenance Agreement Incorporated
between Crystal Springs Hydroelectric Company by Reference
and BPC, dated July 7, 1988 (Crystal Springs
Project). (Incorporated by reference to
Exhibit 19(b) filed with Form 10-K for the
fiscal year ended December 31, 1988.)
10(af) 10 Term Loan Agreement with Westinghouse Credit Incorporated
Corporation dated December 28, 1989 (Steamboat by Reference
Springs Project). Incorporated by reference
to Exhibit 7.(c)(1) filed with Form 8-K dated
January 17, 1990.)
10(ag) 10 Note in the principal amount of $400,000 to Incorporated
1-A Enterprises (Steamboat Springs Project). by Reference
(Incorporated by reference to Exhibit 7.(c)(2)
filed with Form 8-K dated January 17, 1990.)
10(ah) 10 The following Exhibits relate to the Westing- Incorporated
house Loan financing on the Steamboat Springs by Reference
Project:
1. Promissory Note.
2. Leasehold Trust Deed and Security
Agreement.
3. Security Agreement.
4. Collateral Assignment.
5. Financing Statement.
6. Escrow Agreement.
7. Escrow Instructions.
8. Consent to Assignment and Agreement
of Sierra Pacific Power Company.
(Incorporated by reference to Exhibit (19)
(ah) filed with Form 10-K for the fiscal
year ended December 31, 1989.)
10(ai) 10 Third Amendment to Geothermal Resources Lease Incorporated
(Steamboat Springs Project). (Incorporated by Reference
by reference to Exhibit (10) (ai) filed with
Form 10-K for the fiscal year ended December
31, 1989.)
10(aj) 10 Amended Memorandum of Lease (Steamboat Incorporated
Springs Project). (Incorporated by ref- by Reference
erence to Exhibit 10-K for the fiscal year
ended December 31, 1989.)
10(ak) 10 Revised and Restated Geothermal Resources Incorporated
Sublease (Steamboat Springs Project). by Reference
(Incorporated by reference to Exhibit (10)
(ak) filed with Form 10-K for the fiscal year
ended December 31, 1989.)
10(al) 10 Memorandum of Revised and Restated Geothermal Incorporated
Resources Sublease (Steamboat Springs Project). by Reference
(Incorporated by reference to Exhibit (10)
(al) filed with Form 10-K for the fiscal year
ended December 31, 1989.)
10(am) 10 Amendment to Operating Agreement (Steamboat Incorporated
Springs Project). (Incorporated by reference by Reference
to Exhibit (10) (am) filed with Form 10-K for
the fiscal year ended December 31, 1989.)
10(an) 10 Compromise Agreement (Steamboat Springs Pro- Incorporated
ject). (Incorporated by reference to Exhibit by Reference
(10) (an) filed with Form 10-K for the fiscal
year ended December 31, 1989.)
10(ao) 10 Agreement Re Disputed Invoice and Interest Incorporated
Due Under Steamboat 1 Operating Agreement by Reference
(Steamboat Springs Project). (Incorporated
by reference to Exhibit (10) (ao) filed with
Form 10-K for the fiscal year ended December
31, 1989.)
10(ap) 10 Agreement for Services (Steamboat Springs). Incorporated
(Incorporated by reference to Exhibit 10 by Reference
filed with Form 10-Q for the quarter ended
June 10, 1990.)
10(aq) 10 Revised Agreement for Services (Steamboat Incorporated
Springs) (Incorporated by reference to Ex- by Reference
hibit 10 (a) filed with Form 10-Q for the
quarter ended June 30, 1990.)
10(ar) 10 Revised Operating Agreement (Steamboat Incorporated
Springs). (Incorporated by reference to by Reference
Exhibit 10 (b) filed with Form 10-Q for the
quarter ended June 31, 1990.)
10(as) 10 Waiver Operating Agreement (Steamboat Incorporated
Springs). (Incorporated by reference to by Reference
Exhibit 10(b) filed with Form 10-Q for the
quarter ended June 30, 1990.)
10(at) 10 First Amendment to collateral Assignment Incorporated
(Steamboat Springs). (Incorporated by ref- by Reference
erence to Exhibit (10) (qt) filed with Form
10-K for the fiscal year ended December 31,
1990.)
10(au) 10 First Amendment to Security Agreement (Steam- Incorporated
boat Springs). (Incorporated by reference to by Reference
Exhibit (10) (au) filed with Form 10-K for the
fiscal year ended December 31, 1990.)
10(av) 10 Fifth Amendment to Escrow Agreement (Steam- Incorporated
boat Springs). (Incorporated by reference to by Reference
Exhibit (10) (av) filed with Form 10-K for the
fiscal year ended December 31, 1990.)
10(aw) 10 Assignment of Ownership (Steamboat Springs). Incorporated
(Incorporated by reference to Exhibit (10)(aw) by Reference
filed with Form 10-K for the fiscal year ended
December 31, 1991).
10(ax) 10 Crystal Springs Agreement (Crystal Springs Incorporated
Project). (Incorporated by reference to Ex- by Reference
hibit (10)(a) filed with Form 10-Q for the
quarter ended June 30, 1992).
10(ay) 10 Award of Arbitrators (Steamboat Springs Pro- Incorporated
ject). (Incorporated by reference to Exhibit by Reference
(10)(a) filed with Form 10-Q for the quarter
ended September 30, 1992).
10(az) 10 Agreement (Crystal Springs Project). (In- Incorporated
corporated by reference to Exhibit (10) (a) by Reference
filed with Form 10-K for the fiscal year ended
December 31, 1992).
10(aaa) 10 Mutual Release Agreement (Crystal Springs Incorporated
Project). (Incorporated by reference to Ex- by Reference
hibit (10) (a) filed with Form 10-K for the
fiscal year ended December 31, 1992).
10(aab) 10 Extension and Modification Agreement (Crystal Incorporated
Springs Project). (Incorporated by reference by Reference
to Exhibit (10) (a) filed with Form 10-K for
the fiscal year ended December 31, 1992).
10(aac) 10 Amendment to Mortgage (Crystal Springs Pro- Incorporated
ject). (Incorporated by reference to Exhibit by Reference
(10) (a) filed with Form 10-K for the fiscal
year ended December 31, 1992).
10(aad) 10 Amendment to Security Agreement (Crystal Incorporated
Springs Project). (Incorporated by reference by Reference
to Exhibit (10) (a) filed with Form 10-K for
the fiscal year ended December 31, 1992).
10(aae) 10 Operation and Maintenance Agreement (Crystal Incorporated
Springs Project). (Incorporated by reference by Reference
to Exhibit (10) (a) filed with Form 10-K for
the fiscal year ended December 31, 1992).
10(aaf) 10 Mutual Satisfaction of Arbitration Award Incorporated
(Steamboat Springs Project). (Incorporated by Reference
by reference to Exhibit (10) (a) filed with
Form 10-K for the fiscal year ended December
31, 1992).
10(aag) 10 Second Extension Agreement (Crystal Springs Incorporated
Project). by Reference
10(aah) 10 Agreement (Crystal Springs Project). Incorporated
by Reference
10(aai) 10 Purchase and Sale Agreement (Crystal Springs Incorporated
Project). by Reference
10(aaj) 10 Bill of Sale (Crystal Springs Project). Incorporated
by Reference
10(aak) 10 Release of All Claims (by Lessor) (Crystal Incorporated
Springs Project). by Reference
10(aal) 10 Consent to Assignment (Crystal Springs Incorporated
Project). by Reference
10(aam) 10 Consent and Agreement (Crystal Springs Incorporated
Project). by Reference
10(aan) 10 Assignment of Interest (Crystal Springs Incorporated
Project). by Reference
10(aao) 10 Certificate As To Fulfillment of Crystal Incorporated
Springs Hydroelectric Company ("Seller") by Reference
and Obligations (Crystal Springs Project).
10(aap) 10 Certificate As To Fulfillment of Crystal Incorporated
Springs Hydroelectric, L.P. ("Purchaser") by Reference
Conditions (Crystal Springs Project).
10(aaq) 10 Release of all claims (by Crystal Springs Incorporated
Hydroelectric Company) (Crystal Springs by Reference
Project).
10(aar) 10 Release of Security Agreement (Crystal Incorporated
Springs Project). by Reference
10(aas) 10 Third Extension and Modification Agreement Incorporated
(Crystal Springs Project). by Reference
10(aat) 10 Amended and Substituted Promissory Note Incorporated
(Crystal Springs Project). by Reference
10(aau) 10 Purchase and Sale Agreement and related Incorporated
documents (Steamboat Springs Plant) by Reference
(Incorporated by Reference to
preliminary Proxy materials filed
January 11, 1996)
Item 23. Consents of Experts and Counsel
23(a) 23 Consent of Independent Public Accountants Incorporated
(Robison Hill and Company). by Reference
The Partnership agrees to furnish to the Securities and
Exchange Commission a copy of any long-term debt instrument or loan
agreement that it may request.
(b) No reports on Form 8-K were filed during the 4th
Quarter of 1995.
(c) The exhibits listed in Item 14(a)(3) are
incorporated by reference.
(d) No financial statement schedules required by this
paragraph are required to be filed as a part of
this form.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Registrant: Far West Electric Energy Fund, L.P.
By: Far West Capital, Inc.,
General Partner
DATE: March 15, 1996 By: __/s/______________________
Ronald E. Burch, President
In accordance with the Exchange Act, this report has been
signed by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
DATE: March 15, 1996 By: __/s/____________________________
Ronald E. Burch, Director and
Principal Executive Officer
DATE: March 15, 1996 By: __/s/____________________________
Alan O. Melchior, Director and
Principal Financial Officer
DATE: March 15, 1996 By: __/s/____________________________
Thomas A. Quinn, Director
DATE: March 15, 1996 By: __/s/____________________________
Kenneth R. Beck, Director
DATE: March 15, 1996 By: __/s/____________________________
Jody Rolfson
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF FAR WEST ELECTRIC ENERGY FUND, L.P. AS OF DECEMBER 31, 1995 AND THE
RELATED STATEMENTS OF INCOME, PARTNERS' CAPITAL AND CASH FLOWS FOR THE YEAR THEN
ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 263
<SECURITIES> 0
<RECEIVABLES> 643
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 910
<PP&E> 16705
<DEPRECIATION> 5377
<TOTAL-ASSETS> 13370
<CURRENT-LIABILITIES> 7505
<BONDS> 537
0
0
<COMMON> 0
<OTHER-SE> 5140
<TOTAL-LIABILITY-AND-EQUITY> 13370
<SALES> 2529
<TOTAL-REVENUES> 2674
<CGS> 1755
<TOTAL-COSTS> 1755
<OTHER-EXPENSES> 153
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 744
<INCOME-PRETAX> 283
<INCOME-TAX> 0
<INCOME-CONTINUING> 283
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 283
<EPS-PRIMARY> 27
<EPS-DILUTED> 27
</TABLE>
