FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended: September 30, 1995
OR
[ ] Transition Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 0-13510
ZOND-PANAERO WINDSYSTEM PARTNERS I
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of Registrant as specified in its charter)
CALIFORNIA 77-003535
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13000 Jameson St., Tehachapi, California 93561
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(805) 822-6835
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
<PAGE>
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1.
Statement of Assets, Liabilities and Partners'
Deficit at September 30, 1995 and December 31, 1994.
Statement of Revenues and Expenses for the
Three Months Ended September 30, 1995, and
September 30, 1994.
Statement of Revenues and Expenses for the
Nine Months Ended September 30, 1995, and
September 30, 1994.
Statement of Changes on Partners' Capital
Accounts at December 31, 1994, and September 30, 1995.
Statement of Cash Flows for the Nine Months
Ended September 30, 1995, and September 30, 1994.
Notes to Interim Financial Statements.
<PAGE>
<PAGE>
<TABLE>
ZOND-PANAERO WINDSYSTEM PARTNERS I
(A California Limited Partnership)
BALANCE SHEET
(Amounts in thousands)
<CAPTION>
December 31, September 30,
1994 1995
(Audited) (Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 37 $ 1,503
Accounts receivable 494 841
Other current assets 158 179
----------- -----------
Total current assets 689 2,523
----------- -----------
Noncurrent assets:
Building 98 98
Wind turbines 49,561 49,561
Less - Accumulated depreciation (24,749) (26,622)
----------- -----------
Total noncurrent assets 24,910 23,037
----------- -----------
Total assets $ 25,599 $ 25,560
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current portion of
notes payable to related party $ 1,449 $ 1,543
Accounts payable 125 155
Interest payable to related party 3,704 4,812
Amounts payable to related parties 84 56
----------- -----------
Total current liabilities 5,362 6,566
----------- -----------
Notes payable to related party, less
current portion 17,321 16,525
----------- -----------
Partners' capital:
Limited partners 2,303 1,860
General partner 16 14
Substituted limited partner 16 14
Special limited partner -- --
Contributed capital 581 581
----------- -----------
Total partners' capital 2,916 2,469
----------- -----------
Total liabilities and partners' capital $ 25,599 $ 25,560
=========== ===========
<FN>
See accompanying notes to interim financial statements
</TABLE>
<PAGE>
<TABLE>
ZOND-PANAERO WINDSYSTEM PARTNERS I
(A California Limited Partnership)
STATEMENT OF OPERATIONS
(Amounts in thousands except limited partnership units)
<CAPTION>
For the Three Months Ended
September 30,
1994 1995
<S> <C> <C>
Revenues:
Sales of electricity $ 1,251 $ 1,291
Other income 5 15
----------- -----------
1,256 1,306
----------- -----------
Costs and Expenses:
Depreciation 625 625
Interest expense 534 496
Property taxes, net of
refund of $39,000 in 1994 (28) 10
Management fees and land lease 111 128
Maintenance and other operating costs 277 265
Insurance expense 52 52
----------- -----------
1,571 1,576
----------- -----------
Net income (loss) $ (315) $ (270)
=========== ===========
Net income (loss) per limited
partnership unit $ (0.264) $ (0.227)
=========== ===========
Number of limited partnership
units outstanding 1,190 1,190
=========== ===========
<FN>
See accompanying notes to interim financial statements
</TABLE>
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<PAGE>
<TABLE>
ZOND-PANAERO WINDSYSTEM PARTNERS I
(A California Limited Partnership)
STATEMENT OF OPERATIONS
(Amounts in thousands except limited partnership units)
<CAPTION>
For the Nine Months Ended
September 30,
1994 1995
<S> <C> <C>
Revenues:
Sales of electricity $ 3,629 $ 4,136
Other income 7 21
----------- -----------
3,636 4,157
----------- -----------
Costs and Expenses:
Depreciation 1,873 1,873
Interest expense 1,634 1,526
Property taxes, net of
refund of $39,000 in 1994 (5) 27
Management fees and land lease 233 266
Maintenance and other operating costs 820 753
Insurance expense 151 159
----------- -----------
4,706 4,604
----------- -----------
Net income (loss) $ (1,070) $ (447)
=========== ===========
Net income (loss) per limited
partnership unit $ (0.899) $ (0.376)
=========== ===========
Number of limited partnership
units outstanding 1,190 1,190
=========== ===========
<FN>
See accompanying notes to interim financial statements
</TABLE>
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<TABLE>
ZOND-PANAERO WINDSYSTEM PARTNERS I
(A California Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Amounts in thousands)
<CAPTION>
Substituted
General Limited Limited Contributed
Total Partner Partners Partner Capital
<S> <C> <C> <C> <C> <C>
Profit and
loss percentage 100% 0.5% 99.0% 0.5% --
======== ======= ======== ======= ======
Accumulated capital
contributions, net of private
placement costs and
cash distributions $ 27,000 $ 273 $ 26,146 $ -- $ 581
Conversion to Substituted
Limited Partner -- (83) -- 83
Accumulated tax basis losses
from June 29, 1984
(inception) through
December 31, 1992 (20,701) (157) (20,494) (50)
---------- --------- ---------- --------- --------
Balance at:
December 31, 1992 6,299 33 5,652 33 581
Net loss (1,640) (8) (1,624) (8)
---------- --------- ---------- --------- --------
December 31, 1993 4,659 25 4,028 25 581
Net loss (1,743) (9) (1,725) (9)
---------- --------- ---------- --------- --------
December 31, 1994 2,916 16 2,303 16 581
Net loss (447) (2) (443) (2) --
---------- --------- ---------- --------- --------
September 30, 1995 $ 2,469 $ 14 $ 1,860 $ 14 $ 581
========== ========= ========== ========= ========
<FN>
See accompanying notes to interim financial statements
</TABLE>
<PAGE>
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<TABLE>
ZOND-PANAERO WINDSYSTEM PARTNERS I
(A California Limited Partnership)
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(Amounts in thousands)
<CAPTION>
December 31, September 30,
1994 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (1,070) $ (447)
Adjustments to reconcile net income (loss) to cash
provided by (used in) operating activities -
Depreciation 1,873 1,873
Accounts receivable (350) (347)
Other current assets (87) (21)
Accounts payable and accrued expenses 84 30
Amounts payable to related party (66) (28)
Interest payable to related party 1,231 1,108
----------- ------------
Net cash provided (used) 1,615 2,168
Cash flows from financing activities:
Principal payments to related party (619) (702)
----------- ------------
Net increase in cash and cash equivalents 996 1,466
Cash & cash equivalents beginning of period 226 37
----------- ------------
Cash and cash equivalents end of period $ 1,222 $ 1,503
=========== ============
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 405 $ 418
=========== ============
<FN>
See accompanying notes to interim financial statements
</TABLE>
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ZOND-PANAERO WINDSYSTEM PARTNERS I
(A California Limited Partnership)
NOTES TO INTERIM FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying unaudited financial statements reflect all
adjustments which are, in the opinion of the Partnership's
general partner, necessary to a fair statement of the
results for for the periods presented. The results of
operations for interim periods are not necessarily
indicative of results for the full year.
2. The Partnership's limited partnership agreement allows the
Partnership's general partner to determine the method for
maintaining the Partnership's accounting records. Untit
1987, the records were maintained on a cash basis. However,
Section 481 of the Tax Reform Act of 1986 (the "Act")
prescribed a change, effective January 1, 1987, in the
accounting method for certain tax shelters having corporate
general partners, including the Partnership, to require
tax-basis accrual accounting. In accordance with Section
481 of the Act, differences between the two bases were
recognized for federal income tax purposes ratably by the
Partnership over a three year period. Below are
reconciliations between the Partnership's tax-basis accrual
financial statements and its GAAP basis accrual financial
statements included herein for both results of operations,
partners' capital balances and total assets.
Taxable income year to date $ 1,422,000
Less: Depreciation less for tax than GAAP (1,870,000)
Other, net 1,000
---------------
GAAP basis income(loss) $ (447,000)
===============
Tax basis partners' capital
at September 30, 1995 $ (14,302,000)
Plus:
GAAP basis loss less than taxable loss net,
June 24, 1984 (inception)
through December 31, 1994 18,640,000
GAAP basis loss less than taxable loss
January 1, 1995 through
September 30, 1995 (1,869,000)
---------------
GAAP basis partners' capital $ 2,469,000
===============
<PAGE>
3. Reconciliation of GAAP Basis and Tax Basis Financial
Statements:
Tax basis total assets $ 8,767,000
Cumulative tax depreciation in excess of
GAAP depreciation 16,793,000
---------------
GAAP basis total assets
at September 30, 1995 $ 25,560,000
===============
4. During all periods presented in these financial statements,
1,190 units of limited partnership interests were
outstanding.
5. As a "Special Limited Partner" of the Partnership, Dean
Witter Reynolds, Inc. is entitled to receive 5% of all
Partnership distributions made after the later of April 1,
1995 and the date on which the cumulative aggregate
distributions to the Partnership's limited partners exceed
$10,000,000.
6. Following its removal as a general partner of the
Partnership effective June 24, 1988, PanAero Management
Corporation became a substituted limited partner of the
Partnership with the same capital account and interest in
profits and losses as it had as a general partner.
7. In accordance with the 1988 agreement between Zond Systems,
Inc.("Zond") and the placement agent, Zond forgave its
share, as a joint venture partner of Mesa Wind Developers,
of certain indebtedness owed by the Partnership to such
joint venture representing management fees, easement
royalties and other miscellaneous expenses related to
windsystem operations.
8. No provision has been made for income taxes in the
accompanying financial statements. The Partnership, as an
entity, is not assessed taxes based upon income generated by
its operations its operations. Income taxes, if any, are the
liability of the individual partners.
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Zond-PanAero Windsystem Partners I, a California Limited
Partnership (the "Partnership") was formed in 1984 to purchase,
own, and operate a wind-driven electric power generating facility
located near Palm Springs, California (the "Windsystem"). The
electricity generated by the Windsystem is sold to Southern
California Edison Company. The general partner of the
Partnership is Zond Windsystems Management Corporation, a
wholly-owned subsidiary of Zond Systems, Inc. ("Zond").
Liquidity and Capital Resources
The Partnership continues to experience a lack of liquidity
primarily due to a continued short-fall in revenues from
operations in comparison to the costs and expenses of operations.
Accordingly, payments on the Purchase Notes in the aggregate
amount of $4,246,000 were in arrears at September 30, 1995. The
Partnership expects that it will continue to experience poor
liquidity and to defer certain payments on the Purchase Notes.
See "Results of Operations."
Results of Operations
Three Months Ended September 30, 1995, Compared to Three
Months Ended September 30, 1994
Revenues from power sales in the three months ended
September 30, 1995, were approximately 3.2% higher than the
corresponding 1994 period. Average wind speed at three
representative anemometer locations on the Operating Site was
approximately 2% lower for the three months ended September 30,
1995, than for the corresponding 1994 period and was
approximately 3% lower than the historical averages. Only three
anemometers are used to measure wind speed, therefore a direct
correlation to production of the entire group of turbines cannot
always be expected. One factor that can effect this correlation
is system availability. During the quarter the wind system was
more available for operation. The increased system availability
during this period compared to the same period last year more
than offset the lower wind speeds recorded. As reported by
Southern California Edison Company, the Windsystem produced
12,652 megawatt hours in the three months ended September 30,
1995, in comparison to production of 12,294 megawatt hours in the
corresponding 1994 period, representing an increase in production
of approximately 3%.
The Partnership received approximately $15,000 in "other
income" from interest earned on excess operating funds in the
three months ended September 30, 1995, and approximately $5,000
in the corresponding 1994 period. Average cash balances in
excess of current operating needs were larger during the current
quarter due to higher production revenue during the nine months
ended September 30, 1995.
<PAGE>
Total expenses for the three months ended September 30, 1995,
were approximately 0.3% higher than the corresponding 1994
period. Maintenance expenses decreased approximately 4.5%.
This variance is within standard range and not material.
Insurance expense was unchanged. Interest expense decreased due
to lower average principal balances on the Purchase Notes
outstanding. Management fees and land lease expenses, which are
based on the Partnership's power generation revenue receipts,
increased approximately 15% due to increased revenue receipts.
Property taxes decreased (net of refund of $39,000) by $1,000 to
$10,000 from the corresponding 1994 period. Overall, the
Partnership reported a loss of $270,000 for the three months
ended September 30, 1995, in comparison to a loss of $315,000 for
the corresponding 1994 period.
The Partnership's overall financial condition worsened during
the three months ended September 30, 1995. The change i n
overall financial condition is primarily due to the third quarter
loss. During the three months ended September 30, 1995, total
partners' capital decreased $270,000 from $2,739,000 at June 30,
1995, to $2,469,000 and Limited Partners' capital decreased
$268,000 from $2,128,000 at June 30, 1995, to $1,860,000. This
represents a total decrease of approximately $225 per unit of
partnership. Based on historical average wind speed and current
cost levels, the Partnership expects to continue to suffer net
annual operating losses. The Partnership expects that its
overall financial condition will continue to worsen for the
foreseeable future.
Nine Months Ended September 30, 1995, Compared to Nine Months
Ended September 30, 1994
Revenues from power sales in the nine months ended September
30, 1995, were approximately 14% higher than the corresponding
1994 period. Average wind speed at three representative
anemometer locations on the Operating Site was approximately 6%
higher for the nine months ended September 30, 1995, than for the
corresponding 1994 period and was approximately 1% higher than
the historical averages. As reported by Southern California
Edison Company, the Windsystem produced 40,547 megawatt hours in
the nine months ended September 30, 1995, in comparison to
production of 35,609 megawatt hours in the corresponding 1994
period, representing an increase in production of approximately
14%.
The Partnership received approximately $21,000 in "other
income" from interest earned on excess operating funds in the
nine months ended September 30, 1995, and approximately $7,000 in
the corresponding 1994 period. Average cash balances in excess
of current operating needs were larger in the current period due
to higher production revenue.
<PAGE>
Total expenses for the nine months ended September 30, 1995,
were approximately 2.2% less than the corresponding 1994 period.
Maintenance expenses decreased approximately 8.2%. In the first
quarter of 1994, the relocation of one Turbine was completed and
certain expenses related to the relocation of three other
Turbines were accounted for.
The Turbines had been relocated as a result of a discovery in
1993 that the earth surrounding and supporting their foundations
had become seriously eroded. The suspected causes were the
heavy rains experienced at the Operating Site during the
preceding winter and the Landers earthquake, whose epicenter was
in the area of the Operating Site. Insurance expense increased
approximately 5.3%. Interest expense decreased due to lower
average principal balances on the Purchase Notes outstanding.
Management fees and land lease expenses, which are based on the
Partnership's power generation revenue receipts, increased
approximately 14.2% due to increased revenue receipts. Property
taxes decreased (net of refund of $39,000) by $7,000 to $27,000
from the corresponding 1994 period. Overall, the Partnership
reported a loss of $447,000 for the nine months ended September
30, 1995, in comparison to a loss of $1,070,000 for the
corresponding 1994 period.
The Partnership's overall financial condition worsened during
the nine months ended September 30, 1995. The change in overall
financial condition is primarily due to the nine month loss.
During the nine months ended September 30, 1995, total partners'
capital decreased $447,000 from $2,916,000 at December 31, 1994,
to $2,469,000 and Limited Partners' capital decreased $443,000
from $2,303,000 at December 31, 1994, to $1,860,000. This
represents a total decrease of approximately $372 per unit of
partnership. Based on historical average wind speed and current
cost levels, the Partnership expects to continue to suffer net
annual operating losses. The Partnership expects that its
overall financial condition will continue to worsen for the
foreseeable future.
<PAGE>
<PAGE>
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 27. Financial Data Schedule.
b. Reports on Form 8-K: No reports on Form 8-K
have been filed by the Registrant.
<PAGE>
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ZOND-PANAERO WINDSYSTEM PARTNERS I
A CALIFORNIA LIMITED PARTNERSHIP
By: Zond Windsystems Management
Corporation, General Partner
Date: November 14, 1995 By:/S/ KENNETH C. KARAS
Kenneth C. Karas
President and
Chief Financial Officer
Date: November 14, 1995 By:/S/ D. MICHAEL WESTBELD
D. Michael Westbeld
Vice President-Controller
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,503
<SECURITIES> 0
<RECEIVABLES> 841
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 179
<PP&E> 49,659
<DEPRECIATION> (26,622)
<TOTAL-ASSETS> 25,560
<CURRENT-LIABILITIES> 6,566
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 2469 <F1>
<TOTAL-LIABILITY-AND-EQUITY> 25,560
<SALES> 4,136
<TOTAL-REVENUES> 4,157
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,078
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,526
<INCOME-PRETAX> (447)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (447)
<EPS-PRIMARY> (0.376)<F2>
<EPS-DILUTED> (0.376)<F2>
<FN>
<F1>Partner equity - 1,190 Partnership units outstanding.
<F2>Per Partnership Unit in thousands.
</FN>
</TABLE>
