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: March 31, 1998
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.
Balance Sheets at March 31, 1998 and December 31, 1997.
Statement of Operations for the
Three Months Ended March 31, 1998, and
March 31, 1997.
Statement of Changes in Partners' Capital
Accounts at March 31, 1998, and December 31, 1997.
Statement of Cash Flows for the Three Months
Ended March 31, 1998, and March 31, 1997.
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, March 31,
1997 1998
(Audited) (Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 183 $ 431
Accounts receivable 368 804
Other current assets 36 42
----------- -----------
Total current assets 587 1,277
----------- -----------
Noncurrent assets:
Building 98 98
Wind turbines 49,561 49,561
Less - Accumulated depreciation (32,240) (32,864)
----------- -----------
Total noncurrent assets 17,419 16,795
----------- -----------
Total assets $ 18,006 $ 18,072
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current portion of
notes payable to related party $ 2,114 $ 2,114
Accounts payable 29 37
Interest payable to related party 4,103 4,482
Amounts payable to related parties 160 34
----------- -----------
Total current liabilities 6,406 6,667
----------- -----------
Notes payable to related party, less
current portion 11,700 11,700
----------- -----------
Partners' capital:
Limited partners (683) (876)
General partner 1 --
Substituted limited partner 1 --
Special limited partner -- --
Contributed capital 581 581
----------- -----------
Total partners' capital (100) (295)
----------- -----------
Total liabilities and partners' capital $ 18,006 $ 18,072
=========== ===========
<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
March 31,
1997 1998
<S> <C> <C>
Revenues:
Sales of electricity $ 1,026 $ 1,069
Other income 5 9
----------- -----------
1,031 1,078
----------- -----------
Costs and Expenses:
Depreciation 624 624
Interest expense 431 380
Property taxes 6 5
Management fees and land lease
to related parties 77 44
Maintenance and other operating
costs to related parties 204 188
Other operating costs 5 3
Insurance expense 32 29
----------- -----------
1,379 1,273
----------- -----------
Net loss $ (348) $ (195)
=========== ===========
Net loss per limited
partnership unit $ (0.292) $ (0.164)
=========== ===========
Number of limited partnership
units outstanding 1,190 1,190
=========== ===========
<FN>
See accompanying notes to interim financial statements
</TABLE>
<PAGE>
<TABLE>
ZOND-PANAERO WINDSYSTEM PARTNERS I
(A California Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Amounts in thousands)
<CAPTION>
<CAPTION>
Substit.
General Limited Limited Contrib.
Total Partner Partners Partner Capital
<S> <C> <C> <C> <C> <C>
Profit and loss allocation
percentage 100% .5% 99% .5%
Capital contributions, net
of private placement costs
and cash distributions $27,000 $ 273 $26,146 $ - $ 581
Conversion to
Substituted Limited
Partner - (83) - 83 -
Loss for the period from
June 29, 1984(inception)
through December 31, 1995 (25,496) (181) (25,241) (74) -
Balance at December 31, 1995 1,504 9 905 9 581
Net loss (543) (3) (537) (3) -
Balance at December 31, 1996 961 6 368 6 581
Net loss (1,061) (5) (1,051) (5) -
Balance at December 31, 1997 (100) 1 (683) 1 581
Net loss (195) (1) (193) (1) -
Balance at March 31, 1998 $ (295) $ - $ (876) $ - $ 581
<FN>
See accompanying notes to financial statements.
</FN>
<PAGE>
<PAGE>
</TABLE>
<TABLE>
ZOND-PANAERO WINDSYSTEM PARTNERS I
(A California Limited Partnership)
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(Amounts in thousands)
<CAPTION>
For the Three Months Ended
March 31,
1997 1998
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (348) $ (195)
Adjustments to reconcile net loss to cash
provided by (used in) operating activities -
Depreciation 624 624
Changes in assets and liabilities -
Accounts receivable 74 (436)
Prepaid insurance and other (61) (6)
Accounts payable and accrued expenses (85) 8
Amounts payable to related party 18 (126)
Accrued interest payable
to related party 431 379
----------- ---------
Net cash provided (used) 653 248
Cash flows from financing activities:
Principal payments on notes payable
to related party -- --
----------- ---------
Net increase in cash and cash equivalents 653 248
Cash & cash equivalents beginning of period 142 183
----------- ---------
Cash and cash equivalents end of period $ 795 $ 431
=========== =========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ -- $ --
=========== =========
<FN>
See accompanying notes to interim financial statements
</TABLE>
<PAGE>
<PAGE>
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 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. Until
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 $ 418,000
Less: Depreciation less for tax than GAAP (623,000)
Other, net 10,000
---------------
GAAP basis loss $ (195,000)
===============
Tax basis partners' capital
at March 31, 1998 $ (10,835,000)
Plus:
GAAP basis loss less than taxable loss net,
June 24, 1984 (inception)
through December 31, 1997 11,153,000
GAAP basis loss versus taxable income
January 1, 1998 through March 31, 1998 (613,000)
---------------
GAAP basis partners' capital $ (295,000)
===============
<PAGE>
3. Reconciliation of GAAP Basis and Tax Basis Financial
Statements:
Tax basis total assets $ 7,512,000
Cumulative tax depreciation in excess of
GAAP depreciation 10,560,000
---------------
GAAP basis total assets
at March 31, 1998 $ 18,072,000
===============
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 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. 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. 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
Partnership's payment for the purchase, construction, and
installation of the Windsystem was comprised of $22,430,000 in
cash and $26,500,000 in the form of eighteen-year notes payable
(the "Purchase Notes"). 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").
On January 3, 1997 Zond's parent, Zond Corporation, became a
wholly-owned subsidiary of Enron Renewable Energy Corporation,
which is majority owned by Enron Corp. In May 1997, the name of
Zond Corporation was changed to Enron Wind Corp. Enron Corp.,
headquartered in Houston, Texas, is the world's leading
integrated energy company. Enron Corp., which owns approximately
$23 billion in energy related assets, delivers physical
commodities and risk management and financial services to provide
energy solutions to customers around the world.
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, interest payments on the Purchase Notes were in
arrears at March 31, 1998 in the aggregate amount of $4,049,000.
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 March 31, 1998, Compared to Three
Months Ended March 31, 1997.
Revenues from power sales in the three months ended March 31
1998 were 4.2% higher than for the corresponding 1997 period. As
reported by Southern California Edison Company, the Windsystem
produced 10,382 megawatt hours in the three months ended March
31, 1998, in comparison to production of 9,928 megawatt hours in
the corresponding 1997 period, representing an increase in
production of approximately 4.6%.
The Partnership received approximately $9,000 in "other
income" from interest earned on cash balances in the three months
ended March 31, 1998, and approximately $5,000 in the
corresponding 1997 period.
Total expenses for the three months ended March 31, 1998 were
approximately 7.7% lower than the corresponding 1997 period.
Interest expense decreased due to lower average principal
balances on the Purchase Notes outstanding. Management fees and
land lease expenses decreased 43%. Management fees are 2% of
sales receipts and land lease is 5% of sales receipts. Sales
receipts lag behind the accrued sales revenue by about two
months. Receipts of electricity sales in the first quarter 1998
were down 43% from the first quarter 1997 as the result of lower
wind energy levels in November and December 1997 and January 1998
compared to November and December 1996 and January 1997.
Maintenance and other operating costs decreased 8%, substantially
due to decreased generator parts replacement and crane rental
expense. Insurance expense decreased 9%, which is attributable
to historical low loss experience, asset devaluation, and the
packaging of all turbine projects Zond operates under one policy
with Enron Corp.
Overall, the Partnership reported a loss of $195,000 for the
three months ended March 31, 1998, in comparison to a loss of
$348,000 for the corresponding 1997 period.
The Partnership's financial condition worsened during the
three months ended March 31, 1998. The change in overall
financial condition is primarily due to the three month loss.
During the three months ended March 31, 1998, total partners'
capital decreased $195,000 from ($100,000) at December 31, 1997,
to ($295,000). Limited Partners' capital decreased $193,000 from
($683,000) at December 31, 1997, to ($876,000). This represents
a total decrease of approximately $164 per unit of partnership.
Based on historical average wind energy and current cost levels,
the Partnership expects to continue to suffer net annual
operating losses and expects that its overall financial condition
will worsen annually for the foreseeable future.
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: May 14, 1998 By:/S/ KENNETH C. KARAS
Kenneth C. Karas
President and
Chief Financial Officer
Date: May 14, 1998 By:/S/ D. MICHAEL WESTBELD
D. Michael Westbeld
Vice President-Controller
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 431
<SECURITIES> 0
<RECEIVABLES> 804
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,277
<PP&E> 49,659
<DEPRECIATION> (32,864)
<TOTAL-ASSETS> 18,072
<CURRENT-LIABILITIES> 6,667
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (295) <F1>
<TOTAL-LIABILITY-AND-EQUITY> 18,072
<SALES> 1,069
<TOTAL-REVENUES> 1,078
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,273
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 380
<INCOME-PRETAX> (195)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (195)
<EPS-PRIMARY> (0.164)<F2>
<EPS-DILUTED> (0.164)<F2>
<FN>
<F1> Partner equity - 1,190 Partnership units outstanding.
<F2> Per Partnership Unit in thousands.
</FN>
</TABLE>
