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, 1999
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)
(661) 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 September 30, 1999 and December 31, 1998.
Statement of Operations for the
Three Months Ended September 30, 1999, and
September 30, 1998.
Statement of Operations for the
Nine Months Ended September 30, 1999, and
September 30, 1998.
Statement of Changes in Partners' Capital
Accounts at September 30, 1999, and December 31, 1998.
Statement of Cash Flows for the Nine Months
Ended September 30, 1999, and September 30, 1998.
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,
1998 1999
(Audited) (Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 10 $ 1,470
Accounts receivable 543 567
Other current assets 86 56
----------- -----------
Total current assets 639 2,093
----------- -----------
Noncurrent assets:
Building 98 98
Wind turbines 49,561 49,561
Less - Accumulated depreciation (34,737) (36,610)
----------- -----------
Total noncurrent assets 14,922 13,049
----------- -----------
Total assets $ 15,561 $ 15,142
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current portion of
notes payable to related party $ 2,398 $ 2,554
Accounts payable 22 25
Interest payable to related party 3,864 4,477
Amounts payable to related parties 260 204
----------- -----------
Total current liabilities 6,544 7,260
----------- -----------
Notes payable to related party, less
current portion 9,302 7,985
----------- -----------
Partners' capital:
Limited partners (866) (686)
General partner -- 1
Substituted limited partner -- 1
Special limited partner -- --
Contributed capital 581 581
----------- -----------
Total partners' capital (285) (103)
----------- -----------
Total liabilities and partners' capital $ 15,561 $ 15,142
=========== ===========
<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,
1998 1999
<S> <C> <C>
Revenues:
Sales of electricity $ 1,102 $ 1,023
Other income 7 11
----------- -----------
1,109 1,034
----------- -----------
Costs and Expenses:
Depreciation 625 625
Interest expense 352 290
Property taxes 32 18
Management fees and land lease
to related parties 146 126
Maintenance and other operating
costs to related parties 318 286
Other operating costs 4 12
Insurance expense 5 17
----------- -----------
1,482 1,374
----------- -----------
Net loss $ (373) $ (340)
=========== ===========
Net income per limited
partnership unit $ (0.313) $ (0.286)
=========== ===========
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 OPERATIONS
(Amounts in thousands except limited partnership units)
<CAPTION>
For the Nine Months Ended
September 30,
1998 1999
<S> <C> <C>
Revenues:
Sales of electricity $ 4,321 $ 4,216
Other income 21 27
----------- -----------
4,342 4,243
----------- -----------
Costs and Expenses:
Depreciation 1,873 1,873
Interest expense 1,108 929
Property taxes 41 83
Management fees and land lease
to related parties 280 294
Maintenance and other operating
costs to related parties 724 773
Other operating costs 12 59
Insurance expense 62 50
----------- -----------
4,100 4,061
----------- -----------
Net income $ 242 $ 182
=========== ===========
Net income per limited
partnership unit $ 0.203 $ 0.153
=========== ===========
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, 1996 (26,039) (184) (25,778) (77) -
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 (185) (1) (183) (1) -
Balance at December 31, 1998 (285) - (866) -
581
Net income 182 1 180 1 -
Balance at September 30, 1999 $ (103)$ 1 $ (686) $ 1 $ 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 Nine Months Ended
September
30,
1998 1999
<S> <C> <C>
Cash flows from operating activities:
Net income $ 242 $ 182
Adjustments to reconcile net income to cash
provided by operating activities -
Depreciation 1,873 1,873
Changes in assets and liabilities -
Accounts receivable (315) (24)
Prepaid insurance and other (68) 30
Accounts payable and accrued expenses (8) 3
Amounts payable to related party 138 (56)
Accrued interest payable
to related party 678 613
----------- ---------
Net cash provided 2,540 2,621
Cash flows from financing activities:
Principal payments on notes payable
to related party (1,024) (1,161)
----------- ---------
Net increase in cash and cash equivalents 1,516 1,460
Cash & cash equivalents beginning of period 183 10
----------- ---------
Cash and cash equivalents end of period $ 1,699 $ 1,470
=========== =========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 430 $ 316
=========== =========
<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 for 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 $ 2,052,000
Less: Depreciation less for tax than GAAP (1,871,000)
Other, net 1,000
---------------
GAAP basis income $ 182,000
===============
Tax basis partners' capital
at September 30, 1999 $ (6,898,000)
Plus:
GAAP basis loss less than taxable loss net,
June 24, 1984 (inception)
through December 31, 1998 8,665,000
GAAP basis loss versus taxable income
January 1, 1999 through September 30, 1999 (1,870,000)
---------------
GAAP basis partners' capital $ (103,000)
===============
<PAGE>
3. Reconciliation of GAAP Basis and Tax Basis Financial
Statements:
Tax basis total assets $ 8,326,000
Cumulative tax depreciation in excess of
GAAP depreciation 6,816,000
---------------
GAAP basis total assets
at September 30, 1999 $ 15,142,000
===============
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 September 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 ("ZWMC"), a wholly-owned subsidiary of
Enron Wind Systems, Inc. ("Enron Wind Systems"), formerly known as Zond
Systems, Inc. ("Zond Systems").
On January 3, 1997, Zond Systems' parent, Zond Corporation, became a
wholly-owned subsidiary of Enron Renewable Energy Corp., which is majority
owned by Enron Corp. ("Enron"). In May 1997, the name of Zond Corporation was
changed to Enron Wind Corp. ("EWC"). Enron, headquartered in Houston, Texas,
is one of the world's leading integrated energy companies. Enron, which owns
approximately $34 billion in energy related assets, delivers physical
commodities and risk management and financial services to provide energy
solutions to customers around the world.
Year 2000 Disclosure
The Year 2000 problem results from the use in computer hardware and software
of two digits rather than four digits to define the applicable year. The use
of two digits was a common practice for decades when computer storage and
processing was much more expensive than today. When computer systems must
process dates both before and after January 1, 2000, two-digit year "fields"
may create processing ambiguities that can cause errors and system failures.
For example, computer programs that have date-sensitive features may recognize
a date represented by "00" as the year 1900, instead of 2000. These errors or
failures may have limited effects, or the effects may be widespread, depending
on the computer chip, system or software, and its location and function.
State of Readiness:
Enron's Board of Directors has been briefed about the Year 2000 problems
generally and as it may affect Enron and its respective business units. The
Board has adopted a Year 2000 plan (the "Plan") covering all of Enron's
business units (including the Partnership). The aim of the Plan is to take
reasonable steps to prevent the mission-critical functions of Enron and each
of Enron's business units from being impaired due to the Year 2000 problem.
"Mission-critical" functions are those critical functions whose loss would
cause an immediate stoppage of or significant impairment to major business
areas (a major business area is one of material importance to the business of
Enron's business units including EWC and the Partnership).
Implementation of Enron's Year 2000 plan is directly supervised by a Senior
Vice President who is aided by a Year 2000 Project Director. The Project
Director coordinates the implementation of the Plan among Enron's business
units. As part of the overall Plan, each business unit in turn has developed,
and is implementing, a Year 2000 plan specific to it. Enron also has engaged
outside consultants, technicians and other external resources to aid in
formulating and implementing the Plan.
As a portion of one of Enron's business units, EWC is implementing its plan
(the "EWC Plan"), which will be modified as events warrant. Any potential
Year 2000 problems of the Partnership are addressed under the EWC Plan. Under
the EWC Plan, EWC will continue to inventory its and its subsidiary entities'
(as well as the Partnership's) mission-critical computer hardware and software
systems and embedded chips (computer chips with date-related functions,
contained in a wide variety of devices); assess the effects of Year 2000
problems on the function of EWC's and its subsidiary entities' (as well as the
Partnership's) businesses; remedy systems, software and embedded chips in an
effort to avoid material disruptions or other material adverse effects on
mission-critical functions, processes and systems; verify and test the mission-c
ritical systems to which remediation efforts have been applied; and attempt to
mitigate those mission-critical aspects of the Year 2000 problem that are not
remediated by January 1, 2000, including the development of contingency plans
to cope with the mission-critical consequences of Year 2000 problems that have
not been identified or remediated by that date.
The EWC Plan recognizes that the computer, telecommunications, and other
systems ("Outside Systems") of outside entities ("Outside Entities") have the
potential for major, mission-critical, adverse effects on the conduct of EWC's
and its subsidiary entities' (as well as the Partnership's) businesses. EWC
does not have control of these Outside Entities or Outside Systems. However,
the EWC Plan includes an ongoing process of identifying and contacting Outside
Entities whose systems, in EWC's judgment, have or may have a substantial
effect on EWC's ability to continue to conduct the mission-critical aspects of
EWC's and its subsidiary entities' (as well as the Partnership's) businesses
without disruption from Year 2000 problems. The EWC Plan envisions EWC's
attempting to inventory and assess the extent to which these Outside Systems
may not be "Year 2000 ready" or "Year 2000 compatible". EWC will attempt
reasonably to coordinate with these Outside Entities in an ongoing effort to
obtain assurance that the Outside Systems that are mission-critical to EWC and
its subsidiary entities (as well as the Partnership) will be Year 2000
compatible well before January 1, 2000. Consequently, EWC will work prudently
with Outside Entities in a reasonable attempt to inventory, assess, analyze,
convert (where necessary), test, and develop contingency plans for EWC's and
its subsidiary entities' (as well as the Partnership's) connections to these
mission-critical Outside Systems and to ascertain the extent to which they
are, or can be made to be, Year 2000 ready and compatible with EWC's and its
subsidiary entities' (as well as the Partnership's) mission-critical systems.
It is important to recognize that the processes of inventorying, assessing,
analyzing, converting (where necessary), testing, and developing contingency
plans for mission-critical items in anticipation of the Year 2000 event are
necessarily iterative processes. That is, the steps are repeated as EWC
learns more about the Year 2000 problem and its effects on EWC's and its
subsidiary entities' (as well as the Partnership's) internal systems and on
Outside Systems. As the steps are repeated, it is likely that new problems
will be identified and addressed. EWC anticipates that it will continue with
these processes through January 1, 2000 and, if necessary based on experience,
into the Year 2000 in order to assess and remediate problems that reasonably
can be identified only after the start of the new century.
EWC has completed its inventory and assessment of all EWC's and its subsidiary
entities' (as well as the Partnership's) internal systems including hardware
and software systems and embedded chips that are mission critical as it
relates to the Partnership. All internal systems that EWC has identified as
mission-critical as it relates the Partnership have been remedied, tested and
appear to be Year 2000 compatible. EWC has contacted Outside Entities that it
believes are mission-critical to the Partnership's business, including
Southern California Edison Company ("SCE"), the entity which purchases the
electricity generated by the Windsystem, and has discussed their efforts to be
Year 2000 ready.
Costs to Address Year 2000 issues:
The Partnership has not incurred material historical costs for Year 2000
awareness, assessment, analysis, conversion, testing, or contingency
planning. Further, ZWMC anticipates that the Partnership's future costs for
these purposes, including those for implementing its Year 2000 contingency
plans, will not be material.
Although management believes that its estimates are reasonable, there can be
no assurance, for the reasons stated in the Summary section below, that the
actual costs of implementing the EWC Plan will not differ materially from the
estimated costs or that the Partnership will not be materially adversely
affected by Year 2000 issues.
Year 2000 Risk Issues:
Potential shortcoming. EWC estimates that its and its subsidiary entities'
(as well as the Partnership's) internal systems will be Year 2000-ready
substantially before January 1, 2000. However, there is no assurance that the
EWC Plan will succeed in accomplishing its purposes or that unforeseen
circumstances will not arise during implementation of the EWC Plan that would
materially and adversely affect the Partnership.
Cascading effect. EWC is taking reasonable steps to identify, assess, and,
where appropriate, replace devices that contain embedded chips. Despite these
reasonable efforts, EWC anticipates that it will not be able to find and
remediate all embedded chips in EWC's and its subsidiary entities' (as well as
the Partnership's) internal systems. Further, EWC anticipates that Outside
Entities on which EWC and its subsidiary entities (as well as the Partnership)
depend also will not be able to find and remediate all embedded chips in their
systems. Some of the embedded chips that fail to operate or that produce
anomalous results may create system disruptions or failures. Some of these
disruptions or failures may spread from the systems in which they are located
to other systems in a cascade. These cascading failures may have adverse
effects on ZWMC's ability to manage the Windsystem and to otherwise operate
the Partnership's business. The embedded chip problem is widely recognized as
one of the more difficult aspects of the Year 2000 problem across industries
and throughout the world. EWC believes that the possible adverse impact of
the embedded chip problem is not, and will not be, unique to EWC and its
subsidiary entities, as well as the Partnership.
Third parties. EWC cannot assure that suppliers upon which it and its
subsidiary entities (as well as the Partnership) depends for essential goods
and services will convert and test their systems and processes in a timely and
effective manner. Failure or delay to do so by all or some of these entities,
including U.S. federal, state or local governments could create substantial
disruptions having a material adverse effect on the Partnership's business.
Particularly, EWC cannot assure that the Year 2000 problem will not negatively
impact SCE's ability to accept electricity generated by the Windsystem, or
negatively impact the electrical grid which allows the Windsystem to operate
and distribute electricity.
Contingency Plans:
As part of the EWC Plan, EWC is developing contingency plans that deal with
two aspects of the Year 2000 problem: (1) that EWC, despite its good-faith,
reasonable efforts, may not have satisfactorily remediated all of its and its
subsidiary entities' (as well as the Partnership's) internal systems; and (2)
that Outside Systems may not be Year 2000 ready, despite EWC's good-faith,
reasonable efforts to work with Outside Entities. EWC's contingency plans are
being designed to minimize the disruptions or other adverse effects resulting
from Year 2000 incompatibilities regarding these functions or systems, and to
facilitate the early identification and remediation of Year 2000 problems that
first manifest themselves after January 1, 2000.
EWC's contingency plans will contemplate an assessment of all its and its
subsidiary entities' (as well as the Partnership's) mission-critical internal
information technology systems and its internal operational systems that use
computer-based controls. This process will commence in the early minutes of Jan
uary 1, 2000, and continue for hours, days, or weeks as circumstances
require. Further, EWC will in that time frame assess any mission-critical
disruptions due to Year 2000-related failures that are external to EWC. The
assessment process will cover, for example, loss of electrical power from
utilities and telecommunications services from carriers.
Worst Case Scenario:
The Securities and Exchange Commission requires that public companies forecast
the most reasonably likely worst case Year 2000 scenario. In doing so, the
Partnership is assuming that EWC's Year 2000 plan will not be effective.
Analysis of the most reasonably likely worst case Year 2000 scenarios the
Partnership may face leads to contemplation of the following possibilities
which, though unlikely in some or many cases, must be included in any
consideration of worst cases: widespread failure of electrical, gas, and
similar supplies by utilities serving EWC and its subsidiary entities (as well
as the Partnership); widespread disruption of the services of communications
common carriers; similar disruptions to means and modes of transportation for
EWC and its subsidiary entities (as well as the Partnership) and their
respective employees, contractors, suppliers, and customers; significant
disruption to EWC's and its subsidiary entities' ability to gain access to,
and remain working in, office buildings and other facilities; the failure of
substantial numbers of EWC's and its subsidiary entities' (including the
Partnership's) information (computer) hardware and software systems, including
both internal business systems and systems (such as those with embedded chips)
controlling operational facilities such as electrical generation,
transmission, and distribution systems; and the failure of Outside Systems,
the effects of which would have a cumulative material adverse impact on EWC's
and its subsidiary entities' (including the Partnership's) systems. Among
other things, the Partnership could face loss of revenues due to service
interruptions, inability to account for certain revenues or obligations or to
bill SCE accurately and on a timely basis, and increased expenses associated
with litigation, stabilization of operations following failures, and the
execution of contingency plans. The Partnership could also experience an
inability by SCE to pay, on a timely basis or at all, obligations owed to the
Partnership. Under these circumstances, the adverse effect on the
Partnership, and the diminution of the Partnership's revenues, would be
material, although not quantifiable at this time.
EWC will continue to monitor business conditions with the aim of assessing and
quantifying material adverse effects on the Partnership, if any, that result
or may result from the Year 2000 problem.
Summary:
EWC has a plan to deal with the Year 2000 challenge and believes that it will
be able to achieve substantial Year 2000 readiness with respect to the
internal systems that it controls. However, from a forward-looking
perspective, the extent and magnitude of the Year 2000 problem as it will
affect the Partnership, both before and for some period after January 1, 2000,
are difficult to predict or quantify for a number of reasons. Among these
are: the difficulty of locating "embedded" chips that may be in a great
variety of hardware used for process or flow control, environmental,
transportation, access, communications and other systems; the difficulty of
inventorying, assessing, remediating, verifying and testing Outside Systems;
the difficulty in locating all software (computer code) internal to EWC and
its subsidiary entities (as well as the Partnership) that is not Year 2000
compatible; and the unavailability of certain necessary internal or external
resources, including but not limited to trained hardware and software
engineers, technicians, and other personnel to perform adequate remediation,
verification and testing of EWC's and its subsidiary entities' (as well as the
Partnership's) internal systems or Outside Systems. Accordingly, there can be
no assurance that all of EWC's and its subsidiary entities' (as well as the
Partnership's) systems and all Outside Systems will be adequately remediated
so that they are Year 2000 ready by January 1, 2000, or by some earlier date,
so as not to create a material disruption to the Partnership's business. If,
despite EWC's reasonable efforts under its Year 2000 Plan, there are Year
2000-related failures that create substantial disruptions to the Partnership's
business, the adverse impact on the Partnership's business could be material.
Additionally, Year 2000 costs are difficult to estimate accurately because of
unanticipated vendor delays, technical difficulties, the impact of tests of
Outside Systems and similar events. Moreover, the estimated costs of
implementing the EWC Plan do not take into account the costs, if any, that
might be incurred as a result of Year 2000-related failures that occur despite
EWC's implementation of the EWC Plan.
Liquidity and Capital Resources
The Partnership continues to experience a lack of liquidity primarily due
to a continued shortfall in revenues from operations in comparison to the
costs and expenses of operations. Accordingly, interest payments on the
Purchase Notes were in arrears at September 30, 1999 in the aggregate amount
of $4,147,000. 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 September 30, 1999, Compared to Three
Months Ended September 30, 1998.
Revenues from power sales in the three months ended September 30, 1999
were 7.17% lower than for the corresponding 1998 period. As reported by
Southern California Edison Company, the Windsystem produced 10,028 megawatt
hours in the three months ended September 30, 1999, in comparison to
production of 10,805 megawatt hours in the corresponding 1998 period,
representing a decrease in production of approximately 7.2%.
<PAGE>
The Partnership received approximately $11,000 in "other income" from
interest earned on cash balances in the three months ended September 30, 1999,
and approximately $7,000 in the corresponding 1998 period.
Total expenses for the three months ended September 30, 1999 were
approximately 7.29% lower than the corresponding 1998 period. Interest
expense decreased due to lower average principal balances on the Purchase
Notes outstanding. Property Taxes decreased 43.75% due to a lower valuation
this year by the property tax assessor in Riverside County, California. The
valuation in 1998, which is based on projected cash flows by the Partnership,
has been appealed. Management fees and land lease expenses decreased 13.7%.
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. Maintenance and other operating costs decreased 7.45% due to reduced
repairs this year compared to last year. Insurance expense increased by
$12,000 due to the timing of the billing for the property and general
liability excess insurance premiums.
Overall, the Partnership reported loss of $340,000 for the three months
ended September 30, 1999, in comparison to a loss of $373,000 for the
corresponding 1998 period.
The Partnership's financial condition worsened slightly during the three
months ended September 30, 1999 due primarily to the lower power sales
revenues during the quarter. Total partners' capital decreased $340,000 from
$237,000 at June 30, 1999, to ($103,000) at September 30, 1999. Limited
Partners' capital decreased $336,000 from ($350,000) at June 30, 1999, to
($686,000) at September 30, 1999. This represents a total decrease of
approximately $286 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.
Nine Months Ended September 30, 1999, Compared to Nine
Months Ended September 30, 1998.
Revenues from power sales in the nine months ended September 30, 1999 were
2.43% lower than for the corresponding 1998 period. As reported by Southern
California Edison Company, the Windsystem produced 41,332 megawatt hours in
the nine months ended September 30, 1999, in comparison to production of
42,265 megawatt hours in the corresponding 1998 period, representing a
decrease in production of approximately 2.2%.
The Partnership received approximately $27,000 in "other income" from
interest earned on cash balances in the nine months ended September 30, 1999,
and approximately $21,000 in the corresponding 1998 period.
<PAGE>
Total expenses for the nine months ended September 30, 1999 were
approximately 0.95% lower than the corresponding 1998 period. Interest
expense decreased due to lower average principal balances on the Purchase
Notes outstanding. Property Taxes increased by $42,000 due to a higher
valuation by the property tax assessor in Riverside County, California. This
revaluation, which is based on projected cash flows by the Partnership, has
been appealed. Management fees and land lease expenses increased 5%.
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. Maintenance and other operating costs increased 13.04%, substantially
due to increased generator parts replacements. Insurance expense decreased
19.35%, which is attributable to historical low loss experience, asset
devaluation, and the packaging of all turbine projects Enron Wind Systems
operates under one policy with Enron Corp.
Overall, the Partnership reported income of $182,000 for the nine months
ended September 30, 1999, in comparison to an income of $242,000 for the
corresponding 1998 period.
The Partnership's financial condition improved during the nine months
ended September 30, 1999. During the nine months ended September 30, 1999,
total partners' capital increased $182,000 from ($285,000) at December 31,
1998, to ($103,000). Limited Partners' capital increased $180,000 from
($866,000) at December 31, 1998, to ($686,000). This represents a total
increase of approximately $153 per unit of partnership. Although the
Partnership's financial condition improved during this interim period, 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: November 12, 1999 By:/S/ KENNETH C. KARAS
Kenneth C. Karas
President and
Chief Financial Officer
Date: November 12, 1999 By:/S/ D. MICHAEL WESTBELD
D. Michael Westbeld
Vice President-Controller
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,470
<SECURITIES> 0
<RECEIVABLES> 567
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,093
<PP&E> 49,659
<DEPRECIATION> (36,610)
<TOTAL-ASSETS> 15,142
<CURRENT-LIABILITIES> 7,260
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (103) <F1>
<TOTAL-LIABILITY-AND-EQUITY> 15,142
<SALES> 4,216
<TOTAL-REVENUES> 4,243
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,061
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 929
<INCOME-PRETAX> 182
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 182
<EPS-BASIC> 0.153 <F2>
<EPS-DILUTED> 0.153 <F2>
<FN>
<F1> Partner equity - 1,190 Partnership units outstanding.
<F2> Per Partnership Unit in thousands.
</FN>
</TABLE>
