KENETECH CORP, 10-Q, 2000-05-15

KENETECH CORP
10-Q, 2000-05-15
COGENERATION SERVICES & SMALL POWER PRODUCERS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q
(Mark One)

[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2000

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission file number 33-53132

KENETECH CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 94-3009803
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

500 Sansome Street, Suite 410
San Francisco, California 94111
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (415)
398-3825

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

On May 5, 2000, there were 39,553,918 shares of the issuer's Common Stock,
$.0001 par value outstanding.

2
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

KENETECH Corporation Consolidated Financial Statements Page

Consolidated Statements of Operations for the
quarterly periods ended March 31, 2000 and 1999 4

Consolidated Balance Sheets, as of March 31, 2000 and
December 31, 1999 5

Consolidated Statement of Stockholders' Equity for the
quarterly period ended March 31, 2000 6

Consolidated Statements of Cash Flows for the quarterly
periods ended March 31, 2000 and 1999 7

Notes to Consolidated Financial Statements 8-16

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 17-20

Item 3. Quantitative and Qualitative Disclosure about Market Risk 21

Part II - OTHER INFORMATION

Item 1. Legal Proceedings. 22

Item 5. Other Information. 22

Item 6. Exhibits and Reports on Form 8-K. 22

3
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

KENETECH CORPORATION
--------------------

CONSOLIDATED STATEMENTS OF OPERATIONS
for the quarterly periods ended March 31, 2000 and 1999
(unaudited, in thousands, except per share amounts)

March 31, March 31,
2000 1999
--------- ---------
Revenues:
Construction services ............................ $ -- $ 410
Maintenance, management fees and other ........... -- 21
--------- ---------
Total revenues ................................. -- 431

Costs of revenues:
Construction services ............................ -- 56
--------- ---------

Total costs of revenues ........................ -- 56

Gross margin ....................................... -- 375

Project development and marketing expenses ......... 2 61
General and administrative expenses ................ 790 2,161
--------- ---------

Loss from operations ............................... (792) (1,847)

Interest income .................................... 633 830
Loss on trading debt securities .................... (54) --
Gain on disposition of subsidiaries and assets ..... -- 4,597
Other income ....................................... 281 62
--------- ---------

Income before taxes ................................ 68 3,642
Income tax expense ................................. -- --
--------- ---------

Net income ................................... $ 68 $ 3,642
========= =========

Net income per common share: Basic and Diluted $ 0.00 $ 0.09

Weighted average number of common shares used in
computing per share amounts: Basic and Diluted 41,919 41,954

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

4
<PAGE>

KENETECH CORPORATION
--------------------
CONSOLIDATED BALANCE SHEETS
March 31, 2000 and December 31, 1999
(unaudited, in thousands, except share amounts)

ASSETS
March 31, December 31,
2000 1999
--------- -----------
Current assets:
Cash and cash equivalents ......................... $ 5,984 $ 15,291
Funds in escrow ................................... 278 314
Accounts receivable ............................... 10 110
Trading debt securities ........................... 36,077 31,388
Interest receivable ............................... 556 464
--------- -----------
Total current assets ................................. 42,905 47,567

Project development advances ........................ 4,764 2,451
Property, plant and equipment, net ................... 50 58
Other assets ......................................... 54 21
--------- -----------
Total assets ................................... $ 47,773 $ 50,097
========= ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable .................................. $ 855 $ 937
Accrued liabilities ............................... 3,607 4,580
Current taxes payable ............................. 129 130
Other notes payable ............................... -- 6
Accrued stock repurchase obligation .............. -- 26
--------- ----------
Total current liabilities ....................... 4,591 5,679

Accrued liabilities .................................. 943 1,168
Deferred benefit for deconsolidated subsidiary losses. 10,305 10,305
--------- ----------
Total liabilities ................................ 15,839 17,152

Commitments and contingencies

Stockholders' equity:
Common stock - 110,000,000 shares authorized,
$.0001 par value; 41,919,218 issued and outstanding
at March 31, 2000, and December 31, 1999,
repurchased for retirement still outstanding
2,059,000 at March 31, 2000, 401,200 at December 31,
1999 - 2,049,400 and 315,900 shares subsequently
retired on April 14 and May 3, 2000, respectively.. 4 4
Additional paid-in capital ........................ 222,663 223,742
Accumulated deficit ............................... (190,733) (190,801)
--------- ----------
Total stockholders' equity ....................... 31,934 32,945
--------- ----------
Total liabilities and stockholders' equity...... $ 47,773 $ 50,097
========= ==========

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

5
<PAGE>

KENETECH CORPORATION
--------------------

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
for the quarterly period ended March 31, 2000
(unaudited, in thousands, except share amounts)

Common Stock Additional
Paid-In Accumulated
Shares Amount Capital Deficit Total

Balance, December 31, 1999 41,919,218 $4 $223,742 $(190,801) $ 32,945
Shares repurchased pending
retirement, still
outstanding as of March 31,
2000, subsequently retired -- - (1,079) -- (1,079)
Net income -- - -- 68 68
---------- -- -------- --------- ---------
Balance, March 31, 2000 41,919,218 $4 $222,663 $(190,733) $ 31,934
========== == ======== ========= =========

The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

6
<PAGE>

KENETECH CORPORATION
--------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS
for the quarterly periods ended March 31, 2000 and 1999
(unaudited, in thousands)

March 31, March 31,
2000 1999
--------- ---------

Cash flows from operating activities:
Net income ..................................... $ 68 $ 3,642
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation, amortization and other ........ 8 3
Gain on disposition of subsidiaries
and assets ................................. -- (4,597)
Other income ................................ (281) --
Loss on trading debt securities ............. 54 --
Changes in assets and liabilities:
Accounts and interest receivable ........... 8 170
Accounts payable ........................... (82) (579)
Accrued liabilities ........................ (923) (902)
Current taxes payable ...................... (1) (2,100)
Other assets ............................... (33) --
Deferred benefit for deconsolidated
subsidiary losses ......................... -- 900
--------- ---------
Net cash used in operating activities ... (1,182) (3,463)

Cash flows from investing activities:
Proceeds from sales of trading
debt securities ............................ 3,234 --
Purchase of trading debt securities ......... (7,977) --
Project development advances ................ (2,313) --
Net proceeds on disposition of subsidiaries
and assets ................................. -- 2,909
Decrease in funds in escrow restricted
for line of credit ......................... 36 --
--------- ---------
Net cash provided by (used in) investing
activities ............................. (7,020) 2,909

Cash flows from financing activities:
Payments on other notes payable ............. -- (1,065)
Decrease in stock repurchase payable ........ (26) --
Stock repurchased for retirement ............ (1,079) --
--------- ---------
Net cash used in financing activities .... (1,105) (1,065)
--------- ---------

Decrease in cash and cash equivalents............ (9,307) (1,619)
Cash and cash equivalents at
beginning of period ........................ 15,291 67,424
--------- ---------

Cash and cash equivalents at end of period ... $ 5,984 $ 65,805
========= =========

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

7
<PAGE>

1. General

The interim consolidated financial statements presented herein include the
accounts of KENETECH Corporation ("KENETECH") and its consolidated
subsidiaries (the "Company"), but exclude KENETECH Windpower, Inc. ("KWI").

These interim consolidated financial statements should be read in
conjunction with the Company's consolidated financial statements and the
notes thereto for the year ended December 31, 1999. These interim
consolidated financial statements are unaudited but, in the opinion of
management, reflect all adjustments necessary (consisting of items of a
normal recurring nature) for a fair presentation of the Company's interim
financial position, results of operations and cash flows. Results of
operations for interim periods are not necessarily indicative of those for
a full year.

2. Significant Accounting Policies

Revenues: Revenues from construction services are recognized on the
percentage-of-completion, cost-to-cost method. Costs of such revenues
include all direct material and labor costs and those indirect costs
related to contract performance such as indirect labor, supplies and tool
costs that can be attributed to specific contracts. Indirect costs not
specifically allocable to contracts and general and administrative expenses
are charged to operations as incurred. Revisions to contract revenue and
cost estimates are recognized in the accounting period in which they are
determined. Provision for estimated losses on uncompleted contracts is made
in the period in which such losses are determined.

Maintenance and management fees are recognized as earned under various
long-term agreements to manage or operate and maintain certain energy
production facilities. Other revenues include development fees earned in
connection with various independent power plant development activities.

Project development revenues: Project development revenues are recognized
as they are earned.

Investments: The Company accounts for investments in marketable equity
securities in accordance with FAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Under FAS No. 115, the Company's
publicly traded securities are classified as trading securities.
Publicly-traded trading securities are stated at their fair value, with any
unrealized gains and losses, net of taxes, reported in results of
operations.

Depreciation: Depreciation is recorded on a straight-line basis over the
estimated useful life of the asset.

Gains or losses on disposition of subsidiaries and projects (net of costs)
are recognized at closing, when proceeds from the sale are received.

Income Taxes: The Company accounts for income taxes using the liability
method under which deferred income taxes arise from temporary differences
between the tax basis of assets and liabilities and their reported amounts
in the consolidated financial statements. Changes in deferred tax assets
and liabilities include the impact of any tax rate changes enacted during
the year and changes in the valuation allowance.

Cash equivalents: Short-term investments purchased with original maturities
of three months or less and other instruments which are readily tradeable
and without significant interest rate risk are considered cash equivalents.

Project development advances: The Company capitalizes amounts funded under
various project participation agreements, as described in Note 3, until
such time as the funding is repaid. Project development costs incurred by
the Company are capitalized as other assets.

Comprehensive Income: The Company has adopted Financial Accounting
Standards Board SFAS No. 130, "Reporting Comprehensive Income," as of
January 1, 1998. SFAS No. 130 requires that all items required to be
recognized under accounting standards as components of comprehensive income
be reported in a financial statement that is displayed with the same
prominence as other financial statements. The Company currently has no
reportable comprehensive income items.

<PAGE>

Recent Accounting Pronouncements: In June 1998, the Financial Accounting
Standards Boards issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The new standard establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. SFAS No. 133 is effective for the Company's quarter ending
March 31, 2001. The Company does not expect SFAS No. 133 to have a material
effect on its financial position or results of operations.

In December 1999, the SEC issued Staff Accounting Bulletin (SAB) No. 101.
The SAB summarized certain of the SEC Staff's views in applying generally
accepted accounting principles to revenue recognition in financial
statements. The Company believes it currently conforms to the guidance
contained in the bulletin.

3. Business Activities

The Company continues its involvement in project development activities.
The Company is currently participating with other parties in developing two
electric generating facilities and one oriented strand board facility.

OSB Chateaugay

In July 1999, the Company entered into a funding and participation
agreement with OSB Chateaugay, LLC ("OSB"). The funding will be used by OSB
to pursue the development of an oriented, strand-board project in
Chateaugay, New York (the "OSB Project"). In addition to development
services, the Company agreed to fund up to $1.25 million. The OSB Project
is expected to produce up to 475 million square feet of strand board per
year. Construction is anticipated to commence in the second half of 2000.
In exchange for the services and funding, the Company will receive
participation distributions. The advances are to be repaid upon the
completion of certain development milestones as specified in the funding
and participation agreement. Repayment of the advances is to occur before
any participation distributions. Repayment of the advances and
participation distributions are both dependent upon the ultimate success of
the OSB Project.

The Company had advanced $440,000 as of March 31, 2000. As of May 5, 2000,
the Company had funded an additional $149,000 on the OSB Project, bringing
the total amount funded to $589,000.

Astoria

In October 1999, the Company entered into funding and participation
agreements with Astoria Energy, LLC ("Astoria") to provide funding under a
note agreement of up to $3 million for the development of a 1,000 megawatt
independent power plant (the "Astoria Project") to be located in Astoria,
Queens, New York. The Astoria Project is currently under development and is
expected to commence construction in the second half of 2001. In exchange
for the services and funding, the Company will receive, in addition to
repayment of the note evidencing the funding, certain participation
distributions. The note is secured by all property and assets of Astoria.
Recovery of the note, interest on the note, and participation distributions
are all dependent upon the ultimate success of the Astoria Project.
Accordingly, interest income and participation distributions will be
recognized upon the completion of certain project milestones.

On March 14, 2000, the note was amended to change the due date of the
original note to December 15, 2000, and provide for interest at 20% on the
balance outstanding beginning on April 15, 2000. On March 14, 2000, the
Company also committed to fund an additional $2 million toward the
development of the Astoria Project in the form of a second note. As of
March 31, 2000, the Company had advanced $1.0 million on the second note.
The second note is due and payable on December 15, 2000, and carries
interest at 20% on the balance outstanding.

As of March 31, 2000, the Company had advanced $4.0 million on the Astoria
Project, consisting of approximately $3.0 million on the original note and
$1.0 million on the second note. An additional $700,000 was funded on the
Astoria Project on April 13, 2000, bringing the total amount funded to $4.7
million.

<PAGE>

Whinash

In February 2000, the Company agreed to finance up to $600,000 for the
development of a wind-powered electrical generating facility to be located
in Whinash, Cumbria, England. The project is a 50 megawatt facility. In
exchange for the funding, the Company will receive certain participation
distributions upon the sale or financial closing of the Whinash project. As
of March 31, 2000, the Company had advanced $350,000.

Other Information

The Company currently has substantial cash balances and net operating
income tax losses and other tax attributes to carry forward to future
years. While pursuing development projects, management continues to
evaluate different businesses that the Company might pursue, through
acquisition or otherwise. In addition, the Company is evaluating all
strategic alternatives available to it. The Company has retained
professionals to assist it in such evaluations.

In addition, the Supreme Court of the State of Delaware affirmed on all
counts the judgment previously entered by the Court of Chancery of the
State of Delaware in favor of the Company in an action brought by former
holders of its PRIDES (see Note 12).

4. Net Income Per Share

Net income per share amounts for the periods ended March 31, 2000 and 1999
were calculated as follows:

Basic and Diluted
(in thousands, except per share amounts)

March 31, March 31,
2000 1999
--------- ----------
Net income $ 68 $ 3,642
--------- ---------
Net income used in per
share calculations $ 68 $ 3,642
========= ==========
Weighted average shares used in per share
calculations 41,919 41,954
========= ==========
Net income per share $ 0.00 $ 0.09
========= ==========

5. Other Income

The Company recorded other income of $281 thousand for the quarter ended
March 31, 2000, primarily due to the reduction in accrued liabilities
related to the favorable resolution of various legal matters.

6. Other Investments

Francisco Partners, L.P.: In April 2000, the Company agreed to invest $5
million over the next four years in Francisco Partners, L.P. ("Francisco
Partners"), a partnership formed to make private information technology
buy-out investments. The Company will receive limited partnership interests
for its investment. The limited partnership interests are highly illiquid
and Francisco Partners has a term of at least ten years.

Draper Atlantic Venture Fund II, L.P.: In April 2000, the Company agreed to
invest $2.5 million over the next two years in Draper Atlantic Venture Fund
II, L.P. ("Draper Atlantic"), a partnership formed to invest primarily in
early-stage information technology companies. The Company will receive
limited partnership interests for its investment. The limited partnership
interests are highly illiquid and Draper Atlantic has a term of at least
ten years. As of May 5, 2000, the Company had invested $125,000.

<PAGE>

Indosuez Capital Funding VI, Ltd.: In April 2000, the Company agreed to
purchase $2.5 million of Class E Junior Subordinated Notes of Indosuez
Capital Funding VI, Ltd. ("Indosuez"). Indosuez is a newly formed company
organized under the laws of the Cayman Islands to acquire and manage a
diversified portfolio of corporate and other debt obligations. The
portfolio will consist primarily of U.S. dollar denominated senior secured
term loans and high yield bonds generally rated below investment grade
which, at the time of purchase by Indosuez, represent obligations of
obligors located in the United States or other non-emerging market
countries. The notes are highly illiquid and have a term of 12 years.

ServiSense.com, Inc.: On April 18, 2000, the Company entered into a Bridge
Loan and Warrant Agreement with ServiSense.com, Inc. ("ServiSense"), a
Delaware corporation whereby the Company loaned ServiSense $1 million in
exchange for a note receivable and a warrant to purchase Servisense
preferred stock. ServiSense is a bundler of core energy and
telecommunications products sold to small businesses and residential
consumers. Its services include local and long distance telephone, natural
gas and home heating oil supplied at rates lower than the incumbent's rate.
The note, which earns interest at 10% per annum, matures upon the earliest
of April 18, 2001 or the date ServiSense closes an equity financing that
yields at least $5 million of gross proceeds. The warrant has a term of
five years and provides for the purchase of newly issued preferred stock in
ServiSense. The number of shares subject to the warrant is variable
depending upon the date ServiSense closes its equity financing. There is no
market for the note or the warrant.

Sage Systems, Inc.: On April 14, 2000, the Company invested $500,000 in
Sage Systems, Inc. ("Sage"), in exchange for 390,625 shares of Sage's
Series A Preferred Stock. Sage is an early-stage technology company that
possesses networking technology which offers web-based control over
everyday devices with a proprietary operating system that runs over
existing power lines. There is no public market for the capital stock of
Sage.

Odin Millennium Partnership, Ltd.: On May 1, 2000, the Company invested
$250,000 in Odin Millennium Partnership, Ltd., a Texas limited partnership
formed to purchase the FPS Laffit Pincay, a semi-submersible offshore
drilling rig. The Company will receive limited partnership interests for
its investment. The limited partnership interests are highly illiquid. The
partnership may operate the drilling rig, lease it to a third party or sell
it.

The above investments involve significant investment risk. They are
long-term in duration and highly illiquid. There is no assurance that the
investments will realize net profits or achieve returns commensurate with
the risks associated with such investments, or that the investments will
not experience losses, which may be substantial.

7. Income Taxes

At March 31, 2000 and December 31, 1999, the Company had substantial net
deferred tax assets for which a valuation allowance of an equal amount has
been established. The balance of the deferred benefit for deconsolidated
subsidiary losses remains unchanged from December 31, 1999, to March 31,
2000, with a balance of $10,305,000 at both periods.

8. Trading Securities

The Company held trading securities during the year ended December 31,
1999. Cumulative unrealized losses on trading securities equaled
approximately $310,000 at March 31, 2000 and $249,000 at December 31, 1999,
representing an increase in unrealized losses of $61,000, which has been
included in earnings during the quarter ended March 31, 2000.

The Company recorded a $54,000 loss on trading securities for the quarter
ended March 31, 2000, consisting of $61,000 in unrealized losses, offset by
$7,000 in realized gains.

The Company uses specific identification to determine the basis used in the
computation of gain or loss on the sale of trading securities.

<PAGE>

9. Stockholder's Equity

Stock Repurchase: In November 1999, the Company's Board of Directors
authorized the repurchase of up to 2,000,000 shares of the Company's Common
Stock. The repurchase program was to continue until the Company acquired
the 2,000,000 shares or until September 30, 2000. The Company, on March 22,
2000, authorized the repurchase of an additional 2,000,000 shares and
extended the repurchase period to December 31, 2000. As of March 31, 2000,
the Company had reacquired 2,059,000 shares at a cost of $1,345,000,
resulting in a decrease of Additional Paid in Capital of $1,345,000 from
inception of the program and $1,079,000 during the quarterly period ended
March 31, 2000.

In May 2000, the Company's Board of Directors subsequently authorized the
repurchase of an additional 5,000,000 shares, bringing the total number of
shares authorized for repurchase to 9,000,000. As of May 5, 2000, the
Company had reacquired 8,211,234 of the 9,000,000 shares authorized. On
April 14 and May 3, 2000, the Company retired 2,049,000 and 315,400 shares,
respectively, of the shares repurchased. The retired shares consisted of
the 2,059,000 shares acquired by March 31, 2000, and additional shares
acquired subsequent to the quarter.

Warrants: In connection with the consulting agreement with Terrasearch,
Inc., the Company issued warrants to purchase up to 500,000 shares of
Common Stock of the Company at an exercise price of $1.00 per share. The
warrants become excercisable on January 1, 2002 and expire on December 31,
2005.

The Financial Accounting Standards Board (FASB) has issued Statement No.
123. "Accounting for Stock-Based Compensation" which is effective for 1996
and subsequent financial statements. With respect to transactions with
employees, SFAS No. 123 requires either recognition of compensation expense
for stock option and other stock-based compensation or supplemental
disclosure of the impact such expense recognition would have had on the
Company's results of operations had the Company recognized such expense.
The Company has elected the supplemental disclosure option with respect to
transactions with employees. With respect to transactions with
non-employees, SFAS No. 123 requires recognition of compensation expense
for stock option and other equity instrument based compensation, including
warrants.

10. Fair Value of Financial Instruments

The carrying amount and estimated fair values of the Company's financial
instruments at March 31, 2000 and December 31, 1999 are as follows:

March 31, December 31,
2000 1999
------------------- -------------------
Estimated Estimated
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- --------- -------- ---------
(in thousands)
Assets:
Cash and cash equivalents $ 5,984 $ 5,984 $ 15,291 $ 15,291
Funds in escrow 278 278 314 314
Accounts receivable 10 10 110 110
Trading debt securities 36,077 36,077 31,388 31,388
Interest receivable 556 556 464 464

Liabilities:
Other notes payable - - 6 6

Estimated fair values are based upon reasonable estimates, using
independent sources whenever possible.

Trading debt securities are carried at fair value. All other instruments
are carried at cost which approximates fair value because they are
short-term in nature.

<PAGE>

The estimated fair value of project development advances is not
determinable because of the structure of funding and participation
agreements.

The fair value estimates presented herein are based on pertinent
information available to management as of March 31, 2000 and December 31,
1999. Although management is not aware of any factors that would
significantly affect the estimated fair value amounts, such amounts have
not been comprehensively revalued for purposes of these financial
statements since those dates, and estimates of fair value subsequent to
those dates may differ significantly from the amounts presented herein.

11. Preferred Stock Rights

On May 4, 1999, the Board of Directors of the Company declared a dividend
of one preferred share purchase right (a "Right") for each outstanding
share of common stock, par value $.0001 per share, of the Company (the
"Common Stock"). The dividend was paid on May 13, 1999 to the stockholders
of record on May 5, 1999 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company one one-thousandth of a
share of Series A Junior Participating Preferred Stock, par value $.01 per
share, of the Company (the "Preferred Stock") at a price of $10 per one
one-thousandth of a share of Preferred Stock (the "Purchase Price"),
subject to adjustment.

The Rights are not exercisable until the earlier to occur of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (with certain exceptions, an "Acquiring Person") has
acquired beneficial ownership of 15% or more of the outstanding shares of
Common Stock or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any
person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would result in
the beneficial ownership by a person or group of 15% or more of the
outstanding shares of Common Stock (the earlier of such dates being called
the "Distribution Date"). The Rights will expire on May 4, 2009 (the "Final
Expiration Date"), unless the Final Expiration Date is advanced or extended
or unless the Rights are earlier redeemed or exchanged by the Company, in
each case as described below.

Shares of Preferred Stock purchasable upon exercise of the Rights will not
be redeemable. Each share of Preferred Stock will be entitled, when, as and
if declared, to a minimum preferential quarterly dividend payment of the
greater of (a) $10 per share, or (b) an amount equal to 1,000 times the
dividend declared per share of Common Stock. In the event of liquidation,
dissolution or winding up of the Company, the holders of the Preferred
Stock will be entitled to a minimum preferential payment of the greater of
(a) $10 per share (plus any accrued but unpaid dividends), or (b) an amount
equal to 1,000 times the payment made per share of Common Stock. Each share
of Preferred Stock will have 1,000 votes, voting together with the Common
Stock. Finally, in the event of any merger, consolidation or other
transaction in which outstanding shares of Common Stock are converted or
exchanged, each share of Preferred Stock will be entitled to receive 1,000
times the amount received per share of Common Stock. These rights are
protected by customary antidilution provisions.

In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become
void), will thereafter have the right to receive upon exercise of a Right
that number of shares of Common Stock having a market value of two times
the exercise price of the Right.

<PAGE>

In the event that, after a person or group has become an Acquiring Person,
the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are
sold, proper provisions will be made so that each holder of a Right (other
than Rights beneficially owned by an Acquiring Person which will have
become void) will thereafter have the right to receive upon the exercise of
a Right that number of shares of common stock of the person with whom the
Company has engaged in the foregoing transaction (or its parent) that at
the time of such transaction have a market value of two times the exercise
price of the Right.

At any time after any person or group becomes an Acquiring Person and prior
to the earlier of one of the events described in the previous paragraph or
the acquisition by such Acquiring Person of 50% or more of the outstanding
shares of Common Stock, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such Acquiring Person which will
have become void), in whole or in part, for shares of Common Stock or
Preferred Stock (or a series of the Company's preferred stock having
equivalent rights, preferences and privileges), at an exchange ratio of one
share of Common Stock, or a fractional share of Preferred Stock (or other
preferred stock) equivalent in value thereto, per Right.

At any time prior to the time an Acquiring Person becomes such, the Board
of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price") payable, at the
option of the Company, in cash, shares of Common Stock or such other form
of consideration as the Board of Directors of the Company shall determine.
The redemption of the Rights may be made effective at such time, on such
basis and with such conditions as the Board of Directors in its sole
discretion may establish. Immediately upon any redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.

Until a Right is exercised or exchanged, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.

12. Commitments and Contingencies

As described in Note 3, the Company has committed to fund approximately
$6.9 million to various development projects, of which approximately $5.6
million has been funded by May 5, 2000.

As described in Note 6, the Company has committed to several long-term
investments, which require $11.75 million in cash to be invested. As of May
5, 2000, approximately $1.875 million has been invested.

Litigation

Delaware Stockholders' Class and Derivative Litigation: On February 2,
2000, plaintiffs Robert L. Kohls and Louise A. Kohls filed two actions in
the Court of Chancery of the State of Delaware In and For New Castle
County, against the Company, Angus M. Duthie, Mark D. Lerdal, Gerald R.
Alderson and Charles Christenson. Plaintiffs filed amended complaints on
February 23, 2000.

Plaintiffs allege that they were beneficial owners of Preferred Redeemable
Increased Dividend Equity Securities, 8-1/4% PRIDES, Convertible Preferred
Stock, par value $0.01 per share (the "PRIDES") of the Company, that
mandatorily converted, on May 14, 1998, into common stock, par value
$0.0001 per share ("Common Stock"), of the Company.

The first action is purportedly brought as a class action on behalf of the
named plaintiffs and all other persons who owned the PRIDES as of May 13,
1998. Plaintiffs allege, among other things, that defendants breached the
terms of the Company's Certificate of Designations, Preferences, Rights and
Limitations (the "Certificate of Designations") under which the PRIDES were
issued and breached their fiduciary duty to protect the interests of the
holders of the PRIDES prior to the PRIDES mandatory conversion. Plaintiffs
are seeking, among other things, (i) certification of the action as a class
action, (ii) a declaration that the holders of PRIDES are entitled to be
paid a liquidation preference of up to $1,012.50 per share of PRIDES, and
(iii) a judgment that the defendants are liable to the PRIDES holders in an
amount up to $1,012.50 per share.

<PAGE>

The second action is purportedly brought as a derivative action on behalf
of the Company. Plaintiffs generally allege that the purchase of the
Company's Common Stock by defendant Mark D. Lerdal in December 1997 was a
corporate opportunity and that such Common Stock should have been instead
purchased by the Company. Plaintiffs are seeking, among other things, (i) a
declaration that the purchase of the Common Stock by defendant Lerdal
constituted the taking of a corporate opportunity and is null and void,
(ii) an order requiring defendant Lerdal to transfer the Common Stock to
the Company for the consideration he paid, and (iii) to the extent the
Common Stock may not be transferred to the Company, damages for the fair
value of the Common Stock.

The defendants filed motions to dismiss both actions on March 20, 2000.
Briefing on the motions was completed on May 5, 2000. Oral argument on the
motions has been scheduled for May 31, 2000. The Company intends to defend
each of these actions vigorously.

PRIDES Litigation: On May 6, 1998, Quadrangle Offshore (Cayman) LLC, and
Cerberus Partners, L.P. ("Plaintiffs"), filed a Verified Complaint for
Declaratory Judgment and Injunctive Relief, in the Court of Chancery of the
State of Delaware In and For New Castle County (Civil Action No. 16362-NC).
Plaintiffs allege that they were beneficial owners of PRIDES.

Plaintiffs filed an amended complaint on July 7, 1998. Generally, the
amended complaint alleged that the Company was currently in liquidation and
was in liquidation prior to May 14, 1998, that the plaintiffs were entitled
to receive the liquidation preference of $1,012.50 per share set forth in
the Certificate of Designations in any distribution of assets the Company
might make notwithstanding that the PRIDES mandatorily converted and ceased
to be outstanding on May 14, 1998, and that the Company breached an implied
covenant of good faith and fair dealing under the Certificate of
Designations. Plaintiffs sought, among other things, (i) a declaration that
they were entitled to receive the liquidation preference in any
distribution of assets before any distribution was made to holders of
Common Stock and that the mandatory conversion of the PRIDES did not
operate to eliminate their right to receive the liquidation preference,
(ii) related injunctive relief, and (iii) other unspecified damages.

A bench trial in the action was held February 16-19, 1999 before the Court
of Chancery and on October 13, 1999, the Court entered judgment in favor of
the Company on all counts and denied the relief requested by plaintiffs. On
October 26, 1999, plaintiffs filed a Notice of Appeal with the Delaware
Supreme Court.

On April 6, 2000, the Supreme Court of the State of Delaware affirmed on
all counts the judgment of the Court of Chancery in favor of the
Company.

Federal Stockholders' Class Action: On September 28, 1995, a class action
complaint was filed against the Company and certain of its officers and
directors (namely, Stanley Charren, Maurice E. Miller, Joel M. Canino and
Gerald R. Alderson), in the United States District Court for the Northern
District of California, alleging federal securities laws violations. On
November 2, 1995, a First Amended Complaint was filed naming additional
defendants, including underwriters of the Company's securities and certain
other officers and directors of the Company (namely, Charles Christenson,
Angus M. Duthie, Steven N. Hutchinson, Howard W. Pifer III and Mervin E.
Werth). Subsequent to the Court's partial grant of the Company's and the
underwriter defendants' motions to dismiss, a Second Amended Complaint was
filed on March 29, 1996. The amended complaint alleged claims under
sections 11 and 15 of the Securities Act of 1933, and sections 10(b) and
20(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder,
based on alleged misrepresentations and omissions in the Company's public
statements, on behalf of a class consisting of persons who purchased the
Company's Common Stock during the period from September 21, 1993 (the date
of the Company's initial public offering) through August 8, 1995 and
persons who purchased the Company's PRIDES (depository shares) during the
period from April 28, 1994 (the public offering date of the PRIDES) through
August 8, 1995. The amended complaint alleged that the defendants
misrepresented the Company's progress on the development of its latest
generation of wind turbines and the Company's future prospects. The amended
complaint sought unspecified damages and other relief.

<PAGE>

The Court certified a plaintiff class consisting of all persons or entities
who purchased Common Stock between September 21, 1993 and August 8, 1995 or
depositary shares between April 28, 1994 and August 8, 1995, appointed
representatives of the certified plaintiff class, appointed counsel for the
certified class and certified a plaintiff and defendant underwriter class
as to the section 11 claim.

On August 9, 1999, the Court granted defendants' motion for summary
judgment and ordered that plaintiffs take nothing and that the action be
dismissed on the merits. The plaintiffs have appealed the Court's order.
The Company intends to defend the appeal vigorously.

Insurance Litigation: On January 29, 1999, Travelers Insurance Company
filed a complaint against KENETECH and CNF Industries, Inc. ("CNF") in the
Superior Court, Judicial District of Hartford, Connecticut. The complaint
alleges that the defendants failed to pay premiums and other charges for
insurance coverage and services. Damages are alleged to be in excess of
$1,121,305. On April 13, 1999, the Company filed a Motion to Dismiss for
lack of personal jurisdiction and also filed a Request to Revise. A hearing
on the Motion and Request is pending. The Company intends to defend this
action vigorously.

Annual Meeting Litigation: On July 30, 1999, Campus, LLC and Joseph A.
Wagda filed a complaint against the Company and its directors (namely,
Angus M. Duthie, Mark D. Lerdal, Gerald R. Alderson and Charles
Christenson) in the Court of Chancery of the State of Delaware In and For
New Castle County. The plaintiffs in this action purport to be stockholders
of the Company. The complaint alleges, among other things, that plaintiffs
were deprived of the opportunity to nominate directors for election at the
Company's annual meeting which took place on August 18, 1999. Plaintiffs
are seeking, among other things, (i) a declaration that the annual meeting
was illegally and inequitably scheduled and that any actions taken at the
annual meeting are null and void and (ii) an order requiring the defendants
to schedule a meeting, allowing stockholders an opportunity to nominate
directors, file solicitation materials with the Securities and Exchange
Commission and conduct a proxy solicitation. The litigation has been stayed
by agreement of the parties. In the event that the litigation resumes, the
Company intends to defend this action vigorously.

Other: The Company is also a party to various other legal proceedings
normally incident to its business activities. The Company intends to defend
itself vigorously against these actions.

The Company does not believe that the ultimate outcome of the
above-described matters will have a material adverse effect on the
Company's financial position.

Lease Commitments: The Company leases approximately 2,400 square feet of
office space in San Francisco, CA. The associated lease commitment is
approximately $75,000 annually, expiring on September 30, 2001.

13. Subsequent Events

On April 14 and May 3, 2000, the Company retired 2,049,400 and 315,900
shares, respectively, of common stock it had repurchased under the
Company's program to repurchase such stock.

As discussed at Part II, Item 5, the Company's Board of Directors approved
in April 2000 a one-for-ten (1 for 10) reverse stock-split, subject to
stockholder approval, at the 2000 Annual Meeting of Stockholders of the
Company.

<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

OVERVIEW

KENETECH Corporation ("KENETECH") is a Delaware corporation that has
historically been involved in the development, construction, and management
of independent power projects. The Company continues in project development
activities at this time; however, it has ceased its construction and
management activities. The Company is currently participating with other
parties in developing two electric generating facilities and one oriented
strand board facility. As used in this document, "Company" refers to
KENETECH and its wholly-owned subsidiaries (including KENETECH Windpower,
Inc. ("KWI") only through May 29, 1996).

OSB Chateaugay

The Company had advanced $440,000 as of March 31, 2000. As of May 5, 2000,
the Company had funded an additional $149,000 on the OSB Project, bringing
the total amount funded to $589,000.

Astoria

In October 1999, the Company entered into funding and participation
agreements with Astoria Energy, LLC ("Astoria") to provide funding, under a
note agreement, of up to $3 million for the development of a 1,000 megawatt
independent power plant (the "Astoria Project") to be located in Astoria,
Queens, New York. The Astoria Project is currently under development and is
expected to commence construction in the second half of 2001. In exchange
for the services and funding, the Company will receive, in addition to
repayment of the note evidencing the funding, certain participation
distributions. The note is secured by all property and assets of Astoria.
Recovery of the note, interest on the note, and participation distributions
are all dependent upon the ultimate success of the Astoria Project.
Accordingly, interest income and project distributions will be recognized
upon the completion of certain project milestones.

<PAGE>

Whinash

Other Investments

Francisco Partners, L.P.: In April 2000, the Company agreed to invest $5
million over the next four years in Francisco Partners, L.P. ("Francisco
Partners"), a partnership formed to make private information technology
buy-out investments. It is expected that Francisco Partners will raise
approximately $2 billion. The Company will receive limited partnership
interests for its investment. The limited partnership interests are highly
illiquid and Francisco Partners has a term of at least ten years.

Draper Atlantic Venture Fund II, L.P.: In April 2000, the Company agreed to
invest $2.5 million over the next two years in Draper Atlantic Venture Fund
II, L.P. ("Draper Atlantic"), a partnership formed to invest primarily in
early-stage information technology companies. It is expected that Draper
Atlantic, will raise approximately $250 million. The Company will receive
limited partnership interests for its investment. The limited partnership
interests are highly illiquid and Draper Atlantic has a term of at least
ten years. As of May 5, 2000, the Company had invested $125,000.

ServiSense.com, Inc.: On April 18, 2000, the Company entered into a Bridge
Loan and Warrant Agreement with ServiSense.com, Inc. ("ServiSense"), a
Delaware corporation whereby the Company loaned ServiSense $1 million in
exchange for a note receivable and a warrant to purchase ServiSense
preferred stock. ServiSense is a bundler of core energy and
telecommunications products sold to small businesses and residential
consumers. Its services include local and long distance telephone, natural
gas and home heating oil supplied at rates lower than the incumbent's rate.
The note, which earns interest at 10% per annum, matures upon the earliest
of April 18, 2001 or the date ServiSense closes an equity financing that
yields at least $5 million of gross proceeds. The warrant has a term of
five years and provides for the purchase of newly issued preferred stock in
ServiSense. The number of shares subject to the warrant is variable
depending upon the date ServiSense closes its equity financing. There is no
market for the note or the warrant.

<PAGE>

CAUTIONARY STATEMENT

Certain information included in this report contains forward looking
statements within the meaning of the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended. Such forward looking
information is based on information available when such statements are made
and is subject to risks and uncertainties that could cause actual results
to differ materially from those expressed in the statements.

Results of Operations
---------------------

The Company recognized net income for the first quarter of 2000 of $68
thousand as compared to $3.6 million in the first quarter of 1999.

Quarters ended March 31, 2000 and March 31, 1999
<TABLE>
<CAPTION>

Quarters Ended
March 31, 2000 March 31, 1999
------------------------ ------------------------
(in thousands)
Gross Gross
Revenues Costs Margins Revenues Costs Margins
-------- ----- ------- -------- ------ -------
<S> ............................ <C> <C> <C> <C> <C> <C>

Construction services ..............$ -- $ -- $ -- $ 410 $ 56 $ 354

Maintenance, management
fees and other .................... -- -- -- 21 -- 21
-------- ----- ------- -------- ------ -------
Total ...............................$ -- $ -- $ -- $ 431 $ 56 $ 375
======== ===== ======= ======== ====== =======
</TABLE>

There were no maintenance, management fees and other revenues or associated
costs in the first quarter of 2000, compared to $21 thousand for this
period in 1999 which was related to the delayed collection of development
and administrative fees. KENETECH Facilities Management, Inc. (KFM), a
wholly-owned subsidiary of the Company which performed operations and
maintenance of thermal power plants, has no further business activity or
employees and is in the process of disposing of its remaining assets and
liabilities.

Project development and marketing expenses decreased to $2 thousand for the
quarter ended March 31, 2000 from $61 thousand for the comparable period in
1999. Project development and marketing expenses incurred in the first
quarter of 2000 related to the development of the OSB Project.

General and administrative expenses decreased to $790 thousand for the
quarter ended March 31, 2000 from $2.2 million for the comparable period in
1999 due principally to reduced personnel expenses related to the payment
of severance to several senior level executives in 1999. Current period
general and administrative expense consists primarily of salary and wages,
legal costs associated with litigation, and consulting expenses.

Interest income decreased to $633 thousand for the quarter ended March 31,
2000 from $830 thousand for the comparable period in 1999 due to the
reduction in funds invested when the payment of accrued PRIDES dividends
was made in April 1999.

During the quarter ended March 31, 2000, the Company recorded a $54
thousand loss on trading debt securities, comprised of a $7 thousand
realized gain on sale, offset by a $61 thousand unrealized loss in fair
value. No such securities were owned during the comparable quarter in 1999.

<PAGE>

The Company recorded no gain on the disposition of subsidiaries and assets
for the quarter ended March 31, 2000, a decrease from $4.6 million for the
comparable quarter in 1999. The $4.6 million gain in 1999 related primarily
to the sales of partnership interests.

The Company recorded other income of $281 thousand for the quarter ended
March 31, 2000 compared to $62 thousand in this period in 1999. Other
income in 2000 relates primarily to the reduction in accrued liabilities
related to the favorable resolution of various legal matters.

Income taxes: The Company uses the asset and liability approach for
financial accounting and reporting for income taxes. The Company reported
no income tax expense or benefit for the periods ended March 31, 2000 and
1999 due to the expected utilization of deferred tax benefits offset by
reduction in valuation reserve.

Liquidity and Capital Resources
-------------------------------

Operating activities

During the first quarter of 2000, operating activities used cash of
approximately $1,182,000 principally from the payment of previously accrued
general and administrative expenses.

Investing activities

During the first quarter of 2000, investment activities used cash of
approximately $7,702,000, consisting primarily of investment in marketable
securities and project development advances.

Financing activities

During the first quarter of 2000, the Company used cash of approximately
$1,105,000 in repurchasing its common stock.

Status

Given the current operations and strategy of the Company, its cash balances
are adequate for the foreseeable future. As of May 5, 2000, the Company had
approximately $1.3 million remaining to be funded under its project
development funding commitments and approximately $9.875 million remaining
under its investment funding commitments.

Effect of Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The new standard establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. SFAS No. 133 is effective for the Company's quarter ending
March 31, 2001. The Company does not expect SFAS No. 133 to have a material
effect on its financial position or results of operations.

In December 1999, the SEC issued Staff Accounting Bulletin (SAB) No. 101.
The SAB summarized certain of the SEC Staff's views in applying generally
accepted accounting principles to revenue recognition in financial
statements. The Company currently conforms to the guidance contained in the
bulletin.

Year 2000 Compliance

The Company currently is not aware of any Year 2000 problem in any of the
Company's critical systems and services. However, the success to date of
our Year 2000 efforts cannot guarantee that a Year 2000 problem affecting
third parties upon which the Company relies will not become apparent in the
future that could have a material adverse effect on the Company's business
or operations.

20
<PAGE>

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Market Risk. As of March 31, 2000, the Company's exposure to market risk is
principally confined to its investment in trading debt securities, which
are subject primarily to interest rate risk. The Company's investment in
trading debt securities is a material component of the Company's total
assets; therefore, market risk exposure should be considered to be
material.

The Company manages its interest rate risk through specific investment
criteria designed to minimize such risk. The Company also employs
discretionary selling practices aimed at minimizing realized market losses.
The Company could foreseeably hold its investment in trading debt
securities until the investments' maturity, thereby effectively eliminating
associated interest rate risk. The majority of the Company's investment in
trading debt securities that is subject to interest rate risk matures
within three years.

The potential gain or loss in fair value to the Company's investment in
trading debt securities resulting from selected hypothetical increases in
interest rates is expressed in the following sensitivity analysis.

Change in market interest rates
-------------------------------
Current 10% 20%
-------------------------------------
(in thousands)

Fair value of trading debt
securities $36,077 $35,936 $35,797

Increase (decrease) from
current fair value - ($141) ($280)

The sensitivity analysis above, known as a stress test in the banking
industry, models the change in fair value based upon specific changes in
the prime interest rate.

The Company has no material market risk relating to foreign exchange rate
risk or commodity price risk.

<PAGE>

Part II OTHER INFORMATION

Item 1. Legal Proceedings.

See discussion under Note 12 of Item 1 incorporated herein by
reference.

Item 5. Other Information.

On April 19, 2000, the Company's Board of Directors set Wednesday,
August 23, 2000 as the date of the Annual Meeting of Stockholders of
the Company for 2000. The Annual Meeting will be held in San
Francisco, for the purpose of:

1. Electing two Class I Directors of the Company to hold office for
a three-year term;

2. Considering and voting upon a proposal to amend and restate the
Certificate of Incorporation of the Company to eliminate the
Company's Series U Preferred Stock;

3. Considering and voting upon a proposal to amend and restate the
Certificate of Incorporation of the Company to effect a
one-for-ten reverse stock split;

4. Ratifying the Board of Directors' appointment of independent
auditors to audit the financial statements of the Company for the
2000 fiscal year; and

5. Acting upon all other matters which may properly come before the
meeting or any adjournments or postponements thereof.

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits

27 Financial Data Schedule.

(b) Reports on Form 8-K

The Company filed a Report on Form 8-K, on May 4, 2000, reporting
under Item 5, the approval of the repurchase of an additional
5,000,000 shares under the Company's stock repurchase program. The
Company also reported that it had completed the repurchase of
2,000,000 shares under the repurchase program approved in March 2000.

The Company filed a Report on Form 8-K, on April 7, 2000, reporting,
under Item 5, the affirmance by the Delaware Supreme Court of the
ruling in favor of the Company on all counts in the PRIDES Litigation
(see Item 1, Note 12).

The Company filed a Report on Form 8-K, on March 22, 2000, reporting,
under Item 5, the approval of the repurchase of an additional
2,000,000 shares and extension of the closing date to December 31,
2000 under the Company's stock repurchase program. The Company also
reported that it had completed the repurchase of 2,000,000 shares
under the repurchase program approved in November 1999.

The Company filed a Report on Form 8-K, on February 3, 2000,
reporting, under Item 5, the filing of the Delaware Stockholders'
Class and Derivative Litigation referred to in Item 1, Note 12.

<PAGE>

SIGNATURES

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.

KENETECH Corporation

By:
Date: May 15, 2000 Mark D. Lerdal
President, Chief Executive Officer
and Principal Accounting Officer

Date: May 15, 2000 By:
Andrew M. Langtry
Corporate Controller and
Chief Accounting Officer

23
<PAGE>

SIGNATURES

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.

KENETECH Corporation

By: /s/ Mark D. Lerdal
Date: May 15, 2000 Mark D. Lerdal
President, Chief Executive Officer
and Principal Accounting Officer

Date: May 15, 2000 By: /s/ Andrew M. Langtry
Andrew M. Langtry
Corporate Controller and
Chief Accounting Officer

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM KENETECH CORPORATION'S MARCH 31, 2000 CONSOLIDATED
FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000807708
<NAME> KENETECH CORPORATION
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-1-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 5,984
<SECURITIES> 36,077
<RECEIVABLES> 10
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 42,905
<PP&E> 128
<DEPRECIATION> (78)
<TOTAL-ASSETS> 47,773
<CURRENT-LIABILITIES> 4,591
<BONDS> 0
0
0
<COMMON> 4
<OTHER-SE> 31,930
<TOTAL-LIABILITY-AND-EQUITY> 47,773
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 792
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 68
<INCOME-TAX> 0
<INCOME-CONTINUING> 68
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