FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended: March 31, 1996
OR
[ ] Transition Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 0-13510
ZOND-PANAERO WINDSYSTEM PARTNERS I
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of Registrant as specified in its charter)
CALIFORNIA 77-003535
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13000 Jameson St., Tehachapi, California 93561
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(805) 822-6835
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
PART I -- FINANCIAL INFORMATION
Item 1.
Balance Sheets at March 31, 1996 and December 31, 1995.
Statement of Operations for the
Three Months Ended March 31, 1996, and
March 31, 1995.
Statement of Changes on Partners' Capital
Accounts at March 31, 1996, and December 31, 1995.
Statement of Cash Flows for the Three Months
Ended March 31, 1996, and March 31, 1995.
Notes to Interim Financial Statements.
ZOND-PANAERO WINDSYSTEM PARTNERS I
(A California Limited Partnership)
BALANCE SHEET
(Amounts in thousands)
December 31, March 31,
1995 1996
(Audited) (Unaudited)
ASSETS
Current assets:
Cash $ 213 $ 435
Accounts receivable 307 897
Other current assets 128 197
----------- -----------
Total current assets 648 1,529
----------- -----------
Noncurrent assets:
Building 98 98
Wind turbines 49,561 49,561
Less - Accumulated depreciation (27,246) (27,870)
----------- -----------
Total noncurrent assets 22,413 21,789
----------- -----------
Total assets $ 23,061 $ 23,318
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current portion of
notes payable to related party $ 1,643 $ 1,643
Accounts payable 109 56
Interest payable to related party 4,048 4,526
Amounts payable to related parties 79 90
----------- -----------
Total current liabilities 5,879 6,315
----------- -----------
Notes payable to related party, less
current portion 15,678 15,678
----------- -----------
Partners' capital:
Limited partners 905 728
General partner 9 8
Substituted limited partner 9 8
Special limited partner -- --
Contributed capital 581 581
----------- -----------
Total partners' capital 1,504 1,325
----------- -----------
Total liabilities and partners' capital $ 23,061 $ 23,318
=========== ===========
<FN>
See accompanying notes to interim financial statements
ZOND-PANAERO WINDSYSTEM PARTNERS I
(A California Limited Partnership)
STATEMENT OF OPERATIONS
(Amounts in thousands except limited partnership units)
For the Three Months Ended
March 31,
1995 1996
Revenues:
Sales of electricity $ 840 $ 1,272
Other income 1 7
----------- -----------
841 1,279
----------- -----------
Costs and Expenses:
Depreciation 624 624
Interest expense 516 476
Property taxes 10 8
Management fees and land lease 53 50
Maintenance and other operating costs 268 258
Insurance expense 54 42
----------- -----------
1,525 1,458
----------- -----------
Net income (loss) $ (684) $ (179)
=========== ===========
Net income (loss) per limited
partnership unit $ (0.575) $ (0.150)
=========== ===========
Number of limited partnership
units outstanding 1,190 1,190
=========== ===========
<FN>
See accompanying notes to interim financial statements
PAGE>
ZOND-PANAERO WINDSYSTEM PARTNERS I
(A California Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Amounts in thousands)
Substituted
General Limited Limited Contributed
Total Partner Partners Partner Capital
Profit and
loss percentage 100% 0.5% 99.0% 0.5% --
======== ======= ======== ======= ======
Accumulated capital
contributions, net of private
placement costs and
cash distributions $ 27,000 $ 273 $ 26,146 $ -- $ 581
Conversion to Substituted
Limited Partner -- (83) -- 83
Accumulated tax basis losses
from June 29, 1984
(inception) through
December 31, 1993 (22,341) (165) (22,118) (58)
---------- --------- ---------- --------- --------
Balance at:
December 31, 1993 4,659 25 4,028 25 581
Net loss (1,743) (9) (1,725) (9)
---------- --------- ---------- --------- --------
December 31, 1994 2,916 16 2,303 16 581
Net loss (1,412) (7) (1,398) (7)
---------- --------- ---------- --------- --------
December 31, 1995 1,504 9 905 9 581
Net loss (179) (1) (177) (1)
---------- --------- ---------- --------- --------
March 31, 1996 $ 1,325 $ 8 $ 728 $ 8 $ 581
========== ========= ========== ========= ========
<FN>
See accompanying notes to interim financial statements
ZOND-PANAERO WINDSYSTEM PARTNERS I
(A California Limited Partnership)
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(Amounts in thousands)
For the Three Months Ended
March 31,
1995 1996
Cash flows from operating activities:
Net income (loss) $ (684) $ (179)
Adjustments to reconcile net income (loss) to cash
provided by (used in) operating activities -
Depreciation 624 624
Changes in assets and liabilities -
Accounts receivable (79) (590)
Other current assets (54) (69)
Accounts payable and accrued expenses (80) (53)
Amounts payable to related party (73) 11
Interest payable to related party 517 478
----------- ------------
Net cash provided (used) 171 222
Cash flows from financing activities:
Principal payments to related party -- --
----------- ------------
Net increase in cash and cash equivalents 171 222
Cash & cash equivalents beginning of period 37 213
----------- ------------
Cash and cash equivalents end of period $ 208 $ 435
=========== ============
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ -- $ --
=========== ============
<FN>
See accompanying notes to interim financial statements
ZOND-PANAERO WINDSYSTEM PARTNERS I
(A California Limited Partnership)
NOTES TO INTERIM FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying unaudited financial statements reflect
all adjustments which are, in the opinion of the
Partnership's general partner, necessary to a fair statement
of the results for the periods presented. The results of
operations for interim periods are not necessarily indicative
of results for the full year.
2. The Partnership's limited partnership agreement allows the
Partnership's general partner to determine the method for
maintaining the Partnership's accounting records. Until
1987, the records were maintained on a cash basis. However,
Section 481 of the Tax Reform Act of 1986 (the "Act")
prescribed a change, effective January 1, 1987, in the
accounting method for certain tax shelters having corporate
general partners, including the Partnership, to require
tax-basis accrual accounting. In accordance with Section
481 of the Act, differences between the two bases were
recognized for federal income tax purposes ratably by the
Partnership over a three year period. Below are
reconciliations between the Partnership's tax-basis accrual
financial statements and its GAAP basis accrual financial
statements included herein for both results of operations,
partners' capital balances and total assets.
Taxable income year to date $ 435,000
Less: Depreciation less for tax than GAAP (623,000)
Other, net 9,000
---------------
GAAP basis income(loss) $ (179,000)
===============
Tax basis partners' capital
at March 31, 1996 $ (14,202,000)
Plus:
GAAP basis loss less than taxable loss net,
June 24, 1984 (inception)
through December 31, 1995 16,141,000
GAAP basis loss versus taxable income
January 1, 1996 through March 31, 1996 (614,000)
---------------
GAAP basis partners' capital $ 1,325,000
===============
3. Reconciliation of GAAP Basis and Tax Basis Financial
Statements:
Tax basis total assets $ 7,773,000
Cumulative tax depreciation in excess of
GAAP depreciation 15,545,000
---------------
GAAP basis total assets
at March 31, 1996 $ 23,318,000
===============
4. During all periods presented in these financial statements,
1,190 units of limited partnership interests were
outstanding.
5. As a "Special Limited Partner" of the Partnership, Dean
Witter Reynolds, Inc. is entitled to receive 5% of all
Partnership distributions made after the date on which the
cumulative aggregate distributions to the Partnership's limited
partners exceed $10,000,000.
6. Following its removal as a general partner of the
Partnership effective June 24, 1988, PanAero Management
Corporation became a substituted limited partner of the
Partnership with the same capital account and interest in
profits and losses as it had as a general partner.
7. In accordance with the 1988 agreement between Zond Systems,
Inc.("Zond") and the placement agent, Zond forgave its
share, as a joint venture partner of Mesa Wind Developers,
of certain indebtedness owed by the Partnership to such
joint venture representing management fees, easement
royalties and other miscellaneous expenses related to
windsystem operations.
8. No provision has been made for income taxes in the
accompanying financial statements. The Partnership, as an
entity, is not assessed taxes based upon income generated by
its operations its operations. Income taxes, if any, are the
liability of the individual partners.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Zond-PanAero Windsystem Partners I, a California Limited
Partnership (the "Partnership") was formed in 1984 to purchase,
own, and operate a wind-driven electric power generating facility
located near Palm Springs, California (the "Windsystem"). The
electricity generated by the Windsystem is sold to Southern
California Edison Company. The general partner of the
Partnership is Zond Windsystems Management Corporation, a
wholly-owned subsidiary of Zond Systems, Inc. ("Zond").
Liquidity and Capital Resources
The Partnership continues to experience a lack of liquidity
primarily due to a continued short-fall in revenues from
operations in comparison to the costs and expenses of operations.
Accordingly, interest payments on the Purchase Notes were in arrears
at March 31, 1996 in the aggregate amount of $3,981,000. The
Partnership expects that it will continue to experience poor
liquidity and to defer certain payments on the Purchase Notes.
See "Results of Operations."
Results of Operations
Three Months Ended March 31, 1996, Compared to Three
Months Ended March 31, 1995.
Revenues from power sales in the three months ended
March 31, 1996 were approximately 51% higher than the
corresponding 1995 period. Wind energy levels at three
representative anemometer locations on the Operating Site was
approximately 36% higher than for the three months ended March 31,
1995 and was approximately 41% higher than the historical averages.
Only three anemometers are used to measure wind speed, therefore
a direct correlation to production of the entire group of
turbines cannot always be expected. As reported by
Southern California Edison Company, the Windsystem produced
12,476 megawatt hours in the three months ended March 31,
1996, in comparison to production of 8,239 megawatt hours in the
corresponding 1995 period, representing an increase in production
of approximately 51%.
The Partnership received approximately $7,000 in "other
income" from interest earned on excess operating funds in the
three months ended March 31, 1996, and approximately $1,000
in the corresponding 1995 period.
Total expenses for the three months ended March 31, 1996, were
approximately 4% lower than the corresponding 1995 period.
Maintenance and other operating costs decreased $10,000. Insurance
expense decreased 22% due to lower insurance premiums. Interest
expense decreased due to lower average principal balances on the
Purchase Notes outstanding.
Overall, the Partnership reported a loss of $179,000 for the
three months ended March 31, 1996, in comparison to a loss of
$684,000 for the corresponding 1995 period.
The Partnership's financial condition worsened during the
three months ended March 31, 1996. The change in overall
financial condition is primarily due to the three month loss.
During the three months ended March 31, 1996, total partners'
capital decreased $179,000 from $1,504,000 at December 31, 1995,
to $1,325,000 and Limited Partners' capital decreased $177,000
from $905,000 at December 31, 1995, to $728,000. This represents
a total decrease of approximately $150 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. The Partnership expects that its overall financial
condition will continue to worsen 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.
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ZOND-PANAERO WINDSYSTEM PARTNERS I
A CALIFORNIA LIMITED PARTNERSHIP
By: Zond Windsystems Management
Corporation, General Partner
Date: May 14, 1996 By:/S/ KENNETH C. KARAS
Kenneth C. Karas
President and
Chief Financial Officer
Date: May 14, 1996 By:/S/ D. MICHAEL WESTBELD
D. Michael Westbeld
Vice President-Controller