FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OFTHE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 2000
Commission file Number 0-25935
THE RIDGEWOOD POWER GROWTH FUND
(Exact name of registrant as specified in its charter.)
Delaware 22-3495594
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
947 Linwood Avenue, Ridgewood, New Jersey 07450-2939
------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(201) 447-9000
----------------
Registrant's telephone number, including area code:
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>
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
The Ridgewood Power Growth Fund
Financial Statements
September 30, 2000
<PAGE>
The Ridgewood Power Growth Fund
Balance Sheet
--------------------------------------------------------------------------------
December 31,
September 30, 2000 1999
------------ ------------
(unaudited)
Assets:
Cash and cash equivalents ................ $ 19,731,393 $ 35,732,660
Accounts receivable ...................... 788,518 --
Due from affiliates ...................... 16,586 316,833
Other current assets ..................... 165,023 156,644
------------ ------------
Total current assets ..................... 20,701,520 36,206,137
------------ ------------
Plant and equipment ...................... 20,307,127 --
Accumulated depreciation ................. (132,410) --
------------ ------------
20,174,717 --
------------ ------------
Investment in:
ZAPWORLD.COM ............................. 3,198,656 3,441,809
Egypt Projects ........................... -- 4,736,092
Mediterranean Fiber Optic Project/GFG .... -- 1,497,670
Synergics Hydro .......................... 13,071,159 --
Deferred due diligence costs ............. 33,680 --
------------ ------------
Total assets ............................. $ 57,179,732 $ 45,881,708
------------ ------------
Liabilities and shareholders' equity:
Liabilities:
Accounts payable and accrued expenses .... $ 43,468 $ 216,795
Due to affiliates ........................ 57,176 7,487
------------ ------------
Total current liabilities ................ 100,644 224,282
------------ ------------
Minority interest in the Egypt Projects .. 7,002,735 --
Commitments and contingencies
Shareholders' equity:
Shareholders' equity (658.1067 and
563.16 investor shares issued and
outstanding at September 30, 2000 and
December 31, 1999, respectively) ......... 50,134,913 46,548,589
Subscriptions receivable ................. -- (863,500)
------------ ------------
Shareholders' equity, net ................ 50,134,913 45,685,089
Managing shareholders' accumulated
deficit (1 management share
issued and outstanding) ................. (58,560) (27,663)
------------ ------------
Total shareholders' equity ............... 50,076,353 45,657,426
------------ ------------
Total liabilities and shareholders' equity $ 57,179,732 $ 45,881,708
------------ ------------
See accompanying notes to financial statements.
<PAGE>
The Ridgewood Power Growth Fund
Statement of Operations (unaudited)
--------------------------------------------------------------------------------
Nine Months Ended Three Months Ended
----------------------- -----------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
----------- --------- --------- -----------
Net Sales .............. $ 523,350 $ -- $ 523,350 $ --
Cost of sales .......... 370,914 -- 370,914 --
----------- --------- --------- -----------
Gross profit ........... 152,436 -- 152,436 --
----------- --------- --------- -----------
Investment fee ......... 199,590 346,130 2,200 119,740
Management fee ......... 685,528 -- 414,337 --
Due diligence costs .... -- 173,606 -- 81,431
Writedown of investment
in Mediterranean
Fiber Optic Project/GFG 1,447,746 -- -- --
General and
administrative expenses 146,251 89,254 140,763 15,444
----------- --------- --------- -----------
Total expenses ...... 2,479,115 608,990 557,300 216,615
----------- --------- --------- -----------
Income (loss) from
operations ............ (2,326,679) (608,990) (404,864) (216,615)
----------- --------- --------- -----------
Other income (expense)
Interest income ....... 1,324,647 991,975 360,020 344,637
Income from the Egypt
Projects ............. 104,457 -- -- --
Income from Synergics
Hydro ................. 750,000 -- 450,000 --
Loss from ZAPWORLD.com (243,153) (157,523) (13,713) (129,308)
Loss from Mediterranean
Fiber Optic
Project/GFG .......... (49,924) -- -- --
----------- --------- --------- -----------
Net other income (loss) 1,886,027 834,452 796,307 215,329
----------- --------- --------- -----------
Income (loss) before
minority interest ..... (440,652) 225,462 391,443 (1,286)
Minority interest in the
earnings of the Egypt
Projects .............. (4,774) -- -- --
----------- --------- --------- -----------
Net income (loss) ...... $ (445,426) $ 225,462 $ 391,443 $ (1,286)
----------- --------- --------- -----------
See accompanying notes to financial statements.
<PAGE>
The Ridgewood Power Growth Fund
Statement of Changes in Shareholders' Equity (unaudited)
--------------------------------------------------------------------------------
Subscriptions Managing
Shareholders Receivable Shareholders Total
------------ ----------- ------------- -----
Shareholders' equity,
December 31, 1999
(563.16 investor shares
and 1 management share) $ 46,548,589 $(863,500) $(27,663) $ 45,657,426
Capital contributions,
net (94.9467 investor
shares) ............... 6,645,185 863,500 -- 7,508,685
Distributions .......... (2,617,889) -- (26,443) (2,644,332)
Net loss ............... (440,972) -- (4,454) (445,426)
------------ --------- -------- ------------
Shareholders' equity,
September 30, 2000
(658.1067 investor
shares and 1 management
share) ................ $ 50,134,913 $ -- $(58,560) $ 50,076,353
------------ --------- -------- ------------
See accompanying notes to financial statements.
<PAGE>
The Ridgewood Power Growth Fund
Statement of Cash Flows (unaudited)
--------------------------------------------------------------------------------
Nine Months Ended
September 30, September 30,
2000 1999
------------ ------------
Cash flows from operating activities:
Net income (loss) ............................ $ (445,426) $ 225,462
------------ ------------
Adjustments to reconcile net
income (loss) to net cash flows
from operating activities:
Depreciation ................................ 132,410 --
Loss from ZAPWORLD.COM ...................... 243,153 157,523
Loss from Mediterranean Fiber
Optic Project/GFG .......................... 49,924 --
Income from Synergics Hydro ................. (750,000) --
Writedown of investment in
Mediterranean Fiber Optic Project/GFG ....... 1,447,746 --
Changes in assets and liabilities,
net of impact of consolidation of the
Egypt Projects:
Increase in accounts receivable ............ (368,293) --
Decrease in due from affiliates ............ 300,247 (1,179,378)
(Increase) decrease in other
current assets ............................ (8,379) 1,832
Decrease in accounts payable
and accrued expenses ...................... (173,327) (11,481)
Increase (decrease) in due
to affiliates, net ........................ 49,689 (1,114,129)
------------ ------------
Total adjustments .......................... 923,170 (2,145,633)
------------ ------------
Net cash provided by (used
in) operating activities .................. 477,744 (1,920,171)
------------ ------------
Cash flows from investing activities:
Investment in ZAPWORLD.COM ................... -- (4,077,490)
Investment in Synergics Hydro ................ (12,321,159) --
Investment in Egypt Projects ................. -- (2,287,201)
Investment in GFG/Med Fiber .................. -- (1,500,000)
Deferred due diligence costs ................. (33,680) (310,269)
Capital expenditures ......................... (4,770,719) --
------------ ------------
Net cash used in investing activities ...... (17,125,558) (8,174,960)
------------ ------------
Cash flows from financing activities:
Proceeds from shareholders' contributions .... 4,424,594 16,527,899
Selling commissions and offering costs paid .. (1,133,715) (2,683,610)
Cash distributions to shareholders ........... (2,644,332) (934,099)
------------ ------------
Net cash provided by financing activities .. 646,547 12,910,190
------------ ------------
Net (decrease) increase in cash
and cash equivalents ........................ (16,001,267) 2,815,059
Cash and cash equivalents, beginning of period 35,732,660 25,256,560
------------ ------------
Cash and cash equivalents, end of period ..... $ 19,731,393 $ 28,071,619
------------ ------------
See accompanying notes to financial statements.
<PAGE>
The Ridgewood Power Growth Fund
Notes to Financial Statements (unaudited)
1. General
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments, which consist of normal recurring adjustments,
necessary for the fair presentation of the results for the interim periods.
Additional footnote disclosure concerning accounting policies and other matters
are disclosed in The Ridgewood Power Growth Fund's (the "Fund") financial
statements included in the 1999 Annual Report on Form 10-K, which should be read
in conjunction with these financial statements.
The results of operations for an interim period should not necessarily be taken
as indicative of the results of operations that may be expected for a twelve
month period.
2. Writedown of investment in Mediterranean Fiber Optic Project/GFG
In September 1999, the Fund and Ridgewood Electric Power Trust V ("Trust V")
made a joint investment of $3,000,000 in Global Fiber Group ("GFG"), which was
in the process of developing an underwater fiber optic cable in the Western
Mediterranean (the "Mediterranean Fiber Optic Project"). The investment, which
was funded equally by the Fund and Trust V, provided for a 25% ownership
interest in GFG and the right to invest in projects developed by GFG. In the
first quarter of 2000, the Fund determined that GFG would probably not be able
to develop the Mediterranean Fiber Optic Project or any other project. As a
result, the Fund determined that it would be unlikely to recover its investment
in GFG. As a result, the Fund recorded a writedown of $1,447,746 in the first
quarter of 2000 to reduce the estimated fair value of the investment to zero.
3. Synergics, Inc. Acquisition
Beginning in late 1999, Ridgewood Power LLC, the Managing Shareholder of the
Fund, began negotiations to buy nine existing hydroelectric generating plants
from Synergics, Inc. ("Synergics"). In the course of negotiations and due
diligence, Ridgewood Power learned that one of Synergics' lenders had declared a
payment default against Synergics and that the lender had agreed to discharge
the debt at a substantial discount from the face amount if payment were made by
the end of April 2000. In order to preserve the benefit of the lender's offer
and to allow completion of the acquisition on favorable terms, Trust V and the
Fund, through a joint venture, acquired the debt from the lender on April 28,
2000 for a payment of $17 million to the lender. The debt remains in default,
but the joint venture is not exercising its remedies against Synergics or the
Synergics subsidiaries pending the proposed acquisition described below.
The joint venture intends to acquire the Synergics hydroelectric generation
business by forgiving the $17 million of outstanding debt and paying an
additional $1 million to the shareholders of Synergics and paying up to an
additional $1.7 million of Synergics' tax liabilities that might be incurred as
a result of the sale of its assets. In addition, if a project lease for
Synergics' Box Canyon, California hydroelectric plant is extended beyond the
year 2010, the joint venture will pay the Synergics shareholders the lesser of
$500,000 or one-half of the agreed present value derived from the lease
extension. The structuring and closing of the acquisition is to be determined
after a review of certain financial, contractual and tax considerations and
termination of the Hart-Scott-Rodino Act antitrust waiting period.
Until the acquisition closes, Synergics has agreed to retain all working capital
for the account of the joint venture and to allow the joint venture to approve
all operational decisions and expenditures. Synergics is cooperating closely
with the joint venture in making operational decisions. However, although the
joint venture currently intends to acquire the Synergics hydroelectric
generation business as promptly as possible, neither the joint venture nor the
Trust V or the Fund are obligated to acquire Synergics or any of its assets.
Wayne L. Rogers, the president of Synergics, agreed to vote the stock of
Synergics, Inc. beneficially owned by him (approximately 69% of the voting
stock) in favor of a merger or other corporate reorganization as specified by
Trust V and the Fund that materially complies with the provisions outlined
above.
Although the joint venture now owns $17 million of the debt of Synergics, there
is approximately $11.725 million of debt owed to Fleet Bank, N.A. Trust V and
the Fund are in discussions with Fleet Bank concerning the assumption of the
Fleet debt in connection with the acquisition.
Trust V supplied $5 million of the capital used by the joint venture to acquire
the debt and the Fund supplied the remaining $12 million. Any additional capital
needed for the acquisition will be supplied to the joint venture by the Fund.
Trust V and the Fund will own the joint venture in proportion to the capital
each supplies and neither will have preferred rights over the other.
Until the joint venture acquires the hydroelectric generation business,
Synergics and the joint venture have agreed that the debt of Synergics will bear
interest equal to the lesser of 15% or the cash flows generated by the
hydroelectric generation business. For the five months ended September 30, 2000,
the Fund recorded $750,000 of income related to the debt of Synergics.
4. Termination of Share Offering
On April 30, 2000, the Fund terminated its offering of shares.
5. Consolidation of the Egypt Projects
From the commencement of activity in Egypt through June 30, 200, the Fund owned
50% of the Egypt Projects and, accordingly, accounted for them under the equity
method. Beginning in the third quarter of 2000, the Fund made additional
investments and acquired majority ownership of the Egypt Projects. As a result,
effective July 1, 2000, the Fund has consolidated the financial position and
results of operations. Trust V's interest in the Egypt Projects is presented as
a minority interest in the balance sheet and statement of operations.
6. Summary Results of Operations for Selected Investments
Summary results of operations for the ZAPWORLD.COM, which is accounted for under
the equity method, were as follows:
Nine Months Ended September 30,
2000 1999
---- ----
Total revenue $8,128,000 $4,444,000
Net loss (1,014,000) (391,000)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Dollar amounts in this discussion are rounded to the nearest $1,000.
Introduction
The financial statements include the accounts of the Fund and the Egypt
Projects. The Egypt Projects for year 2000 use the consolidation method of
accounting. For year 1999, the equity method of accounting was used for the
Egypt Projects. The Fund uses the equity method of accounting for its
investments in ZAPWORLD.COM, Synergics Incorporated, and the Mediterranean Fiber
Optic Project/GFG.
Results of Operations
In the third quarter of 2000, the Fund had total revenue of $524,000 and cost of
sales of $371,000, which are the results of operations of the Egypt Projects.
Prior to the third quarter 2000, the Egypt projects were on the equity method
and no sales were recorded.
The investment fee expense charged on capital contributions decreased to
$200,000 in the first nine months of 2000 compared to $346,000 in the first nine
months of 1999 reflecting a lower level of capital contributions due to the
termination of the offering. Contributions in the third quarter of 2000 were
also lower than in the corresponding period in the prior year resulting in
investment fees of $2,000 in the third quarter of 2000 compared to $120,000 in
the third quarter of 1999. In accordance with the terms of the share offering,
beginning in May 2000, the Managing Shareholder began charging a monthly
management fee to Fund. The management fee was $686,000 for the nine months
ended September 30.
Due diligence expense related to rejected investment opportunities was $174,000
in the first nine months of 1999 ($81,000 in the third quarter 1999) did not
recur in 2000 because the Fund identified investment opportunities for all its
available funds early in 2000.
As discussed in Note 2 to the June 30, 2000 financial statements, the Fund
recorded a $1,447,746 writedown of its investment in Mediterranean Fiber Optic
Project/GFG in the first quarter of 2000.
Interest income increased by $15,000 from $360,000 in the third quarter of 1999
to $345,000 in the third quarter of 1999 due to higher average cash balances and
interest rates. Interest income also increased by $333,000 from $992,000 in the
first nine months of 1999 to $1,325,000 in the same period of 2000 for the same
reasons.
The Fund recorded losses from its equity interest in ZAPWORLD.COM of $14,000 in
the third quarter ($243,000 in the first nine months) of 2000 compared to
$129,000 in the third quarter ($158,000 in the first nine months) of 1999. The
Fund acquired a minority interest in that company on March 30, 1999.
In the third quarter of 2000, the Fund recorded income of $450,000 from its
Synergics investment which was acquired in April 2000. The acquisition of the
Synergics investment is discussed in Note 3 to the June 30, 2000 financial
statements.
Liquidity and Capital Resources
Other than investments of available cash in power generation Projects,
obligations of the Fund are generally limited to payment of Project operating
expenses, payment of a management fee to the Managing Shareholder, payments for
certain accounting and legal services to third persons and distributions to
shareholders of available operating cash flow generated by the Fund's
investments. The Fund's policy is to distribute as much cash as is prudent to
shareholders. Accordingly, the Fund does not expect that it will be necessary to
retain a material amount of working capital.
The Fund anticipates that, during 2000, its cash flow from operations and
unexpended offering proceeds will be adequate to fund its obligations.
Forward-looking statement advisory
This Quarterly Report on Form 10-Q, as with some other statements made by the
Fund from time to time, contains forward-looking statements. These statements
discuss business trends and other matters relating to the Fund's future results
and the business climate and are found, among other places, in the notes to
financial statements and at Part I, Item 2, Management's Discussion and
Analysis. In order to make these statements, the Fund has had to make
assumptions as to the future. It has also had to make estimates in some cases
about events that have already happened, and to rely on data that may be found
to be inaccurate at a later time. Because these forward-looking statements are
based on assumptions, estimates and changeable data, and because any attempt to
predict the future is subject to other errors, what happens to the Fund in the
future may be materially different from the Fund's statements here.
The Fund therefore warns readers of this document that they should not rely on
these forward-looking statements without considering all of the things that
could make them inaccurate. The Fund's other filings with the Securities and
Exchange Commission and its Confidential Memorandum discuss many (but not all)
of the risks and uncertainties that might affect these forward-looking
statements.
Some of these are changes in political and economic conditions, federal or state
regulatory structures, government taxation, spending and budgetary policies,
government mandates, demand for electricity and thermal energy, the ability of
customers to pay for energy received, supplies of fuel and prices of fuels,
operational status of plant, mechanical breakdowns, availability of labor and
the willingness of electric utilities to perform existing power purchase
agreements in good faith. Some of the cautionary factors that readers should
consider are described in the Fund's most recent Annual Report on Form 10-K.
By making these statements now, the Fund is not making any commitment to revise
these forward-looking statements to reflect events that happen after the date of
this document or to reflect unanticipated future events.
<PAGE>
PART II - OTHER INFORMATION
None.
<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.
THE RIDGEWOOD POWER GROWTH FUND
Registrant
November 13, 2000 By /s/ Christopher I. Naunton
Date Christopher I. Naunton
Vice President and
Chief Financial Officer
(signing on behalf of the
Registrant and as
principal financial
officer)
