UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1998
Commission File Number 0-21304
RIDGEWOOD ELECTRIC POWER TRUST II
(Exact name of registrant as specified in its charter.)
Delaware, U.S.A. 22-3206429
(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)
Registrant's telephone number, including area code:
(201) 447-9000
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 I - FINANCIAL STATEMENTS
<TABLE>
RIDGEWOOD ELECTRIC POWER TRUST II
BALANCE SHEET
<CAPTION>
March 31, December 31,
1998 1997
(unaudited)
<S> <C> <C>
Assets:
Investments in power generation projects $ 12,609,307 $ 12,609,307
Cash and cash equivalents 50,054 175,818
Notes receivable from sale of investment 2,428,994 2,521,001
Due from affiliates 80,870 144,113
Other assets 2,501 2,436
Total assets $ 15,171,726 $ 15,452,675
Liabilities and Shareholders' Equity:
Accounts payable and accrued expenses $ 17,855 $ 32,186
Due to affiliates 125,166 156,735
Total liabilities 143,021 188,921
Shareholders' equity:
Shareholders' equity (235.3775 shares
issued and outstanding) 15,079,660 15,312,360
Managing shareholder's
accumulated deficit (50,955) (48,606)
Total shareholders' equity 15,028,705 15,263,754
Total liabilities and
shareholders' equity $ 15,171,726 $ 15,452,675
<FN>
See accompanying note to financial statements.
</TABLE>
<PAGE>
<TABLE>
RIDGEWOOD ELECTRIC POWER TRUST II
STATEMENTS OF OPERATIONS (Unaudited)
<CAPTION>
Three months ended
March 31, March 31,
1998 1997
<S> <C> <C>
Revenue:
Income from power generation projects $236,154 $ 529,269
Interest income 55,422 1,996
Total revenue 291,576 531,265
Expenses:
Project due diligence costs --- 2,671
Management fee 95,721 ---
Accounting and legal fees 25,656 9,097
Writedown of electric power equipment --- 281,018
Miscellaneous 12,680 4,205
Total expenses 134,057 296,991
Net income $157,519 $234,274
<FN>
See accompanying note to financial statements
</TABLE>
<PAGE>
<TABLE>
RIDGEWOOD ELECTRIC POWER TRUST II
STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY (Unaudited)
<CAPTION>
Managing
Shareholders Shareholder Total
<S> <C> <C> <C>
Shareholders' equity,
December 31, 1997 $15,312,360 $(48,606) $15,263,754
Cash distributions (388,643) (3,925) (392,568)
Net income for the period 155,943 1,576 157,519
Shareholders' equity,
March 31, 1998 $15,079,660 $(50,955) $15,028,705
<FN>
See accompanying note to financial statements
</TABLE>
<PAGE>
<TABLE>
RIDGEWOOD ELECTRIC POWER TRUST II
STATEMENTS OF CASH FLOWS (Unaudited)
Three months ended
March 31, March 31,
1998 1997
<S> <C> <C>
Cash flows from operating
activities:
Net income $157,519 $234,274
Adjustments to reconcile net
income to cash flows from
operating activities:
Writedown of electric power
equipment --- 281,018
Proceeds from note receivable 92,007 ---
Changes in assets and liabilities:
Increase in other assets (65) (3,379)
Decrease in accounts payable
and accrued expenses (14,331) (74,382)
Increase in due to
affiliates, net 31,674 238,796
Total adjustments 109,285 442,053
Net cash provided by operating
activities 266,804 676,327
Cash flows from financing
activities:
Cash distributions to
shareholders (392,568) (497,880)
Net cash used in
financing activities (392,568) (497,880)
Net (decrease) increase in
cash and cash equivalents (125,764) 178,447
Cash and cash equivalents
beginning of year 175,818 ---
Cash and cash equivalents
end of period $ 50,054 $ 178,447
<FN>
See accompanying note to financial statements
</TABLE>
<PAGE>
Ridgewood Electric Power Trust I
Note to Financial Statements
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 representation of the results for the
interim periods. Additional footnote disclosure concerning accounting
polices and other matters are disclosed in Ridgewood Electric Power Trust
II's financial statements included in the 1997 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.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q, like some other statements made by the
Trust from time to time, has forward-looking statements. These statements
discuss business trends and other matters relating to the Trust's future
results and the business climate. In order to make these statements, the
Trust 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 Trust in the future
may be materially different from the Trust's forward-looking statements
here.
The Trust 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 Trust's other filings with the
Securities and Exchange Commission 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.
By making these statements now, the Trust 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.
Dollar amounts in this discussion are generally rounded to the nearest
$1,000.
Introduction
The Trust carries its investment in the Projects it owns at fair value and
does not consolidate its financial statements with the financial statements
of the Projects. Revenue is recorded by the Trust as cash distributions
are received from the Projects. Trust revenues may fluctuate from period
to period depending on the operating cash flow generated by the Projects
and the amount of cash retained to fund capital expenditures.
Results of Operations
Quarter ended March 31, 1998 compared to quarter ended March 31, 1997
As summarized below, total revenue decreased 45.0% to $292,000 in the first
quarter of 1998 compared to $531,000 in the first quarter of 1997,
primarily due to the absence of revenues related to the Columbia project
and a project development limited partnership:
Project 1998 1997
Monterey $ 147,000 $ 136,000
Berkshire 88,000 96,000
Columbia --- 165,000
San Diego --- 50,000
Sunkist 1,000 9,000
Project development --- 73,000
Interest income 56,000 2,000
Total $ 292,000 $ 531,000
The Monterey, Berkshire and Sunkist Projects had relatively unchanged
operating results in the first quarter of 1998. The Trust received $50,000
of distributions from the San Diego project in the first quarter of 1997
prior to its sale. In the first quarter of 1998, the Trust recorded
$50,000 of interest income from the note that it received from the sale of
the San Diego project. The Columbia Project did not make a cash
distribution in the first quarter of 1998 because its profit margin was
negatively impacted by increased competition from other waste management
companies operating in the region. In addition, the Trust received a $73,000
distribution in the first quarter of 1997 from a project development limited
partnership for which the Trust had previously written off its investment.
Interest income increased to $55,000 in 1998 compared to $2,000 in 1997 due
to interest income earned on the note received from the sale of the San
Diego project.
Total expenses decreased $163,000 (45.1%) to $134,000 in the first quarter
of 1998 compared to $297,000 in the same period in 1997 primarily due to
the absence of a $281,000 write-off of certain electric power equipment
recorded in 1997. This reduction was partially offset by $96,000 of
management fees charged in the first quarter of 1998 that were not charged
in the corresponding period in 1997. All other 1998 Trust expenses were
comparable to those of 1997.
Liquidity and Capital Resources
In 1997, the Trust and Fleet Bank, N.A. (the "Bank") entered into a
revolving line of credit agreement, whereby the Bank provides a three year
committed line of credit facility of $750,000. Outstanding borrowings bear
interest at the Bank's prime rate or, at the Trust's choice, at LIBOR plus
2.5%. The credit agreement requires the Trust to maintain a ratio of total
debt to tangible net worth of no more than 1 to 1 and a minimum debt
service coverage ratio of 2 to 1. The credit facility was obtained in
order to allow the Trust to operate using a minimum amount of cash,
maximize the amount invested in Projects and maximize cash distributions to
shareholders. There were no borrowing under line of credit in 1998.
Obligations of the Trust are generally limited to payment of the 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 Trust's investments. The Trust's
policy is to distribute as much cash as is prudent to shareholders.
Accordingly, the Trust has not found it necessary to retain a significant
amount of working capital. The amount of working capital retained is
further reduced by the availability of the line of credit facility.
The Trust anticipates that its cash flow during 1998 and line of credit
facility will be adequate to fund its obligations.
<PAGE>
PART II - OTHER INFORMATION
Item #1 Legal Proceedings
On February 28, 1997 Michael Cutbirth, an individual, sued the Managing
Shareholder in the Superior Court of California, Kern County, claiming
unspecified damages (which may include a claim for an equity interest)
for breach of an alleged confidentiality agreement relating to the
acquisition of the Monterey Project. The Managing Shareholder has
successfully removed the lawsuit to the United States District Court for
the Eastern District of California. Discovery has been completed and
motions for summary judgment are pending. The Managing Shareholder
believes that it has ample defenses to Mr. Cutbirth's claims and that it
will defend the action vigorously.
Item #6 Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 27. Financial Data Schedule
RIDGEWOOD ELECTRIC POWER TRUST II
SIGNATURES
Pursuant to the requirement 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.
RIDGEWOOD ELECTRIC POWER TRUST II Registrant
May 14, 1998 By /s/ Martin V. Quinn
Date Martin V. Quinn
Senior Vice President and
Chief Financial Officer
(signing on behalf of the
Registrant and as principal
financial officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from the Registrant's unaudited interim financial
statements for the nine months ended March 31, 1998 and is
qualified in its entirety by reference to those financial
statements.
</LEGEND>
<CIK> 0000895993
<NAME> RIDGEWOOD ELECTRIC POWER TRUST II
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 50,054
<SECURITIES> 15,038,301<F1>
<RECEIVABLES> 80,870
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 133,425
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,171,726
<CURRENT-LIABILITIES> 143,021
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 15,028,705<F2>
<TOTAL-LIABILITY-AND-EQUITY> 15,171,726
<SALES> 0
<TOTAL-REVENUES> 291,576
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 134,057
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 157,519
<INCOME-TAX> 0
<INCOME-CONTINUING> 157,519
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 157,519
<EPS-PRIMARY> 669
<EPS-DILUTED> 669
<FN>
<F1>Investments in power project partnerships and note receivable from
sale of San Diego Project.
<F2>Represents Investor Shares of beneficial interest in
Trust with capital accounts of $15,079,660 less managing
shareholder's accumulated deficit of $50,955.
</FN>
</TABLE>
