FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 2000
Commission file Number 0-21304
RIDGEWOOD ELECTRIC POWER TRUST II
(Exact name of registrant as specified in its charter.)
Delaware 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)
(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
Ridgewood Electric Power Trust II
Financial Statements
March 31, 2000
<PAGE>
Ridgewood Electric Power Trust II
Balance Sheet
- --------------------------------------------------------------------------------
March 31, December 31,
2000 1999
(unaudited)
------------ ------------
Assets:
Investments in power generation projects ...... $ 10,392,856 $ 10,274,790
Cash and cash equivalents ..................... 202,912 537,541
Notes receivable from sale of investment ...... 1,621,028 1,729,181
Other assets .................................. 1,724 3,306
------------ ------------
Total assets ............................. $ 12,218,520 $ 12,544,818
------------ ------------
Liabilities and Shareholders' Equity:
Accounts payable and accrued expenses ......... $ 21,642 $ 49,923
Borrowings under line of credit agreements .... -- 400,000
Due to affiliates ............................. 131,730 153,191
------------ ------------
Total liabilities ........................ 153,372 603,114
Commitments and contingencies ................. -- --
Shareholders' equity:
Shareholders' equity (235.3775 shares issued
and outstanding) ............................. 12,145,740 12,023,530
Managing shareholder's accumulated deficit .... (80,592) (81,826)
------------ ------------
Total shareholders' equity ................ 12,065,148 11,941,704
------------ ------------
Total liabilities and shareholders' equity $ 12,218,520 $ 12,544,818
------------ ------------
See accompanying note to financial statements.
<PAGE>
Ridgewood Electric Power Trust II
Statement of Operations (unaudited)
- --------------------------------------------------------------------------------
Three months ended
March 31, March 31,
2000 1999
--------- ---------
Revenue:
Income from power generation projects $110,523 $137,247
Interest income ..................... 34,962 42,855
--------- ---------
Total revenue .................. 145,485 180,102
--------- ---------
Expenses:
Management fee ...................... -- 55,607
Accounting and legal fees ........... 8,079 14,203
Miscellaneous ....................... 13,962 20,275
--------- ---------
Total expenses ................. 22,041 90,085
--------- ---------
Net income ...................... $123,444 $ 90,017
--------- ---------
See accompanying note to financial statements.
<PAGE>
Ridgewood Electric Power Trust II
Statement of Changes in Shareholders' Equity (unaudited)
- --------------------------------------------------------------------------------
Managing
Shareholders Shareholder Total
------------- ----------- -----------
Shareholders' equity,
December 31, 1999 ..... $12,023,530 $ (81,826) $11,941,704
Net income for the period 122,210 1,234 123,444
------------- ----------- -----------
Shareholders' equity,
March 31, 2000 ........ $12,145,740 $ (80,592) $12,065,148
------------- ----------- -----------
See accompanying note to financial statements
<PAGE>
Ridgewood Electric Power Trust II
Statement of cash flows (unaudited)
- --------------------------------------------------------------------------------
Three Months Ended
March 31, March 31,
2000 1999
--------- ---------
Cash flows from operating activities:
Net income .......................................... $ 123,444 $ 90,017
--------- ---------
Adjustments to reconcile net income to net
cash flows from operating activities
Investment in power generation projects ............ (118,066) (55,182)
Proceeds from note receivable ...................... 108,153 99,864
Changes in assets and liabilities:
Decrease in other assets .......................... 1,582 758
(Decrease) increase in accounts payable
and accrued expenses ............................. (28,281) 37,901
Decrease in due to affiliates ..................... (21,461) (38,051)
--------- ---------
Total adjustments ................................. (58,073) 45,290
--------- ---------
Net cash provided by operating activities ......... 65,371 135,307
--------- ---------
Cash flows from financing activities:
Cash distributions to shareholders .................. -- (285,307)
Repayment of borrowings under line of credit facility (400,000) --
Borrowing under line of credit facility ............. -- 150,000
--------- ---------
Net cash used in financing activities ............. (400,000) (135,307)
--------- ---------
Net decrease in cash and cash equivalents ............ (334,629) --
Cash and cash equivalents, beginning of period ....... 537,541 --
--------- ---------
Cash and cash equivalents, end of period ............. $ 202,912 $ --
--------- ---------
See accompanying note to financial statements.
<PAGE>
Ridgewood Electric Power Trust II
Note 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 manners
are disclosed in Ridgewood Electric Power Trust II's 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.
<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 Trust carries its investment in Projects 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, 2000 compared to quarter ended March 31, 1999
Total revenue decreased 38.4% to $145,000 in the first quarter of 2000 compared
to $180,000 in the first quarter of 1999, primarily because of lower
distribution income from the Monterey Project reflecting increased legal costs
associated with the dispute with Pacific Gas and Electric Company. In addition,
interest income was $8,000 lower in the first quarter of 2000 compared to the
first quarter of 1999 because interest represents a declining portion of the
constant monthly payments on the Trust's note receivable.
Total expenses decreased $68,000 (75.5%) to $22,000 in the first quarter of 2000
compared to $90,000 in the same period in 1999, primarily due to the waiver of
the management fee which was $56,000 in the first quarter of 1999 and would have
been $44,781 for the first quarter of 2000. In addition, accounting and legal
fees declined by $6,000 and miscellaneous expenses also declined by $6,000.
Quarter ended March 31, 1999 compared to quarter ended March 31, 1998
As summarized below, total revenue decreased 38.4% to $180,000 in the first
quarter of 1999 compared to $292,000 in the first quarter of 1998, primarily
because the Berkshire Project ceased distributions to the Trust in the third
quarter of 1998 and because interest income declined.
Project 1999 1998
- -------- ---- ----
Monterey ...... $137,000 $147,000
Berkshire ..... -- 88,000
Pump Services . -- 1,000
Interest income 43,000 56,000
-------- --------
Total ......... $180,000 $292,000
-------- --------
The Monterey project had slightly lower operating results in the first quarter
of 1999 reflecting higher maintenance and repair costs. Interest income declined
primarily because interest represents a smaller portion of the constant monthly
payment from the note received from the sale of the San Diego project. The lower
interest income also reflects lower Trust cash balances in 1999.
The decline in revenue at Berkshire reflects the stoppage of distributions from
the Project in the third quarter of 1998. Please refer to the Trust's Annual
Report on Form 10-K for 1999 for an explanation of the situation at the Project.
Total expenses decreased $44,000 (32.8%) to $90,000 in the first quarter of 1999
compared to $134,000 in the same period in 1998, primarily due a decrease in the
management fee. The decline in the management fee reflects both the lower net
assets of the Trust resulting from the write down of the carrying value of the
Berkshire project and a scheduled reduction in annual management fee percentage
from 2.5% to 1.5% of net assets effective February 1, 1999.
All other 1999 Trust expenses were comparable to those of 1998.
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. Borrowings under the credit facility of
$400,000 at December 31, 1999 were repaid in the quarter ended March 31, 2000.
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 anticipates that its cash flow from operations during 2000 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
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 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 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 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 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 Trust's most recent Annual Report on Form 10-K.
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.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Please refer to Item 3 of the Trust's Annual Report on Form 10-K for the year
1999 for a description of the existing litigation between the Trust's subsidiary
that owns the Monterey Project and Pacific Gas and Electric Company ("PG&E").
The Trust and PG&E have agreed to dismiss the current litigation in the Superior
Court of California for San Francisco, without prejudice. This is being done
with the expectation that the dispute will be brought to the Federal Energy
Regulatory Commission ("FERC"), which has jurisdiction to determine whether the
Monterey Project is and has been a qualifying facility. The Trust expects FERC
proceedings to begin late in the second quarter of 2000. The Trust and PG&E will
be entitled to complete a limited amount of discovery after the dismissal for
use in the FERC proceedings or any further actions.
The Trust anticipates that administrative proceedings before FERC will be
materially less expensive than the costs of litigation in California, although
there can be no assurance that this will in fact be the case. The Trust has
resumed payment of quarterly distributions because it believes that it will be
receiving cash flow from the Monterey Project as a result of the lower legal
costs. If the Trust is incorrect, it may have to reduce or suspend distributions
again.
<PAGE>
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 15, 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)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Registrant's unaudited interim financial statements for the nine month period
ended March 31, 2000 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-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 202,912
<SECURITIES> 10,392,856<F1>
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 204,636
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,218,520
<CURRENT-LIABILITIES> 153,372<F2>
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 12,065,148<F3>
<TOTAL-LIABILITY-AND-EQUITY> 12,218,520
<SALES> 0
<TOTAL-REVENUES> 145,485
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 22,041
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 22,041
<INCOME-TAX> 0
<INCOME-CONTINUING> 123,444
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 123,444
<EPS-BASIC> 524
<EPS-DILUTED> 524
<FN>
<F1>Investments in power project partnerships.
<F2>Includes $131,730 due to affiliates.
<F3>Represents Investor Shares of beneficial interest
in Trust with capital accounts of $12,145,740 less
managing shareholder's accumulated deficit of $80,592.
</FN>
</TABLE>
