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 June 30, 2000
Commission file Number 0-23432
RIDGEWOOD ELECTRIC POWER TRUST III
(Exact name of registrant as specified in its charter.)
Delaware 22-3264565
(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 [ ]
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PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
Ridgewood Electric Power Trust III
Financial Statements
June 30, 2000
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Ridgewood Electric Power Trust III
Balance Sheet
--------------------------------------------------------------------------------
June 30, December 31,
2000 1999
------------ ------------
(unaudited)
Assets:
Investments in power generation projects ... $ 23,603,729 $ 23,202,879
Cash and cash equivalents .................. -- 603,922
Due from affiliates ........................ 5,009 80
Other assets ............................... 112,154 7,416
------------ ------------
Total assets ..................... $ 23,720,892 $ 23,814,297
------------ ------------
Liabilities and Shareholders' Equity:
Accounts payable and accrued expenses ...... $ 67,398 $ 51,676
Borrowings under line of credit facility ... 725,000 --
Due to affiliates .......................... 236,069 11,438
------------ ------------
Total liabilities ........................ 1,028,467 63,114
------------ ------------
Commitments and contingencies .............. -- --
Shareholders' equity:
Shareholders' equity (391.8444 shares
issued and outstanding) ................... 22,796,535 23,844,706
Managing shareholder's accumulated deficit . (104,110) (93,523)
------------ ------------
Total shareholders' equity ............... 22,692,425 23,751,183
------------ ------------
Total liabilities and shareholders' equity $ 23,720,892 $ 23,814,297
------------ ------------
See accompanying notes to financial statements.
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Ridgewood Electric Power Trust III
Statement of Operations (unaudited)
--------------------------------------------------------------------------------
Six Months Ended Three Months Ended
----------------------- ------------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
Revenue:
Income from power
generation projects $ 558,957 $ 668,407 $ 195,052 $ 410,372
Interest income ........ 17,138 34,633 14,509 8,874
Income from arbitration
award, net ............ -- 1,488,805 -- 1,488,805
---------- ---------- ---------- ----------
Total revenue .... 576,095 2,191,845 209,561 1,908,051
---------- ---------- ---------- ----------
Expenses:
Writedown of investments
in power generation
projects .............. 77,500 -- 77,500 --
Management fee ......... 296,890 297,288 148,246 148,644
Accounting and legal
fees .................. 74,023 21,973 25,832 9,080
Miscellaneous .......... 25,108 52,907 14,989 15,875
---------- ---------- ---------- ----------
Total expenses ... 473,521 372,168 266,567 173,599
---------- ---------- ---------- ----------
Net income (loss) ...... $ 102,574 $1,819,677 $ (57,006) $1,734,452
---------- ---------- ---------- ----------
See accompanying notes to financial statements.
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Ridgewood Electric Power Trust III
Statement of Changes in Shareholders' Equity (unaudited)
--------------------------------------------------------------------------------
Managing
Shareholders Shareholder Total
------------ ------------ ------------
Shareholders' equity,
December 31, 1999 ...... $ 23,844,706 $ (93,523) $ 23,751,183
Cash distributions ...... (1,149,719) (11,613) (1,161,332)
Net income for the period 101,548 1,026 102,574
------------ ------------ ------------
Shareholders' equity,
June 30, 2000 .......... $ 22,796,535 $ (104,110) $ 22,692,425
------------ ------------ ------------
See accompanying notes to financial statements.
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Ridgewood Electric Power Trust III
Statement of Cash Flows (unaudited)
--------------------------------------------------------------------------------
Six Months Ended
--------------------------
June 30, 2000 June 30, 1999
----------- -----------
Cash flows from operating activities:
Net income ................................. $ 102,574 $ 1,819,677
----------- -----------
Adjustment to reconcile net income
to cash flows from operating activities:
Purchase of investments in power
generation projects, net ................. (478,350) (1,694,324)
Writedown on investments in power
generation projects ...................... 77,500 --
Changes in assets and liabilities:
Increase in due from affiliates .......... (4,929) (121,960)
(Increase) decrease in other assets ...... (104,738) 89,731
Increase (decrease) in accounts
payable and accrued expenses ............ 15,722 (156,881)
Increase (decrease) in due to affiliates . 224,631 (91,635)
----------- -----------
Total adjustments ......................... (270,164) (1,975,069)
----------- -----------
Net cash used in operating activities ..... (167,590) (155,392)
----------- -----------
Cash flows from financing activities:
Borrowing under line of credit facility .... 725,000 --
Cash distributions to shareholders ......... (1,161,332) (1,189,808)
----------- -----------
Net cash used in financing activities ..... (436,332) (1,189,808)
----------- -----------
Net decrease in cash and cash equivalents . (603,922) (1,345,200)
Cash and cash equivalents, beginning of year 603,922 2,414,916
----------- -----------
Cash and cash equivalents, end of period ... $ -- $ 1,069,716
----------- -----------
See accompanying notes to financial statements.
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Ridgewood Electric Power Trust III
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 pair presentation of the results for the interim periods.
Additional footnote disclosure concerning accounting policies and other matters
are disclosed in Ridgewood Electric Power Trust III's financial statements
included in the 1999 Annual Report on Form 10-K, which should be read in
conjunction with these financial statements. Certain prior year amounts have
been reclassified to conform to the current year presentation.
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 AES-NJ Project
In the second quarter of 2000, the Trust determined that it would be unlikely to
recover its investment in the Massapequa Project, one of the cogeneration
projects owned by AES-NJ. The Massapequa Project was shut down earlier in 2000
due to the financial difficulties of the host company. As a result, the Trust
recorded a writedown of $77,500 in the second quarter of 2000 to reduce the
estimated fair value of the investment in the project to zero.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of OperationsDollar amounts in this discussion are rounded to the nearest
$1,000.IntroductionThe 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 by the Projects to fund capital expenditures.
Results of Operations
As summarized below, total revenue decreased 73.7% to $576,000 in the first six
months of 2000 compared to $2,192,000 in the same period in 1999. Revenue also
decreased to $210,000 in the second quarter of 1999 compared to $1,908,000 in
the second quarter of 1999. Excluding the arbitration award income discussed
below, revenues decreased by 18.1% and 49.9% for the first six months and second
quarter, respectively of 2000 compared to the prior year.
Six months ended June 30, Three months ended June 30,
----------------------- -------------------------
Project 2000 1999 2000 1999
---- ---- ---- ----
On-site Cogeneration:
Massachusetts .......... $ -- $ 371,000 $ -- $ 262,000
Others ................. 115,000 -- -- --
---------- ---------- ---------- ----------
Subtotal ........... 115,000 371,000 -- 262,000
Providence ............. 240,000 221,000 124,000 93,000
Hawthorne .............. 187,000 -- 71,000 --
Byron .................. -- 37,000 -- 37,000
San Joaquin ............ -- 3,000 -- 3,000
Ridgewood/AES .......... 17,000 36,000 -- 15,000
Arbitration award income -- 1,489,000 -- 1,489,000
Interest income ........ 17,000 35,000 15,000 9,000
---------- ---------- ---------- ----------
Total .................. $ 576,000 $2,192,000 $ 210,000 $1,908,000
---------- ---------- ---------- ----------
The Trust recorded revenues from the Massachusetts on-site cogeneration project
of $371,000 in the first six months of 1999. The Trust recorded no revenues from
the project in 2000 because the facility is shutdown (see the 1999 Annual Report
on Form 10-K for information on the dispute with the host company).
Distributions in the first quarter of 2000 from the other on-site cogeneration
projects were primarily generated from the Elmsford facility which had lower
maintenance costs and higher revenue in 2000 compared to the prior year.
Distributions from the Providence facility were slightly higher in 2000 compared
to the prior year due to a slight decrease in engine maintenance costs. The
decline in distributions from the Byron, San Joaquin and Ridgewood/AES on-site
cogeneration projects was due to higher fuel costs in 2000.
The Trust recorded distributions of $187,000 and $71,000 in the first six months
and second quarter of 2000, respectively, from its investment in Hawthorne
engines which were acquired in the second half of 1999.
Income of $1,489,000 from the arbitration proceedings against EUA was recorded
in the second quarter of 1999 when payment was received.
The management fee of $148,000 and $297,000 in the second quarter and first six
months of 2000, respectively, was unchanged from the same periods in 1999. As
discussed in Note 2 to the June 30, 2000 financial statements, the Trust
recorded a $77,5000 writedown of its investment in the Massapequa on-site
cogeneration project in the second quarter of 2000.
Liquidity and Capital Resources
During 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. The trust borrowed $350,000
under this line of credit in the first quarter of 2000 and an additional
$375,000 in the second quarter of 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, repayment of borrowings under the line of credit facility 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 material 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 from operations during 2000 and the
line of credit facility 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, contains 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.
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PART II - OTHER INFORMATION
None.
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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.
RIDGEWOOD ELECTRIC POWER TRUST III
Registrant
August 14, 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)
