UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
Commission File Number 0-25430
RIDGEWOOD ELECTRIC POWER TRUST IV
(Exact name of registrant as specified in its charter.)
Delaware, U.S.A. 22-3324608
(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
<TABLE>
RIDGEWOOD ELECTRIC POWER TRUST IV
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
June 30, December 31,
1998 1997
(unaudited)
<S> <C> <C>
Assets
Cash and cash
equivalents $ 7,096,878 $11,086,281
Accounts receivable,
trade 1,113,293 657,217
Due from affiliates 85,950 164,536
Other assets 438,648 383,810
Total current assets 8,734,769 12,291,844
Investments:
Investment in
Maine Hydro Projects 7,382,366 6,694,826
Investment in and
loans to Maine
Biomass projects 6,556,829 6,617,862
Electric power
equipment held
for resale 455,182 455,182
Deferred due
diligence costs 279,254 27,159
Plant and
equipment: 15,974,250 14,949,735
Less-accumulated
depreciation (1,389,840) (1,068,812)
Electric power
sales contract 8,338,040 8,338,040
Less-accumulated
amortization (1,221,750) (946,212)
Debt reserve fund 605,199 605,199
Total assets $45,714,299 $47,964,823
Liabilities and
Shareholders'
Equity
Current maturities
of long-term debt $ 621,192 $ 592,193
Accounts payable
and accrued
expenses 339,162 384,533
Due to affiliates 291,810 658,253
Total current
liabilities 1,252,164 1,634,979
Long-term debt,
less current
portion 4,530,049 4,848,068
Minority interest in
the Providence
Project 6,366,105 6,458,416
Commitments and
contingencies
Shareholders' equity
(476.8 shares
issued
and outstanding) 33,635,388 35,078,194
Managing shareholders'
accumulated deficit (69,407) (54,833)
Total
Shareholders' equity 33,565,981 35,023,361
Total liabilities
and shareholders'
equity $45,714,299 $47,964,823
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
RIDGEWOOD ELECTRIC POWER TRUST IV
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS AND QUARTERS
ENDED JUNE 30, 1998 AND JUNE 30, 1997
(Unaudited)
<CAPTION>
Six Months Quarter ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1998
<S> <C> <C> <C> <C>
Net sales $ 3,431,187 $ 3,245,273 $ 1,727,715 $ 1,563,094
Sublease income 184,500 184,500 92,250 92,250
Total revenues 3,615,687 3,429,773 1,819,965 1,655,344
Cost of sales 2,410,903 2,368,847 1,286,799 1,180,612
Gross profit 1,204,784 1,060,926 533,166 474,732
General and administrative
expenses 341,795 236,784 154,798 133,488
Management fee 560,142 578,644 280,071 285,644
Project due diligence costs 19,169 15,340 19,169 9,864
Other expenses 10,022 16,358 2,928 8,501
Total other
operating expenses 931,128 847,126 456,966 437,517
Income from operations 273,656 213,800 76,200 37,215
Other income (expense):
Interest income 276,254 550,925 112,857 301,455
Interest expense (255,406) (301,194) (125,976) (133,744)
Income from
Maine Hydro Projects 687,540 773,699 361,010 546,502
Loss from Maine Biomass
Projects (311,033) --- (43,176) ---
Net other income 397,355 1,023,430 304,715 714,213
Income before
minority interest 671,011 1,237,230 380,915 751,428
Minority interest in
the earnings of the
Providence Project (250,071) (228,385) (109,189) (98,803)
Net income $ 420,940 $ 1,008,845 $ 271,726 $ 652,625
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
RIDGEWOOD ELECTRIC POWER TRUST IV
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD ENDED JUNE 30, 1998
(unaudited)
<CAPTION>
Managing
Shareholders Shareholder Total
<S> <C> <C> <C>
Shareholders' equity
December 31, 1997 $35,078,194 $ (54,833) $35,023,361
Cash distributions (1,859,537) (18,783) (1,878,320)
Net income
for the period 416,731 4,209 420,940
Shareholders' equity
June 30, 1998 $33,635,388 $ (69,407) $33,565,981
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
RIDGEWOOD ELECTRIC POWER TRUST IV
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
JUNE 30, 1997
(Unaudited)
<CAPTION>
Six Months Ended
June 30, 1998 June 30, 1997
<S> <C> <C>
Cash flows from
operating activities:
Net income $ 420,940 $ 1,008,845
Adjustments to reconcile
net income to net cash
flows from operating
activities:
Depreciation and
amortization 596,566 515,724
Amortization of
prepaid and accrued
royalties- net --- 144,535
Minority interest
in earnings of the
Providence Project 250,071 228,385
Income from
unconsolidated Maine
Hydro projects (687,540) (773,699)
Loss from unconsolidated
Maine BioMass projects 311,033 ---
Changes in assets
and liabilities:
(Increase) decrease
in accounts receiv-
able, trade (456,076) 21,730
(Increase) decrease
in other assets (54,838) 396,677
Decrease in accounts
Payable and accrued
Expenses (45,371) (209,294)
Decrease in due to
affiliates net (287,857) (45,020)
Total adjustments (374,012) 279,038
Net cash provided
by operating
activities 46,928 1,287,883
Cash flows from investing
activities:
Investment in Maine Hydro
Projects --- (58,374)
Loans to Maine
BioMass Projects (250,000) ---
Capital expenditures (1,024,515) (1,268,590)
Deferred due diligence costs (252,095) (153,553)
Net cash used in
investment activities (1,526,610) (1,480,517)
Cash flows from financing
activities:
Cash distributions to
Shareholders (1,878,320) (1,442,146)
Payments to reduce
long-term debt (289,019) (266,232)
Distribution to minority
interest (342,382) (413,065)
Net cash used in
financing activities (2,509,721) (2,121,443)
Net decrease in cash
and cash equivalents (3,989,403) (2,314,077)
Cash and cash equivalents
beginning of period 11,086,281 22,685,829
Cash and cash equivalents
end of period $ 7,096,878 $ 20,371,752
Ridgewood Electric Power Trust IV
Notes to the Consolidated 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 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 IV's financial statements included in
the 1997 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. Loans to Biomass Project
In the first quarter of 1998, the Trust loaned $250,000 to
Indeck Maine Energy, L.L.C. ("Maine Biomass Projects"). The
loan is in the form of two demand notes that bear interest
at 5% per annum. Ridgewood Electric Power Trust V, which
owns an identical preferred membership interest in the Maine
Biomass Projects, also made identical loans to the Maine
Biomass Projects. The other Maine Biomass Project members
also loaned $500,000 to the Maine Biomass Projects with the
same terms.
3. Legal Proceedings
On August 6, 1998, the Trust was notified by the Region I
office of the U.S. Environmental Protection Agency ("EPA")
that the EPA is considering an administrative proceeding
against a subsidiary of the Trust to recover civil penalties
of up to $190,000 for alleged violations of operational
recordkeeping and training requirements at the Providence
Project. The Trust is entering into discussions with the
EPA as to the merits of the allegations and sanctions,
if any, and expects that it will resolve the matter during
1998. The Trust does not anticipate a material adverse
impact from the proceeding and does not anticipate the need
to make further material capital expenditures to remedy the
items identified by the EPA.
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 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.
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 consolidated financial statements include only the
accounts of the Trust and of the subsidiaries owning the
Providence and Pump Services Projects. The Trust uses the
equity method of accounting for its investments in the Maine
Hydro projects and the Maine Biomass Projects.
Results of Operations
In the first six months of 1998, the Trust had total
revenues of $3,616,000, which were slightly higher than the
total revenue of $3,430,000 in the same period in 1997.
Revenues in the second quarter of 1998 of $1,820,000 were
also slightly higher than the 1997 second quarter revenues
of $1,655,000. Cost of sales of $2,410,000 in the first six
months of 1998 were also slightly higher than the cost of
sales of $2,369,000 in the first six months of 1997. Cost
of sales in the second quarter of 1998 of $1,287,000 were
also slightly higher than the 1997 second quarter cost of
sales of $1,181,000. The increases in both revenues and
costs of sales in 1998 are attributable to the higher
production levels achieved at the Providence Project in
1998.
General and administrative expenses in the second quarter of
1998 of $155,000 were comparable to $133,000 for the same
period in 1997. General and administrative expenses for the
six months ended June 30, 1998 were $105,000 higher than the
amount for the same period in 1997 because in 1997 a portion
of the general and administrative costs paid to Ridgewood
Power Management Corporation were capitalized as part of the
costs of adding a ninth engine to the Providence project.
Interest income declined from $301,000 in the second quarter
of 1997 to $113,000 in the second quarter of 1998 and from
$551,000 in the first six months of 1997 to $276,000 in the
first six months of 1997 due to lower average cash balances.
Interest expense was slightly lower in 1998 due to lower
borrowings outstanding at the Providence project.
The Trust's equity in income from the Maine Hydro Projects
decreased from $774,000 in the first six months of 1997 to
$688,000 in the same period in 1998 and from $301,000 in the
second quarter of 1997 to $113,000 in the same period in
1998. Revenues from those projects were lower because of
precipitation fluctuations affecting the flow of water. The
Trust recorded an loss of $311,000 in the first six months
of 1998 and a loss of $43,000 in the second quarter of 1998
with respect to its equity in Maine Biomass Projects. The
projects are not operating (except for required testing) but
in April 1998 they began selling "installed capability" (a
measure of their capability to provide electricity) under
contract to participants in the New England Power Pool.
Revenues from those sales caused the loss attributable to
the Trust from the Maine Biomass Projects to be
significantly reduced in the second quarter of 1998.
Liquidity and Capital Resources
During the first six months of 1998, the Trust's operating
activities generated $47,000 of cash compared to $1,288,000
during the same period in 1997, as the result of the factors
discussed above. Cash distributions to shareholders
increased to $1,878,000 in the first six months of 1998 from
$1,442,000 in the same period in 1997 due to a increase in
the monthly cash distribution rate made in 1997.
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
$1,150,000. 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 have been no borrowings under the
line of credit in 1998.
Other than investments of available cash in power generation
Projects, obligations of the Trust 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 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.
<PAGE>
PART II - OTHER INFORMATION
Item #6 Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 27. Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly cause this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
RIDGEWOOD ELECTRIC POWER TRUST IV
Registrant
Date: August 14, 1998 By /s/ Martin V. Quinn
Martin V. Quinn
Senior Vice President and
Chief Financial Officer
(signing on behalf of the
Registrant and as
principal financial
officer)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from the Registrant's unaudited interim financial
statements for the six months ended June 30, 1998 and is
qualified in its entirety by reference to those financial
statements.
</LEGEND>
<CIK> 0000930364
<NAME> RIDGEWOOD ELECTRIC POWER TRUST IV
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 7,096,878
<SECURITIES> 13,939,195<F1>
<RECEIVABLES> 1,199,243<F2>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,734,769
<PP&E> 15,974,250
<DEPRECIATION> (1,389,840)
<TOTAL-ASSETS> 45,714,229
<CURRENT-LIABILITIES> 1,252,164
<BONDS> 4,530,049
<COMMON> 0
0
0
<OTHER-SE> 33,565,981
<TOTAL-LIABILITY-AND-EQUITY> 45,714,299
<SALES> 0
<TOTAL-REVENUES> 3,615,687
<CGS> 2,410,903
<TOTAL-COSTS> 2,410,903
<OTHER-EXPENSES> 931,128
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 255,406
<INCOME-PRETAX> 420,940<F3>
<INCOME-TAX> 0
<INCOME-CONTINUING> 420,940
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 420,940
<EPS-PRIMARY> 883
<EPS-DILUTED> 883
<FN>
<F1>Investment in hydroelectric project and Biomass project
accounted for on equity method in financial statements.
<F2>Includes $85,950 due from affiliates.
<F3>After deduction of minority interest in Providence
Project earnings of $250,071.
</FN>
</TABLE>
