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, 1999
Commission file Number 0-25430
RIDGEWOOD ELECTRIC POWER TRUST IV
(Exact name of registrant as specified in its charter.)
Delaware 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)
(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 IV
Consolidated Financial Statements
June 30, 1999
<PAGE>
Ridgewood Electric Power Trust IV
Consolidated Balance Sheet
- --------------------------------------------------------------------------------
June 30, December 31,
1999 1998
------------ ------------
(unaudited)
Assets:
Cash and cash equivalents .................. $ 1,099,309 $ 2,021,168
Accounts receivable, trade ................. 1,201,724 617,973
Due from affiliates ........................ 246,618 377,710
Other assets ............................... 49,553 57,975
------------ ------------
Total current assets ..................... 2,597,204 3,074,826
------------ ------------
Investments:
Maine Hydro Projects ....................... 6,471,950 6,217,289
Maine Biomass Projects ..................... 6,121,321 6,306,818
Santee River Rubber ........................ 4,382,242 4,501,357
Electric power equipment
held for resale ........................... 455,182 455,182
Plant and equipment ........................ 16,651,406 16,359,211
Accumulated depreciation ................... (2,535,002) (2,073,744)
------------ ------------
14,116,404 14,285,467
------------ ------------
Electric power sales contract .............. 8,338,040 8,338,040
Accumulated amortization ................... (1,780,013) (1,502,081)
------------ ------------
6,558,027 6,835,959
------------ ------------
Spare parts inventory ...................... 746,178 746,178
Debt reserve fund .......................... 650,107 637,108
------------ ------------
Total assets ............................. $ 42,098,615 $ 43,060,184
------------ ------------
Liabilities and Shareholders' Equity:
Liabilities:
Current maturities of long-term debt ....... $ 743,487 $ 651,613
Accounts payable and accrued expenses ...... 519,794 563,685
Due to affiliates .......................... 923,447 441,614
------------ ------------
Total current liabilities ................ 2,186,728 1,656,912
Long-term debt, less current portion ....... 3,786,560 4,196,455
Minority interest in the
Providence Project ........................ 5,997,263 6,202,894
Commitments and contingencies
Shareholders' equity:
Shareholders' equity (476.8 shares
issued and outstanding) ................... 30,231,856 31,098,950
Managing shareholder's accumulated deficit . (103,792) (95,027)
------------ ------------
Total shareholders' equity ............... 30,128,064 31,003,923
------------ ------------
Total liabilities and shareholders' equity $ 42,098,615 $ 43,060,184
------------ ------------
See accompanying notes to consolidated financial statements.
<PAGE>
Ridgewood Electric Power Trust IV
Consolidated Statement of Operations (unaudited)
- --------------------------------------------------------------------------------
Six Months Ended Three Months Ended
------------------------- -----------------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
Net sales .............. $ 3,486,909 $ 3,431,187 $ 1,785,510 $ 1,727,715
Sublease income ........ 184,500 184,500 92,250 92,250
----------- ----------- ----------- -----------
Total revenues ....... 3,671,409 3,615,687 1,877,760 1,819,965
Cost of sales .......... 3,086,051 2,410,903 1,564,062 1,286,799
----------- ----------- ---------- -----------
Gross profit ........... 585,358 1,204,784 313,698 533,166
General and
administrative
expenses .............. 351,449 341,795 168,818 154,798
Management fee ......... 233,634 560,142 116,817 280,071
Project due diligence
costs ................. -- 19,169 -- 19,169
Other expenses ......... 4,780 10,022 4,780 2,928
----------- ----------- ----------- -----------
Total other operating
expenses .............. 589,863 931,128 290,415 456,966
----------- ----------- ----------- -----------
Income (loss) from
operations ............ (4,505) 273,656 23,283 76,200
----------- ----------- ----------- -----------
Other income (expense):
Interest income ...... 45,576 276,254 22,004 112,857
Interest expense ..... (226,406) (255,406) (111,303) (125,976)
Income from Maine
Hydro Projects ...... 654,661 687,540 117,526 361,010
Income from Santee
River Rubber ........ 63,835 -- 71,267 --
Loss from Maine
Biomass Projects .... (410,497) (311,033) (242,094) (43,176)
----------- ----------- ----------- -----------
Net other income (loss) 127,169 397,355 (142,600) 304,715
----------- ----------- ----------- -----------
Income (loss) before
minority interest ..... 122,664 671,011 (119,317) 380,915
Minority interest
in the earnings of the
Providence Project .... (83,452) (250,071) (18,149) (109,189)
----------- ----------- ----------- -----------
Net income (loss) ...... $ 39,212 $ 420,940 $ (137,466) $ 271,726
----------- ----------- ----------- -----------
See accompanying notes to the consolidated financial statements.
<PAGE>
Ridgewood Electric Power Trust IV
Consolidated Statement of Changes in Shareholders' Equity (unaudited)
- --------------------------------------------------------------------------------
Managing
Shareholders Shareholder Total
------------ ------------ ------------
Shareholders' equity,
December 31, 1998 ...... $ 31,098,950 $ (95,027) $ 31,003,923
Cash distributions ...... (905,914) (9,157) (915,071)
Net income for the period 38,820 392 39,212
------------ ------------ ------------
Shareholders' equity,
June 30, 1999 .......... $ 30,231,856 $ (103,792) 30,128,064
------------ ------------ ------------
See accompanying notes to consolidated financial statements.
<PAGE>
Ridgewood Electric Power Trust IV
Consolidated Statement of Cash Flows (unaudited)
- --------------------------------------------------------------------------------
Six Months Ended
----------------------------
June 30, 1999 June 30, 1998
------------ ------------
Cash flows from operating activities:
Net income ..................................... $ 39,212 $ 420,940
------------ ------------
Adjustments to reconcile net income
to net cash flows from operating
activities:
Depreciation and amortization ................. 739,190 596,566
Minority interest in earnings of the
Providence Project ........................... 83,452 250,071
Income from unconsolidated Maine Hydro Projects (654,661) (687,540)
Loss from unconsolidated Maine Biomass Projects 410,497 311,033
Income from unconsolidated Santee River Rubber (63,835) --
Changes in assets and liabilities:
Increase in accounts receivable, trade ....... (583,751) (456,076)
Decrease in due from affiliates .............. 131,092 78,586
Decrease (increase) in other assets .......... 8,422 (54,838)
Decrease in accounts payable and accrued
expenses .................................... (43,891) (45,371)
Increase (decrease) in due to affiliates ..... 481,833 (366,443)
------------ ------------
Total adjustments ............................ 508,348 (374,012)
------------ ------------
Net cash provided by operating activities .... 547,560 46,928
------------ ------------
Cash flows from investing activities:
Loans to Maine Biomass Projects ............... (225,000) (250,000)
Distributions from Maine Hydro Projects ....... 400,000 --
Distributions from Santee River Rubber ........ 182,950 --
Capital expenditures .......................... (292,195) (1,024,515)
Deferred due diligence costs .................. -- (252,095)
------------ ------------
Net cash provided by (used in) investing
activities ................................... 65,755 (1,526,610)
------------ ------------
Cash flows from financing activities:
Cash distributions to shareholders ............ (915,071) (1,878,320)
Payments to reduce long-term debt ............. (318,021) (289,019)
Increase in debt reserve fund ................. (12,999) --
Distribution to minority interest ............. (289,083) (342,382)
------------ ------------
Net cash used in financing activities ......... (1,535,174) (2,509,721)
------------ ------------
Net decrease in cash and cash equivalents ...... (921,859) (3,989,403)
Cash and cash equivalents, beginning of year ... 2,021,168 11,086,281
------------ ------------
Cash and cash equivalents, end of period ....... 1,099,309 $ 7,096,878
------------ ------------
See accompanying notes to consolidated financial statements.
<PAGE>
Ridgewood Electric Power Trust IV
Notes to Consolidated 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 IV's financial statements
included in the 1998 Annual Report on Form 10-K, which should be read in
conjunction with these financial statements. The year-end balance sheet data was
derived from audited financial statements, but does not include all disclosures
required by generally accepted accounting principles. 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. Maine Biomass Projects
In the first six months of 1999, the Trust loaned $225,000 to Indeck Maine
Energy, L.L.C. ("Maine Biomass Projects"). The loan is in the form of 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 $450,000 in the first six months of
1999 to the Maine Biomass Projects with the same terms.
The Maine Biomass Projects were operated by Indeck Operations, Inc., an
affiliate of the members of the Maine Biomass Projects. The annual operator's
fee is $300,000, of which $200,00 is payable contingent upon the Trusts
receiving their cumulative annual return. The management agreement had a term of
one year and automatically continued for successive one year terms, unless
canceled by either the Maine Biomass Projects or Indeck Operations, Inc. The
Maine Biomass Projects exercised their right to terminate the contract of March
1, 1999 because certain preferred membership interest payments have not been
made. Under an Operating Agreement with the Trust, Ridgewood Power Management
Corporation ("Ridgewood Management"), an entity related to the managing
shareholder through common ownership, will provide management, purchasing,
engineering, planning and administrative services to the Maine Biomass Projects.
Ridgewood Management charges the projects at its cost for these services and for
the allocable amount of certain overhead items. Allocations of costs are on the
basis of identifiable direct costs, time records or in proportion to amounts
invested in projects
3. Providence EPA Matter
In June 1999, Ridgewood Providence Power Partners, L.P. ("RPPP"), a limited
partnership through which the Trust owns its limited partnership interest in the
Providence Project, settled the administrative proceeding brought by the Region
I office of the U.S. Environmental Protection Agency ("EPA") for approximately
$86,000. As previously disclosed the charges related to alleged recordkeeping,
training documentation and tank labelling violations and did not relate to any
discharge of pollutants or direct danger to the environment.
4. Summary Results of Operations for Selected Investments
Summary results of operations for the Maine Hydro projects, which are accounted
for under the equity method, were as follows:
Six months ended June 30,
1999 1998
Total revenue ............... $2,861,095 3,037,670
Depreciation and amortization 550,907 544,715
Income from operations ...... 1,349,818 1,380,957
Net income .................. 1,309,321 1,396,401
Summary results of operations for the Maine Biomass projects, which are
accounted for under the equity method, were as follows:
Six months ended June 30,
1999 1998
Total revenue ............... $ 575,230 646,167
Depreciation and amortization 90,415 90,415
Loss from operations ........ (774,807) (617,015)
Net loss .................... (820,995) (626,815)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Dollar amounts in this discussion are generally rounded to the nearest $1,000.
Introduction
The consolidated financial statements include the accounts of the Trust and the
limited partnerships owning the Providence Project and the California Pumping
project. The Trust uses the equity method of accounting for its investments in
the Maine Hydro Projects, the Maine Biomass Projects and the Santee River Rubber
Project, which are owned 50% or less by the Trust.
Results of Operations
In the second quarter of 1999, the Trust had total revenue of $1,878,000, which
is comparable with total revenue of $1,820,000 in the same period in 1998. Total
revenues for the first six months of 1999 of $3,671,000 were also comparable
with total revenue of $3,616,000 in the same period in 1998. Cost of sales
increased to $1,560,000 in the second quarter of 1999 ($3,082,000 in the first
six months of 1999) from $1,286,000 in the same period in 1998 ($2,411,000 in
the first six months of 1998) as a result of higher engine maintenance costs at
the Providence Project. A portion of the increase in maintenance costs resulted
from an engine failure in the first quarter of 1999.
General and administrative expenses in the second quarter of 1999 of $169,000
were comparable with the $155,000 recorded in the same period in 1998. General
and administrative expenses for the first six months of 1999 of $351,000 were
comparable with the $342,000 recorded in the same period in 1998. The management
fee decreased from $280,000 in the second quarter of 1998 ($560,000 in the first
six months of 1998) to $117,000 in the same period in 1999 ($234,000 in the
first six months of 1999) as a result of the Managing Shareholder's decision to
voluntarily waive one-half of its management fee for an indefinite period.
Interest income declined by $89,000 from $113,000 in the second quarter of 1998
to $24,000 in the second quarter of 1998 due to the lower average cash balances.
The decline in interest income from $276,000 for the six months ended June 30,
1998 to $46,000 for the same period was also due to lower cash balances.
Interest expense was reduced from $126,000 in the second quarter of 1998
($255,000 for the first six months of 1998) to $111,000 in the second quarter of
1999 ($226,000 for the first six months of 1999) due to lower borrowings
outstanding at the Providence Project.
Equity income from the Maine Hydro Projects decreased from $361,000 in the
second quarter of 1998 to $118,000 in the same period in 1999 due to lower
production because of below-average river flows. However, river flows were
higher than average in the first three months of 1999 resulting in comparable
results for the first six months of 1999 and 1998 ($655,000 for the first six
months of 1999 compared to $688,000 for the first six months of 1998).
The equity loss from the shut-down Maine Biomass Projects increased from $43,000
in the second quarter of 1998 ($311,000 for the first six months of 1998) to
$242,000 in the second quarter of 1999 ($410,000 for the first six months of
1999) due to lower revenues from the sale of installed capacity at the plants
and additional maintenance costs incurred to prepare the plants for limited
summer operations.
The Trust recorded income from its equity interest in the Santee River Rubber
project of $71,000 and $64,000 in the second quarter and first six months of
1999, respectively. The Trust acquired its investment in Santee River Rubber in
the third quarter of 1998. The Santee River Rubber project is expected to begin
operations in the last quarter of 1999.
The decrease in the minority interest in the earnings of the Providence Project
from $109,000 in the second quarter of 1998 ($250,000 for the first six months
of 1998) to $18,000 in the second quarter of 1999 ($83,000 for the first six
months of 1999) is a result of lower earnings from the Providence Project caused
primarily by higher maintenance costs.
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 $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 1999.
The Managing Shareholder announced a change of distribution policy in May 1999.
Distributions to Investors from the Trust, which had been made on a monthly
basis, are now made on a quarterly basis in order to reduce administrative
burdens.
In addition, the Managing Shareholder reduced the Trust's distribution rate per
share to $1,000 per quarter, equal to a 4% distribution rate per year. The rate
paid in 1998 was 6% per year. The reduction is expected to continue at least
into early 2000. The Managing Shareholder also has voluntarily waived one-half
of its management fee (approximately $39,000 per month) beginning in January
1999. The Managing Shareholder is not obligated to continue the waiver and may
end it at any time in its sole discretion. The Trust anticipates that the Santee
River and Maine Biomass plants will begin to make significant contributions to
cash flow in mid- to-late 2000, which might permit an increase in distributions
at that time. However, the Trust cannot assure that these results will occur or
that the distribution rate will be maintained or increased.
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.
The Trust anticipates that, during 1999, its cash flow from operations,
unexpended offering proceeds and line of credit facility will be adequate to
fund its obligations.
Year 2000 remediation
Please refer to the Trust's disclosures at Item 7 - Management's Discussion and
Analysis of its Annual Report on Form 10-K for 1998 for a discussion of year
2000 issues affecting the Trust. Since that report was filed, the only material
change in the Trust's year 2000 compliance is that the changes to the Managing
Shareholder's investor distribution system have been completed. No material
changes in the Trust's remediation efforts or its plans for year 2000 compliance
have occurred.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In June 1999, Ridgewood Providence Power Partners, L.P. ("RPPP"), a limited
partnership through which the Trust owns its limited partnership interest in the
Providence Project, settled the administrative proceeding brought by the Region
I office of the U.S. Environmental Protection Agency ("EPA") for approximately
$86,000. As previously disclosed in the Trust's Annual Report on Form 10-K for
1998, the charges related to alleged recordkeeping, training documentation and
tank labelling violations and did not relate to any discharge of pollutants or
direct danger to the environment.
Item 5. Other Information
Ridgewood Power Corporation has been the managing shareholder of the Trust. It
organized the Trust and acted as managing shareholder until April 1999. On or
about April 20, 1999 it was merged into Ridgewood Power LLC, a New Jersey
limited liability company, which thus became the Managing Shareholder of the
Trust. Ridgewood Power LLC was organized in early April 1999 and has no business
other than acting as the successor to Ridgewood Power Corporation. No material
change in the Trust's operations or business will result from the merger.
Robert E. Swanson has been the President, sole director and sole stockholder of
Ridgewood Power Corporation since its inception in February 1991 and is now the
controlling member, sole manager and President of the Managing Shareholder. Mr.
Swanson currently is the sole equity owner of the Managing Shareholder but is
considering a transfer of 53% of the equity ownership to two family trusts. If
that transfer is made, he will have the power on behalf of those trusts to vote
or dispose of the membership equity interests owned by them and accordingly will
continue to have sole control of the Managing Shareholder. Further, Mr. Swanson
is designated as the sole manager of the Managing Shareholder in its operating
agreement.
Ridgewood Power LLC is also the managing shareholder of the other five business
trusts organized by Ridgewood Power Corporation to participate in the
independent electric power industry.
Similarly, Ridgewood Power Management Corporation, which operates certain
Projects on behalf of the Trust, was merged on or about April 20, 1999 into a
new New Jersey limited liability company, Ridgewood Power Management LLC. The
ownership and control of Ridgewood Power Management LLC are the same as those of
Ridgewood Power LLC and its only business is to be the successor to Ridgewood
Power Management Corporation. No material change in the operation of the
Projects is expected as a result of that merger.
<PAGE>
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
August 13, 1999 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 six month period
ended June 30, 1999 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-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,099,309
<SECURITIES> 16,975,513<F1>
<RECEIVABLES> 1,201,724
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 19,572,717<F2>
<PP&E> 16,651,406
<DEPRECIATION> (2,535,002)
<TOTAL-ASSETS> 42,098,615
<CURRENT-LIABILITIES> 2,186,728<F3>
<BONDS> 3,786,560
<COMMON> 0
0
0
<OTHER-SE> 30,128,064<F4>
<TOTAL-LIABILITY-AND-EQUITY> 42,098,615
<SALES> 3,486,909
<TOTAL-REVENUES> 3,671,409
<CGS> 3,086,051
<TOTAL-COSTS> 3,086,051
<OTHER-EXPENSES> 589,863
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 39,212<F5>
<INCOME-TAX> 0
<INCOME-CONTINUING> 39,212<F5>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,212<F5>
<EPS-BASIC> 82
<EPS-DILUTED> 82
<FN>
<F1>Investment in hydroelectric project, Santee River project and Biomass
project accounted for on equity method in financial statements.
<F2>Includes $246,618 due from affiliates.
<F3>Includes $943,447 due to affiliates.
<F4>Shareholders' equity of $30,231,856 less managing share-
holders' accumulated deficit of $103,792.
<F5>After deduction of minority interest in Providence Project
earnings of $83,452.
</FN>
</TABLE>
