RIDGEWOOD ELECTRIC POWER TRUST II
947 LINWOOD AVENUE
RIDGEWOOD, NEW JERSEY 07450-2939
TEL. (201) 447-9000
May 14, 2001
Securities and Exchange Commission
Washington, D.C. 20549
Dear Commission:
Pursuant to the requirements of the Securities Exchange Act of 1934, we are
transmitting herewith a Quarterly Report on Form 10-Q for the period ended
March 31, 2001.
If you have any questions, please contact the undersigned or our counsel, Daniel
V. Gulino, at this office.
Sincerely,
RIDGEWOOD ELECTRIC POWER TRUST II
/s/Christopher I. Naunton
Christopher I. Naunton, Vice President
and Chief Financial Officer
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, 2001
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 [ ]
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
Ridgewood Electric Power Trust II
Financial Statements
March 31, 2001
Ridgewood Electric Power Trust II
Balance Sheet
- --------------------------------------------------------------------------------
March 31, 2001
(unaudited) December 31, 2000
------------ -------------
Assets:
Investments in power generation projects .. $ 10,385,782 $ 10,751,582
Cash and cash equivalents ................. 258,577 89,829
Notes receivable from sale of investment .. 1,166,197 1,283,327
Due from affiliates ....................... 23,812 6,174
Other assets .............................. 5,141 4,398
------------ ------------
Total assets ............................. $ 11,839,509 $ 12,135,310
------------ ------------
Liabilities and Shareholders' Equity:
Liabilities:
Accounts payable and accrued expenses ..... $ 6,928 $ 41,972
Due to affiliates ......................... 25,693 270,765
------------ ------------
Total liabilities ........................ 32,621 312,737
------------ ------------
Commitments and contingencies
Shareholders' equity:
Shareholders' equity (235.3775 shares
issued and outstanding)
11,890,063 11,905,591
Managing shareholder's accumulated deficit (83,175) (83,018)
------------ ------------
Total shareholders' equity ............... 11,806,888 11,822,573
------------ ------------
Total liabilities and shareholders' equity $ 11,839,509 $ 12,135,310
------------ ------------
See accompanying note to financial statements.
Ridgewood Electric Power Trust II
Statement of Operations (unaudited)
- --------------------------------------------------------------------------------
Three Months Ended
--------------------
March 31, March 31,
2001 2000
-------- --------
Revenue:
Income from power generation projects $ -- $110,523
Interest income ..................... 29,695 34,962
-------- --------
Total revenue .................. 29,695 145,485
-------- --------
Expenses:
Management fee ...................... 25,693 --
Accounting and legal fees ........... 13,290 8,079
Miscellaneous ....................... 6,397 13,962
-------- --------
Total expenses ................. 45,380 22,041
-------- --------
Net (loss) income ............... $(15,685) $123,444
-------- --------
See accompanying note to financial statements.
Ridgewood Electric Power Trust II
Statement of Changes in Shareholders' Equity (unaudited)
- --------------------------------------------------------------------------------
Managing
Shareholders Shareholder Total
------------ ------------ -----------
Shareholders' equity,
December 31, 2000 .... $ 11,905,591 $ (83,018) $ 11,822,573
Net loss for the period (15,528) (157) (15,685)
------------ ------------ ------------
Shareholders' equity,
March 31, 2001 ....... $ 11,890,063 $ (83,175) $ 11,806,888
------------ ------------ ------------
See accompanying note to financial statements
Ridgewood Electric Power Trust II
Statement of Cash Flows (unaudited)
- --------------------------------------------------------------------------------
Three Months Ended
----------------------
March 31, March 31,
2001 2000
--------- ---------
Cash flows from operating activities:
Net (loss) income ................................... $ (15,685) $ 123,444
--------- ---------
Adjustments to reconcile net income
to net cash flows from operating activities:
Return of investment in power generation projects ... 365,800 --
Investment in power generation projects ............. -- (118,066)
Proceeds from note receivable ....................... 117,130 108,153
Changes in assets and liabilities:
Increase in due from affiliates ..................... (17,638) --
(Increase) decrease in other assets ................ (743) 1,582
Decrease in accounts payable and accrued expenses .. (35,044) (28,281)
Decrease in due to affiliates ...................... (245,072) (21,461)
--------- ---------
Total adjustments .................................. 184,433 (58,073)
--------- ---------
Net cash provided by operating activities ........... 168,748 65,371
--------- ---------
Cash flows from financing activities:
Repayment of borrowings under line of credit facility -- (400,000)
--------- ---------
Net cash used in financing activities ............... -- (400,000)
--------- ---------
Net decrease in cash and cash equivalents ........... 168,748 (334,629)
Cash and cash equivalents, beginning of period ...... 89,829 537,541
--------- ---------
Cash and cash equivalents, end of period ............ $ 258,577 $ 202,912
--------- ---------
See accompanying note to financial statements.
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 2000 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.
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
Total revenue decreased 79.6% to $30,000 in the first quarter of 2001 compared
to $145,000 in the first quarter of 2000, primarily because of the absence of
distribution income from the Monterey Project. The absence of distributions from
the Monterey Project reflects Pacific Gas and Electric Company ("PG&E")'s
failure to pay the project for power delivered since December 1, 2000. Interest
income decreased from $35,000 in the first quarter of 2000 to $30,000 in the
first quarter of 2001 due to lower average cash balances.
Total expenses increased $23,000 (105.9%) to $45,000 in the first quarter of
2001 compared to $22,000 in the same period in 2000, primarily due to the
resumption of the management fee, which was $26,000 in the first quarter of
2001.
Liquidity and Capital Resources
Obligations of the Trust are generally limited to payment of the management fee
to the Managing Shareholder and payment of certain accounting and legal services
to third parties. The Trust ceased making distributions to shareholders in the
first quarter of 2001.
The Trust anticipates that its cash flow during 2001 will be adequate to fund
its obligations, notwithstanding PG&E's financial difficulties.
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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
As reported by the Trust in it Form 10-K for the year ended December 31, 2000,
Sunnyside Cogeneration Partners, L.P., which owns the Monterey Project, is under
a long-term power purchase and sale agreement with PG&E. Due to the California
energy crisis, PG&E was unable to pay in full for electrical energy and capacity
delivered in December 2000 and January 2001. Although partial payments were made
by PG&E (15%) the full amount remained due and outstanding. As a result of
PG&E's failure to pay, the Monterey Project's gas supplier refused to supply
additional gas and the Monterey Project shut operations. As a result of PG&E's
failure to pay in full, the Monterey Project, along with the Byron and San
Joaquin Projects owned by Ridgewood Electric Power Trust III, filed a lawsuit on
February 6, 2001 against PG&E seeking damages for breach of contract equal to
lost net revenues for the remaining term of the power contract.
On April 6, 2001, PG&E sought protection from creditors under Chapter 11 of the
Bankruptcy Code. As a result, the state litigation instituted by the Monterey
Project was automatically stayed pursuant to the Bankruptcy Code. Moreover, the
Bankruptcy Code provides PG&E with the ability to reject or assume executory
contracts, such as the power contract. As of this date, PG&E has not indicated
whether is will assume or reject the Monterey Project's power contract. If PG&E
were to reject the power contract, it would as a result be terminated and the
Monterey Project would be able to recover "rejection damages" from PG&E which,
given the bankruptcy, may not be significant and, in addition, be free to sell
its power to the open market. Given current conditions and electric prices in
California, which are likely to continue for some period of time, the Monterey
Project could sell into such market profitably; however, there is no way to
determine whether such sales would equal or exceed any amounts that may have
been earned under the power contract.
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, 2001 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)