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 June 30,2002
Commission file Number 0-24240
RIDGEWOOD ELECTRIC POWER TRUST I
(Exact name of registrant as specified in its charter.)
Delaware 22-3105824
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
947 Linwood Avenue, Ridgewood, New Jersey 07450-2939
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(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. Consolidated Financial Statements
Ridgewood Electric Power Trust I
Consolidated Financial Statements
June 30, 2002
Ridgewood Electric Power Trust I
Consolidated Balance Sheets (unaudited)
- -------------------------------------------------------------------------------
June 30, December 31,
2002 2001
----------- -----------
Assets:
Cash and cash equivalents ....................... $ 2,005,471 $ 2,848,041
Trade receivables ............................... 606,727 228,958
Due from affiliates ............................. -- 1,698
Other current assets ............................ 49,527 17,197
----------- -----------
Total current assets ..................... 2,661,725 3,095,894
Investment in Stillwater Hydro Partners, L.P. ... 544,456 562,319
Plant and equipment ............................. 6,134,018 5,869,018
Accumulated depreciation ........................ (1,063,958) (946,721)
----------- -----------
5,070,060 4,922,297
----------- -----------
Electric power sales contract ................... 2,207,778 2,207,778
Accumulated amortization ........................ (1,576,988) (1,419,289)
----------- -----------
630,790 788,489
----------- -----------
Total assets ............................. $ 8,907,031 $ 9,368,999
----------- -----------
Liabilities and Shareholders' Equity:
Liabilities:
Accounts payable and accrued expenses ........... $ 214,862 $ 114,707
Current maturities of long-term debt ............ 261,531 252,272
Due to affiliates ............................... 14,109 1,117
----------- -----------
Total current liabilities ................ 490,502 368,096
Long-term debt, less current portion ............ 1,094,891 1,227,674
Commitments and contingencies ................... -- --
Shareholders' Equity:
Shareholders' equity
(105.5 investor shares issued and outstanding)
7,338,581 7,785,656
Managing shareholder's accumulated deficit
(1 management share issued and outstanding) .... (16,943) (12,427)
----------- -----------
Total shareholders' equity ............... 7,321,638 7,773,229
----------- -----------
Total liabilities and shareholders' equity $ 8,907,031 $ 9,368,999
----------- -----------
See accompanying notes to the consolidated financial statements.
Ridgewood Electric Power Trust I
Consolidated Statements of Operations (unaudited)
- -------------------------------------------------------------------------------
Six Months Ended Three Months Ended
-------------------------- --------------------------
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
Restated Restated
----------- ----------- ----------- -----------
Power generation
revenue ............ $ 1,342,677 $ 2,346,933 $ 824,215 $ 1,348,328
Rental revenue ...... 42,000 96,640 21,000 20,775
----------- ----------- ----------- -----------
Total revenue ... 1,384,677 2,443,573 845,215 1,369,103
Cost of sales ....... 1,424,002 1,057,172 876,064 513,069
----------- ----------- ----------- -----------
Gross profit (loss) . (39,325) 1,386,401 (30,849) 856,034
General and
administrative
expenses ........... 52,393 638,810 36,954 128,963
Management fee
paid to managing
shareholder ....... 38,866 46,264 19,433 20,571
----------- ----------- ----------- -----------
Total other
operating
expenses ....... 91,259 685,074 56,387 149,534
----------- ----------- ----------- -----------
Income (loss) from
operations ........ (130,584) 701,327 (87,236) 706,500
----------- ----------- ----------- -----------
Other income(expense):
Interest income ... 27,394 47,117 4,041 19,280
Interest expense .. (61,914) -- (30,232) --
Other expense ..... (79,691) (28,743) (51,077) (17,138)
Equity loss from
Stillwater Hydro
Partners,L.P .... (17,863) (24,572) (29,286) (23,773)
----------- ----------- ----------- -----------
Other income
(expense), net .. (132,074) (6,198) (106,554) (21,631)
----------- ----------- ----------- -----------
Net income (loss) ... $ (262,658) $ 695,129 $ (193,790) $ 684,869
----------- ----------- ----------- -----------
See accompanying notes to the consolidated financial statements.
Ridgewood Electric Power Trust I
Consolidated Statement of Changes in Shareholders' Equity (unaudited)
- -------------------------------------------------------------------------------
Managing
Shareholders Shareholder Total
----------- ----------- -----------
Shareholders' equity,
December 31, 2001 .... $ 7,785,656 $ (12,427) $ 7,773,229
Cash distributions .... (187,044) (1,889) (188,933)
Net loss for the period (260,031) (2,627) (262,658)
----------- ----------- -----------
Shareholders' equity,
June 30, 2002 ........ $ 7,338,581 $ (16,943) $ 7,321,638
----------- ----------- -----------
See accompanying notes to the consolidated financial statements.
Ridgewood Electric Power Trust I
Consolidated Statements of Cash Flows (unaudited)
- -------------------------------------------------------------------------------
Six Months Ended
--------------------------
June 30, June 30,
2002 2001
Restated
----------- -----------
Cash flows from operating activities:
Net income (loss) ........................... $ (262,658) $ 695,129
----------- -----------
Adjustments to reconcile net income (loss)
to net cash flows from operating activities:
Depreciation and amortization ............... 274,936 276,377
Equity loss from unconsolidated
Stillwater Hydro Partners, L.P ............. 17,863 24,572
Changes in assets and liabilities:
Increase in trade receivables ............. (377,769) (96,162)
Increase in other current assets .......... (32,330) (8,273)
Increase (decrease) in accounts payable
and accrued expenses ..................... 100,155 (16,529)
Increase in due to/from affiliates, net ... 14,690 184,446
----------- -----------
Total adjustments ....................... (2,455) (4,461)
----------- -----------
Net cash (used in) provided by
operating activities ................... (265,113) 690,668
----------- -----------
Cash flows from investing activities:
Capital expenditures ........................ (265,000) (221,677)
----------- -----------
Net cash used in investing activities ... (265,000) (221,677)
----------- -----------
Cash flows from financing activities:
Cash distributions to shareholders .......... (188,933) --
Payments to reduce long-term debt ........... (123,524) --
----------- -----------
Net cash used in financing activities ... (312,457) --
----------- -----------
Net (decrease) increase in cash and cash
equivalents ..................................... (842,570) 468,991
Cash and cash equivalents, beginning of year ..... 2,848,041 1,712,745
----------- -----------
Cash and cash equivalents, end of period ......... $ 2,005,471 $ 2,181,736
----------- -----------
See accompanying notes to the consolidated financial statements.
Ridgewood Electric Power Trust I
Note to the Consolidated Financial Statements (unaudited)
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1. General
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments, which consist of normal recurring
adjustments, necessary for the fair representation of the results for the
interim periods. Additional footnote disclosure concerning accounting polices
and other matters are disclosed in Ridgewood Electric Power Trust I's ("the
Trust") consolidated financial statements included in the 2001 Annual Report on
Form 10-K, which should be read in conjunction with these consolidated 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. Summary Results of Operations for Selected Investments
Summary results of operations for the Stillwater Hydro Partners, L.P., which are
accounted for under the equity method, were as follows:
Six Months Ended Three Months Ended
June 30, June 30,
---------------------- ---------------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Revenue .......... $ 788,000 $ 779,000 $ 448,000 $ 427,000
Operating expenses 878,000 857,000 538,000 503,000
Net loss ......... (55,000) (78,000) (90,000) (76,000)
3. Summary of Significant Accounting Policies
Accounting Changes
Effective on December 18, 2001, the shareholders of the Trust consented to end
its election to be treated as a Business Development Corporation ("BDC") under
the Investment Company Act of 1940. As a BDC under the 1940 Act, the Trust
utilized generally accepted accounting principles for investment companies. As a
result of the elimination of the BDC status, the Trust now utilizes generally
accepted accounting principles for operating companies. In accordance with the
generally accepted accounting principles for BDCs, investments in power
generation projects were stated at fair value in previously issued financial
statements. As a result of the elimination of the BDC status, consolidation and
equity method accounting principles now apply to the accounting for investments.
Accordingly, the financial data for all prior periods presented have been
restated to reflect the use of consolidation and equity method accounting
principles.
New Accounting Standards and Disclosures
SFAS 141
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") 141, Business Combinations, which
eliminates the pooling-of-interest method of accounting for business
combinations and requires the use of the purchase method. In addition, SFAS 141
requires the reassessment of intangible assets to determine if they are
appropriately classified either separately or within goodwill. SFAS 141 is
effective for business combinations initiated after June 30, 2001. The Trust
adopted SFAS 141 on July 1, 2001, with no material impact on the consolidated
financial statements.
SFAS 142
In June 2001, the FASB issued SFAS 142, Goodwill and Other Intangible Assets,
which eliminates the amortization of goodwill and other acquired intangible
assets with indefinite economic useful lives. SFAS 142 requires an annual
impairment test of goodwill and other intangible assets that are not subject to
amortization. Other intangible assets with definite economic lives will continue
to be amortized over their useful lives. The Trust adopted SFAS 142 on January
1, 2002, with no material impact on the consolidated financial statements.
SFAS 143
In June 2001, the FASB issued SFAS 143, Accounting for Asset Retirement
Obligations, on the accounting for obligations associated with the retirement of
long-lived assets. SFAS 143 requires a liability to be recognized in the
consolidated financial statements for retirement obligations meeting specific
criteria. Measurement of the initial obligation is to approximate fair value,
with an equivalent amount recorded as an increase in the value of the
capitalized asset. The asset will be depreciated in accordance with normal
depreciation policy and the liability will be increased for the time value of
money, with a charge to the income statement, until the obligation is settled.
SFAS 143 is effective for fiscal years beginning after June 15, 2002. The Trust
will adopt SFAS 143 effective January 1, 2003 and is currently assessing the
impact that this standard may have on the Trust.
SFAS 144
In August 2001, the FASB issued SFAS 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, which replaces SFAS 121, Accounting for the
Impairment of Long-lived Assets and for Long-Lived Assets to Be Disposed Of. For
long-lived assets to be held and used, SFAS 144 retains the requirements of SFAS
121 to (a) recognize an impairment loss only if the carrying amount is not
recoverable from undiscounted cash flows and (b) measure an impairment loss as
the difference between the carrying amount and fair value of the asset. For
long-lived assets to be disposed of, SFAS 144 establishes a single accounting
model based on the framework established in SFAS 121. The accounting model for
long-lived assets to be disposed of by sale applies to all long-lived assets,
including discontinued operations and replaces the provisions of APB Opinion No.
30, Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions, for the disposal of segments of a business. SFAS 144
also broadens the reporting of discontinued operations. The Trust adopted SFAS
144 on January 1, 2002, with no material impact on the consolidated financial
statements.
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 consolidated financial statements include the accounts of the Trust and the
subsidiaries owning the Mobile Power modules and the Olinda Projects, which
includes Brea Power Partners, L.P. ("Brea") and Ridgewood Olinda, L.L.C.
("Olinda") (a 2.5 megawatt expansion of the Brea project). The Trust uses the
equity method of accounting for its investment in the Stillwater Hydro Project,
which is owned 50% or less by the Trust.
Results of Operations
Three Months Ended June 30,2002, Compared to the Three Months Ended June 30,2001
Total revenue decreased $524,000, or 38.3%, to $845,000 in the second quarter of
2002 from $1,369,000 in the second quarter of 2001. The decrease is primarily
due to the decrease in power generation revenue from the Brea project. Power
generation revenue from the Brea project decreased by $750,000 in the second
quarter of 2002, offset by revenues of $187,000 from the new Olinda expansion.
The decrease in revenue from the Brea project is attributable to the higher
energy prices charged during the second quarter of 2001 as a result of the
California energy crisis.
Cost of sales increased $363,000 to $876,000 in the second quarter of 2002 as
compared to $513,000 in the second quarter of 2001. The increase is due to the
Brea project experiencing greater repair and maintenance costs as a result of
the overhaul of one of its engines.
Gross profit decreased from $856,000 in the second quarter of 2001, to a loss of
$31,000 in the second quarter of 2002. The decrease is a result of the higher
energy prices charged during the California energy crisis in 2001. The current
year loss of $31,000 is also due to the Brea project experiencing greater repair
and maintenance costs as a result of the overhaul of one of its engines.
General and administrative expenses decreased by $92,000, to $37,000 in the
second quarter of 2002 as compared to $129,000 in 2001. The decrease is due to
the reduction in legal fees incurred in 2001 as a result of Southern California
Edison's failure to pay for the power it received in the first quarter of 2001.
The management fee for the second quarter of 2002 was comparable with the second
quarter of 2001.
Interest income decreased by $15,000 to $4,000 in the second quarter of 2002 due
to lower average cash balances. Interest expense increased to $30,000 from zero
in the second quarter of the prior year due to the new project financing on the
expansion of the Olinda project, which occurred during the fourth quarter of
2001.
Other expense increased from $17,000 in the second quarter of 2001 to $51,000 in
the second quarter of 2002. The increase is primarily due to the State of
California withholding tax on the distributions made by the Trust.
The equity loss in the Stillwater Hydro Project for the second quarter of 2002
was comparable to the second quarter of 2001.
Six Months Ended June 30, 2002, Compared to the Six Months Ended June 30, 2001
Power generation revenue decreased 42.8% to $1,004,000 in the first six months
of 2002 from $2,347,000 in the first six months of 2001, primarily due to the
decrease in power generation revenue from the Olinda Projects. Power generation
revenue from the Brea project decreased by $1,191,000, while the new Olinda
expansion provided an increase of $187,000 in the first half of 2002. The
decrease in revenue from the Brea project is attributable to the higher energy
prices charged during the first half of 2001 as a result of the California
energy crisis. Rental revenue from the Trust's mobile power modules decreased by
$55,000 or 57.3%, to $42,000 in the first half of 2002. The decrease in rental
revenue is due the higher rental volume experienced in 2001, as a result of the
California energy crisis.
Cost of sales increased $367,000 to $1,424,000 in the first half of 2002, from
$1,057,000 in the first half of 2001. The increase is due to the Brea project
experiencing greater repair and maintenance costs as a result of the overhaul of
one of its engines.
Gross profit decreased from $1,386,000 in the first half of 2001, to a loss of
$39,000 for the corresponding period in 2002. The decrease is a result of the
higher energy prices charged during the California energy crisis in 2001. The
current year loss of $39,000 is also due to the Brea project experiencing
greater repair and maintenance costs as the result of the overhaul of one of its
engines.
General and administrative expenses decreased by $587,000, to $52,000 in the six
months ended June 30, 2002. The decrease is due to the reduction in legal fees
incurred and the loss recognized on the sale of uncollected receivables in 2001
as a result of Southern California Edison's failure to pay for the power it
received in the first quarter of 2001. The management fee for the first six
months of 2002 was comparable with the first six months of 2001.
Interest income decreased by $20,000 to $27,000 for the first half of 2002 due
to lower average cash balances. Interest expense increased to $62,000 from zero
in the first six months of the prior year due to the new project financing on
the expansion of the Olinda project, which occurred during the fourth quarter of
2001.
Other expense increased from $29,000 for the first half of 2001 to $80,000 for
the first half of 2002. The increase is primarily due to the State of California
withholding tax on the distributions made by the Trust.
The equity loss in the Stillwater Hydro Project for the six months ended June
2002 was comparable to the prior year related period.
Liquidity and Capital Resources
Dollar amounts in this discussion are rounded to the nearest $1,000.
Cash used in operating activities for the six months ended June 30, 2002 was
$265,000 as compared to cash provided by operating activities of $691,000 for
the six months ended June 30, 2001. The decrease in cash flow from operating
activities is primarily due to the $263,000 net loss recognized in the current
year as compared to net income of $695,000 in the prior year. The increase in
trade receivables, which is primarily associated with the amounts due to the new
expansion of the Olinda project, also had a negative impact on cash as compared
to June 2001.
Cash used in investing activities for the first half of 2002 was comparable to
the first half of 2001. The Trust spent $265,000 in 2002 and $222,000 in 2001
for capital expenditures as a result of the expansion of the Olinda project.
Cash used in financing activities for the first six months of 2002 was $312,000
compared to zero for the first six months of 2001. The decrease in cash flow
from financing activities is due to distributions made to shareholders of
$189,000 and scheduled payments made to reduce the loan on the Olinda expansion.
The Trust has historically financed its operations from cash generated from
its subsidiaries operations. Obligations of the Trust are generally limited to
payment of the management fee to the Managing Shareholder, scheduled long-term
debt payments related to the expansion on the Olinda Project and payment of
certain accounting and legal services to third parties. The Trust expects that
its cash flows from operations and cash on hand will be sufficient to fund its
obligations for the next twelve months.
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.
PART II - OTHER INFORMATION
None.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant as duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RIDGEWOOD ELECTRIC POWER TRUST I
Registrant
August 14, 2002 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)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Ridgewood Electric Power Trust I (the
Trust) on Form 10-Q for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the Report), I, Robert E.
Swanson, Chief Executive Officer of the Trust, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Trust.
/s/ Robert E. Swanson
Robert E. Swanson
Chief Executive Officer
August 14, 2002
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Ridgewood Electric Power Trust I (the
Trust) on Form 10-Q for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the Report), I,
Christopher I. Naunton, Chief Financial Officer of the Trust, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Trust.
/s/ Christopher I. Naunton
Christopher I. Naunton
Chief Financial Officer
August 14, 2002