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 31,2002
Commission file Number 0-25430
RIDGEWOOD ELECTRIC POWER TRUST IV
(Exact name of registrant as specified in its charter.)
Delaware 22-3324608
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(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
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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 IV
Consolidated Financial Statements
March 31, 2002
Ridgewood Electric Power Trust IV
Consolidated Balance Sheets (unaudited)
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March 31, December 31,
2002 2001
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Assets:
Cash and cash equivalents ...................... $ 642,208 $ 1,050,638
Accounts receivable, trade ..................... 647,570 624,752
Due from affiliates ............................ 565,604 250,000
Other assets ................................... 52,824 53,661
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Total current assets ........... 1,908,206 1,979,051
Investments:
Maine Hydro Projects ........................... 4,897,258 4,879,015
Maine Biomass Projects ......................... 4,775,106 4,830,991
Plant and equipment ............................ 16,922,174 16,890,129
Accumulated depreciation ....................... (4,984,617) (4,773,988)
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11,937,557 12,116,141
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Electric power sales contract .................. 8,338,040 8,338,040
Accumulated amortization ....................... (3,308,639) (3,169,688)
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5,029,401 5,168,352
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Spare parts inventory .......................... 670,769 670,769
Debt reserve fund .............................. 740,456 738,226
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Total assets ........................... $ 29,958,753 $ 30,382,545
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Liabilities and Shareholders' Equity:
Liabilities:
Current maturities of long-term debt ........... $ 1,689,099 $ 868,098
Accounts payable and accrued expenses .......... 307,772 383,503
Due to affiliates .............................. 471,906 1,015,131
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Total current liabilities ............... 2,468,777 2,266,732
Long-term debt, less current portion ........... 1,592,117 1,822,425
Minority interest in the Providence Project .... 5,483,462 5,477,894
Commitments and contingencies
Shareholders' Equity:
Shareholders' equity (476.8875 investor
shares issued and outstanding) ................ 20,615,320 21,012,406
Managing shareholder's accumulated deficit
(1 management share issued and outstanding) ... (200,923) (196,912)
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Total shareholders' equity ............... 20,414,397 20,815,494
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Total liabilities and shareholders' equity $ 29,958,753 $ 30,382,545
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See accompanying notes to consolidated financial statements.
Ridgewood Electric Power Trust IV
Consolidated Statements of Operations (unaudited)
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Three Months Ended
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March 31, March 31,
2002 2001
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Net sales ................................... $ 1,840,674 $ 1,815,188
Sublease income ............................. 136,749 136,749
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Total revenue ................ 1,977,423 1,951,937
Cost of sales, including depreciation
and amortization of $349,580 and $366,749
in 2002 and 2001 .......................... 1,704,984 1,471,187
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Gross profit ................................ 272,439 480,750
General and administrative expenses ......... 207,945 167,195
Management fee ............................. 156,116 248,725
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Total other operating expenses 364,061 415,920
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Income (loss) from operations ............... (91,622) 64,830
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Other income (expense):
Interest income ....................... 8,152 27,094
Interest expense ...................... (66,408) (81,993)
Other income, net ..................... 116,991 --
Income from Maine Hydro Projects ...... 18,243 19,120
Loss from Maine Biomass Projects ...... (380,885) (222,590)
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Net other income ............. (303,907) (258,369)
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Loss before minority interest ............... (395,529) (193,539)
Minority interest in the earnings of the
Providence Project .................... (5,568) (130,378)
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Net loss .................................... $ (401,097) $ (323,917)
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See accompanying notes to the consolidated financial statements.
Ridgewood Electric Power Trust IV
Consolidated Statements of Changes in Shareholders' Equity (unaudited)
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Managing
Shareholders Shareholder Total
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Shareholders' equity,
December 31, 2001 .... $ 21,012,406 $ (196,912) $ 20,815,494
Net loss for the period (397,086) (4,011) (401,097)
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Shareholders' equity,
March 31, 2002 ....... $ 20,615,320 $ (200,923) $ 20,414,397
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See accompanying notes to consolidated financial statements.
Ridgewood Electric Power Trust IV
Consolidated Statements of Cash Flows (unaudited)
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Three Months Ended
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March 31, March 31,
2002 2001
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Cash flows from operating activities:
Net loss .................................... $ (401,097) $ (323,917)
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Adjustments to reconcile net loss to net
cash flows from operating activities:
Depreciation and amortization .............. 349,580 366,749
Minority interest in earnings of the
Providence Project ........................ 5,568 130,378
Income from unconsolidated Maine Hydro
Projects .................................. (18,243) (19,120)
Loss from unconsolidated Maine Biomass
Projects .................................. 380,885 222,590
Changes in assets and liabilities:
Increase in accounts receivable, trade .. (22,818) (491,477)
Decrease (increase) in other assets ..... 837 (15,351)
(Decrease) increase in accounts payable
and accrued expenses .................. (75,731) 2,713
Increase in due to/from affiliates,net .. (858,829) (99,998)
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Total adjustments .............. (239,249) 96,484
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Net cash used in operating activities ... (639,848) (227,433)
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Cash flows from investing activities:
Capital expenditures ........................ (32,045) (8,595)
Investment in Maine Biomass Projects ........ (325,000) --
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Net cash used in investing activities ... (357,045) (8,595)
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Cash flows from financing activities:
Borrowings under line of credit ............. 800,000 --
Payments to reduce long-term debt ........... (209,307) (190,220)
Increase in debt reserve fund ............... (2,230) (6,703)
Distribution to minority interest ........... -- (181,073)
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Net cash provided by (used in)
financing activities ................... 588,463 (377,996)
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Net decrease in cash and cash equivalents ........ (408,430) (614,024)
Cash and cash equivalents, beginning of period ... 1,050,638 1,656,861
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Cash and cash equivalents, end of period ......... $ 642,208 $ 1,042,837
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See accompanying notes to consolidated financial statements.
Ridgewood Electric Power Trust IV
Notes to 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 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 consolidated
financial statements included in the 2001 Annual Report on Form 10-K, which
should be read in conjunction with these consolidated financial statements.
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 Maine Hydro Projects, which are accounted
for under the equity method, were as follows:
Three Months Ended
March 31,
2002 2001
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Revenue ......... $790,000 $812,000
Operating expense 754,000 774,000
Net income ...... 36,000 38,000
Summary results of operations for the Maine Biomass Projects, which are
accounted for under the equity method, were as follows:
Three Months Ended
March 31,
2002 2001
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Revenue ..... $ 1,766,000 $ 538,000
Cost of sales 2,289,000 733,000
Other expense 239,000 250,000
Net loss .... (762,000) (445,000)
3. Long-Term Debt
During the fourth quarter of 1997, the Trust and its principal bank executed a
revolving line of credit agreement, whereby the bank will provide a three year
committed line of credit facility of $1,070,000 for borrowings or letters of
credit. The credit facility was extended until July 31, 2002. At March 31, 2002
the Trust had outstanding borrowings of $800,000, which bears interest at the
bank's prime rate or, at the Trust's choice, at LIBOR plus 2.5% (4.342% and
4.376% at March 31, 2002 and December 31, 2001, respectively). The credit
agreement will require 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.
4. Related Party Transactions
At March 31, 2002 and December 31, 2001, the Trust had outstanding payables and
receivables, with the following affiliates:
Due To Due From
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March 31, December 31, March 31, December 31,
2002 2001 2002 2001
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Ridgewood Management $190,453 $201,269 $ -- $ --
Trust III .......... 134,715 384,105 -- --
Trust V ............ 135,667 135,667 -- --
Maine Hydro ........ -- 270,006 69,994 --
Maine Biomass ...... -- -- 495,000 250,000
Other affiliates ... 11,071 24,084 610 --
From time to time, the Trust records short-term payables and receivables from
other affiliates in the ordinary course of business. The amounts payable and
receivable with the other affiliates do not bear interest.
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
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 and the Maine Biomass Projects, which are owned 50% or
less by the Trust.
Results of Operations
Total revenue for the first quarter of 2002 was consistent with the first
quarter of 2001. Cost of sales increased from $1,471,000 in the first quarter of
2001 to $1,705,000 in the same period in 2002 as a result of higher engine
maintenance costs at the Providence Project.
General and administrative expenses increased $41,000 in the first quarter of
2002 to $208,000. The increase is a result of higher administrative costs at the
Providence Project. The management fee decreased from $249,000 in the first
quarter of 2001 to $156,000 in the same period in 2002 as a result of the
Trust's lower net asset balance.
Interest income decreased by $19,000 from $27,000 in the first quarter of 2001
to $8,000 in the first quarter of 2002 due to lower average cash balances.
Interest expense was reduced by $16,000 from $82,000 in the first quarter of
2001 to $66,000 in the first quarter of 2002 due to lower borrowings outstanding
at the Providence Project offset by the increase in borrowings under the Trust's
credit line.
Other income increased by $117,000 in the first quarter of 2002 primarily due to
the proceeds received from the liquidation of the Santee River Rubber Company,
which filed for bankruptcy in 2000.
Equity income from the Maine Hydro Projects remained consistent with the first
quarter of 2001.
The equity loss from the Maine Biomass Projects increased from $223,000 in the
first quarter of 2001 to $381,000 in the same period in 2002. The increase in
the equity loss in the Maine Biomass Projects is primarily attributable to lower
capacity revenues in the first quarter of 2002 as compared to the same period in
2001. During the first quarter of 2002, the West Enfield plant was in operation,
while the Jonesboro plant was not. During the first quarter of 2001, both plants
were not in operation. On May 9, 2002, the West Enfield plant and the Jonesboro
plant each filed an "Application for Statement of Qualification" with the
Massachusetts Division of Energy Resources to qualify as new renewable electric
generation facilities under the Massachusetts Renewable Portfolio Standard
Regulations ("RPS"). Pursuant to these regulations, qualified renewable electric
generation facilities produce renewable portfolio standard attributes ("RPS
Attributes") when they generate electricity. RPS Attributes are then sold to and
used by entities that are providing electricity to end-use customers in
Massachusetts. The RPS regulations, and the statute under which they were
promulgated, are intended to spur use and development of new renewable
generation facilities.
If the West Enfield and Jonesboro plants qualify under the RPS, then, pursuant
to the power sales contract, Select Energy will also purchase and pay an
additional amount for the RPS Attributes associated with the electric energy it
purchased from the West Enfield plant. While the agreement with Select Energy is
only for a term of possibly five months, given the market and proposed supply of
renewable resources that can qualify for the RPS Attributes, the Trust believes
that the Maine Biomass Plants will be able to sell their RPS Attributes pursuant
to longer-term contracts. However, no negotiations regarding such contracts have
taken place.
Liquidity and Capital Resources
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
Providence Project and payment of certain accounting and legal services to third
parties. The Trust ceased making distributions to shareholders in the second
quarter of 2000.
The Trust expects that its cash flows from operations will be sufficient to fund
its obligations for the next twelve months.
During the fourth quarter of 1997, the Trust and its principal bank executed a
revolving line of credit agreement, whereby the bank will provide a three year
committed line of credit facility of $1,070,000 for borrowings or letters of
credit. The credit facility was extended until July 31, 2002. In the first
quarter of 2002 the Trust borrowed $800,000. Outstanding borrowings, which will
be repaid prior to the expiration of the credit facility, bear interest at the
bank's prime rate or, at the Trust's choice, at LIBOR plus 2.5% (4.342% and
4.376% at March 31, 2002 and December 31, 2001, respectively). The credit
agreement will require 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.
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 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
May 15, 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)