FORM 8-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
Date of report (Date of earliest event reported): November 22, 2002
Commission file Number 0-25935
THE RIDGEWOOD POWER GROWTH FUND
(Exact name of registrant as specified in its charter.)
Delaware 22-3495594
(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)
Item 2. Acquisition or Disposition of Assets
On November 27, 2002, the Registrant filed a current report on Form 8-K
reporting under Item 2 the acquisition of assets of Synergics, Inc. This Form
8-K/A amends that report by providing financial information called by Item 7.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
See Exhibit 99.1
(b) Pro Forma Financial Information.
See Exhibit 99.1
(c) Exhibits.
The following exhibits are filed herewith:
Exhibit Description
99.1 Financial Statements
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE RIDGEWOOD POWER GROWTH FUND
Date: February 5, 2003 By: /s/ Christopher I. Naunton
--------------------------
Christopher I. Naunton,
Vice President and
Chief Financial Officer
Exhibit 99.1
SYNERGICS HYDRO, INC. AND SUBSIDIARIES,
BOX CANYON LIMITED PARTNERSHIP,
AND EMPORIA HYDRO LIMITED PARTNERSHIP
COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2001
Independent Auditors' Report
Shareholders and Partners
Synergics Hydro, Inc. and Subsidiaries
Box Canyon Limited Partnership
Emporia Hydro Limited Partnership
We have audited the accompanying combined balance sheets of Synergics Hydro,
Inc. and Subsidiaries, Box Canyon Limited Partnership, and Emporia Hydro Limited
Partnership as of December 31, 2001, and the related combined statements of
operations and retained earnings, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Synergics Hydro, Inc. and
Subsidiaries, Box Canyon Limited Partnership, and Emporia Hydro Limited
Partnership as of December 31, 2001, and the results of their operations and
their cash flows for the year then ended in conformity with auditing standards
generally accepted in the United States of America.
Toal, Ranes, Davis, & Simmons, LLC
Annapolis, Maryland
April 5, 2002
SYNERGICS HYDRO, INC. AND SUBSIDIARIES, BOX CANYON LIMITED PARTNERSHIP,
AND EMPORIA HYDRO LIMITED PARTNERSHIP
COMBINED BALANCE SHEETS
DECEMBER 31, 2001
ASSETS
Current Assets
Cash and Cash Equivalents ...................... $ 925,407
Accounts Receivable ............................ 346,625
Current Portion of Long Term Notes Receivable .. 1,429,144
Prepaid Expenses ............................... 160,924
------------
Total Current Assets ......................... 2,862,100
Non Current Receivables:
Long Term Notes Receivable,
net of current portion ........................ 5,995,393
Property, Plant and Equipment .................... 36,785,221
Less: Accumulated Depreciation ................ (16,766,529)
------------
Net Property, Plant and Equipment ............ 20,018,692
Other Assets
Other Intangibles .............................. 1,175,293
Less: Accumulated Amortization ................ (717,307)
------------
Total Other Assets ........................... 457,986
------------
Total Assets ............................ $ 29,334,171
============
LIABILITIES AND STOCKHOLDER'S AND PARTNERS' EQUITY
Current Liabilities
Accrued Expenses ............................... $ 31,307
Current Portion of Long Term Debt .............. 1,525,000
Due to Parent .................................. 7,707,931
------------
Total Current Liabilities .................... 9,264,238
Long Term Debt, Net of Current Portion ........... 7,100,000
------------
Total Liabilities ...................... 16,364,238
Stockholder's and Partners' Equity
Common Stock, $1.00 Par Value: 100
Shares Authorized, Issued and Outstanding ... 100
Additional Paid-in Capital ..................... 2,799,900
Retained Earnings and Partners' Capital ........ 10,169,933
------------
Total Stockholder's and
Partners' Equity ....................... 12,969,933
------------
Total Liabilities and Stockholder's
and Partners' Equity ................... $ 29,334,171
============
See accompanying notes to combined financial statements.
SYNERGICS HYDRO, INC. AND SUBSIDIARIES, BOX CANYON LIMITED PARTNERSHIP,
AND EMPORIA HYDRO LIMITED PARTNERSHIP
STATEMENT of OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
REVENUES
Energy Revenue ................... $ 3,794,625
COSTS AND EXPENSES
Management ....................... 465,576
General and Administrative ....... 651,743
Operating and Maintenance ........ 887,327
-----------
Total Costs and Expenses ...... 2,004,646
-----------
Earnings From Operations ...... 1,789,979
OTHER EXPENSES (INCOME)
Depreciation and Amortization .... 1,268,549
Interest Income .................. (890,540)
Interest Expense ................. 606,315
-----------
Net Other Expense ............. 984,324
-----------
Net Income Before Income Taxes 805,655
PROVISION FOR INCOME TAXES
Current Income Tax Expense - States 57,666
Income Tax Expense - Parent Company 270,000
Benefit of the Use of Tax Loss
Carryforward - Parent Company .... (270,000)
-----------
Net Income .......................... $ 747,989
===========
See accompanying notes to combined financial statements.
SYNERGICS HYDRO, INC. AND SUBSIDIARIES, BOX CANYON LIMITED PARTNERSHIP,
AND EMPORIA HYDRO LIMITED PARTNERSHIP
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2001
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income ........................................ $ 747,989
Adjustments to Reconcile Net Income
to Cash Provided by Operations:
Depreciation and Amortization ................... 1,268,549
Interest Income Accrued to Long-Term Receivable . (775,536)
Decrease (Increase) in:
Accounts Receivable ........................... 26,571
Prepaid Expenses .............................. (6,077)
Decrease in Accounts Payable and Accrued Expenses (12,519)
-----------
Net Cash Provided by Operating Activities ....... 1,248,977
CASH FLOW FROM FINANCING ACTIVITIES:
Payments on Notes Payable ......................... (1,525,000)
Borrowings (Payments) from (to) Parent Company .... 83,758
-----------
Net Cash Flow Used by Financing Activities ...... (1,441,242)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of Property, Plant and Equipment ......... (39,307)
Payments on Long Term Notes Receivable ............ 200,000
-----------
Net Cash Flow Provided by Investing Activities .. 160,693
-----------
Net Decrease in Cash ................................ (31,572)
Cash, Beginning of Year ............................. 956,979
-----------
Cash, End of Year ................................... $ 925,407
===========
SUPPLEMENTAL DISCLOSURE:
Interest Paid ..................................... $ 606,315
===========
Income Taxes Paid ................................. $ 57,666
===========
See accompanying notes to combined financial statements.
SYNERGICS HYDRO, INC. AND SUBSIDIARIES,
BOX CANYON LIMITED PARTNERSHIP, AND EMPORIA HYDRO LIMITED PARTNERSHIP
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2001
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Operations - Synergics Hydro, Inc., Box Canyon Limited Partnership and Emporia
Hydro Limited Partnership are wholly-owned or effectively wholly-owned by
Synergics, Inc. The Companies lines of business include ownership and operation
of hydropower projects. The plants produce electricity which is sold to local
electric utilities and is dependent on water flow for such production.
Accordingly, the Companies revenues are adversely affected in periods of
drought.
During April, 2000, Synergics, Inc. and its 69% majority shareholder entered
into an agreement with Ridgewood Power, LLC the effect of which, among other
things, was the sale of the hydroelectric projects included in these financial
statements to Ridgewood Power, LLC or its assigns (Ridgewood). See Note 4.
Principles of Consolidation and Basis of Presentation - The combined financial
statements include the accounts of Synergics Hydro, Inc. and Subsidiaries
(Hydro), Box Canyon Limited Partnership (Box Canyon), and Emporia Hydro Limited
Partnership (Emporia). All combined partnerships and corporations are
effectively 100% owned by Synergics, Inc. which in turn is effectively owned by
Ridgewood. Entities owned less than 50% are carried at equity, or at cost if
less than 20% owned. All significant intercompany transactions are eliminated.
Depreciation and Amortization - Hydropower plants are depreciated over the
lesser of the facility lease life, if any, or 40 years. Depreciation is computed
on the straight line method for financial reporting purposes. For income tax
purposes, depreciation is provided using accelerated methods over generally the
shortest lives allowable.
Income Taxes - The combined entities report for federal income tax purposes on a
consolidated basis with Synergics, Inc. using the accrual method of accounting
on a calendar year basis. Deferred income taxes are provided, where required,
for temporary differences arising from the recognition of certain income and
expense amounts in different periods for tax and financial reporting purposes.
Investment tax credits are recognized as a reduction of the provision for income
taxes in the year realized. The provision for federal income taxes to the parent
company is calculated as if the combined entities were to file a separate
federal return and any tax expense or benefit is recorded as due to or from
Synergics, Inc. At December 31, 2001, Synergics, Inc. combined net operating
loss carryforwards exceeded $16,000,000 and combined tax credit carryovers
exceeded $2,000,000 expiring in varying amounts to 2014. The 2001 and 2000
current tax represents various state income taxes.
Cash Management- Synergics, Inc., (Parent Company) maintains a centralized cash
management program for all of its subsidiaries. Generally, cash produced from
operating revenues are deposited in Parent Company accounts and disbursements
for operating items are made by the Parent Company on behalf of its
subsidiaries. Accordingly, the net activity of cash transactions with the Parent
Company has been reflected as an increase or decrease in amounts due to the
Parent Company. Bank deposits at Synergics Hydro, Inc. and the Parent Company
generally exceed federally insured limits. Neither the Parent Company nor Hydro
have experienced any losses in such account. The Companies believe they are not
exposed to any significant credit risk on cash.
Cash and Cash Equivalents
Cash and cash equivalents include only accounts in the name of the combined
entities. For purposes of the statement of cash flows, all short-term debt
securities purchased with a maturity of three months or less are considered to
be cash equivalents.
Estimates - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2 - LONG TERM NOTES RECEIVABLE
During 1989, Synergics, Inc. constructed a hydroelectric facility for the
Truckee-Carson Irrigation District (TCID). The construction and term funding for
this plant was provided by a portion of the secured credit facility (See Note
5). The sales price of the plant was paid by assignment of future revenues of
the hydroelectric plant. Synergics, Inc. repaid construction advances received
from Hydro by assignment of the long term receivable. The receivable has been
pledged as additional collateral for the variable rate secured credit facility
(see Note 5). By agreement with Truckee-Carson Irrigation District (TCID), all
revenue of the plant is paid to the Company as escrow agent for the benefit of
TCID, Synergics, Inc. and Hydro. The agreement runs for 20 years and is
automatically renewable until the full amount due Synergics, Inc. (or assigns)
has been paid. The amounts initially due Synergics, Inc. and assigned to Hydro
were:
Portion payable over
15 years at variable interest $4,000,000
Portion payable over
15 years at 15% fixed rate 2,137,000
----------
Total due $6,137,000
==========
Cash flow from the plant is to be disbursed on the following priority basis
after payment of operations and maintenance expenses:
a) for payment of principal and interest on $4,000,000 portion;
b) for payment of principal and interest on $1,363,000 at 10% interest
amortized over 15 years to TCID;
c) for payment of principal and interest on the $2,137,000 portion at 15%
interest; and
d) the balance, if any, to be shared 50/50 between Hydro and TCID.
Any accrued interest not paid on the $1,363,000 or $2,137,000 are to be added to
principal and the new balance amortized over the remaining amortization period.
Any accrued interest not paid or deferred principal amounts on the four million
portion are given priority ahead of the $1,363,000 and $2,137,000 portions.
Operations began in June 1989 and cash flow has not been sufficient to make all
payments identified in a) through c) above. Accrued and unpaid interest has been
added to the principal amounts due under items a) through c). For the years
ended December 31, 2001 and 2000, the $4,000,000 portion of the receivable
decreased by $200,000 per year. Because cash payments on the $2,137,000 portion
were not adequate to pay all accrued interest in 2001, the note increased
$775,537.
In 1994, Hydro reclassified $449,347 of accrued unpaid interest on the long term
receivable to other assets and began to charge this amount to operations on a
straight-line basis over the estimated useful life of the agreement with TCID.
Maturities on the amounts due Hydro were as follows at December 31, 2001:
$4,000,000 $2,137,000
Portion Portion Total
--------- ---------- ----------
2002 $ 200,000 $ 1,229,144 $ 1,429,144
2003 200,000 1,413,516 1,613,516
2004 200,000 3,303,121 3,503,121
2005 200,000 -- 200,000
2006 200,000 -- 200,000
Thereafter 478,756 -- 478,756
----------- ----------- -----------
$ 1,478,756 $ 5,945,781 $ 7,424,537
=========== ===========
Current Portion of Long-Term Receivable (1,429,144)
-----------
Long-Term Portion at December 31,2001 $ 5,995,393
===========
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost (see Note 5).
2001
Land ....................................... $ 45,600
Hydroelectric Plants, including improvements 36,739,621
------------
36,785,221
Less: Accumulated Depreciation ............ (16,766,529)
------------
Total Property, Plant and Equipment ........ $ 20,018,692
============
NOTE 4 - RELATED PARTY TRANSACTIONS
At December 31, combined entities were indebted to Synergics, Inc. for net funds
advanced of $7,707,931.
In prior years Synergics, Inc. entered into a loan agreement with Trust Company
of the West (TCW) as trustee for a pension plan (TCW Debt). The proceeds of the
loan were used to acquire or construct hydroelectric plants. Each hydroelectric
plant is owned in separate entities and those entities pledged their respective
assets as security for the TCW Debt. The power plants owned by Box Canyon and
Emporia are pledged as collateral on the TCW Debt.
In April 2000, Ridgewood (see Note 1) purchased the TCW Debt. Accordingly, at
December 31, 2001, substantially all of the assets of Box Canyon and Emporia
were effectively pledged to Ridgewood.
The amount due Synergics, Inc. as noted above, therefore, include funds advanced
by Synergics to acquire or construct the power plants, net of power revenues
deposited at Synergics and operating expenses paid on behalf of the power
plants. See Note 1.
NOTE 5 - NOTES PAYABLE AND LONG TERM DEBT
Power plants owned by subsidiaries of Hydro are financed by a term loan. Hydro
has a choice of variable or fixed interest rates on the term loan. Variable
rates are LIBOR plus 1 3/4% or the Lenders Corporate Base Rate plus 1/2%. At
Hydro's option, a fixed interest rate can be selected, payable on any portion of
the debt in excess of $1,000,000, for any period of time from two to seven
years. Such fixed rate shall be based on the U.S. Treasury note rate at the date
of election plus 2 3/4%.
Notes Payable and long term debt, all term at December 31, were as follows:
2001 2000
---- ----
7.84% (LIBOR base) at December 31, 2000
180 Day Maturity ....................... $ -- $ 1,456,250
3.77% and 7.87% (LIBOR base) at
December 31, 2001 and December 31, 2000,
respectively - 90 Day Maturity ........ 8,625,000 8,693,750
----------- -----------
Total ................. $ 8,625,000 $10,150,000
=========== ===========
This credit facility is secured by six hydroelectric plants.
Repayment of this facility is based on a schedule of varying quarterly payments
with the balance due in full on December 31, 2007. Annual maturities are as
follows:
2002 $1,525,000
2003 1,450,000
2004 1,475,000
2005 1,475,000
2006 1,475,000
Thereafter 1,225,000
---------
Total 8,625,000
Less Current Portion (1,525,000)
---------
Long-Term Indebtedness,
Net of Current Portion $7,100,000
=========
As additional compensation to the lender, Hydro is required to pay to the lender
a "royalty" equal to 10% of the cash flow, as defined, of the financed projects
plus 10% of any net proceeds, as defined, from the sale or refinancing of any of
the financed projects. No additional interest payments were required for 2001 or
2000.
During 2000 and through March 31, 2001, the lender issued, on behalf of Hydro, a
Letter of Credit as collateral for performance on a power purchase contract. The
Letter of Credit was supported by the pledge of cash equivalents in the amount
of $914,531.
NOTE 6 - COMMITMENTS
Long term power purchase contracts for each operating hydroelectric plant
require the sale of the entire output of power of the respective facility to
local public utility companies.
Two of the hydroelectric plants operate on sites subject to long term leases.
The leases terminate in 2010 and 2024, respectively. Lease payments are as
follows:
2002 $ 645,000
2003 660,000
2004 670,000
2005 685,000
2006 695,000
Thereafter 7,626,477
----------
Total Minimum Lease
Payments $10,981,477
===========
Other combined entities have required payments based upon a percentage of annual
gross revenue of the hydroelectric plant less any taxes or other fees paid to
the lessors. There are no minimum rents required and these commitments are not
included in the amounts presented above.
SYNERGICS HYDRO, INC. AND SUBSIDIARIES, BOX CANYON LIMITED PARTNERSHIP,
AND EMPORIA HYDRO LIMITED PARTNERSHIP
COMBINED BALANCE SHEETS
SEPTEMBER 30, 2002
(Unaudited)
ASSETS
Current Assets
Cash and Cash Equivalents ........................ $ 1,995,348
Accounts Receivable .............................. 197,321
Current Portion of Long Term Notes Receivable .... 4,458,137
Prepaid Expenses ................................. 375,803
------------
Total Current Assets ........................... 7,026,609
Non Current Receivables:
Long Term Notes Receivable, net of current portion 3,441,670
Property, Plant and Equipment ...................... 36,785,221
Less: Accumulated Depreciation .................. (17,679,781)
------------
Net Property, Plant and Equipment .............. 19,105,440
Other Assets
Other Intangibles ................................ 1,175,293
Less: Accumulated Amortization .................. (755,467)
------------
Total Other Assets ............................. 419,826
------------
Total Assets .............................. $ 29,993,545
============
LIABILITIES AND STOCKHOLDER'S AND PARTNERS' EQUITY
Current Liabilities
Accrued Expenses ................................. $ 30,155
Current Portion of Long Term Debt ................ 1,468,750
Due to Parent .................................... 8,450,292
------------
Total Current Liabilities ...................... 9,949,197
Long Term Debt, Net of Current Portion ............. 6,012,500
------------
Total Liabilities ........................ 15,961,697
Stockholder's and Partners' Equity
Common Stock, $1.00 Par Value: 100
Shares Authorized, Issued and Outstanding ..... 100
Additional Paid-in Capital ....................... 2,799,900
Retained Earnings and Partners' Capital .......... 11,231,848
------------
Total Stockholder's and Partners' Equity .. 14,031,848
------------
Total Liabilities and Stockholder's
and Partners' Equity ..................... $ 29,993,545
============
See accompanying notes to combined financial statements.
SYNERGICS HYDRO, INC. AND SUBSIDIARIES, BOX CANYON LIMITED PARTNERSHIP,
AND EMPORIA HYDRO LIMITED PARTNERSHIP
STATEMENT of OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(Unaudited)
REVENUES
Energy Revenue .................. $ 3,759,994
COSTS AND EXPENSES
Management ...................... 236,318
General and Administrative ...... 559,485
Operating and Maintenance ....... 689,149
-----------
Total Costs and Expenses ..... 1,484,952
-----------
Earnings From Operations ..... 2,275,042
OTHER EXPENSES (INCOME)
Depreciation and Amortization ... 951,412
Interest Income ................. (711,867)
Interest Expense ................ 962,781
-----------
Net Other Expense ............ 1,202,326
-----------
Net Income Before Income Taxes 1,072,716
PROVISION FOR INCOME TAXES
Current Income Tax Expense ....... 10,801
-----------
Net Income ......................... $ 1,061,915
===========
See accompanying notes to combined financial statements.
SYNERGICS HYDRO, INC. AND SUBSIDIARIES, BOX CANYON LIMITED PARTNERSHIP,
AND EMPORIA HYDRO LIMITED PARTNERSHIP
COMBINED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income ........................................ $ 1,061,915
Adjustments to Reconcile Net Income
to Cash Provided by Operations:
Depreciation and Amortization ................... 951,412
Interest Income Accrued to Long-Term Receivable . (675,297)
Decrease (Increase) in:
Accounts Receivable ........................... 149,304
Prepaid Expenses .............................. (214,879)
Decrease in Accounts Payable and Accrued Expenses (1,155)
-----------
Net Cash Provided by Operating Activities ....... 1,271,300
CASH FLOW FROM FINANCING ACTIVITIES:
Payments on Notes Payable ......................... (1,143,750)
Borrowings from Parent Company ................... 742,391
-----------
Net Cash Flow Used by Financing Activities ...... (401,359)
CASH FLOW FROM INVESTING ACTIVITIES:
Payments on Long Term Notes Receivable ............ 200,000
-----------
Net Cash Flow Provided by Investing Activities .. 200,000
-----------
Net Increase in Cash ................................ 1,069,941
Cash, Beginning of Year ............................. 925,407
-----------
Cash, End of Period ................................. $ 1,995,348
===========
See accompanying notes to combined financial statements.
SYNERGICS HYDRO, INC. AND SUBSIDIARIES, BOX CANYON LIMITED PARTNERSHIP,
AND EMPORIA HYDRO LIMITED PARTNERSHIP
NOTES TO COMBINED UNAUDITED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine months ended September 30, 2002 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2002.
THE RIDGEWOOD POWER GROWTH FUND
SYNERGICS, INC. AND SUBSIDIARIES
F/K/A
SYNERGICS HYDRO, INC. AND SUBSIDIARIES, BOX CANYON LIMITED PARTNERSHIP,
AND EMPORIA HYDRO LIMITED PARTNERSHIP
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On November 22, 2002, a joint venture formed between The Ridgewood Power Growth
Fund (the "Fund") and Ridgewood Electric Power Trust V ("Trust V") acquired 100%
of the outstanding stock of Synergics, Inc., which owned nine hydroelectric
generating plants. The former shareholders of Synergics Inc. received 100% of
the outstanding shares of a subsidiary of Synergics in exchange for selling the
stock of Synergics, Inc. to the Fund and Trust V. The transaction resulted in
the former Synergics shareholders retaining one hydroelectric plant and the Fund
and Trust V acquiring the remaining eight plants. The eight hydroelectric plants
acquired by the Fund and Trust V were owned by subsidiaries of Synergics, Inc.
These subsidiaries were formerly known as, Synergics Hydro, Inc., Box Canyon
Limited Partnership and Emporia Hydro Limited Partnership. The following
unaudited pro forma condensed combined balance sheet as of September 30, 2002
has been prepared to present the financial position of the combined companies as
though the acquisition had been consummated on September 30, 2002. The following
pro forma condensed combined statements of operations for the year ended
December 31, 2001 and the nine months ended September 30, 2002 have been
prepared to present the operations of the combined companies assuming the
acquisition had been completed on January 1, 2001.
The unaudited pro forma condensed combined financial statements, including the
notes thereto, are qualified in their entirety by reference to, and should be
read in conjunction with, the historical consolidated financial statements of
The Ridgewood Power Growth Fund included in its Annual Report on Form 10-K for
the year ended December 31, 2001 and Quarterly Report on Form 10-Q for the
quarter ended September 30, 2002. The unaudited pro forma condensed combined
balance sheet and statements of operations have been included herein for
comparative purposes only and do not purport to be indicative of the results of
operations which actually would have been obtained had the acquisition been
completed at the beginning of the respective combined periods. In addition,
future results may vary significantly from the results reflected in these pro
forma financial statements.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 2002
(UNAUDITED)
Ridgewood Power Synergics,Inc. Pro Forma
Growth Fund &Subsidiaries Adjustments Combined
------------ ------------ ----------- -----------
Assets:
Cash and cash
equivalents ..... $1,212,585 $1,995,348 -- $3,207,933
Accounts
receivable ...... 1,629,188 197,321 -- 1,826,509
Due from
affiliates ...... 208,856 -- -- 208,856
Current
portion
of note
receivable ...... -- 4,458,137 (4,258,137) a 200,000
Other
current
assets .......... 237,102 375,803 -- 612,905
----------- ----------- ----------- -----------
Total
current
assets ....... 3,287,731 7,026,609 (4,258,137) 6,056,203
Long term
note
receivable,
net of
current (1,177,656) b
portion ......... -- 3,441,670 4,258,137 a 6,522,151
Plant and
equipment ....... 32,187,024 36,785,221 (35,003,945) c 33,968,300
Construction
in progress ..... 1,463,720 -- -- 1,463,720
Office
equipment ....... 1,022,969 -- -- 1,022,969
---------- ----------- ----------- ----------
Total plant
and
equipment ....... 34,673,713 36,785,221 (35,003,945) 36,454,989
Accumulated
depreciation ... (3,247,281) (17,679,781) 17,679,781 d (3,247,281)
---------- ----------- ----------- ----------
Plant and
equipment,net ... 31,426,432 19,105,440 (17,324,164) 33,207,708
---------- ----------- ----------- ----------
Electric power
sales
contracts
and other
intangibles ..... -- 1,175,293 16,134,442 e 17,309,735
Accumulated
amortization ... -- (755,467) 755,467 f --
---------- ---------- ---------- ----------
Electric
power sales
contracts,net .. -- 419,826 16,889,909 17,309,735
---------- ---------- ---------- ----------
Investment in:
Synergics
Projects ........ 14,288,819 -- (14,288,819)g --
United Kingdom
Landfill
Projects ........ 5,398,337 -- -- 5,398,337
---------- ---------- ---------- ----------
Total
assets ...... $ 54,401,319 $ 29,993,545 $(15,900,730) $ 68,494,134
---------- ---------- ---------- ----------
Liabilities
and
shareholders'
equity:
Liabilities:
Accounts
payable
and accrued
expenses ........ $ 1,510,911 $ 30,155 $ 1,100,000 h $ 2,641,066
Bank debt ........ 761,998 1,468,750 -- 2,230,748
Due to
affiliates ...... 467,358 8,450,292 (8,450,292)i 467,358
---------- ---------- ---------- ----------
Total
current
liabilities .. 2,740,267 9,949,197 (7,350,292) 5,339,172
--------- ---------- ----------- ----------
Bank debt,
less current
portion ......... 5,256,558 6,012,500 -- 11,269,058
Minority
interest ........ 8,972,511 -- 5,481,410 j 14,453,921
Shareholders'
equity:
Total
shareholders'
equity .......... 37,431,983 14,031,848 (14,031,848) k 37,431,983
----------- ---------- ---------- ----------
Total
liabilities
and
shareholders'
equity ........ $ 54,401,319 $ 29,993,545 $(15,900,730) $ 68,494,134
---------- ---------- ---------- ----------
See accompanying notes to pro forma condensed combined financial statements.
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 2001
(UNAUDITED)
Ridgewood Power Synergics,Inc. Adjustments Pro Forma
Growth Fund & Subsidiaries Combined
---------- -------------- ---------- ----------
Revenues ........... $ 4,237,676 $ 3,794,625 -- $ 8,032,301
Cost of sales ...... 3,256,555 2,155,876 105,440 a 5,517,871
----------- ----------- ----------- -----------
Gross profit ....... 981,121 1,638,749 (105,440) 2,514,430
General and
administrative
expenses .......... 1,523,877 651,743 -- 2,175,620
Management fee
paid to the
managing
shareholders ...... 1,645,267 465,576 -- 2,110,843
----------- ----------- ----------- -----------
Total other
operating
expenses ........ 3,169,144 1,117,319 -- 4,286,463
Income (loss)
from operations ... (2,188,023) 521,430 (105,440) (1,772,033)
Other income
(expense):
Interest income .... 305,746 890,540 (775,540)d 420,746
Income from
Synergics Hydro
Projects .......... 993,685 -- (993,685)b --
Interest expense ... (29,698) (606,315) -- (636,013)
Equity interest
in income(loss)of:
ZAPWORLD.COM .... (818,043) -- -- (818,043)
United Kingdom
Landfill
Projects ....... (164,559) -- -- (164,559)
Other income
(expense) ........ 197,629 -- -- 197,629
----------- ----------- ----------- ----------
Write down of
investment in ZAP . (1,282,241) -- -- (1,282,241)
----------- ----------- ----------- -----------
Other (expense)
income, net .... (797,481) 284,225 (1,769,225) (2,282,481)
----------- ----------- ----------- -----------
Income (loss)
before taxes ...... (2,985,504) 805,655 (1,874,665) (4,054,514)
Income tax
expense ........... 57,666 -- -- 57,666
----------- ----------- ----------- -----------
Income (loss)
before
minority interest . (2,985,504) 747,989 (1,874,665) (4,112,180)
Minority interest
in the (earnings)
loss of
consolidated
subsidiaries ...... (51,907) -- 38,567 c (13,340)
----------- ----------- ----------- -----------
Net income(loss) ... $(3,037,411) $ 747,989 $(1,836,098) $(4,125,520)
----------- ----------- ----------- -----------
See accompanying notes to pro forma condensed combined financial statements.
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2002
(UNAUDITED)
Ridgewood Power Synergics,Inc. Pro Forma
Growth Fund & Subsidiaries Adjustments Combined
----------- -------------- ---------- ------------
Revenues .......... $ 4,351,994 $ 3,759,994 -- $ 8,111,988
Cost of sales ..... 3,838,263 1,640,557 79,080 a 5,557,900
----------- ----------- ----------- -----------
Gross profit ...... 513,731 2,119,437 (79,080) 2,554,088
General and
administrative
expenses ......... 1,324,138 559,485 -- 1,883,623
Management fees ... 822,633 236,318 -- 1,058,951
----------- ----------- ----------- -----------
Total other
operating
expenses ....... 2,146,771 795,803 -- 2,942,574
Income(loss)
from operations .. (1,633,040) 1,323,634 (79,080) (388,486)
Other income
(expense):
Interest income ... 60,128 711,867 (675,297)d 96,698
Interest expense .. (618,877) (962,785) 749,906 b (831,756)
Equity interest
in income(loss)of
United Kingdom
Landfill
Projects ...... (484,021) -- -- (484,021)
Sinai
Environmental
Services ...... (37,298) -- -- (37,298)
Other income
(expense) ........ 7,439 -- -- 7,439
----------- ----------- ----------- -----------
Other income
(expense), net . (1,072,629) (250,918) 74,609 (1,248,938)
----------- ----------- ----------- -----------
Income(loss)
before taxes .... (2,705,669) 1,072,716 (4,471) (1,637,424)
Income tax
expense ......... -- 10,801 -- 10,801
----------- ----------- ----------- -----------
Income (loss)
before minority
interest ........ (2,705,669) 1,061,915 (4,471) (1,648,225)
Minority interest
in the loss
(earnings) of
consolidated
subsidiaries . 755,304 -- (306,659) c 448,645
----------- ----------- ----------- -----------
Net loss .......... $(1,950,365) $ 1,061,915 $ (311,130) $(1,199,580)
----------- ----------- ----------- -----------
See accompanying notes to pro forma condensed combined financial statements.
THE RIDGEWOOD POWER GROWTH FUND
SYNERGICS, INC. AND SUBSIDIARIES
F/K/A
SYNERGICS HYDRO, INC. AND SUBSIDIARIES, BOX CANYON LIMITED PARTNERSHIP,
AND EMPORIA HYDRO LIMITED PARTNERSHIP
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 1- ACQUISITION
Beginning in late 1999, the Fund and Ridgewood Electric Power Trust V ("Trust
V") (collectively "Ridgewood Power") began negotiations with Synergics, Inc.
("Synergics") to buy nine existing hydroelectric generating plants (the
"Synergics Projects"). In the course of negotiations and due diligence,
Ridgewood Power learned that one of Synergics' lenders had declared a payment
default against Synergics and that the lender had agreed to discharge the debt
at a substantial discount from the face amount if payment were made by the end
of April 2000. In order to preserve the benefit of the lender's offer and to
allow completion of the acquisition on favorable terms, the Fund and Trust V,
through a joint venture, acquired the debt from the lender on April 28, 2000 for
a payment of $17 million to the lender. Trust V supplied $5 million of the
capital used by the joint venture to acquire the debt and the Fund supplied the
remaining $12 million. The Fund and Trust V own the joint venture in proportion
to the capital each supplied and neither will has preferred rights over the
other.
On November 22, 2002, through another joint venture owned in the same proportion
as the joint venture that acquired the debt of Synergics, the Fund and Trust V
acquired 100% of the outstanding stock of Synergics. The former shareholders of
Synergics Inc. received 100% of the outstanding shares of a subsidiary of
Synergics in exchange for selling the stock of Synergics to the Fund and Trust
V.
In total, the Fund and Trust V acquired the Synergics Projects for approximately
$20.3 million. In return for their investment, the Fund and Trust V received
eight hydroelectric generating plants with a market value of approximately $1.8
million, $2.4 million in cash, $6.7 million in notes receivable, $ .5 million in
accounts receivable, and $.2 million in other assets. In accordance with the
purchase agreement, the Fund and Trust V assumed approximately $7.5 million of
bank debt and income taxes of approximately $1.1 million. The Fund and Trust V
assigned the approximate excess purchase price of $17.3 million to electric
power sales contracts, which will be amortized over the remaining life of the
respective contracts.
NOTE 2 - PRO FORMA ADJUSTMENTS
Balance Sheet
(a) Reclass current portion of note receivable to long term to
reflect estimated collection schedule ..................... $ 4,258,137
(b) Adjust note receivable to estimated fair market value ....... (1,177,656)
(c) Adjust plant and equipment to estimated fair market value ... (35,003,945)
(d) Eliminate accumulated depreciation .......................... 17,679,781
(e) Adjust electric power sales contract and other intangibles to
estimated fair market value ............................... 16,134,442
(f) Eliminate accumulated amortization .......................... 755,467
(g) Eliminate investment in Synergics ........................... (14,288,819)
(h) Income taxes assumed as a result of acquisition ............. 1,100,000
(i) Eliminate inter-company balance due to affiliates ........... (8,450,292)
(j) Record minority interest share in acquisition ............... 5,481,410
(k) Eliminate Stockholders' equity .............................. (14,031,848)
Statements of Operations
December 31, September 30,
2001 2002
--------- ---------
(a) Record additional depreciation and .......... $ 105,440 $ 79,080
amortization expense as a result of the new
assigned fair values and useful lives of
property, plant and equipment and power
sales contracts
(b) Eliminate related party interest (income)
expense ................................... (993,685) 749,906
(c) Record minority interest share of Synergics
(earnings) loss ........................... 38,567 (306,659)
(d) Adjust interest income earned on notes
receivable ................................ (775,540) (675,297)