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EX-32 - RIDGEWOOD ELECTRIC POWER TRUST IV | ex32.htm |
EX-31.2 - RIDGEWOOD ELECTRIC POWER TRUST IV | ex31_2.htm |
EX-31.1 - RIDGEWOOD ELECTRIC POWER TRUST IV | ex31_1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
10-K
(Mark
One)
x |
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the
fiscal year ended December 31, 2009
or
o |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the
transition period from ________ to _______
Commission
File Number: 0-25430
RIDGEWOOD
ELECTRIC POWER TRUST IV
(Exact Name of
Registrant as Specified in Its Charter)
Delaware
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22-3324608
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(State
or Other Jurisdiction of
Incorporation
or Organization)
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(IRS
Employer Identification Number)
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1314
King Street, Wilmington, DE 19801
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(Address
of Principal Executive Offices, including Zip Code)
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(302)
888-7444
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(Registrant’s
telephone number, including area code)
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SECURITIES
REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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None
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SECURITIES
REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
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Investor
Shares of Beneficial Interest
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(Title
of Class)
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o No
þ
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act. Yes o No þ
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 þ No o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes o No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. þ
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting company þ
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(Do
not check if a smaller reporting
company)
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No þ
There is
no market for the Investor Shares. The number of Investor Shares outstanding at
February 28, 2010 was 476.8.
FORM
10-K
TABLE OF CONTENTS
PART
I
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Page
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3
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7
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10
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10
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10
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11
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PART
II
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11
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11
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11
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14
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14
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14
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14
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15
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PART
III
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15
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17
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17
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18
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19
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PART
IV
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20
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23
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Forward-Looking
Statements
Certain
statements discussed in Item 1. “Business”, Item 3. “Legal Proceedings”, Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and elsewhere in this Annual Report on Form 10-K constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995.
These
forward-looking statements generally relate to the Trust’s plans, objectives and
expectations for future events and include statements about the Trust’s
expectations, beliefs, plans, objectives, intentions, assumptions and other
statements that are not historical facts. These statements are based upon
management’s expectations, opinions and estimates as of the date they are made.
Although management believes that the expectations, opinions and estimates
reflected in these forward-looking statements are reasonable, such
forward-looking statements are subject to known and unknown risks and
uncertainties that may be beyond the Trust’s control, which could cause actual
results, performance and achievements to differ materially from the results,
performance and achievements projected, expected, expressed or implied by the
forward-looking statements. Examples of events that could cause actual results
to differ materially from historical results or those anticipated
include:
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·
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the
timing or terms of any sale of the Trust’s
assets,
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·
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whether
the landfill gas-fired electric generating projects will be able to obtain
financing required to expand and make planned changes to its
operations,
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·
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the
outcome of the matters described in Item 3. “Legal Proceedings” of this
report,
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·
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the
ability to secure a long-term contract for the sale of energy produced by
the landfill project on favorable
terms,
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·
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changes
in political and economic conditions, or federal or state regulatory
structures,
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·
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government
mandates, including those associated with climate
change,
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·
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the
ability of customers to pay for energy
received,
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·
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supplies
and prices of fuels,
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·
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operational
status of generating plants, including mechanical breakdowns,
and
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·
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volatility
in the price for electric energy, natural gas, or renewable
energy.
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Additional
information concerning the factors that could cause actual results to differ
materially from those in the forward-looking statements is contained in Item 1A.
“Risk Factors”, Item 7. “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and elsewhere in this Annual Report on Form
10-K. Any forward-looking statement that the Trust makes, speaks only as of the
date of this report. The Trust undertakes no obligation to publicly update or
revise any forward-looking statements or cautionary factors, as a result of new
information, future events or otherwise, except as required by law.
PART
I
ITEM
1. BUSINESS
Overview
Ridgewood
Electric Power Trust IV (the “Trust”) is a Delaware trust formed on September 8,
1994 primarily to make investments in projects and businesses in the energy and
infrastructure sectors. The Managing Shareholder of the Trust is Ridgewood
Renewable Power LLC, a New Jersey limited liability company (the “Managing
Shareholder” or “RRP”). As the Managing Shareholder, RRP has direct and
exclusive control over the management and operations of the Trust.
The Trust
focuses primarily on projects fueled by natural gas and renewable sources of
fuel. These projects allowed the Trust to develop long-term positions in
attractive specialty markets for products and services provided by its projects
and companies. As of December 31, 2009, the Trust had one remaining operating
investment located in the United States, an investment in a landfill gas-fired
electric generating project with total capacity of 20.4 megawatts (“MW”). The
Trust owned hydro-electric projects that were sold in November 2009, as
discussed below. Also, the Trust previously owned biomass fueled
electricity generating facilities in Maine which were sold in December 2008, as
discussed below.
The
Managing Shareholder is marketing the Trust’s landfill project for sale. The
Managing Shareholder cannot predict the timing of the sale process or whether
any sale will occur.
The Trust
initiated its private placement offering in February 1995, selling whole and
fractional investor shares of beneficial interests of $100,000 per share
(“Investor Shares”). There is no public market for Investor Shares and one is
not likely to develop. In addition, Investor Shares are subject to significant
restrictions on transfer and resale and cannot be transferred or resold except
in accordance with the Trust’s Declaration of Trust (“Declaration of Trust”) and
applicable federal and state securities laws. The offering was concluded in
September 1996, and after payment of offering fees, commissions and investment
fees, the Trust had $39.5 million available for investments and operating
expenses.
Managing
Shareholder
RRP, via
a predecessor corporation, was founded in 1991 by Robert E. Swanson. As the
Managing Shareholder, RRP has direct and exclusive control over the management
of the Trust’s operations. With respect to project investments, RRP locates
potential projects, conducts appropriate due diligence and negotiates and
completes the transactions in which the investments are made by the
Trust.
In
addition, RRP performs, or arranges for the performance of, the operation and
maintenance of the projects invested in by the Trust and the management and
administrative services required for Trust operations. Among other services, RRP
administers the accounts, including tax and other financial information, and
handles relations with the shareholders. RRP also provides the Trust with office
space, equipment and facilities and other services necessary for its
operation.
As
compensation for its management services, the Managing Shareholder is entitled
to (i) an annual management fee, payable monthly, equal to 3% of the Trust's
prior year net asset value, and (ii) a 20% interest in the cash distributions
made by the Trust in excess of certain threshold amounts expressed in terms of
shareholder returns, which have not been achieved by the Trust. The Managing
Shareholder is also entitled to receive reimbursement from the Trust for
operating expenses incurred by the Trust, or on behalf of the Trust and paid by
RRP, as the Managing Shareholder. RRP has arranged for administrative functions
required to be performed for the Trust to be performed by an affiliate,
Ridgewood Power Management LLC (“RPM”), and at RPM’s costs, such costs are
reimbursed to RPM by the Trust. RRP also serves as the managing shareholder (or
managing member as appropriate) of a number of affiliated trusts and investment
vehicles similar to the Trust and, through RPM, provides services to those
entities similar to those provided to the Trust.
Affiliates
of RRP act on behalf of a number of investment vehicles in the oil and gas and
venture capital sectors in a manner similar to that for which RRP serves on
behalf of the Trust.
Rhode
Island LFG Genco, LLC
Ridgewood
Providence Power Partners, L.P. (“Ridgewood Providence”) was formed in February
1996 as a Delaware limited partnership and, in April 1996, Ridgewood Providence
purchased substantially all of the net assets of Northeastern Landfill Power
Joint Venture. The assets acquired included a 13.8MW capacity electrical
generating station and associated gas treatment system, located at the Central
Landfill in Johnston, Rhode Island (the “Landfill”). The project included
nine reciprocating engine generator sets (“gensets”) fueled by methane gas
produced by and collected from the Landfill. Prior to the reorganization
discussed below, the Trust owned 64.3% of Ridgewood Providence and the remaining
35.7% interest was owned by Ridgewood Electric Power Trust III (“Trust
III”).
In April
2002, the Managing Shareholder formed Ridgewood Rhode Island Generation LLC
(“RRIG”) through a joint venture between Ridgewood Electric Power Trust I
(“Trust I”) (15%) and the Ridgewood Power B Fund/Providence Expansion (“B Fund”)
(85%) for the purpose of utilizing a portion of the supply of gas from the
Landfill that was in excess of the quantity that could be used by Ridgewood
Providence. The RRIG project currently is a 6.6MW facility and include four
gensets. RRIG’s capacity declined by 2.6MW, from 9.2MW, as two gensets were
decommissioned in the third quarter of 2009. Prior to the reorganization
discussed below, the Trust did not own any interest in RRIG.
Rhode
Island LFG Genco, LLC (“RILG”) was formed in October 2007 as a Delaware limited
liability company which must be dissolved no later than December 31, 2107. On
November 17, 2008, the Trust, Trust I, Trust III and B Fund entered directly or
indirectly, through one or more subsidiaries, into a series of agreements
relating to the operations of Ridgewood Providence and RRIG at the
Landfill. The
principal purpose of these agreements was to consolidate the activities of the
Trust, Trust I, Trust III and B Fund, at the Landfill under one entity, RILG,
for the purposes of developing a new electric generating facility and
consolidating all gas rights under one entity. References to RILG herein refer
to RILG or RILG and its subsidiaries, as the context requires.
Pursuant
to terms and conditions of a contribution agreement, the Trust, Trust I, Trust
III and B Fund each contributed certain membership, partnership and economic
interests that they held in Ridgewood Providence, RRIG, Rhode Island Gas
Management LLC (“RIGM”) and Ridgewood Providence Power Corporation (“RPPC”) to
RILG, in exchange for their allocable interests in RILG. As a result
of the reorganization, the Trust, Trust I, Trust III and B Fund directly or
indirectly own all of the equity interests in RILG. The Trust contributed its
64.3% interest in Ridgewood Providence in exchange for its 35.24% interest in
RILG.
The
assets owned by Ridgewood Providence and RRIG currently have a combined 20.4MW
of electrical generating capacity and are operated under contract by RPM on an
at-cost basis.
The
electricity produced by Ridgewood Providence was historically sold to
New England Power Service Company (“NEP”) under a long-term electric power
sales contract which would have expired in 2020. In July 2009, NEP under the
long-term contract elected to exercise its one-time option to terminate its
contract with RILG, effective January 2010. RILG currently sells all of its
electrical output in the spot or day-ahead wholesale electricity market. RILG is
currently seeking alternate arrangements for the sale of its output of its
electricity generating capacity in lieu of selling the output at open market
spot prices. Whether this effort will be successful and what the results to RILG
will be if successful cannot be determined at this time.
Under the
site lease and gas rights agreement entered into in connection with the
transaction, Rhode Island Resource Recovery Corporation (“RIRRC”), the owner and
operator of the Landfill, transferred 100% of the current and future landfill
gas produced at the Landfill to RILG. Effective with the commercial
operation of the new generating facility, RILG will pay a royalty of 15% of
gross revenue to RIRRC, net of certain credits, from all sources including
electricity, capacity and Renewable Portfolio Standards Attributes (“RPS
Attributes”). RILG will also pay monthly rent of $3,400 (escalated for
inflation beginning in 2010) for the land on which the treatment facility is
intended to be built. The payment arrangements under the previously
existing arrangements will continue in place until the new generating facility
begins commercial operation. Under the prior existing RPS
Attribute agreement between Ridgewood Providence and RIRRC, Ridgewood
Providence is required to pay 15% net revenue royalties from the sale of its RPS
Attributes to each of RIRRC and Ridgewood Gas Services LLC. In addition,
Ridgewood Providence is also required to pay, as royalty, 18% of power
generation revenue to RIRRC. Similarly, RRIG is required to pay 15% net revenue
royalties derived from the sale of its RPS Attributes to RIRRC, net of
certain adjustments.
The site
lease and gas rights agreement also requires that Ridgewood Providence terminate
operation of its existing facility, decommission the facility and turn it over
to RIRRC, if requested, but no earlier than December 31, 2011 (subject to
acceleration with a payment by RIRRC). RILG may also need to relocate a portion
of RRIG’s plant and will split any cost of such relocation with RIRRC (subject
to a $250,000 cap on RIRRC’s share).
RILG is
also obligated, under the terms of the various agreements with RIRRC, to
construct a new electric generating facility at the Landfill and to assume
primary responsibility for costs associated with the landfill gas collection
system at the Landfill as of the first to occur of the commencement of operation
of a new electric generating facility or June 1, 2013. RILG is also
responsible for the development and construction of a sulfur treatment facility
on the Landfill and the construction of new pipes and headers. The cost of
building and operating the sulfur treatment facility and the pipes and headers
is estimated to be approximately $5 million. The cost of the sulfur
treatment facility will be split equally between RILG and RIRRC and the entire
cost associated with the construction of pipes and headers will be paid by
RILG. In addition, the cost of new flares on the Landfill will be
borne by RIRRC, but in certain circumstances, the costs may be shared with RILG.
If RILG fails to comply with these obligations, it could be subject to monetary
damages and could also forfeit its contracted gas rights as discussed in Item 7.
“Management’s Discussion and Analysis of Financial Condition and Result of
Operations - Contractual Obligations and Commitments”.
On
November 3, 2009, RILG received notice from the United States Department of
Energy (“DOE”) that it had been awarded a grant of $15 million towards the
purchase of equipment relating to RILG expansion. The final detail of the award
is subject to final contract negotiations between RILG and the DOE. As a result,
the exact amount, and timing of the receipt of any award, cannot currently be
predicted.
Massachusetts law
requires that all retail electricity suppliers in Massachusetts (i.e. those
entities supplying electric energy to retail end-use customers in Massachusetts)
purchase a minimum percentage of their electricity supplies from
qualified renewable generation units powered by one of several renewable
fuels, such as solar, biomass or landfill methane gas. Beginning
in 2009, each such retail supplier must obtain at least approximately
four percent of its supply from qualified new renewable
generation units and approximately four percent from qualified older
renewable generation units. The regulations providing for certain of these
provisions are currently being reviewed by the Massachusetts Department of
Energy Resources (“DOER”) and could be modified as a result of that
review.
In
January 2003, Ridgewood Providence received a “Statement of Qualification” from
the DOER pursuant to the Renewable Portfolio Standards (“RPS”) adopted by
Massachusetts. Since Ridgewood Providence became qualified, it has been
able to sell to retail electric suppliers the RPS Attributes associated with its
electrical energy, subject to “vintage” provisions, which disqualifies the
amount of a facility’s generation of electric energy measured by its average
output during the period 1995 through 1997. Retail electric suppliers may
purchase RPS Attributes associated with renewable energy and not necessarily the
energy itself. Thus, electrical energy and RPS Attributes are separable products
and need not be sold or purchased as a bundled product.
During
2004, Ridgewood Providence became qualified to sell RPS Attributes in
Connecticut under a similar RPS program, except that the Connecticut program
does not have “vintage” provisions. Thus, Ridgewood Providence can sell the
86,000 megawatt hours that are ineligible under Massachusetts standards into the
Connecticut market. During 2009 and 2008, Ridgewood Providence sold its
“vintage” RPS Attributes pursuant to agreements with various power
marketers.
The
output from Ridgewood Providence and RRIG qualifies for renewable energy
incentives in Massachusetts, New Hampshire, Rhode Island and Connecticut. The
output of RRIG electrical generating capacity also qualifies for Section 45
federal tax credits. The federal tax credits are expected to continue until
October 2015, the tenth anniversary of the commissioning of the
gensets.
RILG and
several of its affiliates had an agreement with a power marketer for which they
were committed to sell RPS Attributes derived from their electric generation.
The agreement provided such power marketer with six separate annual options to
purchase such attributes from 2004 through 2009 at fixed prices, as defined in
the agreement. The power marketer did not exercise its option to purchase 2009
RPS Attributes, and a deposit provided by RILG and its affiliates to secure
their obligations under the agreement was returned by April 2009. All required
RPS Attributes were supplied by April 2009 and the contract expired according to
its terms on June 15, 2009. RILG currently has no long-term agreements for the
sale of RPS Attributes.
Maine
Hydro
In August
1996, the Trust and Ridgewood Electric Power Trust V (“Trust V”) formed
Ridgewood Maine Hydro Partners, L.P. (“Maine Hydro”) and in December 1996,
acquired a portfolio of hydro-electric facilities located in Maine from CHI
Energy, Inc. The Trust and Trust V owned equal interests in Maine
Hydro.
On
November 20, 2009, Maine Hydro entered into a purchase and sale agreement and
sold for cash, all of the assets of Maine Hydro to KEI (USA) Power Management
Inc. and certain of its subsidiaries (“KEI USA”), which are affiliated with
Kruger Energy, Inc., a Canada-based international company. The total gross
purchase price of the sale, including a post-closing adjustment made in 2010 for
estimated working capital at the time of the sale, totaled $7.3 million, of
which $3.6 million was allocated to the Trust. A summary of the terms and
conditions of the sale is provided in a Current Report on Form 8-K filed with
the United States Securities and Exchange Commission (“SEC”) on November 23,
2009.
The
sellers gave a limited number of representations and warranties to the buyers in
connection with the sale that are considered typical of such transactions.
Should there be a breach of those representations and warranties, the buyers
must first make a claim against the insurance policy purchased by the seller for
claims arising from any such breach. As of the date of such filing, the Trust is
not aware of any such claims.
Indeck
Maine
In June
1997, the Trust and Trust V purchased equal portions of a preferred membership
interest in Indeck Maine Energy, LLC, an Illinois limited liability company
(“Indeck Maine”) that owned two electric power generating stations fueled by
clean wood biomass at West Enfield and Jonesboro, both in Maine. Indeck Energy
Services, Inc. (“IES”), an entity unaffiliated with the Trust, owned the
remaining membership interest in Indeck Maine and was the seller in the June
1997 transaction.
On August
22, 2008, Ridgewood Maine LLC (“Ridgewood Maine”), co-owned by the Trust and
Trust V, and IES (together the “Sellers”) entered into a purchase and sale
agreement to sell 100% of the membership interests of Indeck Maine to Covanta
Energy Corporation (“Covanta”) for cash, subject to various closing conditions,
including approval of shareholders of the Trust and Trust V. A summary of the
terms and conditions of the sale is provided in Current Reports on Form 8-K
filed with the SEC on August 25, 2008 and November 14, 2008.
On
December 22, 2008, the Sellers completed the sale and transferred 100% of the
membership interests in Indeck Maine to Covanta for an aggregate purchase price
of $53.9 million, which includes a net working capital adjustment of $3.1
million as defined in the purchase and sale agreement, as amended, less
estimated retention and vacation payments of $1.2 million relating to RPM staff
based at the Indeck Maine facilities.
Project
Raw Materials
The
Trust’s investments convert a raw material into a finished product and the
arrangements for obtaining these raw materials are a key element in the business
of the Trust. The landfill electricity generating facilities consist of gensets
that use methane-containing landfill gas as fuel. Gas is collected from the
Landfill as it is produced through natural anaerobic digestion of the waste.
RILG does not own or operate the Landfill but has arrangements with RIRRC which
give the project certain rights, including the right to build the project,
occupy the compound and use the gas from the Landfill. These arrangements are
set out in long-term agreements that include provisions for royalty payments
from the project to RIRRC as compensation for granting these
rights.
Competition
Prior to
January 2010, power generated by RILG was partly sold pursuant to long-term
contract and partly at prevailing market prices. Effective January 2010, all of
the power generated by RILG is sold at prevailing market prices. RILG competes
with other renewable energy producers for the sale of the electricity and RPS
Attributes.
Government
Incentives and Regulation
Projects
of the Trust are subject to energy and environmental laws and regulations at the
federal, state and local levels in connection with development, ownership,
operation, geographical location, zoning and land use of a project and emissions
and other substances produced by a project. These energy and environmental laws
and regulations generally require that a wide variety of permits and other
approvals be obtained before the commencement of construction or operation of an
energy-producing facility and that the facility then operate in compliance with
such permits and approvals.
RILG
qualifies for incentives because of the use of renewable fuel.
All of
the Trust’s projects have operated under Qualifying Facility Certifications
issued by the Federal Energy Regulatory Commission. Even though these projects
have no employees, they are affected by general employment regulations in the
jurisdictions in which they operate through the RPM operations and
maintenance agreements. The Trust considers these regulations to be routine and
does not consider the cost of compliance to be material.
Insurance
The Trust
has in place, either directly or through investee companies, insurance typical
for activities such as those conducted by the Trust or its investee companies.
These policies include property and casualty, business interruption and
workman’s compensation insurance, which the Trust believes to be
appropriate.
Employees
The Trust
does not have employees. The activities of the Trust are performed either by
employees of the Managing Shareholder or its affiliates.
Offices
The
principal office of the Trust is located at 1314 King Street, Wilmington,
Delaware, 19801 and its phone number is 302-888-7444. The Managing Shareholder’s
principal office is located at 14 Philips Parkway, Montvale, New Jersey, 07645
and its phone number is 201-447-9000.
ITEM
1A. RISK FACTORS
In
addition to the other information set forth elsewhere in this report, you should
carefully consider the factors discussed below.
RISKS
INHERENT IN THE BUSINESSES OF THE TRUST
RILG
depends on the production of landfill methane gas from the Landfill site on
which they operate and access to that gas production.
A number
of factors influence the amount and quality of landfill methane gas produced by
a landfill site, including the quantity and makeup of the waste deposited into
the site by RIRRC, the manner and sequence of the waste deposition, the
non-waste materials used to support the landfill structure and the amount of
liquid in the landfill. A number of factors also affect access to gas that is
being produced by a landfill including the land filling strategy and practices
of the landfill site operator. To the extent that these factors limit the
production of landfill methane gas or the ability of the project to collect and
use that gas, RILG may not maintain profitable output levels.
RILG
is subject to monetary damages and forfeiture of its gas rights if the
facilities at the Landfill are not expanded as contractually
required.
The terms
of RILG’s site lease and gas rights agreement will continue so long as RILG or
an affiliate has electricity generating facilities on the Landfill capable of
using the landfill gas on an economic basis or otherwise making economic use of
the landfill gas products, including, without limitation, sales to third
parties. RILG is also obligated, under the terms of the various agreements
with RIRRC, to construct a new electric generating facility at the Landfill and
to assume primary responsibility for costs associated with the landfill gas
collection system at the Landfill as of the first to occur of the commencement
of operation of the new electric generating facility or June 1,
2013. RILG is also responsible for the development and construction
of a sulfur treatment facility on the Landfill and the construction of new pipes
and headers. If RILG fails to comply with these obligations, it could be subject
to monetary damages and could also forfeit its contracted gas rights. While the
full cost of the expansion activities is not yet known, it is the opinion of the
Managing Shareholder that RILG has insufficient capital to meet all of its
obligations to expand its Landfill operations. As a result, for the development
efforts to be completed, RILG must either be sold to entities that can invest in
the development of these projects or obtain third-party financing to perform its
duties under the various agreements. While the Managing Shareholder believes a
portion of such financing will be available, there can be no assurance whether
or when RILG can obtain sufficient financing or obtain it on satisfactory
terms. The current condition of the capital markets may make selling
or obtaining financing for these projects very difficult.
The
projects of the Trust are subject to regulatory changes (including changes in
environmental regulations) that could significantly reduce revenues or increase
expenses of the Trust.
Regulatory
changes, such as emission control changes and climate change regulations could
impact the operations of the Trust’s projects. Such changes could increase their
costs, prevent them from operating or alternatively, increase their
value.
The
Trust’s projects sell their electricity output and RPS Attributes at open market
prices and could be adversely impacted by unfavorable changes in market
prices.
Historically,
RILG sold electricity partly at fixed prices pursuant to a long-term contract
and partly at prevailing market prices. However, effective January 2010, RILG
started selling all of its electricity at market prices. If market
prices for electricity fall sufficiently, RILG may not be able to operate
profitably. Effective January 2009, all RPS Attributes generated by
RILG’s operations are sold at market prices. These market prices are highly
dependent on the available supply of RPS Attributes. The supply of available RPS
Attributes in the region has been increasing and is expected to continue to
increase in the coming years. Additionally, the price for RPS Attributes has
been declining since 2008. If the market prices for RPS Attributes continue to
decline, such a decline would adversely impact the profitability of RILG, and,
if severe enough or if coupled with a decrease in electricity prices, could
result in a suspension of operations.
The
projects of the Trust depend on the near-continuous operation of their
equipment. Should the productivity of some or all of this equipment be
compromised or should the equipment fail altogether, the projects and the Trust
would be adversely affected. The Managing Shareholder may also experience
difficulty in hiring qualified operating personnel.
The
primary equipment of the projects is gensets. This equipment is subject to
mechanical failure that the Trust may not be able to predict and that can render
specific projects inoperable for considerable periods of time. This risk also
extends to failures of the electricity grid near the Trust’s projects that could
prevent the affected project or projects from delivering its electricity. In
addition, the Managing Shareholder may experience price increases for, or
difficulty in obtaining, spare parts for the Trust’s projects and in identifying
and hiring personnel qualified to operate, maintain and repair the specialized
equipment that make up parts of the Trust’s projects.
The
Trust is, and may in the future become, involved in litigation that may be
resolved unfavorably.
The Trust
faces an inherent business risk of exposure to various types of claims and
lawsuits that may arise in the ordinary course of business. Although it is not
possible to predict the timing, nature or outcome of such claims or lawsuits
should they arise, any such claims or proceedings, or any claim or proceeding
discussed herein under Item 3. “Legal Proceedings”, may be disposed of
unfavorably to the Trust. An unfavorable ruling could include money damages or
injunctive relief and could result in a material adverse impact on the Trust's
business, results or financial condition. Generally, for accounting purposes,
the Trust's results of operations would be impacted for the period in which the
matter is ultimately resolved unfavorably to the Trust or an unfavorable outcome
becomes probable and reasonably estimable. In addition, while the Trust
maintains insurance coverage with respect to certain claims, the Trust may not
be able to obtain such insurance on acceptable terms in the future, if at all,
and any such insurance may not provide adequate coverage against any such
claims.
RISKS
RELATED TO THE NATURE OF THE TRUST’S SHARES
The
Trust’s shares have significant restrictions on transferability and liquidity
and shareholders are required to hold the shares indefinitely.
The
Trust’s shares are illiquid investments. There is currently no market for these
shares and one is not likely to develop. Because there may be only a limited
number of persons who purchase shares and because there are significant
restrictions on the transferability of such shares under the Trust’s Declaration
of Trust and under applicable federal and state securities laws, it is expected
that no public market will develop. Moreover, neither the Trust nor the Managing
Shareholder will provide any market for the shares. Shareholders are generally
prohibited from selling or transferring their shares except in the circumstances
permitted under the Declaration of Trust and applicable law, and all such sales
or transfers require the Trust’s consent, which it may withhold at its sole
discretion. Accordingly, shareholders have no assurance that an investment can
be transferred and must be prepared to bear the economic risk of the investment
indefinitely.
Shareholders
are not permitted to participate in the Trust’s management or operations and
must rely exclusively on the Managing Shareholder.
Shareholders
have no right, power or authority to participate in the Trust’s management or
decision making or in the management of the Trust’s projects. The Managing
Shareholder has the exclusive right to manage, control and operate the Trust’s
affairs and business and to make all decisions relating to its
operation.
The
Trust’s assets are generally illiquid and any disposition of Trust assets is at
the discretion of the Managing Shareholder.
The
Trust’s interest in projects is illiquid. The Managing Shareholder has full
discretion to determine whether any project, or any partial interest, should be
sold and the terms and conditions under which such project would be sold.
Consequently, subject to shareholder approvals as detailed in the Declaration of
Trust, shareholders will depend on the Managing Shareholder for the decision to
sell all or a portion of an asset, or retain it, for the benefit of the
shareholders and for negotiating and completing the sale
transaction.
The
Trust indemnifies its officers, as well as the Managing Shareholder and its
employees, for certain actions taken on its behalf. Therefore, the Trust has
limited recourse relative to these actions.
The
Declaration of Trust provides that the Trust’s officers and agents, the Managing
Shareholder, the affiliates of the Managing Shareholder and their respective
directors, officers and agents when acting on behalf of the Managing Shareholder
or its affiliates on the Trust’s behalf, will be indemnified and held harmless
by the Trust from any and all claims arising out of the Trust’s management,
except for claims arising out of bad faith, gross negligence or willful
misconduct or a breach of the Declaration of Trust. Therefore, the Trust may
have difficulty sustaining an action against the Managing Shareholder, or its
affiliates and their officers, based on breach of fiduciary responsibility or
other obligations to the shareholders.
The
Managing Shareholder is entitled to receive a management fee regardless of the
Trust’s profitability and also receives cash distributions.
The
Managing Shareholder is entitled to receive an annual management fee from the
Trust regardless of whether the Trust is profitable in that year. The annual
fee, payable monthly, is equal to 3% of the Trust's prior year’s net asset
value. In addition to its annual management fee, the Managing Shareholder, as
compensation for its management services, will receive 20% of the Trust’s cash
distributions to shareholders upon the shareholders having received a certain
minimum level of distributions as set out in the Declaration of Trust, even
though the Managing Shareholder has not contributed any cash to the Trust.
Accordingly, shareholders contribute all of the cash utilized for the Trust’s
investments and activities. If the Trust’s projects are unsuccessful, the
shareholders may lose 100% of their investment while the Managing Shareholder
will not suffer any investment losses because it did not contribute any capital.
None of the compensation to be received by the Managing Shareholder has been
derived as a result of arm’s length negotiations.
Cash
distributions are not guaranteed and may be less than anticipated or
estimated.
Distributions
depend primarily on available cash from project operations. At times,
distributions have been delayed to repay the principal and interest on project
or Trust borrowings, if any, or to fund other costs. The Trust’s taxable income
will be taxable to the shareholders in the year earned, even if cash is not
distributed.
Because
the Managing Shareholder manages other electricity generation and infrastructure
trusts, it may have conflicts of interest in its management of the Trust’s
operations.
Shareholders
will not be involved in the management of the Trust’s operations. Accordingly,
they must rely on the Managing Shareholder’s judgment in such matters. Inherent
with the exercise of its judgment, the Managing Shareholder will be faced with
conflicts of interest. While neither the Trust nor the Managing Shareholder have
specific procedures in place in the event of any such conflicting
responsibilities, the Managing Shareholder recognizes that it has fiduciary
duties to the Trust in connection with its position and responsibilities as
Managing Shareholder and it intends to abide by such fiduciary responsibilities
in performing its duties. Therefore, the Managing Shareholder and its affiliates
will attempt, in good faith, to resolve all conflicts of interest in a fair and
equitable manner with respect to all parties affected by any such conflicts of
interest. However, the Managing Shareholder is not liable to the Trust for how
conflicts of interest are resolved unless it has acted in bad faith, or engaged
in gross negligence or willful misconduct.
TAX
RISKS ASSOCIATED WITH AN INVESTMENT IN SHARES
The Trust
is organized as a Delaware trust and the Managing Shareholder has qualified the
Trust as a partnership for federal tax purposes. The principal tax risks to
shareholders are that:
|
·
|
The
Trust may recognize income taxable to the shareholders but may not
distribute enough cash to cover the income taxes owed by shareholders on
the Trust’s taxable income.
|
|
·
|
The
allocation of Trust items of income, gain, loss, and deduction may not be
recognized for federal income tax
purposes.
|
|
·
|
All
or a portion of the Trust’s expenses could be considered either investment
expenses (which would be deductible by a shareholder only to the extent
the aggregate of such expenses exceeded 2% of such shareholder’s adjusted
gross income) or as nondeductible items that must be
capitalized.
|
|
·
|
All
or a substantial portion of the Trust’s income could be deemed to
constitute unrelated business taxable income, such that tax-exempt
shareholders could be subject to tax on their respective portions of such
income.
|
|
·
|
If
any Trust income is deemed to be unrelated business taxable income, a
shareholder that is a charitable remainder trust could have all of its
income from any source deemed to be
taxable.
|
|
·
|
All
or a portion of the losses, if any, allocated to the shareholders will be
passive losses and thus deductible by the shareholder only to the extent
of passive income.
|
|
·
|
The
shareholders could have capital losses in excess of the amount that is
allowable as a deduction in a particular
year.
|
Although
the Trust has obtained an opinion of counsel regarding the matters described in
the preceding paragraph when it was established, it will not obtain a ruling
from the IRS as to any aspect of the Trust’s tax status. The tax consequences of
investing in the Trust could be altered at any time by legislative, judicial, or
administrative action.
If
the IRS audits the Trust, it could require investors to amend or adjust their
tax returns or result in an audit of their tax returns.
The IRS
may audit the Trust’s tax returns. Any audit issues will be resolved at the
Trust level by the Managing Shareholder. If adjustments are made by the IRS,
corresponding adjustments will be required to be made to the federal income tax
returns of the shareholders, which may require payment of additional taxes,
interest, and penalties. An audit of the Trust’s tax return may result in the
examination and audit of a shareholder’s return that otherwise might not have
occurred, and such audit may result in adjustments to items in the shareholder’s
return that are unrelated to the Trust’s operations. Each shareholder bears the
expenses associated with an audit of that shareholder’s return.
In the
event that an audit of the Trust by the IRS results in adjustments to the tax
liability of a shareholder, such shareholder will be subject to interest on the
underpayment and may be subject to substantial penalties.
The tax
treatment of the Trust cannot be guaranteed for the life of the Trust. Changes
in laws or regulations may adversely affect any such tax treatment.
Deductions,
credits or other tax consequences may not be available to shareholders.
Legislative or administrative changes or court decisions could be forthcoming
which would significantly change the statements herein. In some instances, these
changes could have substantial effect on the tax aspects of the Trust. Any
future legislative changes may or may not be retroactive with respect to
transactions prior to the effective date of such changes. Bills have been
introduced in Congress in the past and may be introduced in the future which, if
enacted, would adversely affect some of the tax consequences of the
Trust.
ITEM
1B. UNRESOLVED STAFF COMMENTS
Not
applicable.
ITEM
2. PROPERTIES
Information
regarding the Trust’s properties is contained in Item 1.
“Business”.
ITEM
3. LEGAL PROCEEDINGS
On August
16, 2006, the Trust and several affiliated entities, including the Managing
Shareholder, filed lawsuits against the former independent registered public
accounting firm for the Trust and several affiliated entities, Perelson Weiner
LLP (“Perelson Weiner”), in New Jersey Superior Court. The suit alleged
professional malpractice and breach of contract in connection with audit and
accounting services performed for the Trust and other plaintiffs by Perelson
Weiner. On October 20, 2006, Perelson Weiner filed a counterclaim against the
Trust and other plaintiffs, alleging breach of contract due to unpaid invoices
with a combined total of approximately $1.2 million. Discovery is ongoing and a
trial date is currently scheduled for May 17, 2010. The costs and expenses
of this litigation, including adverse judgments, if any, are being paid by the
Managing Shareholder and affiliated management companies and not the underlying
investment funds.
ITEM
4. RESERVED
PART
II
ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
SECURITY HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market
Information
There has
never been an established public trading market for the Trust’s Investor
Shares.
Holders
As of
February 28, 2010, there were 1,061 holders of Investor Shares.
Dividends
Trust
distributions for the years ended December 31, 2009 and 2008 were as follows (in
thousands, except per share data):
|
|
2009
|
|
|
2008
|
|
||
Distributions
to Investors
|
|
$
|
9,536
|
|
|
$
|
985
|
|
Distributions
per Investor Share
|
|
|
20,000
|
|
|
|
2,065
|
|
Distributions
to Managing Shareholder
|
|
|
96
|
|
|
|
10
|
|
While the
remaining operating project of the Trust is for sale, the Trust does not expect
to make distributions.
ITEM
6. SELECTED FINANCIAL DATA
Not
required.
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The
following discussion and analysis should be read in conjunction with the Trust’s
Consolidated Financial Statements and Notes which appear elsewhere in this
Annual Report on Form 10-K. This discussion contains forward-looking
statements that involve risks, uncertainties and assumptions. The Trust’s actual
results could differ materially from those anticipated in these forward-looking
statements as a result of various factors, including those set forth in
“Forward-Looking Statements”, Item 1A. “Risk Factors” and elsewhere in this
Annual Report on Form 10-K.
Overview
The Trust
is a Delaware trust formed on September 8, 1994, primarily to make investments
in projects and businesses in the energy and infrastructure sectors. RRP, a New
Jersey limited liability company, is the Managing Shareholder of the Trust and
has direct and exclusive control over the management and operations of the
Trust.
The Trust
focuses primarily on small scale projects fueled by natural gas and renewable
sources of fuel. These projects allowed the Trust to develop long-term positions
in attractive specialty markets for products and services provided by its
projects and companies. As of December 31, 2009, the Trust had one remaining
operating investment in the United States, an investment in a landfill gas-fired
electric generating project with total capacity of 20.4 MW. RRIG’s capacity
declined by 2.6MW, from 9.2MW, as two gensets were decommissioned in the third
quarter of 2009.
The
Trust’s accompanying consolidated financial statements include the accounts of
the Trust. The Trust’s consolidated financial statements also include the
Trust’s 35.24% interest in RILG, effective November 17, 2008 accounted for under
the equity method of accounting, as the Trust has the ability to exercise
significant influence but does not control the operating and financial policies
of the investment. The Trust owned a 50% interest in Maine Hydro and a 25%
interest in Indeck Maine, which were sold in November 2009 and December 2008,
respectively.
On
November 20, 2009, Maine Hydro entered into a purchase and sale agreement and
sold for cash, all of the assets of Maine Hydro to KEI USA. The total gross
purchase price of the sale, including a post-closing adjustment made in 2010 for
estimated working capital at the time of the sale, totaled $7.3 million, of
which $3.6 million was allocated to the Trust. A summary of the terms and
conditions of the sale is provided in a Current Report on Form 8-K filed with
the SEC on November 23, 2009.
Prior to
November 17, 2008, the Trust owned a 64.3% interest in Ridgewood Providence and
the remaining 35.7% noncontrolling interest was owned by Trust III. The interest
of Trust III was presented as noncontrolling interest in the accompanying
consolidated statements of operations. On November 17, 2008, the Trust and other
affiliated entities agreed to contribute their interest in Ridgewood Providence,
RRIG, RIGM and RPPC to a new entity, RILG. The Trust contributed its 64.3%
interest in Ridgewood Providence in exchange for a 35.24% interest in
RILG. Effective November 17, 2008, the Trust’s interest in RILG is
accounted for using the equity method of accounting, and therefore, the Trust no
longer consolidates the assets, liabilities, revenues and expenses of Ridgewood
Providence.
RILG’s revenue
is derived from the sale of electricity generated and the sale of related RPS
Attributes. For the year ended December 31, 2009, RILG derived $4.4 million, or
31%, of its annual revenues from the sale of RPS Attributes. As discussed in
Item 1A. "Risk Factors", the supply of RPS Attributes has been increasing and is
expected to continue to increase in coming years, which has resulted in a
decrease in the price of RPS Attributes.
Historical
operating revenues and cost of revenues of the Trust for the 2008 period have
been derived from the Ridgewood Providence’s operations. As the Trust
no longer consolidates Ridgewood Providence, and instead accounts for its
investment in RILG as an equity interest, the Trust does not anticipate having
any future reported revenues and cost of revenues.
On
November 3, 2009, RILG received notice from the DOE that it had been awarded a
grant of $15 million towards the purchase of equipment relating to RILG
expansion. The final detail of the award is subject to final contract
negotiations between RILG and the DOE. As a result, the exact amount, and timing
of the receipt of any award, cannot currently be predicted.
The
Managing Shareholder is marketing RILG for sale. The Managing Shareholder cannot
predict the timing of the sale process or whether any sale will
occur.
The sale
of Maine Hydro, Indeck Maine and the RILG reorganization have significantly
impacted the comparability of period-to-period financial
statements.
Critical
Accounting Policies and Estimates
The
following discussion and analysis of the Trust’s financial condition and results
of operations are based upon the Trust’s consolidated financial statements,
which have been prepared in conformity with accounting principles generally
accepted in the United States of America (“GAAP”). In preparing these financial
statements, the Trust is required to make certain estimates and assumptions that
affect the reported amounts of the Trust’s assets, liabilities, revenues and
expenses, including the disclosure of contingent assets and liabilities. The
Trust evaluates these estimates and assumptions on an ongoing basis. The Trust
bases its estimates and assumptions on historical experience and on various
other factors that the Trust believes to be reasonable at the time the estimates
and assumptions are made. However, future events and their effects cannot be
predicted with absolute certainty. Therefore, the determination of estimates
requires the exercise of judgment. Actual results may differ from these
estimates and assumptions under different circumstances or conditions, and such
differences may be material to the consolidated financial statements. The Trust
believes the following critical accounting policies affect the more significant
estimates and assumptions used in the preparation of the Trust’s consolidated
financial statements.
Revenue
Recognition
Power
generation revenue is recorded in the month of delivery, based on the estimated
volumes sold to customers at rates stipulated in the electric power sales
contract. Adjustments are made to reflect actual volumes delivered when the
actual volumetric information subsequently becomes available. Billings to
customers for power generation generally occurs during the month following
delivery. Final billings do not vary significantly from estimates.
Renewable
attribute revenue is derived from the sale of the RPS Attributes. Qualified
renewable electric generation facilities produce RPS Attributes when they
generate electricity. Renewable attribute revenue is recorded in the month in
which the RPS Attributes are delivered, as Ridgewood Providence has
substantially completed its obligations for entitled benefits, represented by
the underlying generation of power within specific environmental
requirements.
Unbilled
Receivables
Unbilled
receivables consists of revenue derived from the sale of RPS
Attributes that has been earned but for which no invoices have been generated
under executed commitments as the certificates to be exchanged have not been
issued by the appropriate regulatory body. The issuance of renewable
certificates by the regulatory body only occurs once every three
months.
Income
Taxes
No
provision is made for income taxes in the Trust’s consolidated financial
statements as the net income or losses of the Trust are passed through and
included in the income tax returns of the individual shareholders of the
Trust.
Results
of Operations
Revenues
and cost of revenues for the year ended December 31, 2008 were derived from
Ridgewood Providence’s operations. As a result of the reorganization affecting
Ridgewood Providence, effective November 17, 2008, the Trust recorded its
interest in the RILG investment using the equity method of accounting, which
eliminated the need to consolidate Ridgewood Providence’s results of operations
in the 2009 period.
General
and administrative expenses decreased $2.8 million from $3.4 million for
the year ended December 31, 2008 to $0.6 million for the same period in 2009.
This decrease was primarily due to the change in accounting for its investment
in Ridgewood Providence and also due to a decrease in professional
fees.
The Trust
recorded equity loss of $2.7 million and $0.3 million from its investment in
RILG in the 2009 and 2008 period, respectively. RILG incurred a loss in the 2009
period compared to Ridgewood Providence’s operating results in the 2008 period,
primarily due to an increase in depreciation expense resulting from a change in
estimated useful lives of a portion of the remaining plant assets as of November
2008 and also due to an impairment charge recorded in the third quarter of 2009
when decommissioned gensets were fully impaired as the Managing Shareholder made
the decision of not repairing them and their having nominal salvage value. RILG
operating results includes $0.9 million and $1.8 million of engineering
development and legal fees relating to planned plant expansion for the years
ended December 31, 2009 and 2008, respectively.
In July
2009, the purchaser to whom RILG sold the output from approximately 60% of its
installed capacity under a long-term electric power sales contract, elected to
exercise its one-time option to terminate its agreement, effective January 2010.
The aggregate price for the output sold under this long-term contract exceeds
current open market prices. RILG is currently seeking alternate arrangements for
the sale of the output of its electricity generating capacity. Whether this
effort will be successful and what the results to RILG will be if successful
cannot be determined at this time.
For the
year ended December 31, 2009, the Trust recorded equity loss of $0.4 million
from its investment in Maine Hydro compared to equity income of $0.3 million for
the same period in 2008. The decrease in equity income of $0.7 million in 2009
was primarily due to a decrease in power generation revenue by approximately 57%
resulting from lower electricity prices compared to the 2008 period. At the end
of 2008, eleven long-term electric power sales contracts expired and going
forward, approximately 74% of Maine Hydro revenue was generated through electric
output sold at market price, the average rate of which was significantly lower
than prior contract price.
During
the fourth quarter of 2009, Maine Hydro entered into a purchase and sale
agreement and sold for cash, all of the assets of Maine Hydro to KEI USA. As a
result of this transaction, the Trust recorded a $2.2 million gain on sale of
Maine Hydro. See Item 1. “Business – Maine Hydro” for further discussion of the
sale.
For the
year ended December 31, 2008, the Trust recorded equity loss of $0.5 million
from its investment in Indeck Maine. During the fourth quarter of 2008, Indeck
Maine completed the sale and transferred 100% of the membership interests in
Indeck Maine to Covanta. As a result of this transaction, the Trust recorded a
$7.2 million gain on sale of Indeck Maine. See Item 1. “Business – Indeck Maine”
for further discussion of the sale.
For the
year ended December 31, 2008, the Trust recorded interest income of $0.4 million
which represented interest earned on Indeck Maine’s note receivable
balance.
For the
year ended December 31, 2009, the Trust recorded other income of $0.4 million,
which primarily represents the sale of RPS Attributes that were associated with
electricity produced by Indeck Maine’s project prior to its sale.
The Trust
recorded a noncontrolling interest in the loss of subsidiary of $0.6 million for
the year ended December 31, 2008, relating to the portion of Ridgewood
Providence owned by Trust III.
Liquidity
and Capital Resources
At
December 31, 2009, the Trust had cash and cash equivalents of $7.8 million, a
decrease of $3.9 million from $11.7 million at December 31, 2008. The cash flows
for the year ended December 31, 2009 were $2.4 million provided by operating
activities, $3.3 million provided by investing activities and $9.6 million used
in financing activities.
In 2009,
the Trust’s operating activities provided cash of $2.4 million, as compared to
cash used of $1.6 million in 2008. This increase in cash flow provided by
operating activities of $4 million in the 2009 period was primarily due to
the collection of amounts related to Indeck Maine’s operations, net of related
distributions to Trust V and IES.
In 2009,
the Trust’s investing activities provided cash of $3.3 million which represents
proceeds received on the disposition of Maine Hydro. In 2008, the Trust’s
investing activities provided cash of $14 million which represents proceeds
received on the disposition of Indeck Maine.
The Trust
used cash for financing activities of $9.6 million and $1.5 million in 2009 and
2008, respectively, relating to the cash distributions to the shareholders and
noncontrolling interest.
Future
Liquidity and Capital Resource Requirements
The Trust
expects cash flows from its equity investments, along with existing cash, cash
equivalents and borrowing capabilities will be sufficient to provide working
capital and fund capital expenditures for the next 12 months.
Off-Balance
Sheet Arrangements
None.
Contractual
Obligations and Commitments
RILG is
obligated, under the terms of various agreements with RIRRC, to construct a new
electric generating facility at the Landfill and to assume primary
responsibility for costs associated with the landfill gas collection system at
the Landfill as of the first to occur of the commencement of operation of a new
electric generating facility or June 1, 2013. RILG is also responsible for the
development and construction of a sulfur treatment facility on the Landfill and
the construction of new pipes and headers. The cost of building and
operating the sulfur treatment facility and the pipes and headers is estimated
to be approximately $5 million. The cost of the sulfur treatment facility
will be split equally between RILG and RIRRC and the entire cost associated with
the construction of pipes and headers will be paid by RILG. In
addition, the cost of new flares on the Landfill will be borne by RIRRC, but in
certain circumstances, the costs may be shared with RILG. If RILG fails to
comply with these obligations, it could be subject to monetary damages and also
forfeit its contracted gas rights. While the full cost of the expansion
activities is not yet known, it is the opinion of the Managing Shareholder that
RILG has insufficient capital to meet all of its obligations to expand its
Landfill operations. As a result, for the development efforts to be completed,
RILG must either be sold to entities that can invest in the development of these
projects or obtain third-party financing to perform its duties under the various
agreements. While the Managing Shareholder believes a portion of such financing
will be available, there can be no assurance whether or when RILG can obtain
sufficient financing or obtain it on satisfactory terms.
Recent Accounting
Pronouncements
For
information related to recent accounting pronouncements, see Note 2. “Summary of
Significant Accounting Policies”, of the Notes to Consolidated Financial
Statements, beginning on page F-1 of this Form 10-K.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not
required.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
The
consolidated financial statements of the Trust, including the notes thereto and
the report of the Trust’s Independent Registered Public Accounting Firm thereon,
are presented beginning on page F-1 of this Form 10-K.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM
9A. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
In
accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), the Trust’s management, with the participation of
the Trust’s Chief Executive Officer and Chief Financial Officer, has evaluated
the effectiveness of the Trust’s disclosure controls and procedures, as defined
in Exchange Act Rule 13a-15(e). Based on this evaluation, the Trust’s Chief
Executive Officer and Chief Financial Officer concluded that the Trust’s
disclosure controls and procedures were effective as of the end of the period
covered by this report to ensure that information required to be disclosed by
the Trust in reports filed pursuant to Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC rules and
forms and that information required to be disclosed by the Trust is accumulated
and communicated to senior management so as to allow timely decisions regarding
required disclosure.
Management’s
Annual Report on Internal Control over Financial Reporting
The
Trust’s management is responsible for establishing and maintaining adequate
internal control over financial reporting for the Trust. The Trust’s internal
control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with policies or procedures may deteriorate.
Management
of the Trust, including its Chief Executive Officer and Chief Financial Officer,
assessed the effectiveness of the Trust’s internal control over financial
reporting as of December 31, 2009. In making this assessment,
management of the Trust used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control over Financial
Reporting — Guidance for Smaller Public Companies. Based on this
evaluation, the Trust’s management concluded that as of December 31, 2009, the
Trust’s internal controls over financial reporting were effective.
This
Annual Report on Form 10-K does not include an attestation report of the Trust’s
independent registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by
the Trust’s independent registered public accounting firm pursuant to temporary
rules of the SEC that permit the Trust to provide only management’s report in
this Annual Report.
Changes
in Internal Control over Financial Reporting
The
Trust’s Chief Executive Officer and Chief Financial Officer have concluded that
there was no change in the Trust's internal control over financial reporting
that occurred during the fiscal quarter ended December 31, 2009 that has
materially affected, or is reasonably likely to materially affect, the Trust’s
internal control over financial reporting.
ITEM
9B. OTHER INFORMATION
None.
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
The
Trust’s Managing Shareholder, RRP, was originally founded in 1991. The Managing
Shareholder has very broad authority, including the authority to elect executive
officers of the Trust.
Each of
the executive officers of the Trust also serves as an executive officer of the
Managing Shareholder. The executive officers of the Trust are as
follows:
Name, Age and Position with
Registrant
|
Officer Since
|
|
Randall
D. Holmes, 62
|
|
|
President
and Chief Executive Officer
|
2004
|
|
Robert
E. Swanson, 63
|
|
|
Chairman
|
1997
|
|
Jeffrey
H. Strasberg, 52
|
|
|
Executive
Vice President and Chief Financial Officer
|
2007
|
|
Daniel
V. Gulino, 49
|
|
|
Senior
Vice President, General Counsel and Secretary
|
2000
|
Set forth
below is the name of and certain biographical information regarding the
executive officers of the Trust:
Randall D. Holmes has served
as President and Chief Executive Officer of the Trust, the Managing Shareholder
and other trusts and limited liability companies since January 2006 and served
as Chief Operating Officer of the Trust, the Managing Shareholder and affiliated
Ridgewood Power trusts and limited liability companies from January 2004 until
January 2006. Prior to such time, Mr. Holmes served as the primary outside
counsel to and has represented the Managing Shareholder and its affiliates since
1991. Immediately prior to being appointed Chief Operating Officer, Mr. Holmes
was counsel to Downs Rachlin Martin PLLC (“DRM”). DRM is one of the primary
outside counsel to the Trust, the Managing Shareholder and its affiliates. Mr.
Holmes is a graduate of Texas Tech University and the University of Michigan Law
School. He is a member of the New York State Bar.
Robert E. Swanson has served
as Chairman of the Trust, the Managing Shareholder and affiliated trusts and
limited liability companies since their inception. From their inception until
January 2006, Mr. Swanson also served as their Chief Executive Officer. Mr.
Swanson is the controlling member of the Managing Shareholder, as well as
Ridgewood Energy and Ridgewood Capital, affiliates of the Trust. Mr. Swanson has
been President and registered principal of Ridgewood Securities since its
formation in 1982, has served as the Chairman of the Board of Ridgewood Capital
since its organization in 1998 and has served as Chief Executive Officer of
Ridgewood Energy since its inception in 1982. Mr. Swanson is a member of the New
York State and New Jersey State Bars, the Association of the Bar of the City of
New York and the New York State Bar Association. He is a graduate of Amherst
College and Fordham University Law School.
Jeffrey H. Strasberg has
served as Executive Vice President and Chief Financial Officer of the Trust, the
Managing Shareholder and affiliated trusts and limited liability companies since
May 2007. Mr. Strasberg also serves as Senior Vice President and Chief Financial
Officer of Ridgewood Capital and affiliated limited liability companies and
Ridgewood Securities and has done so since April 2005. Mr. Strasberg joined
Ridgewood Capital in 1998 where his initial responsibilities were to serve as
interim Chief Financial Officer of various portfolio companies in which
Ridgewood Capital trusts had interests. Mr. Strasberg is a Certified Public
Accountant and a graduate of the University of Florida.
Daniel V. Gulino has served as
Senior Vice President and General Counsel of the Trust, the Managing Shareholder
and affiliated trusts and limited liability companies since 2000 and was
appointed Secretary in February 2007. Mr. Gulino also serves as Senior Vice
President and General Counsel of Ridgewood Energy, Ridgewood Capital, Ridgewood
Securities and affiliated trusts and limited liability companies and has done so
since 2000. Mr. Gulino is a member of the New Jersey State and Pennsylvania
State Bars. He is a graduate of Fairleigh Dickinson University and Rutgers
University School of Law.
Board
of Directors and Board Committees
The Trust
does not have its own board of directors or any board committees. The Trust
relies upon the Managing Shareholder to perform the function that a board of
directors or its committees would otherwise perform. Officers of the Trust are
not directly compensated by the Trust, and all compensation matters are
addressed by the Managing Shareholder, as described in Item 11. “Executive
Compensation”. Because the Trust does not maintain a board of directors and
because officers of the Trust are compensated by the Managing Shareholder, the
Managing Shareholder believes that it is appropriate for the Trust not to have a
nominating or compensation committee.
Managing
Shareholder
The
Trust’s Management Agreement with the Managing Shareholder details how the
Managing Shareholder is to render management, administrative and investment
advisory services to the Trust. Specifically, the Managing Shareholder performs
(or may arrange for the performance of) the management and administrative
services required for the operation of the Trust. Among other services, the
Managing Shareholder administers the accounts and handles relations with
shareholders, provides the Trust with office space, equipment and facilities and
other services necessary for its operation, and conducts the Trust’s relations
with custodians, depositories, accountants, attorneys, brokers and dealers,
corporate fiduciaries, insurers, banks and others, as required.
The
Managing Shareholder also has been responsible for making investment and
divestment decisions, subject to the provisions of the Declaration of Trust. The
Managing Shareholder is obligated to pay the compensation of the personnel and
administrative and service expenses necessary to perform the foregoing
obligations. The Trust pays all other expenses of the Trust, including
transaction expenses, valuation costs, expenses of preparing and printing
periodic reports for shareholders and the SEC, postage for Trust mailings, SEC
fees, interest, taxes, legal, accounting and consulting fees, litigation
expenses and other expenses properly payable by the Trust. The Trust reimburses
the Managing Shareholder for all such Trust expenses paid by the Managing
Shareholder.
As
compensation for the Managing Shareholder’s performance under the Management
Agreement, the Trust is obligated to pay the Managing Shareholder an annual
management fee described below in Item 13. “Certain Relationships and Related
Transactions, and Director Independence”.
Each
investor in the Trust consented to the terms and conditions of the Management
Agreement by subscribing to acquire Investor Shares in the Trust. The Management
Agreement is subject to termination at any time on 60 days prior notice by a
majority in interest of the shareholders or the Managing Shareholder. The
Management Agreement is subject to amendment by the parties upon the approval of
a majority in interest of the investors.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act, requires the Trust’s executive officers and
directors, and persons who own more than 10% of a registered class of the
Trust’s equity securities, to file reports of ownership and changes in ownership
with the SEC. During the past fiscal year, the Managing Shareholder believes
that all filings required to be made by the Trust’s executive officers pursuant
to Section 16(a) of the Exchange Act have been timely filed with the SEC. The
Trust has no directors or 10% shareholders.
Code
of Ethics
In March
2004, the Managing Shareholder, for itself and for the Trust and its affiliates,
adopted a Code of Ethics applicable to the principal executive officer,
principal financial officer, principal accounting officer or controller (or any
persons performing similar functions) of each such entity. A copy of the Code of
Ethics is filed as Exhibit 14 to this Annual Report on Form 10-K.
ITEM
11. EXECUTIVE COMPENSATION
During
2009, the executive officers of the Trust did not receive compensation directly
from the Trust or any of its subsidiaries. They provide managerial services to
the Trust in accordance with the terms of the Trust’s Declaration of Trust and
the Operating Agreement. The Managing Shareholder or affiliated management
companies, determines and pays the compensation of these officers. Each of the
executive officers of the Trust also serves as an executive officer of the
Managing Shareholder and other trusts managed by the Managing Shareholder and
its affiliates.
The Trust
does, however, pay the Managing Shareholder a management fee and the Managing
Shareholder may determine to use a portion of the proceeds from the management
fee to pay compensation to executive officers of the Trust. See Item 13.
“Certain Relationships and Related Transactions, and Director Independence” for
more information regarding Managing Shareholder compensation and payments to
affiliated entities.
As part
of the sale of various assets of the Trust, affiliated trusts and assets of the
Managing Shareholder, the Managing Shareholder has adopted the Senior Executive
Bonus Plan (“Plan”), which provides for incentive payments to the participants
in the Plan. Any payments made pursuant to this Plan will be borne entirely by
the Managing Shareholder and not by any of the trusts managed by the Managing
Shareholder. Pursuant to the Plan:
|
·
|
Once
a relevant trust reaches payout, three officers of the Managing
Shareholder, including Randall D. Holmes, President and Chief Executive
Officer of the Trust and the Managing Shareholder will receive, in the
aggregate, depending on the trust, 25% to 30% (25% in regards to the
Trust) of any payments received by the Managing Shareholder from the
various trusts it manages resulting from the sale of assets by the
trusts.
|
|
·
|
Participants
in the Plan will receive bonus payments in the aggregate at the rate of
30% of any payment received by the Managing Shareholder for sales of
assets owned by it and not a trust.
|
|
·
|
The
Managing Shareholder will generally fund the Plan as it receives any
payments from a trust from the sale of its assets once that trust reaches
payout.
|
As of the
date of this filing, no payment has been made pursuant to this
Plan.
Under the
Plan, the three officers have also agreed to be employed by any purchasers of
assets from the trusts as requested by the Managing Shareholder, for up to one
year. To the extent that the compensation received by any of them from any such
purchase is less than the base salary that officer currently receives from the
Managing Shareholder, the Managing Shareholder has agreed to pay to that officer
75% of the difference, if any, for one year, even if such officer leaves the
employ of the purchaser prior to the end of such one year period, except in the
event of death or disability.
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The
following table sets forth information with respect to the beneficial ownership
of the Trust’s Investor Shares as of February 28, 2010 (no person owns more than
5%) by:
|
·
|
each
executive officer of the Trust (there are no directors);
and
|
|
·
|
all
of the executive officers of the Trust as a
group.
|
Beneficial
ownership is determined in accordance with SEC rules and includes voting or
investment power with respect to the securities. Except as indicated by
footnote, and subject to applicable community property laws, the persons named
in the table below have sole voting and investment power with respect to all
Investor Shares shown as beneficially owned by them. Percentage of beneficial
ownership is based on 476.8 Investor Shares outstanding at February 28, 2010.
Other than as set forth below, no officer of the Trust owns any shares of the
Trust.
Name
of beneficial owner
|
Number
of
shares (1)
|
Percent
|
||
Ridgewood
Renewable Power LLC (Managing Shareholder)
Robert
E. Swanson, controlling member
|
2.0331
|
*
|
||
Executive
officers as a group
|
2.0331
|
*
|
||
|
|
|
|
|
*
|
Represents
less than one percent.
|
|
|
|
|
|
|
|
|
(1)
|
Does
not include a management share in the Trust representing the beneficial
interests and management rights of the Managing Shareholder in its
capacity as the Managing Shareholder. The management share owned by the
Managing Shareholder is the only issued and outstanding management share
of the Trust. The management rights of the Managing Shareholder are
described in further detail in Item 1. “Business – Managing Shareholder”.
The Managing Shareholder’s beneficial interest in cash distributions of
the Trust and its allocable share of the Trust’s net profits and net
losses and other items attributable to the management share are described
in further detail below in Item 13. “Certain Relationships and Related
Transactions, and Director
Independence”.
|
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
Under the
terms of the Management Agreement, the Trust paid the Managing Shareholder an
annual management fee of $0.7 million and $0.5 million for the years ended
December 31, 2009 and 2008, respectively, as compensation for the services
the Managing Shareholder provides to the Trust, which was equal to 3% of the
Trust’s prior year net asset value. The management fee is to be paid in monthly
installments and, to the extent that the Trust does not pay the management fee
on a timely basis, the Trust accrues interest at an annual rate of 10% on the
unpaid balance.
Under the
Operating Agreement with the Trust, RPM provides management, purchasing,
engineering, planning and administrative services to the projects operated by
the Trust. RPM charges the projects at its cost for these services and for the
allocable amount of certain overhead items. Allocations of costs are on the
basis of identifiable direct costs or in proportion to amounts invested in
projects managed by RPM. For the years ended December 31, 2009 and 2008, RPM
charged the projects $0.6 million and $0.9 million, respectively, for overhead
items allocated in proportion to the amount invested in projects managed. In
addition, for the years ended December 31, 2009 and 2008, RPM charged the
projects $6.5 million and $26.8 million, respectively, for direct expenses
allocated in proportion to the amount invested in projects managed. These
charges may not be indicative of costs incurred if the projects were not
operated by RPM.
Under the
Declaration of Trust, the Managing Shareholder is entitled to receive,
concurrently with the shareholders of the Trust other than the Managing
Shareholder, 1% of all distributions from operations made by the Trust in a year
until the shareholders have received distributions in that year equal to 14% per
annum of their equity contribution. Thereafter, the Managing Shareholder is
entitled to receive 20% of the distributions for the remainder of the year. The
Managing Shareholder is entitled to receive 1% of the proceeds from dispositions
of Trust property until the shareholders other than the Managing Shareholder,
have received cumulative distributions equal to their original investment
(“Payout”). After Payout, the Managing Shareholder is entitled to receive 20% of
all remaining distributions of the Trust. Distributions to the Managing
Shareholder for the years ended December 31, 2009 and 2008 were $0.1 million and
$10,000, respectively. The Trust has not yet reached Payout.
Income is
allocated to the Managing Shareholder until the profits so allocated equal
distributions to the Managing Shareholder. Thereafter, income is allocated among
the shareholders other than the Managing Shareholder in proportion to their
ownership of Investor Shares. If the Trust has net losses for a fiscal period,
the losses are allocated 99% to the shareholders other than the Managing
Shareholder and 1% to the Managing Shareholder, subject to certain limitations
as set forth in the Declaration of Trust. Amounts allocated to shareholders
other than the Managing Shareholder are apportioned among them in proportion to
their capital contributions.
Under the
terms of the Declaration of Trust, if the Adjusted Capital Account (as defined
in the Declaration of Trust) of a shareholder other than the Managing
Shareholder would become negative using General Allocations (as defined in the
Declaration of Trust), losses and expenses will be allocated to the Managing
Shareholder. Should the Managing Shareholder’s Adjusted Capital Account become
negative and items of income or gain occur, then such items of income or gain
will be allocated entirely to the Managing Shareholder until such time as the
Managing Shareholder’s Adjusted Capital Account becomes positive. This mechanism
does not change the allocation of cash, as discussed above.
In
accordance with the Declaration of Trust, upon or prior to the first
distribution by the Trust in liquidation, the Managing Shareholder is required
to contribute to the capital of the Trust an amount equal to any deficit in the
tax basis capital account of the Managing Shareholder calculated just prior to
the date of such distribution. As of December 31, 2008, the last date such
calculation was made, the Managing Shareholder would have been required to
contribute $0.1 million to the Trust prior to the Trust making any liquidating
distributions.
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND
SERVICES
The following table presents fees and
services rendered by Grant Thornton LLP, the Trust’s principal independent
registered public accounting firm, for the years ended December 31, 2009 and
2008 (in thousands).
|
|
2009
|
|
|
2008
|
|
||
|
|
|
|
|
|
|
||
Audit
fees
|
|
$
|
159
|
|
|
$
|
371
|
|
Tax
fees1
|
|
|
21
|
|
|
|
27
|
|
Total
|
|
$
|
180
|
|
|
$
|
398
|
|
1
|
Tax
fees consisted principally of tax compliance, planning and advisory
services as well as tax examination
services.
|
Audit
Committee Pre-Approval Policy
The
Managing Shareholder pre-approves on an annual basis all audit and permitted
non-audit services that may be performed by the Trust’s independent registered
public accounting firm, including the audit engagement terms and fees, and also
pre-approves any detailed types of audit-related and permitted tax services to
be performed during the year. The Managing Shareholder pre-approves permitted
non-audit services on an engagement-by-engagement basis. All of the services
listed in the table above were pre-approved by the Managing
Shareholder.
PART
IV
ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) | Consolidated Financial Statements | ||
See the Index to Consolidated Financial Statements on page F-1 of this report. | |||
(a)(2) | Consolidated Financial Statement Schedules | ||
Not applicable. | |||
(a)(3) | Exhibits | ||
Exhibits required by Section 601 of Regulation S-K: |
Exhibit No.
|
|
Description
|
|
|
|
|
|
2.1
|
Purchase
and Sale Agreement, dated November 20, 2009, by and between Ridgewood
Maine Hydro Partners, L.P., subsidiaries of Ridgewood US Hydro Corporation
and KEI(USA) Power Management Inc. and certain of its subsidiaries
(incorporated by reference to Exhibit 2.1 to the Current Report on Form
8-K filed by the Registrant with the SEC on November 23,
2009)
|
||
2.2
|
Agreement
Regarding Representations and Warranties dated November 20, 2009, by and
between Ridgewood Renewable Power, LLC, Ridgewood Maine Hydro Partners,
L.P., subsidiaries of Ridgewood US Hydro Corporation and KEI(USA) Power
Management Inc. and certain of its subsidiaries (incorporated by reference
to Exhibit 2.2 to the Current Report on Form 8-K filed by the Registrant
with the SEC on November 23, 2009)
|
||
2.3
|
|
|
Purchase
and Sale Agreement, dated August 19, 2008, by and among Ridgewood Maine,
L.L.C., and Indeck Energy Services, Inc., Covanta Energy
Corporation, and for certain limited purposes, Indeck Maine Energy, LLC
(incorporated by reference to Exhibit 2.1 to the Current Report on Form
8-K filed by the Registrant with the SEC on August 25,
2008)
|
|
|
|
|
2.4
|
|
|
First
Amendment to the Purchase and Sale Agreement, dated November 11, 2008, by
and among Ridgewood Maine, L.L.C., Indeck Energy Services, Inc., Covanta
Energy Corporation, and for certain limited purposes Indeck Maine Energy,
LLC (incorporated by reference to Exhibit 2.1 to the Current Report on
Form 8-K filed by the Registrant with the SEC on November 14,
2008)
|
|
|
|
|
3
|
(i)(A)
|
|
Certificate
of Trust of the Registrant (incorporated by reference to the Registrant’s
Registration Statement filed with the SEC on or about January 24,
1995)
|
|
|
|
|
3
|
(i)(B)
|
|
Certificate
of Amendment to the Certificate of Trust of the Registrant filed with
Delaware Secretary of State on December 18, 2003 (incorporated by
reference to the Registrant’s Annual Report on Form 10-K filed with the
SEC on October 30, 2007)
|
|
|
|
|
3
|
(ii)(A)
|
|
Declaration
of Trust of the Registrant (incorporated by reference to the Registrant’s
Registration Statement filed with the SEC on or about January 24,
1995)
|
|
|
|
|
3
|
(ii)(B)
|
|
First
Amendment to the Amended and Restated Declaration of Trust of the
Registrant (incorporated by reference to the Registrant’s Annual Report on
Form 10-K for the year ended December 31, 1996; SEC File No.
000-25430)
|
|
|
|
|
3
|
(ii)(C)
|
|
Second
Amendment to the Amended and Restated Declaration of Trust (incorporated
by reference to the Registrant’s Proxy Statement filed with the SEC on
November 5, 2001; SEC File No. 000-25430)
|
|
|
|
|
3
|
(ii)(D)
|
|
Amendment
to the Amended Declaration of Trust of the Registrant effective January 1,
2005 (incorporated by reference to the Registrant’s Annual Report on Form
10-K filed with the SEC on October 30,
2007)
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
10.1
|
#
|
Management
Agreement between the Trust and Managing Shareholder, dated January 3,
1995 (incorporated by reference to the Registrant’s Annual Report on Form
10-K filed with the SEC on April 16, 1997)
|
|
10.2
|
Contribution
Agreement dated as of November 17, 2008 by and among Ridgewood Olinda,
LLC, Ridgewood Electric Power Trust III, Ridgewood Electric Power Trust
IV, Ridgewood Power B Fund/Providence Expansion, Ridgewood Providence
Power Corporation, Rhode Island Gas Management, LLC, Ridgewood Management
Corporation, Rhode Island LFG Genco, LLC and Ridgewood Renewable Power LLC
(incorporated by reference to Exhibit 10.1 to the Current Report on Form
8-K filed by the Registrant with the SEC on November 20,
2008)
|
||
10.3
|
|
|
Amended
and Restated Limited Liability Company Agreement of Rhode Island LFG
Genco, LLC dated as of November 17, 2008 by Rhode Island LFG Genco, LLC,
Ridgewood Olinda, LLC, Ridgewood Electric Power Trust III, Ridgewood
Electric Power Trust IV, Ridgewood Power B Fund/Providence Expansion and
Ridgewood Renewable Power LLC (incorporated by reference to Exhibit 10.2
to the Current Report on Form 8-K filed by the Registrant with the SEC on
November 20, 2008)
|
|
|
|
|
10.4
|
|
|
Amended
and Restated Site Lease and Landfill Gas Delivery Agreement dated as of
November 17, 2008 between Rhode Island LFG Genco, LLC and Rhode Island
Resource Recovery Corporation (incorporated by reference to Exhibit 10.3
to the Current Report on Form 8-K filed by the Registrant with the SEC on
November 20, 2008)
|
|
|
|
|
10.5
|
|
Amended
and Restated Landfill Gas Services Agreement dated as of November 17, 2008
among Ridgewood Gas Services LLC, Rhode Island Resource Recovery
Corporation and, solely as to Sections 3.2 and 3.3, Rhode Island LFG
Genco, LLC (incorporated by reference to Exhibit 10.4 to the Current
Report on Form 8-K filed by the Registrant with the SEC on November 20,
2008)
|
|
|
|
|
|
10.6
|
|
Purchase
and Sale Agreement dated as of November 17, 2008 between Ridgewood Gas
Services LLC and Rhode Island Resource Recovery Corporation (incorporated
by reference to Exhibit 10.5 to the Current Report on Form 8-K filed by
the Registrant with the SEC on November 20, 2008)
|
|
|
|
|
|
10.7
|
|
Backup
Certificate Agreement, dated as of August 19, 2008, by and among Indeck
Maine Energy, LLC, Ridgewood Providence Power Partners, L.P., Ridgewood
Rhode Island Generation, LLC, Linwood 0708 LLC, Rhode Island LFG Genco,
LLC, and for certain limited purposes, Ridgewood Power Management LLC, and
Covanta Energy Corporation (incorporated by reference to Exhibit 10.1 to
the Current Report on Form 8-K filed by the Registrant with the SEC on
August 25, 2008)
|
|
|
|
|
|
10.8
|
|
First
Amendment to the Backup Certificate Agreement, dated as of November 11,
2008, by and among Indeck Maine Energy, LLC, Ridgewood Providence Power
Partners, L.P., Ridgewood Rhode Island Generation, LLC, Linwood 0708 LLC,
Rhode Island LFG Genco, LLC, and for certain limited purposes, Ridgewood
Power Management LLC and Covanta Energy Corporation (incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the
Registrant with the SEC on November 14, 2008)
|
|
|
|
|
|
10.9
|
|
Guaranty
of Covanta Energy Corporation dated as of August 19, 2008 (incorporated by
reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the
Registrant with the SEC on August 25, 2008)
|
|
|
|
|
|
10.10
|
|
First
Amendment to the Guaranty of Covanta Energy Corporation, dated as of
November 11, 2008 (incorporated by reference to Exhibit 10.2 to the
Current Report on Form 8-K filed by the Registrant with the SEC on
November 14, 2008)
|
|
10.11
|
Sellers
Omnibus Agreement, dated as of August 19, 2008, by and among Ridgewood
Maine, L.L.C., Indeck Energy Services, Inc., and, for certain limited
purposes, Ridgewood Renewable Power LLC (incorporated by reference to
Exhibit 10.3 to the Current Report on Form 8-K filed by the Registrant
with the SEC on August 25, 2008)
|
||
10.12
|
First
Amendment to the Sellers Omnibus Agreement, dated as of November 11, 2008,
by and among Ridgewood Maine, L.L.C. and Indeck Energy Services, Inc. and,
for certain limited purposes, Ridgewood Renewable Power LLC (incorporated
by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by
the Registrant with the SEC on November 14,
2008)
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
10.13
|
Certificate
Sale Support Agreement, dated as of July 31, 2008, by and among Linwood
0708 LLC, Ridgewood Rhode Island Generation, LLC, Ridgewood Providence
Power Partners, L.P., Rhode Island LFG Genco, LLC, Indeck Energy Services,
Inc., Ridgewood Electric Power Trust I, Ridgewood Electric Power Trust
III, Ridgewood Electric Power Trust IV, Ridgewood Electric Power Trust V,
Ridgewood Power B Fund/Providence Expansion, and Ridgewood Renewable
Power, LLC (incorporated by reference to Exhibit 10.4 to the Current
Report on Form 8-K filed by the Registrant with the SEC on August 25,
2008)
|
||
10.14
|
First
Amendment to the Certificate Sale Support Agreement, dated as of November
11, 2008, by and among Linwood 0708 LLC, Ridgewood Rhode Island
Generation, LLC, Ridgewood Providence Power Partners, L.P., Rhode Island
LFG Genco, LLC, Indeck Energy Services, Inc., Ridgewood Electric Power
Trust I, Ridgewood Electric Power Trust III, Ridgewood Electric Power
Trust IV, Ridgewood Electric Power Trust V, Ridgewood Power B
Fund/Providence Expansion and Ridgewood Renewable Power, LLC (incorporated
by reference to Exhibit 10.4 to the Current Report on Form 8-K filed by
the Registrant with the SEC on November 14, 2008)
|
||
10.15
|
|
|
Agency
Agreement, dated as of August 19, 2008, among Ridgewood Providence Power
Partners, L.P., Ridgewood Rhode Island Generation, LLC, Linwood 0708 LLC,
Ridgewood Power Management, LLC and Indeck Maine Energy, LLC. This Agency
Agreement is also acknowledged by Ridgewood Electric Power Trust III,
Ridgewood Electric Power Trust IV, Ridgewood Electric Power Trust V and
Ridgewood Power B Fund/Providence Expansion (incorporated by reference to
Exhibit 10.5 to the Current Report on Form 8-K filed by the Registrant
with the SEC on August 25, 2008)
|
|
|
|
|
10.16
|
|
|
First
Amendment to the Agency Agreement, dated as of November 11, 2008, among
Ridgewood Providence Power Partners, L.P., Ridgewood Rhode Island
Generation, LLC, Linwood 0708 LLC, Ridgewood Power Management, LLC and
Indeck Maine Energy, LLC. This First Amendment to Agency Agreement is also
acknowledged by Ridgewood Electric Power Trust III, Ridgewood Electric
Power Trust IV, Ridgewood Electric Power Trust V and Ridgewood Power B
Fund/Providence Expansion (incorporated by reference to Exhibit 10.5 to
the Current Report on Form 8-K filed by the Registrant with the SEC on
November 14, 2008)
|
|
|
|
|
10.17
|
#
|
|
Senior
Executive Bonus Plan (incorporated by reference to Exhibit 10.6 to the
Current Report on Form 10-Q filed by the Registrant with the SEC on
November 7, 2008)
|
|
|
|
|
10.18
|
#
|
|
Amendment
to Senior Executive Bonus Plan (incorporated by reference to Exhibit 10.1
to the Current Report on Form 10-Q filed by the Registrant with the SEC on
November 9, 2009)
|
|
|
|
|
14
|
|
Code
of Ethics, adopted on March 1, 2004 (incorporated by reference
to Exhibit 14 to the Annual Report on Form 10-K by The Ridgewood Power
Growth Fund with the SEC on March 1, 2006)
|
|
|
|
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21
|
|
Subsidiaries
of the Registrant (incorporated by reference to Exhibit 21 to the Annual
Report on Form 10-K filed by the Registrant with the SEC on April 3,
2009)
|
|
|
|
|
|
31.1
|
*
|
|
Certification
of Randall D. Holmes, Chief Executive Officer of the Registrant, pursuant
to Securities Exchange Act Rule 13a-14(a)
|
|
|
|
|
31.2
|
*
|
|
Certification
of Jeffrey H. Strasberg, Executive Vice President and Chief Financial
Officer of the Registrant, pursuant to Securities Exchange Act Rule
13a-14(a)
|
32
|
*
|
Certifications
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
The Sarbanes-Oxley Act of 2002, signed by Randall D. Holmes, Chief
Executive Officer of the Registrant, and Jeffrey H. Strasberg, Chief
Financial Officer of the
Registrant
|
______________________
*
|
Filed
herewith.
|
|
|
#
|
A
management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 15(a)(3) of Form
10-K.
|
SIGNATURES
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, thereunto
duly authorized.
|
RIDGEWOOD
ELECTRIC POWER TRUST IV
|
||
|
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|
|
|
|
|
Date: March
25, 2010
|
By:
|
/s/
Randall D. Holmes
|
|
|
|
Randall
D. Holmes
|
|
|
|
President
and Chief Executive Officer
|
|
|
|
(Principal
Executive Officer)
|
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signature
|
|
Capacity
|
|
Date
|
|
|
|
|
|
/s/
Randall D. Holmes
|
|
President
and Chief Executive Officer
|
|
March
25, 2010
|
Randall
D. Holmes
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
/s/
Jeffrey H. Strasberg
|
|
Executive
Vice President and Chief Financial Officer
|
|
March
25, 2010
|
Jeffrey
H. Strasberg
|
|
(Principal
Financial and Accounting Officer)
|
|
|
|
|
|
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|
|
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|
|
RIDGEWOOD
RENEWABLE POWER LLC
|
|
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(Managing
Shareholder)
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
By:
/s/ Randall D. Holmes
|
|
President
and Chief Executive Officer of Managing Shareholder
|
|
March
25, 2010
|
Randall
D. Holmes
|
|
|
|
|
RIDGEWOOD
ELECTRIC POWER TRUST IV
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
|
Page
|
|
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
Managing Shareholder and Shareholders
Ridgewood
Electric Power Trust IV
We have
audited the accompanying consolidated balance sheets of Ridgewood Electric Power
Trust IV (a Delaware trust) and subsidiaries as of December 31, 2009 and 2008,
and the related consolidated statements of operations, changes in shareholders’
equity (deficit), and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Trust
is not required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Trust’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, 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 consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Ridgewood Electric
Power Trust IV and subsidiaries as of December 31, 2009 and 2008, and the
results of their operations and their cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ GRANT
THORNTON LLP
Edison,
New Jersey
March 25,
2010
RIDGEWOOD
ELECTRIC POWER TRUST IV
|
||||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||||
(in
thousands, except share data)
|
||||||||
December
31,
|
||||||||
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 7,804 | $ | 11,683 | ||||
Unbilled
receivables
|
- | 6,572 | ||||||
Other
receivable
|
- | 6,461 | ||||||
Security
deposits
|
- | 2,345 | ||||||
Due
from affiliates
|
606 | - | ||||||
Prepaid
expenses and other current assets
|
24 | 108 | ||||||
Total
current assets
|
8,434 | 27,169 | ||||||
Investments
|
2,001 | 6,458 | ||||||
Total
assets
|
$ | 10,435 | $ | 33,627 | ||||
LIABILITIES
AND SHAREHOLDERS’ EQUITY (DEFICIT)
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
$ | 98 | $ | 1,194 | ||||
Due
to Indeck Energy Services
|
- | 7,828 | ||||||
Due
to affiliates
|
- | 2,771 | ||||||
Total
liabilities
|
98 | 11,793 | ||||||
Commitments
and contingencies
|
||||||||
Shareholders’
equity (deficit):
|
||||||||
Shareholders’
equity (476.8 Investor Shares
|
||||||||
issued
and outstanding)
|
10,502 | 21,884 | ||||||
Managing
Shareholder’s accumulated deficit
|
||||||||
(1
management share issued and outstanding)
|
(165 | ) | (50 | ) | ||||
Total
shareholders’ equity
|
10,337 | 21,834 | ||||||
Total
liabilities and shareholders’ equity
|
$ | 10,435 | $ | 33,627 |
The
accompanying notes are an integral part of these consolidated financial
statements.
RIDGEWOOD ELECTRIC POWER TRUST
IV
|
||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||
(in
thousands, except per share data)
|
||||||||
Years
Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Power
generation revenue
|
$ | - | $ | 6,916 | ||||
Renewable
attribute revenue
|
- | 1,436 | ||||||
Total
revenues
|
- | 8,352 | ||||||
Cost
of revenues
|
- | 7,283 | ||||||
Gross
profit
|
- | 1,069 | ||||||
Operating
expenses:
|
||||||||
General
and administrative expenses
|
613 | 3,408 | ||||||
Management
fee to Managing Shareholder
|
655 | 527 | ||||||
Total
operating expenses
|
1,268 | 3,935 | ||||||
Loss
from operations
|
(1,268 | ) | (2,866 | ) | ||||
Other
(expense) income:
|
||||||||
Equity
in loss of RILG
|
(2,700 | ) | (261 | ) | ||||
Equity
in (loss) income of Maine Hydro
|
(426 | ) | 254 | |||||
Gain
on disposition of Maine Hydro
|
2,158 | - | ||||||
Equity
in loss of Indeck Maine
|
- | (509 | ) | |||||
Gain
on disposition of Indeck Maine
|
- | 7,197 | ||||||
Interest
income, affiliates
|
- | 416 | ||||||
Interest
expense
|
- | (60 | ) | |||||
Other
income
|
371 | 16 | ||||||
Total
other (expense) income, net
|
(597 | ) | 7,053 | |||||
Net
(loss) income
|
(1,865 | ) | 4,187 | |||||
Net
loss attributable to noncontrolling interest
|
- | 603 | ||||||
Net
(loss) income attributable to Trust
|
$ | (1,865 | ) | $ | 4,790 | |||
Managing
Shareholder – Net (loss) income
|
$ | (19 | ) | $ | 48 | |||
Shareholders
– Net (loss) income
|
(1,846 | ) | 4,742 | |||||
Net
(loss) income per Investor Share
|
(3,872 | ) | 9,943 |
The
accompanying notes are an integral part of these consolidated financial
statements.
RIDGEWOOD
ELECTRIC POWER TRUST IV
|
||||||||||||
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(DEFICIT)
|
||||||||||||
YEARS
ENDED DECEMBER 31, 2009 AND 2008
|
||||||||||||
(in
thousands)
|
||||||||||||
Managing
|
Total
|
|||||||||||
Shareholders'
|
Shareholder
|
Shareholders'
|
||||||||||
Equity
|
Deficit
|
Equity
|
||||||||||
Balance
at December 31, 2007
|
$ | 17,665 | $ | (93 | ) | $ | 17,572 | |||||
Net
income
|
4,742 | 48 | 4,790 | |||||||||
Cash
distributions
|
(985 | ) | (10 | ) | (995 | ) | ||||||
Capital
contributions
|
462 | 5 | 467 | |||||||||
Balance
at December 31, 2008
|
21,884 | (50 | ) | 21,834 | ||||||||
Net
loss
|
(1,846 | ) | (19 | ) | (1,865 | ) | ||||||
Cash
distributions
|
(9,536 | ) | (96 | ) | (9,632 | ) | ||||||
Balance
at December 31, 2009
|
$ | 10,502 | $ | (165 | ) | $ | 10,337 |
The
accompanying notes are an integral part of these consolidated financial
statements.
RIDGEWOOD
ELECTRIC POWER TRUST IV
|
||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||
(in
thousands)
|
||||||||
Years
Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
(loss) income attributable to Trust
|
$ | (1,865 | ) | $ | 4,790 | |||
Adjustments
to reconcile net (loss) income to net cash provided by
|
||||||||
(used
in) operating activities:
|
||||||||
Depreciation
and amortization
|
- | 1,229 | ||||||
Change
in rotable spare parts
|
- | (137 | ) | |||||
Interest
income on notes receivable
|
- | (391 | ) | |||||
Gain
on disposition of Indeck Maine
|
- | (7,197 | ) | |||||
Gain
on disposition of Maine Hydro
|
(2,158 | ) | - | |||||
Net
loss attributable to noncontrolling interest
|
- | (603 | ) | |||||
Equity
interest in loss (income) of:
|
||||||||
RILG
|
2,700 | 261 | ||||||
Maine
Hydro
|
426 | (254 | ) | |||||
Indeck
Maine
|
- | 509 | ||||||
Cash
distributions from RILG
|
231 | - | ||||||
Cash
distributions from Maine Hydro
|
- | 963 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
- | 220 | ||||||
Unbilled
receivables
|
6,572 | 698 | ||||||
Other
receivable
|
6,461 | - | ||||||
Security
deposits
|
2,345 | (2,932 | ) | |||||
Prepaid
expenses and other current assets
|
84 | (99 | ) | |||||
Accounts
payable and accrued expenses
|
(1,096 | ) | 1,800 | |||||
Accrued
royalty expense
|
- | (142 | ) | |||||
Due
to Indeck Energy Services
|
(7,828 | ) | - | |||||
Due
to/from affiliates, net
|
(3,425 | ) | (316 | ) | ||||
Total
adjustments
|
4,312 | (6,391 | ) | |||||
Net
cash provided by (used in) operating activities
|
2,447 | (1,601 | ) | |||||
Cash
flows from investing activities:
|
||||||||
Proceeds
on disposition of Maine Hydro
|
3,306 | - | ||||||
Proceeds
on disposition of Indeck Maine
|
- | 14,094 | ||||||
Exchange
of cash for RILG interest
|
- | (96 | ) | |||||
Net
cash provided by investing activities
|
3,306 | 13,998 | ||||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from affiliate loan payable
|
- | 3,000 | ||||||
Repayment
of affiliate loan payable
|
- | (3,000 | ) | |||||
Cash
distributions to noncontrolling interest
|
- | (500 | ) | |||||
Cash
distributions to shareholders
|
(9,632 | ) | (995 | ) | ||||
Net
cash used in financing activities
|
(9,632 | ) | (1,495 | ) | ||||
Net
(decrease) increase in cash and cash equivalents
|
(3,879 | ) | 10,902 | |||||
Cash
and cash equivalents, beginning of year
|
11,683 | 781 | ||||||
Cash
and cash equivalents, end of year
|
$ | 7,804 | $ | 11,683 | ||||
Supplemental
disclosure of cash flow information:
|
||||||||
Interest
paid
|
$ | - | $ | 52 | ||||
Supplemental
disclosure of noncash financing activities:
|
||||||||
Exchange
of assets for RILG membership interest:
|
||||||||
Plant
and equipment, net
|
$ | - | $ | (7,096 | ) | |||
Intangibles,
net
|
- | (724 | ) | |||||
Security
deposit
|
- | (509 | ) | |||||
Minority
interest
|
- | 2,858 | ||||||
Net
working capital, excluding cash
|
- | 375 | ||||||
Noncash
activity in connection with Indeck Maine sale:
|
||||||||
Exchange
of notes for membership units
|
$ | - | $ | 5,654 | ||||
Distribution
of Indeck Maine unbilled receivables and deposits
|
- | 10,468 | ||||||
Amounts
due to Indeck Maine members
|
- | 2,500 |
The accompanying notes are an
integral part of these consolidated financial statements.
RIDGEWOOD
ELECTRIC POWER TRUST IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands, except
per share data)
1. DESCRIPTION
OF BUSINESS
Ridgewood
Electric Power Trust IV (the “Trust”) is a Delaware trust formed on September 8,
1994. The Trust began offering shares in February 1995 and concluded its
offering in September 1996. The objective of the Trust is to provide benefits to
its shareholders through a combination of distributions of operating cash flow
and capital appreciation. The Managing Shareholder of the Trust is Ridgewood
Renewable Power LLC, a New Jersey limited liability company (the “Managing
Shareholder” or “RRP”). The Trust has been organized to invest primarily in
power generation facilities located in the US. The projects of the Trust have
characteristics that qualify the projects for government
incentives.
The
Trust’s accompanying consolidated financial statements include the accounts of
the Trust. The Trust’s consolidated financial statements also include the
Trust’s 35.24% interest in Rhode Island LFG Genco, LLC (“RILG”), effective
November 17, 2008, which is accounted for under the equity method of accounting,
as the Trust has the ability to exercise significant influence but does not
control the operating and financial policies of the investment. The Trust owned
a 50% interest in Ridgewood Maine Hydro Partners, L.P. (“Maine Hydro”) and a 25%
interest in Indeck Maine Energy, LLC (“Indeck Maine”), which were sold in
November 2009 and December 2008, respectively, as further discussed in Note
3.
Prior to
November 17, 2008, the Trust owned a 64.3% interest in Ridgewood Providence
Power Partners, L.P. (“Ridgewood Providence”) and the remaining 35.7%
noncontrolling interest was owned by Ridgewood Electric Power Trust III (“Trust
III”). On November 17, 2008, the Trust contributed its 64.3% interest in
Ridgewood Providence in exchange for a 35.24% interest in RILG. Effective
November 17, 2008, the interest in RILG is accounted for using the equity method
of accounting and therefore, the Trust no longer consolidates the assets,
liabilities, revenues and expenses of Ridgewood Providence, as discussed further
in Note 3.
The
Managing Shareholder is marketing RILG for sale. The Managing Shareholder cannot
predict the timing of the sale process or whether any sale will
occur.
The
Managing Shareholder performs, or arranges for the performance of, the operation
and maintenance of the projects invested in by the Trust and the management and
administrative services required for Trust operations. Among other services, the
Managing Shareholder administers the accounts, including tax and other financial
information, and handles relations with the shareholders. The Managing
Shareholder also provides the Trust with office space, equipment and facilities
and other services necessary for its operation.
The Trust
has evaluated subsequent events and transactions through the date of the
issuance of its financial statements, and concluded that there were no such
events or transactions that require adjustment to, or disclosure in the notes
to, the consolidated financial statements.
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
a)
Principles of Consolidation
The
consolidated financial statements include the accounts of the Trust and its
majority-owned subsidiary. All material intercompany transactions have been
eliminated in consolidation.
The Trust
uses the equity method of accounting for its investments in affiliates, which
are 50% or less owned, as the Trust has the ability to exercise significant
influence over the operating and financial policies of the affiliates but does
not control the affiliate. The Trust’s share of the earnings or losses of the
affiliates is included in the consolidated financial statements.
b)
Use of Estimates
The
preparation of consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America (“GAAP”) requires
the Trust to make estimates and assumptions that affect the reported amounts of
the Trust’s assets, liabilities, revenues and expenses, including the disclosure
of contingent assets and liabilities. The Trust evaluates these estimates and
assumptions on an ongoing basis. The Trust evaluates its estimates of assets,
including investments, prepaid expenses and other current assets and recordable
liabilities for litigation and other contingencies. The Trust bases its
estimates and assumptions on historical experience, current and expected
conditions and various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different circumstances or conditions.
RIDGEWOOD
ELECTRIC POWER TRUST IV
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands, except
per share data)
c)
Revenue Recognition
Power
generation revenue of RILG, is recorded in the month of delivery, based on the
estimated volumes sold to customers at rates stipulated in the electric power
sales contract. Adjustments are made to reflect actual volumes delivered when
the actual volumetric information subsequently becomes available. Billings to
customers for power generation generally occurs during the month following
delivery. Final billings do not vary significantly from estimates.
Renewable
attribute revenue is derived from the sale of the Renewable Portfolio Standards
Attributes (“RPS Attributes”). Qualified renewable electric
generation facilities produce RPS Attributes when they generate electricity.
Renewable attribute revenue is recorded in the month in which the RPS Attributes
are delivered, as Ridgewood Providence has substantially completed its
obligations for entitled benefits, represented by the underlying generation of
power within specific environmental requirements.
d)
Cash and Cash Equivalents
The Trust
considers all highly liquid investments with maturities, when purchased, of
three months or less as cash and cash equivalents. At December 31, 2009 and
2008, cash and cash equivalents exceeded federal insured limits by $7,447 and
$11,413, respectively, all of which was invested either in US Treasury bills or
money market accounts that invest primarily in US government
securities.
e)
Unbilled Receivables
Unbilled
receivables consists of RPS Attributes distributed from Indeck Maine, for which
revenue had been earned but for which no invoices had been generated under
executed commitments as the certificates to be exchanged had not been issued by
the appropriate regulatory body. The issuance of renewable certificates by the
regulatory body only occurs once every three months.
f) Fair Value of Financial
Instruments
At
December 31, 2009 and 2008, the carrying value of the Trust’s cash and cash
equivalents, unbilled receivables, other receivable, other current assets,
security deposits, accounts payable and accrued expenses and other liabilities
approximates their fair value due to their short-term nature.
g)
Comprehensive (Loss) Income
The
Trust's comprehensive (loss) income consists only of net (loss)
income.
h)
Income Taxes
No
provision is made for income taxes in the Trust’s consolidated financial
statements as the net income or losses of the Trust are passed through and
included in the income tax returns of the individual shareholders of the
Trust.
i)
Recent Accounting Pronouncements
Fair
Value Measurements
In
February 2008, the Financial Accounting Standards Board (“FASB”) issued guidance
which delayed the effective date of fair value measurements for non-financial
assets and non-financial liabilities for the Trust until January 1, 2009, except
for items that are recognized or disclosed at fair value in the financial
statements on a recurring basis. The Trust adopted this guidance effective
January 1, 2009, with no material impact on its consolidated financial
statements.
In April
2009, the FASB issued additional guidance relating to factors to consider in
estimating fair value when there has been a significant decrease in market
activity for a financial asset. The Trust adopted this guidance effective June
30, 2009, with no material impact on its consolidated financial
statements.
In August
2009, the FASB amended its previous guidance regarding the fair value
measurements and disclosures in order to reduce potential uncertainty in
financial reporting when measuring the fair value of liabilities. The Trust
adopted this guidance effective September 30, 2009, with no material impact on
its consolidated financial statements.
RIDGEWOOD
ELECTRIC POWER TRUST IV
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands, except
per share data)
In
January 2010, the FASB amended its previous guidance to clarify and provide
additional disclosure requirements relating to recurring and non-recurring fair
value measurements and employers’ disclosures about postretirement benefit plan
assets in order to provide greater level of disaggregated information and more
robust disclosures about valuation techniques and inputs to fair value
measurements. This guidance will become effective for interim and annual
reporting periods beginning after December 15, 2009, except for certain kind of
disclosures for which effective date is for fiscal year beginning after December
15, 2010. The Trust is currently evaluating the impact of adopting this guidance
on its consolidated financial statements.
Noncontrolling
Interests in Consolidated Financial Statements
In
December 2007, the FASB issued guidance regarding noncontrolling
interests in consolidated financial statements, which requires that ownership
interests in subsidiaries held by parties other than the parent, and the amount
of consolidated net income attributable to noncontrolling interests, be clearly
identified, labeled, and presented in the consolidated financial
statements within equity, but separate from the parent’s equity. It also
requires that once a subsidiary is deconsolidated, any retained noncontrolling
equity investment in the former subsidiary be initially measured at fair value.
Sufficient disclosures are required to clearly identify and distinguish between
the interests of the parent and the interests of the noncontrolling
owners. This guidance became effective for the Trust beginning
January 1, 2009. Except for the presentation and disclosure requirements,
which are applied retrospectively for all periods presented subsequent to the
adoption, the adoption of this guidance had no material impact on its
consolidated financial statements.
Subsequent
Events
In May
2009, the FASB issued guidance regarding subsequent events which establishes
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before financial statements are issued or are
available to be issued. It requires the disclosure of the date through which an
entity has evaluated subsequent events and the basis for that date. The Trust
adopted this guidance effective June 30, 2009, with no material impact on its
consolidated financial statements. In February 2010, the FASB amended its
previous guidance regarding subsequent events by removing the requirement for a
registrant to disclose a date through which subsequent events have been
evaluated.
Consolidation
of Variable Interest Entities
In June
2009, the FASB amended previous guidance regarding the consolidation of variable
interest entities (“VIE”). This guidance eliminates exceptions to consolidating
qualifying special-purpose entities, contains new criteria for determining the
primary beneficiary, and increases the frequency of required reassessments to
determine whether a company is the primary beneficiary of a VIE. This guidance
also contains a new requirement that any term, transaction, or arrangement that
does not have a substantive effect on an entity’s status as a VIE, a company’s
power over a VIE, or a company’s obligation to absorb losses or its right to
receive benefits of an entity must be disregarded in applying the guidance to
consolidation of VIE. The Trust adopted this guidance effective January 1, 2010,
with no material impact on its consolidated financial statements.
In
December 2009, the FASB amended its previous guidance issued in June 2009
regarding the consolidation of VIE which replace the quantitative-based risks
and rewards calculation for determining which reporting entity, if any, has a
controlling financial interest in a VIE with an approach focused on identifying
which reporting entity has the power to direct the activities of a VIE that most
significantly impact the entity’s economic performance and (1) the
obligation to absorb losses of the entity or (2) the right to receive
benefits from the entity. This amendment also requires additional disclosures
about a reporting entity’s involvement with VIEs. This guidance will
become effective for the fiscal year beginning after November 15, 2009, for
interim periods within that first annual reporting period and for interim and
annual reporting periods thereafter. The Trust is currently evaluating the
impact of adopting this guidance on its consolidated financial
statements.
FASB
Accounting Standards Codification
In June 2009, the
FASB announced the FASB Accounting Standards Codification (the “Codification”)
as the single source of authoritative non-governmental GAAP superseding
existing codification from the FASB, American Institute of Certified Public
Accountants, Emerging Issues Task Force, and related accounting literature.
Effective September 30, 2009, the Codification superseded all existing non-SEC
accounting and reporting standards and all other non-grandfathered non-SEC
accounting literature not included in the Codification became
non-authoritative. The Trust adopted the Codification with no
material impact on its consolidated financial statements.
RIDGEWOOD
ELECTRIC POWER TRUST IV
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands, except
per share data)
3. INVESTMENTS
RILG
In
October 2007, RILG was formed as a Delaware limited liability company which must
be dissolved no later than December 31, 2107. RILG has electrical
generating capacity of 20.4 megawatts and associated gas treatment systems,
located at the Central Landfill in Johnston, Rhode Island (the “Landfill”). The
project includes reciprocating engine generator sets which are fueled by methane
gas produced by and collected from the Landfill. RILG is operated under contract
by Ridgewood Power Management LLC (“RPM”), an affiliate of the Managing
Shareholder, on an at-cost basis.
On
November 17, 2008, the Trust, Ridgewood Electric Power Trust I (“Trust I”),
Trust III and Ridgewood Power B Fund/Providence Expansion (“B Fund”) entered
directly or indirectly, through one or more subsidiaries, into a series of
agreements relating to the operations of Ridgewood Providence and Ridgewood
Rhode Island Generation LLC (“RRIG”) at the Landfill. The principal purpose of
these agreements was to consolidate the activities of the Trust, Trust I, Trust
III and B Fund, at the Landfill under one entity, RILG, for the purposes of
developing a new electric generating facility and consolidating all gas rights
under one entity.
Pursuant
to terms and conditions of a contribution agreement, the Trust, Trust I, Trust
III and B Fund each contributed certain membership, partnership and economic
interests that they held in Ridgewood Providence, RRIG, Rhode Island Gas
Management LLC and Ridgewood Providence Power Corporation to RILG, in exchange
for their allocable interests in RILG. As a result of the
reorganization, the Trust, Trust I, Trust III and B Fund directly or indirectly
own all of the equity interests in RILG. The Trust contributed its 64.3%
interest in Ridgewood Providence in exchange for its 35.24% interest in
RILG.
RILG and
several of its affiliates had an agreement with a power marketer for which they
were committed to sell RPS Attributes derived from their electric generation.
The agreement provided such power marketer with six separate annual options to
purchase such attributes from 2004 through 2009 at fixed prices, as defined in
the agreement. The power marketer did not exercise its option to purchase 2009
RPS Attributes, and a deposit provided by RILG and its affiliates to secure
their obligations under the agreement was returned by April 2009. All required
RPS Attributes were supplied by April 2009 and the contract expired according to
its terms on June 15, 2009. RILG currently has no long-term agreements for the
sale of RPS Attributes.
Historically,
RILG sold electricity it produced partly at fixed prices pursuant to a long-term
contract and partly at prevailing market prices. In July 2009, the purchaser
under the long-term contract elected to exercise its one-time option to
terminate its contract with RILG, effective January 2010. RILG currently sells
all of its electrical output in the spot or day-ahead wholesale electricity
market. RILG is currently seeking alternate arrangements for the sale of its
output of its electricity generating capacity in lieu of selling the output at
open market spot prices. Whether this effort will be successful and what the
results to RILG will be if successful cannot be determined at this
time.
On
November 3, 2009, RILG received notice from the United States Department of
Energy (“DOE”) that it had been awarded a grant of $15,000 towards the purchase
of equipment relating to RILG expansion. The final detail of the award is
subject to final contract negotiations between RILG and the DOE. As a result,
the exact amount, and timing of the receipt of any award, cannot currently be
predicted.
Summarized
balance sheet data for RILG at December 31, 2009 and 2008 is as
follows:
December
31,
|
||||||||
2009
|
2008
|
|||||||
Current
Assets
|
$
|
3,128
|
$
|
4,120
|
||||
Non-current
assets
|
8,512
|
15,004
|
||||||
Total
assets
|
$
|
11,640
|
$
|
19,124
|
||||
Current
liabilities
|
$
|
3,641
|
$
|
2,782
|
||||
Members’
Equity
|
7,999
|
16,342
|
||||||
Total
liabilities and equity
|
$
|
11,640
|
$
|
19,124
|
||||
Trust
share of RILG equity
|
$
|
2,001
|
$
|
4,931
|
RIDGEWOOD
ELECTRIC POWER TRUST IV
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands, except
per share data)
Summarized
statements of operations data for RILG for the year ended December 31,
2009 and from November 17, 2008 to December 31, 2008 is as
follows:
Year
Ended
|
November
17 to
|
|||||||
December
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Revenues
|
$ | 14,296 | $ | 2,200 | ||||
Cost
of revenues
|
16,973 | 2,050 | ||||||
Other
expenses
|
4,985 | 890 | ||||||
Total
expenses
|
21,958 | 2,940 | ||||||
Net
loss
|
$ | (7,662 | ) | $ | (740 | ) | ||
Trust
share of equity loss
|
$ | (2,700 | ) | $ | (261 | ) |
The Trust
share of loss in RILG is calculated from November 17, 2008, the date as which
the Trust’s interest in RILG is accounted for using the equity method of
accounting. The Trust’s share of RILG equity is not based on its 35.24% interest
in RILG. Instead, it represents the carrying value of its net investment in
Ridgewood Providence at the time of the reorganization, increased/decreased for
its 35.24% share of earnings, losses and distributions of RILG that occurred
subsequent to the reorganization.
During
the third quarter of 2009, RILG recorded an impairment charge of $1,207 due to
the decision made by the Managing Shareholder not to repair certain long-lived
assets that were taken out of service for non-performance. As this equipment has
only nominal salvage value, upon determination that the assets would not be
restored to an operating status, their asset value was written off. The Trust's
share of the impairment charge was included in equity loss in RILG in the
accompanying consolidated statements of operations.
Due to a
change in the estimated useful life of certain assets, RILG recorded additional
depreciation expense of $3,337 and $564 for the years ended December 31, 2009
and 2008, respectively, which was included in equity loss in RILG in the
accompanying consolidated statements of operations.
Maine
Hydro
In August
1996, the Trust and Ridgewood Electric Power Trust V (“Trust V”) formed
Ridgewood Maine Hydro Partners, L.P. (“Maine Hydro”) and in December 1996,
acquired a portfolio of hydro-electric facilities located in Maine from CHI
Energy, Inc. The Trust and Trust V owned equal interests in Maine
Hydro.
On
November 20, 2009, Maine Hydro entered into a purchase and sale agreement and
sold for cash, all of the assets of Maine Hydro to KEI (USA) Power Management
Inc. and certain of its subsidiaries, which are affiliated with Kruger Energy,
Inc., a Canada-based international company. The total gross purchase price of
the sale, including a post-closing adjustment made in 2010 for estimated working
capital at the time of the sale, totaled $7,293, of which $3,646 was allocated
to the Trust. The Trust recorded a gain of $2,158 on the sale of Maine Hydro in
the accompanying consolidated statements of operations.
Summarized
balance sheet data for Maine Hydro at December 31, 2008 is as
follows:
Current
assets
|
$ | 1,583 | ||
Noncurrent
assets
|
2,137 | |||
Total
assets
|
$ | 3,720 | ||
Current
liabilities
|
$ | 668 | ||
Partners'
equity
|
3,052 | |||
Total
liabilities and partners' equity
|
$ | 3,720 | ||
Trust
share of Maine Hydro equity
|
$ | 1,526 |
RIDGEWOOD
ELECTRIC POWER TRUST IV
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands, except
per share data)
Summarized
statements of operations for Maine Hydro for the period from January 1, 2009 to
November 20, 2009 and for the year ended December 31, 2008 is as
follows:
2009
|
2008
|
|||||||
Revenues
|
$ | 2,331 | $ | 5,473 | ||||
Cost
of revenues
|
2,089 | 3,104 | ||||||
Other
expenses, net
|
1,094 | 1,860 | ||||||
Total
expenses
|
3,183 | 4,964 | ||||||
Net
(loss) income
|
$ | (852 | ) | $ | 509 | |||
Trust
share of (loss) income in Maine Hydro
|
$ | (426 | ) | $ | 254 |
Indeck
Maine
On
December 22, 2008, Indeck Maine completed the sale and transferred 100% of the
membership interests in Indeck Maine to Covanta Energy Corporation for an
aggregate price of $53,858, which includes an estimated net working capital of
$3,111 as defined in the purchase and sale agreement, as amended, less estimated
retention and vacation payments of $1,162 relating to RPM staff based at the
Indeck Maine facilities. The Trust recorded a gain of $7,197 on the sale of
Indeck Maine in the accompanying consolidated statement of
operations.
Immediately
prior to the sale in 2008, Indeck Maine transferred to a wholly-owned subsidiary
of the Trust, specific accounts receivable, deposits and rights to future cash
flows. As these amounts were collected, in accordance with an agreement
between the Trust, Trust V and Indeck Energy Services, Inc. (“IES”),
45% was distributed to IES, 27.5% distributed to Trust V and the
Trust retained the other 27.5%. During 2009, the entire amount
due to Trust V and IES was distributed.
Summarized
statement of operations data for Indeck Maine for the period from January 1,
2008 to December 22, 2008 is as follows:
Revenues
|
$
|
37,421
|
||
Cost
of revenues
|
35,776
|
|||
Other
expenses, net
|
2,105
|
|||
Total
expenses
|
37,881
|
|||
Net
(loss) income
|
$
|
(460
|
)
|
|
Trust
share of (loss) income in Indeck Maine
|
$
|
(509
|
)
|
During
the second quarter of 2008, management fees due to IES’ board members totaling
$933 was forgiven by the members. Indeck Maine has recorded this forgiveness as
a capital contribution. The Trust and Trust V have each recorded this
forgiveness as a deemed capital contribution of $467.
The Trust
assigned the excess purchase price over the net assets acquired to fixed assets.
The Trust depreciated the fixed assets over their remaining useful lives using
the unit of production method. Depreciation expense of $279 for the year
ended December 31, 2008, was included in the equity loss from Indeck Maine in
the accompanying consolidated statements of operations.
4. ROYALTY
EXPENSE
Prior to
the formation of RILG, Ridgewood Providence and RRIG entered into agreements
with Rhode Island Resource Recovery Corporation (“RIRRC”), the owner and
operator of the Landfill, for the purpose of leasing the sites at the Landfill
and to obtain the landfill gas rights necessary to operate the
projects. The projects may occupy the site and take delivery of
landfill gas for as long as the projects are able to generate electricity from
such gas.
Under the
prior existing RPS Attribute agreement between Ridgewood Providence and RIRRC,
Ridgewood Providence is required to pay 15% net revenue royalties from the sale
of its RPS Attributes to each of RIRRC and Ridgewood Gas Services LLC. In
addition, Ridgewood Providence is also required to pay, as royalty, 18% of power
generation revenue to RIRRC. Similarly, RRIG is required to pay a royalty to
RIRRC equal to 15% of net revenues plus an amount equal to $0.18/MMBtu (adjusted
for CPI) plus an amount equal to 10% of the net profits generated by RRIG in
excess of a threshold profit level. The portion of the RRIG payment based
on net profit is only to be made after RRIG has received a minimum return on its
investment in the projects.
RIDGEWOOD
ELECTRIC POWER TRUST IV
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands, except
per share data)
Effective
November 17, 2008, RILG entered into new agreements with RIRRC which provide for
a royalty of 15% of net revenue subject to certain credits, provided,
however, that the existing royalty arrangement will remain in effect until
the commercial operation of the new electric generating plant.
For the
period from January 1, 2008 to November 16, 2008, royalty expense paid by
Ridgewood Providence to RIRRC amounted to $1,702, which is included in cost of
revenues in the accompanying consolidated statements of operations. As the
Trust’s interest in RILG is accounted for using the equity method of accounting,
royalty expense for the year ended December 31, 2009 and from November 17, 2008
to December 31, 2008, is included in equity loss of RILG in the accompanying
consolidated statement of operations.
5. COMMITMENTS
AND CONTINGENCIES
RILG is
obligated, under the terms of various agreements with RIRRC, to construct a new
electric generating facility at the Landfill and to assume primary
responsibility for costs associated with the landfill gas collection system at
the Landfill as of the first to occur of the commencement of operation of a new
electric generating facility or June 1, 2013. RILG is also responsible for the
development and construction of a sulfur treatment facility on the Landfill and
the construction of new pipes and headers. The cost of building and
operating the sulfur treatment facility and the pipes and headers is estimated
to be approximately $5,000. The cost of the sulfur treatment facility will
be split equally between RILG and RIRRC and the entire cost associated with the
construction of pipes and headers will be paid by RILG. In addition,
the cost of new flares on the Landfill will be borne by RIRRC, but in certain
circumstances, the costs may be shared with RILG. If RILG fails to comply with
these obligations, it could be subject to monetary damages and also forfeit its
contracted gas rights. While the full cost of the expansion activities is not
yet known, it is the opinion of the Managing Shareholder that RILG has
insufficient capital to meet all of its obligations to expand its Landfill
operations. As a result, for the development efforts to be completed, RILG must
either be sold to entities that can invest in the development of these projects
or obtain third-party financing to perform its duties under the various
agreements. While the Managing Shareholder believes a portion of such financing
will be available, there can be no assurance whether or when RILG can obtain
sufficient financing or obtain it on satisfactory terms.
On August
16, 2006, the Trust and several affiliated entities, including the Managing
Shareholder, filed lawsuits against the former independent registered public
accounting firm for the Trust and several affiliated entities, Perelson Weiner
LLP (“Perelson Weiner”), in New Jersey Superior Court. The suit alleged
professional malpractice and breach of contract in connection with audit and
accounting services performed for the Trust and other plaintiffs by Perelson
Weiner. On October 20, 2006, Perelson Weiner filed a counterclaim against the
Trust and other plaintiffs, alleging breach of contract due to unpaid invoices
with a combined total of approximately $1,200. Discovery is ongoing and a trial
date is currently scheduled for May 17, 2010. The costs and expenses of
this litigation, including adverse judgments, if any, are being paid by the
Managing Shareholder and affiliated management companies and not the underlying
investment funds.
The Trust
may become subject to legal proceedings involving ordinary and routine claims
related to its business. The ultimate legal and financial liability with
respect to all such matters cannot be estimated with certainty and requires the
use of estimates in recording liabilities for potential litigation settlements.
Estimates for losses from litigation are disclosed if considered reasonably
possible and accrued if considered probable after consultation with outside
counsel. If estimates of potential losses increase or the related facts and
circumstances change in the future, the Trust may be required to record
additional litigation expense. While it is not possible to predict
the outcome of the litigation discussed in this Note with certainty and some
lawsuits, claims or proceedings may be disposed of unfavorably to the Trust,
based on its evaluation of matters which are pending or asserted, the Trust’s
management believes the disposition of such matters will not have a material
adverse effect on the Trust’s business or its financial condition or
results of operations.
6. TRANSACTIONS
WITH MANAGING SHAREHOLDER AND AFFILIATES
The Trust
operates pursuant to the terms of a management agreement (“Management
Agreement”). Under the terms of the Management Agreement, the
Managing Shareholder provides certain management, administrative and advisory
services and office space to the Trust. The Trust paid the Managing Shareholder
an annual management fee of $655 and $527 for the years ended December 31,
2009 and 2008, respectively, as compensation for the services the Managing
Shareholder provides to the Trust, which was equal to 3% of the Trust’s prior
year net asset value. The management fee is to be paid in monthly installments
and, to the extent that the Trust does not pay the management fee on a timely
basis, the Trust accrues interest at an annual rate of 10% on the unpaid
balance.
RIDGEWOOD
ELECTRIC POWER TRUST IV
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands, except
per share data)
Under the
Operating Agreement with the Trust, RPM provides management, purchasing,
engineering, planning and administrative services to the projects operated by
the Trust. RPM charges the projects at its cost for these services and for the
allocable amount of certain overhead items. Allocations of costs are on the
basis of identifiable direct costs or in proportion to amounts invested in
projects managed by RPM. For the years ended December 31, 2009 and 2008, RPM
charged the projects $581 and $947, respectively, for overhead items allocated
in proportion to the amount invested in projects managed. In addition, for the
years ended December 31, 2009 and 2008, RPM charged the projects $6,465 and
$26,837, respectively, for direct expenses allocated in proportion to the amount
invested in projects managed. These charges may not be indicative of costs
incurred if the projects were not operated by RPM.
Under the
Declaration of Trust, the Managing Shareholder is entitled to receive,
concurrently with the shareholders of the Trust other than the Managing
Shareholder, 1% of all distributions from operations made by the Trust in a year
until the shareholders have received distributions in that year equal to 14% per
annum of their equity contribution. Thereafter, the Managing Shareholder is
entitled to receive 20% of the distributions for the remainder of the year. The
Managing Shareholder is entitled to receive 1% of the proceeds from dispositions
of Trust property until the shareholders other than the Managing Shareholder,
have received cumulative distributions equal to their original investment
(“Payout”). After Payout, the Managing Shareholder is entitled to receive 20% of
all remaining distributions of the Trust. Distributions to the Managing
Shareholder were $96 and $10 for the years ended December 31, 2009 and 2008,
respectively. The Trust has not yet reached Payout.
Income is
allocated to the Managing Shareholder until the profits so allocated equal
distributions to the Managing Shareholder. Thereafter, income is allocated among
the shareholders other than the Managing Shareholder in proportion to their
ownership of Investor Shares. If the Trust has net losses for a fiscal period,
the losses are allocated 99% to the shareholders other than the Managing
Shareholder and 1% to the Managing Shareholder, subject to certain limitations
as set forth in the Declaration of Trust. Amounts allocated to shareholders
other than the Managing Shareholder are apportioned among them in proportion to
their capital contributions.
Under the
terms of the Declaration of Trust, if the Adjusted Capital Account (as defined
in the Declaration of Trust) of a shareholder other than the Managing
Shareholder would become negative using General Allocations (as defined in the
Declaration of Trust), losses and expenses will be allocated to the Managing
Shareholder. Should the Managing Shareholder’s Adjusted Capital Account become
negative and items of income or gain occur, then such items of income or gain
will be allocated entirely to the Managing Shareholder until such time as the
Managing Shareholder’s Adjusted Capital Account becomes positive. This mechanism
does not change the allocation of cash, as discussed above.
In
accordance with the Declaration of Trust, upon or prior to the first
distribution by the Trust in liquidation, the Managing Shareholder is required
to contribute to the capital of the Trust an amount equal to any deficit in the
tax basis capital account of the Managing Shareholder calculated just prior to
the date of such distribution. As of December 31, 2008, the last date such
calculation was made, the Managing Shareholder would have been required to
contribute $119 to the Trust prior to the Trust making any liquidating
distributions.
RRP owns
2.0331 Investor Shares of the Trust. The Trust granted the Managing Shareholder
a single Management Share representing the Managing Shareholder’s management
rights and rights to distributions of cash flow.
The Trust
records short-term payables to and receivables from certain of its affiliates in
the ordinary course of business. The amounts payable to and receivable from its
affiliates, other than amounts relating to management fees, do not bear
interest. At December 31, 2009 and 2008, the Trust had outstanding receivables
and payables as follows:
Due
From
|
Due
To
|
|||||||
2009
|
2008
|
|||||||
Ridgewood
Power Management LLC
|
$ | 4 | $ | 20 | ||||
Ridgewood
Renewable Power LLC
|
9 | 8 | ||||||
Trust
V
|
- | 2,570 | ||||||
Maine
Hydro
|
- | 2 | ||||||
RILG
|
592 | 171 | ||||||
Other
affiliates
|
1 | - | ||||||
Total
|
$ | 606 | $ | 2,771 |
F-14