10-Q 1 fs5q3.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended September 30, 2002 Commission file Number 0-24143 RIDGEWOOD ELECTRIC POWER TRUST V (Exact name of registrant as specified in its charter.) Delaware 22-3437351 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 947 Linwood Avenue, Ridgewood, New Jersey 07450-2939 ------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (201) 447-9000 Registrant's telephone number, including area code: Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] PART I. - FINANCIAL INFORMATION Item 1. Financial Statements Ridgewood Electric Power Trust V Consolidated Financial Statements September 30, 2002 Ridgewood Electric Power Trust V Consolidated Balance Sheets (unaudited) -------------------------------------------------------------------------------- Assets: September 30, December 31, 2002 2001 ------------ ------------ Cash and cash equivalents ...................... $ 2,682,372 $ 2,519,330 Accounts receivable, trade ..................... 1,941,829 2,464,557 Due from affiliates ............................ 253,150 435,823 Other current assets ........................... 460,343 334,859 ------------ ------------ Total current assets ..................... 5,337,694 5,754,569 ------------ ------------ Plant and equipment ............................ 24,158,089 20,040,217 Construction in progress ....................... 1,179,592 -- ------------ ------------ Total plant and equipment ...................... 25,337,681 20,040,217 Less - Accumulated depreciation ................ (3,617,169) (2,287,288) ------------ ------------ Plant and equipment, net ................. 21,720,512 17,752,929 ------------ ------------ Electric power sales contracts and other intangibles ......................... 21,933,709 19,891,901 Less - Accumulated amortization ................ (3,326,535) (1,976,152) ------------ ------------ Electric power sales contracts and other intangibles, net ............. 18,607,174 17,915,749 ------------ ------------ Investments: Maine Hydro Projects ....................... 4,922,738 4,879,015 Maine Biomass Projects ..................... 4,831,717 4,830,991 Egypt Projects ............................. 3,668,816 3,836,912 Synergics Projects ......................... 5,869,109 5,869,109 CLP Spanish Landfill Projects .............. 1,059,860 766,335 ------------ ------------ Total assets ............................. $ 66,017,620 $ 61,605,609 ------------ ------------ Liabilities and shareholders' equity: Liabilities: Current portion of long-term debt .............. $ 1,200,215 $ 609,550 Accounts payable and accrued expenses .......... 3,196,659 3,234,486 Due to affiliates .............................. 1,449,358 343,057 ------------ ------------ Total current liabilities ................. 5,846,232 4,187,093 ------------ ------------ Long-term debt, less current portion ........... 18,626,297 13,878,183 Deferred income taxes .......................... 813,542 1,081,202 Minority interest .............................. 10,699,135 10,408,841 Commitments and contingencies Shareholders' equity: Shareholders' equity (932.8875 investor shares issued and outstanding) ............ 30,486,129 32,483,826 Managing shareholder's accumulated deficit (1 management share issued and outstanding) ................. (453,715) (433,536) ------------ ------------ Total shareholders' equity ............... 30,032,414 32,050,290 ------------ ------------ Total liabilities and shareholders' equity $ 66,017,620 $ 61,605,609 ------------ ------------ See accompanying notes to the consolidated financial statements. Ridgewood Electric Power Trust V Consolidated Statements of Operations (unaudited) -------------------------------------------------------------------------------- Nine Months Ended Three Months Ended --------------------------- --------------------------- September 30, September 30, September 30, September 30, 2002 2001 2002 2001 ----------- ----------- ----------- ----------- Revenues ............ $ 5,809,962 $ 4,416,136 $ 2,046,043 $ 1,514,394 Cost of sales ....... 5,289,006 3,176,092 1,836,518 1,132,744 ----------- ----------- ----------- ----------- Gross profit ........ 520,956 1,240,044 209,525 381,650 General and administrative expenses ........... 853,877 593,906 417,163 234,065 Management fee paid to managing shareholder ........ 1,166,112 1,749,168 -- 583,056 Research and development ........ 1,206,822 238,776 509,599 (318,059) ----------- ----------- ----------- ----------- Total other operating expenses ......... 3,226,811 2,581,850 926,762 499,062 Loss from operations ......... (2,705,855) (1,341,806) (717,237) (117,412) Other income (expense): Interest income ... 57,194 139,788 22,750 39,632 Interest expense .. (1,162,922) (788,271) (377,826) (293,008) Interest income from Synergics Projects ......... -- 409,825 -- 136,609 Equity interest in Income(loss)from Maine Hydro Projects ........ 43,723 (50,471) (354,607) (321,577) (Loss)income from Maine Biomass Projects ....... (324,274) (269,680) 587,538 144,182 Income(loss)from Egypt Projects .. (104,756) 131,202 (74,574) 61,978 Loss from CLP Spanish Landfill Projects ........ (32,309) -- (23,998) -- Other income ..... 147,158 -- (6,733) -- ----------- ----------- ----------- ----------- Other income (expense) net . (1,376,186) (427,607) (227,450) (232,184) ----------- ----------- ----------- ----------- Loss before taxes ... (4,082,041) (1,769,413) (944,687) (349,596) Income tax(benefit) expense ............ (331,414) 74,658 (498,759) (131,297) ----------- ----------- ----------- ----------- Loss before minority interest in net loss of consolidated subsidiaries ....... (3,750,627) (1,844,071) (445,928) (218,299) Minority interest in loss(earnings) of consolidated subsidiaries ....... 916,105 (68,881) 176,758 (300,227) ----------- ----------- ----------- ----------- Net loss ............ $(2,834,522) $(1,912,952) $ (269,170) $ (518,526) =========== =========== =========== =========== See accompanying notes to the consolidated financial statements. Ridgewood Electric Power Trust V Consolidated Statement of Changes in Shareholders' Equity (unaudited) -------------------------------------------------------------------------------- Managing Shareholders Shareholder Total ------------ ------------ ------------ Shareholders' equity, December 31, 2001 .............. $ 32,483,826 $ (433,536) $ 32,050,290 Cumulative translation adjustment 808,480 8,166 816,646 Net loss for the year ........... (2,806,177) (28,345) (2,834,522) ------------ ------------ ------------ Shareholders' equity, September 30, 2002 ............. $ 30,486,129 (453,715) $ 30,032,414 ------------ ------------ ------------ Ridgewood Electric Power Trust V Consolidated Statements of Comprehensive Loss (unaudited) -------------------------------------------------------------------------------- Nine Months Ended Three Months Ended ---------------------------- ---------------------------- September 30, September 30, September 30, September 30, 2002 2001 2002 2001 ----------- ----------- ----------- ----------- Net loss ......... $(2,834,522) $(1,912,952) $ (269,170) $ (518,526) Cumulative translation adjustment ...... 816,646 (572,814) 188,078 (37,604) ----------- ----------- ----------- ----------- Comprehensive loss $(2,017,876) $(2,485,766) $ (81,092) $ (556,130) ----------- ----------- ----------- ----------- See accompanying notes to the consolidated financial statements. Ridgewood Electric Power Trust V Consolidated Statement of Cash Flows (unaudited) -------------------------------------------------------------------------------- Nine Months Ended --------------------------- September 30, September 30, 2002 2001 ----------- ----------- Cash flows from operating activities: Net loss .................................. $(2,834,522) $(1,912,952) ----------- ----------- Adjustments to reconcile net loss to net cash flows from operating activities: Depreciation and amortization ........... 2,189,639 1,447,302 Minority interest in (loss) income of consolidated subsidiaries .......................... (916,105) 68,881 (Income) loss from Maine Hydro Projects . (43,723) 50,471 Loss from Maine Biomass Projects ........ 324,274 269,680 Loss from CLP Spanish Landfill Projects . 32,309 -- Loss (income) from Egypt Projects ...... 104,756 (131,202) Interest income from Synergics Projects . -- (409,825) Changes in assets and liabilities: Decrease (increase) in accounts receivable ........................... 672,579 (635,377) Decrease in due from affiliates ....... 182,674 164,237 (Increase) decrease in other current assets ...................... (125,484) 569,090 (Decrease) increase in accounts payable and accrued expenses ................ (211,164) 937,519 Increase (decrease) in deferred income taxes ......................... (331,414) 67,382 Increase (decrease) in due to affiliates ........................... 1,106,301 (312,879) ----------- ----------- Total adjustments ..................... 2,984,642 2,085,279 ----------- ----------- Net cash provided by operating activities ................. 150,120 172,327 ----------- ----------- Cash flows from investing activities: Capital expenditures ...................... (3,619,870) (3,539,901) Purchase of power contract ................ -- (3,192,929) Investment in CLP Spanish Landfill Projects ...................... (255,608) -- Loans to Maine Biomass Projects ........... (325,000) (450,000) Distributions from Egypt Projects ......... -- 899,982 ----------- ----------- Net cash used in investing activities ................. (4,200,478) (6,282,848) ----------- ----------- Cash flows from financing activities: Contributions to United Kingdom Landfill Projects by minority interest ....................... 4,491 3,466,950 Borrowings under bank loan ................ 4,022,063 2,680,582 ----------- ----------- Net cash provided by financing activities ................. 4,026,554 6,147,532 ----------- ----------- Effect of exchange rate on cash and cash equivalents ......................... 186,846 (21,518) Net increase in cash and cash equivalents ...... 163,042 15,493 Cash and cash equivalents, beginning of year ... 2,519,330 4,731,081 ----------- ----------- Cash and cash equivalents, end of period ....... $ 2,682,372 $ 4,746,574 ----------- ----------- See accompanying notes to the consolidated financial statements. Ridgewood Electric Power Trust V Notes to Consolidated Financial Statements (unaudited) ------------------------------------------------------------------------------ 1. General In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments which consist of normal recurring adjustments, necessary for the fair presentation of the results for the interim periods. Additional footnote disclosure concerning accounting policies and other matters are disclosed in Ridgewood Electric Power Trust V's (the "Trust") consolidated financial statements included in the 2001 Annual Report on Form 10-K, which should be read in conjunction with these financial statements. Certain items in previously issued financial statements have been reclassified for comparative purposes. The results of operations for an interim period should not necessarily be taken as indicative of the results of operations that may be expected for a twelve month period. 2. Summary Results of Operations for Selected Investments Summary results of operations for the Maine Hydro Projects, which are accounted for under the equity method, were as follows: Nine Months Ended Three Months Ended September 30, September 30, 2002 2001 2002 2001 ----------- ----------- ----------- ----------- Revenue ......... $ 2,538,000 $ 2,214,000 $ 154,000 $ 145,000 Operating expense 2,451,000 2,315,000 864,000 788,000 Net income (loss) 87,000 (101,000) (710,000) (643,000) Summary results of operations for the Maine Biomass Projects, which are accounted for under the equity method, were as follows: Nine Months Ended Three Months Ended September 30, September 30, 2002 2001 2002 2001 ----------- ----------- ----------- ----------- Revenue ......... $ 5,938,000 $ 3,910,000 $ 3,405,000 $ 2,565,000 Cost of sales ... 5,739,000 3,567,000 1,905,000 1,857,000 Other expense ... 848,000 882,000 325,000 419,000 Net income (loss) (649,000) (539,000) 1,175,000 289,000 Summary results of operations for the Egypt Projects, which are accounted for under the equity method, were as follows: Nine Months Ended Three Months Ended September 30, September 30, 2002 2001 2002 2001 ----------- ----------- ----------- ----------- Revenue ......... $ 4,352,000 $ 3,452,000 $ 2,058,000 $ 1,371,000 Cost of sales ... 3,838,000 2,163,000 2,064,000 870,000 Other expense ... 1,263,000 690,000 527,000 203,000 Net income (loss) (749,000) 599,000 (533,000) 298,000 3. Summary of Significant Accounting Policies New Accounting Standards and Disclosures SFAS 141 In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") 141, Business Combinations, which eliminates the pooling-of-interest method of accounting for business combinations and requires the use of the purchase method. In addition, SFAS 141 requires the reassessment of intangible assets to determine if they are appropriately classified either separately or within goodwill. SFAS 141 is effective for business combinations initiated after June 30, 2001. The Trust adopted SFAS 141 on July 1, 2001, which did not have an impact on the consolidated financial statements. SFAS 142 In June 2001, the FASB issued SFAS 142, Goodwill and Other Intangible Assets, which eliminates the amortization of goodwill and other acquired intangible assets with indefinite economic useful lives. SFAS 142 requires an annual impairment test of goodwill and other intangible assets that are not subject to amortization. Other intangible assets with definite economic lives will continue to be amortized over their useful lives. The Trust adopted SFAS 142 on January 1, 2002, which did not have an impact on the consolidated financial statements. SFAS 143 In June 2001, the FASB issued SFAS 143, Accounting for Asset Retirement Obligations, on the accounting for obligations associated with the retirement of long-lived assets. SFAS 143 requires a liability to be recognized in the consolidated financial statements for retirement obligations meeting specific criteria. Measurement of the initial obligation is to approximate fair value, with an equivalent amount recorded as an increase in the value of the capitalized asset. The asset will be depreciated in accordance with normal depreciation policy and the liability will be increased for the time value of money, with a charge to the income statement, until the obligation is settled. SFAS 143 is effective for fiscal years beginning after June 15, 2002. The Trust will adopt SFAS 143 effective January 1, 2003 and has assessed that this standard will not have a material impact on the Trust. SFAS 144 In August 2001, the FASB issued SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which replaces SFAS 121, Accounting for the Impairment of Long-lived Assets and for Long-Lived Assets to Be Disposed Of. For long-lived assets to be held and used, SFAS 144 retains the requirements of SFAS 121 to (a) recognize an impairment loss only if the carrying amount is not recoverable from undiscounted cash flows and (b) measure an impairment loss as the difference between the carrying amount and fair value of the asset. For long-lived assets to be disposed of, SFAS 144 establishes a single accounting model based on the framework established in SFAS 121. The accounting model for long-lived assets to be disposed of by sale applies to all long-lived assets, including discontinued operations and replaces the provisions of APB Opinion No. 30, Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for the disposal of segments of a business. SFAS 144 also broadens the reporting of discontinued operations. The Trust adopted SFAS 144 on January 1, 2002, which did not have an impact on the consolidated financial statements. SFAS 145 In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Correction. SFAS No. 145 eliminates extraordinary accounting treatment for reporting gain or loss on debt extinguishment, and amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The Trust will adopt SFAS 145 effective January 1, 2003 and has assessed that this standard will not have a material impact on the Trust. SFAS 146 In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 requires recording costs associated with exit or disposal activities at their fair values when a liability has been incurred. The Trust will adopt SFAS 146 effective January 1, 2003 and has assessed that this standard will not have a material impact on the Trust. 4. Long-Term Debt Following is a summary of United Kingdom Landfill Gas Projects long-term debt at September 30, 2002 and December 31, 2001: September 30, December 31, 2002 2001 ------------ ------------ Bank loan payable ..... $ 19,826,512 $ 14,487,733 Less - Current maturity (1,200,215) (609,550) ------------ ------------ Total long-term debt .. $ 18,626,297 $ 13,878,183 ------------ ------------ The bank loan is repayable in semi annual installments each March 31st and September 30th through September 30, 2010. The loan bears interest at LIBOR plus 2.25% (4.069% and 4.126% at September 30, 2002 and December 31, 2001, respectively). The notes are collateralized by substantially all of the assets of the projects. The increase in the loan balance is due to the borrowings used for the development of new projects in the United Kingdom as well as the effect of the change in the foreign currency translation rate. During the fourth quarter of 1997, the Trust and its principal bank executed a revolving line of credit agreement, whereby the bank will provide a three year committed line of credit facility of $750,000 for borrowings or letters of credit. The credit facility was extended until July 31, 2002. Outstanding borrowings, which will be repaid prior to the expiration of the credit facility, bear interest at the bank's prime rate or, at the Trust's choice, at LIBOR plus 2.5% (4.319% and 4.376% at September 30, 2002 and December 31, 2001, respectively). During the third quarter of 2002, the Trust extended its revolving line of credit agreement with its principal bank through August 31, 2002 and subsequently finalized a further extension until July 31, 2003. The extension expiring on August 31, 2002 provided the Trust with a committed line of credit of $700,000, while the credit facility through July 31, 2003 will provide a committed line of $593,000. The credit agreement, which will require the Trust to maintain a ratio of total debt to tangible net worth of no more than 1 to 1 and a minimum debt service coverage ratio of 2 to 1, is currently waived as long as the Trust provides 100% cash collateral for any borrowings after December 31, 2002. There were no outstanding borrowings at September 30, 2002. In October 2002, the Trust borrowed $590,000 under the line of credit facility. 5. Related Party Transactions At September 30, 2002 and December 31, 2001, the Trust had outstanding payables and receivables, with the following affiliates: Due To Due From ------------------------- -------------------------- September 30, December 31, September 30, December 31, 2002 2001 2002 2001 ---------- ---------- ---------- ---------- Ridgewood Power Management LLC ... $ -- $ 141,707 $ 93,038 $ -- Ridgewood Power LLC -- -- 2,250 -- Ridgewood Power Growth Fund ...... 362,143 181,832 -- -- Egypt Projects .... -- -- 152,863 -- Ridgewood Electric Power Trust IV ... -- -- -- 135,823 Maine Hydro ....... 838,788 -- -- 100,000 Maine Biomass ..... 229,333 -- -- 200,000 Other affiliates .. 19,094 19,518 4,999 -- ---------- ---------- ---------- ---------- Total .... $1,449,358 $ 343,057 $ 253,150 $ 435,823 ---------- ---------- ---------- ---------- From time to time, the Trust records short-term payables and receivables from other affiliates in the ordinary course of business. The amounts payable and receivable with the other affiliates do not bear interest. 6. Income taxes The Trust recorded a provision for United Kingdom ("UK") income taxes of $167,345 for the six months ended June 30, 2002. Due to the net loss recognized through September 30, 2002 and the capital allowances available under UK tax law, the Trust does not expect its UK operations to record an income tax provision for the year ended December 31, 2002. As a result of the current financial results, the Trust recorded an income tax benefit of $331,414 and the prior period provision was accordingly reversed. At September 30, 2002 and December 31, 2001, the Trust had a deferred tax liability of $813,542 and $1,081,202, respectively. 7. Subsequent Event Beginning in late 1999, the Trust and The Ridgewood Power Growth Fund ("Growth Fund") (collectively "Ridgewood Power") began negotiations with Synergics, Inc. ("Synergics") to buy nine existing hydroelectric generating plants (the "Synergics Projects"). In the course of negotiations and due diligence, Ridgewood Power learned that one of Synergics' lenders had declared a payment default against Synergics and that the lender had agreed to discharge the debt at a substantial discount from the face amount if payment were made by the end of April 2000. In order to preserve the benefit of the lender's offer and to allow completion of the acquisition on favorable terms, the Trust and the Growth Fund, through a joint venture, acquired the debt from the lender on April 28, 2000 for a payment of $17 million to the lender. The Trust supplied $5 million of the capital used by the joint venture to acquire the debt and the Growth Fund supplied the remaining $12 million. The Trust and the Growth Fund own the joint venture in proportion to the capital each supplied and neither has preferred rights over the other. On November 22, 2002, through another joint venture owned in the same proportion as the joint venture that acquired the debt of Synergics, the Trust and Growth Fund acquired 100% of the outstanding stock of Synergics. The former shareholders of Synergics Inc. received 100% of the outstanding shares of a subsidiary of Synergics in exchange for selling the stock of Synergics to the Trust and Growth Fund. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Dollar amounts in this discussion are generally rounded to the nearest $1,000. Introduction The consolidated financial statements include the accounts of the Trust, United Kingdom Landfill Projects ("UK Projects") and Ridgewood Waterpure Corporation. The Trust's investment in the Synergics Hydro projects is in the form of a note receivable and, accordingly, the Trust's earnings are in the form of interest income. The Trust uses the equity method of accounting for its investments in the Maine Hydro Projects, Maine Biomass Projects, and the Egypt Projects. Results of Operations Three Months Ended September 30, 2002, Compared to the Three Months Ended September 30, 2001 Revenues increased by $532,000, to $2,046,000 in the third quarter of 2002, as compared to the third quarter of 2001. The increase in revenues is due to the increase in the number of power producing facilities owned and operated by the UK Projects as a result of the merger that was completed in the fourth quarter of 2001. Gross profit decreased from $382,000 for the three months ended September 30, 2001to $210,000 for the corresponding period of 2002. The decrease is attributed to the increase in maintenance costs incurred to repair some of the UK Projects. General and administrative expenses increased $183,000 in the third quarter of 2002 to $417,000. The increase in general and administrative expenses is a result of the merger of operations of the UK projects in the fourth quarter of 2001. Prior to the merger, the Trust paid a third party non-affiliate to manage and operate the UK Projects. As a result of the merger, the Trust now manages, develops and operates the UK projects internally. The increase is also attributable to bank fees incurred by the Trust in exploring possibilities of obtaining a new credit line. The management fee decreased $583,000 due to the managing shareholder waiving the third quarter 2002 management fee. In the third quarter of 2001 Ridgewood WaterPure's available cash ran out, therefore, in October 2001, Ridgewood WaterPure filed under Chapter 7 of the United States Bankruptcy Code to liquidate its assets. As a result of the filing, the Trust reversed $318,000 of research and development costs it had previously recognized. The reversal of these expenses brings the Trust's valuation of its investment in Ridgewood WaterPure to zero. In the third quarter of 2002, the UK Projects incurred $510,000 of developmental costs as a result of the construction and development of new plants. Interest income decreased by $17,000 from $40,000 in the third quarter of 2001 to $23,000 in the third quarter of 2002 due to lower average cash balances. Interest expense increased by $85,000 from $293,000 in the third quarter of 2001 to $378,000 in the third quarter of 2002 due to the increase in borrowings under the UK Projects credit line. The Trust recorded interest income from the note related to the Synergics Projects of $137,000 in the third quarter of 2001. During the second half of 2001, drought conditions affected many of the Synergics Projects, reducing revenues and cash flows recorded by Synergics. As a result of these reduced cash flows experienced by Synergics, the Trust ceased accruing interest effective as of October 1, 2001. The Trust recorded $62,000 of equity income related to the Egypt projects in the third quarter of 2001 compared to $75,000 of losses in the third quarter of 2002. The loss in 2002 is attributed to the increase in maintenance and depreciation expense as a result of the completion of facilities and their operation, as compared to the prior year when some facilities were still under construction. The equity loss from the Maine Hydro Projects was comparable to the third quarter of 2001. The loss is attributable to the low rainfall, normally experienced during the summer months. The equity income from the Maine Biomass Projects increased from $144,000 in the third quarter of 2001 to $588,000 in the same period in 2002. The increase in income from the Maine Biomass Projects is primarily attributable to the renewable energy attributes revenue (discussed in more detail below) recognized by the West Enfield plant. On May 9, 2002, the West Enfield plant and the Jonesboro plant each filed an "Application for Statement of Qualification" with the Massachusetts Division of Energy Resources (the "Division") to qualify as new renewable electric generation facilities under the Massachusetts Renewable Portfolio Standard Regulations ("RPS"). Pursuant to these regulations, qualified renewable electric generation facilities produce renewable portfolio standard attributes ("RPS Attributes") when they generate electricity. RPS Attributes are then sold to and used by entities that are providing electricity to end-use customers in Massachusetts. The RPS regulations, and the statute under which they were promulgated, are intended to spur use and development of new renewable generation facilities. On July 8, 2002, the Trust received official notice from the Division that the Application for Statement of Qualification filed pursuant to the Massachusetts Renewable Energy Portfolio Standard Regulations ("Regulations") by both the Jonesboro and West Enfield plants had been approved as of July 3, 2002. Pursuant to such approval, the Division found that the Plants meet the eligibility requirements of the Regulations and therefore may market and sell renewable attributes associated with the electric generation of the Plants. Because the West Enfield plant qualifies under the RPS, pursuant to the power sales contract, Select Energy paid an additional amount for the RPS Attributes associated with the electric energy it purchased from the West Enfield plant, which amounted to approximately $929,000 for the third quarter of 2002. Because the Trust received notification of its approval for qualification by the Division in July 2002, the Trust recognized its share of the additional revenues, which amounted to $1,113,000 for the first half of 2002, in the third quarter as well. In the third quarter of 2002 the Trust recorded an income tax benefit for its UK projects of $446,000, compared to $131,000 for the third quarter of 2001. The increase is due the larger net loss incurred in 2002 as well as the reversal of the income tax provision recorded for the six months ended June 30, 2002. Nine Months Ended September 30, 2002, Compared to the Nine Months Ended September 30, 2001 Revenues increased by $1,394,000 to $5,810,000 for the first nine months of 2002, as compared to the same period of 2001. The increase in revenues is due to the increase in the number of power producing facilities owned and operated by the UK Projects as a result of the merger that was completed in the fourth quarter of 2001. Gross profit decreased from $1,240,000 for the nine months ended September 30, 2001 to $521,000 for the corresponding period of 2002. The decrease is attributed to the increase in maintenance costs incurred to repair some of the UK Projects. General and administrative expenses increased $260,000 in the first nine months of 2002 to $854,000. The increase in general and administrative expenses is a result of the merger of operations of the UK Projects in the fourth quarter of 2001. Prior to the merger, the Trust paid a third party non-affiliate to manage and operate the UK Projects. As a result of the merger, the Trust now manages, develops and operates the UK Projects internally. The increase is also attributable to bank fees incurred by the Trust in exploring possibilities of obtaining a new credit line. The management fee decreased $583,000, from $1,749,000 for the first nine months of 2001 to $ 1,166,000 for the first nine months of 2002, due to the managing shareholder waiving the third quarter 2002 management fee. Research and development costs increased $968,000 to $1,207,000 for the first nine months of 2002. In the first nine months of 2001, the Trust's Ridgewood WaterPure subsidiary incurred $239,000 of research and development costs related to its water distillation technology. As a result of Ridgewood WaterPure's bankruptcy filing in the fourth quarter of 2001, no research and development costs were incurred in 2002. In the first nine months of 2002, the UK Projects incurred $1,207,000 of developmental fees as a result of the construction and development of new plants. In 2001, the UK Projects did not incur development costs since it did not develop and construct its plants but rather purchased completed and operable facilities. Interest income decreased by $83,000 from $140,000 in the first nine months of 2001 to $57,000 for the corresponding period of 2002, due to lower average cash balances. Interest expense increased by $375,000 from $788,000 for the nine months ended September 2001 to $1,163,000 for the nine months ended September 2002, due to the increase in borrowings under the UK Project's credit line. The Trust recorded interest income from the note related to the Synergics Projects of $410,000 in the first nine months of 2001. During the second half of 2001, drought conditions affected many of the Synergics Projects, reducing revenues and cash flows recorded by Synergics. As a result of these reduced cash flows experienced by Synergics, the Trust ceased accruing interest effective as of October 1, 2001. The Trust recorded $131,000 of equity income related to the Egypt projects for the first nine months of 2001 compared to $105,000 of losses for the same period of 2002. The loss in 2002 is attributed to the increase in maintenance and depreciation expense as a result of the completion of facilities and their operation, as compared to the prior year when some facilities were still under construction. Equity income from the Maine Hydro Projects increased by $94,000, to $44,000 in the first nine months of 2002. The increase is due to the heavier rainfall experienced in 2002. The equity loss from the Maine Biomass Projects for the nine months ended September 30, 2002 was $324,000 compared $270,000 for the corresponding period of 2001. The equity loss recognized in 2002 is primarily due to the higher maintenance fees incurred as a result of the West Enfield plant operating under a normal full time schedule, as well as lower capacity revenues received by the West Enfield and Jonesboro plants. As an offset to the higher maintenance fees and lower capacity revenues, the West Enfield plant recorded $2,042,000 of renewable energy attributes revenue based on its recent qualification. On July 8, 2002, the Trust received official notice from the Division that the Application for Statement of Qualification filed pursuant to the Massachusetts Renewable Energy Portfolio Standard Regulations ("Regulations") by both the Jonesboro and West Enfield plants had been approved as of July 3, 2002. Pursuant to such approval, the Division found that the Plants meet the eligibility requirements of the Regulations and therefore may market and sell renewable attributes associated with the electric generation of the Plants. Because the West Enfield plant qualifies under the RPS, pursuant to the power sales contract, Select Energy paid an additional amount for the RPS Attributes associated with the electric energy it purchased from the West Enfield plant, which amounted to approximately $2,042,000 for the first nine months of 2002. Other income increased by $147,000 in the first nine months of 2002 primarily due to the proceeds received from the liquidation of the Santee River Rubber Company, which filed for bankruptcy in 2000. For the nine months ended September 30, 2002, the Trust recorded an income tax benefit for its UK projects of $331,000, compared to income tax expense of $75,000 for the corresponding period of the prior year. The income tax benefit is due to the larger net loss incurred in 2002. Liquidity and Capital Resources Dollar amounts in this discussion are rounded to the nearest $1,000. Cash provided by operating activities for the nine months ended September 30, 2002 was comparable to the prior year, as a result of the increase in short-term payables to affiliates and the decrease in accounts receivable, being offset by the increase in net loss. Cash used in investing activities decreased to $4,200,000 during the first nine months of 2002 as compared to $6,283,000 for the first nine months of 2001. The decrease is primarily due to the Trust purchasing more power plants in the United Kingdom in 2001, $6,733,000, as compared to 2002, $3,620,000. The Trust also made a lesser investment in the Maine Biomass Projects in 2002, $325,000, as compared to $450,000 in 2001. As opposed to the $900,000 cash distribution received from the Egypt Projects in 2001, there were no distributions received in 2002. The Trust also made an additional investment of $256,000 in the CLP Spanish Landfill Projects in 2002. Cash provided by financing activities for the first nine months of 2002 was $4,027,000 compared to a $6,148,000 in the first nine months of 2001. The decrease in 2002 cash flow from financing activities is due to the $3,467,000 investment in the UK projects by the Ridgewood Power Growth Fund in 2001. During the fourth quarter of 1997, the Trust and its principal bank executed a revolving line of credit agreement, whereby the bank will provide a three year committed line of credit facility of $750,000 for borrowings or letters of credit. The credit facility was extended until July 31, 2002. Outstanding borrowings, which will be repaid prior to the expiration of the credit facility, bear interest at the bank's prime rate or, at the Trust's choice, at LIBOR plus 2.5% (4.319% and 4.376% at September 30, 2002 and December 31, 2001, respectively). During the third quarter of 2002, the Trust extended its revolving line of credit agreement with its principal bank through August 31, 2002 and subsequently finalized a further extension until July 31, 2003. The extension expiring on August 31, 2002 provided the Trust with a committed line of credit of $700,000, while the credit facility through July 31, 2003 will provide a committed line of $593,000. The credit agreement, which will require the Trust to maintain a ratio of total debt to tangible net worth of no more than 1 to 1 and a minimum debt service coverage ratio of 2 to 1, is currently waived as long as the Trust provides 100% cash collateral for any borrowings after December 31, 2002. There were no outstanding borrowings at September 30, 2002. In October 2002, the Trust borrowed $590,000 under the line of credit facility. Obligations of the Trust are generally limited to payment of the management fee to the Managing Shareholder and payment of certain accounting and legal services to third parties. The Trust ceased making distributions to shareholders in the first quarter of 2001. The Trust expects that its cash flows from operations, cash on hand and line of credit will be sufficient to fund its obligations for the next twelve months. Item 4. Controls and Procedures Based on their evaluation, as of a date within 90 days of the filing date of this Form 10-Q, the Trust's Chief Executive Officer and Chief Financial Officer have concluded that the Trust's disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended) are effective. There have been no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Forward-looking statement advisory This Quarterly Report on Form 10-Q, as with some other statements made by the Trust from time to time, contains forward-looking statements. These statements discuss business trends and other matters relating to the Trust's future results and the business climate and are found, among other places, in the notes to financial statements and at Part I, Item 2, Management's Discussion and Analysis. In order to make these statements, the Trust has had to make assumptions as to the future. It has also had to make estimates in some cases about events that have already happened, and to rely on data that may be found to be inaccurate at a later time. Because these forward-looking statements are based on assumptions, estimates and changeable data, and because any attempt to predict the future is subject to other errors, what happens to the Trust in the future may be materially different from the Trust's statements here. The Trust therefore warns readers of this document that they should not rely on these forward-looking statements without considering all of the things that could make them inaccurate. The Trust's other filings with the Securities and Exchange Commission and its Confidential Memorandum discuss many (but not all) of the risks and uncertainties that might affect these forward-looking statements. Some of these are changes in political and economic conditions, federal or state regulatory structures, government taxation, spending and budgetary policies, government mandates, demand for electricity and thermal energy, the ability of customers to pay for energy received, supplies of fuel and prices of fuels, operational status of plant, mechanical breakdowns, availability of labor and the willingness of electric utilities to perform existing power purchase agreements in good faith. Some of the cautionary factors that readers should consider are described in the Trust's most recent Annual Report on Form 10-K. By making these statements now, the Trust is not making any commitment to revise these forward-looking statements to reflect events that happen after the date of this document or to reflect unanticipated future events. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None. (b) Reports on Form 8-K The following report on Form 8-K was filed in or for the three months ended September 30, 2002: In July 2002, the Trust filed a Current Report on Form 8-K to report that the Trust received official notice that its Application for Statement of Qualification filed pursuant to the Massachusetts Renewable Energy Portfolio Standard Regulations for the Jonesboro and West Enfield plants (collectively the Maine Biomass Projects) had been approved. 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 V Registrant December 4, 2002 By /s/ Christopher I. Naunton Date Christopher I. Naunton Vice President and Chief Financial Officer (signing on behalf of the Registrant and as principal financial officer) CERTIFICATION I, Robert E. Swanson, Chief Executive Officer of Ridgewood Electric Power Trust V ("registrant"), certify that: 1. I have reviewed this quarterly report on Form 10-Q of the registrant; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and senior management: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: December 4, 2002 /s/ Robert E. Swanson ----------------------- Robert E. Swanson Chief Executive Officer CERTIFICATION I, Christopher I. Naunton, Chief Financial Officer of Ridgewood Electric Power Trust V ("registrant"), certify that: 1. I have reviewed this quarterly report on Form 10-Q of the registrant; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and senior management: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: December 4, 2002 /s/ Christopher I. Naunton ---------------------------- Christopher I. Naunton Chief Financial Officer