RIDGEWOOD ELECTRIC POWER TRUST V - FORM 10-Q - November 14, 2011

Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - RIDGEWOOD ELECTRIC POWER TRUST VFinancial_Report.xls
EX-32 - EXHIBIT 32 - RIDGEWOOD ELECTRIC POWER TRUST Vex32.htm
EX-31 - EXHIBIT 31 - RIDGEWOOD ELECTRIC POWER TRUST Vex31.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q
(Mark One)

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
For the quarterly period ended September 30, 2011
 
Or
   
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ________ to _______
 
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
Incorporation or Organization)
  
(I.R.S. Employer Identification No.)

500 Delaware Avenue, #1112
 Wilmington, DE
  
 
19801
(Address of Principal Executive Offices)
  
(Zip Code)

 
(302) 888-7444
  
 
(Registrant’s Telephone Number, Including Area Code)
  
 
 
Not Applicable
  
 
(Former name, former address and former fiscal year, if changed since last report)
  
 
 
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 þ  No o

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
Accelerated filer  o
Non-accelerated filer  o
Smaller reporting company  þ
   
(Do not check if a smaller reporting company)
 
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

As of October 31, 2011, there were 932.8877 Investor Shares outstanding.
 
 
FORM 10-Q
 


 
 
PART I.   FINANCIAL INFORMATION




RIDGEWOOD ELECTRIC POWER TRUST V
  
CONDENSED CONSOLIDATED STATEMENTS OF NET ASSETS
  
(Liquidation Basis)
  
(in thousands)
  
             
   
September 30,
    
December 31,
  
   
2011
    
2010
  
   
(unaudited)
        
ASSETS
            
Current assets:
            
     Cash and cash equivalents
   $ -     $ 440  
     Other current assets
     -       6  
                 
                Total assets
   $ -     $ 446  
                 
LIABILITIES AND NET ASSETS
                
Current liabilities:
                
      Accounts payable and accrued expenses
   $ -     $ 231  
      Due to affiliates
     -       179  
                 
                Total liabilities
   $ -     $ 410  
                 
Net assets in liquidation
   $ -     $ 36  

The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
RIDGEWOOD ELECTRIC POWER TRUST V
  
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
  
(Liquidation Basis)
  
(unaudited, in thousands)
  
                         
                         
   
Nine Months Ended September 30,
    
Three Months Ended September 30,
  
   
2011
    
2010
    
2011
    
2010
  
                         
Net assets in liquidation, beginning of period
   $ 36     $ 1,248     $ 10     $ 36  
Adjustment to estimated Special Litigation Committee expenses
     (231 )     (732 )     (10 )     (382 )
Adjustment to estimated management fees to be incurred during liquidation
     136       (184 )     -       191  
Investment income in unconsolidated entities
     -       44       -       -  
Loss on disposal of REFI
     -       (15 )     -       -  
Distribution to shareholders
     -       (466 )     -       -  
Other, net
     59       141       -       191  
                                 
Net assets in liquidation, end of period
   $ -     $ 36     $ -     $ 36  
                                 
Distributions per Investor Share
   $ -     $ 500     $ -     $ -  

The accompanying notes are an integral part of these condensed consolidated financial statements.
 
RIDGEWOOD ELECTRIC POWER TRUST V
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollar amounts in thousands)
 
1.      DESCRIPTION OF BUSINESS

Ridgewood Electric Power Trust V (the "Trust") is a Delaware trust formed on March 14, 1996. The Trust began offering shares in April 1996 and concluded its offering in April 1998. The Trust has 932.8877 investor shares of beneficial interest (“Investor Shares”) outstanding. Prior to the adoption of the Trust’s Plan of Dissolution (described below), the objective of the Trust was 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”). Historically, the Trust focused primarily on independent power generation facilities, water desalinization plants and other infrastructure projects both in the US and abroad.

The Trust’s accompanying condensed consolidated financial statements include the accounts of the Trust. The Trust owned a 14.1% interest in Ridgewood Near East Holding LLC (“NEH”). On March 2, 2010, NEH sold its interests in its wholly owned subsidiary, Ridgewood Egypt for Infrastructure LLC (Egypt) (“REFI”), the final operating asset of the Trust, as further discussed in Note 3.

On December 22, 2008, the Plan of Liquidation and Dissolution of Ridgewood Electric Power Trust V (the “Plan of Dissolution”) became effective. Under the Plan of Dissolution, the business of the Trust shifted, and became limited to the disposal of its remaining assets and resolution of its remaining liabilities. Upon the completion of these activities, if successful, the Managing Shareholder expects to distribute any remaining cash to the Trust’s shareholders and then proceed to terminate the Trust and its reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Trust is required to make adequate provisions to satisfy its known and unknown liabilities, which could substantially delay or limit the Trust’s ability to make future distributions to shareholders. The process of accounting for the Trust’s liabilities, including those that are presently unknown, may involve difficult valuation decisions, which could adversely impact the amount or timing of any future distributions by the Trust.

Under the Plan of Dissolution, the Managing Shareholder has sole authority to conduct the Trust’s dissolution, liquidation and termination without additional shareholder approval. As of November 14, 2011, the Trust has not been liquidated, primarily due to on-going litigation discussed in Note 4. Since this litigation is a derivative suit brought on behalf of the Trust, it is possible that resolution of the litigation could result in a payment to the Trust. The Managing Shareholder is unable to predict when or how this litigation will be resolved or estimate what financial impact the litigation will have on the Trust’s net assets or the timing, likelihood or amount of any distributions to shareholders. The Trust does not anticipate any further distributions to shareholders until the Trust has completed the liquidation process. At that time, management expects that the Trust’s cash, if any, first would be used to satisfy any outstanding obligations of the Trust and then remaining cash, if any, would be distributed to its shareholders. The Trust currently has no cash or other assets and does not expect to have any cash with which to make further distributions to shareholders unless the Trust’s litigation results in a payment to the Trust.

For the purposes of the Trust’s estimates of fees and expenses to be incurred during liquidation, management has assumed that the liquidation of the Trust will be completed by December 31, 2011. If the liquidation of the Trust, including the resolution of the litigation discussed in Note 4, is not completed by that date, the actual expenses that the Trust will incur will likely increase.

The Trust believes that it currently has access to sufficient resources to meet its anticipated obligations, primarily as the Managing Shareholder has agreed to pay the fees and expenses of the Special Litigation Committee associated with the Trust’s current litigation, if the Trust does not have the cash to do so. Additionally, the Managing Shareholder anticipates waiving a portion of the 2011 management fees due to it, as well as pay ongoing operating expenses of the Trust during the pendency of the Trust’s litigation, though it is under no obligation to do either and may discontinue doing so at any time. Uncollected management fees total $1,724 at September 30, 2011. Based on the Trust's anticipation of the Managing Shareholder waiving its 2011 management fees and paying the committee's and ongoing operating expenses of the Trust, no additional estimated expenses for liquidation have been reflected in the accompanying financial statements of the Trust.
 
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 condensed consolidated financial statements.

2.      BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements are unaudited and have been prepared pursuant to the rules of the United States Securities and Exchange Commission (the “SEC”) and, in the opinion of management, include all adjustments that are necessary for a fair presentation of the condensed consolidated financial statements for the periods presented. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to SEC rules. These condensed consolidated financial statements should be read in conjunction with the Trust’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011 (the “2010 Form 10-K”). No significant changes have been made to the Trust’s accounting policies and estimates disclosed in its 2010 Form 10-K.
 
RIDGEWOOD ELECTRIC POWER TRUST V
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollar amounts in thousands)
 
Upon the effectiveness of the Trust’s Plan of Dissolution, the Trust began preparing its consolidated financial statements on the liquidation basis of accounting. This basis of accounting is considered appropriate when, among other things, liquidation of the Trust is probable. Under this basis of accounting, assets are valued at their estimated net realizable values and liabilities are valued at their estimated settlement amounts. The valuation of assets and liabilities requires management to make significant estimates and assumptions.

Upon conversion to the liquidation basis of accounting, the Trust accrued known estimated values of assets expected to be received and known estimated costs expected to be incurred in liquidation. On an ongoing basis, the Trust evaluates the estimates and assumptions that can have a significant impact on the Trust’s reported net assets in liquidation. Actual amounts may differ materially and adversely from these estimates. If there are delays in liquidating the Trust, actual costs incurred during the liquidation process would increase, which may reduce net assets available in liquidation and for future distributions to shareholders.

3.      INVESTMENT

On March 2, 2010, NEH disposed of all of its interest in REFI for cash to Mr. Zaki Girges, the general manager of REFI, and El Orouba for Water Desalination S.A.E., an Egyptian joint stock company owned by Mr. Girges and his family. NEH received gross proceeds, prior to expenses, of $13,000 of which $1,833 was allocated to the Trust.
 
Summarized statement of operations data for NEH for the period from January 1, 2010 to March 2, 2010 was as follows:

Revenues
   $ 1,939  
         
Gross profit
     323  
         
Income from operations
     66  
         
Net income
     313  
         
Trust share of income in NEH
     44  

 
4.      COMMITMENTS AND CONTINGENCIES

On March 20, 2007, the Paul Bergeron Trust (“Bergeron”) commenced a derivative action on behalf of the Trust, in Suffolk County Superior Court, Commonwealth of Massachusetts. Bergeron joined the Trust and affiliated entities, including the Managing Shareholder and a person who is an officer of the Managing Shareholder, alleging that the allocation of the proceeds from the sale of certain assets of the Trust and affiliated entities was unfair, and sought an injunction prohibiting the distribution to shareholders of such proceeds. The Superior Court denied the request by Bergeron for an injunction. On February 29, 2008, an amended complaint was filed adding two additional investors, one in the Trust and one in The Ridgewood Power Growth Fund (“Growth Fund”), as derivative plaintiffs. On October 6, 2010, the Superior Court allowed the plaintiffs to file a second amended complaint adding a claim that the defendants breached fiduciary duties to the Trust and Growth Fund by forming affiliated funds to finance the expansion of underlying projects in which each of the Trust and Growth Fund had an interest rather than using alternative financing, which allegedly resulted in a misallocation of sale proceeds. As previously reported, Bergeron is no longer a party to this derivative action; however the other plaintiffs continue to pursue this matter. Discovery ended during the quarter ended September 30, 2011.

In May 2010, the Managing Shareholder formed a Special Litigation Committee comprised of two members independent of the Managing Shareholder, the Trust and Growth Fund. The purpose of the committee, as stated in its charter, is to perform an independent evaluation of the derivative action and make all decisions on behalf of the Trust and Growth Fund relative to the derivative action. The Special Litigation Committee has retained legal counsel and has reviewed documents and interviewed witnesses related to the litigation. On October 29, 2010, the Special Litigation Committee issued its report finding that, in the committee’s opinion, there is not sufficient evidence to support the plaintiffs’ allegations and the chance of the plaintiffs succeeding on the merits of the complaint to be extremely poor. The Special Litigation Committee concluded that the Trust and Growth Fund should move to have the complaint dismissed and the litigation ended. Counsel to the Special Litigation Committee filed a motion to dismiss. The plaintiffs challenged the motion to dismiss, oral arguments were heard in July 2011, and the judge denied the motion to dismiss in August 2011. The Trust and Growth Fund, at the direction of the Special Litigation Committee, have appealed the court’s ruling.

The parties have entered into settlement discussions. Any settlement agreement would be subject to the court’s approval. A trial is scheduled to begin November 29, 2011.
 
 
 
This management’s discussion and analysis of the Trust as of September 30, 2011 is intended to help readers analyze the accompanying condensed consolidated financial statements, notes and other information contained in this report. This discussion and analysis should be read in conjunction with the accompanying condensed consolidated financial statements, notes and other information included elsewhere in this report as well as the consolidated financial statements, notes and other information and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Trust’s 2010 Form 10-K.

Forward-Looking Statements
 
Certain statements discussed in this item and elsewhere in this Quarterly Report on Form 10-Q 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 many of which 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:

 
·
possible contingent liabilities and risks associated with the dissolution and liquidation of the Trust, including, without limitation, settlement of the Trust’s liabilities and obligations and the outcome of the matters described in Part I, Item 1, Note 4. “Commitments and Contingencies” of this report,
 
·
whether, to what extent, and for how long, the Managing Shareholder will waive management fees due to it under the Trust’s management agreement as well as pay both the Special Litigation Committee fees and expenses and ongoing operating expenses of the Trust,
 
·
the actual timing of the completion of the liquidation process, including, without limitation, any delay in the liquidation of the Trust as a result of the timing of the resolution of the matters described in Part I, Item 1, Note 4. “Commitments and Contingencies” of this report, and
 
·
the amount and timing of liquidating distributions, if any.

Additional information concerning the factors that could cause actual results to differ materially from those in the forward-looking statements is contained elsewhere in this report and in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in the Trust’s 2010 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.

Liquidation Basis of Accounting

Upon the effectiveness of the Trust’s Plan of Dissolution, the Trust began preparing its consolidated financial statements on the liquidation basis of accounting. This basis of accounting is considered appropriate when, among other things, liquidation of the Trust is probable. Under this basis of accounting, assets are valued at their estimated net realizable values and liabilities are valued at their estimated settlement amounts. The valuation of assets and liabilities requires management to make significant estimates and assumptions.

Upon conversion to the liquidation basis of accounting, the Trust accrued known estimated values of assets expected to be received and known estimated costs expected to be incurred during liquidation. On an ongoing basis, the Trust evaluates the estimates and assumptions that could have a significant impact on the Trust’s reported net assets in liquidation. Actual amounts may differ materially and adversely from these estimates. If there are delays in liquidating the Trust, actual costs incurred during the liquidation process would increase, which may reduce net assets available in liquidation and for future distributions to shareholders.

Critical Accounting Policies and Estimates

The discussion and analysis of the Trust’s financial condition and results of operations are based upon the Trust’s condensed consolidated financial statements, which have been prepared in conformity with GAAP. In preparing these financial statements, the Trust is required to make certain estimates, judgments and assumptions that affect the reported amount of the Trust’s assets, liabilities, revenues and expenses, including the disclosure of contingent assets and liabilities, as well as the reported amounts of changes in net assets. The estimates also affect the reported estimated value of net realizable assets and settlement of 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 condensed consolidated financial statements. No significant changes have been made to the Trust’s critical accounting policies and estimates disclosed in its 2010 Form 10-K.
 
 
Results of Operations and Changes in Financial Condition

Net assets at September 30, 2011 totaled zero, a $10,000 decrease from June 30, 2011. This decrease is due to Special Litigation Committee expenses being higher than previously estimated.

Future Liquidity and Capital Resource Requirements

The Trust believes that it currently has access to sufficient resources to meet its anticipated obligations, primarily as the Managing Shareholder has agreed to pay the fees and expenses of the Special Litigation Committee (see Part I, Item 1, Note 4. “Commitments and Contingencies” of this report) if the Trust does not have the cash to do so. Additionally, the Managing Shareholder anticipates waiving a portion of the 2011 management fees due to it, as well as pay ongoing operating expenses of the Trust during the pendency of the Trust’s litigation, though it is under no obligation to do either and may discontinue doing so at any time. Uncollected management fees total $1,724 at September 30, 2011.

The Trust currently has no cash or other assets and does not expect to have any cash with which to make further distributions to shareholders unless the Trust’s litigation results in a payment to the Trust. Since the Trust’s litigation is a derivative suit brought on behalf of the Trust, it is possible that resolution of the litigation could result in a payment to the Trust. The Managing Shareholder is unable to predict when or how this litigation will be resolved or estimate what financial impact the litigation will have on the Trust’s net assets or the timing, likelihood or amount of any distributions to shareholders. The Trust does not anticipate any further distributions to shareholders until the Trust has completed the liquidation process. At that time, management expects that the Trust’s cash, if any, first would be used to satisfy any outstanding obligations of the Trust and then remaining cash, if any, would be distributed to its shareholders.
 
Off-Balance Sheet Arrangements and Contractual Obligations

None.

Commitments and Contingencies

For a discussion of litigation involving the Trust, see Note 4 “Commitments and Contingencies” in the notes to the condensed consolidated financial statements in Part I, Item 1 of this report.

 
Not required.

 
Disclosure Controls and Procedures

In accordance with Rule 13a-15(b) of the Exchange Act, the Trust’s management, with the participation of the Trust’s Chief Executive and 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 and 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 the Exchange Act is recorded, processed, summarized and reported within the time periods specified in 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.

Changes in Internal Control over Financial Reporting

The Trust’s Chief Executive and Financial Officer has concluded that there was no change in the Trust's internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2011 that has materially affected, or is reasonably likely to materially affect, the Trust’s internal control over financial reporting. 

 
PART II.   OTHER INFORMATION

 
For a discussion of developments regarding the Trust’s legal proceedings, see Note 4 “Commitments and Contingencies” in the notes to the condensed consolidated financial statements in Part I, Item 1 of this report.


Not required

 
None.


None.


 
None.
 
 
Exhibit No.
  
Description
                              
31
*
Certification of Jeffrey H. Strasberg, Chief Executive and Financial Officer of the Registrant, pursuant to Securities Exchange Act Rule 13a-14(a).
     
32
*
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by Jeffrey H. Strasberg, Chief Executive and Financial Officer of the Registrant.
     
101.INS
*#
XBRL Instance Document.
     
101.SCH
*#
XBRL Taxonomy Extension Schema Document.
     
101.CAL
*#
XBRL Taxonomy Extension Calculation Linkbase Document.
     
101.LAB
*#
XBRL Taxonomy Extension Label Linkbase Document.
                   
101.PRE
*#
XBRL Taxonomy Extension Presentation Linkbase Document.
                                     
*            Filed herewith.
#
Under Rule 406T of Regulation S-T, this exhibit is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise is not subject to liability under those sections.
 
 

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
     
     
     
Date: November 14, 2011
By:
/s/  Jeffrey H. Strasberg
   
Jeffrey H. Strasberg
   
Chief Executive and Financial Officer
   
(Principal Executive, Financial and Accounting Officer)

 

 
 

 
8
 

RIDGEWOOD ELECTRIC POWER TRUST V Reports