SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File
For Quarter Ended: September 30, 1995 No. 0-422
MIDDLESEX WATER COMPANY
(Exact name of registrant as specified in its charter)
INCORPORATED IN NEW JERSEY 22-1114430
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1500 RONSON ROAD, ISELIN, NJ 08830
(Address of principal executive offices) (Zip Code)
(908) 634-1500
(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 and Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that this registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 30 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the
Issuer's classes of common stock, as of the latest practicable
date:.
Class: Outstanding at September 30, 1995:
Common Stock, No Par Value 4,111,826
PART I. - FINANCIAL INFORMATION
MIDDLESEX WATER COMPANY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
1995 1994 1995 1994
__________ __________ __________ __________
Operating Revenues $10,446,934 $ 9,456,581 $28,794,578 $27,222,270
__________ __________ __________ __________
Operating Expenses:
Operation and Maintenance 4,428,294 4,207,237 13,050,296 12,481,499
Depreciation 716,860 662,687 2,088,248 1,967,448
Taxes,other than Income Taxes 1,483,365 1,375,879 4,200,353 4,018,014
Federal Income Taxes 1,029,891 759,909 2,412,200 2,116,631
__________ __________ __________ __________
Total Operating Expenses 7,658,410 7,005,712 21,751,097 20,583,592
__________ __________ __________ __________
Utility Operating Income 2,788,524 2,450,869 7,043,481 6,638,678
Other Income(Expense)-Net (90,599) (34,804) (99,793) 7,924
__________ __________ __________ __________
Income before Interest Charges 2,697,925 2,416,065 6,943,688 6,646,602
Interest Charges 775,952 798,718 2,302,088 2,301,451
__________ __________ __________ __________
Net Income 1,921,973 1,617,347 4,641,600 4,345,151
Preferred Stock Dividend
Requirements 39,731 42,327 119,200 146,173
__________ __________ __________ __________
Earnings Applicable to
Common Stock $ 1,882,242 $ 1,575,020 4,522,400 4,198,978
__________ __________ __________ __________
Earnings per Share of
Common Stock $0.46 $0.39 $1.11 $1.05
__________ __________ __________ __________
Average Number of Common
Shares Outstanding 4,095,254 4,010,830 4,063,197 3,996,244
Cash Dividends Paid per
Common Share $0.27 $0.26 1/4 $0.81 $0.78 3/4
See Notes to Consolidated Financial Statements
MIDDLESEX WATER COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS AND OTHER DEBITS
September 30, December 31,
1995 1994
___________ ___________
(Unaudited)
UTILITY PLANT:
Water Production $ 27,558,204 $ 25,612,023
Transmission and Distribution 96,329,038 93,334,300
General 18,060,094 11,202,947
Construction Work in Progress 818,843 262,249
___________ ___________
TOTAL 142,766,179 130,411,519
Less Accumulated Depreciation 26,310,465 21,668,506
___________ ___________
UTILITY PLANT-NET 116,455,714 108,743,013
___________ ___________
NONUTILITY PROPERTY-NET 1,737,232 400,209
___________ ___________
CURRENT ASSETS:
Cash and Cash Equivalents 881,867 3,854,186
Marketable Securities 987,577 933,298
Accounts Receivable(net of allowance
for doubtful accounts) 4,599,904 4,236,800
Unbilled Revenues 2,676,495 2,143,795
Materials and Supplies(at average cost) 1,098,180 991,116
Prepayments 594,170 503,808
___________ ___________
TOTAL CURRENT ASSETS 10,838,193 12,663,003
___________ ___________
DEFERRED CHARGES:
Regulatory Assets 6,028,531 5,818,530
Unamortized Debt Expense 2,999,514 3,082,420
Preliminary Survey and Investigation Charges 769,862 653,328
Other 843,835 1,052,255
___________ ___________
TOTAL DEFFERED CHARGES 10,641,742 10,606,533
___________ ___________
TOTAL $139,672,881 $132,412,758
___________ ___________
See Notes to Consolidated Financial Statements
MIDDLESEX WATER COMPANY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND OTHER CREDITS
September 30, December 31,
1995 1994
___________ ___________
(Unaudited)
CAPITALIZATION(see accompanying statements) $100,427,721 $ 97,141,200
CURRENT LIABILITIES:
Accounts Payable 1,317,072 1,616,945
Notes Payable-Current Portion 240,000 0
Customer Deposits 341,381 308,174
Taxes Accrued 4,882,993 4,444,372
Interest Accrued 937,737 1,134,223
Other 924,495 877,283
___________ ___________
TOTAL CURRENT LIABILITIES 8,643,678 8,380,997
___________ ___________
DEFERRED CREDITS:
Customer Advances for Construction 8,928,145 9,199,363
Accumulated Deferred Investment Tax Credits 2,398,335 2,452,096
Accumulated Deferred Federal Income Taxes 10,005,884 9,767,241
Other 1,952,363 1,312,961
___________ ___________
TOTAL DEFERRED CREDITS 23,284,727 22,731,661
___________ ___________
CONTRIBUTIONS IN AID OF CONSTRUCTION 7,316,755 4,158,900
___________ ___________
TOTAL $139,672,881 $132,412,758
___________ ___________
See Notes to Consolidated Financial Statements
MIDDLESEX WATER COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION AND RETAINED EARNINGS
September 30, December 31,
1995 1994
___________ ___________
(Unaudited)
CAPITALIZATION:
Common Stock,No Par Value
Authorizied,6,000,000 Shares
Outstanding Shares-1995,4,111,826
1994,4,030,834 $ 28,367,653 $ 27,151,673
Retained Earnings 18,933,763 17,699,422
___________ ___________
TOTAL COMMON EQUITY 47,301,416 44,851,095
___________ ___________
Cumulative Preference Stock,No Par Value
Authorized,100,000 Shares;Outstanding,None.
Cumulative Preferred Stock,No Par Value,
Authorized,69,418 Shares
Convertible:
Outstanding,$7 Series-14,901 Shares 1,564,605 1,564,605
Nonredeemable:
Outstanding,$7 Series-1995,1,017 Shares
1994,2,255 Shares 101,700 225,500
Outstanding,$4.75 Series-10,000 Shares 1,000,000 1,000,000
___________ ___________
TOTAL CUMULATIVE PREFERRED STOCK 2,666,305 2,790,105
___________ ___________
Long-term Debt:
First Mortgage Bonds:
7.25%,Series R,due July 1,2021 6,000,000 6,000,000
5.20%,Series S,due October 1,2022 12,000,000 12,000,000
5.25%,Series T,due October 1,2023 6,500,000 6,500,000
6.40%,Series U,due February 1,2009 15,000,000 15,000,000
5.25%,Series V,due February 1,2029 10,000,000 10,000,000
7% Promissory Notes,due April 21,1996-2000 1,200,000 0
___________ ___________
SUB-TOTAL LONG-TERM DEBT 50,700,000 49,500,000
Less: Current Portion of Long-Term Debt 240,000 0
___________ ___________
TOTAL LONG-TERM DEBT 50,460,000 49,500,000
___________ ___________
TOTAL CAPITALIZATION $100,427,721 $ 97,141,200
___________ ___________
Nine Months Ended Year Ended
September 30, December 31,
1995 1994
___________ ___________
(Unaudited)
RETAINED EARNINGS:
BALANCE AT BEGINNING OF PERIOD $ 17,699,422 $ 16,615,466
Net Income 4,641,600 5,495,372
___________ ___________
TOTAL 22,341,022 22,110,838
___________ ___________
Cash Dividends:
Cumulative Preferred Stock 118,765 180,006
Common Stock 3,288,494 4,231,410
___________ ___________
TOTAL DEDUCTIONS 3,407,259 4,411,416
___________ ___________
BALANCE AT END OF PERIOD $ 18,933,763 $ 17,699,422
___________ ___________
See Notes to Consolidated Financial Statements
MIDDLESEX WATER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
1995 1994
___________ ___________
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 4,641,600 $ 4,345,151
Adjustments To Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation 2,088,248 1,967,448
Amortization of Deferred Charges 139,177 289,101
Provision for Deferred Income Taxes 238,643 540,010
Amortization of Investment Tax Credit (53,761) (53,761)
Allowance for Funds Used During Construction (22,764) 0
Changes in Current Assets and Liabilities:
Accounts Receivables (363,104) (225,761)
Materials and Supplies (107,064) (35,699)
Accounts Payable (299,873) (95,877)
Accrued Income Taxes 438,621 136,234
Accrued Interest (196,486) (516,146)
Unbilled Revenues (532,700) (212,300)
Other-Net 98,108 (53,387)
___________ ___________
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,068,645 6,085,013
___________ ___________
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility Plant Expenditures (6,790,753)(3,129,068)
Marketable Securities (54,279) 0
Note Receivable (1,250,000) 0
Preliminary Survey and Investigation Charges (116,534) (63,238)
Other-Net 178,304 (294,205)
___________ ___________
NET CASH USED IN INVESTING ACTIVITIES (8,033,262) (3,486,511)
___________ ___________
CASH FLOW FROM FINANCING ACTIVITIES:
Redemption of Long-term Debt 0 (12,500,000)
Issuance of Long-term Debt 1,200,000 25,000,000
Short-term Bank Borrowings(Repayments) 0 (9,000,000)
Long-term Debt Issuance Expense (8,000) (1,167,604)
Temporary Cash Investments-Restricted 214,335 2,193,776
Proceeds from Issuance of Common Stock 1,215,980 687,903
Payment of Preferred Dividends (118,765) (136,274)
Payment of Common Dividends (3,288,494) (3,145,376)
Customer Advances-Net (98,958) 84,916
Redemption of Preferred Stock (123,800) (1,224,000)
___________ ___________
NET CASH PROVIDED FROM FINANCING ACTIVITIES (1,007,702) 793,341
___________ ___________
NET CHANGE IN CASH AND CASH EQUIVALENTS (2,972,319) 3,391,843
___________ ___________
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 3,854,186 1,146,245
___________ ___________
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 881,867 $ 4,538,088
___________ ___________
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash Paid During the Period for:
Interest $ 2,162,361 $ 2,722,327
Income Taxes $ 2,053,000 $ 1,824,936
Excludes Allowance for funds Used During Construction
See Notes to Consolidated Financial Statements
MIDDLESEX WATER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies
Consolidation - Middlesex Water Company (Middlesex or the Company) is the
parent company and sole shareholder of Tidewater Utilities, Inc. (Tidewater or
Delaware), Pinelands Water Company, Pinelands Wastewater Company, and Utility
Service Affiliates, Inc. (USA) . White Marsh Environmental Systems, Inc. is a
wholly-owned subsidiary of Tidewater. The financial statements for Middlesex
and its wholly-owned subsidiaries are reported on a consolidated basis.
The consolidated notes accompanying the 1994 Form 10-K are applicable to this
report and, in the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial position
as of September 30, 1995 and the results of operations and its cash flows for
the periods ended September 30, 1995 and 1994. Information included in the
Balance Sheet as of December 31, 1994 has been derived from the Company's
audited financial statements included in its annual report on Form 10-K for
the year ended December 31, 1994.
Note 2 - Regulatory Matters
On February 2, 1995, the Company filed a petition with the New Jersey Board
of Public Utilities (BPU) seeking approval for a Purchased Water Adjustment
Clause (PWAC) rate modification. A PWAC is a regulatory vehicle that allows
New Jersey water utilities to pass along to, or credit, customers' account
changes in the cost of purchasing water,without the need for filing a full
base rate case. On July 13, 1995, the BPU approved the PWAC which resulted
in a decrease of the PWAC rate from 1994. This decrease will not have
a material effect on revenues.
Note 3 - Capitalization
Preferred Stock - During the first quarter, the Company purchased and retired
1,238 shares of the nonredeemable $7.00 Series at the stated purchase price
of $100 per share.
Common Stock - During the third quarter, 40,123 common shares ($0.5 million)
were issued under the Company's Dividend Reinvestment and Common Stock
Purchase Plan and the Restricted Stock Plan.
Long-Term Debt - On September 13, 1995, Tidewater received approval from the
Delaware Public Service Commission to borrow up to $3.5 million through an
amortizing secured term bank loan. The terms of the loan agreement provide for
a maximum term of twenty five years from the initial advance with the interest
rate fixed on the date of any advance by the bank. Tidewater has until
December 31, 1996 to draw down the full proceeds of the available loan
amount. On October 27, 1995, Tidewater received $2.5 million at a rate of
8.02%.
Note 4 - Commitments
On April 21, 1995, the Company completed the asset purchase of a 2,200 customer
water utility and a 2,200 customer wastewater utility in Burlington County, New
Jersey. The newly acquired systems are called Pinelands Water Company and
Pinelands Wastewater Company. These systems will not have a material impact
on the Company's revenues and will require substantial rate increases to
attain profitability.
On May 19, 1995, Middlesex and USA, jointly entered into a five-year contract
with the City of South Amboy to operate and maintain the City's 2,800
customer water system. The Contract, which is subject to renewal for three
future five-year periods, is expected to produce approximately $1.5 million in
revenues during the first five years with only a minimal impact on earnings.
MIDDLESEX WATER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO SEPTEMBER 30, 1994
Revenues increased by 10.5% for the third quarter and 5.8% for the first nine
months of 1995. This was due primarily to increased consumption, connection
fees from Tidewater operations, and the inclusion of revenues from the
operations of Pinelands Water and Wastewater Companies.
Operations and maintenance expenses increased by 5.3% for the third quarter and
4.6% for the first nine months. The increase was due to higher purchased power
costs, chemicals, labor charges, and expenses from the operations of the
Pinelands Companies. Lower purchased water costs, insurance expense, and
consultant fees minimized the increase.
Continuing expansion of the Tidewater system and the acquisition of the
Pinelands systems resulted in depreciation expense increasing by 8.2% and 6.1%
for the third quarter and the first nine months, respectively.
Taxes, other than income taxes increased by 7.8% for the third quarter and 4.5%
for the first nine months due primarily to revenue related taxes.
Federal income taxes increased by 35.5% for the quarter and 14.0% year to date
due to higher level of taxable income.
Capital Resources: The consolidated capital program for 1995, estimated at
$7.2 million, includes $5.0 million for routine plant additions and $2.2
million for special plant additions. The $5.0 million for routine items
includes $1.6 million for mains, $0.6 million for service lines, $0.5 million
for meters and $2.3 million for various other items. The $2.2 million for
special plant additions includes $1.1 million for water production facilities
in Delaware, $0.3 million for treatment of well supplies, $0.2 million for
treatment plant expansion, $0.1 million for Robinson's Branch Dam Project,
and $0.5 million for South River Basin Regional Supply Project.
Liquidity: To finance the 1995 capital program, the Company will utilize
internally-generated cash, proceeds from Tidewater's long-term financing as
discussed in Note 3 to the Consolidated Financial Statements, and cash
balances on hand at December 31, 1994. Capital expenditures of $5.6 million,
including $1.1 million for the Pinelands Acquistion, have been incurred
through September 30, 1995.
MIDDLESEX WATER COMPANY
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
Exhibits - 27 Financial Data Schedule
Reports on Form 8-K - None.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
MIDDLESEX WATER COMPANY
(Registrant)
Date: November 10, 1995 /Ernest C. Gere/
Ernest C. Gere
Senior Vice President and
Chief Financial Officer
/A. Bruce O'Connor/
A. Bruce O'Connor
Vice President and Controller
UT
0000066004
MIDDLESEX WATER COMPANY
9-MOS
DEC-31-1995
SEP-30-1995
PER-BOOK
116,455,714
1,737,232
10,838,193
10,641,742
0
139,672,881
28,367,653
0
18,933,763
47,301,416
0
2,666,305
50,460,000
0
0
0
240,000
0
0
0
39,005,160
139,672,881
28,794,578
2,412,200
19,338,897
21,751,097
7,043,481
(99,793)
6,943,688
2,302,088
4,641,600
119,200
4,522,400
3,288,494
2,885,250
6,068,645
1.11
1.11
