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: June 30, 1996 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 June 30, 1996
Common Stock, No Par Value 4,166,504
PART I. - FINANCIAL INFORMATION
MIDDLESEX WATER COMPANY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
__________ __________ __________ __________
Operating Revenues $ 9,631,852 $ 9,607,771 $18,878,801 $18,347,644
__________ __________ __________ __________
Operating Expenses:
Operation and Maintenance 4,646,295 4,453,994 9,271,773 8,622,002
Depreciation 728,500 694,522 1,450,520 1,371,388
Taxes,other than Income Taxes 1,406,246 1,415,438 2,790,997 2,716,988
Federal Income Taxes 665,686 759,096 1,212,046 1,382,309
__________ __________ __________ __________
Total Operating Expenses 7,446,727 7,323,050 14,725,336 14,092,687
__________ __________ __________ __________
Utility Operating Income 2,185,125 2,284,721 4,153,465 4,254,957
Other Income(Expense)-Net (57,358) (7,931) (47,773) (9,194)
__________ __________ __________ __________
Income Before Interest Charges 2,127,767 2,276,790 4,105,692 4,245,763
Interest Charges 820,433 770,163 1,645,095 1,526,136
__________ __________ __________ __________
Net Income 1,307,334 1,506,627 2,460,597 2,719,627
Preferred Stock Dividend
Requirements 39,731 39,732 79,463 79,469
__________ __________ __________ __________
Earnings Applicable to
Common Stock $ 1,267,603 $ 1,466,895 $ 2,381,134 $ 2,640,158
__________ __________ __________ __________
Earnings per Share of
Common Stock $0.30 $0.36 $0.57 $0.65
__________ __________ __________ __________
Average Number of Common
Shares Outstanding 4,157,585 4,056,551 4,150,383 4,046,903
Cash Dividends Paid per
Common Share $0.27 1/2 $0.27 $0.55 $0.54
See Notes to Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS AND OTHER DEBITS
June 30, December 31,
1996 1995
___________ ___________
(Unaudited)
UTILITY PLANT:
Water Production $ 27,820,182 $ 27,598,613
Transmission and Distribution 99,294,904 97,359,802
General 18,211,866 18,169,056
Construction Work in Progress 728,762 1,207,538
___________ ___________
TOTAL 146,055,714 144,335,009
Less Accumulated Depreciation 27,569,320 26,402,377
___________ ___________
UTILITY PLANT-NET 118,486,394 117,932,632
___________ ___________
NONUTILITY ASSETS-NET 1,730,680 1,735,048
___________ ___________
CURRENT ASSETS:
Cash and Cash Equivalents 4,770,486 4,900,640
Marketable Securities 1,548 1,548
Temporary Cash Investments-Restricted 295,344 77,190
Accounts Receivable(net of allowance
for doubtful accounts) 4,242,501 4,224,653
Unbilled Revenues 2,462,743 2,170,143
Materials and Supplies(at average cost) 1,111,432 1,030,801
Prepayments 637,890 584,124
___________ ___________
TOTAL CURRENT ASSETS 13,521,944 12,989,099
___________ ___________
DEFERRED CHARGES:
Regulatory Assets 7,311,533 7,160,533
Unamortized Debt Expense 2,908,817 2,969,281
Preliminary Survey and Investigation Charges 901,559 833,869
Other 1,531,516 1,201,745
___________ ___________
TOTAL DEFERRED CHARGES 12,653,425 12,165,428
___________ ___________
TOTAL $146,392,443 $144,822,207
___________ ___________
See Notes to Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND OTHER CREDITS
June 30, December 31,
1996 1995
___________ ___________
(Unaudited)
CAPITALIZATION(see accompanying statements) $103,709,382 $103,269,966
CURRENT LIABILITIES:
Accounts Payable 1,759,718 1,521,515
Current Portion of Long-term Debt 240,000 240,000
Customer Deposits 361,733 348,631
Taxes Accrued 4,583,475 4,321,919
Interest Accrued 1,174,801 1,216,851
Other 1,456,797 1,161,630
___________ ___________
TOTAL CURRENT LIABILITIES 9,576,524 8,810,546
___________ ___________
DEFERRED CREDITS:
Customer Advances for Construction 9,071,614 9,207,565
Accumulated Deferred Investment Tax Credits 2,344,574 2,380,416
Accumulated Deferred Federal Income Taxes 11,447,010 11,147,627
Other 1,946,131 1,985,654
___________ ___________
TOTAL DEFERRED CREDITS 24,809,329 24,721,262
___________ ___________
CONTRIBUTIONS IN AID OF CONSTRUCTION 8,297,208 8,020,433
___________ ___________
TOTAL $146,392,443 $144,822,207
___________ ___________
See Notes to Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION AND RETAINED EARNINGS
June 30, December 31,
1996 1995
___________ ___________
(Unaudited)
CAPITALIZATION:
Common Stock,No Par Value
Authorizied,6,000,000 Shares
Outstanding Shares-1996,4,166,504
1995,4,136,972 $ 29,400,014 $ 28,820,844
Retained Earnings 18,923,063 18,822,817
___________ ___________
TOTAL COMMON EQUITY 48,323,077 47,643,661
___________ ___________
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-1,017 Shares 101,700 101,700
Outstanding,$4.75 Series-10,000 Shares 1,000,000 1,000,000
___________ ___________
TOTAL CUMULATIVE PREFERRED STOCK 2,666,305 2,666,305
___________ ___________
Long-term Debt:
8.02% Amortizing Secured Note,
due December 20,2021 2,500,000 2,500,000
7.00% Promissory Notes,due April 21,2000 960,000 1,200,000
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
___________ ___________
SUBTOTAL LONG-TERM DEBT 52,960,000 53,200,000
Less: Current Portion of Long-term Debt (240,000) (240,000)
___________ ___________
TOTAL LONG-TERM DEBT 52,720,000 52,960,000
___________ ___________
TOTAL CAPITALIZATION $103,709,382 $103,269,966
___________ ___________
Three Months Ended Year Ended
June 30, December 31,
1996 1995
___________ ___________
(Unaudited)
RETAINED EARNINGS:
BALANCE AT BEGINNING OF PERIOD $ 18,822,817 $ 17,699,422
Net Income 2,460,597 5,703,744
___________ ___________
TOTAL 21,283,414 23,403,166
___________ ___________
Cash Dividends:
Cumulative Preferred Stock 79,463 158,497
Common Stock 2,280,888 4,421,852
___________ ___________
TOTAL DEDUCTIONS 2,360,351 4,580,349
___________ ___________
BALANCE AT END OF PERIOD $ 18,923,063 $ 18,822,817
___________ ___________
See Notes to Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
1996 1995
___________ ___________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,460,597 $ 2,719,627
Adjustments To Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 1,498,900 1,427,944
Provision for Deferred Income Taxes 299,383 111,223
Allowance for Funds Used During Construction (15,879) (13,707)
Changes in Current Assets and Liabilities:
Accounts Receivables (17,848) 570,657
Materials and Supplies (80,631) (58,368)
Accounts Payable 238,203 (204,674)
Accrued Income Taxes 261,556 292,093
Accrued Interest (42,050) 18,990
Unbilled Revenues (292,600) (481,168)
Other-Net 80,565 19,876
___________ ___________
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,390,196 4,402,493
___________ ___________
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility Plant Expenditures (1,985,955)(5,271,018)
Notes Receivable 0 (1,250,000)
Marketable Securities 0 (37,528)
Preliminary Survey and Investigation Charges (67,690) (4,800)
Other-Net (366,943) 46,807
___________ ___________
NET CASH USED IN INVESTING ACTIVITIES (2,420,588) (6,516,539)
___________ ___________
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Long-term Debt (240,000) 0
Proceeds from Issuance of Long-term Debt 0 1,200,000
Deferred Debt Issuance Expenses (251) (8,000)
Temporary Cash Investments-Restricted (219,154) (2,123)
Proceeds from Issuance of Common Stock-Net 579,170 681,716
Payment of Preferred Dividends (79,463) (79,034)
Payment of Common Dividends (2,280,888) (2,183,234)
Customer Advances and Contributions-Net 140,824 (101,275)
Redemption of Preferred Stock 0 (123,800)
___________ ___________
NET CASH USED IN FINANCING ACTIVITIES (2,099,762) (615,750)
___________ ___________
NET CHANGE IN CASH AND CASH EQUIVALENTS (130,154) (2,729,796)
___________ ___________
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 4,900,640 3,854,186
___________ ___________
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 4,770,486 $ 1,124,390
___________ ___________
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash Paid During the Period for:
Interest(net of amounts capitalized) $ 1,612,667 $ 1,428,917
Income Taxes $ 1,125,000 $ 1,386,000
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
Organization - Middlesex Water Company (Middlesex or the
Company) is the parent company and sole shareholder of
Tidewater Utilities, Inc. (Tidewater), 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 (Consolidated Group) are reported on a
consolidated basis.
The consolidated notes accompanying the 1995 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 June 30, 1996 and the results of
operations and its cash flows for the periods ended June 30,
1996 and 1995. Information included in the Balance Sheet as
of December 31, 1995 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, 1995.
Note 2 - Regulatory Matters
On February 21, 1996, Pinelands Water and Wastewater
Companies filed petitions with the New Jersey Board of
Public Utilities (BPU) for increases in rates seeking
overall increases in revenues of approximately $0.6 million.
The Pinelands Companies have requested phasing in the
proposed rate increase over a three-year period to minimize
the impact on customers. The increase is required to allow
proper maintenance, development and improvement of the
utility plant and to cover the additional costs of power,
chemicals, insurance, labor, benefits, depreciation and
taxes. A decision on this matter is expected by the fourth quarter
of 1996.
On April 16, 1996, the Company filed a petition with the
BPU seeking approval for a Purchased Water Adjustment Clause
(PWAC). A PWAC is a regulatory vehicle that allows New
Jersey water utilities to pass along to, or credit,
customers changes in the cost of purchasing water, without
the need for filing a full base rate case. The Company is
seeking recovery of approximately $0.2 million of increased
costs. A decision on this matter is expected to be rendered
during the third quarter of 1996.
Note 3 - Capitalization
Common Stock - During the second quarter, 15,606 common
shares ($0.3 million) were issued under the Company's
Dividend Reinvestment and Common Stock Purchase Plan.
MIDDLESEX WATER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE
THREE AND SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO JUNE
30, 1995
Revenues increased by less than 1% for the second quarter
and by 3.0% or $0.5 million for the first half of 1996.
These increases are primarily due to increased consumption
in New Jersey, an increased customer base in Delaware, and
contract services rendered by USA. Revenues have been
impacted in the second quarter by unseasonal temperatures
and unexpected rain patterns.
Operation and maintenance expenses increased 4.3% for the
second quarter and 7.5% for the six months ended June 30,
1996. This was the result of increased purchased water and
power, chemicals, outside professional services, labor,
employee benefits, and the inclusion of the Pinelands Water
and Wastewater Companies for the entire six month period in
1996. These increases were partially offset by decreases in
insurance and routine maintenance costs.
Depreciation expense for the second quarter and first half
of 1996 increased 4.9% and 5.8%, respectively. These
increases reflect the full effect of the acquisition of the
Pinelands Companies' fixed assets in April of 1995 and other
plant additions of $3.6 million since June 30, 1995.
Federal Income Taxes decreased by 12.3% for both the quarter
and year-to-date due largely to a lower level of taxable
income.
Interest expense for the second quarter and first half of
1996 increased 6.5% and 7.8%, respectively, as a result of a
long-term financing of $2.5 million by Tidewater in late
1995.
Capital Resources: The consolidated capital program for
1996 is estimated at $12.9 million, inclusive of $5.0
million for routine capital expenditures and $7.9 million
for special plant additions. The $5.0 million for routine
plant items is comprised of $1.8 million for mains,
$1.0 million for cleaning and lining, $0.7 million for
service lines, $0.6 million for meters, and $0.9 million for
various other items. The $7.9 million for special plant
additions includes $2.6 million for water systems additions
and improvements in Delaware, $3.5 million for treatment of
well supplies, $1.0 million for plant modifications and
improvements, $0.2 million for the South River Basin
regional supply, $0.2 million for improvements to the
Pinelands Companies' systems, and $0.4 million for
miscellaneous items.
Liquidity: To finance the 1996 Capital Program, the Company
will utilize internally-generated cash and cash balances on
hand at December 31, 1995 and possibly short-term borrowings
through available lines of credit. For the six months ended
June 30, 1996, $2.0 million of capital expenditures have
been incurred.
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)
/A. Bruce O'Connor/
Date: August 12, 1996 A. Bruce O'Connor
Vice President and Controller
UT
0000066004
MIDDLESEX WATER COMPANY
6-MOS
DEC-31-1996
JUN-30-1996
PER-BOOK
118,486,394
1,730,680
13,521,944
12,653,425
0
146,392,443
29,400,014
0
18,923,063
48,323,077
0
2,666,305
52,720,000
0
0
0
240,000
0
0
0
42,443,061
146,392,443
18,878,801
1,212,046
13,513,290
14,725,336
4,153,465
(47,773)
4,105,692
1,645,095
2,460,597
79,463
2,381,134
2,280,888
2,885,250
4,390,196
.57
.57
