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, 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 September 30, 1996
Common Stock, No Par Value 4,190,378
PART I. - FINANCIAL INFORMATION
MIDDLESEX WATER COMPANY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
__________ __________ __________ __________
Operating Revenues $ 9,934,128 $10,446,934 $28,812,929 $28,794,578
__________ __________ __________ __________
Operating Expenses:
Operation and Maintenance 4,614,937 4,428,294 13,886,710 13,050,296
Depreciation 737,088 716,860 2,187,608 2,088,248
Taxes,other than Income Taxes 1,438,272 1,483,365 4,229,269 4,200,353
Federal Income Taxes 747,978 1,029,891 1,960,024 2,412,200
__________ __________ __________ __________
Total Operating Expenses 7,538,275 7,658,410 22,263,611 21,751,097
__________ __________ __________ __________
Utility Operating Income 2,395,853 2,788,524 6,549,318 7,043,481
Other Income(Expense)-Net (86,483) (90,599) (134,256) (99,793)
__________ __________ __________ __________
Income Before Interest Charges 2,309,370 2,697,925 6,415,062 6,943,688
Interest Charges 815,756 775,952 2,460,851 2,302,088
__________ __________ __________ __________
Net Income 1,493,614 1,921,973 3,954,211 4,641,600
Preferred Stock Dividend
Requirements 39,732 39,731 119,195 119,200
__________ __________ __________ __________
Earnings Applicable to
Common Stock $ 1,453,882 $ 1,882,242 $ 3,835,016 $ 4,522,400
__________ __________ __________ __________
Earnings per Share of
Common Stock $0.35 $0.46 $0.92 $1.11
__________ __________ __________ __________
Average Number of Common
Shares Outstanding 4,179,249 4,095,254 4,160,075 4,063,197
Cash Dividends Paid per
Common Share $0.27 1/2 $0.27 $0.82 1/2 $0.81
See Notes to Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS AND OTHER DEBITS
September 30, December 31,
1996 1995
___________ ___________
(Unaudited)
UTILITY PLANT:
Water Production $ 28,113,797 $ 27,598,613
Transmission and Distribution 100,238,955 97,359,802
General 18,236,077 18,169,056
Construction Work in Progress 1,373,774 1,207,538
___________ ___________
TOTAL 147,962,603 144,335,009
Less Accumulated Depreciation 28,068,139 26,402,377
___________ ___________
UTILITY PLANT-NET 119,894,464 117,932,632
___________ ___________
NONUTILITY ASSETS-NET 1,728,496 1,735,048
___________ ___________
CURRENT ASSETS:
Cash and Cash Equivalents 3,858,968 4,900,640
Marketable Securities 1,548 1,548
Temporary Cash Investments-Restricted 78,844 77,190
Accounts Receivable(net of allowance
for doubtful accounts) 4,275,983 4,224,653
Unbilled Revenues 2,396,343 2,170,143
Materials and Supplies(at average cost) 1,088,314 1,030,801
Prepayments 547,291 584,124
___________ ___________
TOTAL CURRENT ASSETS 12,247,291 12,989,099
___________ ___________
DEFERRED CHARGES:
Regulatory Assets 7,373,233 7,160,533
Unamortized Debt Expense 2,878,584 2,969,281
Preliminary Survey and Investigation Charges 1,192,284 833,869
Other 1,630,934 1,201,745
___________ ___________
TOTAL DEFERRED CHARGES 13,075,035 12,165,428
___________ ___________
TOTAL $146,945,286 $144,822,207
___________ ___________
See Notes to Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND OTHER CREDITS
September 30, December 31,
1996 1995
___________ ___________
(Unaudited)
CAPITALIZATION(see accompanying statements) $104,307,675 $103,269,966
CURRENT LIABILITIES:
Accounts Payable 1,582,389 1,521,515
Current Portion of Long-term Debt 240,000 240,000
Customer Deposits 369,293 348,631
Taxes Accrued 4,699,738 4,321,919
Interest Accrued 470,693 1,216,851
Other 1,469,060 1,161,630
___________ ___________
TOTAL CURRENT LIABILITIES 8,831,173 8,810,546
___________ ___________
DEFERRED CREDITS:
Customer Advances for Construction 9,042,102 9,207,565
Accumulated Deferred Investment Tax Credits 2,326,655 2,380,416
Accumulated Deferred Federal Income Taxes 11,786,363 11,147,627
Other 2,011,733 1,985,654
___________ ___________
TOTAL DEFERRED CREDITS 25,166,853 24,721,262
___________ ___________
CONTRIBUTIONS IN AID OF CONSTRUCTION 8,639,585 8,020,433
___________ ___________
TOTAL $146,945,286 $144,822,207
___________ ___________
See Notes to Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION AND RETAINED EARNINGS
September 30, December 31,
1996 1995
___________ ___________
(Unaudited)
CAPITALIZATION:
Common Stock,No Par Value
Authorizied,6,000,000 Shares
Outstanding Shares-1996,4,190,378
1995,4,136,972 $ 29,693,763 $ 28,820,844
Retained Earnings 19,227,607 18,822,817
___________ ___________
TOTAL COMMON EQUITY 48,921,370 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 $104,307,675 $103,269,966
___________ ___________
Nine Months Ended Year Ended
September 30, December 31,
1996 1995
___________ ___________
(Unaudited)
RETAINED EARNINGS:
BALANCE AT BEGINNING OF PERIOD $ 18,822,817 $ 17,699,422
Net Income 3,954,211 5,703,744
___________ ___________
TOTAL 22,777,028 23,403,166
___________ ___________
Cash Dividends:
Cumulative Preferred Stock 119,195 158,497
Common Stock 3,430,226 4,421,852
___________ ___________
TOTAL DEDUCTIONS 3,549,421 4,580,349
___________ ___________
BALANCE AT END OF PERIOD $ 19,227,607 $ 18,822,817
___________ ___________
See Notes to Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
1996 1995
___________ ___________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 3,954,211 $ 4,641,600
Adjustments To Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 2,252,913 2,173,664
Provision for Deferred Income Taxes 638,736 238,643
Allowance for Funds Used During Construction (37,458) (22,764)
Changes in Current Assets and Liabilities:
Accounts Receivables (51,330) (363,104)
Materials and Supplies (57,513) (107,064)
Accounts Payable 60,874 (299,873)
Accrued Income Taxes 377,819 438,621
Accrued Interest (746,158) (196,486)
Unbilled Revenues (226,200) (532,700)
Other-Net 159,759 98,108
___________ ___________
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,325,653 6,068,645
___________ ___________
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility Plant Expenditures (4,108,309)(6,790,753)
Notes Receivable 0 (1,250,000)
Marketable Securities 0 (54,279)
Preliminary Survey and Investigation Charges (358,415) (116,534)
Other-Net (435,883) 178,304
___________ ___________
NET CASH USED IN INVESTING ACTIVITIES (4,902,607) (8,033,262)
___________ ___________
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 (1,654) 214,335
Proceeds from Issuance of Common Stock-Net 872,919 1,215,980
Payment of Preferred Dividends (119,195) (118,765)
Payment of Common Dividends (3,430,226) (3,288,494)
Customer Advances and Contributions-Net 453,689 (98,958)
Redemption of Preferred Stock 0 (123,800)
___________ ___________
NET CASH USED IN FINANCING ACTIVITIES (2,464,718) (1,007,702)
___________ ___________
NET CHANGE IN CASH AND CASH EQUIVALENTS (1,041,672) (2,972,319)
___________ ___________
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 4,900,640 3,854,186
___________ ___________
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 3,858,968 $ 881,867
___________ ___________
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash Paid During the Period for:
Interest(net of amounts capitalized) $ 2,867,452 $ 2,162,361
Income Taxes $ 1,616,998 $ 2,053,000
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 September 30, 1996 and the results
of operations and its cash flows for the periods ended September 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 is expected in 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. On October 9, 1996,
the Company received approval from the BPU to increase its PWAC rate,
which will allow the Company to recover approximately $.2 million in
increased purchased water costs.
Note 3 - Capitalization
Common Stock - During the third quarter, 23,874 common shares ($0.3
million) were issued under the Company's Restricted Stock Plan and the
Dividend Reinvestment and Common Stock Purchase Plan.
Long-Term Debt - Subsequent to the end of the third quarter of 1996,
Tidewater borrowed the remaining amount of $1.0 million available
through its amortizing secured term loan agreement resulting in a
weighted fixed interest rate of 8.05% on the total $3.5 million borrowed.
Monthly principal payments will begin in January 1997 with the final
payment due in December 2021.
MIDDLESEX WATER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO SEPTEMBER 30,
1995
Revenues decreased by 5% or $0.5 million for the third quarter and
remained stable for the first nine months of 1996. The decrease in the
quarter is the result of lower consumption in New Jersey service
territories partially offset by contract services rendered by Utility
Service Affiliates, Inc., and increased revenues in Delaware operations,
resulting from an increased customer base.
Operation and maintenance expenses increased 4.2% for the third quarter
and 6.4% for the nine months ended September 30, 1996. This was the
result of increased purchased water, chemicals, labor and the inclusion
of Pinelands Water and Wastewater Companies for the entire nine month
period in 1996. These increases were partially offset by decreases in
purchased power, insurance and routine maintenance.
Depreciation expense for the third quarter and the first nine months of
1996 increased 2.8% and 4.8%, 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 $3.3 million since
September 30, 1995.
Taxes, other than Income Taxes decreased 3.0% for the quarter due mainly
to a decline in revenue based taxes. For the first nine months, there
was an increase of less than 1.0%.
Federal Income Taxes decreased 27.4% for the quarter and 18.7% year-to-
date due to a lower level of taxable income.
Interest expense for the third quarter and the first nine months of 1996
increased by 5.1% and 6.9%, respectively, as a result of the long-term
financing by Tidewater in late 1995.
Capital Resources: The revised consolidated capital program for 1996 is
estimated at $7.0 million inclusive of $4.2 million for routine capital
expenditures and $2.8 million for special plant additions. The $4.2
million for routine plant items is comprised of $1.4 million for mains,
$1.0 million for cleaning and lining, $0.5 million for service lines,
$0.4 million for meters, and $0.9 million for various other items. The
$2.8 million for special plant additions includes $1.6 million for water
systems additions and improvements in Delaware, $0.8 million for plant
modifications and improvements, $0.2 million for improvements to the
Pinelands Companies' systems, and $0.2 million for miscellaneous items.
Liquidity: To finance the 1996 Capital Program, internally-generated
cash and cash balances on hand at December 31, 1995 will be utilized.
For the nine months ended September 30, 1996, $4.1 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: November 13, 1996 A. Bruce O'Connor
Vice President and Controller
UT
0000066004
MIDDLESEX WATER COMPANY
9-MOS
DEC-31-1996
SEP-30-1996
PER-BOOK
119,894,464
1,728,496
12,247,291
13,075,035
0
146,945,286
29,693,763
0
19,227,607
48,921,370
0
2,666,305
52,720,000
0
0
0
240,000
0
0
0
42,397,611
146,945,286
28,812,929
1,960,024
20,303,587
22,263,611
6,549,318
(134,256)
6,415,062
2,460,851
3,954,211
119,195
3,835,016
3,430,226
2,885,250
6,325,653
.92
.92
