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, 1997 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)
(732) 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, 1997
Common Stock, No Par Value 4,232,277
PART I. - FINANCIAL INFORMATION
MIDDLESEX WATER COMPANY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
__________ __________ __________ __________
Operating Revenues $ 9,937,149 $ 9,631,852 $19,273,168 $18,878,801
__________ __________ __________ __________
Operating Expenses:
Operation and Maintenance 4,923,826 4,721,295 9,439,054 9,346,773
Depreciation 759,628 728,500 1,515,111 1,450,520
Taxes, other than Income Taxes 1,429,827 1,406,246 2,820,997 2,790,997
Federal Income Taxes 704,294 665,686 1,355,027 1,212,046
__________ __________ __________ __________
Total Operating Expenses 7,817,575 7,521,727 15,130,189 14,800,336
__________ __________ __________ __________
Utility Operating Income 2,119,574 2,110,125 4,142,979 4,078,465
Other Income-Net 16,966 17,642 93,598 27,227
__________ __________ __________ __________
Income Before Interest Charges 2,136,540 2,127,767 4,236,577 4,105,692
Interest Charges 825,720 820,433 1,643,732 1,645,095
__________ __________ __________ __________
Net Income 1,310,820 1,307,334 2,592,845 2,460,597
Preferred Stock Dividend
Requirements 39,731 39,731 79,463 79,463
__________ __________ __________ __________
Earnings Applicable to
Common Stock $ 1,271,089 $ 1,267,603 $ 2,513,382 $ 2,381,134
__________ __________ __________ __________
Earnings per Share of
Common Stock $0.30 $0.30 $0.60 $0.57
__________ __________ __________ __________
Average Number of Common
Shares Outstanding 4,224,248 4,157,585 4,217,480 4,150,383
Cash Dividends Paid per
Common Share $0.28 $0.27 1/2 $0.56 $0.55
See Notes to Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS AND OTHER DEBITS
June 30, December 31,
1997 1996
___________ ___________
(Unaudited)
UTILITY PLANT:
Water Production $ 26,499,362 $ 27,378,668
Transmission and Distribution 105,930,863 103,852,969
General 17,227,157 18,156,233
Construction Work in Progress 1,201,183 319,238
___________ ___________
TOTAL 150,858,565 149,707,108
Less Accumulated Depreciation 28,491,180 28,462,588
___________ ___________
UTILITY PLANT-NET 122,367,385 121,244,520
___________ ___________
NONUTILITY ASSETS-NET 1,670,505 1,774,106
___________ ___________
CURRENT ASSETS:
Cash and Cash Equivalents 4,457,830 4,262,862
Accounts Receivable(net of allowance
for doubtful accounts) 4,167,560 4,022,129
Unbilled Revenues 2,459,034 2,175,478
Materials and Supplies(at average cost) 1,133,974 1,034,572
Prepayments and Other Current Assets 742,757 430,000
___________ ___________
TOTAL CURRENT ASSETS 12,961,155 11,925,041
___________ ___________
DEFERRED CHARGES:
Regulatory Assets 7,322,664 7,184,764
Unamortized Debt Expense 2,787,887 2,848,352
Preliminary Survey and Investigation Charges 2,153,590 1,716,884
Other 1,981,242 1,965,855
___________ ___________
TOTAL DEFERRED CHARGES 14,245,383 13,715,855
___________ ___________
TOTAL $151,244,428 $148,659,522
___________ ___________
See Notes to Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND OTHER CREDITS
June 30, December 31,
1997 1996
___________ ___________
(Unaudited)
CAPITALIZATION(see accompanying statements) $105,496,225 $104,843,071
___________ ___________
CURRENT LIABILITIES:
Current Portion of Long-term Debt 40,837 39,047
Accounts Payable 2,237,665 1,686,652
Customer Deposits 390,813 377,702
Taxes Accrued 5,094,211 4,529,185
Interest Accrued 1,172,775 1,168,242
Other 1,729,348 2,125,683
___________ ___________
TOTAL CURRENT LIABILITIES 10,665,649 9,926,511
___________ ___________
DEFERRED CREDITS:
Customer Advances for Construction 8,859,854 8,977,081
Accumulated Deferred Investment Tax Credits 2,272,898 2,308,736
Accumulated Deferred Federal Income Taxes 12,450,310 12,088,144
Other 1,898,624 1,715,458
___________ ___________
TOTAL DEFERRED CREDITS 25,481,686 25,089,419
___________ ___________
CONTRIBUTIONS IN AID OF CONSTRUCTION 9,600,868 8,800,521
___________ ___________
TOTAL $151,244,428 $148,659,522
___________ ___________
See Notes to Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION AND RETAINED EARNINGS
June 30, December 31,
1997 1996
___________ ___________
(Unaudited)
CAPITALIZATION:
Common Stock,No Par Value
Shares Authorized,6,000,000
Shares Outstanding-1997,4,232,277
1996,4,204,949 $ 30,509,596 $ 29,988,966
Retained Earnings 19,380,248 19,226,847
___________ ___________
TOTAL COMMON EQUITY 49,889,844 49,215,813
___________ ___________
Cumulative Preference Stock,No Par Value
Shares Authorized,100,000; Shares Outstanding,None
Cumulative Preferred Stock,No Par Value,
Shares Authorized - 150,000
Convertible:
Shares Outstanding,$7.00 Series - 14,901 1,564,605 1,564,605
Nonredeemable:
Shares Outstanding,$7.00 Series - 1,017 101,700 101,700
Shares Outstanding,$4.75 Series - 10,000 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 3,480,913 3,500,000
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 52,980,913 53,000,000
Less: Current Portion of Long-term Debt (40,837) (39,047)
___________ ___________
TOTAL LONG-TERM DEBT 52,940,076 52,960,953
___________ ___________
TOTAL CAPITALIZATION $105,496,225 $104,843,071
___________ ___________
Six Months Ended Year Ended
June 30, December 31,
1997 1996
___________ ___________
(Unaudited)
RETAINED EARNINGS:
BALANCE AT BEGINNING OF PERIOD $ 19,226,847 $ 18,822,817
Net Income 2,592,845 5,167,460
___________ ___________
TOTAL 21,819,692 23,990,277
___________ ___________
Cash Dividends:
Cumulative Preferred Stock 79,463 158,926
Common Stock 2,359,981 4,604,504
___________ ___________
TOTAL DEDUCTIONS 2,439,444 4,763,430
___________ ___________
BALANCE AT END OF PERIOD $ 19,380,248 $ 19,226,847
___________ ___________
See Notes to Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
1997 1996
___________ ___________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,592,845 $ 2,460,597
Adjustments To Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 1,557,090 1,498,900
Provision for Deferred Income Taxes 362,166 299,383
Allowance for Funds Used During Construction (12,071) (15,879)
Changes in Current Assets and Liabilities:
Accounts Receivable (145,431) (17,848)
Materials and Supplies (99,402) (80,631)
Accounts Payable 551,013 238,203
Accrued Income Taxes 565,026 261,556
Accrued Interest 4,533 (42,050)
Unbilled Revenues (283,556) (292,600)
Other-Net (508,030) 80,565
___________ ___________
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,584,183 4,390,196
___________ ___________
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility Plant Expenditures (2,623,454)(1,985,955)
Preliminary Survey and Investigation Charges (436,706) (67,690)
Other-Net 132,571 (366,943)
___________ ___________
NET CASH USED IN INVESTING ACTIVITIES (2,927,589) (2,420,588)
___________ ___________
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Long-term Debt (19,087) (240,000)
Deferred Debt Issuance Expenses 0 (251)
Temporary Cash Investments-Restricted (206,845) (219,154)
Proceeds from Issuance of Common Stock-Net 520,630 579,170
Payment of Preferred Dividends (79,463) (79,463)
Payment of Common Dividends (2,359,981) (2,280,888)
Customer Advances and Contributions-Net 683,120 140,824
___________ ___________
NET CASH USED IN FINANCING ACTIVITIES (1,461,626) (2,099,762)
___________ ___________
NET CHANGE IN CASH AND CASH EQUIVALENTS 194,968 (130,154)
___________ ___________
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 4,262,862 4,900,640
___________ ___________
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 4,457,830 $ 4,770,486
___________ ___________
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash Paid During the Period for:
Interest(net of amounts capitalized) $ 1,575,885 $ 1,612,667
Income Taxes $ 500,700 $ 1,125,000
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. All intercompany accounts and transactions have been eliminated.
The consolidated notes accompanying the 1996 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, 1997 and the results of operations and its cash flows for the
periods ended June 30, 1997 and 1996. Information included in the Balance Sheet
as of December 31, 1996 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, 1996.
Note 2 - Capitalization
Common Stock - During the second quarter, 13,945 common shares ($0.2 million)
were issued under the Company's Restricted Stock Plan and the Dividend
Reinvestment and Common Stock Purchase Plan.
Note 3 - Commitments
During the second quarter, Middlesex Water Company received approval from the
New Jersey Board of Public Utilities and the Delaware Public Service Commission
to acquire Public Water Supply Company, Inc., (Public), a 2,500 customer water
system located in Sussex County Delaware. On July 31, 1997, the acquisition of
Public was completed. Under the terms of the acquisition, Middlesex issued
20,000 shares of no par $8.00 Cumulative and Convertible Preferred Stock
convertible into approximately 135,000 shares of Middlesex's common stock for
100% of the common stock of Public. The acquisition price representing the
value of the preferred stock issued was $2.3 million.
MIDDLESEX WATER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE
THREE AND SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO JUNE 30, 1996
Net income remained relatively stable for the second quarter and rose 5% or
$0.1 million for the first six months of 1997. Impacting net income for the
second quarter and year-to-date were increased revenues resulting from higher
contract sales in New Jersey, an increased customer base in Delaware, rate
increases implemented by the Pinelands Companies, and contract services
rendered by USA. Additionally, in the first half of 1997, there was an
increase in Other Income which includes the net benefit from the transfer of
Robinson's Branch Reservoir property and associated development rights.
Offsetting effects to second quarter and year-to-date net income were increased
operations and maintenance expenses, which included purchased water and Company
labor offset by purchased power and transmission and distribution maintenance.
Depreciation expense increased 4% for both periods due to plant additions of
$3.0 million since June 30, 1996. A higher level of taxable income resulted in
a 6% and 12% increase in federal taxes for the second quarter and first six
months, respectively.
Capital Resources: The revised consolidated capital program for 1997,
estimated at $10.5 million, includes $5.4 million for routine capital
expenditures and $5.1 million for special plant additions. The $5.4 million
for routine plant items is comprised of $2.0 million for cleaning and lining,
$1.6 million for mains, $0.6 million for service lines, $0.4 million for
meters, and $0.8 million for various other items. The $5.1 million for special
plant additions consists of $2.5 million for the upgrade of the Carl J. Olsen
Water Treatment Plant, $1.8 million for water systems additions and
improvements in Delaware and $0.8 million for miscellaneous items.
Liquidity: To finance the Capital Program, the Company will utilize internally-
generated cash and external financing. The Company will rely upon short-term
borrowings through lines of credit established with three financial
institutions through the end of the year. There is $20 million available under
these commitments. Capital expenditures of $3.0 million have been incurred in
the six months ended June 30, 1997.
New Accounting Pronouncement: In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" (SFAS 128). SFAS 128 simplifies the financial accounting
and reporting standards for computing and presenting earnings per share (EPS)
previously found in Accounting Principles Board Opinion No. 15, "Earnings Per
Share". SFAS 128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods. Earlier application
is not permitted. The Company will adopt SFAS 128 in 1997 and believes there
will be no impact on the EPS as currently computed.
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
Annual Meeting of Shareholders held May 28, 1997.
Matters voted up on at the meeting:
ELECTION OF DIRECTORS:
Nominees for Class I term expiring in 2000:
FOR WITHHOLD
John C. Cutting 3,114,329 198,324
Ernest C. Gere 3,113,546 199,107
John P. Mulkerin 3,114,273 198,380
Philip H. Reardon 3,115,209 197,444
Resolution approving appointment of Deloitte & Touche LLP,
Certified Public Accountants, as independent auditors for 1997:
FOR AGAINST ABSTAIN
3,265,546 20,234 26,873
Resolution approving amendment to the Restated Certificate of
Incorporation to increase the authorized Preferred Stock, without
par value, from 69,418 shares to 150,000 shares:
FOR AGAINST ABSTAIN NON-VOTE
2,116,563 430,091 109,167 656,832
Resolution approving allocation of an additional 100,000 shares
of Common Stock to the 1989 Restricted Stock Plan and amendment
of the 1989 Restricted Stock Plan to authorize issuance of the
additional 100,000 shares of Common Stock and to make certain
other modifications to the Plan.
FOR AGAINST ABSTAIN NON-VOTE
2,989,249 197,777 83,175 42,452
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, 1997 A. Bruce O'Connor
Vice President and Controller
UT
0000066004
MIDDLESEX WATER COMPANY
6-MOS
DEC-31-1997
JUN-30-1997
PER-BOOK
122,367,385
1,670,505
12,961,155
14,245,383
0
151,244,428
30,509,596
0
19,380,248
49,889,844
0
2,666,305
52,940,076
0
0
0
40,837
0
0
0
45,707,366
151,244,428
19,273,168
1,355,027
13,775,162
15,130,189
4,142,979
93,598
4,236,577
1,643,732
2,592,845
79,463
2,513,382
2,359,981
2,885,250
4,584,183
.60
.60
