UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One) | |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended | |
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OR | |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from ___________to ___________ |
Commission File Number
(Exact name of registrant as specified in its charter)
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(State of incorporation) |
(IRS employer identification no.) |
(Address of principal executive offices, including zip code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | |||
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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.
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 such shorter period that the registrant was required to submit and post files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act.
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Accelerated filer ☐ |
Non-accelerated filer ☐ | ||
Smaller reporting company |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes
The number of shares outstanding of each of the registrant's classes of common stock, as of July 30, 2021: Common Stock, No Par Value:
INDEX
PAGE | |
PART I.FINANCIAL INFORMATION | |
1 | |
1 | |
2 | |
3 | |
Condensed Consolidated Statements of Capital Stock and Long-Term Debt |
4 |
Condensed Consolidated Statements of Common Stockholders’ Equity |
5 |
Notes to Unaudited Condensed Consolidated Financial Statements |
6 |
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations |
17 |
Item 3.Quantitative and Qualitative Disclosures of Market Risk |
24 |
Item 4.Controls and Procedures |
25 |
PART II.OTHER INFORMATION | |
Item 1.Legal Proceedings |
26 |
Item 1A.Risk Factors |
26 |
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds |
26 |
26 | |
Item 4.Mine Safety Disclosures |
26 |
Item 5.Other Information |
26 |
Item 6.Exhibits |
26 |
27 |
MIDDLESEX WATER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands except per share amounts)
Three Months Ended June 30, |
Six Months Ended June 30, | |||||||||||||||
2021 |
2020 |
2021 |
2020 | |||||||||||||
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Operating Revenues |
$ |
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$ |
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$ |
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$ |
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Operating Expenses: | ||||||||||||||||
Operations and Maintenance |
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Depreciation |
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Other Taxes |
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Total Operating Expenses |
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Operating Income |
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Other Income (Expense): | ||||||||||||||||
Allowance for Funds Used During Construction |
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Other Income (Expense), net |
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Total Other Income, net |
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Interest Charges |
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Income before Income Taxes |
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Income Taxes |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
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Net Income |
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Preferred Stock Dividend Requirements |
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Earnings Applicable to Common Stock |
$ |
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$ |
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$ |
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$ |
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Earnings per share of Common Stock: | ||||||||||||||||
Basic |
$ |
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$ |
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$ |
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$ |
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Diluted |
$ |
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$ |
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$ |
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$ |
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Average Number of Common Shares Outstanding: | ||||||||||||||||
Basic |
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Diluted |
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See Notes to Condensed Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
June 30, |
December 31, | ||||||||||
ASSETS |
2021 |
2020 | |||||||||
UTILITY PLANT: |
Water Production |
$ |
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$ |
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Transmission and Distribution |
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General |
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Construction Work in Progress |
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TOTAL |
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Less Accumulated Depreciation |
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UTILITY PLANT - NET |
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CURRENT ASSETS: |
Cash and Cash Equivalents |
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Accounts Receivable, net of allowance for uncollectible accounts of $ |
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Unbilled Revenues |
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Materials and Supplies (at average cost) |
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Prepayments |
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TOTAL CURRENT ASSETS |
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OTHER ASSETS: |
Operating Lease Right of Use Asset |
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Preliminary Survey and Investigation Charges |
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Regulatory Assets |
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Restricted Cash |
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Non-utility Assets - Net |
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Other |
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TOTAL OTHER ASSETS |
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TOTAL ASSETS |
$ |
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$ |
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CAPITALIZATION AND LIABILITIES |
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CAPITALIZATION: |
Common Stock, No Par Value |
$ |
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$ |
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Retained Earnings |
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TOTAL COMMON EQUITY |
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Preferred Stock |
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Long-term Debt |
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TOTAL CAPITALIZATION |
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CURRENT |
Current Portion of Long-term Debt |
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LIABILITIES: |
Notes Payable |
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Accounts Payable |
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Accrued Taxes |
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Accrued Interest |
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Unearned Revenues and Advanced Service Fees |
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Other |
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TOTAL CURRENT LIABILITIES |
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COMMITMENTS AND CONTINGENT LIABILITIES (Note 7) | |||||||||||
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OTHER LIABILITIES: |
Customer Advances for Construction |
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Lease Obligations |
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Accumulated Deferred Income Taxes |
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Employee Benefit Plans |
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Regulatory Liabilities |
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Other |
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TOTAL OTHER LIABILITIES |
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CONTRIBUTIONS IN AID OF CONSTRUCTION |
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TOTAL CAPITALIZATION AND LIABILITIES |
$ |
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$ |
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See Notes to Condensed Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended June 30, | ||||||||
2021 |
2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net Income |
$ |
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$ |
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Adjustments to Reconcile Net Income to | ||||||||
Net Cash Provided by Operating Activities: | ||||||||
Depreciation and Amortization |
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Provision for Deferred Income Taxes and Investment Tax Credits |
( |
) |
( |
) | ||||
Equity Portion of Allowance for Funds Used During Construction (AFUDC) |
( |
) |
( |
) | ||||
Cash Surrender Value of Life Insurance |
( |
) |
( |
) | ||||
Stock Compensation Expense |
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Changes in Assets and Liabilities: | ||||||||
Accounts Receivable |
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( |
) | ||||
Unbilled Revenues |
( |
) |
( |
) | ||||
Materials & Supplies |
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Prepayments |
( |
) |
( |
) | ||||
Accounts Payable |
( |
) |
( |
) | ||||
Accrued Taxes |
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Accrued Interest |
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Employee Benefit Plans |
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Unearned Revenue & Advanced Service Fees |
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Other Assets and Liabilities |
( |
) |
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NET CASH PROVIDED BY OPERATING ACTIVITIES |
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CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Utility Plant Expenditures, Including AFUDC of $ |
( |
) |
( |
) | ||||
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NET CASH USED IN INVESTING ACTIVITIES |
( |
) |
( |
) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Redemption of Long-term Debt |
( |
) |
( |
) | ||||
Proceeds from Issuance of Long-term Debt |
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Net Short-term Bank Borrowings |
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Deferred Debt Issuance Expense |
( |
) |
( |
) | ||||
Proceeds from Issuance of Common Stock |
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Payment of Common Dividends |
( |
) |
( |
) | ||||
Payment of Preferred Dividends |
( |
) |
( |
) | ||||
Construction Advances and Contributions-Net |
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NET CASH PROVIDED BY FINANCING ACTIVITIES |
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NET CHANGES IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
( |
) |
( |
) | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD |
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CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD |
$ |
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$ |
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SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY: | ||||||||
Utility Plant received as Construction Advances and Contributions |
$ |
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$ |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: | ||||||||
Cash Paid During the Year for: | ||||||||
Interest |
$ |
|
$ |
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Interest Capitalized |
$ |
|
$ |
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Income Taxes |
$ |
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$ |
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See Notes to Condensed Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CAPITAL STOCK AND LONG-TERM DEBT
(Unaudited)
(In thousands)
|
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June 30, |
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December 31, |
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2021 |
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2020 |
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Common Stock, No Par Value |
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Shares Authorized - |
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Shares Outstanding - 2021 - |
|
$ |
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$ |
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Retained Earnings |
|
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TOTAL COMMON EQUITY |
|
$ |
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$ |
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Cumulative Preferred Stock, No Par Value: |
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Shares Authorized - |
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Shares Outstanding - 2021 - |
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Convertible: |
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Shares Outstanding, $7.00 Series - |
|
$ |
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$ |
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Nonredeemable: |
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Shares Outstanding, $7.00 Series - |
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Shares Outstanding, $4.75 Series - |
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TOTAL PREFERRED STOCK |
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$ |
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$ |
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Long-term Debt: |
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First Mortgage Bonds, |
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$ |
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$ |
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Amortizing Secured Notes, |
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State Revolving Trust Notes, |
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State Revolving Fund Bond, |
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Construction Loans, |
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SUBTOTAL LONG-TERM DEBT |
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Add: Premium on Issuance of Long-term Debt |
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Less: Unamortized Debt Expense |
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( |
) |
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( |
) |
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Less: Current Portion of Long-term Debt |
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( |
) |
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( |
) |
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TOTAL LONG-TERM DEBT |
|
$ |
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|
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$ |
|
|
|
See Notes to Condensed Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands)
Common |
Common | |||||||||||||||
Stock |
Stock |
Retained | ||||||||||||||
Shares |
Amount |
Earnings |
Total | |||||||||||||
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For the Three Months Ended June 30, 2020 | ||||||||||||||||
Balance at April 1, 2020 |
|
$ |
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$ |
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$ |
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Net Income |
- |
- |
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Dividend Reinvestment & Common Stock Purchase Plan |
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- |
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Restricted Stock Award - Net - Employees |
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- |
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Restricted Stock Award - Board of Directors |
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- |
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Cash Dividends on Common Stock ($ |
- |
- |
( |
) |
( |
) | ||||||||||
Cash Dividends on Preferred Stock |
- |
- |
( |
) |
( |
) | ||||||||||
Balance at June 30, 2020 |
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$ |
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$ |
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$ |
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For the Six Months Ended June 30, 2020 | ||||||||||||||||
Balance at January 1, 2020 |
|
$ |
|
$ |
|
$ |
| |||||||||
Net Income |
- |
- |
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Dividend Reinvestment & Common Stock Purchase Plan |
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- |
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Restricted Stock Award - Net - Employees |
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- |
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Restricted Stock Award - Board of Directors |
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Cash Dividends on Common Stock ($ |
- |
- |
( |
) |
( |
) | ||||||||||
Cash Dividends on Preferred Stock |
- |
- |
( |
) |
( |
) | ||||||||||
Common Stock Issuance Expenses |
- |
- |
( |
) |
( |
) | ||||||||||
Balance at June 30, 2020 |
|
$ |
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$ |
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$ |
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For the Three Months Ended June 30, 2021 | ||||||||||||||||
Balance at April 1, 2021 |
|
$ |
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$ |
|
$ |
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Net Income |
- |
- |
|
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Dividend Reinvestment & Common Stock Purchase Plan |
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|
- |
| ||||||||||||
Restricted Stock Award - Net - Employees |
|
( |
) |
- |
( |
) | ||||||||||
Restricted Stock Award - Board of Directors |
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- |
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Cash Dividends on Common Stock ($ |
- |
- |
( |
) |
( |
) | ||||||||||
Cash Dividends on Preferred Stock |
- |
- |
( |
) |
( |
) | ||||||||||
Balance at June 30, 2021 |
|
|
|
$ |
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|
|
$ |
|
|
|
$ |
| |||
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For the Six Months Ended June 30, 2021 | ||||||||||||||||
Balance at January 1, 2021 |
|
$ |
|
$ |
|
$ |
| |||||||||
Net Income |
- |
- |
|
| ||||||||||||
Dividend Reinvestment & Common Stock Purchase Plan |
|
|
- |
| ||||||||||||
Restricted Stock Award - Net - Employees |
|
( |
) |
- |
( |
) | ||||||||||
Restricted Stock Award - Board of Directors |
|
|
| |||||||||||||
Cash Dividends on Common Stock ($ |
- |
- |
( |
) |
( |
) | ||||||||||
Cash Dividends on Preferred Stock |
- |
- |
( |
) |
( |
) | ||||||||||
Balance at June 30, 2021 |
|
$ |
|
$ |
|
$ |
|
See Notes to Condensed Consolidated Financial Statements.
MIDDLESEX WATER COMPANY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Basis of Presentation and Recent Developments
Middlesex Water Company (Middlesex or the Company) is the parent company and sole shareholder of Tidewater Utilities, Inc. (Tidewater), Tidewater Environmental Services, Inc. (TESI), Pinelands Water Company (Pinelands Water) and Pinelands Wastewater Company (Pinelands Wastewater) (collectively, Pinelands), Utility Service Affiliates, Inc. (USA), and Utility Service Affiliates (Perth Amboy) Inc. (USA-PA). Southern Shores Water Company, LLC (Southern Shores) and White Marsh Environmental Systems, Inc. (White Marsh) are wholly-owned subsidiaries of Tidewater. The financial statements for Middlesex and its wholly-owned subsidiaries are reported on a consolidated basis. All significant intercompany accounts and transactions have been eliminated.
The consolidated notes within the 2020 Annual Report on Form 10-K (the 2020 Form 10-K) are applicable to these financial statements and, in the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (including normal recurring accruals) to present fairly the financial position as of June 30, 2021, the results of operations for the three month and six month periods ended June 30, 2021 and 2020 and cash flows for the six month periods ended June 30, 2021 and 2020. Information included in the Condensed Consolidated Balance Sheet as of December 31, 2020, has been derived from the Company’s December 31, 2020 audited financial statements included in the 2020 Form 10-K.
Recent Developments
Loan Agreement - In March 2021, Tidewater entered into a $
Middlesex Financing Petition – In June 2021, Middlesex received approval from the New Jersey Board of Public Utilities (NJBPU) to redeem up to $
Novel Coronavirus (COVID-19) – In March 2020, the United States declared the COVID-19 pandemic a national emergency, which was extended on February 24, 2021, and remains in effect. While the Company’s operations and capital construction program have not been materially disrupted to date from the pandemic, the COVID-19 impact on economic conditions nationally continues to be uncertain and could affect the Company’s results of operations, financial condition and liquidity in the future. In New Jersey and Delaware, where our operations are located, the declared COVID-19 State of Emergency Orders ended in June 2021 and July 2021, respectively.
The NJBPU and the Delaware Public Service Commission (DEPSC) have approved the tracking of COVID-19 related incremental costs for potential recovery in customer rates in future rate proceedings. Neither jurisdiction has established a timetable or definitive formal procedures for seeking cost recovery. Since March 2020, the Company has increased its allowance for doubtful accounts for expected increases in accounts receivable write-offs due to the financial impact of COVID-19 on customers. We will continue to monitor the effects of COVID-19 and evaluate its impact on the Company’s business, results of operations, financial condition and liquidity.
Recent Accounting Guidance
There is no new adopted or proposed accounting guidance that the Company is aware of that could have a material impact on the Company’s financial statements.
Note 2 – Rate and Regulatory Matters
Middlesex – In May 2021, Middlesex filed a petition with the NJBPU seeking permission to increase annual base water revenues by approximately $
In March 2021, the NJBPU approved Middlesex’s petition to reset its Purchased Water Adjustment Clause (PWAC) tariff rate to recover additional costs of $
Tidewater - Effective January 1, 2021, Tidewater increased its DEPSC-approved Distribution System Improvement Charge (DSIC) rate, which was expected to generate revenues of approximately $
In March 2021, Tidewater was notified by the DEPSC that it had determined Tidewater’s earned rate of return exceeded the rate of return authorized by the DEPSC. Consequently, Tidewater reset its DSIC rate to zero effective April 1, 2021 and is refunding customers, with interest, in the form of an account credit for DSIC revenue billed between April 1, 2020 and March 31, 2021. Accordingly, in March 2021, Tidewater recorded a $
Twin Lakes Utilities, Inc. (Twin Lakes) - Twin Lakes provides water services to approximately 115 residential customers in Shohola, Pennsylvania. In 2020, Twin Lakes filed a petition requesting the Pennsylvania Public Utilities Commission (PAPUC) to order the acquisition of Twin Lakes by a public utility pursuant to Section 529 of the Pennsylvania Public Utility Code. The PAPUC assigned an Administrative Law Judge (ALJ) to adjudicate the matter and submit a recommended decision (Recommended Decision) to the PAPUC. In April 2021, the ALJ issued a Recommended Decision concluding Twin Lakes has fully met the criteria for the PAPUC to order the acquisition of Twin Lakes by a public utility pursuant to Section 529. The ALJ, however, recommended that the PAPUC condition the acquisition of Twin Lakes pursuant to Section 529 upon Twin Lakes’ parent, Middlesex, contributing $
Twin Lakes remains under the operation of a large PAPUC regulated investor-owned water utility as the receiver, which had been appointed by the PAPUC under an Order effective January 15, 2021. The receivership is to remain in place until the final outcome of the Section 529 proceeding.
It is unknown at this time if the PAPUC will affirm or deny the Recommended Decision in whole, or in part. Separate from the disposition of this matter by the PAPUC, or any further litigation which may proceed beyond the PAPUC’s final decision, the financial results, total assets and financial obligations of Twin Lakes are not material to Middlesex.
Note 3 – Capitalization
Common Stock - During the six months ended June 30, 2021 and 2020, there were
Long-term Debt - Subject to regulatory approval, the Company periodically issues long-term debt to fund its investments in utility plant. To the extent possible, the Company finances qualifying capital projects under State Revolving Fund (SRF) loan programs in New Jersey and Delaware. These government programs provide financing at interest rates that are typically below rates available in the broader financial markets. A portion of the borrowings under the New Jersey SRF is interest-free. Under the New Jersey SRF program, borrowers first enter into a construction loan agreement with the New Jersey Infrastructure Bank (NJIB) at a below market interest rate. The interest rate on the Company’s current construction loan borrowings is zero percent (
Middlesex currently has two projects that are in the construction loan phase of the New Jersey SRF program:
1)
In April 2018, the NJBPU approved Middlesex’s request to participate in the NJIB loan program to fund the construction of a 4.5 mile large-diameter transmission pipeline from the Carl J. Olsen water treatment plant in Edison, New Jersey and interconnect with our distribution system. Middlesex closed on a $
2)
In March 2018, the NJBPU approved Middlesex’s request to participate in the NJIB loan program to fund the 2018 RENEW Program, which is an ongoing initiative to eliminate unlined water distribution mains in the Middlesex system. Middlesex closed on an $
The Company anticipates that these two construction loans will be converted into long-term securitized loans by the NJIB during the fourth quarter of 2021.
In May 2020, Middlesex received approval from the NJBPU to borrow up to $
As part of its ongoing comprehensive financing plan, Middlesex received approval from the NJBPU in February 2019 to issue and sell up to $
In August 2019, Middlesex priced and closed on a NJEDA debt financing transaction of $
Fair Value of Financial Instruments - The following methods and assumptions were used by the Company in estimating its fair value disclosure for financial instruments for which it is practicable to estimate that value. The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, trade receivables, accounts payable and notes payable approximate their respective fair values due to the short-term maturities of these instruments. The fair value of FMBs and SRF Bonds (collectively, the Bonds) issued by Middlesex is based on quoted market prices for similar publicly traded issues. Under the fair value hierarchy, the fair value of cash and cash equivalents is classified as a Level 1 measurement and the fair value of notes payable and the Bonds in the table below are classified as Level 2 measurements. The carrying amount and fair value of the Bonds were as follows:
(In Thousands) | ||||
June 30, 2021 |
December 31, 2020 | |||
Carrying |
Fair |
Carrying |
Fair | |
Amount |
Value |
Amount |
Value | |
Bonds |
$ |
$ |
$ |
$ |
For other long-term debt for which there was no quoted market price and there is not an active trading market, it was not practicable to estimate their fair value (for details, including carrying value, interest rates and due dates on these series of long-term debt, please refer to those series noted as “Amortizing Secured Note”, “State Revolving Trust Note”, “State Revolving Trust Bond”, “Construction Loans” and “Series 2020A” on the Condensed Consolidated Statements of Capital Stock and Long-Term Debt). The carrying amount of these instruments was $
Note 4 – Earnings Per Share
Basic earnings per share (EPS) are computed on the basis of the weighted average number of shares outstanding during the period presented. Diluted EPS assumes the conversion of the Convertible Preferred Stock $7.00 Series.
(In Thousands Except per Share Amounts) | ||||||||||||||||
Three Months Ended June 30, | ||||||||||||||||
2021 |
2020 | |||||||||||||||
Basic: |
Income |
Shares |
Income |
Shares | ||||||||||||
Net Income |
$ |
|
|
$ |
|
| ||||||||||
Preferred Dividend |
( |
) |
( |
) | ||||||||||||
Earnings Applicable to Common Stock |
$ |
|
|
$ |
|
| ||||||||||
| ||||||||||||||||
Basic EPS |
$ |
|
$ |
| ||||||||||||
| ||||||||||||||||
Diluted: | ||||||||||||||||
Earnings Applicable to Common Stock |
$ |
|
|
$ |
|
| ||||||||||
$7.00 Series Preferred Dividend |
|
|
|
| ||||||||||||
Adjusted Earnings Applicable to Common Stock |
$ |
|
|
$ |
|
| ||||||||||
| ||||||||||||||||
Diluted EPS |
$ |
|
$ |
|
Six Months Ended June 30, | ||||||||||||||||
2021 |
2020 | |||||||||||||||
Basic: |
Income |
Shares |
Income |
Shares | ||||||||||||
Net Income |
$ |
|
|
$ |
|
| ||||||||||
Preferred Dividend |
( |
) |
( |
) | ||||||||||||
Earnings Applicable to Common Stock |
$ |
|
|
$ |
|
| ||||||||||
| ||||||||||||||||
Basic EPS |
$ |
|
$ |
| ||||||||||||
| ||||||||||||||||
Diluted: | ||||||||||||||||
Earnings Applicable to Common Stock |
$ |
|
|
$ |
|
| ||||||||||
$7.00 Series Preferred Dividend |
|
|
|
| ||||||||||||
Adjusted Earnings Applicable to Common Stock |
$ |
|
|
$ |
|
| ||||||||||
| ||||||||||||||||
Diluted EPS |
$ |
|
$ |
|
Note 5 – Business Segment Data
The Company has identified
(In Thousands) | ||||||||||||||||
Three Months Ended |
Six Months Ended | |||||||||||||||
June 30, |
June 30, | |||||||||||||||
Operations by Segments: |
2021 |
2020 |
2021 |
2020 | ||||||||||||
Revenues: | ||||||||||||||||
Regulated |
$ |
|
$ |
|
$ |
|
$ |
| ||||||||
Non – Regulated |
|
|
|
| ||||||||||||
Inter-segment Elimination |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Consolidated Revenues |
$ |
|
$ |
|
$ |
|
$ |
| ||||||||
| ||||||||||||||||
Operating Income: | ||||||||||||||||
Regulated |
$ |
|
$ |
|
$ |
|
$ |
| ||||||||
Non – Regulated |
|
|
|
| ||||||||||||
Consolidated Operating Income |
$ |
|
$ |
|
$ |
|
$ |
| ||||||||
| ||||||||||||||||
Net Income: | ||||||||||||||||
Regulated |
$ |
|
$ |
|
$ |
|
$ |
| ||||||||
Non – Regulated |
|
|
|
| ||||||||||||
Consolidated Net Income |
$ |
|
$ |
|
$ |
|
$ |
| ||||||||
| ||||||||||||||||
Capital Expenditures: | ||||||||||||||||
Regulated |
$ |
|
$ |
|
$ |
|
$ |
| ||||||||
Non – Regulated |
|
|
|
| ||||||||||||
Total Capital Expenditures |
$ |
|
$ |
|
$ |
|
$ |
|
As of |
As of | |||||||
June 30, |
December 31, | |||||||
2021 |
2020 | |||||||
Assets: | ||||||||
Regulated |
$ |
|
$ |
| ||||
Non – Regulated |
|
| ||||||
Inter-segment Elimination |
( |
) |
( |
) | ||||
Consolidated Assets |
$ |
|
$ |
|
Note 6 – Short-term Borrowings
The Company maintains lines of credit aggregating $110.0 million.
(Millions) | |||||||||||||||||
As of June 30, 2021 |
Renewal Date | ||||||||||||||||
Outstanding |
Available |
Maximum |
Credit Type | ||||||||||||||
Bank of America |
$ |
|
$ |
|
$ |
|
|
| |||||||||
PNC Bank |
|
|
|
|
| ||||||||||||
CoBank |
|
|
|
|
| ||||||||||||
$ |
|
$ |
|
$ |
|
The interest rate for borrowings under the lines of credit is set using the London InterBank Offered Rate (LIBOR) and adding a credit spread, which varies by financial institution. There is no requirement for a compensating balance under any of the established lines of credit. Each of the lines of credit includes a provision for a replacement benchmark for when LIBOR is fully phased-out and no longer available to set the interest rate on borrowings under these lines of credit.
The weighted average interest rate on the outstanding borrowings at June 30, 2021 under these credit lines is
The weighted average daily amounts of borrowings outstanding under the Company’s lines of credit and the weighted average interest rates on those amounts were as follows:
Three Months Ended |
Six Months Ended | ||||||||||||||
June 30, |
June 30, | ||||||||||||||
2021 |
2020 |
2021 |
2020 | ||||||||||||
Average Daily Amounts Outstanding |
$ |
|
$ |
|
$ |
|
$ |
| |||||||
Weighted Average Interest Rates |
|
% |
|
% |
|
% |
|
% |
The $
Note 7 – Commitments and Contingent Liabilities
Water Supply - Middlesex has an agreement with the New Jersey Water Supply Authority (NJWSA) for the purchase of untreated water through
Middlesex has an agreement with a non-affiliated regulated water utility for the purchase of treated water. This agreement, which expires
Tidewater contracts with the City of Dover, Delaware to purchase
Purchased water costs are shown below:
(In Thousands) | ||||||||||||||||
|
Three Months Ended |
Six Months Ended | ||||||||||||||
|
June 30, |
June 30, | ||||||||||||||
2021 |
2020 |
2021 |
2020 | |||||||||||||
Treated |
|
$ |
|
$ |
|
$ |
|
$ |
| |||||||
Untreated |
|
|
|
|
| |||||||||||
Total Costs |
|
$ |
|
$ |
|
$ |
|
$ |
|
Guarantees - As part of an agreement with the County of Monmouth, New Jersey (County), prior to 2020 Middlesex had served as guarantor of the performance of an unaffiliated wastewater treatment contractor and partner (Contractor), to operate a County-owned leachate pretreatment facility.
In November 2019, Middlesex was notified that the County terminated its Agreement with the Contractor. The Contractor had initiated legal action against the County that, in part, contests the County’s exercise of this termination. The County filed a counter-claim against the Contractor’s parent company and has brought Middlesex into the suit as a third-party defendant. We continue to monitor this litigation. However, given the cancellation of the underlying operating contract by the County, the fact that the Company had not been requested by the County to perform under the guarantee and the continuation of the litigation, we do not anticipate the ultimate outcome will have a material impact on the Company’s results of operations or financial condition.
Leases - The Company determines if an arrangement is a lease at inception. Generally, a lease agreement exists if the Company determines that the arrangement gives the Company control over the use of an identified asset and obtains substantially all of the benefits from the identified asset.
The Company has entered into an operating lease of office space for administrative purposes, expiring in 2030. The Company has not entered into any finance leases. The exercise of a lease renewal option for the Company’s administrative offices is solely at the discretion of the Company.
The right-of-use (ROU) asset recorded represents the Company’s right to use an underlying asset for the lease term and lease liability represents the Company’s obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company’s operating lease does not provide an implicit discount rate and as such the Company used an estimated incremental borrowing rate (
Given the impacts of accounting for regulated operations, and the resulting recognition of expense at the amounts recovered in customer rates, expenditures for operating leases are consistent with lease expense and were $
Information related to operating lease ROU assets and lease liabilities is as follows:
|
(In Millions) | ||||||||
|
As of June 30, 2021 |
As of December 31, 2020 | |||||||
ROU Asset at Lease Inception |
|
$ |
|
$ |
| ||||
Accumulated Amortization |
|
( |
) |
( |
) | ||||
Current ROU Asset |
|
$ |
|
$ |
|
The Company’s future minimum operating lease commitments as of June 30, 2021 are as follows:
|
|
(In Millions) | |||
2021 |
|
$ |
|
| |
2022 |
|
|
|
| |
2023 |
|
|
| ||
2024 |
|
|
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