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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: March 31, 2000 No. 0-422
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MIDDLESEX WATER COMPANY
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(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
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(Address of principal executive offices) (Zip Code)
(732) 634-1500
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(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 March 31, 2000
----- -----------------------------
Common Stock, No Par Value 5,011,469
INDEX
PART I. FINANCIAL INFORMATION PAGE
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Item 1. Financial Statements:
Consolidated Statements of Income 1
Consolidated Balance Sheets 2
Consolidated Statements of Capitalization and Retained Earnings 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures of Market Risk 12
PART II. OTHER INFORMATION 13
SIGNATURE 14
MIDDLESEX WATER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Twelve Months
Ended March 31, Ended March 31,
2000 1999 2000 1999
----------- ----------- ----------- -----------
Operating Revenues $12,981,089 $11,679,893 $54,798,349 $44,968,720
----------- ----------- ----------- -----------
Operating Expenses:
Operations 6,922,269 6,207,458 26,983,158 21,426,309
Maintenance 678,665 640,497 2,656,847 2,027,989
Depreciation 1,146,133 860,875 4,169,908 3,337,460
Other Taxes 1,668,390 1,529,849 7,009,646 6,217,111
Federal Income Taxes 514,369 495,198 3,208,064 2,812,236
----------- ----------- ----------- -----------
Total Operating Expenses 10,929,826 9,733,877 44,027,623 35,821,105
----------- ----------- ----------- -----------
Operating Income 2,051,263 1,946,016 10,770,726 9,147,615
Other Income:
Allowance for Funds Used During Construction 17,176 486,222 880,970 1,402,463
Other - Net 37,355 212,978 385,368 919,193
----------- ----------- ----------- -----------
Total Other Income 54,531 699,200 1,266,338 2,321,656
Income Before Interest Charges 2,105,794 2,645,216 12,037,064 11,469,271
----------- ----------- ----------- -----------
Interest Charges 1,199,678 1,152,007 4,743,116 4,718,087
----------- ----------- ----------- -----------
Net Income 906,116 1,493,209 7,293,948 6,751,184
Preferred Stock Dividend Requirements 63,697 79,697 284,786 318,786
----------- ----------- ----------- -----------
Earnings Applicable to Common Stock $ 842,419 $ 1,413,512 $ 7,009,162 $ 6,432,398
=========== =========== =========== ===========
Earnings per share of Common Stock:
Basic $ 0.17 $ 0.29 $ 1.42 $ 1.43
Diluted $ 0.17 $ 0.29 $ 1.40 $ 1.42
Average Number of
Common Shares Outstanding :
Basic 5,005,354 4,902,005 4,952,521 4,504,617
Diluted 5,176,924 5,128,431 5,160,156 4,731,043
Cash Dividends Paid per Common Share $ 0.30 1/2 $ 0.29 1/2 $ 1.20 $ 1.16
See Notes to Consolidated Financial Statements.
-1-
MIDDLESEX WATER COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS AND OTHER DEBITS
March 31, December 31,
2000 1999
------------ ------------
(Unaudited)
UTILITY PLANT:
Water Production $ 64,959,055 $ 70,316,961
Transmission and Distribution 130,980,247 122,002,931
General 19,908,704 19,717,575
Construction Work in Progress 1,123,492 2,858,703
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TOTAL 216,971,498 214,896,170
Less Accumulated Depreciation 36,176,260 35,174,531
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UTILITY PLANT-NET 180,795,238 179,721,639
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NONUTILITY ASSETS-NET 2,552,594 2,087,498
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CURRENT ASSETS:
Cash and Cash Equivalents 3,797,660 5,169,772
Temporary Cash Investments-Restricted 5,601,444 5,731,827
Accounts Receivable (net of allowance
for doubtful accounts) 5,190,339 5,969,546
Unbilled Revenues 2,686,562 2,627,863
Materials and Supplies (at average cost) 1,006,233 956,950
Prepayments and Other Current Assets 547,202 616,224
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TOTAL CURRENT ASSETS 18,829,440 21,072,182
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DEFERRED CHARGES:
Unamortized Debt Expense 2,994,845 3,029,362
Preliminary Survey and Investigation Charges 471,315 472,287
Regulatory Assets
Income Taxes 5,955,879 5,955,879
Post Retirement Costs 1,106,332 1,127,884
Other 1,757,668 1,568,934
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TOTAL DEFERRED CHARGES 12,286,039 12,154,346
------------ ------------
TOTAL $214,463,311 $215,035,665
============ ============
See Notes to Consolidated Financial Statements.
-2-
MIDDLESEX WATER COMPANY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND OTHER CREDITS
March 31, December 31,
2000 1999
------------ ------------
(Unaudited)
CAPITALIZATION (see accompanying statements) $156,486,858 $156,882,012
------------ ------------
CURRENT LIABILITIES:
Current Portion of Long-term Debt 222,397 201,921
Notes Payable 2,500,000 2,000,000
Accounts Payable 1,934,027 3,392,432
Taxes Accrued 7,155,918 5,358,737
Interest Accrued 726,745 1,760,470
Other 1,361,108 1,591,706
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TOTAL CURRENT LIABILITIES 13,900,195 14,305,266
------------ ------------
DEFERRED CREDITS:
Customer Advances for Construction 11,524,208 11,775,581
Accumulated Deferred Investment Tax Credits 2,069,995 2,089,650
Accumulated Deferred Federal Income Taxes 12,148,111 12,113,286
Employee Benefit Plans 4,901,048 4,656,575
Other 1,165,075 1,059,206
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TOTAL DEFERRED CREDITS 31,808,437 31,694,298
------------ ------------
CONTRIBUTIONS IN AID OF CONSTRUCTION 12,267,821 12,154,089
------------ ------------
TOTAL $214,463,311 $215,035,665
============ ============
See Notes to Consolidated Financial Statements.
-3-
MIDDLESEX WATER COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION AND RETAINED EARNINGS
March 31, December 31,
2000 1999
------------- -------------
(Unaudited)
CAPITALIZATION:
Common Stock, No Par Value
Shares Authorized, 10,000,000
Shares Outstanding - 2000 - 5,011,469; 1999 - 5,000,589 $ 47,929,789 $ 47,593,514
Retained Earnings 22,212,450 22,895,844
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TOTAL COMMON EQUITY 70,142,239 70,489,358
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Cumulative Preference Stock, No Par Value
Shares Authorized, 100,000; Shares Outstanding, None
Cumulative Preferred Stock, No Par Value, Shares Authorized - 140,497
Convertible:
Shares Outstanding, $7.00 Series - 14,881 1,562,505 1,562,505
Shares Outstanding, $8.00 Series - 12,000 1,398,857 1,398,857
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 4,063,062 4,063,062
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Long-term Debt:
8.02% Amortizing Secured Note, due December 20, 2021 3,359,179 3,371,527
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
5.35%, Series W, due February 1, 2038 23,000,000 23,000,000
0.00%, Series X, due August 1, 2018 1,009,775 1,024,986
4.53%, Series Y, due August 1, 2018 1,135,000 1,135,000
0.00%, SeriesZ, due September 1, 2019 2,150,000 2,150,000
5.25%, SerieAA, due September 1, 2019 2,350,000 2,350,000
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SUBTOTAL LONG-TERM DEBT 82,503,954 82,531,513
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Less: Current Portion of Long-term Debt (222,397) (201,921)
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TOTAL LONG-TERM DEBT 82,281,557 82,329,592
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TOTAL CAPITALIZATION $ 156,486,858 $ 156,882,012
============= =============
Three Months Ended Year Ended
March 31, December 31,
2000 1999
----------- -----------
(Unaudited)
RETAINED EARNINGS:
BALANCE AT BEGINNING OF PERIOD $22,895,844 $21,222,294
Net Income 906,116 7,881,041
----------- -----------
TOTAL 23,801,960 29,103,335
----------- -----------
Cash Dividends:
Cumulative Preferred Stock 63,697 300,786
Common Stock 1,525,813 5,857,405
Common Stock Expenses 0 49,300
----------- -----------
TOTAL DEDUCTIONS 1,589,510 6,207,491
----------- -----------
BALANCE AT END OF PERIOD $22,212,450 $22,895,844
=========== ===========
See Notes to Consolidated Financial Statements.
-4-
MIDDLESEX WATER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31, Twelve Months Ended March 31,
2000 1999 2000 1999
------------ ------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 906,116 $ 1,493,209 $ 7,293,948 $ 6,751,184
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 1,238,674 942,050 4,599,816 3,854,933
Provision for Deferred Income Taxes 34,825 (139,285) 49,795 (111,256)
Allowance for Funds Used During Construction (17,176) (486,222) (880,970) (1,402,463)
Changes in Current Assets and Liabilities:
Accounts Receivable 779,207 376,721 (680,993) (424,848)
Accounts Payable (1,458,405) (669,047) (1,248,585) 360,861
Accrued Taxes 1,797,181 1,633,605 301,644 324,891
Accrued Interest (1,033,725) (1,012,075) 37,490 113,498
Unbilled Revenues (58,699) 44,040 (432,454) (45,280)
Employee Benefit Plans 244,473 229,331 909,201 1,006,544
Other-Net (218,834) (237,288) 129,522 472,022
------------ ------------ ------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,213,637 2,175,039 10,078,414 10,900,086
------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility Plant Expenditures* (2,660,153) (6,207,508) (19,734,380) (27,716,434)
Note Receivable (7,500) 12,875 2,785,727 (1,591,078)
Preliminary Survey and Investigation Charges 972 (37,066) (158,047) (107,893)
Other-Net (131,016) (274,189) (15,423) (915,666)
------------ ------------ ------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (2,797,697) (6,505,888) (17,122,123) (30,331,071)
------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Long-term Debt (27,559) (11,289) (88,000) (43,678)
Proceeds from Issuance of Long-term Debt -- -- 4,500,000 2,185,000
Short-term Bank Borrowings 500,000 (1,000,000) 2,500,000 (3,063,614)
Deferred Debt Issuance Expenses -- (1,107) (21,161) (503,307)
Temporary Cash Investments-Restricted 130,383 5,314,817 (1,140,189) 18,633,684
Proceeds from Issuance of Common Stock-Net 336,275 276,532 1,164,212 13,837,833
Payment of Common Dividends (1,525,813) (1,445,197) (5,938,021) (5,210,239)
Payment of Preferred Dividends (63,697) (79,696) (284,787) (318,785)
Construction Advances and Contributions-Net (137,641) 476,184 1,561,098 1,081,826
------------ ------------ ------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (788,052) 3,530,244 2,253,152 26,598,720
------------ ------------ ------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (1,372,112) (800,605) (4,790,557) 7,167,735
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,169,772 9,388,822 8,588,217 1,420,482
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,797,660 $ 8,588,217 $ 3,797,660 $ 8,588,217
============ ============ ============ ============
* Excludes Allowance for Funds Used During Construction
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash Paid During the Period for:
Interest (net of amounts capitalized) $ 2,166,191 $ 1,644,621 $ 3,658,981 $ 3,047,999
Income Taxes $ 4,350 $ 150,500 $ 3,582,550 $ 2,954,475
See Notes to Consolidated Financial Statements.
-5-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies
Organization - Middlesex Water Company (Middlesex) is the parent company and
sole shareholder of Tidewater Utilities, Inc. (Tidewater), Pinelands Water
Company, Pinelands Wastewater Company, Utility Service Affiliates, Inc. (USA),
and Utility Service Affiliates (Perth Amboy) Inc. (USA-PA). White Marsh
Environmental Systems, Inc. is a wholly-owned subsidiary of Tidewater. The
financial statements for Middlesex and its wholly owned subsidiaries (the
Company) are reported on a consolidated basis. All intercompany accounts and
transactions have been eliminated.
The consolidated notes accompanying the 1999 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 March 31, 2000 and the results of operations and its cash flows for the
periods ended March 31, 2000 and 1999. Information included in the Balance Sheet
as of December 31, 1999, 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, 1999.
Note 2 - Regulatory Matters
On March 31, 2000, Tidewater amended its base rate increase petition from 38.3%
to 21.2%. The original petition was filed with the Delaware Public Service
Commission (PSC) in September 1999. The lower request is due mostly to lower
than projected capital expenditures. Evidentiary hearings were held in mid-April
2000. Several issues that account for a large portion of the requested increase
remain in dispute. These include return on equity, quality of service, utility
plant and depreciation rates. Based on the hearing examiner's timetable, a
decision is expected to be rendered in August 2000.
Note 3 - Capitalization
Common Stock - During the three months ended March 31, 2000, 10,880 common
shares ($0.3 million) were issued under the Company's Dividend Reinvestment and
Common Stock Purchase Plan.
-6-
Note 4 - Earnings Per Share
Basic earnings per share (EPS) are computed on the basis of the weighted average
number of shares outstanding. Diluted EPS assumes the conversion of both the
Convertible Preferred Stock $7.00 Series and the Convertible Preferred Stock
$8.00 Series.
(In Thousands Except for per Share Amounts)
Three Months Ended Twelve Months Ended
March 31 March 31
2000 1999 2000 1999
Basic: Income Shares Income Shares Income Shares Income Shares
- --------------------------------------------------------------------------------------------------------------------
Net Income $ 906 5,005 $1,493 4,902 $7,294 4,953 $6,751 4,505
(64) (80) (285) (319)
---- ---- ----- -----
Preferred Dividend
Earnings Applicable
to Common Stock $ 842 5,005 $1,413 4,902 $7,009 4,953 $6,432 4,505
Basic EPS $0.17 $0.29 $1.42 $1.43
Diluted:
- --------------------------------------------------------------------------------------------------------------------
Earnings Applicable
to Common Stock $ 842 5,005 $1,413 4,902 $7,009 4,953 $6,432 4,505
$7.00 Series Dividend 26 89 26 89 104 89 104 89
$8.00 Series Dividend 24 83 40 137 126 118 160 137
----- ----- ------ ----- ------ ----- ------ -----
Adjusted Earnings
Applicable to
Common Stock $ 892 5,177 $1,479 5,128 $7,239 5,160 $6,696 4,731
Diluted EPS $0.17 $0.29 $1.40 $1.42
Note 5 - Business Segment Data
The Company has identified two reportable segments. One is the regulated
business of collecting, treating and distributing water on a retail and
wholesale basis to residential, commercial, industrial and fire protection
customers in parts of New Jersey and Delaware. It also operates a regulated
wastewater system in New Jersey. The Company is subject to regulations as to its
rates, services and other matters by the States of New Jersey and Delaware with
respect to utility service within these States. The other segment is the
non-regulated contract services for the operation and maintenance of municipal
and private water and wastewater systems in New Jersey and Delaware. On January
1, 1999 the Company began operating the water and wastewater systems of the City
of Perth Amboy, New Jersey under a service contract. The accounting policies of
the segments are the same as those described in the summary of significant
accounting policies in Note 1 to the Consolidated Financial Statements.
Inter-segment transactions relating to operational costs are treated as pass
through expenses. Finance charges on inter-segment loan activities are based on
interest rates that are below what would normally be charged by a third party
lender.
-7-
(Thousands of Dollars)
Three Months Ended Twelve Months Ended
March 31, March 31,
Operations by Segments: 2000 1999 2000 1999
- ------------------------------------------------------------------------------------
Revenues:
Regulated $ 11,291 $ 9,919 $47, 419 $ 42,884
Non - Regulated 1,699 1,772 7,415 2,114
Inter-segment Elimination (9) (11) (36) (29)
-------- -------- -------- --------
Consolidated Revenues $ 12,981 $ 11,680 $ 54,798 $ 44,969
-------- -------- -------- --------
Operating Income:
Regulated $ 1,969 $ 1,808 $ 9,900 $ 8,869
Non - Regulated 82 138 871 279
Inter-segment Elimination -- -- -- --
-------- -------- -------- --------
Consolidated Operating Income $ 2,051 $ 1,946 $ 10,771 $ 9,148
-------- -------- -------- --------
Depreciation/Amortization:
Regulated $ 1,134 $ 855 $ 4,139 $ 3,332
Non - Regulated 12 6 31 5
Inter-segment Elimination -- -- -- --
Consolidated
-------- -------- -------- --------
Depreciation/Amortization $ 1,146 $ 861 $ 4,170 $ 3,337
-------- -------- -------- --------
Other Income:
Regulated $ 208 $ 845 $ 2,780 $ 3,179
Non - Regulated (3) (5) 2 (5)
Inter-segment Elimination (150) (141) (1,516) (852)
-------- -------- -------- --------
Consolidated Other Income $ 55 $ 699 $ 1,266 $ 2,322
-------- -------- -------- --------
Interest Expense:
Regulated $ 1,337 $ 1,224 $ 5,206 $ 4,952
Non - Regulated 21 51 175 165
Inter-segment Elimination (159) (123) (638) (399)
-------- -------- -------- --------
Consolidated Interest Expense $ 1,199 $ 1,152 $ 4,743 $ 4,718
-------- -------- -------- --------
Net Income:
Regulated $ 840 $ 1,430 $ 7,474 $ 7,096
Non - Regulated 58 81 698 109
Inter-segment Elimination 8 (18) (878) (454)
-------- -------- -------- --------
Consolidated Net Income $ 906 $ 1,493 $ 7,294 $ 6,751
-------- -------- -------- --------
Capital Expenditures:
Regulated $ 2,190 $ 6,208 $ 19,255 $ 27,658
Non - Regulated 470 150 479 208
Inter-segment Elimination -- -- -- --
-------- -------- -------- --------
Total Capital Expenditures $ 2,660 $ 6,358 $ 19,734 $ 27,866
-------- -------- -------- --------
As of As of
March 31, December 31,
2000 1999
Assets:
Regulated $ 232,907 $ 231,650
Non - Regulated 2,901 2,405
Inter-segment Elimination (21,345) (19,019)
--------- ---------
Consolidated Assets $ 214,463 $ 215,036
--------- ---------
-8-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Three Months Ended March 31, 2000
Operating revenues for the three months ended March 31, 2000 were up $1.3
million or 11.1% from the same period in 1999. Over 85% of the increase relates
to rate increases in all our regulated service territories. Continued customer
growth and consumption increases in our Delaware operations accounted for the
balance of the revenue increase.
Offsetting higher revenues were increased operating expenses of $1.2 million or
12.2% over last year. Operations expenses rose in all categories. In our New
Jersey operations, higher treatment costs, additional labor and materials for
winter main break repairs and increased employee benefit costs all contributed
to push expenses higher. In Delaware, customer growth fueled the need for
additional production, treatment and distribution systems and additional labor,
which resulted in higher operation expenses.
Depreciation expense increased 33.1% over the same period from last year. The
improvements to Middlesex primary treatment facility, the Carl J. Olsen
Treatment Plant (CJO Plant), were placed in service July 1999 causing most of
the $0.3 million increase in depreciation expense.
Other taxes rose $0.1 million or 9.1%, due to higher revenue related taxes in
New Jersey. Federal income taxes were flat, which reflected a higher amount of
deferred income tax expense, offsetting the effect of lower current taxable
income.
Other income fell by over $0.6 million compared to the same three-month period
in 1999. With the completion of the CJO Plant, we ceased recording an Allowance
for Funds Used During Construction (AFUDC) which resulted in a decrease of just
under $0.5 million. Interest income decreased by more than $0.1 million due to a
lower level of funds available for short-term investment.
The preferred stock dividend requirement decreased by 20% as a result of the
partial exercise of the conversion feature of the $8.00 Series of Preferred
Stock in late 1999.
Net income fell 39.3% to $0.9 million due mostly to the benefit of the net
financing activity realized during the construction phase of the CJO Plant
upgrade in the prior year.
Results of Operations - Twelve Months Ended March 31, 2000
Operating revenues for the twelve months ended March 31, 2000 were higher by
$9.8 million or 21.9%. The following factors contributed to this increase. The
inclusion of USA-PA for the full twelve-month period contributed $5.4 million to
revenues. USA-PA began operation in January 1999. The rate increase implemented
by Middlesex added $4.5 million and rate increases in all other regulated
subsidiaries accounted for $0.2 million of additional revenues. Customer growth
in Delaware contributed $0.6 million in revenues. Drought related consumption
decreases in New Jersey and a one-time refund to a large industrial customer
offset revenue increases by $0.9 million.
-9-
Total operating expenses increased $8.2 million or 22.9%. Primary factors
contributing to the increase included the inclusion of a full year of USA-PA's
operating and maintenance expenses for $4.1 million, higher salaries and wages
of $0.7 million due to overtime and increased employee levels and increased
water production and treatment costs of $0.6 million. Other operating and
maintenance costs increased by $0.9 million. Depreciation expense increased $0.8
million or 24.9% as a result of the CJO Plant completion in July 1999.
Other Taxes increased $0.8 million or 12.8%. The increase primarily relates to
higher revenue-related taxes, employers' payroll taxes and the inclusion of
USA-PA. Federal income taxes increased $0.4 million or 14.1% as a result of a
higher amount of deferred taxes and an increased amount of current income taxes.
Other income fell $1.1 million with lower AFUDC and lower earnings on excess
funds each accounting for approximately 50% of the decline.
The 10.7% decrease in preferred stock dividend requirements reflects the partial
exercise of the conversion feature of the $8.00 Series of Preferred Stock in
late 1999. Basic and diluted earnings per share decreased slightly to $1.42 and
$1.40, respectively. The $0.02 per share dilution for the twelve months ended
March 31, 2000 and 1999 is the result of the two series of convertible preferred
stock currently outstanding.
Capital Resources
The Company's capital program for 2000 is estimated to be $18.1 million and
includes $7.1 million for water system additions and improvements for our
Delaware systems and $2.2 million for the RENEW Program, which is our program to
clean and cement line approximately nine miles of unlined mains in the Middlesex
System. There is a total of approximately 160 miles of unlined mains in the 670
mile Middlesex System. Final expenditures on the upgrade to the CJO Plant are
estimated at $2.0 million. The capital program also includes and $6.8 million
for scheduled upgrades to our existing systems in New Jersey. The scheduled
upgrades consists of $1.0 million for mains, $0.8 million for service lines,
$0.5 million for meters, $0.4 million for hydrants, $0.8 million for computer
systems and $3.3 million for various other items.
Liquidity
Middlesex issued $4.5 million of First Mortgage Bonds in November 1999 through
the New Jersey State Revolving Fund (SRF). $2.2 million of that financing will
be used to cover the cost of the 2000 RENEW Program. The balance will be used to
fund the 2001 RENEW program. The capital program in Delaware will be financed
through a combination of a capital contribution from Middlesex and long-term
debt financing from either a financial institution or the Company. Other capital
expenditures will be financed through internally generated funds and sale of
common stock through the Dividend Reinvestment and Common Stock Purchase Plan
(DRP). Capital expenditures of $2.7 million have been incurred in the three
months ended March 31, 2000. The Company may also utilize short-term borrowings
through $18.0 million of available lines of credit it has with two commercial
banks for working capital purposes. At March 31, 2000, there was $2.5 million
outstanding against the lines of credit.
-10-
Accounting Standards
In June 1998, The Financial Accounting Standards Board (FASB) issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." This
Statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts. The Company is currently evaluating the requirements of the
accounting standard, which is required to be adopted in the first quarter of
2001.
Forward Looking Information
Certain matters discussed in this report on Form 10-Q are "forward-looking
statements" intended to qualify for safe harbors from liability established by
the Private Securities Litigation Reform Act of 1995. Such statements may
address future plans, objective, expectations and events concerning various
matters such as capital expenditures, earnings, litigation, growth potential,
rate and other regulatory matters, liquidity and capital resources and
accounting matters. Actual results in each case could differ materially from
those currently anticipated in such statements. The Company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
-11-
Item 3. Quantitative and Qualitative Disclosures of Market Risk
The Company is subject to the risk of fluctuating interest rates in the normal
course of business. Our policy is to manage interest rates through the use of
fixed rate long-term debt and, to a lesser extent, short-term debt. The
Company's interest rate risk related to existing fixed rate, long-term debt is
not material due to the term of the majority of our First Mortgage Bonds, which
have maturity dates ranging from 2009 to 2038. Over the next twelve months
approximately $0.2 million of the current portion of four existing long-term
debt instruments will mature. Applying a hypothetical change in the rate of
interest charged by 10% on those borrowings, would not have a material effect on
earnings.
-12-
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
(a) Exhibits: No. 27, Financial Data Schedule.
(b) Reports on Form 8-K: None
-13-
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)
/s/A. Bruce O'Connor
--------------------
Date: May 12, 2000 A. Bruce O'Connor
Vice President and Controller
-14-
UT 0000066004 MIDDLESEX WATER COMPANY 3-MOS DEC-31-2000 MAR-31-2000 PER-BOOK 180,795,238 2,552,594 18,829,440 12,286,039 0 214,463,311 47,929,789 0 22,212,450 70,142,239 0 4,063,062 82,281,557 2,500,000 0 0 222,397 0 0 0 55,254,056 214,463,311 12,981,089 514,369 10,415,457 10,929,826 2,051,263 54,531 2,105,794 1,199,678 906,116 63,697 842,419 1,525,813 4,290,086 2,213,637 0.17 0.17