-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KI4dm1hWws5oa/TZTq4GhGU0VrlHnFjGgOrykEiOatKhW9irCSUlxVc24wssa9F+ 9H9Lghy45XeGRJ2eb5thpA== 0000318819-97-000006.txt : 19970514 0000318819-97-000006.hdr.sgml : 19970514 ACCESSION NUMBER: 0000318819-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN WATER WORKS CO INC CENTRAL INDEX KEY: 0000318819 STANDARD INDUSTRIAL CLASSIFICATION: WATER SUPPLY [4941] IRS NUMBER: 510063696 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03437 FILM NUMBER: 97601557 BUSINESS ADDRESS: STREET 1: 1025 LAUREL OAK RD CITY: VOORHEES STATE: NJ ZIP: 08043 BUSINESS PHONE: 6093468200 MAIL ADDRESS: STREET 1: 1025 LAUREL OAK ROAD CITY: VOORHEES STATE: NJ ZIP: 08043 10-Q 1 FORM 10-Q Page 1 of 14 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 --------------------------------------------- OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------------------------- ----------------- Commission File Number 1-3437-2 -------------------------------------------------- AMERICAN WATER WORKS COMPANY, INC. - --------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 51-0063696 - ------------------------------- ----------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 1025 Laurel Oak Road, Voorhees, New Jersey 08043 - --------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (609) 346-8200 - --------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - --------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- At May 1, 1997, the number of shares of common stock, $1.25 par value, outstanding was 78,977,431 shares. Page 2 FORM 10-Q PART I FINANCIAL INFORMATION ---------------------------- Item 1. Financial Statements ----------------------------- AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES ----------------------------------------------------------- Consolidated Statements of Income and Retained Earnings (Unaudited) (In thousands, except per share amounts) Three Months Ended March 31, 1997 1996 -------- -------- CONSOLIDATED INCOME Operating revenues $213,357 $198,189 -------- -------- Operating expenses Operation and maintenance 100,753 100,644 Depreciation and amortization 25,057 21,542 General taxes 22,644 20,578 -------- -------- 148,454 142,764 -------- -------- Operating income 64,903 55,425 Allowance for other funds used during construction 1,404 3,637 Other income 109 283 -------- -------- 66,416 59,345 -------- -------- Income deductions Interest 35,618 32,698 Allowance for borrowed funds used during construction (701) (2,628) Amortization of debt expense 392 341 Preferred dividends of subsidiaries 889 912 Other deductions 861 345 -------- -------- 37,059 31,668 -------- -------- Income before income taxes 29,357 27,677 Provision for income taxes 11,327 10,646 -------- -------- Net income 18,030 17,031 Dividends on preferred stocks 996 996 -------- -------- Net income to common stock $ 17,034 $ 16,035 ======== ======== Weighted average shares of common stock outstanding 78,676 68,306 Earnings per common share on weighted average shares outstanding $ 0.22 $ 0.23 ======== ======== Page 3 FORM 10-Q Three Months Ended March 31, 1997 1996 -------- -------- CONSOLIDATED RETAINED EARNINGS Balance at beginning of period $662,183 $622,061 Add - net income 18,030 17,031 Deduct - adjustment for 1996 two-for-one stock split, in the form of a 100% stock dividend, on shares issued during the period 0 480 -------- -------- 680,213 638,612 -------- -------- Deduct - dividends Preferred stock 882 882 Preference stock 114 114 Common stock - $.19 per share in 1997; $.175 per share in 1996 14,912 11,902 -------- -------- 15,908 12,898 -------- -------- Balance at end of period $664,305 $625,714 ======== ======== The accompanying notes are an integral part of these financial statements.
Page 4 FORM 10-Q AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES ----------------------------------------------------------- Consolidated Balance Sheet (Unaudited) (In thousands) March 31 December 31 1997 1996 ----------- ----------- ASSETS Property, plant and equipment Utility plant - at original cost less accumulated depreciation $ 3,481,548 $ 3,453,950 Utility plant acquisition adjustments 52,022 52,156 Non-utility property, net of accumulated depreciation 32,465 31,302 Excess of cost of investments in subsidiaries over book equity at acquisition 22,693 22,690 ----------- ----------- 3,588,728 3,560,098 ----------- ----------- Current assets Cash and cash equivalents 10,359 12,974 Customer accounts receivable 64,416 67,293 Allowance for uncollectible accounts (1,164) (1,115) Unbilled revenues 52,850 53,868 Miscellaneous receivables 5,755 4,787 Materials and supplies 11,991 11,063 Deferred vacation pay 12,218 10,400 Other 8,013 7,994 ----------- ----------- 164,438 167,264 ----------- ----------- Regulatory and other long-term assets Regulatory asset - income taxes recoverable through rates 177,977 177,064 Debt and preferred stock expense 28,486 28,736 Deferred pension expense 19,290 18,340 Deferred postretirement benefit expense 11,771 11,852 Deferred treatment plant costs 8,272 8,388 Deferred water utility billings 6,041 6,808 Tank painting costs 10,070 10,224 Funds restricted for construction 6,267 5,791 Other 40,164 37,591 ----------- ----------- 308,338 304,794 ----------- ----------- $ 4,061,504 $ 4,032,156 =========== =========== Page 5 FORM 10-Q March 31 December 31 1997 1996 ----------- ----------- CAPITALIZATION AND LIABILITIES Capitalization Common stock $ 98,453 $ 98,027 Paid-in capital 305,522 298,448 Retained earnings 664,305 662,183 Unearned compensation (1,318) (784) ----------- ----------- Common stockholders' equity 1,066,962 1,057,874 Preferred stocks with mandatory redemption requirements 40,000 40,000 Preferred stocks without mandatory redemption requirements 11,673 11,673 Preferred stocks of subsidiaries with mandatory redemption requirements 40,800 41,060 Preferred stocks of subsidiaries without mandatory redemption requirements 6,284 6,279 Long-term debt American Water Works Company, Inc. 116,000 116,000 Subsidiaries 1,614,867 1,600,394 ----------- ----------- 2,896,586 2,873,280 ----------- ----------- Current liabilities Bank debt 162,979 147,390 Current portion of long-term debt 30,788 57,144 Accounts payable 23,270 36,786 Taxes accrued, including federal income 28,548 10,803 Interest accrued 37,521 32,128 Accrued vacation pay 12,350 10,564 Other 34,515 40,155 ----------- ----------- 329,971 334,970 ----------- ----------- Page 6 FORM 10-Q March 31 December 31 1997 1996 ----------- ----------- Regulatory and other long-term liabilities Advances for construction $ 129,720 $ 129,466 Deferred income taxes 390,661 382,592 Deferred investment tax credits 37,058 37,345 Accrued pension expense 31,179 35,702 Accrued postretirement benefit expense 9,979 10,034 Other 8,833 4,081 ----------- ----------- 607,430 599,220 ----------- ----------- Contributions in aid of construction 227,517 224,686 ----------- ----------- Commitments and contingencies 0 0 ----------- ----------- $ 4,061,504 $ 4,032,156 =========== =========== The accompanying notes are an integral part of these financial statements.
Page 7 FORM 10-Q AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES ----------------------------------------------------------- Consolidated Statement of Cash Flows (Unaudited) (In thousands) Three Months Ended March 31, 1997 1996 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 18,030 $ 17,031 Adjustments Depreciation and amortization 25,057 21,542 Provision for deferred income taxes 7,275 5,135 Provision for losses on accounts receivable 1,825 1,023 Allowance for other funds used during construction (1,404) (3,637) Employee benefit expenses greater than (less than) funding 46 (560) Employee stock plan expenses 973 1,096 Deferred tank painting costs (214) (143) Deferred rate case expense (835) (516) Amortization of deferred charges 2,744 2,481 Other, net (1,812) 387 Changes in assets and liabilities, net of effects from acquisition Accounts receivable 133 3,568 Unbilled revenues 1,018 (2,700) Other current assets (947) 1,431 Accounts payable (13,516) (22,978) Taxes accrued, including federal income 17,745 9,857 Interest accrued 5,393 9,260 Other current liabilities (5,640) (1,553) -------- -------- Net cash from operating activities 55,871 40,724 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Construction expenditures (55,096) (38,144) Allowance for other funds used during construction 1,404 3,637 Water system acquisitions (125) (266,449) Proceeds from the disposition of property, plant and equipment 180 500 Removal costs from property, plant and equipment retirements (1,256) (552) Funds restricted for construction activity (476) 2,714 -------- -------- Net cash used in investing activities (55,369) (298,294) -------- -------- Page 8 FORM 10-Q Three Months Ended March 31, 1997 1996 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term debt $ 19,000 $ 0 Proceeds from common stock 5,869 13,680 Net borrowings under line-of-credit agreements 15,589 278,894 Advances and contributions for construction, net of refunds 3,901 894 Debt and stock issuance costs (430) (5,051) Repayment of long-term debt (30,883) (10,692) Redemption of preferred stocks (255) (167) Dividends paid (15,908) (12,898) -------- -------- Net cash from(used in) financing activities (3,117) 264,660 -------- -------- Net increase(decrease) in cash and cash equivalents (2,615) 7,090 Cash and cash equivalents at beginning of period 12,974 23,717 -------- -------- Cash and cash equivalents at end of period $ 10,359 $ 30,807 ======== ======== Cash paid during the period for: Interest, net of capitalized amount $ 31,060 $ 21,770 ======== ======== Income taxes $ 6,738 $ 5,758 ======== ======== Common stock issued in lieu of cash in connection with the Savings Plan for Employees and the Long-Term Performance-Based Incentive Plan totaled $2,046 in 1997 and $4,999 in 1996. Debt and liabilities of $141 million and $5.9 million, respectively, were assumed in connection with the Acquisition in 1996. The accompanying notes are an integral part of these financial statements.
Page 9 FORM 10-Q AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES ----------------------------------------------------------- Information Accompanying Financial Statements (Unaudited) (In thousands, except share and per share amounts) March 31 December 31 1997 1996 ---------- ----------- Preferred stocks with mandatory redemption requirements Cumulative preferred stock - $25 par value Authorized - 1,770,000 shares 8.50% series (non-voting) - 1,600,000 shares outstanding $ 40,000 $ 40,000 ---------- ----------- $ 40,000 $ 40,000 ========== =========== Preferred stocks without mandatory redemption requirements Cumulative preferred stock - $25 par value 5% series (one-tenth of a vote per share) - 101,777 shares outstanding $ 2,544 $ 2,544 Cumulative preference stock - $25 par value Authorized - 750,000 shares 5% series (non-voting) - 365,158 shares outstanding 9,129 9,129 Cumulative preferential stock - $35 par value Authorized - 3,000,000 shares 0 0 ---------- ----------- $ 11,673 $ 11,673 ========== =========== The terms of the 8.50% preferred stock provide that all shares of the series shall be redeemed on December 1, 2000. Common stockholders' equity Common stock - $1.25 par value Authorized - 300,000,000 shares Outstanding - 78,762,424 shares at March 31, 1997; 78,421,302 at December 31, 1996 $ 98,453 $ 98,027 Paid-in capital 305,522 298,448 Retained earnings 664,305 662,183 Unearned compensation (1,318) (784) ---------- ----------- $1,066,962 $ 1,057,874 ========== =========== During the first three months of 1997, 224,032 shares were issued in connection with the Dividend Reinvestment and Stock Purchase Plan, 56,247 shares were issued in connection with the Savings Plan for Employees and 60,843 shares were issued in connection with the Long-Term Performance-Based Incentive Plan. At March 31, 1997, common shares reserved for issuance in connection with the Company's stock plans were 60,923,162 shares for the Stockholder Rights Plan, 6,817,199 shares for the Dividend Reinvestment and Stock Purchase Plan, 937,240 shares for the Employees' Stock Ownership Plan, 258,714 shares for the Savings Plan for Employees and 397,585 shares for the Long-Term Performance-Based Incentive Plan. Page 10 FORM 10-Q AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES ----------------------------------------------------------- Notes to Consolidated Financial Statements (Unaudited) (Dollars in thousands, except per share amounts) NOTE 1 -- Financial Statement Presentation The information presented in this Form 10-Q is unaudited. In the opinion of management the information reported reflects all adjustments, consisting of normal recurring adjustments, which were necessary to a fair statement of the results for the periods reported. Certain reclassifications have been made to conform previously reported data to the current presentation. NOTE 2 -- Acquisition On February 16, 1996, the Company's subsidiary, Pennsylvania-American Water Company, acquired the water utility operations of Pennsylvania Gas and Water Company (now known as PG Energy Inc.) for $409,400. The acquired operations, which include 10 water treatment plants and 36 reservoirs, serve approximately 132,000 customers in northeastern Pennsylvania. The acquisition was accounted for as a purchase, and the accompanying financial statements reflect the results of operations of the acquired business subsequent to the purchase date. The purchase price consisted of $262,500 in cash and the assumption of $146,900 of PG Energy Inc.'s liabilities, including $141,000 of its long-term debt. The cash payment was funded with short-term debt that was subsequently repaid with the proceeds from the Company's 1996 common stock offering and a portion of the proceeds from Pennsylvania-American's 1996 offering of $150,000 of 30-year, 7.8% General Mortgage Bonds. The unaudited pro forma results listed below were prepared as if the acquisition and related offerings had occurred on January 1, 1996, and include the historical results of the Company and of the acquired operations. The unaudited pro forma information is not necessarily indicative of the results of operations that might have occurred had the acquisition actually taken place on the date indicated, or of future results of operations of the combined entities. Three months ended March 31, 1996 - --------------------------------- Revenues $205,733 Net income 17,692 Earnings per common share $ 0.22 NOTE 3 -- New Accounting Standard In February 1997, Statement of Financial Accounting Standards No. 128, "Earnings per Share" and Statement of Financial Accounting Standards No. 129, "Disclosure of Information about Capital Structure," were issued by the Financial Accounting Standards Board requiring implementation for periods ending after December 15, 1997. Adoption of these statements effective December 31, 1997, is not expected to have a significant effect on the financial statements of the Company. Page 11 FORM 10-Q PART I - FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - -------------------------------------------------------------------------- Results of Operations - --------------------- Operating revenues for the first quarter of 1997 were 8% higher than for the first quarter of 1996 due to the acquisition of regulated water operations in northeastern Pennsylvania and authorized rate increases for several subsidiaries. In the first quarter of 1997, the northeastern Pennsylvania acquisition increased operating revenues by $6.9 million in comparison to the first quarter of 1996. During the first four months of 1997, three regulated subsidiaries received rate orders which are expected to provide approximately $4.7 million in additional annual revenues. Seven subsidiaries have rate increase applications on file before regulatory agencies which, if granted in full, would provide approximately $70.8 million in additional annual revenues. A rate increase application pending for Pennsylvania-American Water Company accounts for $41.4 million of the $70.8 million in requested additional annual revenues awaiting decision. That request addresses the Company's added investment in water service facilities since its last rate decision including the northeastern Pennsylvania acquisition. A decision is expected late in 1997. The 55.9 billion gallons of water sold in the first quarter of 1997 were 2% more than the 55.0 billion gallons sold in the first quarter of 1996. The northeastern Pennsylvania acquisition added 1.7 billion gallons in water sales volume in comparison to the first quarter of 1996. Total operating expenses for the first quarter of 1997 were 4% higher than a year ago. Operation and maintenance expenses were equal to last year. Depreciation expense was higher due to growth in utility plant in service. Higher general tax expense reflects higher property values and increased gross receipts. Income deductions increased by 17% in the first quarter of 1997 compared to the same period last year. Interest expense rose by 9% to $35.6 million in the first quarter of 1997 compared to the first quarter of 1996, primarily due to an increase in total debt to fund construction of new water service assets and the northeastern Pennsylvania acquisition. The total allowance for funds used during construction recorded in the first quarter of 1997 was 66% less than the first quarter of 1996. This decrease was due to the completion of the Delaware River Regional Water Treatment Plant in New Jersey which began operation in 1996. Income taxes increased as a result of increased earnings in the first three months of 1997 when compared to the first three months in 1996. Net income to common stock was $17.0 million for the first quarter of 1997 compared with $16.0 million for the same period in 1996. First quarter 1997 results included three months of the northeastern Pennsylvania acquisition as compared to one and one-half months for the same period in 1996. Page 12 FORM 10-Q PART I - FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (contd.) - -------------------------------------------------------------------------- Capital Resources and Liquidity - -------------------------------- All shares of common stock issued during 1997 have been the result of stock issued in conjunction with the Dividend Reinvestment and Stock Purchase Plan, the Savings Plan for Employees and the Long-Term Performance-Based Incentive Plan. During the balance of 1997, the Company plans to issue shares of common stock through its Dividend Reinvestment and Stock Purchase Plan, the Employees' Stock Ownership Plan and the Savings Plan for Employees. Proceeds from the issuance of common stock will fund additional equity investments in subsidiaries. Three regulated subsidiaries issued $19.0 million of long-term debt during the first four months of 1997. In addition, the Company invested $5.4 million in the common stock of four subsidiaries. The proceeds from these financing arrangements have been used to fund construction programs and repay bank borrowings. It is anticipated that some subsidiaries will sell long-term debt to institutional investors and common stock to the Company during the remainder of 1997, with the proceeds used to repay bank loans and fund construction projects. Page 13 FORM 10-Q PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K ----------------------------------------- A. Exhibits -------- Exhibit number (27), Financial Data Schedule, is filed herewith electronically. B. Reports on Form 8-K ------------------- No report on Form 8-K was filed by the registrant during the quarter ended March 31, 1997. Page 14 FORM 10-Q SIGNATURES - ---------- 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 thereunto duly authorized. AMERICAN WATER WORKS COMPANY, INC. Date May 9, 1997 /s/ George W. Johnstone - ---------------------- -------------------------------------- George W. Johnstone, President and CEO (Authorized Officer) Date May 9, 1997 /s/ Robert D. Sievers - ---------------------- -------------------------------------- Robert D. Sievers, Comptroller (Chief Accounting Officer) EX-27 2
OPUR1 0000318819 R. D. SIEVERS 1,000 3-MOS DEC-31-1997 MAR-31-1997 PER-BOOK 3,481,548 107,180 164,438 268,174 40,164 4,061,504 98,453 304,204 664,305 1,066,962 80,800 17,957 1,730,867 162,979 0 0 30,788 0 0 0 971,151 4,061,504 213,357 11,327 148,454 159,781 53,576 72 53,648 35,618 18,030 996 17,034 14,912 33,978 55,871 .22 0
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